Once you accurately fill out the claim form and send it to the insurer, they will verify it and transfer the money to the bank account. The process will be completed within 30 days from the date of receipt of all the documents.
What Are the Maturity Benefits in ULIP?
What Happens to ULIP After Maturity?
After completion of the policy duration of a ULIP, different categories of people can raise a claim. These are as follows:
- Policyholder: If a policyholder outlives the tenure of ULIP, they are eligible to raise a claim on their policy. Under such situations, the maturity amount equals the fund value with bonuses and other loyalty benefits.
- Nominee: A nominee can also raise a claim of a ULIP in case of the policyholder's demise. However, the amount they will receive upon policy maturity will depend on the type of ULIP.
There are two types of ULIP on which the policy payout depends. These include:
Type 1: For this type, you can receive either the fund value or the sum assured, whichever is higher.
Type 2: Here, you will be eligible to receive both the fund value and the sum assured on the maturity of your policy.
Furthermore, you will also have the option to extend the policy duration by five years to keep reaping its benefits.
What Are ULIP Maturity Benefits?
The maturity benefit of ULIP refers to the sum assured along with bonuses that an insurer pays a policyholder on outliving policy duration. This helps investors in wealth creation so they can fulfil monetary goals earlier than the estimated time.
According to Section 10 (10D) of the Income Tax Act of 1961, you will not have to pay an additional ULIP tax on the maturity amount. However, to enjoy these advantages, it becomes mandatory to fulfil certain conditions. These include:
- If you have bought the ULIP before April 1, 2012, the yearly premium of your plan should be less than 20% of the sum assured to stand eligible for tax exemption on maturity amount.
- However, if you have purchased a plan between April 1, 2012 and February 1, 2021, it is compulsory to ensure that the premium is less than 10% of the sum assured to claim the ULIP maturity tax benefit.
- Furthermore, if you have purchased a ULIP after February 1, 2021, it is crucial to ensure that the total premium paid is less than ₹5 lakhs for receiving a tax-free maturity amount.
How to Claim Maturity Benefits of ULIP?
You can claim a payout on outliving the duration after the policy ends. Raising a maturity benefit claim is one of the simplest processes requiring minimal documentation. Here are some hassle-free steps that you can follow for a ULIP maturity benefit claim.
You can follow the steps below to raise a claim on the maturity benefits of ULIP:
Step 1: Collect the Policy Discharge Form and list of documents your insurer needs at least one month before the maturity date.
Step 2: Fill out the Policy Discharge Form accurately with all the essential details.
Step 3: Arrange all the crucial documents mentioned in the document list you received from your insurer.
Step 4: Send all the papers to the insurance company at least 5 to 7 working days before the maturity of your policy.
Once done, the insurer will verify the documents received. Then, they will process the maturity claim and transfer the money to a policyholder's account.
What Are the Documents Needed for Claiming Maturity Benefit?
You will need the following documents when claiming the maturity benefit of ULIP:
- Original policy papers
- Photocopy of address proof
- Photocopy of identity proof
- A cancelled cheque
- A bank mandate for containing all the bank details
ULIP maturity benefits vary with the type of plan and insurer you select. Hence, it is essential to select the most suitable ULIP type considering your premium paying capacity. Also, you should go only to reputed insurers to get the best offers for maximising your returns from the investment.
FAQs About Maturity Benefits in a ULIP
You will not be eligible for the maturity benefit on purchasing a ULIP with a yearly premium of more than ₹2.5 lakhs post-February 1, 2021. Hence, you should keep this condition in mind while buying a ULIP policy.
No, you will not be eligible to receive a maturity benefit on surrendering a ULIP during the lock-in period, that is, before at least 5 years from purchase. On the contrary, you will have to pay a tax on the surrender amount of ULIP.
Yes, you can get a tax-free maturity amount on surrendering your ULIP policy after the lock-in period of 5 years. Also, you will not have to pay any penalty or additional charges, ensuring maximum savings.
Only a policyholder can claim a maturity benefit on outliving their policy duration. On the contrary, a nominee can avail death benefit of a ULIP policy in case of the untimely demise of the policyholder.
Important Guides Related to ULIP Plans
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.