Here Is What You Need To Know About A Long Term Insurance Policy

2024-08-02

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While one can more accurately prepare for future expenses, it is much harder and trickier to prepare for future emergencies. Unfortunate circumstances come in many forms, and if not adequately prepared for, can leave an individual or a family under dire financial pressures. That is why a highly recommended financial suggestion is to always secure your future with a trusted, long-term life insurance policy.

That being said, the fact of the matter is that life insurance comes in many forms and via a wide range of products on the market. In order to truly determine which life insurance policy is the perfect one for your needs, it is important to know about its benefits in the long run. Overall, an ideal life insurance policy is one that apart from ample coverage, also provides ample scope for wealth creation.

This is made possible by the means of United Linked Insurance Plans, or ULIPs for short. A ULIP is an insurance product that doubles as an excellent market-linked investment instrument as well. According to your choice of ULIP, you can either pay your premiums on a monthly or annual basis. While some amount of your premium is contributed towards providing you with insurance coverage, the other part of the amount is invested in your investment fund of choice.

These dual benefits make ULIP the prime insurance product of choice for individuals who believe in investing for the long haul. Moreover, since the returns from a ULIP are market-linked, it is more prudent to invest in them for a longer period of time. Apart from this, there are a few more considerations that make ULIP a worthy long-term insurance option.

Lock-in Period

ULIP typically come with a lock-in period of 5 years, during which the policyholder is not allowed any withdrawals or payouts. This serves a very specific purpose, allowing the investment to grow at a higher rate and provide higher returns. It also helps the policyholder in inculcating a disciplined approach to investing.

Particularly, with the power of compounding, investment in the best ULIP can result in substantial returns when compared to not investing the amount at all. Over a long period of time, these returns can even help you achieve financial goals such as purchasing a home or a car. All of this with the added benefit of having a reliable life insurance cover.

Flexibility

When signing up for the long term, it is important to have an investment that can keep up with your ever-changing goals and needs. That is where the flexibility of ULIP comes in handy. In general, the best ULIP offer a variety of fund options to choose from, such as equity, debt and balanced funds. Based on your risk appetite as an investor, you can take your pick and invest accordingly with the added option of moving your money between these different funds as you see fit. As time progresses, you can change your investment strategy and your ULIP will be able to support you either way.

Moreover, ULIP also work as a long term option due to the flexibility they offer with respect to your life insurance cover. You can customise your ulip and your ideal sum assured at the start of your policy, and with some ULIPs, you even have the option of increasing your sum assured at important milestones in your life.

Tax Benefits

Apart from this, ULIP also offer a variety of tax deduction benefits. The primary of these is that the premiums contributed to a ULIP are allowed for deduction within Rs. 1.5 lakh under Section 80C of the Income Tax Act, 1961. Moreover, under Section 10 (10D), the death benefit or maturity amount from a ULIP is tax-free. ULIPs also have the distinction of being the only market-linked investment tool that is exempted from Long Term Capital Gains, or LTCG taxes. With tax benefits such as these, your ULIP can greatly contribute to your long term savings.

The key to maximising the benefits of a long-term insurance policy in general, and a ULIP in particular, is to find the right, reliable insurer that can offer the best plans customised for your needs. With Canara HSBC, you can avail a variety of the best ULIP based on your financial needs and risk appetite. These include ULIPs such as the Invest 4G Plan, Titanium Plus Plan, the Smart Future Plan, and the Smart Goals Plan.

Particularly, the Invest 4G ULIP from Canara HSBC is a popular ULIP scheme among investors with options ranging from 7 different funds as well as 4 portfolio strategies. You can also make the most of several additional benefits such as wealth boosters and loyalty additions.

Questions that you need to ask while Buying the Best Term Insurance Plan?

Are you buying a term plan with return of premium?
Amount of premium you have to pay based on your age, habits, education, and monthly income
The total number of benefits covered in the term insurance plan. Do they include benefits that you care about the most?
How to save money on tax if you pay for the term life insurance plan?
Do they offer regular income options?
Can you change the coverage and premium in the future?
Does the claim consider valid if death occurs outside India?
Which kind of death is not covered by a term insurance plan?
Can NRIs take a term insurance plan? If yes, what are the conditions?
Does the term insurance plan have a cash value if you decide to cancel the term insurance policy?
Under what circumstances can a term insurance plan be cancelled?
Can I pay the premiums online or make electronic payments?
What will happen to the term life insurance plan if the life assured starts smoking after purchasing the policy?