ULIPs Are Back: Is Your ₹1.5L Tax Play Worth It?

LIC sees ULIP demand bouncing back in the second half of FY27. Before you buy one for tax savings, here's what every salaried Indian must check — charges, lock-in, and whether a plain ELSS beats it.

Here's what happened: LIC's top management has flagged a recovery in ULIP demand and expects the second half of FY2026-27 to deliver stronger premium collections than H1.. Alternate distribution channels — bancassurance, online platforms, and brokers — are growing faster for LIC, reducing dependence on traditional agents.. LIC does not foresee major business disruption from the proposed IDBI Bank divestment, which currently acts as a bancassurance partner for distributing its policies..

What you should do: Ask for the 'Benefit Illustration' document before buying any ULIP — it legally must show projected returns at 4% and 8% net of all charges, so compare these with what a plain ELSS would return.. Check the premium allocation charge and policy administration charge in year 1 and year 2 — these can consume 15-25% of your first-year premium before a rupee gets invested.. Compare your ULIP's 5-year lock-in cost against ELSS mutual funds (3-year lock-in, no mortality deduction) using a free SIP calculator before committing to any Section 80C product this March..

If your ULIP annual premium crosses ₹2.5 lakh, maturity proceeds become taxable under capital gains rules introduced in Budget 2021 — the tax-free exit many agents still pitch no longer applies at that premium level.