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ULIP Calculator

(Calculate ULIP returns as per your tenure and premium)

Formula to Calculate ULIP Returns

AULIP policy return calculatoris a useful tool for policyholders. There are two methods to measure your returns on the sum assured in ULIP:

1. Absolute returns

This is the percentage increase in the total value of the ULIP, calculated after deducting expenses like management fees and operating charges.

Absolute returns = [(Current value - Value at the time of purchase) / Value at the time of purchase] x 100

For instance, if the value of your ULIP at the time of purchase was ₹250/-, and one year later it becomes ₹350/-, in this case, your absolute return is 40% in a year. This method is useful for a plan with a short tenure.

2. CAGR (Compound Annual Growth Rate)

The CAGR method helps evaluate the annual growth of your investment during a specific period. It assists in determining the rate of return received from your plan year on year.

CAGR = {[(Current value / Value at the time of purchase) ^ (1 / number of years)] - 1} x 100

For instance, if the value of your ULIP at the time of purchase was ₹250/-, and after five years its value is ₹ 350/-, in this case, the CAGR is 6.96%.

Alternatively, you can also utilize an online ULIP plan returns calculator to, ease your earnings.

Which Method Should You Use?

When deciding which method to use for calculating ULIP returns, consider the following criteria:

• Time Period: If your investment is for the short term (less than one year), Absolute Returns is the preferred method due to its straightforward calculation. For investments spanning more than a year, CAGR is more appropriate, as it provides a clear picture of annualized growth over time.
• Investment Type: For a one-time investment, Absolute Returns gives a quick snapshot of the return. However, for long-term wealth creation, CAGR is the better choice, as it accounts for the compounding effect over the investment period.
• Complexity: The simplicity of Absolute Returns lies in its straightforward calculation. You only need to know the initial value of your investment and its current value, making it ideal for quick assessments, especially for short-term investments.

However, CAGR involves a slightly more complex formula that factors in the time period of the investment. It calculates the average annual growth rate, which provides a clearer picture of your investment's performance over multiple years. While it may require familiarity with compounding principles and some mathematical understanding, CAGR is invaluable for long-term financial planning as it smooths out short-term market fluctuations and focuses on consistent growth over time.

Benefits of a ULIP Calculator

Thebenefits of ULIPplans include the opportunity to grow their wealth while also protecting their loved ones in the event of an unforeseen event. With the introduction of ULIP calculators, it has become easier for investors to determine the potential returns on their investments.

ULIP charges you should know

ULIPs have become a preferred investment choice as they offer the dual benefit of market-linked returns and life insurance coverage. However, before investing, it’s crucial to understand the associated charges, as they can impact your overall returns. Being aware of these costs helps you make an informed decision and choose a ULIP that aligns with your financial goals.