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When investing in equity markets, volatility is inevitable. Stock prices are affected by world events, whether it is war, terrorism or natural disasters, plummetting the price of everything from crude oil to gold. Investors are bound to feel insecure during such unstable circumstances and even worry about their savings.
However, there is no cause of concern if one picks the right financial instruments to grow one’s wealth. For instance, investing in unit-linked insurance plans or ULIPs in the long-term helps one ride through the lows of the stock market till it subsides, without taking a hit. One such is HDFC Life’s Click 2 Wealth ULIP plan.
While it is believed that one should invest when the stocks fall and sell when they soar, it is difficult to read the market during volatility. ULIPs enable one to cut through the noise and focus on growing the investment over a long period of time, in a disciplined manner. While one may be tempted to exit the fund during turbulent times, it is important to remember that eventually, equities outperform most other asset classes despite a rapid rise and fall in stock prices. It’s, therefore, wise to stick to the financial plan to reap benefits. ULIPs allow policyholders the flexibility to choose from multiple fund options, allowing policyholders to diversify across different asset classes, such as equity and debt in a single product. Investors can also opt for an automatic asset allocation formula, which is calculated according to one’s age and risk appetite. In fact, HDFC Life’s Click 2 Wealth ULIP plan allows one to choose from 11 funds to maximise investment, along with offering an unlimited free switching option.
With ULIPs, policyholders can switch from a consistent debt-oriented plan to one focussed on equity, which has the potential for higher returns, or a combination of both. This balancing act empowers investors to ride the rough patch and be rewarded in the long run. To minimise the risk of a portfolio, HDFC Life’s Click 2 Wealth ULIP plan allows policyholders to switch seamlessly from one asset class to another. It comes with three plan options – Invest Plus, the classic wealth creation option; Premium Waiver option, wherein the future Premium(s) are paid by the insurer in case of death of the Premium Payor (different from the Life Assured); and Golden Years Benefit option which provides life cover till 99 years of age.
Unit-linked insurance plans are preferred by customers as they combine life insurance and an investment plan under a single policy. Unlike mutual funds, ULIP plans are exempt from long-time capital gains tax and their EEE-status comes with tax benefits since premiums up to Rs 1.5 lakh are eligible for tax deductions. This makes the death and maturity benefits exempt from tax as well. HDFC Life’s Click 2 Wealth ULIP plan also offers a systematic withdrawal from your funds for post-retirement income.
Moreover, policyholders can withdraw a lump sum as a partial withdrawal amount from their funds to meet any financial emergencies, after five years. For a ULIP that matures during a volatile period when the market is hitting the lows, investors can safely defer the payout and opt for spread-out withdrawals instead of a lump sum to get a higher NAV as markets improve over time. This is particularly advisable if you are not in urgent need of funds. ULIP investors can also look forward to loyalty additions or bonuses which accrue over the years, provided you are regular with your premium payments. The power of compounding also works in your favour as you stay invested for a longer period and see your corpus grow year after year.
This proves that the consistent long-term performance of a ULIP investment plan makes it the perfect instrument for the current volatile market environment. So, if you are looking for a low-risk plan with the potential for high returns, a ULIP is the right fit for you. It’s time to check out HDFC Life’s Click 2 Wealth ULIP plan.
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