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Everything You Need To Know About Top-Up Premiums In ULIPs

24-June-2021 |

Amidst the trials and tribulations of our professional and personal lives, we are consistently on the lookout for a savings and investment avenue that can provide us multiple benefits under the same plan. If you are searching for such an investment option, a ULIP plan, i.e., a Unit Linked Insurance Plan, is an option as it also provides life insurance protection

By combining the features of insurance and investment, a ULIP policy spares you the trouble of selecting multiple plans and allows you to grow your investments and build a substantial corpus in a planned and systematic manner. The premium in a ULIP insurance plan is allocated towards two avenues, namely:

  • A sum assured to provide you a life insurance cover;

  • An investment in a market-linked fund or portfolio of funds selected by you. 

 

Benefits of a ULIP Insurance Plan

 

A ULIP plan has several benefits, some of which have been listed below.

  1. Systematic investment of savings in market-linked funds of your choosing;

  2. Security of a life cover for you, the policyholder, and death benefit for your nominee in the event of you passing during the tenure of the policy;

  3. Maturity benefit at the end of the term of the ULIP policy;

  4. The option to select funds in accordance with your risk appetite;

  5. The flexibility to switch between funds;

  6. Tax* deduction on premium payments under Section 80C of the Income Tax Act, 1961;

  7. Tax* exemption on the death benefit under Section 10(10D);

  8. The freedom to add a top-up premium to your ULIP plan.

Of the many benefits of a ULIP plan, the last one listed above is one that is lesser known than the others. However, the freedom to add a top-up premium to your ULIP policy enables you to enhance the magnitude of your investment and the weight of your ULIP fund as and when your financial ability gets enhanced.

 

Here is How Top-up Premiums in a ULIP Plan Work 

 

Several ULIP plans allow you the flexibility to increase the amount of the premium in your ULIP plan at a stage following the purchase of the plan. For instance, at Tata AIA, we offer the Tata AIA Life Insurance Fortune Pro Plan(UIN-110L112V04) that has the option of premium top-ups. You can exercise the aforementioned option anytime during the tenure of your ULIP policy except during the last five years.

ULIP plans with the option of premium top-ups are flexible instruments that you can optimise as per your financial strengths and changes therein. However, it is important to remember that the top-up premium option in most ULIP plans carries a specific lock-in period for the corresponding amounts which is usually 5 years. Therefore, unless you opt for a complete withdrawal of your ULIP insurance plan, you cannot withdraw the amount of the top-up premium till the expiration of the specified lock-in period.

 
 
Here is How You Can Purchase a ULIP plan

 

It is easy to purchase a ULIP plan online. You can visit the Tata AIA website and utilise our ULIP plan calculator to compare various ULIP plans and select the one most suited to your financial goals. With our wide range of Tata AIA investment plans, you can choose an investment avenue that enables you to build a corpus in a gradual and systematic manner.

With our commitment to upholding the 'Rakshakaran Ki Reet', that is, the promise of protection, for all our policyholders, the Tata AIA Life Insurance Fortune Pro Plan (UIN-110L112V04) offers you, amongst others, the following benefits.

  • A substantial life cover;

  • The flexibility to choose the premium payment mode and frequency;

  • Regular loyalty boosts to enhance the value of your investment;

  • The option to add three additional riders# to your plan;

  • Tax* benefits under Section 80C and 10(10D) of the Income Tax Act, 1961;

  • The option to top-up premium amounts four times in a policy year, except during the last five years of the policy;

  • The freedom to allocate the top-up premium towards the selected funds in a proportion of your choosing.

However, the total amount of the top-up premium payments cannot be more than the sum of the regular premium payments or the single premium payment at any point during the policy tenure. Furthermore, top-up premiums are subject to some charges which are mentioned in the selected ULIP plan.

 

 

Here is What Happens if You do Not Pay Your ULIP Premium

 

During the lock-in period of your ULIP policy, if you stop fulfilling your premium payment obligations, the policy becomes discontinued and the amount gets transferred to a Discontinued Policy Fund. If you exercise the option of policy revival within the stipulated period, you shall get the discontinued policy's proceeds after the lock-in period after the deduction of the applicable charges.

You can, however, opt for a surrender of the policy in which case the proceeds of the policy shall be released post the expiration of the lock-in period or date of surrender whichever is later. If you fail to pay the policy premium after the lock-in period and the following grace period, your ULIP policy gets converted into a Reduced Paid-up Policy and you shall have the option to either revive or surrender the policy within the timelines communicated by the insurer. 

 

 

Conclusion

 

A ULIP insurance plan with an option to top-up the premium amount is a versatile investment tool, one that can help you enhance your investment in a ULIP plan with the rise in your earnings and investment capacity. Additionally, these plans also offer life insurance protection. However, it is important to understand all the clauses associated with such a top-up before exercising the said option. 

 

L&C/Advt/2022/Jan/0034

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Need more information?

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TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

Looking to get a new plan? 

Connect with us now

+91

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

People Like You Also Read

6 Reasons Why You Must Invest In A ULIP Plan
Read More
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Read More
4 Reasons Why ULIPs are Important
Read More
Everything You Need to Know about Absolute Returns in ULIPs
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Why Do Wise Investors Choose ULIP Plans?
Read More
Everything you Need to Know About Premium Redirection in ULIPs
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A Complete Guide on Whole Life ULIP Plans
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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA), Tata AIA Life Insurance is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Disclaimer
  • Insurance cover is available under the product.

  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.

  • * Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.

  • #Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums, and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch

  • IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER. THE LINKED INSURANCE PRODUCT DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICY HOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF THE FIFTH YEAR.

  • Past performance is not indicative of future performance.

  • All investments made by the Company are subject to market risks. The Company does not guarantee any assured returns. The investment income and price may go down as well as up depending on several factors influencing the market.

  • Please make your own independent decision after consulting your financial or other professional advisor.

Need more information?

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TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

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TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.