Unit Linked Insurance Plan

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What is Unit Linked Insurance Plan?

ULIP is a combination of Insurance and Market-Linked Investments. The goal behind this financial tool is that you can get the benefit of wealth creation along with life cover.

Why Unit Linked Insurance Plan?

ULIP ensures financial stability & security for your family and helps it achieve its goals.

Section 80C Tax Benefit

Partial withdrawals

Redirection of Premiums

Top-ups allowed

Why us?

Fincart has an automated technology platform providing customised personal online financial and investment solutions.

We keep track of client's portfolios across multiple financial products under one platform.

We suggest a financial plan that will serve the financial requirements of a client.

What is customised ULIP Plan?

ULIP is a combination of Insurance and Market-Linked Investments. There are GOOD ULIPs & BAD ULIPs. There are four types of main charges associated with ULIPs -premium allocation charges, policy administration charges, fund management charges, & mortality charges for providing Life Insurance Cover. 

A bad ULIP will have all these charges embedded. The high amounts eat away the returns that the ULIP generates. However, a good ULIP carries:

  • ZERO Premium Allocation Charges
  • ZERO Policy Administration Charges.

Why recommend ULIP when given a choice of mutual funds?

Asset Allocation has two components - Strategic Asset Allocation and Tactical Asset Allocation.

  1. The strategic asset allocation comprises Mutual Fund schemes while the tactical asset allocation uses ULIP. It is the core asset allocation of the portfolio.
  2. Tactical Asset Allocation tries to take advantage of the market movement by investing when the market is down and booking profit when it is relatively expensive. Using this strategy for mutual funds invites short-term capital gains and/or exit load as well.

We use ULIP to save these capital gain taxes and also the exit loads. Further, the return is tax-free after maturity. However, sensing the advantage of such a strategy the government has capped it to an investment of less than 250,000 premium per annum. There is one negative point though, ULIP comes with a minimum annual commitment of 5 years. It makes a good case for funding long-term goals.

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faq's

The two pillars in your financial foundation that are required are Investment & Insurance. Both these pillars are present under ULIP. The goal behind this financial tool is that you can get the benefit of wealth creation along with life cover. 

  • Section 80C Tax Benefit 
  • Adjustable Investment amount 
  • Allow Top-ups 
  • Partial withdrawals
  • Redirection of Premiums 
  • More than just a Life cover

In ULIPs, there are bad ULIPs and good ULIPs. ULIPs are charged in four categories -

  • Premium Allocation Charges 
  • Policy Administration Charges 
  • Fund Management Charges 
  • Mortality Charges for providing Life Insurance Cover

All these charges are embedded in a bad ULIP. ULIP returns are eroded by high charges. A good ULIP has ZERO Premium Allocation Charges and ZERO Policy Administration Charges.

ULIPs cannot be redeemed within the initial five years, so you must stay invested during that time.

Your ULIP policy allows you to withdraw funds only after the completion of 5 years of investment, after which you can withdraw up to 20% of the fund value. This withdrawal is tax-free.

In the past, you were not taxed on your ULIP returns if the amount invested exceeded 10% of the life insurance policy's coverage. If you pay more than Rs 2.5 lakh for ULIPS, then the returns you receive will be taxed. Your ULIP's composition will determine the tax rate.

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