Freelancers and Entrepreneurs are often viewed as individuals who work on their terms, choose their own boss, decide their own payment terms, and enjoy freedom. However, this general notion has another side. One challenge of working as an entrepreneur or a freelancer is dealing with irregular or unstable income. The cash flow is inconsistent, but the stress is always there. This adds to the pressure of securing your financial future.
Here comes a ULIP, Unit-Linked Insurance Plan. This can be the secret shield for you, allowing you to insure and invest. So, if you ever feel overwhelmed trying to protect your family’s future while struggling with your business and also wanting to invest, ULIPs might be a smart choice. Consider this as a safety net that you aren’t getting because of your out-of-corporate setting work culture.
What are ULIPs?
Before investing in any plan, consider understanding what it entails. So, the first question here is: What is ULIP? Well, think of ULIPs as combo solutions. It offers you the best of two worlds: investment and insurance. As ULIPs come with a 5-year lock-in, they also help inculcate the habit of systematic and disciplined savings.
This means when you invest in ULIPs, you pay a premium. Now, a portion of this premium is used for life coverage. The remaining amount is invested in various securities, including equity funds, debt funds, and more. This choice can be based on your risk appetite, financial objectives, and other factors.
Benefits of ULIPs for Freelancers and Entrepreneurs
As mentioned, ULIPs are designed with dual benefits, that of an investment and insurance. However, this isn’t the only benefit that makes them a suitable choice for freelancers or entrepreneurs. If you’re still thinking about how investing in a ULIP can help, here are some compelling benefits you might need to know:
1. Ensures Financial Safety = Protection + Growth
Let’s be honest- when you’re self-employed as a freelancer or entrepreneur, there is one benefit that you’re deprived of: the corporate safety net. With ULIPs, you develop that for yourself and your family. You ensure you’re not financially stranded; instead, you have life cover to protect your loved ones. Plus, the investment component keeps working in the background to grow your money.
2. You Choose Your Investment Preference
Another prominent benefit of choosing ULIPs is that you get to choose what you’re willing to invest in. It can be anything, debt funds, equity funds, hybrid funds, or more, whatever you decide based on your risk tolerance and financial goals.
3. Flexibility in Switching Funds
As a freelancer, it is common to sometimes struggle with regular cash flow. However, with ULIPs, you have that part sorted. You can top up your plan with extra money and adjust it based on your income flow. For instance, you may switch funds as per market trends.
The liquidity and control come in handy for both entrepreneurs and freelancers.
4. Reduce the Stress of Daily Management
When you think of investments, you often think of fund management. This requires a lot of patience, expertise, and time, which is a challenge for freelancers and entrepreneurs who often struggle with time management. However, you do not have to worry about the same with ULIPs. ULIPs are managed by professional fund managers. This means you can avoid micromanaging, saving time and energy that would otherwise be invested in your business, attracting new clients, and growing your business.
5. Tax-Saving Benefits
Another common yet important benefit of ULIPs is their tax-related perks. For instance, the premiums paid are eligible for tax deductions under section 80C of the Income Tax Act. Plus, you may also claim certain tax exemptions on the maturity amount as per the conditions under Section 10(10D) of the Income Tax Act.
6. Partial Withdrawals for Unexpected Moments
Entrepreneurs! Imagine having a business crunch or an emergency. Or say you simply want to expand your business. ULIPs can help with this as well. These come with the benefit of a partial withdrawal facility once the lock-in period is over. This means you can withdraw a certain amount in times of emergency.
Final Word
Investing in ULIPs can help you earn several advantages. However, make sure you choose the right plan. You may consider a variety of factors to choose the best ULIP. This includes fund options, market performance of the funds, hidden charges, etc. Also, do not forget to consider your investment objectives.
You may also use a ULIP calculator to compare and experiment with different investment preferences and see how they impact your maturity amount. This can help you compare plans and make an informed choice as per your evolving life goals.
Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.
