Mr. Sharma retired at the age of 55 years, after a long and successful career as an architect with a prestigious firm. Goaded by his wife, he was anxious to start investing in instruments which would provide him with handsome returns over a period of time. His concerns mainly revolved around ensuring that his wife and he could enjoy the remaining years of their lives in comfort and never be in want of anything. Having approached an insurance agent that he had got friendly with owing to professional considerations, Mr. Sharma was introduced to Unit Linked Insurance Plans (ULIPs) which appeared to offer several advantages to persons in his age group. ULIP for senior citizens is an ideal plan, since it allows them to safely invest their savings and derive high returns from them.
ULIP plans act as a combination of both insurance and investment instruments. Not only is the policyholder provided coverage under the plan, but a portion of their premium payments is diverted towards investments. ULIPs for senior citizens invests in a range of securities including equity, debt or a combination of both. The percentage of the investment amount that is paid towards equity or debt securities, in the case of combined ULIPs, depends on the policyholder’s risk appetite as well as their financial goals. ULIPs allow them to choose funds within the plan which fits with their requirements. Read on to learn about the different advantages that are available to policyholders with ULIPs.
1. Life Cover:
The foremost benefit of investing in a ULIP is life cover that it offers for the policyholder. By opting for a life cover, the policyholder ensures that their dependents are taken care of regardless of unexpected situations.
2. Income Tax Benefits:
Investing in ULIPs allows policyholders to avail several tax benefits, which are available for their investments into these plans. Income tax benefits are available under several sections of the Income Tax Act, 1961, which include tax deductions on payment of premiums as well as exemptions on the fund received at maturity. Tax benefits are also available at the time of policyholders switching between funds , in order to pursue the highest returns.
With ULIPs, there are options for policyholders to switch funds from time to time. This flexibility in switching between funds allows policyholders to easily drive their investments based on their individual risk profiles and financial goals. Several ULIPs allow policyholders a number of free switches in a year, which allows them to easily switch funds based on their requirements and their understanding of market sentiment. Switching of funds allows investors to outperform markets in several cases, and thereby, earn higher returns.
4. Partial Withdrawals:
Senior citizens can face situations where financial emergencies crop up and require immediate attention. At such times, ULIPs can be enormously beneficial since they allow policyholders to make partial withdrawals from the funds after a certain period of time has passed. Most ULIPs have a lock-in period of five years, post which funds can be withdrawn by policyholders to attend to emergency financial situations where payments are required on an urgent basis. These payments could help pay for medical emergencies or any other cash crunches that crop up unexpectedly.
5. High Returns:
ULIPs can provide high returns to investors, owing to their ability to generate high returns from across funds. ULIPs can invest more in a certain kind of security, based on the policyholder’s risk profile and financial goals. If a ULIP invests higher amounts into equity funds, they have the potential of generating higher returns but these funds are also more subject to risks owing to their dependency on market fluctuations. Alternatively, ULIPs can allocate a higher percentage of the investment in debt securities, which generate comparatively lower returns but offer greater security of funds invested. Additionally, ULIPs allow policyholders to invest in hybrid funds which provide a healthy balance of equity and debt funds; and thereby ensure high returns while also guaranteeing the security of funds invested.
ULIP for senior citizens allows investors to generate the highest returns in their golden years, and tick multiple objectives off their bucket lists. The Future Generali Big Dreams Plan allows policyholders to begin investing for as little as Rs. 1,500 and allows them to choose between 6 funds which offer both high returns and security of funds.