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What are the Benefits of ULIP - Explained

What are the Benefits of ULIP - Explained
  • 14th Apr 2022 |
  • 2,796

Investing money for securing your future or planning something in the future is becoming a norm now. But at the same time investing in the right place can be a challenge for many. There are so many investment options and opportunities available today that it is quite tough to pick the right one for yourself. The main goal behind picking up the right investment plan is to ensure that the returns match your future financial needs, be it short-term or long-term financial goals.

ULIP is one of the popular investment plan among investors these days. Being a modern investment tool, it allows investors to diversify their portfolio unlike traditional investment options. In addition to the ULIP benefits, you also get the option to invest your money in the market. Not only this, the ULIP tax benefits serve as icing on the cake. ULIP tax benefits are uniform and regularized by the government during the Budget 2021 session. Thus, you can avail the ULIP tax benefits, irrespective of the ULIP plan you opt for.

Unit Linked Insurance Plans - Benefits of investing in ULIPs

Just don’t already make the decision. Find the right information about ULIPs, advantages and disadvantages of it and then make an informed decision.

In this article will briefly discuss ULIP benefits, benefits of ULIP over mutual funds, and ULIP insurance benefits.

Top 5 Unit Linked Insurance Plan(ULIP) Benefits

1. Flexibility and Diversity

When an investor opts for a ULIP policy, he has a whole host of high-risk, medium-risk, and low-risk fund options to choose from under the same plan. The policyholder can choose as per their risk-taking appetite.

In addition to this, you also get ULIP insurance benefits. One gets to flexibly choose premiums based on their financial needs or the sum assured. Moreover, if you want to add more to your policy above your premium by opting for ULIP top-up option.

So, in case you see a good investment opportunity, or you earned a bonus that you want to invest in, then ULIP insurance benefits allow you to do that. Also, with ULIP, you get to have market-linked financial growth without directly investing in the stock markets and get a life cover ULIP benefit.

2. Transparency

When we talk about the top benefits of Unit Linked Insurance Plans(ULIP), transparency is an important one. ULIP plans allow you to have a transparent investment scheme. When opting for ULIP, the policyholder is made aware of the complete charge structure, the investment value, return rate expectations, and other important details for the complete policy tenure.

This is important because it is your right as an investor and a great move to understand all the important details about a policy before putting your hard-earned money into it.

3. Partial Withdrawal

Liquidity is a major factor that decides whether a person will invest in a financial scheme/policy/plan or not. When you opt for ULIP, you can make a partial withdrawal once the lock-in period is over.

4. Tax benefits of unit linked insurance policy

ULIP plans tax benefits are something that attracts many investors towards it. According to the IT Act Section 80C and Section 10 (10D), you can easily take ULIP plans tax benefits. The premiums of up to ₹1.5 lakhs/annum are exempted from tax, and the maturity amount is also exempted from tax

However, to prevent the misuse of ULIP, the government brought some changes to higher investment in ULIPs. ULIP has better tax benefits than mutual funds as mutual funds qualify for exemption under the sections mentioned above in the IT Act.

5. Great disciplined long-term savings tool

Honestly, ULIPs serve as a great long-term investment tool that helps you in creating good savings in the long term. Not only that, it allows you to keep up pace with the market growth and inflation as a part of your premium is invested in market funds.

You can avail these benefits and many others if you conduct thorough research and invest wisely in the right funds under a ULIP plan.

Kotak e-Term Plan


  • Nominal Cost
  • Multiple Plan Options
  • Flexible Payout Options
  • Critical Illness Rider
  • Tax Savings
  • Long term Coverage

Ref. No. KLI/22-23/E-BB/492


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