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Planning To Purchase An Unit Linked Insurance Plan? Here Are a Few Things You Should Know!

Published On Feb 11, 2022 10:10 AM By InsuranceDekho

A unit-linked insurance product (ULIP) is a form of insurance that combines investment and insurance into one package. A Unit Linked Insurance Plan, or ULIP, combines the advantages of wealth accumulation with the security of your family's future. ULIPs allow you to develop your money using traditional wealth-building strategies while simultaneously offering full life insurance cover. As a consequence, purchasing a ULIP may offer the best protection against life's volatility. Depending on your risk tolerance, ULIPs allow you to invest in either stocks or debt funds, with investment returns decided by the performance of the funds. While the maturity benefit is susceptible to market risks, a ULIP's insurance coverage is not. A Unit Linked Insurance Plan (ULIP) is a type of Life Insurance policy that combines the benefits of investing with the benefits of insurance. ULIPs allow you to save money while simultaneously offering life insurance coverage. ULIPs are investment instruments in which you may put your money to work (equity, debt, or a combination of both). The returns on your investment are determined by the performance of the funds you pick.

Planning To Purchase An Unit Linked Insurance Plan? Here Are a Few Things You Should Know!

Things Need to Know About Unit Linked Insurance Plan

A few things to know about ULIPs are as follows:

Added Value

ULIPs offer both life insurance and the opportunity to develop wealth. By investing in ULIPs, you can get market-linked returns. Because of this dual benefit, ULIPs are used as a complete financial tool.

Option of Picking Your own Investment Strategy

1. Depending on your risk tolerance, you may invest your money in a variety of ways.
2. Equity funds are a good option for investors who are ready to face a lot of risks.
3. Moderate risk-takers could invest using a balanced strategy.
4. Debt funds are a fantastic choice for investors who want to take a low-risk approach.
5. Market conditions allow an investor to make modifications to his portfolio.

Taxation's Advantages

Under section 80C, premiums paid towards a ULIP are eligible for a tax deduction of up to Rs 1,50,000. If certain circumstances are satisfied under Section 10(10D) of the Internal Revenue Code, the policy's returns are also eligible for an income tax maturity benefit. Note that ULIPs with yearly premiums above Rs. 2.5 lakh issued on or after February 1, 2021, would not be exempt under Section 10 of the Act. 


Switching is the process of moving money from one mutual fund to another. If your investment strategy changes throughout the plan's term, you can use the switching facility to change your investment funds for free up to a specified amount in one policy year.

Withdrawals in Parts

The option to make partial withdrawals is a characteristic of ULIPs that is not available in other insurance policies. This withdrawal can be done at any moment after the first five years of the plan, and a limited number of withdrawals are also free.

Take Away

India has advanced from actually trading bonds under a tree to providing a wide choice of financial instruments that allow a person to invest his or her earnings according to his or her requirements, boundaries, risk appetite, and financial objectives. ULIPs, on the other hand, are investments with the dual objective of providing insurance and making a profit.

Also read: How Is Premium Utilised Under ULIPs?

Ways To Maximise ULIP Returns

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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