How 4G ULIPs can help millennials fulfil their long-term wealth goals?

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How 4G ULIPs can help millennials fulfil their long-term wealth goals?
How 4G ULIPs can help millennials fulfil their long-term wealth goals? Image source: Pixabay

Any individual born anytime between the mid-1980s to the late 1990s are termed as millennials. People born under this category are considered as reckless investors. According to a report, millennials spend their money on high-assets like an expensive gadget, automobiles, and so forth. Maintaining a financial plan can be a challenge for many millennials today. Nearly half of the millennials are worried about their retirement, while the remaining 2/3rd live under the fear of outliving their retirement savings. Moreover, the rising life expectancy rate and higher cost of living makes investing wisely a crucial need.

According to new research, over seven out of ten millennials invest in financial products. However, the rest are still skeptical since they feel too young to start investing. Investing at a young age provides relatively more benefits than investing at a later stage of life. Let’s take a look below to understand why, as a millennial you should invest at a young age?

When you invest at a young age, you can reap the benefits of the power of compounding. Compounding lets you earn interest on your returns of investment. Therefore, you should start investing at a young age to ensure you have more funds by the time you reach your retirement period. The earlier you start, the higher are the chances for the growth of your invested capital.

There are several investment options you can choose from to invest your money to achieve your long-term goals. However, a Unit Linked Insurance Plan (ULIP) is an excellent choice since it is a combination of insurance and investment. Being a long-term investment option, you can fulfill your life goals like pursuing higher studies, planning a dream wedding, purchasing a new house or a car, and so on. Let’s take a look below to understand how 4G ULIPs can accomplish your long-term wealth goals:

  1. You can create wealth for your long-term goals

After undergoing various changes suggested by the Insurance Regulatory and Development Authority of India (IRDAI), a ULIP policy has emerged as the best investment tool for wealth generation. However, you should invest in a ULIP policy at an early stage of your life for a higher accumulation of funds for a better future. A ULIP policy has a lock-in period of five years. As a policyholder, you should stay invested until the end of the policy tenure to ensure you can generate a substantial corpus.

  1. You can receive high returns of investment

Market volatility can be a problem if you purchase any investment option for the short term. With a ULIP insurance, you can invest for a long period to achieve high returns. In addition to this, compounding would ensure you develop a larger corpus. For instance, if you invest Rs. 5,000 every month in your 20s, for 25 years, your corpus would grow to approximately Rs. 70-75 Lakh at the rate of 10%. In simple terms, staying invested in a ULIP policy offers high returns by combating the impacts of inflation.

  1. You can avail low charges of a ULIP policy

Although a ULIP policy has been in the market for a long time, it has gained popularity only after the introduction of new rules by the IRDAI. The prime reason for the mass attraction towards a ULIP policy is its low cost. The most common ULIP charges are as follows:

  • Policy administration charge
  • Fund management charge
  • Premium allocation charge
  • Mortality charge
  1. You can save more money due to tax benefits

Although there are various ULIP benefits, the tax-savings benefit of a ULIP policy is the highlight. When you invest in a ULIP policy, you would receive its dual Exempt-Exempt-Exempt (EEE) tax benefits. According to Section 80C of the Income Tax Act, 1961, you can claim a tax deduction up to Rs. 1,50,000 on your taxable income. Additionally, the death benefit provided to your nominees in your absence is tax-free under Section 10(10D) of the Income Tax Act, 1961.

To sum up, long-term goals are usually your dreams and aspiration you might want to achieve in the future. Before purchasing a ULIP policy, you should first identify your long-term goals. Later, you should select a ULIP plan based on your financial needs and wealth goals.

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