Investing in products such as term insurance that act as a financial safety net are prudent choices as they pay a lump sum payout in the event of the death of the policyholder during the policy term and protect the dependents from any financial distress. However, this may not address long term needs like savings and investments. Instead, Vivek Jain, Head - Investments, Policybazaar.com opines that combining term insurance with other financial instruments like savings or investments can help build long-term financial corpus. 

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He says that unlike any other investment options, Waiver Of Premium (WOP) safeguards the pursuit of various life goals, offering a protective mechanism that goes beyond traditional investment products such as Mutual Funds, Term Insurance, etc.

"ULIPs are designed for long-term financial goals, such as retirement, education, paying off loans, or buying a house. The Waiver Of Premium feature provides continuity to the policy, even in the unfortunate event of the policyholder's demise, ensuring that the investment goals are not derailed," Jain says.

ULIPs further stand out due to the variety of fund options available with excellent market-linked returns. It allows flexibility in asset allocation based on the policyholder's risk appetite and financial goals. 

The Head of Investments at Policybazaar.com adds, "ULIPs offer tax benefits under Section 80C of the Income Tax Act for the premium paid (up to Rs 1.5 lakh) and zero tax on maturity proceeds unlike the 10 per cent LTCG on mutual funds under Section 10(10D). This benefit is only applicable if annual investment in ULIP policy is less than Rs 2.5 lakh; applicable for all policies bought after 01 February, 2021."

For Example: Mr. Sharma invests in a mutual fund to secure life goals like purchasing a house for his family. By investing Rs 10,000 every month, he aims to accumulate Rs 1 crore for this purpose.

However, if an unfortunate event occurs within 2 years, a term insurance plan might not cover this Rs 1 crore requirement. It could get utilized for everyday expenses like household bills and children's school fees, leaving the goal of buying a house unmet.

On the other hand, if he opts for a WOP ULIP plan, the insurance company would step in. They'll cover all future premiums, ensuring the Rs 1 crore goal and the house installment payments continue smoothly. This secures the Sharma family's future as well.