Insurance helps you save tax. Can it grow your wealth?
Insurance is generally considered to be an avenue for protecting near and dear ones from financial loss in case of the death of the insured. Most people hence invest in insurance plans simply because it is mandatorily imposed on them by their employer or because of a continuing family legacy of setting aside some money for life insurance. While it is known that life insurance can help you save tax, it can also help you generate good returns on your investment – this is where Life Unit Linked Insurance Plans come in.
What are the benefits of investing in ULIPs?
These are essentially life insurance policies where the returns are linked to the performance of the funds that the plans invest in. ULIPs invest in either debt or equity funds and you can choose between either. Because of the linkage to market performance, ULIPs offer good returns when considered from a long term perspective.
What are Unit Linked Insurance Plans?
- Market Linked Returns: Unit Linked Plans give you the benefit of obtaining returns linked to the market, outperforming traditional endowment plans. You get a good combination of both protection and returns from these plans as compared to a traditional life insurance plan. The downside is that these also carry a risk and you may stand to lose in case the market underperforms. Historically, over a horizon of time (typically over 5 years), ULIPs have averaged healthy returns that score over other traditional methods of saving. Having said this, it may be stated that ULIPs are recommended only for investors who have a risk appetite that can withstand short term negative fluctuations in investment value.
- Flexible payments: You can choose to invest either a lump sum amount or choose premium payment options at regular intervals.
- Tax benefits: Life ULIPs are a very good investment option when it comes to saving tax. You can avail tax benefits on the premium paid by claiming deductions under Sec 80C. Returns from the ULIPs are also tax free subject to conditions under Sec 10 (10D).
- Choosing the funds: In a ULIP you have the option of choosing from a list of equity or debt funds where you want your money to be invested in. You can also switch options depending on your requirements, subject to fulfilment of certain terms and conditions.
To know more about Insurance Services offered by Standard Chartered Bank, click here or SMS ‘SAVETAX’ to 57575
Tax Benefits subject to prevailing tax laws. The user/investor needs to verify all the facts and circumstances with the prevailing tax statutes and seek appropriate professional advice before acting on the basis of the above information. Tax laws are subject to amendments from time to time.
Unlike traditional insurance products, Unit Linked Insurance products are subject to market risk, which affect the Net Asset Values. The names of the company, product nams or fund options do not indicate their quality or future guidance on returns. Funds do not offer guaranteed or assured returns
Standard Chartered Bank, India having its corporate office at Crescenzo Building C-38/C-39 G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400051 is a licensed Corporate Agent of ICICI Prudential Life Insurance Company Limited (IRDA registration no. 105) for life insurance products, vide composite license number 1096736. Insurance is the subject matter of solicitation.