Close
Close

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak Guaranteed Fortune Builder

A plan that offers guaranteed income for your future goals. Know more

Kotak e-Term

Protect your family's financial future. 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 life cover. Know more

Kotak e-Invest

Insurance and Investment in one plan. Know more

Kotak Lifetime Income Plan

Retirement years are the golden years of life. Know more

Close

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.

Why Should I Invest in ULIP?

The earnings from a debt fund in ULIP is tax-free for investors, setting it apart from all other market-related investments. Read more to know about why should you invest in ULIP?

  • Mar 02, 2022
  • 2,282 Views

Investment options have gotten people’s attention like never before in this day and age of financial planning. While some people choose to adhere to traditional investing instruments, others appear eager to try newer schemes. One such popular plan is ULIP. It stands for Unit-Linked Insurance Plans.

How Does ULIP Work?

Depending on your risk tolerance, ULIPs provide you with the option to invest your money in a variety of equities or debt funds. The returns are tax-free under Section 10(10D) of the Income Tax Act, 1961 even though the premiums you pay are deductible from your taxable income under Section 80C#. This is how ULIP functions.

  • You must choose the level of life insurance, premium amount, premium payment method, and policy term to match your goals for financial security and savings before you may participate in the capital market with ULIPs.
  • The choice of an upfront, lump sum payment or recurring payments on an annual, half-yearly, or monthly basis, as well as the frequency of the premium instalments, can be made at your convenience.
  • A portion of your premium provides you with a life insurance policy.
  • Depending on your selections, the remainder of your premium is invested in the stock market using equity, debt, or hybrid funds.
  • Equity invests your funds in stocks. Debt funds invest your money in bonds, treasury securities, and other safe investment vehicles.
  • The value of your coverage is determined by the capital put in these funds. Your possibilities of earning bigger returns increase as you invest over a longer period of time.
  • Your nominee will receive the sum assured in the event of an unfortunate event during the policy term to realise their dreams.

ULIP is a scheme that provides both insurance and ULIP benefits. In this plan, the payment is split into two parts:

One is used to provide life insurance. The other is used to invest money in market assets.

The earnings from even a debt fund in ULIP are tax-free in the hands of the investor, setting it apart from all other market-related investments. While everyone appears to be on the hunt for the best ULIP plan, it begs the issue of why one should invest in it. If you’re unsure whether or not you should put your hard-earned money into a ULIP plan, we’ve put up a list of advantages to help you make an informed decision.

Here's why you should invest in Unit-Linked Insurance Plans (ULIPs))

Optimise Your Growth

Investors can choose from several sources in ULIPs, such as debt funds, equity investments, and balanced funds. Depending on your risk tolerance, you can pick one of these options.

If you are a risk-taker, you can ensure higher returns by investing in equity funds. You can also invest in debt funds if you are risk-averse. Choosing between several funds depending on market conditions is a key advantage of ULIPs. As a consequence, you may be able to earn a higher return on your investment.

ULIP allow you to optimize your returns, and it is unlike any other investment plan where you can not only get insured but also optimize your returns based on market conditions.

Increased Returns

When compared to other investment options, ULIP investment returns offer a high potential for maximum financial benefits. These high results may be achieved due to the clear flexibility of equity and debt funds. Similarly, investing in ULIPs qualify you for certain prizes and incentives. Insurance firms give bonuses in the form of revenue multipliers or loyalty bonuses.

Tax Exemption for ULIP Investments Under 80C

ULIPs is subject to tax deductions under Section 80C of the Income Tax Act. Annually, an investor can receive up to ₹1,50,000 on ULIP investments. Likewise, under Section 10D of the Income Tax Act, the profits you get at the maturity of your ULIP insurance are tax-free. Furthermore, under Section 10 (10D) of the Income Tax Act, the sum received by the nominee upon the insured’s death is tax-free.

Riders Under ULIPs

ULIPs are one of the most effective market-linked investment solutions since they allow you to buy supplementary life insurance for your loved ones through rider options such as critical illness, accidental death, disability, etc., thereby ensuring that they are taken care of even after you are no longer there.

Things to Consider Before Buying ULIP

Several things should be considered when purchasing a unit-linked insurance plan. Some of them are as follows.

Assurance’s Reliability

Long-term investments, or ULIPs, are a wise choice. Determining whether the insurance provider can offer sufficient protection in the event of future threats or obligations is crucial. Additionally, the insurance provider will make market investments on your behalf. Therefore, before investing in a ULIP, look into the insurance company’s track record and customer testimonials.

Select the Maximum Sum Assured Option

A sum guaranteed is a lump-sum payment given to the policyholder’s nominee if the policyholder passes away unexpectedly during the ULIP’s validity period. When a ULIP is purchased, the sum insured is determined. You must select a maximum sum covered because this money will be utilised to support your family and loved ones after your passing. The insurance expert can provide you an example of the prospective premium payment and the fund value that has grown as a result of your ULIP investment. You can also calculate your refunds using an online ULIP calculator.

Keep a Close Eye on the Charges

A ULIP’s price varies depending on the insurance provider. The following are some of the most typical expenses related to ULIPs:

  • Administration fees for policies
  • Fees for premium allocations
  • Murder charges
  • Fees for Riders and Fund Administration

When is the Best Time to Invest in ULIPS?

When you are working toward your objectives, whatever they may be, and have a reliable income and few responsibilities, it is an excellent time to invest in ULIPs. You aren’t required to invest the same amount each year, and you can even change your premium allocation each year. You could select from a range of funds with different equity exposures based on your risk profile. Selecting a fund with a bigger equity exposure may be necessary if you want to achieve higher returns. You can also make use of the tax-saving options for ULIP premiums and maturity amounts under Sections 80 C and 10D of the IT Act if you are a salaried professional and even a mid-level executive at that.

Wrapping Up

Investors who formerly preferred to invest in FDs are gradually switching to mutual funds and insurance. A greater number of people are choosing ULIPs as a result of changes in investment patterns and the availability of tools that are linked to the market, such ULIPs. Every earner must typically have coverage for at least 10 years of income. Ten times the annual premium is offered as life insurance by ULIPs. The policyholder becomes immune to market volatility as a result. They provide transparency, appropriateness, safety, returns, liquidity, and safety. Choosing to invest in ULIPs is a prudent move.

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

Kotak e-Invest

Download Brochure

Features

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

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

T&C

- A Consumer Education Initiative series by Kotak Life

Similar Articles

Difference Between Passive and Active Investing

6 Important Tips to Maximize Your Gains with ULIP Investments

Know How to Invest at Every Age for Larger Returns

Creating a second source of income with life insurance

Understanding ULIP Risks: What are the Odds of Losing all my Money and Projected Returns?

उच्च रिटर्न प्राप्त करने के लिए सर्वश्रेष्ठ इन्वेस्टमेंट विकल्प

What are the Advantages and Disadvantages of ULIP?

How to Use Recurring Investment Strategies to Build Wealth?

यूलिप के फायदे और नुकसान क्या हैं?

Can ULIP Policy be Transferred?

Safe Investment Options with High Returns for FY 2018-19

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

Here's Whether You Should Link ULIP Plan with your Term Insurance

Is This The Right Time To Invest In ULIP? Why or Why Not?

How Much Wealth Can You Create from ULIP in 10 years?

ULIP NAV - Everything You Need to Know

Factors Affecting Share Prices In The Stock Market

What are Some of the Safest Investment Options in India?

What is Fund Switch in ULIP? And ULIP Fund Switching Techniques

Four Financial Lessons from The Vedas on Living Life to The Fullest

How to Apply for Death Claim Benefits in ULIPs - Kotak Life

Why Should You Build an Emergency Fund?

8 Charges in ULIP That You Must Know

Can ULIP Help in Achieving Short-Term Financial Goals?

Receiving regular payouts at various stages of life

How to Increase Net Worth Along with Family Protection

What is Compound Interest, And How Do I Calculate it?

Top 11 Investment Plans Available in India

First Job? Here are Some Tips on How to Manage Finances

Can NRIs Invest in ULIP Plans Offered in India?

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

5 Reasons to Have a Child Education Plan

8 Important Tips to Maximize Gains with ULIP Investments

Will AI be Your Future Financial Adviser? What Role Will Humans Play?

Tax-Deferred Savings Plan: Overview, Benefits, Works

What are loyalty additions, and how do they work in a ULIP?

Develop an investing plan

What are the Minimum and Maximum Investments in ULIP?

How to Calculate Your ULIP Returns?

ULIP Capital Gain Tax: Check Tax Norms for Capital Gain on ULIPs

Planning For Children's Future

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

Planning For Son or Daughter's Wedding

What is a Savings Plan and What are is Benefits?

Early Investing and the Power of Compounding

How Do One-Time Investment Plans Work?

How to Make Your Financial Portfolio?

Here's are the uses of ULIP your must be aware of

What's Better for Your Child's Education? Child Plans or Mutual Funds?

Why are ULIPs One of the Best Tax Saving Instruments?

Successful Financial Planning for Urban Women

How to Set Financial Goals for Your Future

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

How to Choose the Best ULIP Plans to Invest in 2022?

Will You Need to Withdraw or Surrender Money From ULIP

Investments Options to Buy a house in India

What is Partial Withdrawal in ULIPs?

5 Reasons to Buy ULIPS for a Financially Secured Future

What Is Social Impact Investing and How Does It Benefit Society?

What is SIP Calculator, and How it Works?

Do ULIPs Give Good Returns On Investments?

Long Term Savings Plan - Best Savings Investment Plans in India

How To Invest Money In ULIP?

How Increasing Your SIP Every Year Helps You Reach Your Financial Goal Sooner?

Can I Surrender My ULIP Policy after 2 Years?

ULIP vs FD - Which is Better and Why?

FAQs on Taxation of ULIPs

How has ULIP Grown Over the Last 3 years?

What are Fixed Maturity Plans and Why Should I Invest in Them?

How to Manage Your Portfolio Like a Professional?

How to Cancel ULIP Policy?

Planning Financial Goals and Objectives of Financial Planning

ULIPs Investment – A Boon or Bane?

How Is ULIP Different from Other Life Insurance Plans? Where Can I Invest - ELSS, ULIP, or PPF?

What is Money Management? Definition & Example

Can You Invest in Both Term Insurance and ULIP?

Unit-Linked Life Insurance (ULIPs) vs. Term Insurance

ULIPs: Suitable for all

Beginner's Guide to Wealth Creation: Meaning, Strategies, & Importance

Difference Between Linked and Non-Linked Insurance Plans

What are the things to consider before buying ULIPs?

Are Investment Returns Guaranteed in a ULIP?

What is the Time Value of Money (TVM)?

What is ULIP and Its Benefits?

What is ULIP Renewal?

ULIP policy: What happens when you stop paying ULIP policy premium during lock-in period

What is ULIP Plan, and How Does it Work?

Is ULIP A Good Investment Option?

यूलिप प्लान में परिपक्वता लाभ क्या हैं: फंड वैल्यू सम एश्योर्ड या ओनली फंड वैल्यू?

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

Rate of Interest on Different Investment Plans in India

Best Investment Options in India in 2022

What are the Best Investment Options For Females?

What are ULIPs and their Types?

Building wealth through regular investing

यूलिप और उनके प्रकार क्या हैं?

What are Financial Assets & their types?

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

What is a Child Money Back Plan, and How Does it Work?

How Can ELSS Funds Help You Save Tax & Create Wealth?

Investment Options for NRIs in India

Is ULIP a Complex Financial Product?

What is Direct Investment and its Types?

Here's Myths on Investments in ULIP Plans

Why is Portfolio Diversification Important? How to Diversify Your Portfolio?

Difference Between Guaranteed Savings Plan and ULIP

All you need to know about Fund Switching in ULIPs

Why ULIP is Better Investment for Long-Term Wealth Creation?

What are the Best Investment Options for Beginners or Amateur Investors in India?

Why ULIP Should Be a Part of Your Investment Portfolio?

Planning for Your Child's Higher Education? Explore These Investment Options

What is a Bond Fund and How It Works?

How to Start Saving Money in 10 Simple Ways?

Top 5 Investment Options in 2022 for Healthy Returns

Best Investment Plans For You To Invest In 2023

Are Money Back Policies Helpful? A Complete Guide

4 Rules To Keep In Mind To Secure Your Child’s Future Financially

How and when should you exit from bad-performing ULIP?

How Safe is it to Invest in ULIP plans?

ULIP Plans Riders You Should Know About

How to Plan your Investment to Achieve Periodic Financial Goals?

Here's Why it's a Good Time to Explore ULIPs as an Investment

What Is a Credit Score? Definition, Factors, and Ways to Raise It

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

Importance of Portfolio Management

ULIP Investment Benefits You Must Know

वित्तीय संपत्तियां और उनके प्रकार

ULIP Frequently Asked Questions (FAQ) - Kotak Life

How ULIPs can help you achieve your financial goals

How to Plan Your Child's Education - A Step-by-Step Guide

Is the surrender value of ULIP taxable?

Different Types of ULIP Investments in India

यूनिट लिंक्ड इंश्योरेंस प्लान में लॉयल्टी एडिशन कैसे काम करते हैं

Savings Plan for Grandchildren

What is Fund Value in ULIP?

Endowment Plan vs Fixed Deposit?

Are Gains from ULIP Sale Taxable?

Got a Salary Hike? Here’s How to Plan your investment further

Top 5 Principles That Need to be Followed for Wealth Creation

What is Mutual Funds? | How Mutual Funds Work, Definition

ULIP As An Investment Option For Senior Citizens

Do You Know the Difference Between Savings and Investment?

ULIP Plan as a Gift

How to Save Money from Salary?

5 Best Long Term Investments To Add To Your Portfolio in 2023

What are Index Funds, and How Do They Work?

How to Manage Inheritance Money?

Why Are ULIPs Called Flexible Investments?

Top ULIP Myths That You Must Stop Believing In

उच्च रिटर्न प्राप्त करने के लिए सर्वश्रेष्ठ इन्वेस्टमेंट विकल्प

ULIP Vs Life Insurance Plan Know the Difference

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

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

Asset Allocations in ULIP - Know the Top Benefits

How to Create Short-Term and Long-Term Wealth with ULIPs - Kotak Life

The lesser-known facts about ULIP policy that customers should be aware of?

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

Best One-Time Investment Plans in India

Learn About Safe Investments with High Returns in India

Top 10 Investment Strategies to Create Wealth

How Can ULIP Plan be as an Investment for Your Child

How is the Compound Annual Growth Rate (CAGR) Calculated in ULIP?

How To Track ULIP Performance?

Customising investments to manage your wealth

ULIP Investment Strategy: Top Tips to Improve Your ULIP Gains

यूलिप में 8 शुल्क जो आपको अवश्य जानना चाहिए

Which is Better – FD, Mutual Fund, SIP, or ULIP?

ULIP Plan or Traditional Insurance Plans - Which is better?

Which are the Best ULIP Plans in India for Children?

What Is Financial Planning?

What is Equity Mutual Funds: Meaning, Types & Benefits

What is Lock-In Period in ULIPs?

Balancing Investment Between Risk and Return on Investments

How to Fix the 9 Most Common Financial Problems Your Family is Facing

Best Investment Options to Cover Your Child's Education

What is Savings and the Importance of Saving Money

Can You Have ULIP Plan and Health Insurance Plan Both?

Why Do You Need A ULIP Plan - All You Need To Know

ULIP Benefits You Can Avail from Early Investing

Why Should You Invest in NPS?

What are the Best Short-Term Investment Plans with High Returns?

Does Rupee Cost Averaging Work In Unit-Linked Insurance Plans?

Difference Between ULIP and Endowment Plan?

How Much Wealth Can You Create From ULIP in 10 years?

Know Why You Should Stay Invested in Your ULIP Plan

How Can a Legal Nominee Claim ULIP Benefits are the Policyholder’s Death?

Benefits of ULIP as a Child Insurance Plan

ULIP Withdrawal Conditions - Before and After 5 years

यूलिप के फायदे (Benefits of ULIP in Hindi)

How to Build a Strong Financial Foundation For the Future?

What are the Best Investment Options for Students in India?

Learn About Safe Investments with High Returns in India

Corporate Bonds: Meaning, Types & Benefits

What are the Best Investment Options for Young Adults?

All you need to know about claiming maturity proceeds from Ulip

Is Life Insurance Investment Worthy Enough

Which is a Better Investment - Mutual Funds Or ULIP?