Looking for the best way to balance protection and wealth creation? Here’s how term insurance and ULIPs together can secure your family and grow your money.
In today’s world, both wealth creation and Term insurance plans are very important for every individual. Life is always uncertain, and with the rate of inflation increasing day by day, it is important to safeguard your family's future along with increasing your money. A common man must invest in a term plan matching his family needs, lifestyle standards, and financial obligations. This assures that when an unfortunate event takes place, the family remains in a secured financial position. By investing in ULIPs, one gets side earnings, and when viewed from a long-term perspective, their income can be generated to build wealth. Together, term insurance grants security, while ULIPs help generate wealth, thereby achieving a perfect balance in financial goals.
Term insurance plans are the most basic and cheapest forms of life insurance policies.
Low premium, high coverage: You pay a small premium, but your family gets a large sum assured in case you die during the policy term
Pure protection: Term insurance is not for saving or investing; it is for protection.
Customizable: Options are available regarding the amount of coverage and the length of the policy that you require.
For example, if your income level is ₹10 lakhs, then you can buy a term insurance plan that offers a coverage of up to ₹1 crore. This ensures that your family is able to maintain their lifestyles, pay off all their debts, as well as any other future commitments.
Understanding ULIP
A Unit Linked Insurance Plan or a ULIP is a product that comprises both insurance and investment.
Dual benefit - life cover + investment: It gives life coverage and also allows the investor to invest in equities, debt instruments, or balanced schemes.
Wealth creation - long term growth and potential: Since a part of your premium gets invested, ULIP plan enable you to create wealth over time.
Flexibility - chooses funds based on market condition: You have the flexibility of choosing different funds as per the situations prevailing in the market.
Tax benefits - In case an individual has paid premiums on policies like ULIPs, he or she can claim a tax deduction under Section 80C. Similarly, maturity values can be tax-free under Section 10(10D). For instance, you may invest ₹15,000 every month, out of which some part might go to life insurance and the remaining to mutual funds. If this is done for 15 to 20 years, then this amount would be considerable.
A sound financial plan is not only about cutting costs, it is also about providing security for your loved ones and making money. Thus, this is one of the most potent options available to you, especially as you start your financial journey, to ensure financial security for you and your family.
Risks & Considerations
ULIP charges: Returns may be reduced by coming off for fund management charges, policy administration, and mortality charges.
Market risk: There are no assured returns, as they are at the mercy of equity/debt performance.
Liquidity: ULIPs come with a lock-in period, generally 5 years; hence, they are not suitable for meeting short-term needs.
Conclusion
With the combination of Term Insurance and ULIPs, a balanced financial strategy is created.
Strong protection for your family.
Wealth growth for long-term goals.
Cost efficiency with affordable coverage and disciplined investment.
Flexibility to adjust as your financial situation changes
This two-pronged approach provides peace of mind at present, as well as a financially secure future.