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    What are ULIP Tax Benefits?

    Last Updated On 04-03-2022

    The Unit Linked Insurance Plans (ULIPs) have emerged as one of the best investment tools for new-age investors. Apart from offering the dual benefits of wealth accumulation and life insurance protection, it provides substantial tax benefits. Continue reading to know what are ULIPs, how they work, ULIP tax benefits, and how it helps you in your retirement planning.

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    What are ULIPs?

    As mentioned, the Unit Linked Insurance Plans (ULIPs) are unique life insurance plans that combine the benefits of life insurance and investment into one. A part of the premium paid towards a ULIP is used to provide life insurance cover to the policyholder, and the remaining amount is invested in the funds of their choice to generate wealth.

    Various life insurance companies in India offer ULIPs with a lock-in period of three to five years. You can choose the plan option, premium payment mode, and fund portfolio as per your investment profile. You can also switch your ULIP portfolio between debt and equity funds based on your risk appetite.

    Tax benefits on ULIPs

    Tax-savings instruments are classified into three types:

    1. Exempt-Exempt-Exempt (EEE)

    2. Exempt- Exempt- Taxable (EET)

    3. Exempt- Taxable- Exempt (ETE)

    ULIPs belong to the EEE category, which is usually applicable for long-term investment avenues, such as Public Provident Fund (PPF), National Pension Scheme (NPS), and Senior Citizens Savings Scheme (SCSS).

    The first E in EEE means that the investments made towards a ULIP are available for tax exemptions. You can deduct the premium paid for ULIPs from your annual income while calculating your income tax.

    The second E means that the interests earned from your investments in ULIPs are also available for tax deductions. Whereas the third E means that there is no taxability of ULIP on surrender, and the amount received on death or maturity is eligible for tax exemption. 

    Below are two sections of the Income Tax Act under which you can avail of tax benefits by investing in ULIPs:· 

    • ULIP tax benefits under Section 80C
      The premiums paid by the policyholders towards ULIPs are available for tax exemptions under section 80C. The maximum deduction you can avail of under this section is ₹1.5 lakh. However, these deductions are applicable only if the yearly premium of the ULIP is less than 10% of its sum assured.
    • ULIP tax benefits under Section 10 (10D)
      The maturity amount or death benefits received by the policyholders (or their nominee) under ULIPs are available for tax exemption under section 10 (10D). There is no maximum limit on the deduction you can avail of under this section. 

    Why should you invest in ULIPs?
    Below are the reasons you should invest in a ULIP:

    • Life cover
      The primary role of ULIPs is to provide life insurance cover to the policyholders. It offers financial security to their family members and other dependents. It means that in case of your untimely death, a ULIP plan would help your loved ones survive even without you.
    • Long-term financial goals
      Apart from providing a life insurance cover to the policyholder, a ULIP also helps them accumulate wealth for their long-term financial goals. Hence, you can invest in a ULIP to make regular savings and redeem your investments anytime after the end of the lock-in period.
    • Exposure to equity market
      By exposing your investments to the equity market, ULIPs allow you to gain inflation-beating returns on them. In most cases, the returns provided by ULIPs are higher than traditional investment avenues, such as Fixed Deposits, recurring bank accounts, etc.
    • Income tax benefits
      You can also avail of ULIP tax exemptions under various sections of the Income Tax, 1961. Read on to know more about the tax benefits you can avail of by investing in ULIPs.   

    Conclusion

    Falling under the EEE category, ULIPs are one of the best tax-saving instruments available in India. However, it’s essential to choose the right plan option and fund portfolio as per your investment profile. 

    PNB MetLife offers various life insurance products, including ULIPs, to help you meet your financial goals. Browse through our website and pick a suitable plan for yourself! 

    Know more about term plan, term insurance and life insurance at PNB MetLife.

     

    Disclaimer:

    The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.

    PNB MetLife India Insurance Company Limited
    Registered office address: Unit No. 701, 702 & 703, 7th Floor, West Wing, Raheja Towers, 26/27 M G Road, Bangalore -560001, Karnataka
    IRDAI Registration number 117 | CIN U66010KA2001PLC028883
    For more details on risk factors, please read the sales brochure and the terms and conditions of the policy, carefully before concluding the sale.
    Tax benefits are as per the Income Tax Act, 1961, & are subject to amendments made thereto from time to time. Please consult your tax consultant for more details.
    Goods and Services Tax (GST) shall be levied as per prevailing tax laws which are subject to change from time to time.
    The marks "PNB" and "MetLife" are registered trademarks of Punjab National Bank and Metropolitan Life Insurance Company, respectively. PNB MetLife India Insurance Company Limited is a licensed user of these marks.
    Call us Toll-free at 1-800-425-6969, Phone: 080-66006969, Website: www.pnbmetlife.com, Email: indiaservice@pnbmetlife.co.in or Write to us: 1st Floor, Techniplex -1, Techniplex Complex, Off Veer Savarkar Flyover, Goregaon (West), Mumbai – 400062, Maharashtra. Phone: +91-22-41790000, Fax: +91-22-41790203.
    Beware of Spurious Phone Calls and Fictitious / Fraudulent Offers!
    IRDAI is not involved in activities like selling insurance policies, announcing bonus or investments of premium. Public receiving such phone calls are requested to lodge a police complaint.

    AD-F/2021-22/795

     

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    Disclaimer:
    The aforesaid article presents the view or an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ before making any decision.

    PNB MetLife India Insurance Company Limited, Registered office address: Unit No. 701, 702 & 703, 7th Floor, West Wing, Raheja Towers, 26/27 M G Road, Bangalore -560001, Karnataka.
    IRDAI Registration Number 117. CI No: U66010KA2001PLC028883. For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding the sale.
    The marks “PNB” and “MetLife” are registered trademarks of Punjab National Bank and Metropolitan Life Insurance Company, respectively. PNB MetLife India Insurance Company Limited is a licensed user of these marks.
    Call us Toll-free at 1-800-425-6969. Phone: 080-66006969, Website: www.pnbmetlife.com, Email: indiaservice@pnbmetlife.co.in or Write to us: 1st Floor, Techniplex -1, Techniplex Complex, Off Veer Savarkar Flyover, Goregaon (West), Mumbai – 400062, Maharashtra. Phone: +91-22-41790000, Fax: +91-22-41790203
    EC342 LD/2019-20/358

    BEWARE OF SPURIOUS/FRAUD PHONE CALLS!
    • IRDAI is not involved in activities like selling policies, announcing bonus or investment of premiums. Public receiving such phone calls are requested to lodge a police complaint.

    Disclaimer

    Collapsed Expanded

    As your trusted life insurance partner, PNB MetLife is with you amidst the current COVID-19 outbreak. Our policies also cover COVID-19 Claims. In case of a Death Claim, kindly submit the signed Claim Intimation Letter mentioning the policy number, brief of the insured event and other claim documents on the email mentioned herewith. Please write-in to us at claimshelpdesk@pnbmetlife.com or indiaservice@pnbmetlife.co.in. You can also call us on 1800-425-6969 for death claims intimations and for any queries on Monday - Saturday between 10:00 am - 7:00 pm.

    PNB MetLife Insurance, amongst the trusted Life Insurance companies in India, aims to provide a wide range of Life Insurance products that suits the needs of an individual at every stage of his life. Life Insurance Plans range from Term Life Insurance PlansTerm PlanProtection PlansLong Term Savings Plans , Retirement Plans & Child Education Plan.

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