New Delhi, June 16 -- A unit-linked insurance plan (ULIP) is a combination of life insurance and investment, with part of the premium invested in market-linked funds such as equity, debt or balanced/hybrid funds. ULIPs are usually chosen by investors seeking insurance coverage along with the potential for wealth creation.

Ulips are increasingly adopting a mutual fund-like approach, launching new fund offers and mirroring mutual fund categorisation. The tax treatment of ULIPs depends on factors such as the annual premium, the date on which the policy was issued, and whether the policy satisfies the conditions for exemption under the income tax law.

As per revisions made during the Finance Act, 2021, the tax treatment of ULIPs issued on o...