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What Is the Additional Premium on ULIPs?


ULIPs are popularly known amongst investors as a way to create wealth for the future. But what if you could increase your investment returns to earn more? The top-up premium facility enables you to do so with a hassle-free process. Apart from the perks of an increased fund investment, you can avail more benefits with this feature. Here’s everything you need to know about additional premium in ULIP policies known as the top-up facility.

What Is Top-up Facility in ULIP?

The top-up premium facility is a feature available under Unit-Linked Insurance Plans where the policyholder can pay an additional amount over and above the annual premium. Now, you might wonder how does this facility benefit you? On paying a surplus amount to your insurance plan, you can increase your coverage amount or invest it into your ULIP fund.

Many a time our insurance requirements change due to increased responsibilities at home. Thus, if you need higher life cover, the top-up premium facility is the way to go. But in case you want to earn greater returns, you can easily dedicate the extra sum towards your investment fund without a worry. Therefore, you decide the end goal of the top-up premium and plan it to suit your long-term goals.

How Does Additional Premium in ULIP Work?

As the top-up premium is paid over the basic premium amount, this surplus is treated as a single premium that gives you additional coverage. Thus, the minimum sum assured you can gain is 125% of the top-up premium for policyholders up to 45 years of age. For individuals above the age of 45 years, the sum assured is 110% of the single premium. This is how your coverage amount can be increased with the top-up facility.

But in the event where you do not want the sum assured to increase but your fund value, then you can pay 25% of your regular premium. This is the capped limit that you can dedicate to your investment to gain lucrative ULIP returns in 10 years.

Things to Remember About Top-Up Facility

Here are some things you should know about the top-up premium facility before opting for it:

  • You can make a surplus payment only up to a certain limit of the total premium that can be paid every year. Your insurer shall have a minimum top-up premium margin mentioned in the ULIP policy documents.
  • This facility is only available to policyholders who make regular premium payments and don’t miss the due date
  • The top-up premium can be made any time during the policy term with zero restrictions
  • Some insurance providers may not allow top-up premium payment in the last five years of the ULIP tenure. But this may vary from one insurer to another.
  • There are some charges associated with ULIP investment that you must pay such as mortality fees and fund management charges. It is recommended to check such charges beforehand as they may differ from insurer to insurer.

Advantages of Top-Up Facility

  1. Increased returns

By pumping an additional amount into your ULIP investment, you can enable your fund to grow to give better returns. A total of 25% of your base premium can be added to your policy fund. To understand how much you can earn with the plan, check out the ULIP returns calculator now!

  1. Higher coverage

In case you have welcomed a newborn into your family, you would prefer increasing your life cover for more security. With the help of ULIP, you can! The top-up facility enables you to get higher coverage to safeguard your loved ones.

  1. Tax perks

The top-up premium paid can be claimed as a deduction under Section 80C of the Income Tax Act, 1961 just like your regular premium. Thus, you can save on taxes with such a facility as well.

You must have understood ULIP additional premium meaning with the above-mentioned pointers. Therefore, now you can reap the benefits of adding an extra sum to your ULIP policy. Ensure to check the terms and charges of availing such a facility in advance. Plan your insurance returns today to earn a lucrative payout in the future with the ULIP return calculator!