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As markets turn volatile, here’s why its a good time to explore ULIPs as an investment

The US Federal Reserves rate hikes have caused the Indian and global stock markets to fall as expected, and central banks across the globe may follow suit with similar policies. As the battle to buckle inflation by controlling cash flow rages on, the US central bank is expected to raise interest rates further this year. At the same time growth will be affected as borrowing costs go up, and the World Bank has warned of a recession. In turbulent times of rising prices and geopolitical tensions that fuel uncertainty, long-term investments are the most advisable option.

Stability in the longer run

India is expected to achieve robust growth over the next three to five years, which is why investment vehicles that offer an outlook of at least three years can be a safe bet. Among such instruments, Unit Linked Insurance Plans (ULIPs) can provide dual benefits, both by acting as an investment and a financial cover for families. A part of the investment in ULIPS goes towards an individual’s life insurance cover, while the rest is invested in a portfolio of stocks, bonds or both according to a person’s appetite for risk.

Comes with additional perks

Similar to insurance policies, ULIPs allow partial withdrawal for investors, so that they are assured about liquidity in case of an emergency. The investor also receives tax benefits on premiums paid towards ULIPs and can also receive tax-free maturity benefits on exiting the plan. Other than higher returns and a secure investment to counter volatility in the markets, ULIPs also provide the option to switch funds to reduce exposure to stocks. Unlike mutual funds, one doesn’t have to complete a settlement by selling units of a fund they have invested in.

So here your premium doubles up as your investment, and also provides tax benefits, stability and long-term liquidity for the family.

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