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Life Insurance as an Investment in 2025: Rise of ULIPs and Hybrid Policies

Submitted by admin on July 21st, 2025

It is not finning the year 2025 that the life insurance is still considered as solely a protective means but now it is greatly accepted as an investment strategy. Like any modern sophisticated finance product, Unit Linked Insurance Plans (ULIPs) and Hybrid life insurance products have been winning massive popularity with increasing understanding of the financial market coupled with changing demands of consumers. The best thing about these plans is that in case of these plans, you get both life cover and a wealth creation plan, which can be appealing to both experienced and young earners.

ULIPs and Hybrid Policies The Rise of ULIPs and Hybrid Policies

Unique life insurance products such as ULIPs give you an insurance cover and at the same time invest in equity, debt or balanced funds. Policyholders could select the funds they want to allocate depending on the risk appetite and the desired financial objectives and most of the contemporary ULIPs include flexible switches in funds at minimal or zero cost.

Next-gen ULIPs currently provide:

• Low fee because of the virtual sales point.
• Increased fund performance and NAV transparency.
• Variabilization achieved by add-on riders and joint premium schedules.

The same also applies to hybrid policies like Endowment Plans and Money-Back Plans which continue to be of significance, with the conservative investor. These products give assurance as far as the maturity benefits and periodic payouts/ bonuses are concerned and as such they are long term in their applications such as in planning the education of the children or life in retirement.

Tax Benefits continues to be a Good Motivation

Although income tax rules have changed, tax advantaged remains a major factor in the popularity of life insurance investments.

1. Section 80C:

The premiums made out to an insurance policy are the deductible under Section 80C of the Income Tax Act, and the maximum limit is 1.5 lakh rupees annually.

This is the premiums on ULIP, endowment policies, and even term insurance.

2. Section 10(10D):

The proceeds of the maturity of life insurance plans are by the rule of 10(10D) are exempted without any tax deductions (condition such as the premium per year should not exceed 10% of the sum assured on the policies issued)after April 1, 2012).

This makes ULIPs especially attractive for long-term investors seeking tax-efficient returns.

Note: From April 1, 2023, if the aggregate premium for ULIPs exceeds ₹2.5 lakh per year (for non-ULIP traditional savings policies, ₹5 lakh as per Budget 2023), the maturity proceeds may become taxable. However, policies taken for genuine protection-cum-savings are still favored for tax relief.

Conclusion: A Smarter Way to Secure and Grow Wealth

In 2025, life insurance is not just about death benefits. ULIPs and hybrid policies allow policyholders to grow their wealth while staying protected, making them ideal for goal-based planning — be it buying a home, securing a child’s future, or planning for retirement.

Combined with continued tax-saving advantages, these products offer a compelling reason for investors to look beyond traditional instruments like PPF or FDs. Life insurance, when chosen wisely, can serve as the cornerstone of a diversified financial portfolio.