Why ULIPs are One of the Best Retirement Planning Instruments?

Written by : Knowledge Centre Team

2021-10-03

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Retirement is one of the milestones that everyone aspires to reach. It is one of the major points of your investment life. You work hard all your life just so that you do not face any problems when you retire. You will want a stress-free life after retirement and you certainly would not want to struggle even after retirement.

Proper retirement planning will ensure that you have a steady flow of cash after retirement. A good retirement plan and investment will give you a large enough corpus to meet your expenses for a long time.

A good retirement plan is always backed by a great investment option. Unit linked insurance plans (ULIPs), New Pension Scheme (NPS), PPF, are some of the good investment options for retirement. But, which one stands out?

Why are ULIPs the Best Retirement Instrument?

ULIPs provide some splendid features that can help you build a sufficient pool for yourself and get you set for your retirement. Invest 4G by Canara HSBC Life Insurance has a special cover option named ‘Century Option’.

By choosing this option, ULIP will provide you with life coverage of up to 100 years. With this option, you will stay covered even after your retirement. This will give your investment more time to build and the more time your investment remains untouched, the bigger will be your corpus.

1. Invest In Asset Mix (Equity & Debt)

ULIPs provide you with an option to invest in not just one but different funds. Here you have the opportunity to invest either in equity or debt or a hybrid involving both equity and debt. This change also does not cost you in policies like Invest 4G. Thus, this gives you full control as you are the one who will decide where your funds will be invested.

2. Automatic Portfolio Management

You have now retired, and now don’t want to deal with the ups and downs of your portfolio frequently. This ULIP will provide you with just that.

ULIPs have a feature called Automated Portfolio Management. Under this, you have custom asset allocation you can choose from and then the rest will happen accordingly. This cuts the need for you to interfere and lets you focus on your family and yourself as well.

For example, you have chosen to balance your portfolio in an equal ratio of debt and equity. With the market changes and your asset balance will keep changing. The automatic balancing will bring the mix back to the level you chose every few months.

3. Bonus Additions for Growth

ULIPs also provide you bonus additions from time to time that contribute to your fund’s growth even more. Under Invest 4G, this happens under two heads

a. Wealth Booster

This gets you bonus units if you have invested for more than 5 years. The units are automatically added to your existing fund, without any charge.

b. Loyalty Additions

This is also the additional amount a user gets for staying invested. These start at the end of the 5th year.

4. Systematic Withdrawal

Invest 4G’s provides you with an option under which you will receive a predetermined percentage of your fund value at your chosen frequency for the rest of the term. This is the best option for the retired as they will have a steady flow of money with them. This can be used to fulfil daily needs.

5. Tax-Free Partial Withdrawals

Under ULIP, you are also provided with the chance to withdraw money. You can withdraw a partial amount at the end of the lock-in period at no extra cost. This can help you if you are in strict need of money. Also, partial withdrawals are completely tax-free.

What is a Good Retirement Planning Instrument?

The best retirement planning investments should have the following features:

a. Lifetime Investment Option

An ideal retirement plan should continue throughout your life. With this option, you don’t have to worry about switching your money from one investment to the other, especially after retirement. You can use a single investment plan to save and draw a pension later.

b. Should be Tax-Efficient

Taxes and inflation are the two great enemies of your wealth. You would not want the hassle of paying taxes even after you retire. You should go for the option that provides you tax benefits and gives you wealth after you retire which is not subject to getting taxed.

c. Multiple Options to Invest

Each investor has different needs and nature. So, the retirement option you would want should provide you with the flexibility to choose the option of funds where you would invest. The market does not remain constant, so there should not be a fund that you have to put all your money in and cannot even change. A plan should provide you authority to choose your way.

d. Portfolio Management Option

The retirement option must have the feature to manage your portfolio in such a way that your risk does not increase while you get higher growth of your fund. You should be able to change how your money is allocated.

e. Option to Withdraw Money

Though the funds should stay invested in your retirement plan, what if something comes up and you really need money? The plan should allow partial withdrawal from the corpus in such emergencies.

Any investment option which carries these features can be your best retirement saving option. ULIP from life insurers are definitely one option offering these features. Invest 4G from Canara HSBC Life Insurance also allows you to continue the policy until your natural demise.

However, these are not the only features that make ULIP the best retirement planning instrument.

Additional Features of Invest 4G ULIP

a) Minimum Guaranteed Death Benefit: ULIPs other than investing your money provide your life coverage as well. This entitles you to receive a guaranteed death benefit in case you die within the policy term. The death benefit is higher of the sum assured and 105% of the premium paid.

b) Return of Mortality Charges: Policies like Invest 4G returns the entire premium paid towards mortality charges at the date of maturity.

c) Fulfil your Legacy Goal: Under the century option which is provided by Invest 4G. You are insured for 100 years. So even if your fund value is low, at your natural death family will receive the death benefit amount.

All these benefits ULIP offers make it a perfect option to opt for your post-retirement plan. If you invest early, you will have a huge corpus to rely upon when you retire. The investment component in ULIP, if managed well, can build you immense wealth.

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