All The Things You Should Know About 4G ULIPS

The people who have just started earning or are already some years into their jobs or businesses, have an important decision to make which will affect their future. It is selecting the right investment plan in order to create a corpus which will help them address their various financial goals.  

But it’s easier said than done.  

With the variety of investment avenues available, which one should an investor choose? Well there are certain factors that define it and it is different for every investor.

However, while we are talking about the age group of earning individuals that too the ones who have either just started or are just few years into the job or business, then the factors that they take into consideration are volatility, their earning capacity, their expenses, savings etc. So basically, an investor is looking for an investment opportunity wherein he gets good returns and also can cater to his demands. One such avenue is ULIP i.e., unit linked investment plan.  

Unit linked investment plan refers to those investment plans wherein an investor can avail the facilities of both investment and insurance under one single plan.

Along with this combo, the charges that an investor incurs on it are also minimal with just the basic administration charges that they need to pay. However, IRDAI has lessened the burden of charge on consumers by making it close to 1.35% or even lesser for the new age ULIP plans. 

So, what is 4G ULIP? 

4G ULIP is a new age ULIP which not only offers great transparency but also an investor gets other benefits like loyalty bonus and additional allocation of units. Also, with the introduction of no admin charge and premium allocation fee and also the return of mortality cost once the plan is matured, this plan has made it in to the market like no other investment plan out there. 

In fact, in the recent news, it has been seen to be better as compared to the mutual funds as the interest earned on it is completely tax free in nature and also the premium paid up to Rs. 150000 is not taxable while computing LTCG tax while in mutual funds an investor has to pay 10% tax if the interest amount

goes beyond Rs. 100000. This point makes ULIP better in terms of returns and also a good investment opportunity for those investors who are in it for the purpose of getting good returns. 

Let’s look on how can an investor invest in ULIP. 

There are two ways via which an investor can invest in ULIP: 

  1. Via annual premiums:

    As the name suggests, you’ll have to pay the premiums annually.  

  2. Via systematic payment of premium:

    In this, an investor will have to pay fixed amount of premium at regular intervals. 

ULIP uses rupee cost averaging in order to lessen the burden of investors in dealing with the market volatility. This means, the investors buy more and sell less when the prices are less and vice versa when the prices are high.

This ensures that the investor doesn’t incur losses as well is able to make more gains out of his investments. In order to avail this benefit, an investor must go ahead with systematic investment method of premium payment so that when market fluctuations happen, he can use it for his own benefit.  

Another benefit of this plan includes shifting between debt and equity funds even during its compulsory lock-in period of 5 years. This allows you to change when you feel that other fund will provide you with better returns.  

4G ULIP is the coming age ULIP plan which has so far turned out to be one of the best investment avenues available around. An investor looking for good tax free returns(more as compared to other investments), can definitely opt for this plan.