What is the top-up facility of a ULIP plan?

Investing in a Unit Linked Insurance Plan (ULIP) is worth your while. But have you wondered about incorporating the top-up facilities provided by a ULIP investment?

A top-up facility which is also termed ‘top-up premium’ is used to increase the investment amount of a policyholder as a part of his policy. As an investor, you can make use of top-ups over and over again with the help of your ULIPs. In order to enjoy these top-up benefits to the fullest, see to it that you have an investment in the base policy i.e ULIPs, first. Before that, take a closer look at the details of this facility and its benefits:

What is a top facility in a ULIP Plan?

In order to tone down the complexity of a top-up facility, let’s begin with an example. We all must be aware of the working of prepaid mobile. Recharging your prepaid number of the cellphone eventually increases the talk time of your phone. However, not essentially the validity period. Similar is the case with a top-up facility of a ULIP.

With the incorporation of a top-up facility, the policyholder can easily invest a sum of the amount on top of his existing premium. In simple terms, a top-up which comes under one of ULIP benefits is a voluntary payment which is made on your regular payment of premium. Typically, these top-up premiums may vary between 1-3%. Until and unless it does not cross the mark of 25%, an investor is not liable to purchase a life cover with a top-up premium.

What are the benefits of a top facility in a ULIP Policy?

Unlike traditional insurance policies, a ULIP Policy allows its investors to efficiently handle all their financial goals and plans. So if you’re still clueless about how this top-up facility can benefit, take a look at these benefits mentioned below in order to use it to the fullest:

  • Tax benefits

The good news is that employing a top-facility in your ULIP Plan means saving taxes. As per section 80C of the Income Tax Act, 1961, the premiums that are paid towards ULIPs are exempted to the payment of taxes. Moreover, according to section 10(10D) of the Income Tax Act, 1961, the maturity amount of the policy is also tax-free.

  • Associated costs

When it comes to top-up premiums, an investor has to keep the associated costs in mind. The primary expense of the top-up facility is the premium allocation charge which covers services like the underwriting costs. Other charges that come under this category are the fund management charges as well the mortality charges. However, these charges ideally depend on the type of insurance company that you select.

  • Online payment

The payment of these top-up premiums is the easiest and the most convenient option for every investor. Top-premiums offer an online mode of payment option to its investors. However, check with your company to confirm their availability online.

  • Surplus Cash

Your cash flow decides the future of your working. So if you’re looking for the surplus flow of cash, then make use of the top-premiums to the fullest. This is because of the fact that it offers you with much-needed security and comfort in a single policy i.e. a ULIP Policy. An investor can top it up with a premium if his ULIP policy has consistently been performing well.

In order to make your investment in a ULIP Policy worthy, the top-up facility has been introduced as one of the most convenient benefits of ULIPs. In order to make the most out of your ULIP Policy, see to it that it includes a top-up facility without fail. Now that you know how these top-up facilities are advantageous to you, invest in the right ULIP Plan which offers you with one.

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