Questions and answers

What is ULIP under 80C?

What is ULIP under 80C?

Premium paid for a ULIP on a yearly basis is exempt from income tax upto Rs. 1.5 lakhs (the limit being applicable on total of all investments under Section 80C). There are, however, certain conditions for this deduction.

Is ULIP surrender taxable?

The entire surrender value will be treated as income for the current year and will be added in gross total income and thus will be taxed as per applicable tax slab rate of the individual. Let’s discuss with an example, if surrender value of ULIP is Rs. 15 lakhs and the entire income is taxed as per slab rate.

Is it safe to invest in ULIP?

ULIP Policies Make a Secure Investment with Long-term Perspective. As ULIP plans have a lock-in period of five years, it makes sense to monitor your ULIPS over a period of five years or more, as it gains stability over a longer term. However, there are a few charges associated with ULIP, such as: Allocation charges.

Is ULIP maturity tax free?

ULIP maturity proceeds not tax free anymore; here’s what it means for you. Also, you can claim a deduction of up to Rs 1.5 lakh under section 80c on premiums paid for ULIPs; further, the maturity amount is tax free in the hands of investors.

Is ULIP premium tax free?

ULIP premium enjoys the section 80C deduction benefit upto Rs 1.5 lakh per annum. This death benefit is tax-free under Section 10(10D) of the Income Tax Act, 1961″ says Karthik Raman, CMO & Head – Products, Ageas Federal Life Insurance.

Is ULIP tax free after 5 years?

The answer is, if you have completed five years, there will be no surrender charge and the surrender value will also be tax free. The surrender value of ULIP is otherwise added to your income and taxed as per applicable slab rate if surrendered before five policy years.

Can I withdraw ULIP after 5 years?

Even though there is a lock-in period of five years in Ulips, one may still surrender the policy. The money, however, will be paid to the policyholder only after the end of 5 years. Importantly, it’s not the fund value as on the date of surrendering that gets paid after 5 years.

Which is better MF or ULIP?

Mutual funds offer the benefit of low costs and professional management. SEBI has capped the expense ratio on mutual funds to 1.05% while there is no such limit for ULIPs. The charges for ULIP schemes can go much higher than mutual funds.

Is it good time to invest in ULIP?

Like with mutual fund investments, any time is a good time to invest in a unit-linked insurance plan. ULIPs help tide over market volatility, so you can invest in them when the markets are down or when they are on the upswing.

What happens if you don’t pay ULIP premium after 5 years?

Upon expiry of the grace period, in case of discontinuance of policy due to non-payment of premium during the lock-in period of five years, the policy will automatically be converted to a “Discontinued Life Policy” and the life insurance cover would be discontinued with fund value being transferred to Discontinued Life …