ULIPs are one of the best tax saving investments for people under 45 years of age

As the New Year approaches, most salaried individuals will be on the lookout for tax saving investments.

Most people make the mistake of having a portfolio which is dominated by a single asset class. It’s important to understand that a single asset class can’t deliver the great result compared to that of a well-balanced investment mix.

For increased results from your investments, it is necessary to create a responsible assortment of asset classes made up of Equity, Debt and Gold.

From SIPs to TIPs, most investments offer tax benefits, but a new type of investment is catching the eye of the investor for providing increased tax- saving benefits.

A Unit Linked Insurance Plan or a ULIP is a financial product offered by insurance companies that gives aggressive investors both insurance and investment under one plan.

ULIPs are one of the best tax saving investments because not only are the premiums paid eligible for tax deduction under section 80C, but they also help investors below the age of 45 to get great returns:

It gives good returns

ULIPs allow you to invest in a range of equity funds. Equity has given the best returns over the long term (greater than 5 years). They also have the unique ability to offer 80C tax saving on investments made in debt and balanced funds. No other investment allows 80C tax saving in these asset classes.

You can also switch between these funds at no extra cost and still get the benefits of 80C tax saving.

Can change between monthly and yearly investments

If you want to get the maximum tax benefit in this financial year, it might be best to choose a yearly mode of premium payment.However, with ULIPs, you can change your mode of payment to monthly which is much more convenient way of investing.

Tax benefits on maturity

The maturity amount on ULIPs can be withdrawn tax free. No other instrument that invests in debt /balanced funds can claim tax free maturity.

Life Cover

ULIPs come with an in-built life cover element which is ideal for someone in the first 5-7 years of their professional career.

Good long term investing tool

The best financial planners are those who invest for the long term. While one can always invest in liquid investments, at least 30% of one’s total investment must be in long term investment instruments and ULIPs by design come with a 5 year lock-in that inculcates the habit of long term investing.

The best part about the Unit Linked Insurance Plans are that they are now easily available to buy at any of the trusted insurers websites. In fact, we've made it much easier for you to calculate your monthly premium right here:
Disclaimer: The quotes are indicative and TIL bears no legal liability for the calculation.
(Image Credits: Policybazaar.com)