Investing In ULIPs: What Is It, How Is It Calculated, And Why Use Investment Calculators?April 05, 2021
A mix of both investment and insurance, ULIP is one of the preferred financial instruments in the country. Since it is a hybrid product, a part of the premium paid in ULIP goes into life cover, and the remaining amount gets invested in funds chosen for wealth creation.
They are a great choice to meet long-term goals, including child education, retirement, a house, among others. Mostly, cost and returns are considered for comparison when it comes to investing in insurance products. It is here that the investment calculator proves to be the best tool.
Many consider it as the best way to calculate ULIP returns online. Plus, you can know the maturity amount based on the expected future investment value and returns. This investment calculator also helps in comparing multiple ULIP policies based on the return.
Before we move any further, note that ULIP full form stands for Unit Linked Insurance Plans. So, do not get confused between sum assured and return value in ULIP plans. The sum assured is the total amount paid to your dependents on account of your untimely demise. Whereas the fund value is the net asset value on the particular day multiplied by the number of units held.
When you choose a ULIP plan, you can choose from a set of funds to invest in according to your risk appetite. Another factor to consider is the market conditions. The fund value is the total monetary worth of the units owned by you. You can evaluate the fund value on a particular day by multiplying each unit’s net asset value on that specific day by the number of units held.
How to Calculate Returns Using the Investment Calculator?
Follow these simple steps to calculate ULIP returns online using the investment calculator:
- The primary step is to log on to any website or the chosen insurer’s website to get free access to the investment calculator. After you log in, you will need to fill in some information like your name, date of birth, gender, contact details, etc.
- After that, provide the ULIP investment-related information. You will have to provide the premium amount or the money you would like to invest in your ULIP plan. However, it will be wise to enter an affordable and realistic premium amount.
- Choose the frequency of the premium as per your requirements. The options include monthly, quarterly, half-yearly or annual basis. You will have to pay the amount as per the chosen premium payment mode throughout your policy tenure. So, it will be smart to analyze your financials and choose as per convenience.
- You will require to fill in the tenure you want the ULIP plans for in the investment calculator. It would help to carefully choose the time frame for which you want to stay invested in a particular ULIP. Remember to keep in mind your long-term goals and investment objective.
- The best aspect of a ULIP plan and the investment calculator is that you get the option to choose the investment fund of your choice. Likewise, you can enter different fund choices to compare the funds and find the best fund.
- However, make sure that you analyze your risk appetite, investment objective, and market conditions before choosing any investment fund option. ULIP pans ensure utmost convenience by providing the option of fund switching.
- Finally, click on the tab and get the estimated return details on the intended ULIP plan. Go through the same process to calculate ULIP returns online of various plans.
Benefits of ULIP Investment Calculators
The market is full of varied ULIP plans designed to suit a diverse range of individual needs. And using an investment calculator will only help you make the right decision. Plus, some other benefits of these calculators are:
- It helps you make an informed and rational investment choice that suits your needs.
- This investment calculator will help you make a financial decision as it is simple to use, free of cost and easy to access.
- The investments that you plan to make can be strategized according to your age, financial goals and risk appetite by using this investment calculator.
Conditions Under Which You Can Receive a Payout
- If you are not around: In case of your absence during the policy term, the sum assured value or fund value will be paid to your beneficiaries. Note the value which will be higher will be given. For instance, if your fund investment has not been performing well, and the fund value is lower, then the sum assured will be given.
- Policy surrender: If you surrender your ULIP policy during the lock-in period, your insurer may deduct the applicable charges from the fund value and pay the surrender value. However, it will be possible only after the IRDAI regulated lock-in period of 5 years. And if you decide to surrender the policy after completing the lock-in period, you will get the fund value.
- Maturity: As and when your ULIP policy’s tenure gets over, the fund value will be returned.
Reading this article must have indeed provided you with more information than ULIP’s full form. If, however, you want to read more, you can check the websites of reliable insurers like Max Life Insurance. Using their investment calculator, you can calculate ULIP returns online and check how beneficial this financial instrument is.
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