Some Unit Linked Insurance Plan (ULIP) are universal plans which can be used as an insurance, children plan, investment and pension. All kind of insurance plans bundled into one.
These are usually high premium plans. Lets take Wealth Builder II from ICICI Prudential.
A 30 years old male with a new-born baby, invests 1,00,000/ for 5 years and takes 20 lakhs insurance for 25 years. Thus it covers our first requirement, Insurance.
Partial withdrawal facility is available after the statutory lock in period of 5 years. To fund the child’s education, he can use it to withdraw money from his fund whenever needed. Here the policy acts like a children policy, our second requirement.
Whatever left may grow with age where the fund can be used for emergency purpose. Here the policy acts like an investment product, our third requirement.
At the end of term, the maturity proceeds can be used to buy annuity plan for Pension from any of the life insurance companies. Here the same product acts like a pension plan.
In case of death, during the term, sum assured or fund value is paid to the beneficiary. Tax benefits at both ends, during investment and also during withdrawals. This type of plans are useful because of high liquidity. It will do wonders if the policy holder stays long and disciplined.