March 18, 2013
4:50 PM By udaya chandran Equity, Income Tax, Insurance, Investments, Tax Saving, Taxation, ULIP No comments
- ULIPs give you both Insurance Cover and Investment Returns
- Minimum sum assured is equal to 10 times of the Annual Premium amount, for example, if you are ready to pay premium of Rs.50000/- p.a. then your minimum sum assured should be Rs.5 lakhs (Rs.50000 x 10 times)
- The Lock-in period is 5 years – you cannot surrender the policy before 5 years
- The Upfront charges are distributed in the first 5 years equally
- You have to pay premium for 5 years without fail
- 4.5% guaranteed returns on Unit Linked Pension Plans
- Surrender charges for less than 10 years term is between 2.5% to 12.5% and 2.5% to 15% for more than 10 years term – so stay invested for long-term
- The Insurance companies charge maximum of 3% for 10 year term policy and 2.5% for 15 year term policy
- Policy holders can choose and switch between plans where premium is invested from Equity, Money Market Instruments to Government securities and corporate bonds.
- The value of your investments is measured by using Net Asset Value (NAV) – It is the value of per unit allotted to your account.
- The premium paid in a financial year is allowed as deduction up to Rs.1 lakh under Section 80C from Gross Total Income as per Income Tax Law