ULIPS and Section 80C

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ULIP
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ULIPS and Section 80C
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• One of Investments which are eligible under
  Section 80C deduction is investment in ULIPS.
• What is a ULIP? ULIP or Unit Linked Insurance
  Plan has a mix of insurance along with
  investment. From a ULIP the goal is to provide
  wealth creation along with life cover. The
  seller of a ULIP puts a portion of your
  investment towards life insurance and rest into a
  fund that is based on equity or debt or both and
  matches with your long term goal. These goals
  could be retirement planning, childrens
  education or another important event you may wish
  to save for.
• Tax Deduction under Section 80C? Deduction is
  available on ULIPS under Section 80C, provided
  the sum assured is at least 10 times the annual
  premium. This is within the overall limit of Rs
  1,50,000 of Section 80C. Of course you can invest
  a higher amount, but the deduction will be
  limited to Rs 1,50,000.
• How do ULIPS work? ULIPS are usually designed in
  a way that they allow you to switch your
  portfolio between debt and equity based on your
  risk appetite as well as your knowledge of how
  the market is performing.

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• It has been noticed that many of the ULIP buyers
  do not have the time or adequate knowledge to
  understand the mix they must keep between debt
  and equity and also when to make the right
  switch. Therefore, if you are someone who has
  deep knowledge of how the fluctuation of interest
  rates and equity returns work this may be the
  product for you. Also, it is wiser to invest in a
  ULIP with a long term horizon, of at least 10
  years.
• Can ULIP be bought for others? An individual may
  purchase a ULIP in his own name, or for spouse or
  any child. Child may be married or unmarried,
  dependent or independent, minor or major all
  these investments shall qualify for deduction
  under Section 80C.
• Tax benefit on maturity? You are allowed to make
  partial withdrawals after 5 years. There is no
  tax on the withdrawals maturity for ULIPS
  provided the sum assured is at least 10 times the
  annual premium.

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