Is Your ULIP Strategy Outdated? Discover the New Trends

ULIP plans are a smart choice for individuals looking to combine the dual benefits of Protection Plans and Investment Plans in one financial product. While these plans feature numerous benefits, the changing regulations, tax implications, and market offering may make your traditional ULIP investment strategy obsolete.

This blog shares the latest ULIP trends and investment strategies so you don’t miss opportunities to maximise returns.   

Introduction to ULIPs 

Unit Linked Insurance Plans (ULIPs) like the Shriram Life Wealth Pro Plan (UIN: 128L096V01) is a hybrid financial product that provides life coverage to policyholders and their family members while letting them enjoy market-linked returns for wealth creation. 

A portion of the premium paid on ULIP plans is used to secure Life Insurance coverage, while the balance is spent on market securities, such as debt funds, equities, balanced funds, etc., of the policyholder’s choice. 

When ULIP was first introduced in the Indian market, it received criticism because of the associated charges, unclear policy structure, and high commissions paid to distributors. 

However, after IRDA’s intervention and reforms in 2010, limits were imposed on charges and ULIPs were made more transparent for investor protection.

Since then, ULIPs have evolved into investor-friendly financial tools that facilitate wealth creation and financial safety for policyholders’ families.                   

Latest Trends in ULIP Investment

Return of Mortality Charges 

Mortality charges refer to the fees deducted by insurers to cover the risk of providing death benefits (sum assured) to nominees if the policyholder dies during the policy term. 

Traditionally, the mortality charges on most ULIP plans were non-refundable. However, many insurers now provide a return of mortality charges. They add the deducted charges to the fund value upon maturity, increasing the overall returns.

Tax on Capital Gains

Previously, high-premium ULIPs enjoyed tax exemption u/s 10(10D) but the revised tax implications made maturity proceeds taxable if their premium payment exceeded  ₹ 2.5 lakh in any year during the policy duration. This rule applies to ULIPs purchased after 1st February 2021.

The 2025 budget also released a new rule wherein ULIPs whose annual premium exceeds 10% of the policy value will attract long-term capital gains (LTCG) tax on maturity. Hence, anyone planning to invest in any types of ULIP plans should consider choosing a lower premium amount for maximum tax benefits. 

You can also complement your ULIP investments with our risk-free Savings Plans or Child Plans to accomplish multiple financial goals faster. 

Preference for Life-Stage ULIPs

Of all the different types of ULIP plans, many investors now prefer life-stage ULIPs because of their dynamic asset allocation strategy. They adjust the investment mix between equity and debt based on the policyholder’s age and risk profile. 

For example, these plans may initially invest in a higher proportion of equity funds and fewer debt funds for young investors. As they age, life-stage ULIPs may gradually transfer a majority of investment to debt funds and fewer amount to equity funds to preserve your accumulated amount.

Latest Strategies to Invest in ULIPs   

Anyone investing in ULIP plans should remain informed on the latest tax implications, policy structure, features, etc., to choose the right plan. Use the available top-up options to invest additional money to boost returns during progressive market conditions and transfer funds to debt instruments during volatile markets. 

Everyone should continue monitoring and reviewing fund performance to make relevant fund switches. Consider consulting a certified financial expert for personalised guidance if you’re overwhelmed with the process and cannot make independent decisions. 

Types of ULIP Plans

Single premium ULIPs

As the name suggests, these are ULIPs where policyholders must pay the entire premium upfront in a single payment. While they provide the same benefits as other traditional ULIPs, they stand out for eliminating the need to make future premium payments. 

It is beneficial for people who don’t have enough time and memory muscle to make multiple, timely payments. You may explore our Shriram Life Fortune Builder Plan (UIN: 128L038V03) as this single premium ULIP provides impressive flexibility, cost-free fund switches, tax benefits, and numerous other benefits. 

Regular premium ULIPs 

They are traditional ULIPs where policyholders pay a predetermined premium at regular intervals, such as monthly, quarterly, or yearly. These plans are generally preferred by salaried employees who can pay small premium amounts consistently every month. 

If you’re looking for a good regular premium ULIP, consider exploring the Shriram Life Growth Plus Plan (UIN: 128L066V03). Besides providing secure life coverage to your loved ones and facilitating wealth creation, it provides flexibility, cost-free fund switching and redirection of premium, loyalty benefits, riders, and more.      

Conclusion

ULIP plans are excellent financial tools for achieving the dual goals of wealth creation and strengthening the family’s financial future when you’re not around. If you want to maximise your ULIP returns, ensure you keep adjusting your investment strategy according to the changing trends. You can find the best ULIP plans at Shriram Life Insurance, designed to fulfil diverse financial goals.