Future Generali

How ULIPs provide the joint benefit of insurance and capital appreciation

A Unit Linked Insurance Plan is a plan that provides both insurance and investment. The goal is to provide life cover while the rest is invested by your insurance company into debt or equity or combination fund. 

What are the different types of ULIPs? 

ParameterType of ULIP
Funds invested in Equity Funds, Balanced Funds, Debt Funds 
End-use  Retirement Planning, Child Education, Wealth Creation
Death benefit  Type 1 ULIP, Type 2 ULIP

What is the sum assured for ULIP plans?
One of the advantages of ULIP plans is that you can choose your sum assured at the beginning of the policy, and even increase it later in some cases. This can allow you to tailor the policy to your life-stage. For instance, as an unmarried individual, your requirement may be different from the time when you are married and have two children. 

What is the maturity benefit of a ULIP?
If the policyholder survives the entire term of the policy, they earn a maturity payout equal to the fund value.

What kind of death benefit is provided by ULIP plans?

  • Type 1 ULIP: The premium amount is relatively lower. On the death of the insured, the beneficiary receives either the fund value or the sum assured - whichever is higher.
  • Type 2 ULIP: The premium amount is higher. Upon the death of the insured, the beneficiary receives fund value+Sum Assured.

What instruments do ULIPs make investments in?
ULIPs invest in debt, equity, or balanced funds as per invertor’s risk appetite and your long-term goals. 

Can you switch your investments?
This is one of the most significant advantages of ULIP plans. You can switch your funds during the policy term. Usually, 4 switches are allowed in a year free of cost. Many investors choose to switch between funds depending on their age/life-stage. For instance, investors approaching retirement may choose a higher allocation towards lower-risk debt funds, while younger individuals in their late 20s may choose a higher allocation towards equity-focused funds. 

How do you check the performance of your funds?
Your fund is divided into units and the per-unit value of a fund is called NAV. The company publishes daily NAV updates which tell about the performance of your fund. 

How do you check the performance of your funds?

  • ULIP premiums are tax-deductible under Section 80C.
  • The maturity payout is also exempted under Section 10(10D). 
  • The maturity payout is also exempted under Section 10(10D). 
  • ⦁ They are exempted from Long Term Capital Gains tax, being one of the few market-linked instruments to remain outside the ambit of LTCG tax.
  • ⦁ They make excellent investments for financial goals like education, marriage, etc. as money gets compounded and is not taxed. 
/*Defer Offscreen Images*/ /*Defer Offscreen Images*/