How to Use ULIP To Visit Your Dream Destination
People have different investment goals. For some, the main purpose of investment is to build a retirement corpus; for others, it may be to fund the expenses of traveling to their dream destination. Read on to know how you can accomplish your travel goal by investing in ULIP.
As an investor, you may constantly strive to remain financially protected and, at the same time, invest adequate funds to accomplish your future goals. The goal could be anything – building a retirement corpus, making a lifestyle purchase, or travelling to your dream destination. And, among the host of investment options, many people prefer investing in ULIP to fulfil their long-term goal, like traveling to the dream destination.
Before we look at how ULIP can help you accomplish your dream, let us first understand what ULIP is?
As the name suggests, the Unit Linked Insurance Plan is primarily an insurance product. It provides the dual benefit of life cover and investment. A part of the premium you pay is used for providing life insurance protection, and the rest is invested in market-linked assets for long-term savings.
How to use ULIP to travel to your dream destination?
Since ULIP offers life protection, you need not look for additional life insurance coverage. A single investment will give you security and investment exposure. Also, since ULIPs have a lock-in period of five years, it helps you develop regular savings habits. This means, as you pay the premium, a part of the amount goes towards realising your travel goal. You can withdraw the amount after maturity and use it to visit your dream destination.
Today, most insurance companies in India give the ULIP holders the flexibility for premium payments. If you are investing in ULIP to realise your goal, you can opt for a top-up option. This means, if you have any surplus savings or investable amount, you can increase the premium to either increase the coverage amount or the investment and get additional fund units. The higher the fund units you hold, the higher is the returns potential, and you can use the amount to fund your travel goal.
ULIPs provide a wide range of benefits, including the opportunity to withdraw the amount partially and invest in different fund options. This means you can define the investment class and the investment percentage, and the fund manager will handle your investments and give you the best returns potential. Since these funds are managed by the professional, they will make the right decision based on their market analysis. Thus, the chances of loss are minimal, and you can be fairly certain that you will get adequate returns to fund your travel goal.
Another significant benefit of investing in ULIP to meet your travel goal is that it enables you to invest in equity funds and equity-oriented investment tools. Depending on your risk-taking capacity, you can allocate a part of the investment amount in equity funds. Historically, these funds are known to provide valuable returns in the long-run. So, if you stay invested for the full five-year term, you can get sufficient returns and travel to your dream destination.
Lastly, tax-saving is an important aspect of any financial goal. Since ULIP is an insurance product, the policy’s premium is eligible for tax benefit under Section 80C of the Indian Income Tax Act. Thus, every year, you can reduce your tax liability and save a significant amount. Additionally, at the end of the policy term, the returns you get are exempted from tax. Thus, you get to enjoy the full corpus without any tax liability and use it to travel to your dream destination.
Thus, investing in ULIP has more than one benefit. It is considered one of the safest investment tools that offer protection and financial security.