How ULIPs can help you have a happy retirement

Financial experts advise against depending only on private savings and pension plans for a comfortable retirement. It is time to look at ULIPs.

Many people planning their retirement at the current moment have built a large savings fund from their income and/or invested in good pension plans for the future. Both are excellent options and must be pursued by every potential retiree. But the question to ask is: Are these enough?

With living costs rising every day and inflation showing a constant upward trajectory, it is vital to look at investment options that can beat inflation and offer good returns. You may have invested in a bank fixed deposit or must make regular contributions to your PPF account. But when you retire, will the monies from these instruments help you tide over a financial crunch?

It is time to look at Unit Linked Insurance Plans (ULIPs) to create a retirement corpus.

Why invest in ULIPs?

Many would be terrified about investing in equity-linked securities, especially in the context of retirement planning. But the best ULIP plans for retirement are aimed at further lowering the inherent risk while offering excellent returns on investment.

Unit-linked pension plans help you build a large corpus for your retirement. Imagine if you invested a lump sum amount of Rs 50,000 at 14% interest for 30 years. After deducting tax, the returns on the ULIP would amount to about Rs 25 lakh. Processing and other charges are lower on ULIPs than on other equity-linked investments.

Besides, you have the option of switching your ULIP investment to debt markets if you do not wish to invest in equity markets. You can switch back to equity markets if they are performing well. In all, you can switch your fund options up to four times a year. Hence, you are assured of high returns on investment. However, it is better to entrust this task to the fund manager to avoid switching at the 

wrong times in the market cycle.

Even more importantly, the best ULIP plans give you the option of increasing your investment size in the ULIP pension plan. You can do this if you have extra income in the future, or if you have gained returns from another investment that you wish to invest in the ULIP. Hence, you get higher returns by the time you retire.

If you are on the lookout for the best ULIP plan for retirement, we recommend Wealth Max Plan. It is a single premium ULIP that gives the option of future top-ups, plus the freedom to partially withdraw against the ULIP in an emergency. Also, the plan provides tax deductions under Sec 80C and 10(10D) of the Income Tax Act, 1961.