Unit Linked Insurance Plans (ULIPs), are insurance policies that provide the possibility for wealth building while also offering the security of a life insurance policy. In ULIPs, a portion of your premium is committed to your Life Coverage, while the remainder is assigned to a common pool of money known as a fund, which invests in equities, debt, or a mix of the two. The returns on your investments are determined by the market performance of the fund you choose.
How Does a ULIP Work?
A ULIP is a type of plan that offers insurance coverage as well as an investment. The policy stipulates a death benefit, which is the amount paid to the nominee if the policyholder dies within the period of the ULIP. Furthermore, if the policyholder survives the duration of the ULIP, he or she is entitled to the ULIP's maturity value. This is the sum earned by the ULIP's equity and/or debt investments. The policyholder is usually given the option of selecting ULIP funds and asset classes to produce these returns. This is the ULIP's investing component.
It should be noted that even if the value of the ULIP investments falls below the sum insured stipulated in the ULIP, the policy holder's nominee(s) will receive the specified death benefit.
What is the Meaning of Renewing a ULIP?
When you purchase a Unit Linked Investment Plans, you have the choice of selecting your payment mechanism. You have the option of paying your premium in a lump sum or on a regular basis. You must pay premiums every month or as specified by the payment frequency, which might be monthly, half-yearly, quarterly, or annually. This type of payment is known as a renewal premium as it results in the renewal of your ULIP plan. If you want to keep your ULIP advantages, you must pay your premiums on time. Fortunately, there are several options for making the premium payment required to renew your ULIP. Continue reading to learn why renewing your ULIP is crucial and how to pay your renewal payment.
The Significance of Renewing a ULIP Policy
Renewal is essential for a variety of reasons. Failure to do so might have a negative impact on your financial strategy. Here's a deeper look at how you might profit from renewal.
It Guarantees that You Profit from Your ULIP for a Long Time.
ULIPs provide you with a life insurance policy that will come in handy in the event of an unexpected incident. In addition, ULIPs include an investing component that aids in capital appreciation. You can keep these advantages and maintain your financial safety net by renewing your ULIP coverage.
Helps You Stay on Top of Your Life Goals.
Failure to pay your premium may result in the cancellation of your insurance. As a result, you have no investment to bank upon and no insurance to fall back on.
Continue to Profit from Tax Breaks.
Renewing your ULIPs not only assures that you continue to get ULIP benefits, but it also provides tax benefits. The premium you pay each year is deducted from your total taxable income for that year under section 80C of the Income Tax Act of 1961 upto a maximum sum of Rs. 1.5 Lakhs per annum. This lowers your taxable income and, as a result, your tax burden. The tax benefits of ULIPs are subject to amendments in tax laws if any.
Methods for Renewing Your ULIP
You may pay the ULIP renewal premium either offline or online. There are numerous possibilities for completing this payment, and you may select the option that is most convenient for you based on the payment options supplied by the Insurer. Read on for some of the most common methods for renewing your ULIP.
This is the most common offline method of ULIP renewal. You can place a cheque for the sum of your renewal premium in a marked drop box at your life insurance company's branch or send your cheque to the insurer's offices. You might also send the cheque to bank partner collecting centres.
Renewal Using Your Bank's Auto-Debit Service
You may use this method of ULIP renewal to ensure that you never miss another premium payment. You may set up auto-debit on either your bank account or your credit card. The payment will be automatically deducted from your bank account/credit card when your premium is due.
Renewal by Online Payment
Another simple and handy approach to ensure that you continue to benefit from your ULIP is to pay your premiums online. Begin by signing up for your Insurer's online portal. Following that, you may go online and pay the premium with your internet banking login or a credit card.
Customers can pay online using the following options, which are available on the website, Customer Portal, or mobile application, depending on the services given by their life insurance provider:
- Credit Card
- Bank Debit Card
- Internet Banking
- Unified Payments Interface
- EMI on certain credit cards
Renewals Via Third-Party Apps
Customers can also pay renewal premiums for their policies using third-party payment mobile applications like as Paytm, Google Pay, PhonePe, and Amazon Pay if their specific life insurance provider offers these services.
Things to Consider for Online ULIP Renewal
Here are some things to consider while renewing your ULIP online.
- Be aware of your premium amount and the due date. Companies typically send payment reminders to your registered cell phone number or email address so that you may complete the necessary tasks on time.
- Make sure you have enough money in your bank account or credit card to complete the premium payment.
- If your bank accepts mobile payments, you might also utilise this approach to renew your ULIP swiftly.
Things to Consider while Offline ULIP Renewal
Here are some things to bear in mind if you're renewing your coverage offline.
- Write your policy number, as well as your name and phone number, on the reverse of the check or demand draft, if that is your chosen method of payment.
- Contact your insurance and/or bank to check that the transaction was completed satisfactorily.
It's always a good idea to check with your insurance provider to see what payment choices they accept. You might also call the insurance agent who assisted you in obtaining the coverage. They will undoubtedly guide you in this regard. You may also go to the company's website and look for customer assistance alternatives before contacting them for further information. Once you've determined your options, you may select the setting that is most convenient for you.
Note- IN ULIP POLICIES, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER
Unit Linked Life Insurance products are different from the traditional products and are subject to market risks.
The premium paid in Unit Linked Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions.
Please know the associated risk and applicable charges from your Insurance Advisor or the intermediary or the policy document issued by the insurance company.
Tax benefits are as per provisions of Income Tax Act, 1961, and subject to amendments made thereto from time to time.