The financial market today offers several market-linked investment products, which are some of the best ways to invest money in the long term with good returns. However, choosing the right plan with the exact benefits is crucial here. ULIP policy is one of the best products introduced by insurance companies as a comprehensive and complete solution.
In this article, we will look at a ULIP calculator and understand how it works. Before that, let us revise what a ULIP is.
What is a ULIP plan, and how does it work?
A ULIP plan is a life insurance product with dual benefits. One portion of the premium amount paid is used as a life cover, and the rest is invested in the securities market for market-linked returns. Based on your risk appetite, you can invest in equity funds for higher risk and returns, debt funds for low risk and hybrid funds for moderate risk. During the policy term, you can switch between the funds to safeguard the sum invested from abrupt price movements.
What is a ULIP calculator?
A ULIP calculator is an online feature that helps you calculate the returns based on your premium payment, amount invested, type of fund and policy tenure. With the ULIP return calculator, you can get a precise value of the returns that will be accrued by the plan for your long-term financial commitments. It takes into account the inflation rate for real values.
How is the ULIP investment calculated?
Here is a step-by-step process that helps you use the ULIP calculator to determine the returns for a ULIP plan.
- Open the ULIP calculator online from a reputed web source. The TATA AIA life insurance calculator provides a reliable medium for effective and precise results.
- Enter the basic details such as your name, date of birth, mobile number etc. If you are an existing user, you can get to the calculation directly.
- Enter the amount to be invested in the ULIP policy.
- Provide the affordable premium amount that can be invested and the frequency, whether monthly, quarterly, half-yearly or annually.
- Choose the policy tenure for the ULIP plan.
- Next, enter the proportion of the amount to be invested in the securities and the required lock-in period. A ULIP plan has a default lock-in period of five years.
- Further, choose the type of fund, whether equity, debt or hybrid, for equating the returns.
Based on the above details provided, the ULIP interest rate calculator will provide the estimated value of the returns. You can change the different values such as the premium, policy tenure, and the funds to derive an affordable plan based on your short-term and long-term financial goals.
Benefits of a ULIP calculator
A ULIP calculator offers the following benefits for effective financial planning:
- The ULIP calculator is available free of cost.
- It is relatively simple to use and can provide values under different options.
- Complex calculations are made simple and easy to understand.
- Helps in planning to invest in a ULIP plan based on your financial goals.
ULIP plan return calculation
The returns under a ULIP policy are based on the Net Asset Value (NAV) by using the Absolute Return method for one year and the Compounded Annual Growth Rate (CAGR) for more than one year.
- Absolute returns: The rate of return is calculated by subtracting the initial NAV from the current NAV and dividing the value by initial NAV and further multiplied by 100 to derive the percentage.
- CAGR:The rate of return is calculated as current NAV divided by initial NAV {[(the current NAV/initial NAV) ^ (1/no. of years)]-1} *100.
Conclusion
A ULIP plan helps in investing money for securing your family’s financial needs and getting market-linked returns at the same time. As the funds are researched and provided by the insurers, it is relatively safe for a long-term investment. Making the right choice based on your income and financial goals is important. If you are confused about calculating the right investment and return, use the ULIP calculator to get it right and perfect!
