Dhanteras has long been considered an auspicious occasion for wealth, prosperity, and new beginnings. Traditionally, people invest in gold, silver, or real estate during this festive season. However, as financial awareness grows, modern investors are shifting toward smarter, more versatile investment instruments. Among the emerging favorites this year is the Unit Linked Insurance Plan (ULIP) — a product that blends investment, insurance, and tax benefits into one powerful financial tool.
ULIPs have evolved into modern, transparent, and cost-effective solutions that address today’s investor priorities: security, tax efficiency, and long-term wealth creation.
Unlike traditional investment products that focus solely on returns, ULIPs offer a balanced combination of market-linked growth and life insurance protection. The earlier perception that ULIPs were complex and expensive has changed drastically, thanks to reforms introduced by the Insurance Regulatory and Development Authority of India (IRDAI). These changes have improved transparency, reduced costs, and made ULIPs more accessible for retail investors.
Now, investors can manage their portfolios digitally, track performance in real time, and benefit from optimized fund allocation — all while ensuring their family’s financial safety.
One of the biggest attractions of ULIPs lies in their dual tax advantage. Under Section 80C of the Income Tax Act, investors can claim a deduction of up to ₹1.5 lakh on their annual premium. Furthermore, under Section 10(10D), if the annual premium is ₹2.5 lakh or less, the entire maturity amount is tax-free.
This means investors not only save tax while investing but also enjoy tax-free maturity benefits. The death benefit paid to nominees is also exempt from tax, ensuring long-term financial protection for the family.
The September 2025 GST 2.0 reforms provided a major boost to the life insurance sector by removing GST from all life insurance products. This move has made ULIPs even more attractive since they now stand as the only market-linked investment option that is completely tax-free — with no direct or indirect tax burden.
Whether it’s planning for retirement, a child’s education, or home ownership, ULIPs now provide a holistic, tax-efficient investment solution.
Previously, ULIPs were considered expensive due to multiple layered charges like fund management fees and policy administration charges. However, IRDAI’s recent guidelines have significantly reduced these costs.
Total annual charges for the first 10 years cannot exceed 2.25%.
Fund Management Charges (FMC) are capped at 1.35% per annum.
In addition, online ULIPs have minimal or no agent commissions, ensuring that a larger share of the investor’s money goes directly into the market funds. This enhances the compounding effect, maximizing long-term returns.
ULIPs stand out because they combine investment with life insurance coverage. In case of the investor’s untimely death, the insurance company continues to pay the remaining premiums under the Waiver of Premium feature. This ensures that long-term financial goals — such as a child’s education or home purchase — remain unaffected.
Such protection is not available in traditional investment products like mutual funds, giving ULIPs a unique edge.
ULIPs also offer complete flexibility to switch between equity and debt funds depending on market conditions — and this switching is 100% tax-free. This allows investors to safeguard their portfolios during volatile periods and capitalize on growth opportunities when the market performs well.
ULIPs are designed for long-term wealth creation. With a minimum lock-in period of five years, they encourage disciplined, regular investing — a crucial element for compounding growth.
For instance, if a 30-year-old invests ₹10,000 per month for 20 years at an estimated 15% annual return:
In a direct mutual fund (FMC 0.55%), the post-tax corpus would be around ₹84.24 lakh.
In an Axis Max Online ULIP (FMC 1.25%), the corpus could reach ₹86.49 lakh, and it would be completely tax-free.
This example clearly demonstrates how ULIPs can outperform mutual funds in long-term, tax-adjusted returns.
ULIPs have transformed from complex insurance products into comprehensive, investor-friendly financial tools. With tax-free maturity, no GST, reduced costs, and built-in life protection, they have emerged as a complete investment solution for the modern Indian investor.
This Dhanteras, instead of choosing traditional assets, consider starting a new investment tradition with ULIPs — where your money not only grows but also safeguards your family’s future with unmatched tax efficiency and security
