5 min read
Updated on Nov 13, 2022
Owing to the high popularity and demand of ULIP plans, investors are now keenly looking at the premium top-up feature of ULIPs to increase their scope of investment. All about top-ups in a ULIP and when exactly to use them during the term of your plan.
A ULIP is a relatively newer but highly popular financial product when compared to most traditional plans. The reason being that a ULIP combines the dual benefit of insurance and investment for the modern investor, thereby giving him the assurance of lifetime protection as well as a pool of funds to invest in and reap the benefits from. ULIP full form is Unit Linked Insurance Plan.
Owing to its immense popularity in a short span of time, there is a new feature introduced in ULIP, meaning that the plan now appeals to an even wider section of the investor community than before. This feature is known as top-ups and the following sections talk all about it and when exactly to use them in your ULIP policy tenure.
Since ULIPs are directly linked to market returns, if at any point of time in your ULIP investment tenure, you feel that your plan is performing really well, you can choose to top it up. This means that the ULIP policyholder is given the option to further invest a specified amount into their ULIP, in turn adding to the already existing premium payable towards the plan.
How does this help? By choosing to pay an additional premium amount, the investor can now increase the component of investment of a particular ULIP that’s performing really well in the capital market at the time. Here are some key features to look out for in the top up premium in ULIP insurance before making the decision.
There are essentially three kinds of charges involved in buying a ULIP plan:
Note that in case you choose to top-up your ULIP premium, the mortality charge for the plan would be levied at the age you choose to top up the plan and not according to the age at which you purchased the ULIP. Also, the minimum sum assured under the life insurance benefit of the plan is also decided based on your age at the time of top-up.
Another advantage of availing the premium top-up feature in ULIPs is that it is entitled for tax deductions. The ULIP plan in India is anyway applicable for tax benefits as detailed under Sections 80C and 10D of the ITA, 1961. Now, the top-ups are also liable for income tax deductions under the same sections (mentioned above) of the ITA.
Here are some of the top ULIP performers in India that you can consider when investing in a ULIP:
|ULIP||Return After 1 Year||Return After 3 Years||Return After 5 Years|
|Tata AIA Life-Top 200||29.89%||14.26%||17.11%|
|Max Life – High Growth Fund||23.90%||9.68%||14.82%|
|PNB Met Life – Virtue Fund II||27.02%||10.28%||13.84%|
|Bajaj Allianz Life-Pure Stock||22.80%||7.15%||12.60%|
There are a couple of points to bear in mind when choosing to top up your ULIP premium:
In a Nutshell
ULIPs are a great source of investment if done wisely. Their direct link to capital market returns make them an attractive option for the modern investor, not to forget the additional attached insurance benefit that comes along with it. And now with the top-up feature being added to the conventional ULIP policy, it is even more lucrative to invest in a ULIP to enhance the investment component of the plan via the top-up.
To look for the best ULIP plan in India, visit PayBima that offers a host of options for investment in ULIP funds. Make sure to check with your insurer directly the features and benefits of your plan before investing.
Found this post informational? Browse PayBima Blogs to read interesting posts related to Health Insurance, Car Insurance, Bike Insurance, Term Life Insurance and Investment section. You can visit PayBima to Buy Insurance Online.
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PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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