Unit Linked Insurance Plans (ULIPs) are one of a kind in the sense they allow you to accomplish both, and they do it with the maximum tax efficiency possible of any investment. But that isn't all; Ulip provides considerably more than just tax-efficient options.

Reasons why ULIPs are a safer investment

1. Invest using safe strategies: One of the most attractive aspects of ULIPs is its ability to distribute assets using tried-and-true investment strategies. Different investing methods can be used for a variety of reasons, including growth, safety, or just maintaining a given asset allocation. Once you've chosen a strategy, you can continue investing normally, and the fund managers will ensure that your portfolio adheres to the chosen strategy.

2. Option to switch between debt and equity: You are aware that ULIP investments allow you to avoid taxes under Section 80C. However, you may not be aware that ULIPs are the only option for investing in market-linked fixed-income instruments while saving taxes. If you want to generate a consistent income, you can convert your entire ULIP portfolio to a liquid fund and withdraw in stages using the mobile app. All other fixed-income instruments that allow you to save tax have a fixed rate of return with minimal prospect of earning more. However, with unit-linked insurance plans, you can invest in highly rated corporate and government bonds, grow your money consistently, and still benefit from section 80C. 

Except for Equity Linked Saving Schemes (ELSS), no other Mutual Fund qualifies for a deduction under Section 80C of the Income Tax Act. As a result, investing just in ELSS Mutual Funds can cut your taxable income by Rs. 1.5 lakh. However, capital gains from ELSS will be taxed in the same way as equity funds are.

Furthermore, nothing prevents you from investing a small amount in equities funds when the time comes. Moving your money from debt funds to equity funds will not result in any capital gains.

3. Invest and withdraw systematically: If you are a salaried individual, the most convenient approach to invest is on a monthly basis. However, if you invest every month in any other secure investment, you are sure to face a slew of taxes. ULIPs allow you to invest in any mode, including top-ups when you have additional funds, while still saving money and paying no taxes on the maturity value.

For this reason, using the mobile app is beneficial as you cannot only find the best investment plan for yourself but also make partial withdrawals from ULIP while not paying any taxes. Regular income and partial withdrawals from most other debt instruments are taxable. However, with a ULIP, you may simply begin making systematic monthly withdrawals without worrying about your tax liability.

4. Your goal is safe. No matter what.

Your family is bound to have various financial goals and to ensure they are able to accomplish them even if you are not around to invest, ULIPs are important. We all know that ULIPs include an inherent life insurance cover with the investment. One of the main benefits of ULIPs is the guaranteed death payment. This implies that even if your investments underperform, your nominee will get a minimum guaranteed sum upon your death. This creates a safety net for your family regardless of market conditions. When you first start investing in a ULIP, you choose a target value for your investment which can very easily be done with the help of a mobile application. This goal value becomes the sum assured amount. As your ULIP investment rises, the life insurance coverage decreases. Thus, if you meet your ultimate fate before achieving your goal, the life cover will compensate for the difference. So your family can still achieve their goals. 

As a safe investor, if you maintain discipline with your ULIP investments, the insurer will add bonus units to your portfolio. ULIPs are the only investments that come with this option. If you are one of those investors who choose to avoid equities market risk, ULIPs can provide you with the security of a fixed-income investment, tax-efficient profits alongside insurance. 

While ULIPs provide numerous benefits, it is critical to consider the following criteria before choosing this investment plan option:

Lock-in term: ULIPs frequently have a lock-in term that limits withdrawals or surrenders.

Charges: ULIPs often have a variety of charges, including mortality charges, fund management charges, and administration charges. These costs can have an impact on your overall returns.

Investment Horizon: ULIPs are best suited to long-term investors. If you require liquidity in the short term, they may not be the best option.

So we are saying, 

ULIPs might be a good investment plan option for those who want to combine the potential returns of equity investing with the security of life insurance. Understanding the features and risks of ULIPs allows you to make an informed decision about whether this investment plan is appropriate for your financial goals and level of risk tolerance.