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In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Kotak e-Invest
Features
Ref. No. KLI/22-23/E-BB/492
A maturity benefit of ULIP is the amount offered by the insurer to the policyholder if the policyholder survives beyond the maturity period of the policy. know about sum assured and fund value.
We all know that getting life insurance is the best and most reliable way to secure and provide protection for our loved ones’ after you. In case you survive the policy’s term, you are eligible for a maturity benefit equal to all premiums paid with most of the policies. But what if we told you there was a way to invest that included the benefits of both life insurance and market-based investing strategies all in one? Isn’t this too good to be true? Such policies are called ULIP.
A Unit Linked Insurance Plan (ULIP) is a type of insurance with a 5-year lock-in period that integrates insurance and investment into one convenient bundle. The goal of ULIP is to provide both insurance coverage and wealth accumulation, with the insurance company investing a chunk of money in the insurance policy and the rest in a fund that is based on stocks, debt, or both and matches your long-term goals. Retirement planning, children’s education, or any other big event for which you may save are examples of these aspirations.
Since ULIPs are hybrid plans, they provide both sum assured and fund value benefits. Assuming you survive the ULIP’s final term, you can wonder what you’d receive between the two? Let’s take a closer look at the difference between the amount assured and fund value to have a better understanding of this.
In a Unit Linked Insurance Plan, the sum assured refers to the amount that the insurer pays to the policyholder’s loved ones if the policyholder dies during the policy’s term. In case of the insured event, it is the sum promised by the insurer to the policyholder’s beneficiaries. This amount practically promises the policyholder and their family that, in the case of a catastrophic catastrophe, the surviving relatives will receive a sum equivalent to the total guaranteed.
When you buy ULIP, you get a certain number of units in the fund. The ULIP fund performance or fund value is equivalent to the combined total value of the funds in your holdings. As a result, the returns you receive from your ULIP — that is, the fund value at maturity – are referred to as the fund value. A ULIP’s fund value is simple to determine. It’s calculated by multiplying the NAV of each unit in the fund on every given day by the number of units you own.
Moving on to the maturity benefits of ULIPs - they differ from traditional insurance policies in a few ways. The policy is deemed to have matured if you, the policyholder, live to see the end of the ULIP’s term, and the fund value is paid out to the policyholder upon maturity.
Until Budget 2021, the advantages on ULIP maturity were completely tax-free if certain requirements were met, as outlined in Section 10 (10D) of the Income Tax Act of 1961. As a result, now that we’re on the other side of the FY22 budget, the taxability of ULIP benefits based on maturity can be separated into two groups.
It is vital that you compare all of the plans and select the one that best meets your needs!
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Kotak e-Invest
Features
Ref. No. KLI/22-23/E-BB/521
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
