A unit linked investment plan (ULIP) is one of the popular investment choices as it offers the dual benefits of wealth creation along with the protection and security of loved ones. With systematic and regular investments, your money grows steadily which can help achieve long-term goals like buying your own house, your child’s education, retirement planning and more. It is essential to know the tax* benefits of the investment too. This will allow you to reap all its benefits.

Here is how your investment in a ULIP is taxed.

For ULIPs purchased after April 1, 2012

If you purchase a ULIP after April 1, 2012, you can claim a deduction under Section 80C* of the Income Tax Act of 1961 provided the premium paid towards your plan is not more than 10% of the total sum assured. The amount on maturity is also tax-exempt subject to conditions under Section 10(10D)*.
However, if the premiums paid are more than 10% of the total sum assured of the plan, the deduction is applicable only up to 10% of the total sum assured. In this case, the amount received at maturity is also taxable.

For ULIPs purchased before April 1, 2012

If you purchased a ULIP before April 1, 2012, you can claim a tax deduction under Section 80C* of the Income Tax Act of 1961 provided the premium paid towards your plan is not more than 20% of the total sum assured. The amount on maturity is also tax-exempt under Section 10 (10D)* in this case.
However, if the premiums paid is more than 20% of the sum assured, you can claim a tax deduction on the amount equivalent to 20% of the sum assured only. Under these circumstances, the amount received at maturity is also taxable.

At maturity

As stated above, the amount received at maturity of your ULIP is exempt from tax if conditions mentioned in Section 10(10D) of the Income Tax Act, 1961 are fulfiled.

Conclusion

If you keep these taxation rules in your mind, you can gain substantially from a ULIP. The ICICI Pru Lifetime Classic Plan1 is a great plan if you are looking to invest in a ULIP2. It allows you to invest your money in a combination of debt, equity, and balance funds. The plan also provides a life cover5 so you can secure your family’s financial future. This plan provides loyalty additions3 and wealth boosters4 which increase your overall returns. The plan allows you to choose flexible premium payouts that can be paid monthly, quarterly, semi-annually, and annually. The plan also offers tax-benefits* under Section 80C of the Income Tax Act, 1961.

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1 This is not a product brochure. For more details on the risk factors, terms and conditions, and the charges and benefits related to Surrender, Premium Discontinuance, Revival etc., please read the sales brochure carefully before concluding the sale.
Past performance is not indicative of the future performance.
2 Unlike traditional products, unit linked insurance products are subject to market risk, which affects the Net Asset Values and the customer shall be responsible for his/her decision. The names of the Company, product names or fund options do not indicate their quality or future guidance on returns. Funds do not offer guaranteed or assured returns. This is a unit linked insurance plan. In this policy, the investment risk in the investment portfolio is borne by the Policyholder. Unit linked Insurance products do not offer any liquidity during the first five years of the contract. The Policyholder will not be able to surrender/withdraw the monies invested in unit linked insurance products completely or partially till the end of the fifth year. On surrender, after completion of five years, the surrender value will be the Fund Value including Top-Up Fund Value, if any.
3 Loyalty Additions: Each Loyalty Addition will be a percentage of the average of daily Fund Values including Top-up Fund Value, if any, in that same policy year. Loyalty Additions will be allocated among the funds in the same proportion as the value of total units held in each fund at the time of allocation. The allocation of Loyalty Additions is guaranteed and shall not be revoked by the Company under any circumstances. If the premium payment is discontinued any time after 5 years, the number of years for which premiums have been paid will be considered as the premium paying term for the purpose of deciding the Loyalty Additions to be paid for the rest of the policy term.
4Wealth Booster: Each Wealth Booster will be equal to a percentage of the average of the Fund Values including Top-up Fund Value, if any, on the last business day of the last eight policy quarters.
Wealth Booster will be allocated between the funds in the same proportion as the value of total units held in each fund at the time of allocation. The allocation of Wealth Booster units is guaranteed and shall not be revoked by the Company under any circumstances. If the premium payment is discontinued any time after 5 years, the number of years for which premiums have been paid will be considered as the premium paying term for the purpose of deciding the Wealth Boosters to be paid for the rest of the policy term.
5 Life Cover is the benefit payable on the death of the life assured during the policy term.
* Tax benefits are subject to conditions under Sections 80C,10(10D), 115BAC and other provisions of the Income Tax Act,1961. Goods and Service Tax and Cesses, if any, will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on the above.
ICICI Pru Life Time Classic UIN 105L155V06
E/II/4996/2021-22
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