Why ULIP Works Best for Long Term Wealth Creation?

Have you been on the lookout for a long-term wealth creation instrument? Then you are at the right place! As you might already know ‘What is ULIP policy‘ due to its popularity, very few investors are aware of its long-term benefits. So, keep reading to know some key features of ULIPs, which make it the perfect option for investing in the long haul.

1. Best for First-Time Investors

Many investors are now slowly moving towards market-linked instruments to earn good returns on their investment. While some of these financial tools may seem complex to first-time investors, ULIP stands out with its simple features. With a limited fund option and the choice to switch between funds, ULIPs have a better offering in the market. Thus, individuals investing for the first time do not have to be investment savvy and have the opportunity to earn high returns in the long term.

2. Presents Dual Advantage

With such uncertain times, we all require a financial backup for our loved ones. While making investments to meet future goals are crucial, a life cover is equally important. However, with Unit-Linked Insurance Plan, you can fulfil both your needs. The dual advantage enables you to avail a death benefit along with an investment opportunity. In case something were to happen to you, the insurer would pay a lump sum amount to your loved ones. So, now you can secure your family in your absence and plan your life goals without any hitches. 

3. Offers Better Returns Than Other Instruments

A Unit-Linked Insurance Plan offers better returns to policyholders due to its equity perks. Thus, when ULIP is compared to other investment tools that aren’t market-linked, the returns are quite higher. But in comparison with similar products, ULIPs provide other lucrative features that give it an upper hand. Fund switching is one such aspect where you can choose to invest in balanced or debt funds in case of high market volatility. Such a feature isn’t available with other investment options and thus, you can secure your ULIP returns for the long term. Check out the online ULIP calculator to know how much returns you can earn!

4. Comes with a Lock-In Period

There is a mandatory lock-in period of five years in ULIPs where you cannot make any withdrawals. Now, is this a benefit? With a lock-in period, you can instil the habit of disciplined investment. Doing this can help you greatly in the future as ULIPs work best as long-term wealth creation tools. If you discontinue your investment early, the ability of the corpus to grow shall be cut short. To enjoy the power of compounding and to ride out the market volatility, an investment discipline is crucial. Thus, such a trait can go a long way in promoting long-term investments.

5. Provides Flexibility

Just as we explained above, ULIPs allow you to switch funds based on your risk appetite. You can pick any other fund type from equity, debt or balanced funds depending on your future goals. But if you were to change your mind after a period, ULIPs easily enable you to switch funds to earn better returns. The insurer allows a set number of free switches after which you must pay a fee to make use of this facility.

With the above pointers, you are now aware of the various types of ULIP features, which make it the best option for long-term wealth creation. Hence, it is advised to stay invested in such a market-linked instrument for a longer time to gain high returns in the future. Ensure to use the ULIP calculator to plan your investments better!