Latest news with #ULIPs
The Hindu
4 days ago
- Business
- The Hindu
How do you de-risk from outliving your savings?
In today's world a nagging question for many Indians is, Will I have enough money to last through retirement? It's a valid worry. Life expectancy, already about 72.5 years, is expected to cross 85 by the end of this century. At the same time, healthcare costs are rising. And inflation? That's silently eroding the value of our money year after year. A recent survey showed nearly 4 out of 10 working Indians fear they might outlive their savings. So, what can you do? Long retirement years If you retire at 60 and live till 85-90, retirement can easily last 25-30 years. That's almost equal to your working life. Let's say you plan to spend ₹50,000 a month in retirement or ₹6 lakh a year. Over 30 years it's ₹1.8 crore without accounting for inflation. Now add inflation at, say, 6%. That ₹50,000 monthly budget could become ₹1.6 lakh in 20 years. And that's why you need more than a 'big enough' retirement corpus. You need a strategy that helps your income keep up with rising costs. Let's look at some key risks which can erode your wealth. Think ₹1 crore is enough? At 6% inflation, the real value of that corpus halves in 12 years. To counter the effects of inflation, you should keep a portion of savings invested in inflation-beating assets that invest in equity market. Unit-Linked Pension Plans are specifically designed to help you build a retirement corpus which helps generate guaranteed income after retirement. These plans work best if you start investing early. A ULIP Pension Plan has two phases: Accumulation phase and payout phase. During working years, you accumulate a big corpus by investing regularly and earning market-linked returns on the investments. And when you retire, you can withdraw a certain portion (up to 60%) of corpus tax-free and also get regular guaranteed income from balance amount. A great feature is you can invest in a mix of equity and debt funds and switch between them. So you can stay equity-heavy in accumulation phase for faster growth and when nearing retirement you can remain debt-heavy to preserve capital. Medical inflation Healthcare costs in India are rising by 12–14% annually. This problem has a simple solution: health insurance. A comprehensive health insurance policy with lifetime renewability can ensure you won't have to dip into savings for any medical emergency. You must also explore topping up your insurance plan. Longevity risk If you've planned finances to last till 80 but live till 90, you could run out of money. The guaranteed regular income from Pension ULIPs on maturity ensures you get income for life irrespective of age. Withdrawals Pulling out big chunks for lifestyle expenses or emergencies early in retirement can put strain on future needs. Unit Linked Pension Plans ensure at least 40% of corpus is set aside to give you guaranteed return for life, thus securing your retirement. Thus, Pension ULIPs help you to counter these risks by providing the flexibility of partial withdrawals allowed for specific life events while the discipline of ensuring 40% of corpus is always set aside to give you guaranteed returns for life ensures you never run out of money. The rest can be withdrawn tax-free under Section 10 (10A) and Clause 23AAB of Income Tax Act, 1961 You can also consider National Pension Scheme (NPS), a government-backed plan which allows up to 75% of contributions to be invested in market-linked instruments with balance in safer debt options. Once you hit 60, at least 40% of the corpus goes into an annuity, giving a steady, guaranteed income for life. A checklist Figure out how much monthly income you need to live a comfortable life post retirement. Then use the 4% rule to arrive at the corpus size. For example, if you need ₹50,000 every month, then you need a corpus of ₹1.5 crore. But if you are expecting to retire after a decade or two, you need to adjust this number for inflation. Rupee cost averaging Markets go up and down. But over time, consistent investing pays off. By consistently investing in unit linked pension plans you ensure you earn higher number of units when markets fall and lower number of units when markets rise. This helps grow your corpus irrespective of market conditions. That's rupee cost averaging. So start early, stay consistent and let compounding do its magic. Investing early Starting to invest early helps save more and investments get time to grow. With right planning, retirement can be one of the most rewarding chapters of your life. (The writer is head, Investments,
Hans India
28-05-2025
- Business
- Hans India
ULIP for Youth: Why It's Gaining Popularity Among First-Time Investors
If you are stepping into the world of investing for the first time, you probably have a lot on your plate right now – saving goals, budgets, and a list of jargon that you don't understand. But here is some good news: you are not alone, and you are certainly not out of smart investment options. Among these smart options, one financial plan that has quietly gained popularity among new investors like you is the unit-linked insurance plan or the ULIP. You can think of ULIP as a two-in-one deal – insurance coverage and market-linked returns under one scheme. The plan is flexible, tax-efficient, and completely customisable. And with access to handy online tools like the ULIP calculator, you do not need to be a finance guru to figure it out. This article will be a guide to understanding why more and more new investors are leaning into unit-linked insurance plans – and why it might be the ideal plan for you as well. Why Young Investors are Falling for ULIPs? Let's be honest, starting to invest can feel like you are expected to suddenly understand things that sound suspiciously like spells. ULIP, or unit-linked insurance plan, may have sounded like just another acronym thrown around by finance gurus, but once you get what it does, you'll see why so many young investors like you are jumping in early. So, what's the big deal? Why are ULIPs catching the eye of a generation that prefers everything instant, digital, and customisable? 1. The Best of Both Worlds If you are torn between buying life insurance to cover your dependents and trying to invest in a mutual fund to grow your wealth, ULIP might be the sweet spot for you. A section of your insurance premium goes toward life coverage, and the rest amount gets invested in market instruments – equity, debt, and other hybrid options. 2. Tax Benefits With ULIPs, the amount that you pay as a premium qualifies for tax deductions under Section 80C up to a limit of Rs. 1.5 lakhs, and the maturity benefit can also be tax-exempt based on some scenarios as per Section 10(10D). If your annual premium is above 2.5 lakhs, the gains on the premium amount will be charged as per capital gains. However, if your annual premium amount is less than the limit mentioned, the total maturity amount will be tax-exempt. 3. Total Control Over Risk Appetite You can choose the fund's investment aspect as per your risk appetite. Prefer slow and steady? Go with debt instruments. Can you afford a little risk? Consider more equity investments. Can't decide? Mix them both and go for a hybrid approach. You can even switch between funds if your financial goals or risk tolerance change over time. 4. Low Entry Barriers, High Growth Potential 'ULIPs are only for rich people' – this is a common misconception. Most entry-level unit-linked insurance plans are completely wallet-friendly. You can start with premiums as low as Rs. 1000 per month. Most plans come with a lock-in period, so these policies are long-term by design. Your small contribution can grow into something special in 7 to 10 years, given that you are consistent with the premium payment. 5. Transparency and Digital Convenience The new generation loves to track their progress in every field – be it fitness, food, or even sleep. ULIPs further complement this by offering digital convenience regarding financial progress tracking. You can monitor your fund performance, switch options, and calculate maturity amount projections with just a few clicks. Everything is transparent, and you have full control over everything. 6. Built-in Financial Discipline Another commotion misconception among new investors is that the lock-in period is a bad thing. In most cases, the lock-in period is set to 5 years. And trust us, your future self will thank you for not withdrawing early. It keeps you from panic-selling every time the market dips or when someone tells you to buy gold and invest in fixed-income instruments instead. Conclusion Getting started with investing can feel much like navigating a jungle of jargon. In such situations, ULIP might just be that shortcut that you require to get to your financial goals in a straight line. The plan helps you cover your base points – wealth creation, setting up a financial safety net, and tax savings – without drowning in them completely. All you need to do is to stay in control, switch your funds to separate plans whenever needed, and watch your money grow with the magic of compounding. Now, if you are a newbie, you can use tools like an online ULIP calculator to align your financial goals with your policy choices and make smart choices. So, don't wait for a 'perfect time' to start. The sooner you start, the more your money has time to grow. Trust us, your future self will thank you for this.
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Business Standard
14-05-2025
- Business
- Business Standard
Max Financial Services stock jumps 4%, hits 52-week high post Q4 results
Max Financial Services share price today: Shares of Max Financial Services (MFSL) jumped over 4 per cent to hit a 52-week high of ₹1,351 on Wednesday after the company reported in-line fourth quarter (Q4 FY25) performance, led by strong execution at its life insurance unit, Axis Max Life. At 2:30 PM, the MFSL stock was trading at ₹1,340.70, up 3.9 per cent from the previous day's close of ₹1,290.1 on the National Stock Exchange (NSE). In comparison, the benchmark Nifty50 index was trading at 24,629.10 levels, up 50.75 points or 0.2 per cent. The stock has surged over 15 per cent on a year-to-date (YTD) basis. The company's total market capitalisation stood at ₹46,269.54 crore. Max Financial Services Q4 FY25 results update The company reported a consolidated net profit of ₹31.31 crore in the quarter under review against a net loss of ₹44.05 crore during the year-ago period. However, the company's sales fell 16.87 per cent year-on-year (Y-o-Y) to ₹12,375.7 crore compared to ₹14,887.5 crore in the corresponding quarter of the previous fiscal. For the full FY25, the company's consolidated net profit declined 3.78 per cent to ₹327.21 crore in the reported quarter as against ₹340.08 crore during the year-ago period. Sales declined 0.23 per cent to ₹46,468.91 crore in Q4 FY25 from ₹46,575.62 crore during the year-ago quarter. According to analysts at brokerage Motilal Oswal Financial Services (MOFSL), Max Financial reported strong sequential growth in VNB (Value of New Business) margin due to a sequential decline in share of ULIPs (Unit Linked Insurance Plans), while the share of non-PAR savings improved Q-o-Q during Q4 FY25. For Q4 FY25, VNB came in at ₹882 crore, up 8 per cent from ₹820 crore in the year-ago period. VNB margin improved by 45 basis points to 29.02 per cent. "The proprietary channel maintained a strong growth trajectory, led by agency, cross-sell, and e-commerce. Persistency trends improved across cohorts," the brokerage said. About Max Financial Services Incorporated in February 1988, Max Financial Services, which operates as a holding company for Max Life Insurance Company, is involved in the business of investments and providing management advisory services. Focused on life insurance, it actively manages Axis Max Life Insurance Company, India's largest non-bank, private life insurance company. Axis Max Life Insurance is a joint venture between Max Financial Services and Axis Bank. Apart from life insurance, it also offers health, pension, and annuity plans. It offers child protection, retirement, savings, and growth plans to individuals and groups.
India Today
07-05-2025
- Business
- India Today
ULIPs, mutual funds or stocks: What's the best for long-term wealth creation?
When it comes to building wealth over the long term, people often come across three popular investment options: ULIPs (Unit Linked Insurance Plans), mutual funds, and stocks. But which one is truly the best for creating wealth over time? Let's break it down in simple terms. UNDERSTANDING ULIPs: A MIX OF INSURANCE AND INVESTMENT ULIPs are a mix of insurance and investment, meaning a part of your premium goes towards life insurance, while the rest is invested in various funds, like equity or debt. The key advantage of ULIPs is the insurance coverage that comes along with the investment. However, they have charges like mortality costs, higher fund management fees, and fund allocation fees. According Manish Kothari, CEO & Co-Founder, ZFunds, 'For ULIPs, the associated costs like mortality cost, higher fund management charges, higher fund allocation charges eat into investor savings. Also, ULIPs come with a minimum 5-year lock-in, making liquidity a challenge.' STRICT TERMS AND LIMITED FLEXIBILITY WITH ULIPS Also, ULIPs have stricter terms. 'Once you go in for a ULIP plan, you need to keep paying premiums without fail for three years or more before you can even take a withdrawal,' said Swapnil Aggarwal, Director, VSRK Capital. He added, 'ULIPs do not have the option to switch funds or AMC as frequently as mutual funds, either. You are well and truly stuck once you opt for a ULIP plan, and that is quite limiting during times of uncertainty in the markets.' STOCKS: HIGH POTENTIAL, BUT MORE RISK On the other hand, stocks are shares of companies listed on the stock market. Investing in stocks means you directly own a part of a company. Stocks can offer some of the highest returns over time, especially if you invest in growing companies, but they also come with more risk. Stock prices can be volatile, and short-term market fluctuations can lead to losses. Manish Kothari stated, 'For stocks, it is essential to plan the entry and exit prices. Making the right calls demands a combination of skill, research and time that the common investors might not have.' MUTUAL FUNDS: THE BALANCED OPTION FOR WEALTH CREATION This is where mutual funds have an edge. With mutual funds, you don't have to worry about market timing, and professional management helps reduce the chances of making costly mistakes. Swapnil Aggarwal, Director at VSRK Capital, agrees with this view, highlighting that mutual funds are superior to ULIPs due to their flexibility and liquidity. He mentioned, 'For long-term wealth creation, mutual funds are comparatively superior to ULIPS because of their flexibility and liquidity. While both ULIPs and mutual funds have similar overall returns, mutual funds give the investor greater freedom.' THE FLEXIBILITY OF MUTUAL FUNDS Unlike ULIPs, mutual funds allow you to invest or redeem your money at any time without being tied down for a certain period. 'With mutual funds, you have the option to invest or redeem your money at any time without being tied down for a certain period. You also have the choice of switching between the different funds or Asset Management Companies (AMCs) depending on your objectives or variation in the market,' he added. Manish Kothari, the CEO and Co-Founder of ZFunds, also believes that equity mutual funds are an ideal choice for long-term wealth creation. 'Equity mutual funds are best for long-term wealth creation as they help investors build a diversified portfolio across market caps and industries, that is managed by a professional fund manager. Having a diversified portfolio is crucial to mitigate the market risks and volatility,' said Kothari. COST-EFFECTIVENESS AND ACCESSIBILITY OF MUTUAL FUNDS Additionally, they are affordable, with fund management fees regulated and reduced as the fund size grows. You can start investing with as little as Rs 10, making them accessible to everyone, mentioned Manish Kothari. 'The open-ended design of mutual funds also enables additional investments and provides liquidity to investors. Thus, making them a more flexible option,' he added. WHICH IS BEST FOR LONG-TERM WEALTH CREATION? It really depends on your goals, risk tolerance, and investment knowledge. If you want a combination of insurance and investment, a ULIP might suit you, but if your focus is purely on wealth creation, mutual funds and stocks are usually the better options. Stocks might offer the highest potential returns, but they come with more risk and require more attention. Mutual funds provide a good middle ground with less risk and professional management. Ultimately, the best investment for you will depend on your personal financial goals and how comfortable you are with risk. Diversifying your investments across these options can also help you balance risk and return, ensuring that you're on the right path to building wealth over the long term.
