In ULIPs, the investment risk in the investment portfolio is borne by the policyholder.

Unit linked insurance plans or ULIPs are ideal for goal-based savings. They offer a dual benefit of investment and insurance in one plan. You can get high returns while also financially securing your loved ones in case of an unfortunate event. Not only are ULIPs a great type of investment but also an ideal tax-saving tool. They help you reduce tax and save money.

What is the meaning of tax* benefits in ULIPs?

The Government of India levies taxes* on the income that you earn. Premiums paid towards life insurance products such as ULIPs are eligible for deduction from taxable income under Section 80C of the Income Tax Act, 1961 up to ₹ 1.5 lakh per financial year.

How does tax* benefit in ULIPs work?

Let us take Divya’s example:

Divya invested in a ULIP to save for her daughter’s higher education. The ULIP offers a total sum assured of ₹ 15 lakh for an annual premium of ₹ 1.8 lakh. Let us now evaluate the deduction under Section 80C that Divya can claim on this ULIP premium paid. As per the tax laws, Divya can claim a deduction of premium paid up to 10% of the total sum assured. Hence, Divya can claim a deduction of up to ₹ 1.5 lakh paid as premium towards ULIP from her taxable income and not the entire ₹ 1.8 lakh, provided that she is not claiming any other deduction under Section 80C.

Let us assume another scenario where Divya invested in a ULIP with a total sum assured of ₹ 15 lakh with an annual premium of ₹ 1.5 lakh. In this case, she will be eligible to claim a deduction of an entire premium under Section 80C, provided that she is not claiming any other deduction under Section 80C.

6 Things to Know about ULIP Tax* Benefits

A ULIP is a well-rounded financial instrument that offers the dual benefit of growth of money and a life cover. In addition to these, you also get to enjoy ULIP tax* benefits. A ULIP offers long-term savings along with several tax benefits. Below are six essential details about the tax* advantages of ULIPs that should know:

Tax Benefits on ULIP Premiums

You can claim a deduction* of up to ₹ 1.5 lakh per annum on the premium paid for the policy under Section 80C of The Income Tax Act, 1961, subject to the conditions mentioned therein

ULIP Tax* Benefits on Maturity amount

Maturity benefits received under the ULIP policy are exempt under Section 10(10D)* of The Income Tax Act, 1961, subject to the condition mentioned therein

Tax-free* payout of life cover

The life cover amount that is paid to the nominee in case of an unfortunate event is exempt under section 10(10D)* of the Income Tax Act. This ensures that your family gets the complete payout without any tax cuts

Key Benefits of ULIPs

ULIPs offer multiple benefits. Below are the key benefits offered by a ULIP like ICICI Pru Signature (Online):

Insurance Plus Investment Benefits

The plan offers you a life cover that secures your loved ones financially in case of an unfortunate event. In addition, your premiums get invested in the instruments of your choice and help you earn market-linked returns. This amount can be used for your long-term goals like buying a house, child’s education or marriage, your financially independent retirement, and more.

Choose and Switch Between Funds

ICICI Pru Signature (online) is a flexible financial plan that allows you to structure your investments according to your financial requirements. You can invest in equity, debt, and hybrid funds as per your risk appetite. You can also switch from one fund to another multiple times in a financial year without any additional costs.

Partial Withdrawals

The plan offers the option to make partial withdrawals. You can choose to withdraw money from your plan whenever you need. This enables you to stay financially prepared for any emergency.

Redirection of Premiums

The plan offers premium redirection option. You can allocate your upcoming premium to a fund of your choice that is different from your existing fund. You have the opportunity to adjust your investment strategy based on your evolving financial goals and market conditions, take advantage of potential growth opportunities, and mitigate risks.

Tax Benefits

ICICI Pru Signature (online) also provides tax* benefits applicable to ULIPs. This helps you save more and adds to the overall returns from the plan.


ULIPs can help you grow your money and achieve different financial goals, while also helping you save tax. Our new-age ULIP, ICICI Pru Signature awarded as the Best ULIP policy of the Year 20211, helps you do just this. This plan not only helps you achieve your financial goals but also provides you with tax* benefits. Additionally, it offers you and your family overall financial protection with a life cover^. In this plan, your premium is invested in a fund~ of your choice – equity, debt or a combination of both. This allows you to grow your wealth as per your risk appetite.

People like you also read ...

* Tax benefits under the policy 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 more details.

~ Past performance is not indicative of the future performance.

^ Life Cover is the benefit payable on death of the life assured during the policy term.

1 The Top Rung -

ICICI Pru Signature (unit-linked non-participating individual life insurance plan) - UIN: 105L177V06


Back to Top