When someone invests in a ULIP (Unit-Linked Insurance Plan), they combine insurance protection with market-linked investment. In the unfortunate event of the policyholder’s demise during the policy term, the beneficiary can apply for death claim benefits in a ULIP and be assured of financial support.
If you are wondering how to go about the process, here’s a guide on what the death claim payable in case of a ULIP is and how exactly to claim it.
How to Apply for Death Claim Benefits in a ULIP?
To get the death claim benefits in a ULIP, the nominee or claimant must follow a few clear steps:
Step 1. Notify the insurer
As soon as possible after the policyholder’s death, the nominee should inform the insurance company about the demise. This should ideally be done in writing, with the policy number and relevant basic details included.
Step 2. Fill out the claim form
The insurer will provide a death claim application form. Fill in the required details, including the nominee’s name, relationship, date, and cause of death, etc.
Step 3. Submit the necessary documents
Along with the filled-out application form, you will need to submit the following documents:
- Original policy document
- Death certificate (issued by the authorities)
- Proof of identity and address of the nominee
- In case of accidental death, FIR, post-mortem report, or hospital records
- Medical records or a doctor’s certificate (if death was due to illness).
The insurer may ask for additional documents depending on the circumstances.
Step 4. Wait for claim verification and settlement
Once all documents are submitted, the insurer will verify the claim. Under IRDAI regulations, the insurer generally has to finalise legitimate claims within 15 days of receiving all papers. In case of additional investigations, the timeline may extend up to 45 days.
After approval, the insurer pays what the death claim payable in the case of a ULIP is, i.e. the sum assured or fund value (or both, depending on plan type). The amount is credited directly to the nominee’s bank account or as per the chosen mode.
With respect to ULIP taxation rules, the death benefit payout is fully tax-exempt under Section 10(10D) in India, regardless of premium amounts.**
So, that was the procedure that tells you how to apply for death claim benefits in a ULIP in a straightforward way.
If you are familiar with what a ULIP is, you will know that the policy comes with more than just a life cover; it also provides market-linked returns. This might lead people to wonder: how does the death benefit differ from the maturity proceeds? Read on for the answer.
Are Death Benefits the Same as Maturity Benefits in a ULIP?
No, death benefits are not the same as maturity benefits in a ULIP. They serve two different purposes, though both pay out under different events.
- Death claim benefits in a ULIP are triggered when the policyholder passes away during the policy term. In most ULIP plans, the nominee receives either the higher of the sum assured or the fund value. Because of this, the amount under the death claim may be more generous (depending on the design of the ULIP plan).
- Maturity benefits, in contrast, are paid if the policyholder survives until the end of the policy tenure. The maturity payout is usually the fund value accumulated over the term (after deducting various ULIP charges). Maturity proceeds may be tax-exempt as well, subject to terms and conditions.**
Thus, while both benefits are part of a ULIP plan, they are distinct in trigger event, quantum, and tax treatment.
When seeking death claim benefits in a ULIP, it is important to follow the correct claim process and supply all required documents. Remember that death benefits differ from maturity payouts, and the current ULIP taxation rules treat death benefits as fully tax-free. To make your ULIP planning more efficient, consider using a unit-linked insurance plan calculator, which gives you clear estimates and helps you make better decisions.
** Tax exemptions are as per applicable tax laws from time to time.
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