If you are looking for an investment option that gives you many benefits rolled into one, ULIPs may be just what you need. In addition to ULIP plans returns, you also have the ULIP tax benefits to depend on. Therefore, you can not only enjoy the advantage of market-linked returns from these Unit Linked Insurance Plans, but you can also enjoy a life cover that secures the future of your loved ones. In addition to this, there is the EEE tax advantage that ULIPs offer.
To better understand these benefits, let’s start by looking at the answer to the fundamental question - What is ULIP?
This will help you understand how ULIPs work.
What is ULIP?
A ULIP or a Unit Linked Insurance Plan is an investment option that comes with a lock-in period of 5 years. It offers the policyholder the dual advantage of investments as well as insurance. Depending on their risk appetite and their investment goals, policyholders can choose to invest in equity funds, debt funds, etc. . Additionally, policyholders also enjoy insurance coverage from the insurer. In return, the insurer charges periodic payments called premiums.
In case the policyholder passes away during the tenure of the plan, the insurer pays out the death benefits to the nominee.. On the other hand, if the policyholder survives the policy term, they will receive the ULIP plans returns upon maturity of the policy.
As you can see, there are different kinds of benefits offered by ULIPs. Are they taxable? We will answer that question as we explore the EEE tax advantage of ULIPs. So, let us dig a little deeper and find out what the EEE tax advantage is all about.