ULIPs

4 ULIP Myths You Never Should Have Believed

abhishek — Wed, 09 Jun 2021 06:30:00 GMT

4 ULIP Myths You Never Should Have Believed

09-Jun-2021 09-Jun-2021'

Over the last few years, the urban Indian’s financial portfolio has been undergoing large changes. While earlier we used to set our expectations on tangible investments like Gold, Real Estate, and FDs, we are now moving away from those investments and going for more abstract investments like Mutual Funds, Equities, and PPFs.

While the Mutual Fund industry has marketed their products intensely, the market-linked product that the Insurance industry has to offer, named Unit-Linked Insurance Plans (ULIPs), enjoys a poor reputation in comparison. Earlier, neither the insurance companies nor their customers were comfortable with an insurance product that could be used as an investment.

However, a lot has changed over the years. These products are not only more transparent today but are also the perfect combination of insurance and investments. They give the same returns as mutual funds while also having advantages such as tax savings, life cover for your family, lower fund-management charges, and others that mutual funds do not provide.

In this piece, we have debunked a few myths that still persist about ULIPs.

Myth 1: ULIPs deduct considerable amounts from your investments

ULIPs today are advertised and sold online, which helps in reducing costs because of low customer acquisition costs as well as no agent commissions. Additionally, IRDAI has put a cap on fund-management charges.

Myth 2: ULIPs have high fund-management charges

ULIPs have 5-year lock-ins, which result in lower fund-management charges. The logic being that a fund manager for mutual funds has to generate profits in the short term, whereas the same job for a ULIP is done with the comfort of having at least 5 years to make money systematically and steadily.

Myth 3: A combo of term insurance and mutual funds are better than ULIPs

ULIPs hold the same weight in the share market as mutual funds. Crafted to be share market investment products, its life insurance pay-outs are more along the lines of “additional value” rather than being the main purpose of the plan. A massive pay-out is possible if you opt for a high sum assured and invest your money in safe funds.

Moreover, term plans are not investments since they have no inherent value. And, while an investment in mutual funds offers quick profits, it is a short-term commitment that comes with additional burdens such as high risks and management hassles.

Myth 4: Insurance is an expense; it should be treated as one

This was true 10 years ago when the Insurance industry had simple products to protect families from financial burdens. Insurance companies now offer holistic products, which on their own are enough to build a strong financial portfolio.

To conclude, ULIPs today have become all-rounder plans that are a must-have if you are looking to build a strong portfolio. ULIPs are now available integrated as child plans, money-back plans, and other plans. These plans can rightfully be termed as “evolved”.

To speak to ULIPs experts, contact OneInsure at 86559-86559 or support@oneinsure.com.

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Budget 2021 – What’s in Store for You

abhishek — Tue, 09 Mar 2021 06:30:00 GMT

Budget 2021 – What’s in Store for You

09-Mar-2021 09-Mar-2021'

abhishek

In a first-ever 100% digital Budget session, Finance Minister Nirmala Sitharaman delivered the Union Budget for FY 2021-22 on Feb 1, 2021. And the reaction of the markets has been more or less reflective of the general population’s sense of the Budget – positive. The SENSEX rose 5% (nearly 4,000 points) in the immediate aftermath of the Budget, which was the most it has gone up by on any Union Budget day since 1999.

So, what does the Budget have in store for you, the Indian householder? Let’s see some highlights in this brief article.

Taxation – Neither Higher, Nor Lower

In a reprieve to the common Indian, the FM has not changed the basic exemption limit, income tax slabs, or income tax rates. This means that the individual taxpayer will continue to pay tax at the same rates that were applicable in FY 2020-21. On the flip side, there were those that were expecting tax burdens to reduce in light of COVID-19 and the continuing struggle, which did not pan out. Standard deduction for salaried individuals and pensioners also remain the same as before.

It’s All about Infrastructure!

Signaling the Center’s push for the sector in the coming decade or so, the Budget was Infrastructure-heavy because of the superior job-creation aspect that goes along with it. FM Sitharaman announced the creation of Development Finance Institutions (DFIs) with the intention of having a portfolio of Rs 5 trillion in three years. She also announced various amendments to increase the ease access for FPIs to invest in Infrastructure Investment Trusts and Real Estate Investment Trusts.

Cleaning up the Books – Banking Sector Reforms

Via asset reconstruction companies working in tandem with asset management companies, the government intends to add further impetus to cleaning up the books of large and public sector banks in order to find a permanent solution to the problem of stressed assets.

Push to Gradually Disinvest and Privatize

The FM reiterated the Center’s commitment to disinvest and privatize, and also added that 2 more public sector banks and a general insurer would be privatized in the coming fiscal. This will be in addition to the proposed divestment in IDBI Bank. Moreover, FY 2021-22 will also see the disinvestment of some iconic public sector companies such as Bharat Petroleum (BPCL), Air India, Shipping Corporation (BEML), Pawan Hans, and Container Corporation of India (CONCOR).

How you can get the benefits of a market upswing – Understanding ULIPs

Unit-linked insurance plans (ULIPs) are wholesome insurance products that benefit from the share market as well as help in meeting financial goals. Moreover, being insurance products, ULIPs provide significant life coverage to secure your family in the event of your untimely demise.

Advantages of ULIPs over mutual funds:

Same returns as mutual funds
Lower maintenance charges
No tax burden
Gains made in ULIPs are completely tax-free!
Hassle-free movement between debt and equity instruments
Added life cover

To speak to a OneInsure executive to seek more details on ULIPs, contact 86559-86559 or support@oneinsure.com.

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How India Transforming from a Spending Economy back to a Savings-based Economy Affects You

Mohit Mishra — Wed, 21 Oct 2020 08:23:02 GMT

How India Transforming from a Spending Economy back to a Savings-based Economy Affects You

21-Oct-2020 21-Oct-2020'

Mohit Mishra

For many years, our country has been moving in the direction of other developed economies of the world. With the globalization of the economy and liberalization of policies in the early 1990s, entrepreneurs have been given a free rein, foreign funding has flowed, and privately held businesses have ample freedom to operate, market, and thrive successfully in India.

Macro steps like these and many other tweaks and revisions of government policies have ensured that our economy—just like those of other developed nations—has become one that focuses on spending rather than saving.

While 30-40 years ago our previous generation believed in toiling at work, saving money, and hoarding wealth in the form of gold, land, and Fixed Deposits, the current generation is more interested in going out on the weekends, having a good time, and investing what is left over in funds like mutual funds or ULIPs or PPFs.

This is a paradigm shift that has occurred over several decades due to increasing salaries; a freer job market where good jobs are only a few interviews away for worthy candidates; and the prevalence of high-performing financial tools like bank loans, EMIs, insurance, and market-linked funds that have by and large done great over the last 30-odd years. And this perfect scenario was never supposed to backtrack...

…and then COVID-19 happened…

The coronavirus outbreak has impacted not only healthcare, but many other spheres of life around the world. India has NOT been an exception. In fact, India currently sits at the third worst impacted country in the world in terms of positive infections (close to 75 lakhs as of this writing).

It’s not surprising, therefore, that India’s citizenry has suddenly gone from a spending economy to a savings-based one.

This reluctance to spend and tendency to hoard wealth is not restricted only to India, according to experts, who share that this behaviour is a direct result of the fear for health and safety – what they term as “survival mode behaviour”. People all around the world have started curbing their expenditures for fear that they might be out of a job tomorrow or due to the fear that their investments and nest eggs will not be sufficient if the pandemic doesn’t end soon. This tendency to hold on to money and not spend it has resulted in the global economic downturn that is in the news daily.

Finance gurus have something interesting to add, though. They insist that this fear psychosis is merely a temporary downtick. As soon as a vaccine is found and starts being distributed across the world effectively, people will return to the streets, the economy will rebound stronger than ever, and the markets will soar!

Did You Know? The SENSEX touched 41,000 on Oct 15, 2020. This is close to the all-time high of 42,000 that it had touched in Jan 2020 (before COVID-19 entered India). You might wonder why the market is doing so well when the economy is doing badly…

Experts in the know suggest a likely reason. They suggest that investors have flocked back to the market because they surmise that the gains they will get when the market rebounds over the next few years as the world defeats COVID-19 will be well worth the investments they put in now.

Let’s see how you can get the benefits of a market upswing too – Understanding ULIPs

Advantages of ULIPs over mutual funds:

Same returns as mutual funds
Lower maintenance charges
No tax burden
Gains made in ULIPs are completely tax-free!
Hassle-free movement between debt and equity instruments
Added life cover

To speak to a OneInsure executive to seek more details on ULIPs, contact 86559-86559 or support@oneinsure.com.

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Bloodbath in the Markets? It’s Time for ULIPs!

Aditya Nair — Mon, 23 Mar 2020 14:27:00 GMT

Bloodbath in the Markets? It’s Time for ULIPs!

23-Mar-2020 23-Mar-2020'

Aditya Nair

When the markets are struggling, the time is right to opt for equities. With the triple blow of an already sluggish Indian economy, the Yes Bank crisis, and the COVID-19 pandemic that is taking the global economy to a likely recession, some of the top names among publicly traded companies have taken a blow that they are not likely to recover from soon. The story of intermediate to smaller companies are even worse.

So, if your investment horizon is long, it is potentially a good time for you to opt for equities. Investing in equities when the markets are in a downward slump is a good way to gather more units. Also, needless to mention, having life insurance in the time of a global pandemic is of paramount importance (additional reading).

Fortunately for you, in the Insurance world, ULIPs serve the dual purpose of giving you the advantages of investing in equities (just like mutual funds) along with the benefits that come with investing in life insurance. But why invest in ULIPs and not mutual funds? Here’s why.

Power to You – Endless Flexibility with ULIPs

Even though you may have a fund manager when you invest in a mutual fund, you should be able to switch funds if you like too, especially in such volatile conditions. A ULIP, just like a mutual fund, invests in certain funds (that are determined by the fund manager and you at inception depending on your risk appetite). Unlike mutual funds, though, ULIPs allow fund switching without taxation or limitations.

To earn from market fluctuations, it is important to remain aware of upcoming trends and be open to the idea of shifting your money. A ULIP allows you to shift funds when you feel strongly that the markets are going to go a particular way, something that your fund manager may not want to do if you have a conservative fund orientation.

Apart from this flexibility, ULIPs offer investor benefits that generally makes it a better investment tool too.

Know Different Fund Options Available

With a ULIP, customers can invest in stocks, mutual funds, and bonds depending on their risk appetite, just as with mutual funds. The funds offered are low-, medium-, or high-risk funds and some of the options are (this list is non-exhaustive):

Cash Funds – Investments are made in money market funds for low returns with a low risk rating
Income Funds – Investments are made in debt funds, corporate bonds, and associated instruments for a fixed income with a high risk rating
Equity Funds – Investments in corporate stocks for high returns with a high risk rating (investments in equity funds receive high returns when the market is doing well)
Balanced Funds – Combination of high-return, high-risk equity funds for moderate returns with a moderate risk rating

Fund Switching Advantages of ULIPs Compared to Mutual Funds

The Long Term Capital Gains (LTCG) tax levied on mutual funds is not applicable to ULIPs. This means switching between equity and debt fund options in ULIPs are not taxable, and you lose no money in the transition, unlike mutual funds.

Fund Switching Advantages of ULIPs Compared to Equity-linked Savings Scheme (ELSS)

ULIP investors can redeem the entire amount at the end of five years, unlike systematic investment plans (SIPs) in equity-linked savings scheme (ELSS). Units in ELSS have to undergo a three-year lock-in period to be redeemed, which makes switching funds a constraint as you will have to wait for 3 years before redeeming your money, by which time there is a good chance it will have dropped down again.

A ULIP has no lock-in period for the money, except for the initial period.

Unit-linked insurance plans are wholesome insurance products that can benefit from the share market as well as help in meeting financial goals. Moreover, being insurance products, ULIPs provide significant life coverage to secure your family in the event of your untimely demise.

To speak to ULIPs experts, contact OneInsure at 86559-86559 or support@oneinsure.com.

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ULIPs vs SIP, Which One Will Fund Your Dream Car?

Aditya Nair — Tue, 03 Sep 2019 06:42:00 GMT

ULIPs vs SIP, Which One Will Fund Your Dream Car?

03-Sep-2019 03-Sep-2019'

Aditya Nair

Gadgets have always fascinated men. And the larger the gadget, the larger the excitement and anxiety to own one.

Take cars, for example. Most men have fascinated about cars at some point in their lives. Many still do. While we fascinated about 2-seater sports cars in our youth, we now itch to own a nice and comfortable sedan or SUV based on the size of our family.

But these typically cost upwards of Rs 5 lakhs, with some even costing tens of lakhs, which is not an amount we can easily afford. So, typically, we end up availing a loan or using the pay-outs of an investment tool that has matured around that time.

What if you could plan these purchases years in advance, though? All you need to know are when you want to buy a new car and what is it likely to cost. Check out the following car-purchasing timetable. This indicates when you would most likely want to buy a new car and its approximate cost:

In 5 years | Car cost: Rs 5 lakhs
In 10 years | Car cost: Rs 8 lakhs
In 15 years | Car cost: Rs 12 lakhs
In 20 years | Car cost: Rs 17 lakhs

We have presumed an average of 5 years between cars and the standard of the vehicle getting better with each car.

Okay, Sounds Good – What’s It Going to Cost Me?

An investment of merely Rs 6,000 a month compounding at a reasonable 10.5% will comfortably allow you to buy the car of your dreams every 5 years. Here’s a look at the returns from ULIP plans, which you can customize in such a way that you are able to withdraw from it in specific intervals:

After 5 years of compounding – Rs 4.7 lakhs
After 10 years of compounding – Rs 13 lakhs
After 15 years of compounding – Rs 26.5 Lakhs
After 20 years of compounding – Rs 50 Lakhs

But What’s the Difference between ULIP and SIP?

ULIPs are the better option compared to mutual fund SIPs in case of goal-oriented investments. Here’s why:

BIGGEST REASON – LTCG tax. This tax forces you to give away 10% of your capital gains at the time of withdrawal. This means that if you have gained Rs 5 lakhs and want to withdraw funds, you will have to give away Rs 50,000 as tax. ULIPs have no such tax. So, when it comes to ULIP plan vs SIP, the winner is very clear.
ULIPs provide triple tax exemptions – at the premium-paying, accumulation, and withdrawal phases. This is proof that there is no doubt which is better ULIP or SIP.
It is tough to stop investing in a ULIP without penalties. This may seem like a bad thing, but it is actually a very good feature. The forced investment nature of ULIPs ensure you don’t move your eyes away from the greater good. According to a nation-wide study, more than 55% of private mutual fund SIP investors want to opt out within the first 2 years.
Being an insurance product, ULIPs come with a death cover, which is absent in SIPs. This is a crucial thing to consider when you compare SIP and ULIPs.
Not convinced yet? Have a read:
- 5 Reasons Why ULIPs Are Superior to Mutual Funds
- Invest Rs 2000 Monthly and Gain Returns Higher than Mutual Funds

The same can be said about the differences between ULIP and ELSS plans.

Isn’t This Logic Applicable for Other Life Goals Too?

It takes a smart reader to realize that the logic we have discussed in this piece can be applied to other milestones too:

Want to go on grand family vacations outside India every 5 years?
Invest in a targeted ULIP plan | Don’t forget to grab a travel plan before you leave!
Want your child to have the best education after Std. XII?
Invest in a guaranteed child plan

Speak with a financial planning expert today
M – 86559-86559 | E – support@oneinsure.com

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Make Huge Profits with ULIPs when the Markets Boom

Arnold Monis — Thu, 23 May 2019 07:27:00 GMT

Make Huge Profits with ULIPs when the Markets Boom

23-May-2019 23-May-2019'

Arnold Monis

Exit poll results and counting day trends for the 2019 General Elections gave an unprecedented boost to those who invested heavily in market-linked instruments. We have all heard stories about those who became overnight lakhpatis during the 2014 General Elections. And similar stories are expected in 2019 too.

In this piece, we discuss how ULIPs (which also invest in the same market-linked funds) have a unique advantage over mutual funds and shares when it comes to making huge profits when the markets boom.

Power to You – Endless Flexibility with ULIPs

Even though you may have a fund manager, fund switches can and should be made by you too. A ULIP, just like a mutual fund, invests in certain funds (that are determined by the fund manager and you at inception depending on your risk appetite). Unlike mutual funds, though, ULIPs allow fund switching without taxation or limitations. To earn from market fluctuations, it is important to remain aware of upcoming trends and be open to the idea of shifting your money. A ULIP allows you to shift funds when you feel strongly that the markets are going to go a particular way, something that your fund manager may not want to do if you have a conservative fund orientation.

Apart from this flexibility, ULIPs offer investor benefits that generally makes it a better investment tool too.

Know Different Fund Options Available

Cash Funds – Investments are made in money market funds for low returns with a low risk rating
Income Funds – Investments are made in debt funds, corporate bonds, and associated instruments for a fixed income with a high risk rating
Equity Funds – Investments in corporate stocks for high returns with a high risk rating (investments in equity funds receive high returns when the market is doing well)
Balanced Funds – Combination of high-return, high-risk equity funds for moderate returns with a moderate risk rating

Fund Switching Advantages of ULIPs Compared to Mutual Funds

(Suggested Reading: 5 Reasons Why ULIPs Are Superior to Mutual Funds)

Fund Switching Advantages of ULIPs Compared to Equity-linked Savings Scheme (ELSS)

A ULIP has no lock-in period for the money, except for the initial period.

Unit-linked investment plans are wholesome insurance products that can benefit from the share market as well as help in meeting financial goals. Moreover, being insurance products, ULIPs provide significant life coverage to secure your family in the event of your untimely demise.

To speak to ULIPs experts, contact OneInsure at 86559-86559 or support@oneinsure.com.

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Invest Rs 2000 Monthly and Gain Returns Higher than Mutual Funds

Shraddha Gala — Mon, 20 May 2019 05:55:00 GMT

Invest Rs 2000 Monthly and Gain Returns Higher than Mutual Funds

20-May-2019 20-May-2019'

Shraddha Gala

“Kuch bhi! Mutual funds jaise returns kuch nahi de sakta hai”, said Mr. Hurry-lal to his friend Mr. Shanti-lal.

You might agree with Hurry-lal, but over the years, everyone from financial gurus to your smart neighbor has realized that ULIP investments have given higher returns than mutual funds along with benefits like much lower tax burden, life cover, lower fund management charges, and so on. More on that later.

For your better understanding, we have illustrated the returns that Hurry-lal gained by investing in mutual funds and Shanti-lal gained by investing in ULIPs.

Why Invest Rs 2,000 Monthly?

Research suggests that above 75% of investors in India opt for a sum between Rs 2,000 and 5,000 for a single instrument. Here is why:

Rs 2,000 is a small sum of your monthly income. Everybody can afford to invest such a small sum.
Even though your salary keeps increasing with the years, the premium of Rs 2,000 will not increase.

Importance of Investing as Little as Rs 2,000 Monthly

Here are the advantages of investing Rs 2,000 per month for 25 years:

You can re-invest the money in various other plans or schemes after the maturity of your fund
Worry-free retirement because you wouldn’t have to financially depend on anyone
Enough corpus for your child’s education and marriage
Ready corpus for financial emergencies

Even with the ULIP features mentioned earlier, many argue that ULIPs have a drawback in terms of flexibility (five-year lock-in period). However, it is not a drawback at all, but one of the biggest advantages of ULIPs. The forced-investment nature of ULIPs ensures you do not move your eyes from the larger goal of financial independence and you end up building a huge amount of wealth.

After all, the best comes to those who wait rather than those who hurry for results!

To help you get started with ULIPs, tap here. Remember to invest based on your needs, age, and income and dependencies.

M – 86559-86559 | E – support@oneinsure.com
Be Sure with OneInsure

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5 ULIP Myths You Never Should Have Believed

Arnold Monis — Thu, 25 Apr 2019 06:53:00 GMT

5 ULIP Myths You Never Should Have Believed

25-Apr-2019 25-Apr-2019'

Arnold Monis

While the Mutual Funds industry has marketed their products intensely and gained large mindshare among well-to-do urban Indians, the market-linked product that the Insurance industry has to offer—Unit-linked Insurance Plans (ULIPs)—enjoys a poor reputation in comparison. Earlier, ULIPs were sold and marketed clumsily. Neither the insurance companies nor their customers were comfortable with an insurance product that could be used as an investment.

However, a lot has changed over the years. With good regulation by IRDAI and new-age value additions to ULIPs, these products are not only more transparent today but are also the perfect combination of insurance and investments. Not only do they give the same returns as mutual funds, but they also come with benefits such as tax savings, life cover for your family, lower fund-management charges, and others that mutual funds do not provide.

In this piece, we have debunked a few myths that still persist about ULIPs.

Myth 1: ULIPs Deduct Considerable Amounts from Your Investments

ULIPs today are advertised and sold online, which helps in escaping additional costs because of low customer acquisition costs as well as no agent commissions. Along with that, IRDAI has slashed the 6 – 10% premium allocation and fund management charges to 2.5 – 3%.

Myth 2: Mortality Charges Are an Additional Burden

ULIPs offer life insurance over and above mutual-fund-like returns. If you compare this with mutual funds or ELSS, the money invested in life insurance is at par with the tax you’re losing out on with investments in mutual funds. A ULIP is tax-free and hence works as the best tool to save tax while gaining from the share market.

Myth 3: ULIPs Have High Fund-management Charges

Myth 4: A Combo of Term Insurance and Mutual Funds Are Better than ULIPs

Moreover, where a term insurance offers massive pay-outs compared to those of a ULIP, it does not help save any money; term plans are not investments since they have no inherent value. And, while an investment in mutual funds offers quick profits, it is a short term commitment that comes with additional burdens such as high risks and management hassles.

Furthermore, even though ULIPs are fixed and long-term investments, new products offer partial withdrawal of money when needed.

Myth 5: Insurance Is an Expense, It Should Be Treated as One

This was true 10 years ago when the insurance industry had simple products to protect families from financial burdens. Insurance companies now offer holistic products, which on its own are enough to build a strong financial portfolio for the urban Indian.

To speak to ULIPs experts, contact OneInsure at 86559-86559 or support@oneinsure.com.

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ULIPs Beat ELSS as a Better Tax-Saving Option

Shraddha Gala — Wed, 06 Feb 2019 05:23:00 GMT

ULIPs Beat ELSS as a Better Tax-Saving Option

06-Feb-2019 06-Feb-2019'

Shraddha Gala

There is no doubt that with all the talk and heavy marketing around mutual funds, it is easy to get carried away and begin investing in mutual fund products like Equity-Linked Savings Scheme (ELSS), which is well-known as a tax-saving product.

However, there is a superior wealth-making instrument in the market that saves you more tax than mutual funds and even gives you life cover, namely Unit Linked Insurance Plans (ULIPs). ULIPs give you far more benefits than mutual funds (including ELSS) and have fewer hidden costs.

Based on facts, let us understand how ULIPs prove to be a better investment option than ELSS.

Long-Term Capital Gains (LTCG) Tax

The Long-Term Capital Gains (LTCG) Tax is a tax that the government has recently started levying on long-term investments. As we know, investors now have to pay 10% LTCG tax on gains exceeding Rs 1 lakh on the sale of equity instruments such as mutual funds and shares held for more than one year. Since the very point of mutual fund investments is creating a huge corpus of money, you cannot escape this tax.

Also, when the customer chooses to move his funds between debt and equity instruments, it attracts capital gains tax. These could be short-term or long-term taxes. Earlier, ELSS used to offer tax-free returns, but after the re-introduction of LTCG tax in the 2018 Budget, this is no longer the case.

On the other hand, ULIPs do not come with the burden of capital gains tax, whether the investment is short term or long. Moreover, there are no charges when you move funds between debt and equity instruments for a set number of times, unlike ELSS.

Gains made in ULIPs are completely tax-free.

Tax Benefits on Investments

Under ELSS, you can avail tax deductions only under Section 80(C). Whereas, under ULIPs, you have the option to avail tax deductions under 80(C) or 80(CCC) and claim a maximum tax deduction of up to Rs 1.5 lakhs in a financial year.

As mentioned earlier, gains made in ULIPs are completely tax-free.

Same Returns as Mutual Funds

Since ULIPs and ELSS (mutual funds) operate in the same markets and give the customer the choice of instruments, risk exposure, and so on, they are exposed to the exact same risks and make similar gains.

Goal Orientation

Financial instruments from which withdrawals are easy to make or do not attract penalties tend to be broken before the intended term; for example, mutual funds.

ULIPs, due to their forced investment nature, are always goal oriented; for example, you start a ULIP for your child’s education or marriage. Stopping a ULIP attracts heavy penalties and there is even the first 5 years' lock-in period. This type of forced investing under ULIPs ensures you do not take your eyes away from the greater good and keeps you on track. Moreover, one invests in ELSS funds for general-purpose tax-savings and not to meet established financial goals.

Fund Management Charges

ELSS funds levy fund management charges up to 2.25%, whereas ULIPs cannot charge more than 1.35% as fund management charges.

Life Cover

Being an insurance product, in the event of the policyholder’s untimely demise, ULIPs provide life cover to the beneficiary. Naturally, ELSS does not offer any such cover.

ULIPs have both insurance and investment components; that is, you can benefit from market-linked returns and also have life cover, which will protect your family ably in your absence. Moreover, the advantages of ULIPs over ELSS as a tax-saving investment option is beyond question too.

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Why ULIPs are Superior to the Combo of Term Insurance + Mutual Funds

Mohit Mishra — Fri, 21 Sep 2018 12:55:00 GMT

Why ULIPs are Superior to the Combo of Term Insurance + Mutual Funds

21-Sep-2018 21-Sep-2018'

Mohit Mishra

After having done a fair bit of research into financial and investment tools, tech-savvy Indians tend to come to this conclusion: All I need is a combination of term insurance and mutual funds. My life is set!

Well, they’re not incorrect in their research. The issue is that both mutual funds and term insurance are marketed well in India today by all types of media, face-to-face by customers, and by financial experts too. Naturally, research on the Internet will only reveal what most people are talking about. The same goes for any numbers you research into or real-world data of performance.

A far superior product exists in the market that not only gives you the same benefits as mutual funds as far as long-term corpus creation goes, but also covers your family financially in case you meet an untimely end. Instead of going for term insurance and mutual fund schemes separately, investing in a Unit-linked Insurance Plan (ULIP) proves more lucrative and convenient. Let’s explore how:

Goal Orientation

Financial instruments from which withdrawals are easy or do not attract penalties tend to be broken before the intended term. Moreover, one invests in a mutual fund for general-purpose savings and not to meet established financial goals.
ULIPs, however, are always goal oriented; for example, you start a ULIP for your child’s education or marriage. Stopping a ULIP attracts heavy penalties and there is even the first 5 years' lock-in period. This type of “forced investing” ensures you do not take your eyes away from the greater good and keeps you on track.

Reduced Hassle

Why go for two separate schemes when you get dual advantages of two different products in a single investment plan? ULIP not only provides you higher returns in the long run, but covers you against the risk of death and disability as well. Subscribing to a plan that takes care of both maximizing your profits and providing you financial security in an unfortunate event is like killing two birds with one stone.

ULIP Takes Less and Gives More

Fund Management Charges (FMC) in the case of mutual funds can go as high as 2.5% of total assets; whereas the maximum ceiling in the case of ULIPs is 1.35%. Let’s understand this better with an illustration.

Say you invested in mutual funds for a period of 30 years and your corpus stands at INR 2 crores. On this amount, you will be liable to pay about 5 lakhs as FMC and that is not a small amount. Contrarily, in the case of ULIPs, the same gets reduced to close to half.

The Advantage of Tax Exemption

By investing in ULIPs, you can reduce your tax burden up to a maximum amount of INR 1,50,000 in accordance with Section 80C of the Indian Income Tax Act. Besides, gains from ULIPs do not attract tax, which is not the case with mutual funds after the Budget of FY2018-19. Not to forget that mutual funds will also attract capital gains tax when you move your funds between debt and equity instruments. With ULIPs, this tax does not apply.

We hope these are reasons enough to give you a clear understanding as to why ULIPs are superior to the combo of term insurance and mutual funds.

Have questions for us? Let us know.

Get on board with hundreds of others who are regularly benefitting from the financial tips that we send across on WhatsApp. Send “Start” through WhatsApp on 98202-25238 to get started today.

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5 Reasons Why ULIPs Are Superior to Mutual Funds

Mariya Panwala — Fri, 27 Jul 2018 10:38:00 GMT

5 Reasons Why ULIPs Are Superior to Mutual Funds

27-Jul-2018 27-Jul-2018'

Mariya Panwala

With all the talk and heavy marketing around mutual funds, it is easy to get carried away and begin investing in them. However, there is a superior wealth-making instrument in the market, namely Unit Linked Insurance Plans (ULIPs), which do much more and have fewer hidden costs.

This piece will not only go into the advantages you receive when you invest in ULIPs but will also demonstrate how ULIPs eliminate all the disadvantages of mutual funds while giving you the same returns.

Lower Charges

While most Mutual Funds attract a Fund Management Charge (FMC) of 2.5% of total assets, for ULIPs this charge is capped at 1.35%. For example, after 30 years of putting your hard-earned money into mutual funds and building a corpus of 2 crores, you will end up paying a sum of 5 lakhs as FMC. This is nearly a year’s worth of earnings when you began this mutual fund. For ULIPs, this is close to half.

No Tax Burden

With Long-Term Capital Gains (LTCG) tax of 10% being applicable from Jan 2018 on all dividends in equity and equity-oriented funds, those who have invested in mutual funds have to pay a high cost when they want to withdraw their investments. Taking the example from earlier, on a corpus of 2 crores, the tax burden will be a whopping 20 lakhs.

Gains made in ULIPs are completely tax-free.

Same Returns as Mutual Funds

Since ULIPs and Mutual Funds operate in the same markets and give the customer the choice of instruments, risk exposure, and so on, they are exposed to the exact same risks and make similar gains.

Hassle-free Movement between Debt and Equity Instruments

In Mutual Funds, when the customer chooses to move his funds between debt and equity instruments, it attracts capital gains tax. These could be short-term or long-term taxes. In ULIPs, there are no capital gains taxes when you move funds between debt and equity instruments.

Added Life Cover

In addition to all the advantages mentioned, ULIPs also provide life cover. A large sum of money will protect your loved ones in the event of your untimely demise if you are actively investing in a ULIP.

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Understanding Unit Linked Insurance Plans

Joan — Tue, 24 Apr 2018 06:03:00 GMT

Understanding Unit Linked Insurance Plans

24-Apr-2018 24-Apr-2018'

Joan

Unit Linked Insurance Plans (in short ULIPs) is a combination of insurance and investment. They provide life cover for the insured individual along with the option of investing in qualified investments like stocks, bonds or government securities. Here, the insured individual would be asked to pay the premiums monthly, quarterly, semi-annually or annually. A portion of it would go into securing life insurance and the remaining gets invested into different qualified investments. Investors of ULIPs can usually adjust their fund preferences all through the duration of their investment, thus giving them the advantage of flexibility.

Features of ULIPs

Switch facility

You get the option to switch between different funds as per your risk appetite. You can go for equities if as an investor you are aggressive by nature. If you are the conservative kind, you can switch to debt or balanced funds from equities. During times when market fluctuations are major, having a greater exposure to equities could possibly bring down your corpus. In such cases, making a switch to debt funds can help keep your money safe. And when the market stabilizes, it would be a good idea to switch back to equities as they have the potential to fetch higher returns compared to other asset classes.

Top-up facility

The top-up facility lets you enhance the amount of investment in ULIPs. It allows you to put an added amount over and above the existing policy. You can avail this facility anytime you wish during the policy term, however, you need to ensure that all premiums have been paid. You can also enjoy the same tax benefits on top-up premiums as regular policies.

Partial withdrawals

One of the many advantage and unique aspect about ULIPs is the partial withdrawal facility. You, the policyholder, can withdraw partially from the Fund Value without affecting the plan continuity. Partial withdrawal can generally be made any time after completion of 5 policy years and not prior to that. Additionally, this will only be allowed after you have paid all your premiums and at the time when the policy is in-force.

Tax-saving tool

ULIPs can serve as an excellent tax-saving tool. Deduction can be claimed on the money invested in ULIP under Section 80C (life insurance). The maximum you can claim under this section is ₹1,50,000. Additionally, under section 10(10D), the sum received on partial withdrawal or at maturity is tax-exempt, however, the condition associated with this is that the premium payable to the sum assured should not surpass 10%.

Read about: Types Of Life Insurance Policies

Charges associated with ULIPs

Premium Allocation Charges - This will be deducted straightaway from the premium paid by the insured individual. This cost makes up for the initial expenses borne by the insurance provider while issuing the policy.

Policy Administration Charges - This will be deducted towards the administrative expenses borne by the insurance provider for policy maintenance. All of the expenses incurred on paperwork and so forth shall be covered under this head.

Mortality Charges - These charges are towards providing the insured individual with the insurance cover. This cost compensates the insurance provider should the insured individual pass away before the end of the policy term.

Fund Management Charges - This cost is levied for managing the fund and is charged as a percentage of the value of assets. It is deduced prior to computing the fund's NAV. It must be noted that as the value of the asset goes up overtime, these charges may rise.

Conclusion

ULIPs are a good option if you are looking for products that give you a mix of insurance and investment. Research on all the ULIPs offered before you opt for one. You will find many options in the market, but it is important that you choose one that adequately meets all your needs. Compare the policies offered by different companies and look into their premiums, features, benefits and limitations. Also, before you shortlist a policy, make sure to keep your risk appetite in mind. Since fixed returns are not guaranteed in ULIPs, knowledge of your risk appetite will help you ascertain whether you want to go for an ULIP or go for another insurance plan. To compare and select the most suitable ULIP option, write to us on support@oneinsure.com or give us a ring at 86559 86559 and our customer support team will guide you.

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Best Investment Options For Salaried People

Joan — Wed, 06 Sep 2017 11:22:00 GMT

Best Investment Options For Salaried People

06-Sep-2017 06-Sep-2017'

Joan

What is that one thing we salaried individuals look forward to every month? - An sms from the bank saying “you’re A/C number ending with xxxx has been credited with Rs. ####.” It’s an all too exciting feeling, but yes, you’ve now got to pay your bills. So what do you do after you’ve taken care of all your expenses? How do you manage what’s remaining? The wise thing to do is invest - invest to ensure a stress-free and successful financial life. Financial success is possible when you select the right investment at the right time.

To get started, here are some of the best investment options for salaried people:

Unit Linked Insurance Plans

Investing in Unit Linked Insurance Plan (ULIP) offered by life insurance companies is a good idea. Here, a part of the premium you pay goes towards investments in government bonds, equity and debt securities that have varying risk levels. ULIPs have both insurance and investment components - you can benefit from market-linked returns and also have a life insurance cover. The insurer allots units to the investors and the net asset value is assessed and declared on an every-day basis. The tax advantage of investing in ULIP is that you can claim tax deductions under Section 80C for premiums (life insurance) paid.

Equities

Equities are a very popular investment option. Investments in equities can generate high returns, but you also have to keep in mind the high risk involved. If you are thinking about investing in equities, make sure you go with the right company. Look at how the company has performed with regards to its return on shareholders’ capital. It is always advisable to invest for the long term, preferably greater than 5 years.

Public Provident Fund

If you’re looking for a safe investment option, consider going for Public Provident Fund. PPF is backed by the government and offers guaranteed returns. The interest you earn is not taxable, while the the deposits can be claimed as tax deductions under Section 80C of the Income Tax Act.

The kind of investment option you need to consider depends on the level of risk you’re willing to take. If your investments are aimed at tax benefits then opt for life insurance products, Equity Linked Savings Scheme, PPF, etc. If you are willing to bear the risk in hopes of high returns, equities are a good option. There are several investment options for salaried individuals. Choose your option wisely.

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