ULIPs and NPS are both long-horizon, tax-favoured vehicles that differ mainly on liquidity and life cover. Here is how each works and what it offers.
What Is a ULIP and What Is NPS?
A unit linked insurance plan bundles life cover with investment. Part of the premium pays for insurance; the rest goes into equity, debt or hybrid funds you choose, and the policy matures as a lump sum. The National Pension System is a retirement account regulated by PFRDA: you contribute through your working life, funds grow at low cost, and at exit after 60 at least 40% of the corpus must be used to buy an annuity, with the rest available as a lump sum. One is a flexible savings contract with insurance attached. The other is a purpose-built pension account with the exit doors deliberately narrowed.
What Does ABSLI Wealth Aspire Plan Offer?
| Feature | Detail |
| Plan name | ABSLI Wealth Aspire Plan |
| UIN | 109L100V06 |
| Plan type | A unit linked life insurance plan |
| Plan options | Two options: Classic Option and Assured Option |
| Investment options | Four: Smart Option, Systematic Transfer Option, Return Optimiser Option and Self-Managed Option |
| Fund options | 21 segregated funds ranging from 100% debt to 100% equity |
| Entry age | Classic Option: from 30 days, with maximum entry age of 50 years for 5 Pay, 55 years for 6 and 7 Pay and 65 years for 8 Pay and above; Assured Option: from 18 years, with maximum of 45 years for 5 to 8 Pay and 50 years for 9 Pay and above |
| Maturity age | Classic Option: 18 to 85 years depending on premium paying term; Assured Option: 28 to 60 years |
| Policy term | Minimum 10 years, maximum 40 years |
| Premium paying term | 5 to 40 years |
| Minimum basic premium | Rs 40,000 for annual mode, Rs 45,000 for semi-annual and Rs 50,000 for quarterly and monthly modes; Rs 5,00,000 a year where entry age is 61 to 65 |
| Minimum sum assured | Rs 4,00,000, with basic sum assured equal to 10 times the annualised premium |
| Lock-in | Five years from inception |
| Fund switching | Permitted between funds within the policy |
| Partial withdrawals | Unlimited withdrawals after five complete policy years or the life insured attaining age 18, whichever is later; minimum Rs 5,000, and not exceeding 25% of the policy fund value at the start of the policy year |
| Top-up premium | Minimum Rs 5,000 |
Optional riders are available at extra cost, including ABSLI Accidental Death Benefit Rider Plus, ABSLI Waiver of Premium Rider, ABSLI Comprehensive Critical Illness Rider and ABSLI Suraksha Term Rider.
Understanding Liquidity in Long-Term Financial Planning
Liquidity is an important factor when selecting any long-term financial solution. Different financial products may have varying lock-in periods, withdrawal conditions, and access provisions that are governed by their respective product structures and regulatory requirements.
Life insurance based savings and investment products may offer features such as partial withdrawals, fund-switching options, or surrender benefits, subject to policy terms and conditions. Similarly, retirement-oriented solutions may have specific withdrawal provisions designed to encourage long-term retirement savings, with access to funds governed by applicable regulations and product rules.
When evaluating any financial product, investors should consider their anticipated liquidity requirements, financial goals, investment horizon, and overall financial planning needs before making a decision.
Tax Considerations
Savings, retirement, and life insurance products are governed by their respective provisions under prevailing tax laws. Certain contributions or premiums may qualify for tax benefits, subject to eligibility criteria and applicable conditions under the Income-tax Act and other relevant regulations.
The tax treatment of benefits, withdrawals, maturity proceeds, pensions, annuities, or other payouts is determined by the applicable provisions of prevailing tax laws and may vary based on factors such as product features, contribution levels, premium amounts, holding periods, and individual circumstances.
GST is not applicable on individual life insurance premiums. Tax laws are subject to change from time to time, and individuals are advised to consult a qualified tax advisor to understand the tax implications relevant to their specific circumstances.
Which Should You Choose?
Choose NPS if the goal is strictly retirement income and the additional deduction matters to your tax planning. Choose a ULIP if the goal could mature before 60, if you value fund switching within the policy, or if you want investment and life cover in one contract. Many salaried professionals in their thirties run both, with NPS as the untouchable retirement core and a ULIP such as ABSLI Wealth Aspire Plan as the flexible wealth layer, alongside retirement and pension plans that convert the eventual corpus into income.
Key Takeaways
- A ULIP bundles life cover with market-linked investment and carries a five-year lock-in.
- NPS is a PFRDA-regulated retirement account where at least 40% of the corpus must be used to buy an annuity at exit after 60.
- Fund switching within a ULIP does not trigger a capital gains event.
- NPS offers an additional deduction of Rs 50,000 under Section 80CCD(1B), beyond the Rs 1.5 lakh limit under Section 80C, subject to applicable tax laws.
- GST is not applicable on individual life insurance premiums.
- In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Disclaimers:
*Individual death claim settlement ratio of 98.86% for FY 2025-26, as per annual audited figures submitted to IRDAI. Tax benefits are subject to prevailing tax laws and conditions. Please read product brochures carefully and consult an advisor before purchasing any policy.
IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER. Linked insurance products are different from traditional insurance products and are subject to risk factors. The premium paid in linked insurance policies is subject to investment risks associated with capital markets. The NAVs of the units may go up or down based on the performance of the fund and factors influencing the capital market and the insured is responsible for his/her decisions. The linked insurance products do not offer any liquidity during the first five years of the contract. ABSLI is only the name of the Life Insurance Company and ABSLI Wealth Aspire Plan is only the name of the linked insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns. Past performance is not necessarily an indication of future performance.
Aditya Birla Sun Life Insurance Company Limited, Registered with Insurance Regulatory & Development Authority of India (IRDAI) as Life Insurance Company. Registered Office: One World Center Tower 1, 16th Floor, Jupiter Mill Compound, 841, Senapati Bapat Marg, Elphinstone Road, Mumbai – 400013. Toll free no. 1800-270-7000. https://lifeinsurance.adityabirlacapital.com/ | care.lifeinsurance@adityabirlacapital.com | CIN: U99999MH2000PLC128110 | Registration No. 109.
“BEWARE OF SPURIOUS PHONE CALLS AND FICTITIOUS / FRAUDULENT OFFERS” IRDAI or its officials do not involve in activities like selling insurance policies, announcing bonus or investment of premiums. Public receiving such phone calls are requested to lodge a police complaint.
For more details on risk factors, terms and conditions please read the sales prospectus carefully before concluding a sale. Life insurance coverage is available in these products.
Product UINs:
ABSLI Wealth Aspire Plan (UIN 109L100V06), ABSLI Accidental Death Benefit Rider Plus (UIN 109A024V01), ABSLI Waiver of Premium Rider (UIN 109A039V01), ABSLI Comprehensive Critical Illness Rider (UIN 109A041V01), ABSLI Suraksha Term Rider (UIN 109A042V01).
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