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How does a ULIP function?
A ULIP is a type of plan that combines insurance protection with investing opportunities. The policy specifies a death benefit, which is the sum paid to the nominee in the event that the policyholder passes away during the ULIP’s validity period. Additionally, the policyholder is entitled to the ULIP’s maturity value if they live out the whole term of the policy. This is the revenue generated by the equity and/or debt investments in the ULIP.
What does it mean to renew a ULIP?
You can choose your preferred payment method when you buy a unit-linked investment plan. You have the choice of paying your premium sporadically or all at once. You are required to pay premiums on a monthly basis or in accordance with the payment frequency, which may be monthly, semi-annually, quarterly, or annually. This kind of payment is referred to as a renewal premium since it causes your ULIP plan to be renewed. You can use a ULIP calculator to estimate future returns and the value of a ULIP investment.
The significance of renewing a ULIP policy
Here’s a closer look at how renewal can benefit you:
1. It ensures that you will make money from your ULIP for a very long time.
You can obtain a life insurance policy through ULIPs, which will be useful if an unplanned disaster occurs. ULIPs also have an investment component that promotes capital growth. Renewing your ULIP coverage will allow you to keep these benefits and your safety net.
2. Maintains your focus on your life goals
Your insurance could be cancelled if you don’t pay your premium. You have no investment to rely on and no insurance to rely on as a result.
3. Gains from tax breaks going forward.
In addition to ensuring that you continue to get ULIP benefits, renewing your ULIPs offers tax advantages. Under section 80C of the Income Tax Act of 1961, the premium you pay each year is subtracted from your total taxable income for that year up to a maximum of Rs. 1.5 lakhs.
The tax benefits mentioned in the article may not apply if you opt for the new tax regime since many tax exemptions and deductions have been scrapped within the new regime. They are also subject to any changes in the law.
How to renew your ULIP?
The ULIP renewal premium can be paid offline or online. There are many options for making this payment, and you can choose the one that suits your needs depending on the payment options the Insurer has provided.
1. Payment via cheque
The most popular offline way of ULIP renewal is this one. You can either mail your check to the life insurance company’s headquarters or leave it off in a designated drop box at the company’s branch. The bank partner collecting centres are another option for sending the check.
2. Renewal using the auto-debit service of your bank
Having an auto-debit setup for your plan ensures that you never miss your premiums. You can set up automatic debit on your credit card or bank account. When your premium is due, payment will be automatically taken from your bank account or credit card.
3. Online renewal with payment
Paying your premiums online is another convenient and easy way to ensure that you continue to gain benefits from your ULIP. Start by registering for the web portal of your insurer. After that, you can use your internet banking login or a credit card to pay the premium online.
Depending on the services offered by their life insurance company, customers can pay online using the following ways, which are accessible on the website, customer portal, or mobile application. Customers can also pay renewal premiums for their policies using third-party mobile payment platforms like Paytm, Google Pay, PhonePe, and Amazon Pay.
Considerations for online ULIP renewal
Here are a few things to think about before renewing your online ULIP.
- Know the size of your premium and when it is due. In order for you to perform the required activities on time, businesses often send payment reminders to your registered mobile phone number or email address.
- Verify that you have sufficient funds in your bank account or credit card to cover the full cost of the premium.
- You can also use this method to quickly renew your ULIP if your bank enables mobile payments.
Things to think about when renewing your ULIP offline
Here are some considerations to keep in mind while renewing your insurance offline.
- On the back of the check or demand draft, if that is your preferred mode of payment, write your policy number, name, and phone number.
- To make sure the transaction went smoothly, get in touch with your bank and/or insurance company.
The ULIP calculator is a simple tool that you can use to predict the return you might get at maturity by entering a few details.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.
