The equation isn't quite as simple in the case of unit linked insurance plans or ULIPs. For ULIPs bought prior to September 2010, the sum assured isn't automatically 5 times the premium. A policyholder should be careful and run the calculations intelligently to get a tax free maturity benefit or else the maturity amount will not be tax free. All ULIPs bought after that is however included in this bracket.
Here however, it is important to remember that a policyholder must choose to opt for a sum assured of 5 times the premium paid, as the possible minimum sum assured in a single premium policy is only 1.25 times the premium paid. If the policyholder opts for a sum assured of less than 5 times, he/she will not get the tax benefit at the time of maturity.
Conclusion
The new guidelines under section 10(10)D of the Income Tax Act are easy to understand. Since most policies automatically take care of the ratio factor, you can almost always benefit from this rule. However you must remember not to make any withdrawals as that will prevent you from getting a tax-free maturity benefit. If you are buying a ULIP, keep the calculations in mind and you can easily take advantage of the tax norms under section 10(10)D of the Income Tax Act.