How ULIP can build a Good Retirement Corpus

Let us discuss how ULIP helps an individual build a significant retirement corpus. 

What are ULIP Plans?

ULIP is an insurance cum investment plan that comes with dual benefits of insurance coverage and wealth creation from investments. It offers the policyholder an opportunity to invest in the market of his choice. ULIP also helps an investor to beat inflation by providing significant returns on the investment. Hence, the policyholder enjoys two benefits in a single premium plan. First, half a portion of the policyholder's fund moves towards providing life coverage paid to his family in an unfortunate event of death. In contrast, with the remaining amount, the policyholder invests in the financial instrument to earn good returns. 

How is ULIP Beneficial for Retirement?

ULIP is undoubtedly a beneficial tool for retirement planning due to the following reasons:

1. Long-term investment

   Retirement is long-term planning which a policyholder should commence in his 30s or 40s. Similarly, ULIP is a long-term investment scheme that provides sufficient returns over a long-term policy, much like how investors often ask which SIP is best for achieving long-term financial goals. The investment grows on the basis of compounding power, which generates significant rewards during the tenure. Hence, the investor may cause a considerable bonus in the long-term planning to meet retirement expenses and beat inflation.

2. Fund switching option

   The fund-switching option is one of the best features of ULIP. An investor may switch from one fund to another fund. How often he wants to reverse the fund in a year is at his discretion. For example, an investor who has invested a portion of his fund in equity may shift to debt if he wishes to lower his risk. Equity involves more risks compared to debt. However, it also provides a significant return compared to the debt instrument. So if the policyholder has a high-risk appetite, he may stay in the equity or switch to debt accordingly. In addition, if he needs clarification in both cases, he may avail another option of a balanced fund, the amalgamation of equity and debt. The investor should make the conscious switch as per the status of the market. For instance, if the equity market is incurring losses, he must shift his fund to debt which will lower the risk but provide a reasonable return. An investor following this technique or method will likely build a good corpus for retirement. 

   

3. Life coverage

   During the course of his life, an individual faces different kinds of health-related issues. Any invasive or long-term treatment may take a massive amount to cover medical expenses. Thus, an individual needs to safeguard his financial interest. In addition, it is also essential to meet the financial requirement of family members in the absence of a guardian. ULIP plans to provide every means to cover the expenses of family members by protecting their economic interests. Further, the amount received from the plan can be used to cover various expenses such as wedding costs, education fees, medical expenses, and many more. 

4. Tax Exemption

   The investor may accumulate tax-free wealth from ULIP plans. He may invest as much as he prefers and can build a massive corpus of tax-free wealth. The amount receivable on maturity will be exempted from tax under section 80C of the Income Tax Act 1961. In addition, the premium paid by the investor will be deducted from the taxable income under sec 10 (10D) of the Income Tax Act. 

5. Wealth booster option

   The returns on the investment are likely to grow the wealth of the investor. The ULIP provides transparency to the investor. Hence, the investor may keep track of his investment and track profit and loss in a particular market. 

Latest ULIP NAVs

• SBI Life ULIP Funds
• HDFC Life ULIP Funds
• Axis Max Life ULIP Funds
• ICICI Prudential Life ULIP Funds
• Tata AIA Life ULIP Funds
• Bajaj Life ULIP Funds
• Aditya Birla Sun Life ULIP Funds
• Kotak Life ULIP Funds
• PNB MetLife ULIP Funds
• Canara HSBC Life ULIP Funds
• Pramerica Life ULIP Funds
• Bandhan Life ULIP Funds
• Aviva Life ULIP Funds
• Bharti AXA Life ULIP Funds
• Edelweiss Tokio Life ULIP Funds
• Future Generali India Life ULIP Funds
• Exide Life ULIP Funds
• Reliance Nippon Life ULIP Funds
• IndiaFirst Life ULIP Funds
• Ageas Federal Life ULIP Funds
• Star Union Dai-ichi Life ULIP Funds

Fund Name	NAV	AUM	5 Yr Returns	10 Yr Returns
SBI Life Balanced Fund	₹70.3	₹21359 Cr	7.42%	9.76%	View More
SBI Life Bond Fund	₹50.57	₹17003 Cr	5.79%	6.91%	View More
SBI Life Equity Fund	₹184.92	₹80948 Cr	9.06%	11.58%	View More
SBI Life Equity Optimiser Fund	₹51.23	₹2662 Cr	9.56%	11.34%	View More
SBI Life Growth Fund	₹89.47	₹2939 Cr	8.6%	11.16%	View More
SBI Life Money Market Fund	₹36.62	₹439 Cr	5.74%	6.02%	View More
SBI Life Top 300 Fund	₹53.8	₹1983 Cr	9.07%	12.14%	View More
SBI Life Pure Fund	₹24.76	₹1145 Cr	8.09%	-	View More
SBI Life Bond Optimiser Fund	₹22.14	₹3230 Cr	7.25%	-	View More
SBI Life Bluechip Fund	₹9.27	₹3071 Cr	-	-	View More
SBI Life Balanced Pension	₹70.86	₹796 Cr	8.12%	10.66%	View More
SBI Life Bond Pension	₹44.97	₹523 Cr	5.67%	7.19%	View More
SBI Life Equity Pension	₹69.46	₹11587 Cr	9.94%	12.42%	View More
SBI Life Growth Pension	₹70.18	₹620 Cr	9.24%	11.69%	View More
SBI Life Money Market Pension	₹33.85	₹140 Cr	5.69%	6%	View More
SBI Life Equity Optimiser Pension	₹54.94	₹966 Cr	9.55%	12.17%	View More
SBI Life Top 300 Pension	₹52.28	₹704 Cr	9.1%	12.22%	View More
SBI Life Midcap Fund	₹45.54	₹52985 Cr	16.63%	-	View More
SBI Life Corporate Bond Fund	₹16.41	₹1027 Cr	5.66%	-	View More
SBI Life Equity Elite II	₹48.59	₹12256 Cr	8.59%	11.17%	View More
SBI Life Index	₹44.46	₹107 Cr	9.49%	11.73%	View More
SBI Life Index Pension	₹46.41	₹28 Cr	9.61%	11.76%	View More
SBI Life Discontinued Policy Fund	₹25.42	₹10703 Cr	5.77%	6.1%	View More
SBI Life Equity Elite	₹82.68	₹13 Cr	11.47%	14.02%	View More
SBI Life P-E Managed	₹36.84	₹222 Cr	8.33%	9.94%	View More
SBI Life Guaranteed Pension GPF070211	₹26.54	₹3 Cr	5.3%	6.82%	View More
SBI Life Bond Pension II	₹23.45	₹29073 Cr	5.56%	6.55%	View More
SBI Life Equity Pension II	₹38.98	₹12265 Cr	9.06%	12.05%	View More
SBI Life Money Market Pension II	₹20.68	₹1537 Cr	5.46%	5.74%	View More
SBI Life Discontinue Pension Fund	₹21.46	₹6890 Cr	5.77%	-	View More
SBI Life Group Growth Plus Fund	₹55.25	₹3 Cr	7.96%	-	View More
SBI Life Group Debt Plus Fund	₹40.15	₹112 Cr	6.49%	-	View More
SBI Life Group Balance Plus Fund	₹47.63	₹11 Cr	7.25%	-	View More
SBI Life Group Balance Plus Fund II	₹26.05	₹863 Cr	7.2%	-	View More
SBI Life Group Debt Plus Fund II	₹26.08	₹278 Cr	6.65%	-	View More
SBI Life Group Growth Plus Fund II	₹25.86	₹235 Cr	8.07%	-	View More
SBI Life Group Short Term Plus Fund II	₹21.57	₹20 Cr	6.11%	-	View More
SBI Life Group Money Market Plus Fund	₹12.46	₹2 Cr	0.98%	-	View More

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How to Plan the Retirement through ULIP?

An individual may plan his retirement through ULIP by applying the following factors:

1. Start early

   In order to build a good corpus for retirement, a policyholder should start early. He must begin investing in his 30s. The long-term investment option adds more value to the scheme and generates a substantial return over a long-term policy. Hence, the individual should take optimum advantage of the ULIP plan.

2. Select the right fund option

   Selecting an appropriate fund option to invest and earn good returns is evident. However, it exclusively depends on the risk appetite of an individual to choose a fund instrument. For example, equity offers a high reward, but it also consists of elevated risk. On the other hand, debt offers low risk with low returns. In contrast, the balanced fund offers moderate risk with low to moderate returns, which can be higher than debt. 

3. Increase the premium

   With the hike in income or salary, the investor must consider increasing the premium to add more bonuses on the scheme's maturity. The premium increase will ensure the maximum return at the end of the policy term. 

Conclusion

UILP is an incredible retirement tool that can be used by every kind of investor. It offers several benefits and desired results at the maturity period. Most plans do not provide transparency to the policyholder. However, with ULIP, an investor may maintain his investment portfolio. In addition, he may also make a partial withdrawal at the end of the 5-year ULIP lock-in period. The ULIP plan offers booster additions, loyalty, and maturity rewards/bonuses for staying invested long-term. Hence, as mentioned above, it can be said that ULIP builds a good corpus for retirement.

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