Friday, August 14, 2020

How to calculate your ULIP fund value

by Maxwell (writer) , July 26, 2020

A Unit Linked Insurance Plan, abbreviated as ULIP, is an insurance plan provides life insurance coverage along with an investment opportunity in multiple types of funds. Those who have long-term financial goals like retirement planning, or sending their children overseas for education, or building a corpus for your child’s destination wedding or buying that dream home they always wanted, such people can invest in ULIP. If you want to understand how much returns your investments are probably going to churn in future, you can make the use of the ULIP calculator.

ULIP calculator is an online calculating tool designed to help ULIP investors determine the potential maturity amount that they are going to receive. It helps investors understand the value of their investment and the returns that they should expect from these investments. However, before you use a ULIP calculator, you should understand how it functions. Not just one, investors can compare multiple policies using the calculator and determine their potential ULIP plans returns. However, before comparing returns please understand that sum assured and fund value are two different terms in ULIPs. In case the ULIP policyholder unfortunately passes away, his/her nominees are entitled to a fixed amount. This is known as the sum assured. A fund value on the other hand is net asset value on that particular day into the number of units held by the policyholder.

Depending on their risk appetite and investment objective ULIP holders can decide how to diversify his portfolio of funds. Someone who is an aggressive investor might have his portfolio equity oriented. On the other hand, someone looking for a balanced portfolio may invest in both equity and debt equally. A conservative investor may choose to invest more in debt instruments as compared to equity.

Here’s how you estimate ULIP returns using online ULIP calculator

You can start by searching ‘ULIP calculator’ on the World Wide Web. You will get several websites in the search, click on any one of them. Once you are directed to a particular ULIP calculator page, you will have to answer general information like your name, age, gender, contact details, whether you are a smoker or non-smoker. This will be followed by details regarding your ULIP investments. Next, you have to enter the premium amount or the amount that you would like to invest in a ULIP scheme. Also, choose the number of years that you wish to remain invested in the ULIP. ULIPs offer investors the choice of investing at different periodic intervals. Choose whether you wish to pay monthly/every three-month/every six months/once a year. Remember that you may have to continue the premium payment mode that you choose until the end of the policy tenure. Hence, choose a mode that is affordable and will not burn a hole in your pocket. Also, when you are choosing the period, make sure that you are ready to invest for that long. The minimum investment tenure in ULIP is 5 years. However, if you really want to see your investments grow, you may have to invest for the long run. Long-term investments hold the potential to help fulfil long-term goals; hence, it is better that invest for at least 10 years. ULIPs also give investors the option to choose the types of mutual funds they wish to invest.

Ensure to pick the right funds depending on your risk appetite, investment horizon, existing market conditions as well as your investment goal. Click on the ‘calculate returns’ tab to get the estimated value your ULIP plan.

Now that you know how to calculate returns, are you planning to invest in a ULIP plan?

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