What Is The Full Form Of ULIP In Income Tax?
ULIP full form in income tax is Unit Link Insurance Plan. It is a kind of financial plan wherein the policyholder can invest his or her money in various kinds of funds such as equity, debt, or mixed funds and also avail of life insurance along with investment in a long-term savings plan. This dual purpose helps to ensure the protection of the insured’s family’s future, as well as wealth accumulation over the years.
Features and Benefits:
The main attraction of ULIPs is that they provide both insurance and investment in one plan. It offers policyholders the benefit of both insurance and an option to invest in one plan. Policyholders also have the choice of different fund options based on the risks they are willing to undertake and financial objectives. Options that could be availed may be stock-focused funds to provide for higher returns, debt funds that ensure stability, or a mix of both.
Charges and Costs:
ULIPs have different fees such as charges for premium allocation, policy administration, managing the funds, and mortality charges. All these costs are the potential costs that may have a noticeable effect on the total returns from the investment. However, the new rules from the Insurance Regulatory and Development Authority of India (IRDAI) have capped these charges to no more than 2.25% in one year, thus making ULIPs much more competitive as well as a good alternative against other investment options.