As a mid-career investor, is a ULIP the right tool to balance long-term growth and financial safety?

As a mid-level executive, I want to diversify my investments without compromising my family’s financial safety. What are the key benefits of ULIPs in striking the right balance between market-linked growth and life insurance protection?

Advice by Satishwar B. MD & CEO, Bandhan Life

This is a smart and forward-thinking question—especially for someone at your life stage. As a mid-level executive, you’re likely balancing personal responsibilities with growing financial aspirations. What you need is a financial solution that not only builds wealth over time but also protects your family from life’s uncertainties. That’s exactly where Unit Linked Insurance Plans (ULIPs) come in.

ULIPs are unique financial products that combine market-linked returns with life insurance protection, giving you the best of both worlds. Even better, modern ULIPs offer a wide range of features that allow you to customise your plan based on your goals, risk appetite, and life stage.

Let’s address your key needs one by one.

1. Advantages of a life cover

First and foremost, ULIPs offer dual benefit of market-linked returns along with life insurance protection, which ensures your family remains financially secure in your absence.

Some ULIPs offer a death benefit as high as 50 times your annual premium, providing your family with a significant financial cushion should something happen to you.

This means your wealth creation strategy doesn't come at the cost of your family’s safety—it complements it.

2. Diversifying investment portfolio

ULIPs are much more than just insurance—they are powerful wealth-building tools that help you grow your money over the long term.

How ULIPs Work

When you pay your premium, part of it goes toward providing life cover, and the rest is invested in market-linked funds. You can choose how your money is invested based on your risk appetite and financial goals.

ULIPs typically offer three types of funds:

· Equity Funds – Higher risk, potentially higher returns.

· Debt Funds – Lower risk, stable returns.

· Balanced Funds – A mix of equity and debt, offering moderate risk and reward.

Fund switching & strategy options

One of the standout features of ULIPs is the ability to switch between funds during the policy term, depending on market conditions or changing life goals. These switches are usually free of cost and tax-free.

You also get to choose how involved you want to be:

· Self-managed option: Ideal if you want to control where your money goes.

· Lifestyle or age-based strategy: Perfect if you prefer professional guidance.

3. Maximising ULIP gains

Given your profile—a mid-career professional who wants growth with safety—a lifestyle strategy managed by a fund manager would be ideal.

Here’s how it works:

· In the early years of the policy, when your risk tolerance is higher and time is on your side, a larger share of your investment is allocated to equity funds to maximise growth.

· As the policy matures and you approach your financial goals, your money is gradually shifted into debt funds, which are more stable and protect your accumulated wealth from market volatility.

This automated approach balances risk and reward across the policy term—allowing you to grow your corpus without constantly monitoring the markets.

4. Other benefits

Beyond growth and protection, ULIPs offer additional benefits that enhance their appeal:

· Liquidity through Partial Withdrawals: After the mandatory five-year lock-in period, you can make partial withdrawals from your fund—ideal for building a contingency fund or meeting unplanned expenses.

· Tax Benefits: Under the old tax regime, ULIPs offer tax deductions on premiums paid under Section 80C (under the old tax regime) and tax-free maturity benefits under Section 10(10D), subject to conditions.

· Goal-based Investing: Whether you’re planning for your children’s education, your retirement, or even buying a home, ULIPs allow you to align investments with specific financial milestones.

ULIPs to the rescue

ULIPs offer the perfect balance for professionals like you who want to diversify their investments without compromising on life cover. With the right plan, you can grow your wealth systematically, protect your family, and access funds when needed—all within one product. By opting for a ULIP with a high life cover, a lifestyle investment strategy, and low or zero allocation charges, you can ensure that your financial plan is not only growth-oriented but also resilient.

 

Disclaimer: Business Today provides market, bullion, crypto and personal news for informational purposes only and should not be construed as investment advice. All investments are subject to market risks. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.