May 21, 2024

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Best Ways to Determine ULIP Returns

ULIP Returns

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ULIP, or a Unit Linked Insurance Policy, is one of the most sought-after investment avenues that should not be missed. This insurance policy comes with a dual benefit as it can offer the policyholders with both investment benefits and life cover. If you are looking for a policy which promises guaranteed return, regular income and financial cover, then a ULIP Plan is an ideal investment plan for you.

A part of the premium paid is invested in funds either in equity, debt, balanced or a combination of these funds. The remaining premium amount is invested for future safety and security. To know the amount to be invested, one can take the help of a ULIP calculator or a ULIP interest rate calculator.

In ULIP, the money is invested in the policy for the long term. Hence, it is also known as a long-term investment avenue. There are several insurance service providers, for example, Tata AIA Life Insuranceand many others, that provide ULIP policies with several benefits, such as higher returns and regular income.

How Can I Calculate the Returns on the Investment?

There are two main types that you can use to calculate the returns. They are Absolute Returns and Compounded Annual Growth Rate (CAGR) methods. The absolute returns method is for investments that are made for a year.

However, if the investments are for more than one year, then Compounded Annual Growth Rate (CAGR) method will be used. To get a better idea about the returns on the investment, one can also take the help of a ULIP calculator or ULIP return calculator. Let us understand the methods in detail:

  • Absolute Returns Method

To start, one should have accurate information about the initial and Net Asset Value (NAV). NAV will help individuals determine whether their fund is overvalued or undervalued.

The steps that one should use to calculate the absolute returns are:

  • From the NAV given, one should subtract the initial value of the NAV
  • Now divide the received value from the initial NAV
  • Last but not least, one should multiply the values by 100 to receive the value in percentages.

Through this method, one can easily determine the absolute returns on investments. This can be done with the help of a ULIP return calculator as well. All you need to do is simply put in your values and get the amount to be invested in a ULIP as well as the return they will receive.

  • Compounded Annual Growth Rate or CAGR method

In a CAGR method, a CAGR formula is used to determine the CAGR of the investment. To calculate the annual growth, one should use an accurate formula. It is given as follows:

CAGR formula = [(ending value/beginning value) 1/number of years– 1] x 100%

In this formula, one should use the beginning and ending values of the scheme with the years they stayed invested in the scheme.  This can also be done with the help of a ULIP Plan calculator.

Conclusion

A method such as CAGR and absolute returns can be indicative of your returns and help to determine your wealth with ease. To get the correct answers, one should use the correct values according to their plan to get an idea about the investment they can get as the ULIP plan returns.In addition, ULIP plan return calculatorsare also available that one can use to determine their returns.