A global pandemic has changed economic dynamics across the planet. The last two years have been a lesson in the importance of financial planning. For the young workforce of India, this is a cue to start investing in a secure future.
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For a young professional in India who wants to start investing, sound financial planning is required. If you invest correctly, you can endure the current economic climate and come out financially stronger on the other side. To begin, you need to start understanding the many financial products that are out in the market, like ULIPs, SIP, PPF, etc.
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From the various options available, we will take a detailed look at ULIP today and try to understand why it could be the right choice for you.
Why Investments Are Important for Young Professionals
Investing early is a sure shot road to long term financial security and gains. Almost all kinds of investments are best started in the early years of our professional life, to reap the benefits of compounding in the long run.
Yet, so many young professionals feel that investing is not possible since they are not earning a lot of money, which is a misconception. A young professional can start by investing minimal amounts and reap the long-term benefits by virtue of time and the due diligence of early investing. Additionally, there is the scope of taking more significant risks with small amounts of money. So really, there is no excuse for not investing!
What are the different investment options?
There is an abundance of investment opportunities for young professionals today. They are:
- Fixed Deposits
- Public Provident Funds
- Mutual Funds
- Shares (Direct Equity)
- Insurance
And many more… How do you choose? On one hand, investing in an insurance product like Term Insurance would seem prudent but not beneficial enough. On the other, you might be lured by the chances of better returns offered by Mutual Funds.
This is where a ULIP comes in. Let us explain.
What is ULIP?
ULIP or a Unit Linked Insurance Plan combines traditional life insurance with options to invest in a variety of funds, which can be either debt, equity or balanced. . It works like a term insurance policy, meaning that you are required to pay monthly premiums, the difference being the dual purpose that they serve:
- Some amount of the premium goes into providing life insurance cover to you.
- The remaining amount is invested in funds of your choice.
As time goes on, your corpus grows and so do your investments. In case of an untimely demise, your family’s financial future is secured as well. So ULIP is a great way to secure your future and, at the same time, grow your money as well. Most major insurance providers offer this product.
Why ULIP?
Now that you understand how ULIP works, you might wonder why ULIP is the best investment plan for you. Well, if you opt to invest in a ULIP, you stand to benefit in the form of:
- Greater Returns: Since investing in markets is involved, you can get excellent returns on your investments, depending on your willingness to take risks. Even if you are not very familiar with how investments in Mutual funds work, you can reap profits by utilizing fund management services. Companies like Edelweiss Tokio Life Insurance allow you to leverage their deep understanding of the markets. You leave the investments up to them and enjoy the profits for yourself!
- Flexibility: A ULIP offers you flexibility in the form of letting you choose or change where you want your money to be invested. If you have a solid understanding of the financial market and want to keep a keen eye on your investments, ULIPs can prove to be a boon. In policies like Wealth Secure+, offered by Edelweiss Tokio, you get the option to switch your funds as many times as you want, depending on the performance of the fund and your risk appetite! You have the option to choose from a pool of 7 funds with varying degrees of risks and returns.
- Long Term Savings: With a lock-in period of 5 years, after which you can make partial withdrawals of money, ULIP is an excellent pool of savings as well. You can dive in times of need or let it accumulate into an ocean. It can serve as your retirement fund as well, through the options of systematic withdrawals offered by Edelweiss Tokio Life Insurance.
- Tax Benefits: You will get tax exemptions of up to 1.5 lac rupees per annum under section 80C Income Tax Act, 1961. Additionally, the sum assured is also tax-free under section 10C of the aforementioned act.
Therefore, ULIPs are a significant long-term investment for young professionals. Keep in mind that the premiums can be a bit on the higher side, but when measured against the returns, they are well justified.
Conclusion
India is undergoing a period of transition and a sea of change is coming about due to many factors. Young professionals are prospering, and to capitalise on that prosperity, they need to start investing in a ULIP. It can provide life cover as well as investment opportunities. They can cultivate a habit of saving and learn about the markets early on.
Edelweiss Tokio’s Wealth Secure+ is an ideal plan for young professionals, as it starts from as little as 1000 rupees per month. It is affordable and yet comprehensive in its scope. If you are a young professional looking to start a financial portfolio, visit their website and fill in the required details. Let that be the start of your investment journey.
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