Consultation For Your Financial Freedom
A Unit Linked Insurance Plan or ULIP is a combination of Life Insurance and Investment. It gives you an opportunity to invest in various market-related securities such as equity, debt, and balanced funds to receive long-term investment returns. A ULIP plan allows you two gains.
According to the Budget 2021 proposal, the maturity amount remains tax-free only if the aggregate annual premium is up to Rs 2.5 lakh a year. If the annual premium goes above Rs 2.5 lakh then one must pay capital gains tax on any income earned on it.
At the same time, the maturity/death benefit received under the ULIP plan is tax-exempt under Section 10(10D) of the Income Tax Act 1961. To help ensure that the insurers avoid the excessive front-ending of expenses, the fees assessed on ULIP plans are distributed equally over the course of the 5-year lock-in period.
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