Did i mess up with this ulip?

magnet

Active Member
#1
Well around in march 2005 i got a hdfc unit link pension plan...for which i pay a regular annual premium of 10k......I had no idea wht ill get except the fact that ill get tax benefit on premium paid and all ...

Every year during tax filing also the Ca used to deduct those 10k from my overall income and used to file the remaining as taxable income...

In around 2007 i got intimation under section 143 that i have assessed the income incorrect....and have to pay ard 2k tax...which when i showed to my ca......He said the ppl forgot to count the 10k amt in overall income and forwarded a letter to it dept and suggested to rectify the mistake under section 154 and issue fresh order.....which never came(2007 year)

Now while reading newspaper i came across following article from vivek kaul of dna newspaper




Now i checked my policy and was shocked to see that sum assured is only rs 1k....That means according to artcile i shouldnt get more than 200 rs deduction on tax rather than 10k which i used to get

I dont know whether this stuff used to exist or just came under law now.....

Now seeing that i might be in some messed....i m thinking to surrender the policy...i already have made payment for this year(now overall 5 years).....and the article came just a week bak so had no idea.....I m thinking to continue to claim rebate as normal as i used to do...and than surrender the policy in later part of this year...and get whtever money i have invested and all and invest at some other place...overall 50k invested but the latest premium is not being shown invested somewhere ....so for 40k i had ard 37k amt so far...thats the reason once i see the latest premium getting invested ill surrender

The policy plan details are mentioned here....

http://www.personalfn.com/insurance/productarena/ulip/pension/hdfc.html

Suggestion needed what should i do now?
 
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kapil123

Well-Known Member
#2
Re: Did i messed up with this ulip?

Please check the policy again as there seems to be a mistake going by the figures of Sum assured of Rs. 1K for a premium of 10K. I hope you are not confusing the Sum Assured with the amount that is deducted from the premium as Insurance charges etc.
 

magnet

Active Member
#3
Re: Did i messed up with this ulip?

no it does mentioned sum assured as rs 1k only......ill b scaning all my documents soon so that i can elaborate more properly....giv me some time

Also i have posted the same topic on another tech forum...and the guys wanted information like that mine is not a single premium ulip plan...but i pay single premium for a year...so isnt mine the same ???
since the personalfinance link mentions to pay premium of 25k to b it to b single...i m confuse on that parameter


plus:::i mailed the author...
here is his reply

Whatever is written in the article is the way it is....Most CAs don't know about it... Most insurance companies don't talk about it while selling a single premium Ulip

Vivek

Note:: JUst found out mine is not single premium ulip...which means only 1 premium paid for the whole term and not annual which misconception i had got....so on tax front its no mistake i guess....

A bit relieved now..lol



But do the 20% rule count for my policy too as sum assured is only 1k plus the investment worth upon death....

I mean ....still i shd get full 10k deduction or just 200 buks
 
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bandlab2

Well-Known Member
#4
Re: Did i messed up with this ulip?

in single premium ulip, your have to opt for min 5 times your premium for insurance coverage, or else you will not get the tax benefit
 

magnet

Active Member
#5
Re: Did i messed up with this ulip?

mine is not single premium since i paid for 5 years its continuous....(regular to b precise)

I just wanted to know now.....

m i eligible for 10k total deduction or just 200 buks since sum assured according to policy is only 1k
 

prasadam

Well-Known Member
#6
Re: Did i messed up with this ulip?

mine is not single premium since i paid for 5 years its continuous....(regular to b precise)

I just wanted to know now.....

m i eligible for 10k total deduction or just 200 buks since sum assured according to policy is only 1k
sir,

after going through the link provided by you, my understanding is that

1) it is a pension plan.
2)you are paying premium in instalments i.e., not a single premium policy.
3) deduction is available u/s 80CCC.
4) sum insured is accumulated fund value + 1k and not just 1k.

("What are the Benefits?
At the chosen vesting date, the unitised fund value will be available to secure pension benefits. Subject to the prevailing regulations, part of this value can be taken in the form of a cash lump sum and the rest converted to an annuity at the rate then offered by HDFC Standard Life. Alternatively, if it is permitted by the prevailing regulations, the proceeds net of any cash lump sum can be used to buy an annuity with any other insurance company who will accept such business. The current maximum limit for any cash lump sum is one-third of the unitised fund value on vesting.

On death the unitised fund value will be paid along with a cash lump sum of Rs. 1,000. The beneficiary may use the proceeds to purchase pension benefits for the surviving spouse.)"


so, you need not worry and continue trusting your CA.
 

magnet

Active Member
#7
Re: Did i messed up with this ulip?

Thanks for the reply...but still i have confirmed for all insurance the 20% rule applies not only for single premium...Also if Ulip are withdrawn within 2 years time of applying all your deduction stuff is cancelled and u have to pay tax on that income

Now consider my scenario ..when i made first payment...10k....ard 70% would had been invested...since all ulip has higher charges at 1st level(year)...

now consider 7k is unutilized in that scenario +1k assured total 8k...i(my family) would had got if i was no more(lol god forbid)...I paid 10k premium......for 8k assured sum...now according to article

20% on that means only 1600 buks exemption on income i should have counted.....but CA counted 10k total....

Getting my point......My CA has asked for exemption much more than what i deserved...so isnt that a mess stuff(prosecuting material stuff)--fishy stuff
 
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prasadam

Well-Known Member
#8
sir,

under sec 80CCC you are eligible for a deduction of 10,000/- ( Rs. 1lakh from 2007-08) from your total income. which means depending on your tax slab, you will get a tax benefit of 1000 to 3000 plus surcharge.

your Ca might have claimed deduction from taxable income. Even if the claim is deduction of 10000 from tax, the I.T. department will ask you to pay the tax along with interest.generally the matter ends there and you will not be prosecuted.

now, coming to the fund value and surrender value etc., that is a different thing and has to be analysed with wrt to your financial status, retirement plans etc.,
 

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