While we may believe that we have complete control of our lives, it isn’t true. Exigencies can strike any moment without caution, which is why it is always essential to be prepared. Of course, a good life insurance plan is critical for both your protection as well as your family’s, but is that enough? In a fast-paced world, both protection and investment are required, and that’s exactly where ULIPs or Unit Linked Insurance Plans step in.

ULIPs, as they are popularly called, are an insurance product that combines both investment and insurance benefits in one plan. When you pay a premium, a part of it is used to provide life cover, while the remaining is invested in various financial instruments of your choice. You can decide what to invest in, based on your life goals and risk appetite. All in all, they help in your goal of wealth creation. This also means you can turn your dreams into reality!

Before we move to the types of ULIP plans, let us first understand why you must invest in them.

Here are a few reasons why you must invest in ULIP plans:

As mentioned above, ULIP plans offer the best of both worlds — investment and insurance.

1. Higher returns: When you invest in ULIPs, you can expect higher returns to the tune of 12-15% on your investment, for a tenure of 10 years. But it is also essential to understand that this is not a guaranteed return rate.
2. A range of investment options: As an investor, you get access to a variety of investment options, in accordance with your risk appetite. For instance, if you have a high-risk appetite, you can invest in equity, while conservative investors can invest in debt funds.
3. Increased flexibility: When you invest in ULIPs, you also have the option to switch between different schemes based on your risk appetite and changing market conditions.
4. Tax benefits: If you have invested in a ULIP plan, you also receive tax benefits on the premium paid, under section 80C of the Income Tax Act, 1961.
5. Liquidity: Unlike several other financial instruments, investors can avail of the partial withdrawal of money, in case a need arises.

Types of ULIPs

An individual can invest in an array of ULIP plans, based on their risk appetite. Here they are:

1. Equity ULIPs: As the name says, in this ULIP plan, a part of the premium is used to buy equity shares. It is important to understand that this is more suited for those who have a higher risk appetite, since any price fluctuations in shares can directly impact the investment corpus. But when there are gains, they are massive.
2. Debt ULIPs: These ULIPs invest in debt instruments like debentures, government bonds, corporate bonds, and more. These cater to those who have a moderate to low risk appetite, which makes them a safer option.
3. Balanced funds ULIPs: In order to strike a balance between equity and debt funds, there are balanced fund ULIPs that invest in both. Here, a part of the fund is invested in debt instruments that have fixed interest rates, while the rest is allocated in equity.
4. Liquid funds: These funds have a low-risk factor and are best for those who are looking for safer options. In this type of ULIP, your money is invested in highly liquid market instruments such as certificates of deposit (CD) and treasury bills. These work perfectly well for short-term goals.
5. Cash funds ULIPs: These funds primarily invest in monetary funds that are a part of banks. These are low-risk in nature, which also means that you do not get high returns. Cash funds ULIPs cater to risk-averse investors.

Benefits of ULIP plans

There are various benefits that ULIP plans provide to an investor:

1. Maturity benefits: In case a policyholder lives beyond the maturity period of the plan, he/she receives the entire corpus in the form of a maturity benefit from the insurer. Also, the good news is that the maturity benefits are exempted from tax under Section 10(10D).
2. Death benefits: What if the policyholder has an unforeseen demise during the policy term? In that case, the death benefits are extended to the family member of the policyholder, who is registered as the beneficiary. 
3. Tax benefits: The amount a policyholder pays as a premium for ULIP plans is eligible for a tax deduction for a maximum of 1.5 lakhs during a year, under section 80C of the Income Tax Act, 1961. 
4. Long-term investment benefits: It is critical to remember that the longer your investment horizon, the higher returns you will receive. In this case, you will also be able to beat market fluctuations. 
5. Withdrawal benefits: As mentioned earlier, one can have access to a partial withdrawal of funds, in case any emergency arises. 

Why choose HDFC Life Click2Wealth

Now that you know all about ULIP plans, it is also significant to choose the right plan that can cater to all your needs. With HDFC Life Click2Wealth, you can pick from 11 Funds to maximize your investment. 

A quick look at some of the options: 

• Invest Plus option: As part of this option, policyholders receive a maturity benefit, death benefit, and fund boosters (added benefits). In the case of fund boosters, at maturity, the total amount of maturity charges deducted from the cover will be added to the fund value.
• Premium Waiver option: This is an option that takes care of all your financial responsibilities in your absence. In case of the policyholder’s unfortunate death, all future premiums are waived to ensure that your fund is not impacted. 

The policy remains the same, and the cover is extended to the life assured. This accumulated fund value is then paid on maturity. On the death of the policyholder, the life assured will become the policyholder. 

• Golden Years Benefit option: In case you are looking to live a worry-free retirement life, and at the same time want to leave behind a legacy for your family, this plan is for you. This option offers you the solution to build your fund value, and you can also have access to a life cover until 99 years of age. You can opt for a systematic withdrawal facility, so that you can receive recurring post-retirement income and not compromise on your lifestyle.

Here are some highlights of the ULIP plans by HDFC Life: 

• Unlimited free switching option
• You only pay a fund management charge towards managing your funds and mortality charge towards your life cover
• Special addition of 1% of the premium allocated to your fund for the first 5 years
• Future premiums are waived off and your fund will continue to grow, in case of death of the policyholder
• Systematic withdrawal from your funds for post-retirement income
• In case of the premium waiver option, mortality charges with regard to the life assured would be refunded

So, get the best of investment and insurance with HDFC Life!