Tax Benefits of ULIPs

When it comes to financial investments, the first advice given to anyone is - prioritize one’s goals. Thinking about this one may count life insurance as a priority or he/she may have a long-term financial goal like child’s education? An equity mutual fund might get one good returns of which a chunk will ultimately reach the tax department. ULIPs are slowly emerging as one of the best tax-saving investment instruments.

Read more
Best ULIP Plans
  • Guaranteed Tax Savings

    Guaranteed Tax Savings^

    Under sec 80C & 10(10D)
  • savings

    ₹1 Crore

    Invest ₹10k Per Month*
  • Zero LTCG Tax

    Zero LTCG Tax^

    Unlike 10% in Mutual Funds
We are rated~
rating
58.9 Million
Registered Consumer
51
Insurance Partners
26.4 Million
Policies Sold
In-built life cover

Top performing plans with High Returns*

Invest ₹10K/month & Get ₹1 Crore returns*

+91
Secure
We don’t spam
Please wait. We Are Processing..
Your personal information is secure with us
Plans available only for people of Indian origin By clicking on "View Plans" you agree to our Privacy Policy and Terms of use #For a 55 year on investment of 20Lacs #Discount offered by insurance company
Get Updates on WhatsApp
We are rated~
rating
58.9 Million
Registered Consumer
51
Insurance Partners
26.4 Million
Policies Sold

Top ULIP Funds
Fund Name
AUM
Returns (in %)
3 Year
5 Year
10 Year
11,839 Cr
Returns
21.83%
Returns
23.81%
Highest Returns
Returns
19.95%
Get Details
1,772 Cr
Returns
23.15%
Returns
27.3%
Highest Returns
Returns
19.47%
Get Details
6,136 Cr
Returns
26.84%
Returns
27.87%
Highest Returns
Returns
18.81%
Get Details
2,984 Cr
Returns
21.78%
Returns
23.76%
Highest Returns
Returns
17.76%
Get Details
4,172 Cr
Returns
21.74%
Highest Returns
Returns
20%
Returns
17.43%
Get Details
Fund Name
AUM
Returns (in %)
3 Year
5 Year
10 Year
247 Cr
Returns
11.88%
Returns
13.92%
Highest Returns
Returns
11.99%
Get Details
352 Cr
Returns
12.26%
Returns
12.56%
Highest Returns
Returns
11.38%
Get Details
526 Cr
Returns
9.79%
Returns
10.72%
Highest Returns
Returns
10.34%
Get Details
837 Cr
Returns
11.67%
Returns
11.81%
Highest Returns
Returns
10.23%
Get Details
22 Cr
Returns
12.6%
Highest Returns
Returns
11.89%
Returns
10.17%
Get Details
Fund Name
AUM
Returns (in %)
3 Year
5 Year
10 Year
494 Cr
Returns
16.43%
Returns
17.28%
Highest Returns
Returns
15.3%
Get Details
242 Cr
Returns
6.94%
Returns
7.91%
Returns
8.81%
Highest Returns
Get Details
786 Cr
Returns
5.4%
Returns
6.88%
Returns
8.1%
Highest Returns
Get Details
302 Cr
Returns
5.86%
Returns
6.8%
Returns
7.79%
Highest Returns
Get Details
465 Cr
Returns
5.1%
Returns
6.93%
Returns
7.78%
Highest Returns
Get Details

That is because a ULIP is the perfect investment solution for the above-stated problems.

What is ULIP?

  • Unit Linked Insurance Plan, often abbreviated as ULIP, is an investment unit wherein the policyholder also gets life insurance coverage as a part of the investment policy.

  • The unique benefit of ULIP is tax benefits. These tax benefits can be availed throughout the term and at the maturity.

  • The reason for the increasing preference for ULIPs over other investment options is its flexibility.

  • It is considered a reliable option for wealth creation in the long term. This is because it is a product which combines returns, tax benefits, and insurance.

  • While a regular life insurance policy doesn’t have much scope for wealth generation, a conservative tax-saving option like PPF doesn’t guarantee good returns. This is where ULIPs stand out from other investment options.

Unit Linked Insurance Plan - An Overview

  • In a ULIP, a portion of the investment is used for the life insurance policy of the policyholder. The rest of the amount is allocated to the investment portfolio.

  • The portfolio can consist of either equity funds or debt funds, depending on the investor’s risk appetite and goal.

  • ULIPs are called unique for their flexibility when it comes to portfolio switch option. The investor can switch between equity and debt funds based on their changing preferences and market performance.

Tax Benefits with ULIPs

  • The amount invested in a ULIP policy is eligible for a deduction under Section 80C. The maximum amount that is eligible for the deduction is Rs.1, 50, 000.

  • Also, the amount received by the policyholder at maturity is exempted from tax under Section 10(10D).

Invest more and Get more with ULIP Plan Invest more and Get more with ULIP Plan

Lock-in Period of ULIPs:

  • The Insurance Regulatory and Development Authority of India (IRDAI) made necessary changes to the lock-in period of ULIP policies.

  • The IRDAI increased the lock-in period of ULIP from three years to five years.

  • However, to get benefit from the policy, one has to invest for the long term, which may range from 10-15 years.

Types of ULIPs:

Though there might be a further classification of ULIPs, it’s usually these three major types.

  • Equity Funds - The premium amount invested in the equity type is spent in the equity market and has a higher risk factor.

  • Balanced Funds - Mostly suitable for investors who are comfortable with a moderate amount of risk; these funds are balanced between equity and debt funds.

  • Debt Funds - If the ULIP is invested in debt instruments, debt funds come in the picture. These funds have low risk.

  • Also, the death benefits differ for policyholders based on the type of ULIP fund they invested in.

  • For type 1 ULIP, the nominee receives the sum assured amount upon the demise of the policyholder.

  • Under type 2 ULIP, the insurance firm pays assured sum plus the fund value to the nominee.

  • ULIPs are divided into these two types based on how much risk does an investor poses to the firm.

Benefits of ULIPs:

  • Life Insurance- Like stated before, this is one of the unique features of the ULIPs. Along with the investment, life cover is offered. In case of unfortunate demise of the policyholder, the sum assured will be given to the investor’s family.

  • In addition to life cover, the investors also get rider options under additional coverage. As of rider options, accidental death rider, critical illness rider and term rider benefits are offered to the investors.

  • Tax-Free Withdrawals- By now the tax benefits that come with ULIPs are clearly defined. However, the advantages of investing in this instrument do not stop there. With unit-linked investments, investors can save taxes on withdrawals. There are three instances in which there might be a withdrawal:

    • If the policy attains maturity

    • If the policyholder passes away

    • The policyholder can get a partial withdrawal after discussing it with his/her insurance company.

Invest in high growth ULIP Plans Invest in high growth ULIP Plans

While the income generated in mutual funds is entirely taxable, the investor can protect his/her savings generated through ULIPs.The amount generated is usually higher than the sum assured as the benefits from the unit-linked investments is mostly higher.

  • Long-Term Financial Goals- While learning about the lock-in period, one may think ULIP as a policy with a brief term. However, it is not true, instead, it suggests that an investor’s money goals are within the long-run. The net returns from this policy are usually higher because the money gets compounded. So, the benefits are higher even if the investor decides to exit after the lock-in period.

  • Flexibility- As stated earlier, the investor can switch between equity and debt funds based on their goals and market fluctuations. Also, the investor can make partial withdrawals although the terms and conditions are different in various firms. ULIPs have a facility of top-ups which allow the policyholder to increase the premium amount now and then.

As one can see, every firm has different terms and conditions when it comes to withdrawals/switches. So, it is necessary to read all the documents before purchasing a ULIP.

ULIPs aren’t just budget-friendly or profitable investments. They look time-saving as well. Having several financial requirements mixed into one, ULIPs are one of the best tax saving instruments.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
+Returns Since Inception of LIC Growth Fund
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

Grow your wealth & meet your Financial goals

Systematically Invest in high growth plans with returns upto 18%*
View plans
Standard T & C Apply*
Insurers Offering ULIPs

Tata AIA

Aditya Birla Sun Life

Bajaj Allianz

Max Life

HDFC Life

ICICI Prudential

Bharti AXA Life

Edelweiss Life

Kotak Life

Future Generali

PNB MetLife

SBI Life

Aviva

Bandhan Life

Canara HSBC

IDBI Federal

IndiaFirst

Pramerica Life

Reliance Life

Sahara Life

Shriram Life

Star Union

View more insurers
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
Invest More Get More!
You Get
₹1 Crores*
You Invest
₹10K/month
You Get
₹80 Lakhs*
You Invest
₹8K/month
You Get
₹50 Lakhs*
You Invest
₹5K/month
capital guarantee
Investment Calculator
  • One time
  • Monthly
/ Year
Sensex has given 10% return from 2010 - 2020
You invest
You get
View plans

Ulip plans articles

Recent Articles
Popular Articles
Mortality Charges in ULIPs

16 Jul 2024

Mortality charges in a ULIP (Unit Linked Insurance Plan)
Read more
Benefits of Buying Online ULIP Over Offline ULIP

21 Jun 2024

Unit Linked Insurance Plans (ULIPs) have emerged as a popular
Read more
Why Should ULIPs Be Part of Your Financial Planning in 2024?

19 Jun 2024

Financial planning requires agility and growth potential. ULIPs
Read more
ULIP for Wealth Creation

19 Jun 2024

Unit-linked insurance Plans (ULIPs) are financial products that
Read more
Dynamic Asset Allocation

21 May 2024

Dynamic Asset Allocation involves actively adjusting investment
Read more
ULIP Calculator
  • 08 Oct 2018
  • 121910
A ULIP Calculator is a financial tool designed to help you compare ULIP plans and estimate the maturity amount
Read more
SBI Life Smart Privilege Plan: Benefits & Features
  • 11 Jan 2017
  • 88561
SBI Life Smart Privilege is a unit-linked, non-participating life insurance plan offered by SBI Life Insurance
Read more
7 Things to Know About the Tax Benefits of ULIPs
  • 06 Oct 2021
  • 15102
Nowadays, Unit Linked Insurance Plans, i.e., ULIPs, have evolved as the popular income tax saving investment
Read more
ULIP Returns in 5 Years
  • 06 Dec 2023
  • 1915
ULIP means Unit Linked Insurance Plan. It is a unique financial instrument that combines insurance coverage with
Read more
Taxability of ULIP on Surrender
  • 28 Dec 2023
  • 2123
ULIPs, or Unit Linked Insurance Plans, combine insurance and investment. The taxability of ULIP on surrender
Read more

top

Become a Crorepati

Invest ₹10K/Month & Get ₹1 Crore returns*

Mobile +91
*T&C Applied.
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL