What is ULIP? Full form, ULIP Meaning, Features & Benefits
- Asked By
- Updated On:27-Jan-2021
- Replies:4
Short Answer
ULIP is a combination of insurance and investment. The insurer puts your money partly towards life insurance and partly invests it in a fund that can be debt or equity or both. There are fund managers to manage your investments.
Detailed Answer
Are you looking for the full form of ULIP? ULIP stands for Unit-Linked Insurance Plan.
ULIP Meaning:
In simple words, ULIP is a combination of insurance and investment. The insurer puts your money partly towards life insurance and partly invests it in a fund that can be debt or equity or both. There are fund managers to manage your investments.
ULIP or Unit-Linked Insurance Plan is primarily a long term investment tool for meeting your long term financial goals. You can switch and adjust your portfolio between debt and equity as per your risk horizon.
ULIP or Unit-Linked Insurance Plan Features & Benefits:
- You get a life insurance cover that acts as a security for your family.
- Premium paid for ULIP qualifies for tax deduction under Section 80C.
- The amount received on maturity is also exempt Under Section 10(10D).
- You can switch from equity to debt as per your risk appetite.
- ULIPs have a lock-in period of 5 years and generally suits long term investors.
Hence, ULIP is another addition to the list of retirement planning and wealth creation options in India.
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Discussion (3)
Don't trust the agents easily. Their main motive is to sell their products and bagged attraction commissions. Usually hide the cons. Honestly, I feel ULIP is not a good investment. Three biggest and painful cons of investing in ULIP that weighed over the good ones are: 1. Highest charges 2. Limited in insurance 3. Hidden details of investment You can still complete your 80c by investing in mutual fund and term insurance separately and 80d to claim double tax benefit by apply in health insurance.
Insurance and investments are 2 boats, better not to try to sail in them together. Insurance should never be mixed with investment. However, one must not ignore the importance of health and term insurance as well. Both, insurance & investment have their own special place in our financial life and none can be ignored. The motive to have insurance should be to safeguard you and your family by taking an adequate risk cover. Whereas your investment strategies must be focused on generating good returns & growing your money in the long run. What do you think? Did I point out correctly? Any add-ons you wish to make to it.
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Harshil Patel
I too believe there are other best investment alternatives rather than putting money in ULIP. These last minute investments for claiming deductions are usually made in a hurry. So, one needs to be very careful while investing in any financial products. People get confused and just want to complete the 80C investment. That's it! This hurry leads to money being stuck up in not so good plans. Therefore, one needs to be cautious and not fall trap to it. We need to focus on our financial goals and then choose the best investment plan.