ULIPs are investments with insurance. The purchase of a ULIP qualifies for an income tax deduction under I-T Act Section 80C. There are just two things that give investors confusion. First, let’s talk about the minimum sum secured for ULIP investments. Second, what is the tax incidence on this policy’s maturity proceeds?
In accordance with a recent IRDA notification, ULIPs are now the same for all age groups. The minimum sum assured for purchasing a ULIP for individuals under the age of 45 has been lowered from 10 times to 7 times the annual premium paid, according to a notification released by the Insurance Regulatory and Development Authority of India (IRDAI). Now, even if you are under 45, you can purchase a As opposed to the previous minimum sum promised of 10 times, you can now purchase a ULIP even if you are under the age of 45 with a minimum sum assured of seven times the yearly premium.
Before, only those over the age of 45 could purchase ULIPs with an insured payment that was less than 10 times the annual premium. As a result of this announcement, ULIPs are now the same for all age groups.
You should keep in mind that the post-tax return on maturity will be reduced to the extent of the tax paid because the maturity value of the policy in the event that the sum insured is less than 10 times the premium paid is taxable.
Even when the amount assured is less than ten times the premium paid, the payout in the event of death during the policy term is tax-exempt.
Therefore, the post-tax return of the policy upon the insured’s death is equal to the pre-tax refund.
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