What is ULIP? Know! What is the advantage in the ULIP plan?
What is ULIP? – ULIP stands for Unit Linked Insurance Plan – ULIP means Unit Linked Insurance Plan.
Should I invest in ULIP Plan? What is the ULIP plan of life insurance companies? know! How much benefits and how to investment in ULIP Plan?
Also read this : LIC New Endowment ULIP Plan
Insurance is an investment that comes in handy with the life of a human being and then for the family. There are many types of insurance, and today we are talking about “ULIP” plans. Ulip plan is actually a combination of insurance policy and market investment. A part of the premium is invested in Equity or Debt Fund under this Ulip Plan policy.
In this plan, the combination of insurance and investment comes with a lock-in period of 5 years. Customers are allowed to invest in large, mid or small caps, debt funds or balanced funds according to the risk. This also allows switching to different funds.
How many types of ULIP plan?
ULIP plans are two types – Pension and Endowment Ulip Plan.
How much charge the charges in the ULIP plan?
There are 4 types of charges in the Ulip Plan – Allocation, Policy Administration, Mortality and Fund Management Charge. Charges of fund management are 1.25%. You can get income tax exemption under Section 80C of the Income Tax Act by investing in the ULIP plan.
Benefits of tax
The ULIP plan has been exempted from LTCG taxation which was introduced in the budget of 2018 last year. Tax exemption under Section 80C of Income Tax can also be obtained. If you want to invest in a ULIP plan, then first consider whether you see this product as an investment or as insurance. To invest in this, you should have a long time to invest and should be aware of the products related to the market.
“ULIP plan” is nothing special as an insurance product, because the sum insured is only 10 to 15 times the annual premium. For the sum insured of Rs. 1 crore, the premium for ULIP plan is about 2 to 3 lakh. At the same time, the premium for a term plan of Rs 1 crore of sum assured is Rs 6000-7000. Talk about investment, the ULIP plans fall under the lock-in period of 5 years, whereas there is considerable flexibility for exit of mutual funds.
New rules have been implemented for the ULIP scheme, which are given below:
Lock in Period: Earlier, these plans were given 3 years lock-in period, which has been increased to 5 years. Because of this, now the funds cannot be withdraw before five years.
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Insurance cover: First, the minimum insurance was five times of the annual premium, now which is 10 times for less than 45 years and at least 7 times for 45 years under the new rules. This will allow investors to get more insurance cover.
Fees: In marked linked plan charges were very high, now under the new rules; There is provision for keeping the expenses in the lock-in period. With this, more funds will be allocated to units in the initial years and the commission of agents will be reduced.
Surrender fee: There was no cap on it earlier. Under the new rules, surrender charges will be reduced every year and no surrender charge will be taken after 5 years.
What are the advantages of ULIP plan:
Market-linked scheme: Since ULIPs are invested in funds, market-linked instruments, so if the market is in your favor then you will get a chance to meet extraordinary returns.
Life insurance: Its insurance policy also provides life coverage, with many features.
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Long-term savings: ULIPs are usually extended for a period of 5 years or more. Just like an insurance plan, long-term commitment is required to pay the premium for this, which will be well paid when the policy is mature.
Flexibility in the plan: Market plan gives you the option to switch between different investment funds, according to your needs.
Tax-free plan: The benefit received from Ulips is tax-free under Section 80C and 10(10D).
Tax Benefit: On the death of the policyholder, Market plan will return upon partial withdrawal and maturity of the policyholder’s wish.
Death Benefit: The return on the policyholder’s death will be completely tax free.
Maturity: Profit on maturity is tax-free under 10-10D.
Partial Withdrawal: If the refund does not exceed 20% of the policy fund value and is made after the lock-in period is completed So this is tax-free.
Premium amount: You can claim a tax deduction at the premium given on market linked plan, which will be available in Equity, Date or Money Market Instruments, Section 80C Investments have been made under. For the current and the coming year, the limit of Section 80C is 150,000. lakhs.
Extra Premium: In the later stages, additional premiums offered in the scheme are tax-exempt under section 80C and 10D, if it is insured No more than 10% of the amount.
Keep these things carefully before buying
After deducting different types of charges from your premium, it is invested. Due to adding many Charges to it, your Amount becomes very small and less money is invested, for this reason you get less profit.
Therefore, whenever you invest in this Plan, before that, get the information about Charges related to Investment from Company so that you understand what percentage of the company your Invested Amount will be taken as Charges, How much percentage will be invested in the Stock Market and how much percentage will be used as Insurance Premium.
Charges of premiums such as Premium Allocation, Mortality, Policy Administration, Fund Management, Agent Commission, etc. are actually recovered from your premium.If the insurance company can not pass the claim to your plan at the time of your need, then that plan is worthless for you, no matter how good the plan you choose. Therefore, before investing in the Ulip Plan, ULIP Company’s Claim Settlement Ratio must also be checked.
How many types of ULIP plan are:
The Ulip Plan offers us a lot of investment options such as Equity fund, Debt fund and Balanced Fund etc.
Therefore, whenever you choose a ULIP policy, firstly choose the option according to your needs, then only purchase the plan such as Equity, Debt or Balanced, which is correct to the ULIP plan. Also, choose the company’s option to provide you with the option to invest in these different types of funds as per your need.
Apart from this, whenever you buy this plan, you should always keep an eye on the company that you are purchasing this market plan, the company is providing you the appropriate Life Cover as per your requirement. If you are not getting the Life Cover accordingly, then you should search for the plan according to your needs in the other company, because many companies in the market offer facility of market linked plan.
Should you invest in a market linked plan?
Should you invest in a ULIP plan? If you understand the difference of insurance and investment properly, then ULIP plans are not for you. It is better for you that in the form of insurance you can make a Term Insurance plan or Endowment plan of up to 20 times your annual income so that if you do not have your Dependents live a Normal Life for at least 30 years. Such as achieving good education for children, marriage of children, financial freedom for their retirement etc.
For more information, please contact:
Baspa Nand Pancholi
Email – firstname.lastname@example.org
25, K G, marg, jeevan prakash building
LIC OF INDIA,
C.P. New Delhi – 110001
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