The minimum amount to invest in ULIPs varies from one plan to another. Some plans offer you the option to invest in market-linked funds with as little as Rs. 1,000 per month. Others offer different premium payment options like annually, monthly etc., while yet others give investors the choice of making a single premium payment.
Let us look at these in detail -
Minimum & Maximum Amount Required to Invest in ULIP Plans
Before choosing a ULIP plan, it’s important to understand what the ULIP minimum investment is, as well as any maximum investment limits, so you can plan according to your budget and investment goals.
There is a range of ULIP plans available in the market. The minimum investment in ULIP depends on the type of policy that you choose, the premium payment mode (single, regular or limited) and the premium paying frequency (annual, half-yearly, quarterly, or monthly). You can check the minimum and maximum premium amount in the plan’s eligibility requirements mentioned online on the insurer’s website or the product brochure.
Benefits offered by ULIP plans
Since the minimum amount to be invested varies from one plan to the next. You need to look at this parameter before choosing your plan. Also, do remember to factor in ULIP performance and the ULIP charges, so you can optimize your ULIP returns.
In addition ULIPs also offer many other benefits, some of which are discussed below.
Dual benefits of insurance and investments
ULIPs give you the benefits of an insurance cover coupled with market-linked investment opportunities. This beneficial feature is unique to Unit Linked Insurance Plans. You can also choose from various ULIP funds like equity funds, debt funds. This gives you greater scope to align your investments with your investor profile.
Tax benefits
- The death benefits paid to the nominee after the death of the policyholder are tax-exempt as per Section 10(10D) of the Income Tax Act, 1961, subject to provisions stated therein.
- The premiums you pay regularly for the plan are also eligible for deduction under section 80C of the Income Tax Act, 1961, up to Rs. 1,50,000, subject to provisions stated therein.
Fund switching options
ULIPs allow investors to switch funds up to a predetermined number of times each policy year. This means you can increase or decrease your asset allocation in the equity and/or debt funds available, depending on the market movements. With this feature, you can align your asset allocation with your life goals and with the market trends, thus optimising ULIP returns.
Things to Consider Before Investing in ULIP
Before deciding to invest in a ULIP, always check the ULIP minimum investment, charges, and long-term affordability. After checking, you would be aware if both your short-term needs and future financial goals are covered. Here are some parameters that should be considered -
ULIP Charges
Being aware of the ULIP charges like premium allocation, fund management, mortality, and policy administration fee is important because they affect your returns. So, check the charges under the plan.
Lock-in period of 5 years
Since a ULIP comes with a lock-in period of five years, your fund value cannot be withdrawn during this time. This will develop a habit of disciplined investing, but you will need to understand your own liquidity needs before buying the policy.
Ensure affordability for the long term
As ULIP is a long-term investment, it is important to assess whether you can afford to comfortably pay the premiums over the chosen premium payment term. Failure to make payments can have implications on the coverage, hence it is important to ensure that the premiums are affordable.
ULIP Minimum Premium Guide
Each insurer sets its own minimum premium amount for a ULIP. By comparing the minimum entry points, you will be able to find a plan that fits your budget and helps you achieve your financial goals. Also, compare the flexibility of different modes of payment.
Conclusion
Since there are many ULIPs that offer the option to start investing periodically even with as little as Rs. 1,000 per month, understanding the minimum investment in ULIP is important for investors. These ULIP plans are one of the preferred investments for all kinds of investors. So, check out the options available and add ULIPs to your investment portfolio as early as possible. That way, your investments have more time to grow.
FAQs
Can I start a ULIP with a small monthly premium?
Yes, many ULIPs allow investors to start with small monthly premiums. The amount can be as low as ₹1,000. So, beginners with limited budgets can access these.
Does the minimum investment in ULIP vary by insurer?
Yes, the minimum investment in ULIP varies across insurers and plans. Companies set their own entry points that may differ on the basis of policy features and premium frequency.
What is the minimum premium for single premium ULIPs?
The minimum premium depends on the policy that you choose since it varies across insurers and their products. Before buying, you should always check the plan details carefully.
Is there a maximum limit on ULIP investment?
Many ULIPs usually don’t have a strict maximum limit on the premium paid.
Can I increase my premium later if I start with the minimum investment?
Yes, most ULIPs allow the possibility of increasing the premium through top-ups (subject to policy terms and conditions) after starting with the minimum investment. This is suitable as it allows you to increase your contributions if your income increases or potential financial goals expand.
Do I still get tax benefits if I only invest the minimum in ULIP?
Yes, ULIP premiums, even at minimum levels, qualify for tax benefits under Section 80C, subject to conditions.
