Things to keep in mind to get the best of your ULIP

1. Understand the key features of your ULIPs

ULIPs offer you the benefit of a Life Cover and also give you the opportunity to grow your wealth. To get the best out of your ULIPs, understand the following benefits available in ULIPs:

1. Fund Switch – An option to move your money between equity and debt funds.

2. Premium Redirection – An option to invest your future premiums in a different fund of your choice other than your base fund.

3. Partial Withdrawals – An option that allows you to withdraw a part of your money.

4. Top-ups – This option allows you to invest your surplus money, either once or multiple times in your existing policy.

To understand all benefits offered under your policy, it is advisable that you read the product brochure carefully. This will help you make the right decision.

2. Choosing ULIP Plans fund options depending on your goals

Unit Linked Insurance Plans (ULIPs) give you an option to invest in equity, debt or a mix of both. Equity funds give you a long-term high growth potential, whereas, debt funds preserve your wealth. Based on your risk appetite and goals, you can choose to invest in either equity or debt. In addition to these, ULIPs also offer balanced funds, which give you an option to enjoy the best of both worlds – equity and debt. With ULIPs, you can also move your money between these funds as per your needs.

3. Taking the right amount of Life Cover

ULIPs are designed to help you meet your financial goals like funding your child’s education or planning for your retirement. In addition to securing your goals, ULIPs also secure your family. They provide a lump sum amount called the Life Cover so that your loved ones can achieve their dreams even in your absence. You can opt for a minimum Life Cover of 10 times your annual premium. To increase your family's financial security, you can also increase the Life Cover offered under your policy.

Let us understand this with an example. For an annual premium of `1,00,000 you can get a minimum Life Cover of `10,00,000. As your children grow older, your financial liabilities increase. As a result, you can increase your family's level of protection by increasing your Life Cover.

4. Stay invested with ULIPs for a long term

Besides providing Life Cover, ULIPs help you create wealth to achieve your financial goals. To stay invested for a long term in your ULIPs, your insurance company will offer you bonuses in the form of ‘Loyalty Additions’ and ‘Wealth Boosters’ to further grow your wealth.

5. Get tax benefits

Under the Income Tax Act, 1961, you can save taxes on your hard earned money with Unit Linked Insurance Plans. You can get tax advantages at different stages of your life insurance policy.

Stage 1: Entry Advantage

You receive tax benefits* on your premium payments under the Sections 80C, 80CCC and 80D

Stage 2: Earnings Advantage

The growth of your money is not taxable*

Stage 3: Exclusive Switching Advantage

You can make completely tax-free* debt-equity Switches**

Stage 4 Exit Advantage

You also receive a tax-free* Maturity Benefit#


*Tax benefits are subject to conditions u/s 80C, 80CCC, 80D, 10(10A) and 10(10D) of the Income Tax Act, 1961. Tax laws are subject to amendments from time to time.
**Switch is an option to move your allocated money between equity and debt funds
#Maturity Benefit is the amount you receive when your policy ends

6. Know the charges in your ULIP

ULIPs help you meet two of your most important financial needs - Protection and Savings. Both these benefits have some charges attached to them and it is important to understand the following charges before purchasing the ULIP:

Premium Allocation charge

Policy Administration charge

Mortality charge

Fund Management charge

In ULIPs, the overall charges reduce in the long term resulting in wealth creation.

Please note that your life insurer reserves the right to revise the charges over time.

Click here to know more about the charge structure of ULIPs.

1. What is a ULIP policy?

A ULIP or Unit Linked Insurance Plan is a life insurance policy which helps you grow wealth by investing your money in the financial markets, while also providing you the protection of life insurance cover.

2. Is it good to invest in ULIP plans?

ULIP plans are a combination of investment and life cover. Investments help you achieve your long term financial goals, whereas life cover makes sure your family doesn’t have to bear financial burden in case of your untimely demise. ULIP premiums can also help you claim deduction under section 80C of Income Tax Act 1961, and ULIP payouts are tax-free* subject to conditions under section 10(10D) of the Act. Hence, investment in ULIP can be considered as a good idea.

3. What is the best way to choose ULIP?

To choose the best ULIP for yourself, you should compare plans and select the one that charges you the minimal amount in Premium Allocation, Policy Administration, Mortality, and Fund Management Charges.

4. Which is better ULIP or term insurance?

ULIP and term insurance are different categories of life insurance. If you are looking to invest your money to achieve a financial goal with the umbrella of life cover, then buy a Unit Linked Insurance Plan. If you wish to get a pure protection plan, then buy a Term insurance plan.


*Tax benefits under the policy are subject to conditions under Section 80C, 80D, 10(10D),115BAC and other provisions of the Income Tax Act, 1961. Good and Service tax and Cesses, if any will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on above.

+Provided monies are not in in the Discontinued Policy (DP) Fund. You can make an unlimited number of partial withdrawals as long as the total amount of partial withdrawals in a year does not exceed 20% of the Fund Value in a policy year. DP Funds refer to Discontinued Policy Funds and consist of money from the lapsed policy.

Unlike traditional products, Unit Linked insurance products are subject to market risk, which affect the Net Asset Values. The customer shall be responsible for his/her decision. The names of the company, product names, or fund options do not indicate their quality or future guidance on returns. Funds do not offer guaranteed or assured returns.


Our ULIP Plans

ICICI Pru Signature

Premium starts at `30,000/- p.m.

ICICI Pru LifeTime Classic

Premium starts at `2500/- p.m.

ICICI Pru Smart Kid Solution

Premium starts at `4000/- p.m.

People like you also read ...

Back to Top