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Myth 5: Not a Good Option

ULIP plans combine life insurance protection with market-linked investments, making them a possible option for individuals looking to address both protection and long-term investment needs.

85.9%

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Key Takeaways

ULIPs combine life insurance and market-linked investments, making them ideal for long-term goals like retirement. You can switch between equity, debt, or balanced funds based on your risk profile, without tax implications.

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ULIP Tax Benefits

Under Section 80C, the premiums paid towards your ULIP are eligible for a tax deduction of up to ₹1.5 lakh per year, helping reduce your taxable income.

85.5%

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Features of ULIP

Tax Benefits: Investments made in ULIPs are eligible for tax deductions under Section 123 of the Income Tax Act (up to ₹1.5 lakh annually). Additionally, the maturity proceeds may be tax-free under Schedule II (Table S.No. 2) (previously known as Section 10(10D) ), subject to certain conditions.

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Myth 2: ULIP is a Risky Investment Option

Under ULIP, investors are allowed to choose funds based on their risk appetite. ULIP come with several fund options, such as debt and liquid funds for low-risk investors, while equity funds for high and moderate risk investors.

84.4%

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Features of ULIP

Multiple Fund Choices: ULIPs typically offer a variety of fund options ranging from high-risk equity funds to low-risk debt funds. You can choose where to invest based on your financial goals and risk tolerance.

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Key Takeaways

ULIP premiums qualify for tax deductions of up to ₹1.5 lakh under Section 80C ULIP maturity and death benefits may be tax‑free under Section 10(10D) , under suitable conditions

80.0%

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Features of ULIP

Tax Benefits: Investments made in ULIPs are eligible for tax deductions under Section 123 of the Income Tax Act (up to ₹1.5 lakh annually). Additionally, the maturity proceeds may be tax-free under Schedule II (Table S.No. 2) (previously known as Section 10(10D) ), subject to certain conditions.

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Riders Available With ULIP Plans?

ULIP offers a range of additional riders that can be added to your policy to enhance its coverage and benefits. These riders are supplementary benefits that allow you to customise your ULIP plan according to your specific needs and financial goals. Here's an overview of the most common riders available with ULIP:

64.6%

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Features of ULIP

Customisation with Riders: You can enhance the protection element of your ULIP by adding riders such as accidental death benefit, critical illness rider, or waiver of premium, depending on the insurer’s offering.

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Features of ULIP Plans

Liquidity: ULIPs also allow you to partially withdraw a sum when you need it after the completion of the lock-in period. Simply put, ULIP provide liquidity only after the lock-in period is over.

53.4%

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Features of ULIP

Partial Withdrawal Facility: ULIPs offer partial withdrawal options after a 5-year lock-in period. This helps you access funds in case of emergencies or short-term financial needs without completely surrendering the policy.

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Common Mistakes When Buying a ULIP

Overlooking the Fund Options and Risk Profile: Not all ULIP are the same, and each policy offers a variety of investment options, ranging from equity to debt and balanced funds. A common mistake is investing in a fund that doesn't align with your risk tolerance or financial goals .

51.8%

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Features of ULIP

Multiple Fund Choices: ULIPs typically offer a variety of fund options ranging from high-risk equity funds to low-risk debt funds. You can choose where to invest based on your financial goals and risk tolerance.

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Partial Withdrawal Charges

ULIP allows partial withdrawals of funds, allowing investors to withdraw money partially after the lock-in period. However, such withdrawals may attract certain charges depending on the policy conditions.

49.8%

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Features of ULIP

Partial Withdrawal Facility: ULIPs offer partial withdrawal options after a 5-year lock-in period. This helps you access funds in case of emergencies or short-term financial needs without completely surrendering the policy.

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Features of ULIP Plans

Lock-in Period: ULIPs come with a lock-in period of 5 years and may offer the potential for wealth creation when invested over a long period of time. Therefore, it can be said that the longer you stay invested in a ULIP, the more it may support your long-term investment goals.

48.3%

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Features of ULIP

Long-Term Wealth Creation: Since ULIPs have a lock-in period of 5 years, they encourage long-term investing. This disciplined investment approach helps build substantial wealth over time through the power of compounding and market growth.

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What is a ULIP Plan?

A ULIP is an insurance product that provides you with the double benefit of investment to achieve long-term wealth creation goal, and a life cover to secure your family’s future if there is an unfortunate event. The premium paid for ULIP is divided into two parts. One part of the premium is used for your life cover and the remaining sum is invested in the fund of your choice. In ULIP plans, you can invest your money in equity, debt or a combination of both funds depending on your risk appetite. The returns on the investment depend upon the performance of the funds.

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Features of ULIP

Dual Benefit of Insurance and Investment: ULIPs provide life insurance coverage along with the opportunity to grow your wealth . A part of your premium goes toward securing a life cover, while the rest is invested in market-linked instruments such as equity, debt, or hybrid funds.

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Benefits of a ULIP Plan

Withdrawal Benefits: This feature allows partial withdrawals from the ULIP investment after the mandatory lock-in period ends. It can be useful in situations where funds are required during the policy term, subject to policy conditions and applicable rules.

39.1%

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Features of ULIP

Partial Withdrawal Facility: ULIPs offer partial withdrawal options after a 5-year lock-in period. This helps you access funds in case of emergencies or short-term financial needs without completely surrendering the policy.

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Things to Keep in Mind Before Investing in a ULIP Plan

Flexibility: ULIP offers you the flexibility to switch between the funds . When buying a ULIP, you must consider the cost and ease of switching, as well as complimentary switches during the policy period.

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Top 5 Reasons to Choose ULIPs For Building a Retirement Corpus

Customisable Asset Allocation: ULIPs offer investments in multiple funds at the same time. These funds could be a mix of equity and debt (balanced funds) or either of the two. Changing your asset allocation or moving money from one type of fund to another does not change the tax status of the investment. Also, you can change your asset allocation anytime or even withdraw money partially after the lock-in period. So, if you want to manage your allocation yourself, you have full control of the ULIP.