Ever heard of the “Latte Factor” prompted by author David Bach? The theory behind this idea is that instead of getting a latte worth Rs.150 – 200 every day if you invest the money wisely, you would accumulate a substantial corpus over a period of time. Following the “Latte Factor” can help you plan your finances wisely. The underlying message conveyed through “Latte Factor” is that people can work towards achieving their long term financial goals by limiting their small and frequent expenses.
So, if you do decide to follow the “Latte Factor” and invest the money that you are saving, ULIPs can prove to be a wise choice. A Unit-Linked Insurance Plan (ULIP) is a modern investment option that has gained massive popularity in recent times due to the high returns provided by it. It is considered as a goal-based investment and hence, ULIP returns can be utilized to fulfill your long-term goals such as buying a house, funding child’s education, etc.
A ULIP is a product offered by insurance companies and it gives the investors both insurance and investment under a single integrated plan. It is a long-term systematic investment plan that allows you to invest your money in a disciplined manner. Moreover, you can calculate the probable returns beforehand with the help of ULIP calculators.
Some of the other benefits of investing in ULIPs are mentioned below:
- A ULIP plan gives you the flexibility to invest your money according to your financial requirements and risk-appetite.
- It also allows you to switch between fund options without any additional cost for up to 12 switches in a year.
- By investing in ULIP, you get the flexibility of increasing your investment portfolio through top-ups to make the most of investment opportunities.
- Since ULIP plans also provide a life cover, it gives you the flexibility to choose your sum assured at the beginning of your policy.
With ULIPs, you can also opt for partial withdrawals in case of any unforeseen events.
- By investing in ULIPs, you can avail various tax benefits. Under section 80(C) of the Income Tax Act, the investments made in ULIPs are eligible for tax deductions.
- You can also receive a tax-free Maturity Benefit, under Section 10 (10D).
To invest in a ULIP investment plan, you should meet the entry age criteria given in the policy document.
Documents required for purchasing a ULIP investment plan.
- Income proof such as salary slips, income tax returns, bank statement, etc.
- Your address proof like Driving License, Aadhar card, Voter ID card, passport, etc.
- Your Identification proof like PAN card, Aadhar card, voting card, etc.
- Your age proof which could be either your Aadhar card, voting card, passport, or driving license, etc.
Now that you are well aware of the details of a ULIP plan, ensure that you invest wisely and make the most of it. However, it is recommended that you compare various plans offered to you by different insurance providers. This will allow you to find a ULIP plan that best suits your needs.