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ULIP Returns in 10 Years

10-year ULIP plans offer a unique combination of investment and insurance benefits. They can help you build a corpus for your long-term financial goals while also providing your family with financial security in case of an unforeseen event. The longer you stay invested, the better your returns will be.

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ULIP Returns in 10 Years

10 Years ULIP Returns
June 26, 2023

Table of Content

 

In this policy, the investment risks in the investment portfolio is borne by the policyholder

Every young Indian aspires to save and invest for a financially secure future. Unit-Linked Insurance Plans (ULIPs) can help you fulfil your long-term goals while protecting your family’s finances. ULIPs are life insurance policies that offer the dual benefit of investment and insurance, available to both residents and non-residents through options like ULIP for NRI. You agree to pay a one-time or regular premium to an insurance company. They use a portion of the amount to provide life coverage. They invest the rest on your behalf in various funds based on your risk appetite. ULIPs come with a lock-in period of five years, but the longer you stay invested, the better. Let’s better understand 10-year ULIP plans and how they can work for you.

What Is a 10-Year ULIP Policy?

As the name suggests, a 10-year ULIP is a plan that provides life coverage for a decade. While the policy is active, you can invest in various debt and equity funds based on your risk appetite. Over ten years, depending on market fluctuations, you can build a significant corpus to help you fulfil your long-term financial goals. Additionally, the plan provides your family with financial security with life coverage. Should anything happen to you during the policy term, your beneficiary or heir receives the payout of the sum assured. You can select the amount based on your Human Life Value (HLV) and expected financial obligations.

How Does a 10-Year ULIP Policy Work?

We can understand how a ULIP for 10 years works with an example. Rajiv, a married man in his 30s, hopes to purchase a home for his growing family in 10 years. He knows that savings alone will not help him. His wife is expecting a child, and she may have to quit work to raise their little one. He decides to purchase a 10-year ULIP to build a corpus to help him buy a home. To estimate his potential returns, Rajiv uses a ULIP Calculator to help plan his investment strategy. He also knows that the sum assured payout will help his wife and child maintain financial stability if anything happens to him. Rajiv opts for a ULIP with a Waiver of Premium option. If the death benefit gets triggered, the future premiums get waived. The insurance company keeps the ULIP active, providing his loved ones additional financial protection. Rajiv chooses to pay monthly premiums for ten years. He selected a mix of equity and debt funds to balance his investment portfolio. His ULIP investment for 10 years helped him buy the house of his dreams.

Why Choose a 10-Year ULIP Policy?

Opting for a 10-year ULIP offers many benefits. Here’s why you should consider purchasing a policy:

  • Market-linked Returns

    ULIPs allow you to invest in debt and equity instruments. Market-linked investments have the potential to provide higher returns than traditional savings.

  • Flexibility

    ULIPs provide the flexibility to choose your investment avenues and make switches based on market conditions. Some ULIPs limit the number of switches during the policy tenure, while others allow unlimited changes. Ensure you select a plan that meets your investment strategy.

  • Tax Benefits

    ULIPs fall under the EEE or exempt-exempt-exempt category subject to the provisions of the Income Tax Law. The amount you invest enjoys tax deductions under Section 80C# of the Income Tax Act.

    Proceeds received on surrender/partial withdrawal/maturity of ULIP plan are exempt from tax subject to provisions mentioned in Section 10(10D) i.e if the premium payable for any of the years during the policy term does not exceeds 10% of the death sum assured.

    In addition to the above, for policies issued after 1st Feb 2021 tax exemption on maturity proceeds will be available if premium paid in any of the years towards such matured polices does not exceed Rs.2,50,000. Out of the total matured policies in a financial year, exemption u/s 10(10D) will be available only towards those polices who’s aggregate premium in any years does not exceed Rs. 2,50,000/.

    Income from rest of the policies exceeding the mentioned limit will be chargeable as capital gains.

    Death proceeds are also exempt from tax for all ULIP plans.

  • Life Coverage

    Your ULIP policy offers life coverage, providing your loved ones with financial security and stability, regardless of what happens to you.

  • Long-term Investment

    With ULIPs, the longer you stay invested, the better. Your ULIP returns in 10 years will be much better than returns over five, eight, or even nine years. A 10-year ULIP helps you build a corpus for your long-term financial goals.

How Are 10-Year ULIP Policy Return Rates Calculated?

ULIP rates refer to the rate of return you can expect on your investment. The returns on your 10-year ULIP policy get calculated based on the performance of the funds you invested in. So, the returns depend on market conditions and the fund selection. The fund’s NAV (Net Asset Value) gets calculated daily, and the returns are calculated based on the change in NAV. The NAV of the funds is affected by various factors, such as market conditions, economic conditions, and fund management.

While projecting your returns, remember your investment amount depends on the insurance company’s ULIP charges. The company deducts management, administration, and mortality charges before investing. Ensure you understand the company’s fees before selecting a ULIP.

A ULIP investment for 10 years allows you to secure your family’s future while building a corpus for your goals. Before investing, evaluate your risk appetite, investment goals, and current financial situation. Investing for ten years enables your investment to grow and provide good returns.

Related Article

ARN - MC/05/23/2053

 

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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Here's all you should know about ULIP insurance.

We help you to make informed insurance decisions for a lifetime.

What is ULIP Plan? Full Form, Meaning, Benefits and Features

What is ULIP Plan? Full Form, Meaning, Benefits and Features

ULIPs, or Unit Linked Insurance Plans, are insurance cum investment plans that allow you to put money into stocks, bonds, or mutual funds. Read here to know more!

Understanding Advantages & Disadvantages of ULIPs

Understanding Benefits of ULIP Plans

Understanding Taxations in ULIP

ULIPs provide various tax-saving advantages under Section 80C and Section 10(10D) of the Income Tax Act. Check out this article to understand the updated tax rules for ULIPs.

Understanding Taxations in ULIP
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Disclaimers

# Subject to conditions specified u/s 80C and u/s 10(10D) of the Income Tax Act, 1961.

The afore stated views are based on the current Income-tax law. Tax Laws are also subject to change from time to time. Also, the customer is requested to seek tax advice from his Chartered Accountant or personal tax advisor with respect to his personal tax liabilities under the Income-tax law.

The Unit Linked Insurance products do not offer any liquidity during the first five years of the contract. The policyholders will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of fifth year.

Unit Linked Life Insurance products are different from the traditional insurance products and are subject to the risk factors. The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. HDFC Life Insurance Company Limited is only the name of the Insurance Company, The name of the company, name of the contract does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.