FAQs of Taxation of ULIPs? 

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term Plan

Protect Your family’s financial future with Kotak e-Term Plan. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. Know more


Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

FAQs on Taxation of ULIPs

Find answers to popular and frequently asked questions related to taxation on Unit-Linked Insurance Plans. Know more about taxes on ULIPs.

  • Apr 29, 2022

ULIPs are a common mode of investment in today’s world, and they have completely revolutionized the way people think about investing.

With so many people leaning towards ULIP investments, it’s only reasonable to wonder what precisely a ULIP plan is and what benefits it provides.

To answer this primary ULIP question, ULIPs are among the safest and most efficient investment options for experienced and new investors.

It’s crucial to understand how ULIPs function since they feature one-of-a-kind investment structure and a 5-year statutory lock-in period. They’re a hybrid product that combines the benefits of both investment and insurance into one convenient bundle. A ULIP plan’s monthly contribution is split into two parts: the first half is used to pay for life insurance premiums, while the second half is used to invest in financial instruments such as shares, debt, or balanced funds. Finally, it’s worth mentioning that market conditions impact the performance of ULIP funds.

Now that you’ve understood ULIPs and their return benefits, it’s time to learn about the wonderful tax benefits and additional taxation for ULIP FAQ.

  • What are the ULIP Tax Benefits Under Section 80C?

Tax benefits under section 80C top the chart for ULIP FAQ. Under section 80C of the Income Tax Act, you can claim up to ₹1,50,000 from your ULIP plan premiums. However, the entire premium paid should be less than 10% of the amount guaranteed. For instance, if your ULIP’s total promised is ₹15 lakhs and the premium paid is less than ₹1.5 lakhs, you can claim the whole amount as a tax deduction under section 80C. However, if your premium is greater than 10%, such as ₹2 lakhs for an amount of ₹15 lakhs, your tax exemption will be limited to 10% or ₹1.5 lakhs.

  • What are the ULIP Tax Benefits Under Section 10(10D)?

Any payment made under ULIP, including any sum designated as a bonus on such insurance, is excluded under Section 10 (10D). However, no deduction shall be provided concerning the amount received under the policy if the payment for any year during the policy’s term surpasses 10% of the actual capital sum guaranteed. This is considered an ‘extra premium’ problem.

  • Do ULIPs also have GST Applicable?

There has been limited knowledge about the impact of the GST on financial investment instruments since its implementation, which is why it is also a crucial ULIP question to ask before purchasing. For example, the Unit Linked Insurance Plan (ULIP) has an 18% GST rate that applies to all cost items, including the insurance premium for the plan and fund management fees.

  • What is the Minimum Tax Exemption that can be Claimed Under ULIP?

This is also one of the most asked ULIP queries.

You can claim a tax deduction of 10% of the entire sum guaranteed, but the deduction will not exceed ₹1.5 lakh, even if your premiums are greater.

After going through all of the major ULIP FAQs and some of the most common ULIP queries, it is clear that this investment instrument is an outstanding choice that offers both big financial returns and substantial tax benefits.

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

Kotak e-Invest

Download Brochure


  • Return of Mortality Charges*$
  • Enhanced Protection
  • Multiple Plan Options
  • Zero Premium Allocation Charges
  • Tax Savings^

Ref. No. KLI/22-23/E-BB/521


- A Consumer Education Initiative series by Kotak Life

Similar Articles

How To Choose The Right Pension Plan?

Difference Between Unit-Linked Insurance Plans and Non-Linked Plans

Is ULIP a Complex Financial Product?

Which Is Better: ULIP or SIP?

Benefits Of Retirement & How Investments Can Help You Enjoy Them

What To Do With Your Retirement Accounts During An Employment Lapse?

Benefits of Early Retirement Plans

What Happens If I Stop Paying My ULIP Policy Premium After Paying the First Premium? Will I Still Get The Return?

Calculating a Retirement Corpus that can Support Your Lifestyle

What are the Charges Levied on ULIP?

Advantages of Pension Schemes and Retirement Plans

The Significance of Number 8,000 in Retirement Planning

Importance of financial Planning for Retirement

Is it Advisable to Withdraw the ULIP Insurance Policy After 5 Years?

Why Should Retirement Planning Be on Top of Your Priority List?

Types of Annuity Plan | Annuity Definition - Meaning & Key Benefits

Top 4 Mistakes To Avoid While Planning For Your Retirement

Can I Surrender My ULIP Policy after 2 Years?

What are the Instruments Available for Building a Retirement Corpus?

Retirement Planning - How To Calculate Your Retirement Premium in India?

Which Pension Plan Suits You best?

Top 6 Flexible Benefits That ULIPs Offer

Is it Suggestible to Take a ULIP Plan Linked with a Term Plan?

Can NRIs Invest in ULIP Plans Offered in India?

What Happens to ULIP Premiums Paid if the Market Crashes?

How Can I Achieve My Wealth Goal with ULIP Investment?

NPS for Housewife

Is ULIP Better Than FD?

Demystifying the Retirement Planning Process

What is an Annuity Plan, and How Does Annuity Plan Work?

What are the 4 Financial Phases of Retirement? How to Budget For Each One?

7 Secrets that can Make Your Post-Retirement Phase Prosperous

5 Reasons to Buy ULIP for a Secured Financial Future

Meaning of Sum Assured in a ULIP

What are the Advantages and Disadvantages of ULIP?

How Much Corpus Does One Need for Retirement?

How Do Annuity Options Work In NPS

How Does NPS Work?

Retirement Planning for Millennials

How Has NPS Performed in Comparison with Other Instruments?

What are the Chances of Losing all my Money in ULIP and How Much Return Should I Expect?

How to Win at Retirement Savings?

Is the ULIP Policy Surrender Value Taxable?

What is Partial Withdrawal in ULIPs?

A Quick Guide to Retirement Plans

Save Early to Keep Living Your Dreams Post Retirement

What are the minimum and maximum investment in ULIP? Would the Whole Amount Insured in The ULIP Insurance be Invested in the Market?

What Are Superannuation Benefits?

What are ULIPs and their Types?

What are the Uses of ULIP?

8 Charges in ULIP That You Must Know

Retirement and Pension Plans in India- What are Your Options?

6 Signs That You Are Not Financially Ready For An Early Retirement

Top 6 Reasons Why You Should Get A Pension Plan

Do ULIPs Give Good Returns On Investments?

5 Notable Investment Options for Retirees

Do Pension Plans Allow any Death Benefits?

What is the difference between Life Insurance and ULIP?

Why You Should Invest In An Annuity Plan?

Retirement Planning Guide for Working Men and Women

What are the things to consider before buying ULIPs?

What Are Mortality Charges In ULIP?

Retirement: A New Start to Life!

Tips to invest your voluntary retirement scheme money

Ten Signs That You're Ready to Retire

How can NPS help you save tax?

Types of Pension Plans for Your Retirement

Is ULIP A Good Investment Option?

Why Should You Invest in NPS?

Different Types of Retirement Schemes

Benefits of Early Retirement Planning in India

How To Make Most of Your Money After Retirement?

Retirement planning with a systematic life insurance plan

Annuity Plan | How to Choose the Right Annuity Plan | Kotak Life

ULIP: Can You Surrender ULIPs or Withdraw Money from It?

ULIPs or Pension Plans – Which is a Better Retirement Plan?

What are the Benefits of ULIP - Explained

Important Questions To Ask Yourself Before Choosing A Good Retirement Plan

What tax benefits are there on saving for retirement?

How to Build a Tax-Free Pension Income for Retirement?

Top Investment Options for Retirement Planning

What is Lock-In Period in ULIPs?

5 Steps to Gift a Smart Retirement Plan to Your Parents

Are You Planning an Early Retirement? Here's Why Buying Annuity Plan Will Make Sense

What is a Retirement Plan - What are its Features?

Getting Close to Retirement? Six Key Retirement Planning Tips That Can Help You Retire

Understanding Annuity Plans

What is the Estimated Return Percentage on ULIP? Do Investors Get Compound Interest?

Single Premium ULIP or a PPF - Which One is Better?

Why ULIP Should Be a Part of Your Investment Portfolio?

Know Why You Should Stay Invested in Your ULIP Plan

Inflation: A Key Factor to Consider into Retirement Planning

Worried About Running Out of Money in Retirement? 4 Tips to Avoid This Crisis

How To Calculate The Present Value And Future Value Of Annuities?

What is the Minimum Lock-in Period for ULIP?

Different Types of ULIP Investments in India

5 Common ULIP Myths That You Should Stop Believing

Is it possible to live a financially independent life, even after you retire?

What is a Defined Benefit Plan and How it Works?

Here's What Retirement Would Look Like 30 Years From Now

What is Premium Redirection in ULIPs Plans | ULIP Insurance Plans | Kotak Life Insurance

What Are Retirement Pension Plans?

5 Reasons Why ULIP Plans are One of The Best Retirement Planning Instruments

What are the Rules for Exit From NPS?

ULIP Plan or Traditional Insurance Plans - Which is better?

At What Age Should You Start Your Retirement Planning?

5 Retirement Planning Tips for a Financially Controlled Post-Employment Life

Pros and Cons of Retirement Annuities

Types of Retirement Plans

What is NAV in ULIP, and How is it calculated?

Who Gets the Benefit After the Maturity of ULIP: The Proposer or The Life Insured?

How Quickly is Fund Switch Effected in ULIPs? Is it Done the Same Day or After a Particular Number of Days?

Does Having Both ULIP Plan and Other Health Insurance Plan Make Sense?

Retirement Planning Guide: These 5 Steps Will Help You Towards a Safe, Secure and Fun Retirement

10 Steps to Figure Out How Much Money You Will Need For Your Post Retirement Plans

How Safe is it to Invest in ULIP plans?

How Does ULIP Work in India?

What is Fund Value in ULIP?

Importance of Retirement Planning

How Can ULIPs Help You Plan for Your Child's Future?

How To Keep Your Retirement Accounts from Being Hacked?

Why Should You start Retirement Planning as soon as you start a job?

What is the Difference Between EPF, VPF, and PPF? What are Their Tax Benefits?

What are the Differences Between ELSS ULIP and Mutual Funds?

Un-Retirement - Are You Ready For It?

Retirement Planning at 50? You Are Still Good to Go

ULIP Tax Benefits: यहां निवेश करने पर मिलते हैं 5 बड़े फायदे

Give Your Retirement Savings A Booster-Shot with Annuities

Is It Worth Buying ULIP Plans For 10 Years?

Terminologies You Should Understand About Retirement Plans

How Does Pension Plans in India Works?

Is ULIP a Good Option for People Above 60?

Looking for Ways to Earn Lifetime Income in Retirement? Here Are 6 of the Top Options

How has ULIP Grown Over the Last 3 years?

ELSS vs ULIP: Which is a Better Investment?

यूलिप के 8 शुल्क

What is the Death Claim Payable in the Case of ULIP?

How should one decide on fund allocation within NPS?

Long Term Investment Guide for Your Retirement

A Beginner's Guide to Understanding 401k Retirement Plan

Saving for approaching retirement with retirement insurance

Best Insurance Plans for a Guaranteed Monthly Income After Retirement!

Invest for your second innings with a guaranteed savings plan

Top 4 Myths About ULIP Investments You Should Know

What are the Maturity Benefits in a ULIP Plan: Fund Value Sum Assured or Only Fund Value?

10 Steps to Figure Out How Much Money You Will Need After You Retire

Are Annuities Great For Early Retirement?

What is ULIP and Its Benefits?