Unit Linked Insurance Plan 1971 (ULIP) Suitability

ULIP is a unique investment scheme from the Unit Trust of India, offering an Insurance cover along with tax benefits and high returns.

Salient Features

The plan can be taken either as a 10 year plan or a 15 year plan. Uniform annual or semi-annual instalments are payable over the period of the plan to secure an aggregate amount called Target Amount. This amount is used to pay a small premium to the Life Insurance Corporation and the rest is invested in units which earns an income and is re-invested every year. The extent of life insurance cover is equal to the target amount secured under the plan. Tax rebate under Section 88 of the IT Act, 1961, is available on every contribution. An accident cover upto Rs. 30,000 is availbale under the plan.

Benefits On Survival

At the end of the plan period, Maturity bonus along with cash equivalent to Units standing to his/her credit is payable. Maturity bonus for a 10 year plan is 5% of target amount Maturity bonus for a 15 year plan is 7.5% of target amount On Death If death occurs before the completion of the plan period, the legal heirs will receive.

Cash equivalent of Units to his/her credit. Amount of Life Insurance cover (target amount). If death occurs due to accident, the amount of accident insurance cover is payable. The accident cover is upto a maximum of Rs. 30,000 irresepctive of target amount.

Other Conditions

Minimum target amount: Rs 6,000 Maximum target amount: Rs. 75,000 10 year plan: 12 years 15 year plan: 12 years

Maximum age at entry : 10 year plan: 55 years and 6 months 15 year plan: 50 years and 6 months

Minimum premium must be Rs.800 per annum If anything unfortunate happens during the first six months, the amount of insurance is limited only ot premia paid to LIC. The amount of insurance payable if anything happens during the six months after first six months, 50% of the target amount is payable. Life Insurance cover for the membership of women having no regular and independent income is restricted to a maximum of Rs. 40,000. Life insurance cover for children is available only if they have independent regular income. In case of minors, application should be made by parents. Physically handicapped persons can join the Plan subject to a lapse of 5 years from the date of event and holding gainful employment at the time of application. If one withdraws from the plan without contributing for a minimum period of 5 years, the tax rebate under the plan cannot be availed. The tax rebate for the contribution can be availed for membership of spouse and/or children also. Under Section 80L of the It Act, 1961, income from ULIP is exempt from tax upto a limit of Rs. 15,000. Value of investments in Units is fully exempt from Wealth Tax.