Planning an Investment Portfolio for Your Family with ULIPs

ULIPs are great ways to build a family investment portfolio. With several benefits, advantages and flexibility, they can be ideal for you.
Planning an Investment Portfolio for Your Family with ULIPs
Over the last few years, people have shown a keen interest in Unit Linked Insurance Plans (ULIPs). This hybrid investment product allows money to grow while providing you with life cover. Unlike the traditional insurance products, ULIPs are linked to the capital market. With the capital market, you have access to instruments such as bonds, stocks and mutual funds. This gives you the leverage of faster growth when compared to some other investment products.

Many of us are averse to the idea of investing in the capital market due to risk and volatility. But, they are also your best bet to defeat inflation and boost your portfolio. You can invest in debt instruments, but the returns are low. If you are looking for a tool to put money for the future of your family, ULIPs may seem like an answer.

  • Insurance + Investment

Pure investment tools invest the entire sum into the purchase of funds. You would end up buying a separate insurance. ULIPs, in this case, dedicate a small portion of your funds to buy insurance and other charges and the rest to buy funds.

  • Flexibility

ULIPs give the customer’s immense flexibility when it comes to choosing the underlying funds. You can decide to go aggressive and design a portfolio based on equity funds. Or, you can take the usual path to a balance between equity and debt instruments. If you are outright conservative, ULIPs will let you choose a portfolio made up of debt funds only.

  • Tax Benefits

Though most investment instruments provide tax benefits in some form, ULIPs have an advantage there. You can invest up to Rs. 1.5 lakhs under Section 80C using ULIPs.

  • Additional Coverage

Being insurance products at the core, some ULIPs would also allow you to purchase riders. For example, to save for your children’s education, some add-ons would help your kids receive a lump sum amount, should anything happen to you. The insurance company would continue paying the premiums on your behalf in such cases.

  • Switching

Another excellent feature of a ULIP is the ability to switch between funds. In your initial days, you can have higher exposure to equity and reduce it as you age.

ULIP makes for a great product for long-term investments, as it can tick several checkboxes at the same time. It qualifies to be a good all-rounder. You can choose these plans for your family for either of the following needs.

  • Retirement

While you are still working, you can make the payments and let the corpus amount build. You can later use this amount for your retirement.

  • Create Wealth

This is one of the most common reasons for investing in anything. Building your wealth over a period can help you and your family lead a comfortable life. As you have flexibility at your disposal, you can use time market up and down as well.

  • Education

All parents wish for their kids to have the best education possible. The idea should not be affected due to unknown or unforeseen circumstances. Investing in ULIPs can provide you cover against this as well.

  • Health Hazards

Unknown health-related issues can eat a significant chunk of your savings. Regular investing can keep you and your family safe under such financial circumstances.

ULIPs come across as a great breed of products, because of their adaptability. The customization makes it reach out to a wider audience. People who like to take risks and those who avoid risks can benefit from this. As you can design your portfolio, you can keep your family priorities first when deciding on a plan. It is a solid way to build a strong financial foundation for your and your family’s future.

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