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Kotak e-Term Plan is a pure term plan that provides a high level of protection to your loved ones in your absence.
Kotak e-Invest is a comprehensive Unit Linked Life Insurance Plan that can be customized as per your goals and needs - be it protection; investment; financial security for child or retirement planning.
Kotak Guaranteed Savings Plan is a savings and protection plan that helps you achieve long-term financial goals and insurance cover against any eventuality.
Kotak Lifetime Income Plan gives you the assurance of your income continuing throughout your life and in your absence throughout the lifetime of your spouse!
The Kotak Health Shield Plan helps secure your finances in times of sudden medical expenses related to illness such as Cardiac, Liver, Neuro and Cancer (all early and major stages of illness /conditions of Cancer); along with offering protection for Personal Accident - in case of accidental death or disability.
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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, a ULIP is a market-linked plan that offers the opportunity for wealth creation along with insurance and superior tax-benefits.
Here are 5 tax benefits of ULIPs that you should know:
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 to 10%. So for instance, if the premium paid by you 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.
2. A 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 the time of maturity. This payout is exempted from tax under Section 10(10) D of the Income Tax Act, 1961. Here too, 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 not only helps in avoiding tax but also 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 nominees/ 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./p>
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.
If you are looking for life protection, high returns, and the flexibility to choose investment strategies,you can invest in Wealth Optima ULIP
Kotak Wealth Optima Plan offers benefits, such as:
Kotak accidental death benefit
Kotak permanent disability benefit
To sum it up
A 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 ample tax benefits.
- A Consumer Education Initiative series by Kotak Life