Unit Linked Insurance Plans provide both insurance cover and investment returns. But, these are linked with market performance. A ULIP calculator can provide an idea about future returns. It offers a structured method of projecting future growth and assists investors in making sound financial choices.
What are ULIP Plans?
A ULIP is an investment product providing insurance with investment. A portion of the premium paid goes towards life insurance coverage. The rest is invested in market-linked instruments. These instruments can include equity, debt or a mixture of both. This exposure to the market makes ULIP returns riskier. This feature is not available in traditional insurance plans that provide fixed returns.
ULIPs are long-term investment products. These have a minimum five-year lock-in period. ULIP plans are also tax-saving investments under Section 80C and Section 10(10D) of the Income Tax Act. It is advised to investors to calculate future returns through a ULIP return calculator.
Workings of ULIP calculator
A ULIP calculator is an online application. This calculator gives a moderately approximate idea about future returns. But, the investor should understand that returns are market oriented and subjected to uncertainties. The most important factors that are used in the calculations are:
Investment Amount (Premium Paid):
The premium paid is taken as the investment amount.
Time period
It is the total period of the investment.
Type of fund
It includes debt, equity, or balanced funds. The kind of fund will depend on the risk tolerance of the investors.
Rate of Return:
This is the expected rate of return. It depends on market factors like inflation, interest rate, etc.
Charges:
ULIPs take charges like fund management fees, mortality fees, and premium allocation charges. This reduces the ultimate returns.
Additional benefits
Top-ups (additional investments) and withdrawals on a proportionate basis influence the ultimate maturity value.
Advantages of Utilizing a ULIP Return Calculator
Accurate forecasting
The calculator allows investors to picture possible returns. ULIP calculator can be aligned to varying investment situations, and they are in a position to set viable monetary goals.
Better comparison
Investors can compare various ULIP plans. Based on these, they can invest funds. This enables them to choose the best according to their risk tolerance and money goals.
Future planning
Policyholders can correlate their ULIP investments with long-term financial objectives. This will help them in making plans like retirement planning or planning for children’s education.
Better clarity
The calculator gives a transparent picture of the premium division and anticipated returns, minimizing confusion regarding investment appreciation.
A ULIP return calculator is a useful instrument for investors. It helps in seeking to predict their investment growth effectively. It offers worthwhile information to help in appropriate ULIP planning. This helps in making smart financial choices. A ULIP also helps in aligning investments with long-term objectives. By utilizing such a tool, investors can maximize their returns. This also provides a double advantage of insurance and market-linked growth in investments. You can consider adding a ULIP to your portfolio for future growth.
(DISCLAIMER: The information in this article does not necessarily reflect the views of The Global Hues. We make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information in this article.)
