What is Ulip first?
ULIP is a unit linked insurance product where insurance and investment benefits come together. They are offered by insurance companies. When you pay the ULIP premium, a part of it is used by the insurance company to provide you insurance coverage and the rest is used to invest in debt and equity. The combination of insurance and investment in ULIPs comes with a lock-in period of 5 years. Now know the six benefits of investing in it
1 – Tax benefit on premium The biggest advantage of investing in a ULIP policy is that the entire premium you pay can be reduced by up to Rs 1.5 lakh in your taxable tax subject to the provisions under Section 80C of the Income Tax Act, 1961, However, the life cover should be at least 10 times the annual premium paid.
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2. Tax benefit on maturity
You invested in ULIP and saved some taxes while making that investment. But, what happens when you hold off your investment after matchair? Do you pay tax on the entire maturity payout or just the profit you have earned? The good news is that if all the due premiums are paid, you do not pay any tax at the time of maturity, especially in policies issued before 1 February 2021, if the policy taken thereafter has a If you pay a premium of more than 2.5 lakh rupees in a year, then the tax exemption available under section 10 (10D) has been removed.
3. Tax-Free Partial Withdrawal
If you want to withdraw money from your ULIP plan after the lock-in period of five years, then you will not have to pay any tax on that withdrawal, provided that the withdrawn amount is less than or equal to 20 percent of the fund.
4. Tax-free payment in case of death
In the unfortunate event of the death of the policyholder, the nominee of the deceased receives the entire sum insured, or the total value of the fund the policyholder has invested in, as per the terms and conditions of the policy. Get more done. In addition, in the event of the death of the policyholder, the entire payment is also exempt from any tax except the Keyman policy.
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5. Cut at the top-up
Another feature of ULIP schemes is flexibility, for example, ULIP allows investors to increase their investment by purchasing top-ups. That way, whenever you have some extra income – or you need to invest at the last minute to reduce your tax outflow – you use that money to buy more units as part of your ULIP investment Can do for These top-ups are also eligible for income tax deduction under Section 80C of the Income Tax Act, 1961.
6. Long Term Capital Gains (LTCG) Tax Protection
The Long Term Capital Gains (LTCG) tax was introduced in the Union Budget 2018 and applies to profits earned from equity markets, whether it is shares, equity mutual funds or equity linked savings schemes (ELSS), if profit 1, 00,000 exceeds Rs. Since ULIP schemes also provide an investment option in equity markets, they remain free from the burden of paying LTCG tax.