A Unit Linked Insurance Plan (ULIP) is a product that offers the best of insurance and investment. The premium paid for ULIPS is invested in debt and equity instruments, which may provide a good return over a period of time.
There are various categories of ULIPS as per the purpose: retirement, wealth creation, children education and health benefits. The investor has a choice to invest as per the risk appetite and exposure. The investment in life insurance provides exemptions and deductions under the Income Tax Act 1961 (Act). The insured can avail deduction benefits under 80C. However the life insurance policy should be evaluated on the basis of protection benefits rather than tax exemption benefits.