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What Are The Tax Benefits Of An Investment ULIP Plan?

By Finserv MARKETS - Jul 29,2019
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We all work hard, but our financial strength is not always enough to deal with the constant rise in daily expenses and healthcare. There are other layers to life: saving for a kid’s education, saving for post-retirement life, saving for a specific indulgence such as a foreign holiday and more. Therefore, investment products that can beat inflation play a crucial role.

Unit linked insurance plans are a hybrid insurance product that make it possible to tide over the fluctuations in the markets and empower you to meet multiple financial goals with one single investment product. You get a life insurance cover and financial protection for your future with one instrument. If you are of the idea that most investment avenues are risky, ULIPs are your cushions: you can choose the level of risk you are willing to take. The investment corpus is tax-exempt too, which is the icing on the cake.

In India, ULIP products have particularly gained attraction as a financial investment since the investment amount has doubled in the period between 2009 and 2017.

ULIP Tax Benefits
Investment plans allow you to keep track of the percentage of the premium that is invested along with the charges levied. In fact, ULIP Plans by Bajaj Allianz Life, available on Finserv MARKETS, come with no premium allocation charges and you can easily buy them online.

The unique benefit provided by Investment ULIPs is that they serve as a tax-free earning opportunity for money that would otherwise be sitting idle. It brings the benefit of exempt-exempt-exempt (EEE) tax benefit.

1. Tax benefit on premium :

The premium you pay towards a unit linked insurance plan is allowed as a deduction under Section 80C of the Income Tax Act, 1961, up to a maximum limit of Rs 1,50,000. This is also subject to the condition that the premium paid during a year should not exceed 10% of the sum assured. For instance, if the sum assured is Rs 20 lakhs and the annual premium paid is 10% of the sum assured accounting to Rs 2,00,000, then it meets the second condition. However, since the maximum limit has been set at Rs 1,50,000, the deduction is capped at this amount even though the premium paid exceeds this amount.

2. Tax benefit on maturity :

You can avail ULIP tax benefits on the maturity amount under Section 10(10D) of the Income Tax Act, 1961.

3. The Long-Term Capital Gains Tax (LTCG) advantage :

Since it was announced in the Union Budget 2018, a 10% LTCG Tax is imposed on profits exceeding Rs 1,00,000 made from the sale of equity mutual fund units that have been held for over a year.

ULIPs are exempt from tax under this recently introduced tax category. In fact, it is the only market-linked investment tool outside the purview of LTCG tax. While they always had an edge over other financial products because of their hybrid nature, the LTCG advantage gives them an extra punch.

Take the Bajaj Allianz ULIP Investment Plan for example, the investor has four investment portfolio options to choose from based on their investment style and risk appetite. You can opt to invest in debt funds if you are a low risk-taker, balanced funds if you are moderate risk-taker, and equity funds if risk appetite is high. You can also invest in balanced funds, combining debt funds and equity funds. Such flexibility ensures that your money is allowed to grow, without being liable to taxes, including the fairly recent LTCG tax. ds. You also have the benefit of switching funds depending on your market outlook. Additionally, there is one more benefit of it being an insurance product. When the policyholder passes away and the beneficiary submits a death claim, the claim payout is completely exempt from tax.

Thus, ULIPs are a great tax-saving tool, making them worth the investment. So get the best investment plan from Bajaj Allianz Life available on Finserv MARKETS today and save up.


Not only does an Investment ULIP policy help you save money but it creates wealth for a bright future. Go to Finserv MARKETS and choose an investment plan online that suits your risk appetite and will take care of your present and future income stability.

To know more on ULIP investments in depth, you can check out these blogs:

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Bajaj Finserv Direct Limited ("BFDL") is primarily engaged in distribution of financial products and services through its digital platform (“Bajaj Finserv MARKETS”) and inter alia renders services of customer acquisition, providing preliminary credit support activities, fulfilment services and post-acquisition customer services to Banks, NBFCs, HFCs. BFDL is also a registered Corporate Agent (Composite) under valid IRDAI registration number: CA0551 valid till 10-Apr-2024 for solicitation and servicing of Insurance Products. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522