Kotak Life

Buy a Life Insurance Plan in a few clicks


Now you can buy life insurance plan online.

Kotak e-Term Plan

Kotak e-Term Plan provides a high level of protection to your loved ones in your absence. Know more

Kotak Guaranteed Savings Plan

Kotak Guaranteed Savings Plan is a savings and protection plan that helps you achieve long-term financial goals and provides an insurance cover against any eventuality. Know more

Kotak E-Invest

Kotak e-Invest plan is a complete Unit-Linked Insurance Plan that can be customized as per your goals and needs. Know more

Kotak Health Shield

Kotak Health Shield Plan helps secure your finances in sudden medical expenses such as Cardiac, Liver, Neuro, and Cancer (all early and significant illness stages/conditions of cancer), along with offering protection for personal accidents - in case of accidental death or disability. Know more

Kotak Lifetime Income Plan

Kotak Lifetime Income Plan gives you the security of your income continuing throughout your life and in your absence throughout your spouse's lifetime! Know more

Why are ULIPs One of the Best Tax Saving Instruments?

Why are ULIPs One of the Best Tax Saving Instruments?
  • 20th Jun 2022 |
  • 1,723

A Unit-Linked Insurance Plan, more commonly known as a ULIP, is a life insurance product. Compared to traditional life insurance tools, such as term insurance plans that offer only life insurance protection, or high-risk investment avenues like mutual funds that provide only the opportunity to create wealth, ULIP is a market-linked plan that offers the opportunity for wealth creation along with insurance and superior tax-benefits.

Moreover, ULIP is a life insurance product that can be considered more reliable. It is one of the best wealth creation tools for long-term investment, given the benefits of ULIP taxation, protection & security, and the returns all in one insurance product. Not only that, it gives you options to invest while offering the benefit of life insurance alongside. But, the ULIPs tax benefits are a key feature, which makes it a special one.

Among various investor-friendly features that ULIPs offer, a very interesting and unique proposition is the ability to invest a portion of the policy premium in a debt-equity mix that too in varying amounts. This enables the policyholder to make inter-fund transfers through the ULIPs fund switching capability without additional ULIPs tax liabilities. This means that you can invest your money into debts or equities in any proportion you wish to and then manipulate the investment amount using the ULIPs switch feature.

5 Tax Benefits of ULIPs

ULIP tax benefits are a feature that makes them the best financial tool for long-term investment. Although there are several ULIP taxation benefits that one can consider useful, some of these are what make ULIP the best tax saving plan for modern investors. From offering tax benefits on all the three stages of an insurance policy, i.e. premium, proceeds, and returns, to offering additional tax benefits like tax-free switches and premium top-ups, ULIP taxation is a great way to save your tax without much hassle. Moreover, you can gain access to valuable tax-free services, which otherwise would have been heavy on your pockets.

1. The premiums paid towards a ULIP are eligible for tax deductions

The premium paid towards a ULIP qualifies for a tax deduction of up to ₹1,50,000 under Section 80C of the Income Tax Act, 1961. However, this deduction is applicable only if the premium is less than 10% of the sum assured of the plan. For premiums beyond 10%, the deduction amount is still capped at 10%. So, for instance, if the premium you pay under a policy is ₹3,00,000 for a sum assured of ₹15,00,000, the deduction amount will be limited to ₹1,50,000. Additionally, you must note that, as there is a lock-in period of 5-years on ULIP policies, you will be directly saving taxes through ULIP tax exemption benefits.

View Plans

2. ULIP offers tax benefits on maturity

Maturity refers to the completion of your policy. Under a ULIP, you get the sum assured or the entire value of the unit-linked investments (whichever is higher) at maturity. This payout is exempted from tax under Section 10(10D) of the Income Tax Act, 1961. The premium amount must be limited to 10% of the sum assured value.

3. You can make tax-free partial withdrawals under a ULIP

You can make tax-free partial withdrawals after completing the mandatory lock-in period of 5 years of your ULIP. However, the withdrawal amount cannot exceed 20% of the total sum assured value. This helps avoid tax and allows you to make partial withdrawals for different financial needs, such as marriage, a child’s education, retirement, home purchase, etc. Hence, you have the freedom to withdraw funds from time to time.

4. The death benefit payable under a ULIP is exempt from tax

The death benefit of a ULIP that is payable to your nominee/family members is not taxable. This benefit includes the total sum assured and the returns generated through market-linked investments under the plan.

5. Any top-ups made under an existing ULIP plan are eligible for tax deductions

With a ULIP, you can make top-up investments or cash additions after the 5-year lock-in period. These top-ups are eligible for tax deductions under Section 80C and Section 10(10) D of the Income Tax Act, 1961. However, the premium amount must not exceed 10% of the sum assured.


ULIP is a perfect bridge between high-risk assets like mutual funds and simple life insurance protection products like pure term plans. It gives you high returns, life coverage, and the ULIP tax benefit. Moreover, ULIP is a highly flexible modern insurance plan where you are in control of your investment and funds. You are free to invest in the market as per your risk appetite and, at the same time, have the security of insurance. Additionally, the ULIPs tax benefits are something that, as an investor, you cannot ignore.

However, you must ensure that you have analyzed your long-term financial goals and invest accordingly into ULIP. Also, you must understand that the longer you stay invested in ULIP, the higher returns you get. So if you are planning to save for a house, say 15 years from now, you must start investing in ULIP now.

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


Browse our library of resources

- A Consumer Education Initiative series by Kotak Life

Similar Articles

Term Insurance: Smokers vs Non-Smokers

Is it a Good Time to Buy Term Insurance During the COVID-19 Pandemic?

Term Insurance: What Happens When You Don’t Pay Your Premiums?

Why Should New Parents Buy Term Life Insurance?

What Is the Correct Age to Buy Term Insurance?

Online vs Offline Term Insurance: Which Is The Better Option To Buy

What Should Be The Duration Of Your Term Plan in India?

10-Year Term Life Insurance Policy - Explained in Detail

Is Group Term Life Insurance Provided By Employer Sufficient?

How To Choose the Right Sum Assured Under a Term Plan?

Which Term Insurance to Choose: Lump Sum or Staggered Pay-out Plan?

4 Reasons Why You Need Critical Illness Cover

6 Types of Death not covered in Term Insurance Plan

What All Documents Required For Term Insurance In India?

Insuring yourself against Ill Health with a Critical Illness Rider

Why Buying a Term Plan Is Smarter Than Traditional Life Insurance Products

5 Reasons to Buy Term Insurance When You are in Your 30s

Calculating Term Insurance Premium

Term Insurance: Most Common Term Insurance Myths Explained | Kotak Life

Is term Insurance Needed for People With No Dependents?

Term Insurance Age Limit – Term Plan for All Age Groups

What is a short term insurance policy?

What is Critical Illness Policy

Can Senior Citizens Avail Term Insurance?

5 Term Insurance Benefits for Single Women

How Much Term Life Insurance Cover Do I Need in India?

Why Term Insurance Is Better Than ULIP?

Endowment Plans vs Term Plans: Understanding the difference

Does Your Term Insurance Plan Cover Death Due to COVID-19?

Term Insurance With Riders In India

4 Methods to Calculate How Much Term Insurance You Need

Why Term Insurance Is Important in times of COVID-19?

Key IRDAI Regulations That Changed Face Of Term Insurance Industry In 2020

Tax Benefits of Term Insurance in India

How Does Term Life Insurance Work? Learn the Benefits

Insuring Against Disability With Disability Insurance Rider

5 Benefits of Early Retirement Planning

Why Should You Not Take A Term Plan Without Medical Test in India?

4 Things To Expect From Your Term Insurance Plan in India

Is Life Insurance Investment Worthy Enough

Can I Make Changes to My Term Insurance Policy Post Purchase?

All About Term Insurance Inbuilt Coverage

How Much Cover Should I Take In A Term Plan?

Comparing Term Plans – What Should You Look Out For

Advantages & Disadvantages of Term Insurance in India

Can Term Insurance Plans Be Purchased As A Gift?

Know How to Invest at Every Age for Larger Returns

How to Identify Term Insurance According to Your Needs?

Why Premium Amount for Term Insurance is So Low?

9 Ways to Help Family Members in Financial Trouble

Increasing Term Insurance and Riders

Is There Any Tax Benefit on Term Insurance?

How to Ensure That Your Term Insurance Claims Are Never Rejected?

What is the Right Term Period For Term Insurance Policy? Here's How You Should Choose!

Different Types of Premium in Term Insurance

What Happens to Term Insurance Plan With No Beneficiary - Kotak Life

Why is it important to buy term insurance plan?

Can I Get Term Insurance on Behalf of My Spouse?

How To Choose the Right Term Insurance Plan?

Reasons You Need Term Insurance Plan as a Self-Employed Person

What is Form 16, Form 16 part A, Form 16 part B, Information Required and FAQs

Eligibility Criteria for Buying Term Insurance in India

Term Insurance Basics You Should Know

Term Insurance – Why You Must Include In Your Financial Planning?

टर्म इंश्योरेंस क्या है? टर्म इंश्योरेंस का मतलब

Steps on How to Buy Term Insurance Online

What Are Insurance Riders and How to Choose Them in a Term Plan?

What Types of Deaths Are Covered in a Term Insurance Plan?

What are the Documents Required for Term Insurance Plan?

Does Term Insurance Cover Accidental Death?

How Not To Get Your Term Insurance Claim Rejected

How To Calculate The Amount Of Term Life Insurance You Need?

Should Youngsters, Working Couples Buy Term Insurance Plans?

Choosing Riders for Insurance Plans

How Much Term Insurance Do I Need

Cost of Term Insurance Likely to Increase Soon

What is Term Insurance - A Complete Guide

Can You Increase Your Term Insurance Cover?

Is ₹1 Crore Term Insurance Good Enough Cover?

Protection for your family

How Does A Term Life Insurance Work in India?

Why does every working woman need life insurance?

Everything About Claim Settlement Ratio for Term Insurance

Best Investment Plans for Children - Secure Your Child's Future

Why Buy Term Insurance Even at Rising Rates?

Why should single women purchase term life insurance?

Why Should You Add a Rider to a Term Insurance Plan?

Can A Housewife Buy a Term Insurance Plan - All You Need to Know

Is a Term Insurance Policy Portable?

Planning For Son or Daughter's Wedding

All you need to Know about Term Insurance Plans for Housewives

Tips to Choose the Right Term Period for Term Insurance Plan

What are incremental term insurance plans?

Should You Have Multiple Term Life Insurance Policies?

Busting Myths and Facts About Term Insurance Policies

6 Reasons That Make Term Insurance a Must Buy

How to Surrender Term Life Insurance When you have No Liabilities

8 Factors to consider before choosing a Critical Illness Insurance

Different Types of Protection Plans

Importance of Term Insurance at Every Stage of Your Life

Term Plan with Spouse Cover

Why Term Plan Should Be The First Step To Securing Your Future?

Difference between Term Insurance and Life Insurance

When is the Right Time to Buy Term Life Insurance Policy for Yourself?

Buying A Term Insurance? Don't Ignore the Claims Settlement Ratio

Why 1 Cr Term Plan Is Necessary For Family?

Insurance Policy for Housewife In India

What Is a Passive Income? Why Should You Use It to Buy a Term Plan?

Is It Good To Buy A Term Insurance Plan In 2022?

Term Vs. Whole Life Insurance: Which One You Should Buy in India?

Planning For Children's Future

What Should You opt for - Limited or Premium Pay?

Key Differences Between Term Insurance, ULIPs, And Health Insurance

How to Compare Term Insurance Online

Are The Add-ons and Optional Features of Term Insurance Plans Actually Beneficial?

Insuring Protection Against Death With Death Insurance Rider

What is Insurance Premium - A Detailed Guide

Make Your Online Term Plan Your Familys Monthly Payout

Top 3 Reasons Why You Should Buy A Term Plan Now

How to Buy 1 Crore Life Insurance Policy Without Medical Test

Which Death Type Does Your Term Plan Not Cover?

Buying A Term Insurance Plan? Take These Factors into Account

Understanding Term Insurance Riders

Do I Need to Give a Medical Test for Term Insurance in India?

Do You Need Term Insurance Cover After Retirement?

Gift Your Father A Term Insurance Plan This Father's Day

Ideal Features of a Suitable Term Plan - Act Now for a Stress-free Future

Is Term Life Insurance Plan an Investment or Expense?

What Happens if you Hide Facts in your Term Insurance?

5 Things To Consider While Buying Term Insurance Plan

What Is a Renewable Term Insurance Policy?

Why Should You Buy Term Insurance in 2022?

How To Change The Nominee in Term Insurance?

What is a Joint Term Insurance Plan? Key Benefits of Joint Term Plan

Insuring Against Accidents with an Accidental Death Insurance Rider

9 Most Frequently Asked Questions on Term Insurance

Term Plans are Definitely Cheaper than You Think!

Make Your Online Term Plan Your Family's Monthly Pay Cheque

Term Insurance Calculator - Everythng You Need To Know

8 Benefits of Term Insurance You Should Know

Why Buy Term Insurance Plan With a High Cover?

Why Surrendering Your Term Plan Policy In The Final Phase Maybe A Bad Idea?

8 Things To Do After Buying Term Insurance

Should You Buy a Term Plan After 40?

Do Beneficiaries Pay Taxes on Term Insurance?

Can I Buy Term Insurance for a COVID-19 Patient?

What Are the Best Term Insurance Plans for Planning Retirement?

Individual Life Insurance vs. Group Term Life Insurance

Can Non-Resident Indians (NRIs) Buy Term Insurance In India?

Ensure Protection Against Death, Disease & Disability With Life Insurance

Why Married People Should Buy Term Insurance Under MWP Act?

Term Insurance Plans and Policies for Smokers

Advantages of Buying Term Insurance in Your 50s

Can I Extend the Tenure of My Term Insurance Plan?

Term Life Insurance Plan for Smokers vs Non-Smokers

Term Insurance with Critical Illness

While Buying Term Insurance Compare Features, Not Just Premiums