ULPPs score over traditional pension plans as the policyholder has the option of benefiting from equity exposure, says Sanjay Tiwari, vice-president, strategy and product, HDFC Life.
NPS requires a minimum contribution of Rs 6,000 while ULPPs require between Rs 18,000 and Rs 24,000.
Likewise, the penalty for discontinuation of contribution is also higher for ULPPs (up to Rs 6,000).
ULPPs offer the flexibility to choose the level of equity participation based on age, risk appetite and retirement age.
Neither ULPPs nor NPS allow premature withdrawals and you have to compulsorily buy annuity at term end.
Annual premiums for ULPPs qualify for a tax deduction under Section 80C of the Income Tax Act.