5 Ways ULIPs Reward Long-Term Investors

Written by : Knowledge Center Team

2025-11-11

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In the world of investment or otherwise, those who stay longer are rewarded better than short-term investors. Unit Linked Insurance Plan is no exception to this rule. ULIPs are unique financial instruments that combine life insurance coverage with market-linked investment opportunities, making them ideal for disciplined, goal-oriented investing. In fact, ULIP plans have features to reward investors who stay invested for a long time. In this blog, we explore how ULIPs are designed to benefit investors who choose to stay invested for the long haul.

Key Takeaways

ULIPs allow tax-free partial withdrawals after 5 years to meet evolving life goals.
Loyalty additions and wealth boosters increase fund value the longer you stay invested.
Upon untimely demise, your family gets at least 105% of the total premiums or the sum assured, whichever is higher.
From systematic transfers to auto fund rebalancing, ULIPs offer multiple strategies to balance growth and safety.
ULIPs offer maturity benefits and ₹1.5 lakhs deduction under Sections 10(10D) and 80C, respectively, if premium limits are met.

ULIPs are long term planning tools. With features like tax efficiency, loyalty rewards, and smart portfolio management, ULIPs are built to benefit disciplined investors.

Here are five such features of ULIP insurance plans which reward long-term investors:

Key Rewards of Investing in ULIP

ULIPs are long term planning tools. With features like tax efficiency, loyalty rewards, and smart portfolio management, ULIPs are built to benefit disciplined investors. Here are five such features of ULIP insurance plans which reward long-term investors:

1. Meet Multiple Goals Using Partial Withdrawals

Long-term investors can use ULIP’s tax exempt withdrawal facility after the lock-in period of five years. Partial withdrawal facility helps you use a single ULIP plan to invest in and meet multiple financial goals over time.

However, investing regularly and for a long time is important to achieve better results. ULIPs offer multiple fund options, and for optimal growth, you should allocate a portion to equity growth funds wisely.

Once your corpus has grown significantly you can start withdrawing the money to meet your goals, within the policy tenure. You can keep investing at the same time to keep adding the boosters to your corpus.

2. Loyalty Additions

Loyalty additions are bonus units credited to your account every few years, provided:

You have been paying the premiums regularly
You stay invested for more than five years (lock-in period)

Loyalty additions are one of the direct benefits you receive for your discipline and persistence with your investments.

Also Read - Investment plan for 5 years

3. Wealth Boosters

Wealth boosters, like loyalty additions, are added benefits which boost your portfolio value if you stay invested long enough. Both wealth boosters and loyalty additions increase the number of units in your portfolio.

With Canara HSBC Life Insurance Plans:

You have been investing regularly and
The policy has not paid a death claim

4. Premiums Returned

Regardless of how markets performed and where your investment value stands, ULIPs protect your investment in your family’s financial goals. While you have a large sum assured in the policy, your premium payments are likely to surpass the sum assured in the long run. But the ULIP will always have your back with the following rule:

“A ULIP will pay at least 105% of the total premiums to your family upon your demise within the policy term.”

For example, If you start investing ₹ 100,000 a year in a ULIP, your available life cover in the policy will be ₹ 10 lakhs (10 times the annual premium). Assuming that your policy tenure is 20 years and you will keep investing throughout the policy tenure, you will exceed the sum assured within 11 years; i.e. you will invest ₹ 11 lakhs in the plan in 11 years.

If you, unfortunately, meet your ultimate fate after the 11th premium payment, your family will receive at least ₹ 11.55 lakhs, regardless of the value of your funds in the plan. If your fund value is higher than ₹ 11.55 lakhs, the family receives the fund value as death claim.

Canara HSBC Life Insurance even has the option to continue your policy as planned with premiums funded by the insurer. So, your family can still achieve the goal you intended in the beginning. In this case, as well, your family receives the higher of the following upon your demise:

The Sum Assured
105% of Total Premiums Paid

5. Portfolio Management for Safety & Return

Unit Linked Insurance Plans (ULIPs) offer a variety of portfolio management strategies tailored to different risk profiles. Whether you're a conservative investor seeking capital protection or a risk-taker aiming for higher returns, ULIPs allow you to allocate your funds between equity, debt, or balanced options. These strategies are managed by professional fund managers who continuously monitor market trends and adjust the asset mix to optimise performance.

Moreover, ULIPs often provide features like automatic portfolio rebalancing and switching between funds, which adds flexibility and enhances risk management. Over time, this can help in both wealth accumulation and capital preservation. It's important to remember that long-term investing plays a crucial role here. ULIPs are most effective when given sufficient time to ride out market fluctuations and harness the power of compounding. The longer you stay invested, the better your chances of achieving a balanced mix of safety and growth.

ULIPs are Tailor Made for Long-Term Investment

ULIPs are one investment option which is made for long-term investors. If you think of growth, and safety ULIPs can offer both efficiently. Added to all the features and advantages you have with a ULIP is the tax efficiency.

ULIPs offer flexibility to switch between equity and debt funds multiple times during the policy term without incurring any tax, as long as the policy qualifies under Section 10(10D). For ULIPs issued on or after 1st February 2021, the maturity benefits are tax-free only if the annual premium is below ₹2.5 lakh and does not exceed 10% of the sum assured.

If the annual premium is ₹2.5 lakh or more, the maturity amount becomes taxable, and gains above ₹1 lakh attract a 10% Long-Term Capital Gains (LTCG) tax. However, the death benefit remains fully tax-exempt under Section 10(10D), regardless of premium size. ULIP premiums also qualify for tax deductions up to ₹1.5 lakh per year under Section 80C, provided the investment complies with the applicable conditions.

Just make sure the life cover sum assured you chose, in the beginning, is at least 10 times of your annual premium. Or, in other words, you can invest a maximum 10% of the policy sum assured every year in ULIP and keep your investments tax exempt. So, if you're looking for a disciplined, tax-efficient, and flexible way to build wealth and protect your family, ULIP plans offered by Canara HSBC Life Insurance can be a smart long-term investment choice.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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Canara HSBC Life Insurance offers online ULIP plans that blend life insurance protection with investment growth, helping you build wealth while securing your family's future.