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When Should You Choose ULIPs Over Fixed Deposit

By Finserv MARKETS - Feb 5,2019
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When Should you choose ULIP over Fixed deposit

An investment made from the very beginning gives you the required financial freedom and takes away your worries about future financial necessities. The future is full of uncertainty and you never know when you might find yourself dealing with an emergency, one that leads to your finances taking a hit. In such cases, inculcating the habit of saving and investing in the right avenues at the right time can prove to be highly beneficial.

Any good investment strategy requires a balanced mix of high-risk and risk-averse investments. This ensures that while your money is safe, it also tends to grow and give positive returns. Among safe investments, Fixed Deposits (FDs) and Unit Linked Insurance Plans (ULIPs) are quite popular in the market. In a fixed deposit, a certain sum of money is deposited regularly in a bank for a specific time at a fixed rate of interest. On the other hand, Unit linked insurance plan is a market-linked product. ULIP benefits include market investment as well as a life insurance cover. A part of your policy premium goes towards life insurance, and the other part is invested in market instruments like stocks, bonds or funds (equity, debt or both). The policyholder has the freedom to decide the investment mix based on his or her risk appetite and life goals.

While FDs are absolutely safe, ULIPs are capable of providing better returns and keeping your money safe simultaneously. So why exactly should you go for the latter? Find reasons below:

  1. The most important thing that a unit linked insurance plan offers but an FD doesn’t is the life insurance cover. This way you can achieve the dual benefits of security and wealth maximization.
  2. In addition to a life cover, ULIPs also offer tax benefit under Section 80C and 10D of the Income Tax Act, 1961. It is a rare investment avenue which are classified as EEE (Exempt Exempt Exempt) i.e. exempt from tax at investment, growth, as well as maturity. On the other hand, interest income from FDs are completely taxable.
  3. A new fixed deposit needs to be opened at the prevailing interest rate. On the other hand, you can make additional investments in the same plan by top-up premiums.
  4. Unit linked insurance plans offer an opportunity to invest in different asset classes, which FDs don’t. It enables an individual to diversify his/her investment portfolio and “not put all eggs in a single basket”.
  5. Unit linked insurance plans can enable an individual to reap market returns if the market performs well. In the case of fixed deposits, even in well-performing markets, the person will only get moderate returns.

All of these reasons make ULIPs a more attractive investment avenue than fixed deposits. Thus, if you want to stay secure while maximizing your wealth, it is definitely the way to go!

So why wait? Get yourself a ULIP plan with Finserv MARKETS today!

To know more on ULIP investments in depth, you can check out these blogs:

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Bajaj Finserv Direct Limited ("BFDL") is primarily engaged in distribution of financial products and services through its digital platform (“Bajaj Finserv MARKETS”) and inter alia renders services of customer acquisition, providing preliminary credit support activities, fulfilment services and post-acquisition customer services to Banks, NBFCs, HFCs. BFDL is also a registered Corporate Agent (Composite) under valid IRDAI registration number: CA0551 valid till 10-Apr-2024 for solicitation and servicing of Insurance Products. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522