Invest 4G

Under the Invest 4G Unit Linked Insurance Plan, you may be entitled to tax benefits under Section 80C and Section 10(10D), as per the Income Tax Act, 1961. These include, first of all, tax benefit on the premium paid towards a ULIP. This amount of premium is allowed as a deduction under Section 80C of the Income Tax Act up to a limit of Rs 1.5 lakhs. The next tax benefit is in the form of tax savings on the withdrawals made or the amount you receive as a part of the policy, whether it is the maturity benefit received at the culmination of the plan or death benefit received by the beneficiary upon the death of the policyholder or a partial withdrawal during the term of the plan. All such receipts are tax-free in the hands of the receiver. The plan also allows for partial withdrawals, so that you can tend to any liquidity requirements or emergencies that strike. You can make these partial withdrawals in multiples of 1000s, 6th policy year onwards, provided all due premiums for first 5 policy years have been paid. These partial withdrawals made without completely surrendering the whole plan, are also completely tax-free

Apart from these, the ULIP plans tax benefits also extend to their exemption from the Long-term capital gains tax. Often referred to as the LTCG tax for short, this tax provides for the taxation of the profits made through long-term investments. ULIPs, including the Invest 4G, are exempt from this tax.

A lock-in period is, as the name suggests, the period during which you are locked into the ULIP scheme. During this period, as you are not able to make withdrawals.

In the case of Invest 4G, the lock-in period is 5 consecutive policy years from the date of commencement of policy during which no benefits will be payable, except in case of death of the life assured.

This is in line with the latest guidelines of the Insurance and Regulatory Development Authority of India (IRDAI). In 2010, the lock-in period was extended from 3 years to 5 years, including top-up premiums. This increase was brought in to signify that ULIPs are meant to serve the purpose of long-term investment goals.

If you surrender or discontinue the ULIP during this 5-year stipulated period, you will receive no liquidity or payout at the end of 5th policy year only. Withdrawals are allowed after the end of the lock-in. Here’s how this works: if you stop paying premiums during the lock-in period, you are given the option to either revive the policy within the revival period or go ahead with the withdrawal from the policy without any risk cover at the end of the lock-in period.

As is clear, it is advisable to stay invested in your Unit Linked Insurance Plan for longer durations to be able to reap the benefits. You can always exercise the option of fund switching if you feel like they’re underperforming, but it is always a good idea to stay invested for longer period even beyond the lock-in period.

Sometimes emergency strikes and there is a need for liquid funds. It is understandable that you might want to draw into your investments. For this purpose, you are allowed to make partial withdrawals without having to completely surrender it. Partial withdrawals are allowed from the 6th year, i.e. when the lock-in period is over and all premiums for the first 5 policy years have been paid. You are allowed to take a minimum amount of Rs. 5000 and a maximum partial withdrawal amount that leaves the fund value at least 120% of the annualized premium immediately after the withdrawal. You can make as many partial withdrawals as needed in a policy year, subject to the above conditions, free of charge.

In fact, if you have chosen Life Option with Premium Funding Benefits, then the amount of your death benefit is not reduced by the partial withdrawals made by you.

However, if you wish to surrender your investment in the Invest 4G Unit Linked Insurance Plan, then it is treated differently. If you surrender the policy within the first 5 policy years, that is within the lock-in period, then surrender charges are levied on the fund value and this amount is transferred to the Discontinued Policy Fund and will earn at least a minimum guaranteed interest rate of 4% or as prescribed by IRDAI from time to time. The proceeds of the discontinued policy will be paid to you only after completion of the 5th policy year. On the other hand, if you surrender after the 5-year lock-in period, the fund value will be paid to you immediately without any surrender charges or penalty.

By definition, a maturity benefit refers to a lump-sum amount that the insurance company pays you upon the maturity of the insurance policy, i.e. when the policy term ends. In the case of Invest 4G Unit Linked Insurance Plan, this is no different.

The Invest 4G policy matures at the end of the policy term as chosen by you at inception. You will receive an amount equivalent to the Fund Value which is calculated on the basis of the prevailing NAVs (Net Asset Value) multiplied by number of units at maturity. Once you receive this fund value, all the benefits in policy gets terminated.

Sum Assured under Invest 4G is 10 times of Annualized Premium in case of regular and limited pay. In case of Single Pay, Sum Assured is 1.25 or 10 times Single Premium basis Age at Entry

Apart from this, the Invest 4G also provides fund value related Loyalty Additions from the end of every 5th policy year starting from the commencement of the Policy i.e. 5th Policy Year, 10th Policy Year, 15th Policy year etc. if you have paid all the premiums.

Yes, the Invest 4G offers death benefits. Like any other Life Insurance Plan, the Invest 4G also comes with the provision of death benefits. Death benefits imply that in the case of the unfortunate death of the life assured during the term of the policy, death benefits are paid to the beneficiary or nominee or the claimant as per the policy documents.

What is the quantum of death benefits paid depends on the option chosen by the life assured under the scheme. There are three benefit options. The first is Life Option. This means that the death benefit paid out is the higher amount of either a) Sum assured less partial withdrawals made during the last two years b) Fund Value as on the date of intimation of death claim c) 105% of all the premiums paid up to the date of death.

The Second Option is the Care Option. Under this option, death benefits are paid as higher of one of the following as a lump sum: a) Sum Assured b) 105% of all premiums, paid up to the date of death. Besides this, the Fund Value is paid when it reaches maturity and all future premiums are paid for by the insurer as and when due.

The third option is the Century Option. Under this option, the death benefits are equivalent to higher amount of either a) Sum Assured less partial withdrawals, if any, in the preceding two years, or b) the fund value as on the date of intimation of death claim, or c) 105% of all premiums paid up to the date of death.