ULIPs are set to get more attractive, post-Budget.
Anyone buying a Unit-Linked Insurance Plan (Ulips) in the first year of the policy will save Rs 200-500 on a premium of Rs 10,000, with the finance minister removing service tax charged on premium allocation and policy administration charges.
However, for the entire tenure of the policy, the benefit tapers down to Rs 20 per year per Rs 10,000 premium paid.
Life insurance companies have been demanding that the government levy service tax only on the fund management charges levied in a Ulip instead of levying service tax on the entire range of charges, to bring parity with the mutual fund industry.
SB Mathur, secretary general of Life Insurance Council, said, “We are grateful to the finance minister for removing the service tax anomalies in Ulips.