What Is the Return of Income in a Kotak Life ULIP Plan?                       

Are you considering investing in a Kotak Life ULIP plan? Learn about the return of income benefits before proceeding with it.

A Kotak Life ULIP plan is an efficient tool for both investment and insurance. When you invest in Kotak e-Invest plan, you will enjoy tax benefits as the return of income. The different tax benefits offered by ULIP are as follows:

  • Tax Benefits on Premium

Any policyholder can enjoy a tax deduction of up to ₹1,50,000 on the premiums paid for ULIPs. You must maintain your ULIP policy for five years to enjoy the tax exemptions. The tax benefits of ULIPs are mentioned under sections 80C and 10D of the Income Tax Act, 1961.

  • Top-Up Deductions

ULIP allows people to increase their investment by purchasing top-ups. The top-ups are eligible for tax deductions under sections 80C and 10D.

  • Tax Benefits for Partial Withdrawals

Partial withdrawals are not subjected to tax if you have ULIPs. When you withdraw money from your ULIP plan after five years of the lock-in period, you won’t have to bear taxes for the withdrawals. But your withdrawal amount should not go beyond 20% of the fund value if you wish to enjoy the tax benefits.

  • Tax Benefits, Investment, and Life Cover Under One Plan

ULIPs are usually more beneficial than conventional insurance plans, mutual funds, and PPFs. Life insurance guarantees lifetime cover, but it does not aid with wealth creation. Mutual funds come with good returns, but you don’t receive insurance coverage. ULIP offers tax benefits but also guarantees lifetime cover and investment advantages.

  • Long-Term Investment Tax Benefits

If you plan to invest in Kotak e-Invest plan, then you must choose a ULIP for long-term investments. The lock-in period is five years. You will profit for a minimum of five years by saving tax on premium amounts. ULIPs will offer more tax benefits when you keep investing in your policy.

  • Tax-free Withdrawals in the Event of Death

If the ULIP policyholder passes away suddenly, then their family will enjoy tax benefits. The family will likely receive an assured sum and returns from the ULIP plans. The payout is exempted from taxes as per the rules of Income Tax.

  • Tax Benefits on Maturity

According to income tax laws, ULIP offers maturity amounts with tax exemptions. Your premium amount must be below 10% of the assured sum to extract benefits on maturity. It applies to people who bought their plans before April 1, 2012.

The tax deduction condition differs for people who signed up for the policy after April 1, 2012. They are eligible for tax-free maturity if the premium is 20% lower than the assured sum. The death benefits also become free of taxes after the policyholder’s demise.

Ending Note

ULIPs are great for wealth creation and allow you to secure your family’s future. The flexible plans come with different fund options, and you can choose any as per your requirements. The tax exemption benefits should further convince you to invest in ULIPs now.

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