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How Fourth-Generation ULIPs Are Changing Life Insurance

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How Fourth-Generation ULIPs Are Changing Life Insurance
November 09, 2023

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

A Unit-Linked Insurance Plan (ULIP) is a versatile financial product that offers life insurance coverage and investment opportunities. Over the years, these products have changed and evolved to meet the population’s dynamic needs. We are now on the brink of a new era with the rollout of 4th-generation ULIP plans. 

Let’s explore how these fourth-generation policies are reshaping the life insurance landscape.

The Rise of Fourth-Generation ULIPs

These new policies offer a significant leap forward in the life insurance world. Fourth-generation ULIPs build on the strengths of previous plans and introduce new features that transform how policyholders approach investments and insurance.

Unlocking the New Features of Fourth-Generation ULIPs

  • Enhanced Transparency

    Fourth-generational ULIPs focus on transparency. They offer policyholders a clear and comprehensive view of all charges, including fund management and premium allocation charges. Better transparency enables individuals to make informed investment decisions.

  • Easy Customisations

    One of the standout features of the new wave of ULIPs is the high level of customisation. Policyholders can choose from various fund options based on their financial goals and risk appetite. Customisations allow investors to align their investments with their unique circumstances and aspirations.

  • Unparalleled Flexibility

    New-age ULIPs can adapt to the policyholder’s evolving financial needs. These plans allow you to switch between funds and risk profiles based on your changing requirements. You can fine-tune your investment strategy based on your financial situation. The flexibility empowers you to remain invested while adapting to new challenges.

  • Loyalty Additions

    Fourth-generation ULIPs come with wealth boosters and loyalty additions to reward investors for their long-term commitment. The additions enhance the overall policy returns. They encourage individuals to stay invested for better growth.

  • New Cost Structure

    The Insurance Regulatory and Development Authority of India (IRDAI) monitors ULIP costs. They have imposed caps on various charges, making ULIPs more affordable and easily accessible. By lowering the overall cost, the IRDAI encourages more individuals to invest and grow their wealth.

  • Tax Benefits

    ULIPs offer tax-saving benefits throughout the policy term and at maturity. Individuals who pay tax under the old tax regime can claim deductions of up to Rs. 1,50,000 per year under Section 80C of the Income Tax Act1. Individuals who purchased their policies before 1 April 2012 will receive a tax-free maturity corpus, as long as the annual premium amount was less than 20% of the sum assured. 

For policies purchased between 1 April 2012 and 1 February 2021, policyholders will receive a tax-free maturity corpus as long as the annual premium amount was less than 10% of the sum assured. For plans purchased after 1 February 2021, individuals will receive a tax-free corpus for plans that have an annual premium of less than Rs. 2,50,000. Always check the policy documents and consult a tax advisor to better understand the charges and tax breaks before investing.

4th-generation ULIP plans are changing the life insurance game. These innovative products combine the strengths of traditional ULIPs with enhanced transparency, easier customisations, unparalleled flexibility, and more. These plans empower individuals to take control of their financial futures. ULIPs help you achieve your goals while enjoying peace of mind through life insurance coverage. Insurance remains at the heart of these plans. You can rest assured that your loved ones will receive financial support and stability, regardless of what happens to you. 

So, whether you’re looking to build wealth, plan for your child’s education, or secure your family’s financial future, fourth-generation ULIPs can help you achieve your goals. These dynamic and comprehensive plans offer wealth-creation opportunities while safeguarding your loved ones with insurance.

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 

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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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Disclaimer

  1. Tax benefits are subject to conditions under Sections 80C, 80D, Section 10(10D) and other provisions of the Income Tax Act, 1961. 

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

For more details on risk factors, associated terms and conditions and exclusions please read sales brochure carefully before concluding a sale. 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.

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