Tax management is one of the priorities for many professionals. It not only allows them to fulfil their national duty but also save money. It starts with finding options to help you tick all the boxes right.

In this context, the Unit Linked Insurance Plan (ULIP) deserves special mention. It is a smart way to segregate your investment into two major options — insurance and fund accumulation. They let you build a good fund over time while also giving you a safety net for your loved ones. They’re much more than typical insurance, which is what makes them stand out. 

By choosing the , you can create substantial wealth and secure your loved ones’ future financially. It means you can gift them dual security during tough times.

ULIPs in a Nutshell

A ULIP is an insurance product where part of the premium funds a life cover, and the rest fuels investment in market instruments. The lock-in period is five years. After that, you can keep the plan active for a longer horizon to really see the benefits of compounding. If you want to focus on wealth accumulation, you might pick equity funds. But if you’d rather be cautious, you can go for debt funds. There are also balanced funds that mix both approaches.

Tax Advantages Under Section 80C (Under Old Tax Regime)

A major attraction of ULIPs is the tax benefit on premiums you pay. The government allows a deduction of up to Rs. 1.5 lakh a year. This is covered under Section 80C, which includes many investment options, but ULIPs stand out because they also offer insurance coverage. Once you buy one of the best ULIP plans, you don’t only reduce your taxable income but also create a financial cushion.

Maturity amounts from ULIPs can be free from taxes if you stick to specific rules. If you keep paying your premiums on time and the sum assured isn’t too low compared to your premium amount, the proceeds you receive at the end are generally tax-free. This is as per Section 10(10D).

Another reason ULIPs can be a strong choice is the flexibility they provide. If markets seem favourable, you can direct a larger share of your investment into equity funds. Or switch to debt instruments when you think caution is better. Plus, some premium insurance providers like Axis Max Life Insurance offer unlimited fund switches. That means you can adjust your portfolio whenever you want.

Comparing ULIPs with Other 80C Options

Some people ask why they should choose ULIPs when there are other 80C instruments around. Others might prefer ELSS (Equity-Linked Savings Scheme), Public Provident Fund (PPF), or tax-saving fixed deposits. Each has its own features, but if you want a flexible tool that supports both protection and growth, it’s hard to beat a ULIP.

Here’s a brief table to put these tax-saving options side by side:

Core Benefits and Special Features of ULIPs

ULIPs offer you the chance to grow your wealth with equity or debt funds, but that’s not all. You gain insurance for your family, which is a big plus if you want a complete financial plan. Even if you pass away during the plan, your family gets either the sum assured or the fund value (or sometimes both). That means they’re covered financially, no matter what happens.

This synergy of investment and insurance sets ULIPs apart. With some extra features being added to it, ULIPs become even more appealing. You can look at the past fund performance, read about the type of assets each fund invests in, and then pick a strategy that suits you. For instance, there are funds focusing on large-cap equity, while others focus on a mix of bonds and shares.

Ways to Maximise ULIP Benefits

Since ULIPs carry this dual advantage, a few steps can help you unlock their full potential.

● You want to stay invested for the long term, at least 10 to 15 years, for compounding to really work. This also helps you skip short-term market jitters, which can make your returns dip.

● ULIPs allow you to invest in a mix of equity and debt funds, which means you can customise your portfolio based on market conditions. If you have a long-term investment horizon, a higher equity allocation could generate better inflation-adjusted returns.

● Premium ULIP providers, such as Axis Max Life Insurance, offer unlimited free fund switches. This means you can shift your investments between equity and debt funds as the market fluctuates without any tax consequences. Compare this to mutual funds, where every switch triggers a tax liability.

Conclusion 

Tax planning isn’t just about finding deductions; it’s about making your money work for you in the long run. When considering , ULIPs offer a unique combination of tax savings, wealth creation, and life protection.

Unlike traditional tax-saving instruments, ULIPs provide market-linked growth, complete tax exemptions, and the flexibility to manage investments as per financial goals. Premium insurance providers like Axis Max Life Insurance offer ULIPs that cater to both investment and protection needs, making them a smart choice for long-term financial security.

So, instead of looking at tax-saving investments in isolation, think bigger. A ULIP can help you lower taxes today while securing your future for tomorrow.

Standard T&C apply

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

Note: The tax benefit is subject to change as per prevalent tax laws.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.

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