Millennials, born between 1981 and 1996, have experienced rapid technological advancements, unstable job markets, and diverse financial approaches. With numerous financial investment tools available on the market, many individuals prefer investing in Unit-Linked Insurance Plans (ULIPs) because they are concerned about their future financial needs, which helps ensure their peace of mind.
So, what really attracts most millennials to ULIPs? Here’s a look at all the aspects that make ULIPs attractive to today’s investors.
Dual Benefit of Term Insurance and Investment
ULIP stands for Unit Linked Insurance Plan. It is a type of life insurance plan that offers dual benefits, combining life insurance and investment to help you achieve financial goals. In this plan, a portion of your premium is used to purchase life protection coverage in the event of an unfortunate occurrence. At the same time, the remaining amount is invested in market-linked funds to yield higher returns.
This way, it helps you achieve long-term financial goals while safeguarding your loved one’s future in the event of a tragedy. It secures your family’s financial future and helps you grow exponential wealth.
Flexibility in Investment Choices
ULIPs are unique in the flexibility they offer when choosing your investments. They have numerous options for selecting market-linked funds, including both riskier equity options and more stable debt options.
Additionally, most ULIPs allow the policyholders to switch between their funds easily. This way, you can rebalance your investments according to the market’s behaviour or your financial goals.
Creating a Financial Plan for Your Goals
Millennials tend to set definite goals for themselves. They explore many financial products to save a financial corpus for their dream home, build a travel fund, or support a start-up.
ULIPs help you plan more effectively towards reaching your individual financial goals compared to other types of investments. Provided you opt for a disciplined way to make the premium payments, you can meet your goals over time. Moreover, having a lock-in period helps young investors stay on track with the right savings strategies.
Tax Benefits
Being financially aware, millennials are careful about taxes when managing their money. ULIP policyholders can claim tax relief under Section 80C of the Income Tax Act, allowing them to deduct the annual premium amounts paid for the policy (up to ₹1.5 lakh). The death benefit is tax-free. In addition, the maturity benefit can also offer tax benefits, provided the rules of Section 10(10D) are followed. This makes it easier for millennials to increase their earnings and decrease their tax liability, which young adults specifically appreciate.
Transparency and Online Accessibility
Transparent and smooth digital interactions are important to millennials. Several new-age ULIP plans enable users to log in online, track their funds, make payments, switch between funds as needed, and review policy details at any time. Moreover, ULIP policy brochures now clearly highlight the costs, prices of funds, and policy details, making the information more apparent to people. When everything is clear, making financial decisions can become easier and more efficient.
Affordable Investment Options
Unlike what many believe, ULIPs are affordable plans that allow millennials to start with a modest investment and add more as their earnings increase. This feature aligns with the experiences of young adults in financial matters. You can gradually get into investing without straining your budget. To understand how the policy will affect your pocket, you can make use of a ULIP calculator. In a few simple steps, the calculator will show you the premiums you’ll have to pay.
Protection Against Rising Inflation
Making the most of their money can often be challenging for millennials due to inflation, which continually increases prices. Traditional savings options usually fail to offer returns that exceed the inflation rate. ULIPs offer customers access to market-linked returns by providing equity and balanced funds. This way, they increase their chances for better wealth accumulation in the future.
Despite the risks associated with the market, the gains from effective management of ULIPs can exceed inflation over a long-term investment horizon, helping millennials protect and grow their money.
Promoting a Long-Term Plan
It is often assumed that millennials have little patience with long-term financial matters because they are influenced by the desire for instant gratification. Since ULIPs have a five-year waiting period and allow investors to continue earning returns, they encourage policyholders to plan their investments for the long term.
Due to this feature, you can seamlessly accomplish your life priorities, such as buying a house, providing for your children’s education, or saving for retirement. ULIPs can be an ideal tool for millennials to make frequent investments and become more financially disciplined.
Customisation and Riders features
Nowadays, you have many options to customise your ULIPs. Insurers offer additional insurance options, such as critical illness coverage, accidental death coverage, temporary waiver of premium, and more. Therefore, millennials can tailor the policy to meet their lifestyle and needs better. Such customisation makes the plan valuable since it safeguards your finances and supports wealth creation.
Conclusion
Today’s insurance world allows young people to combine insurance, investment, and tax savings with ULIPs. This generation needs flexible insurance with no hidden charges that helps them save for the long run. Here’s hoping that you have learned what makes a unit-linked insurance plan attractive for millennials in a simplified manner.
Also Read: Proactive Strategies to Manage Tax Responsibilities as a Landlord
