A sound financial plan that is created well in advance not only guarantees better future returns but also protects you from taxation. That being said, the new tax rules in the new financial year have come into play, leading debt investors to revisit their investment portfolios for higher returns.


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Vivek Jain, Head – Investments, Policybazaar.com in an exclusive chat with Reema Sharma of Zee News said, "In light of the fact that tax laws are constantly changing, it's critical to consider both the interest rate you're receiving and the total amount of tax you'll have to pay in order to calculate your actual gains. This is where unit-linked insurance plans (ULIPs), such as debt insurance plans, come into play."


Jain lists out the following 3 broad reasons as to why you should choose ULIPs for wealth management.


• Switching between debt and equity


Every investor has a varied risk appetite and ability to navigate through market risks. The best part about ULIPs is the flexibility they offer to the investor. You can adjust your debt-to-equity ratio in a proportion that you are comfortable with to secure your money. Alternatively, if you are adept at navigating market currents, you can increase your share of equity in favourable funds in order to maximize your returns. Indian markets have historically rewarded investors with 12-15% returns under optimistic conditions, so you can accumulate significant tax-free wealth with this investment avenue.


• Medium to long-term investment horizon


It is recommended that one should invest in ULIPs with a medium to long-term view along with proper asset allocation to make the most of their investment. While ULIPs do offer the flexibility to withdraw after 5 years, if investors want to gain inflation-beating returns, they should dive in for at least 15-20 years. As seen in recent years, ULIP equity funds have outperformed their benchmark index over a period of 10 years or above. So, patience and discipline go a long way in fetching great returns with ULIPs.


• Secure your dependents with life cover


ULIPs are a combination of insurance and investment, so a certain proportion of your premium is set aside for providing life cover to your dependents. In case anything unfortunate happens to the policyholder, their policy will pay a total life cover or the fund value to dependents, whichever is higher. This amount, yet again, will be completely tax-free. So, ULIPs cover you not only for life but also beyond that. Such an option is not available to investors in mutual funds or FDs.


Jain advises that one should compare their options wisely and invest prudently. But most importantly, invest early to maximize your corpus and your returns, he adds.