While considering a safe investment option for market returns, Unit Linked Insurance Plan(ULIP) is one of the most popular options. It helps you secure funds for protecting your family's financial future in your absence and increase wealth during the long term. The ULIP plan has various flexible features that provide a range of benefits based on your financial requirements. Here is a detail about how it works, its features and its benefits for your reference.
 

Before we get started, let us understand the ULIP plan meaning.
 

What is a Unit Linked Insurance Plan?
 

A Unit Linked Insurance Plan(ULIP) is a comprehensive life insurance plan that provides dual benefits, a life cover to secure your family in the event of your unexpected demise and market returns as the maturity benefit. In addition, it provides various flexible features to help you customise them based on your financial needs.

How ULIP Works?

The premium you pay for the unit-linked insurance plans will be utilised by your insurer for two different purposes. One portion of the premium will be utilised to ensure the life cover, and the other will be invested in the financial markets. Expert fund managers will monitor your fund investment and suggest changes if required.
 

Features of a ULIP Investment Plan
 

The flexible ULIP plan features will help you invest based on your risk appetite and ensure you accumulate wealth during the policy term.

• Fund options based on risk appetite - In ULIP insurance you can invest in the fund options based on your risk appetite. For example, if you are a conservative investor, you can choose to invest in debt funds. On the other hand, if you are an aggressive investor, you can choose equity funds. There are also hybrid funds that help you balance your investment between equity and debt funds.
  
  Therefore, you can analyse your financial condition and your family's financial commitments to determine the risk profile and the suitable fund option.
  
  
• Flexible premium payment - The ULIP insurance plan provides flexible payment options, such as single payment, regular and limited premium payment options. And for the regular and the limited premium payment option, you can choose the frequency of payment, whether monthly, quarterly, semi-annually or annually.
  
  
• Rider^# options - The ULIP policy also provides the option to choose the add-on rider^# options for the enhanced financial benefits during specific scenarios, such as when you get affected due to a minor or major illness, critical illness, disability, etc.,
  
  
• Switching between the fund options - While you can choose the fund option based on your risk appetite, you can always switch to a different one based on the changing market conditions or your priorities. It is one of the most important features of the unit-linked insurance plan.
  
  For example, if you have invested in the equity fund option in your ULIP plan, you can always switch to a hybrid fund or debt fund if the market conditions are reducing your investment value. There are a few free switches available, after which the switching is charged at a minimal rate.
   

Benefits Of ULIP Policy
 

The various flexible features help you customise the ULIP insurance plan to maximise the financial benefits.
 

• Dual ULIP benefits - With a single investment plan, you can ensure a life cover to secure your family while increasing the market returns to appreciate your wealth.
  
  
• Safe investment benefit - As the ULIP insurance plan provides the option to invest based on your risk profile and switch between the fund options considering the changing global economic conditions, it is a safe investment option.
  
  
• Loyalty additions - In addition to the maturity benefit of ULIP, you can receive loyalty additions for being invested in the ULIP policy for the long term. It gets added to the total corpus increasing your wealth.
  
  
• Long-term investment option - Long-term benefits ULIP investment. ULIP as a lock-in period of 5 years. Partial withdrawal is applicable after this term. Therefore, it encourages you to invest for the long term. The longer the investment is made, the higher the returns earned.
  
  
• ULIP Calculator - At Tata AIA Life, we also provide the online ULIP calculator that helps you decide the right product choice, sum assured, investment, policy term and premium based on your financial conditions and requirements.
  
  
• Tax* Benefits - The Income Tax Act 1961 provides tax* deductions and exemption benefits.
  
  
  • Tax deduction - The premium for the ULIP investment qualifies for a tax* deduction under Section 80C of the Income Tax Act 1961 of up ₹1,50,000 when the annual premium does not exceed 10% of the sum assured. If you plan to top-up your investment, the additional premium will also qualify for the tax* deduction, subject to the terms and conditions.
    
    
  • Tax* exemption - For ULIP policies purchased before 1 February 2021, the payout received will qualify for tax* exemption under Section 10(10D) if the premium does not exceed 10% of the actual capital sum assured. And for ULIP¹ policies purchased after 1 February 2021, the payout received will qualify for tax* exemption on satisfying the above condition while the premium is not more than ₹2,50,000. Furthermore, if you have purchased multiple ULIP policies, the aggregate premium should not exceed ₹2,50,000.
    
    If the investment qualifies for a tax* exemption, the maturity benefit, bonus^@ if earned and the partial withdrawal after 5 years are tax*-free. And, in the event of the policyholder's death, the death payout and the investment benefit will qualify for the exemption irrespective of the stated terms and conditions.

  The tax* benefits are applicable if you pay the premium for the ULIP¹ insurance for 5 consecutive years.

 

Therefore, if you have compared the ULIP features and benefits of the different insurers and chose the apt ULIP plan in India, you can secure your family and increase your wealth, considering your financial condition and commitments.
 

Conclusion
 

The ULIP policy in India is becoming increasingly popular, considering its importance in ensuring financial protection for the family and enhancing wealth in the long term. It helps you invest in the financial market based on your risk appetite, switch between the fund options during volatile market conditions and provide a tax* deduction and exemption benefits. Therefore, you need to understand your financial requirements,analyze the different ULIP plans and choose the best product to help satisfy your financial needs and benefit from it maximally through the long term.



L&C/Advt/2022/Dec/3163