Know How Much Returns Your ULIP Investment Can Provide

Feb 07, 2018 | 2 years ago | Read Time: 2 minutes | By iKnowledge Team

“How can an insurance policy give returns?” asked Shubha, rather incredulously and slightly bemused. She thought her friend Ravi, a financial advisor, was merely taking the Mickey out of her.

But Ravi is right. Some plans actually do. And that too at an attractive rate!

Say hello to unit-linked insurance plans (ULIPs). These actually allow you to enjoy a life cover and the opportunity to earn market-linked returns.

The other benefits they bring to the table are:

  • Flexibility

Some ULIPs allow you to invest in funds as per your investment objective. Aegon Life offers the iMaximize plan which gives you the flexibility to choose from six funds. The iMaximize plan allows four switches in each policy year free of cost.

  • Encourage goal-based savings

ULIPs help you to make the investment as per your goals in life. As you can select the funds and switch them, you can plan for child education and retirement during your investment journey.

  • Offer tax benefits

You can claim a tax deduction for the premium amount of a ULIP plan. So, when you purchase a ULIP plan, you invest, insure and save tax as well.

You need to be aware of the tax benefit associated with ULIPs at different stages of the policy:

a) Tax benefits during investment

Money invested in ULIP can be claimed as a deduction under Section 80C of the Income Tax Act, 1961. The maximum deduction on the premium amount that is available under current tax laws is Rs 1.5 lakhs. The deduction can be availed when the premium is less than 10% of the sum assured.

b) Tax benefits at maturity

When the policy matures, the holder receives the maximum of the assured amount or the fund value. The assured amount is the guaranteed amount your family receives if you pass away. The fund value is the amount of money that is amassed via your investment option. The payout at the policy maturity is exempt from tax under Section 10 (10D) of the Income Tax Act.

The other stand-out points

  • Riders

Insurers do offer riders on their ULIP products. Riders are additional benefits for a slightly extra charge. Some insurers may offer it free of cost as well. The riders include a death benefit, critical illness benefit and disability benefit. If you have opted for them, then your future premium gets waived in the event of any unfortunate incident, while your family remains protected.

c) Top up option

The top-up option allows you to increase your fund value by increasing the premium amount. With a top-up, you also increase the risk cover for your life and increase protection to your family.

Returns

ULIPs provide you with a raft of investment options, depending on your needs. Therefore, the returns vary according to the nature of investment option you choose. For instance, Aegon Life’s iMaximize plan has six investment options to choose from. You can pick the Blue-Chip Equity, Accelerator, Opportunity, Stable, Debt and Secure fund. They are all different in nature. Some are high-risk, high-growth options, while some are on low-risk, stable returns option.

To sum up

Ravi wasn’t fooling around with his friend. Investing in a ULIP does offer you perhaps the best combination of life cover, tax returns and investment. It’s an ideal investment for a person with low to moderate risk appetite. So, invest in a ULIP today.

To know about AegonLife’s life insurance products, visit our home page.


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