What are Top-Up Premiums in ULIP Policies?

People prefer ULIP investment plans nowadays due to the series of benefits that they offer. They are maturity benefits, tax exemption, death benefits and several others. Unit-linked insurance plans (ULIP plans) are insurance plans that provide you with life insurance cover and investing freedom, along with market-linked ULIP plan returns. 

In addition to the protection and advantages of a standard insurance plan, policyholders can participate in various securities, mutual funds, and stocks, among many others. ULIP plans also impart ULIP top-up tax benefits. With a top-up premium in ULIP insurance, you can add an extra return to the maturity of your policy. Here is the complete insight on top-up premiums in ULIP insurance. Read the article for better comprehensive information. 

What is a ULIP plan?

A ULIP plan is a guaranteed contract in which you agree to pay a predetermined premium every year for a certain period of time or all at once. You are generally expected to pay the same premium every year for the length of the policy. However, you can opt for the top-up premium in the ULIP policy. 

What is the Top-Up Premium in ULIP Insurance? 

Suppose you get the promotion or the raise, then you can invest extra (apart from the regular premium) in your ULIP plan. This is called a top-up premium. A top-up premium is a sum paid at irregular periods in addition to your ULIP insurance contract’s base premium. It is a one-time payment that should be handled by your insurer as a single premium contract that will provide you with additional insurance coverage. 

As a result, the regulation for single-premium plans applies to top-up premium payments. There will be a minimum sum guaranteed. It will be 125% for individuals under 45 years old and 110% for those above the age of 45. 

In addition, you can avail of ULIP top-up tax benefits. You must note that you can not apply for the top-up premiums with traditional insurance policies. This is only eligible with the ULIP insurance. 

Are There Any Charges With Top-Up Premiums in the ULIP plan? 

You need to pay the initial fee as a one-time premium allocation charge. It will be part of the top-up premium itself. Further, there will be a mortality fee. The mortality fee is for providing you with life insurance cover and will be levied based on the policyholder’s age rather than the age at which you purchased the policy. 

You need to consult the insurance companies for more detail on the charges you need to pay because they vary from person to person. 

You need to pay fund-management fees following your ULIP insurance policy. You must consider that the total top-up premium paid by you cannot exceed the total of the regular premiums paid up to that point in time. 

When Should You Choose To Top Up The Premium in the ULIP policy? 

Top-ups are quick and straightforward, with a cheaper premium allocation charge and no policy administration fee. If your purpose in topping up your ULIP is solely to increase your insurance coverage, you are far better off buying a pure insurance plan. Alternatively, if you are simply increasing your investment in your plan, you are better off without paying the additional mortality penalty. As a result, before topping up your ULIP, consider your motivation and alternative investing possibilities.


Several insurance plans from reputed insurers like Tata AIA Life Insurance can be considered when choosing ULIP insurance. In case you are considering choosing the top-up premium, then make sure you consider all the charges that are levied on it. Top-up premiums do have their own advantage but still, make sure to look for alternative options as well. 

Jennifer Winget

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