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How is Compoud Annual Growth Rate (CAGR) Calculated in ULIP?

How is Compoud Annual Growth Rate (CAGR) Calculated in ULIP?
  • 15th Apr 2022 |
  • 5,663

CAGR means compound annual growth rate. ULIP investments provide excellent returns; nonetheless, it is critical to keep a careful eye on how your investment picks perform in terms of their market-linked returns

For consumers who desire life insurance and long-term investment in one bundle, ULIPs are the greatest option. The premiums for ULIPs are divided into two groups. Half of it is used to give life insurance policy to the insured, while the other half is utilized to invest in stocks in the market. The insurer collects funds from many investors and pools them into a single large fund to invest in the market.

ULIP returns are inextricably related to market performance, although there are a few different ways to classify and calculate ULIP gains or returns, as follows:

  • Absolute Return:
  • Total Return is the profit or loss earned by invested funds over a certain period, usually one year. It is a measurement of asset appreciation or depreciation. The net asset value of a unit-linked insurance plan is used to compute the absolute returns. The net asset value of an investment account is the capital value per unit less the costs.

  • Compound Annual Growth Rate in ULIP:
  • CAGR is the average yearly growth rate of an investment over a certain time. The investment’s value is supposed to have multiplied over time. Unlike an absolute return, CAGR accounts for the time worth of money. As a result, it can accurately depict the annual returns on investment.

In this article, we’ll go over all you need to know about CAGR in ULIPs so you can calculate the true value of your returns using the CAGR formula.

CAGR Calculator: The Basics

A Compound Annual Growth Rate (CAGR) calculator is useful for calculating the compound annual growth rate in ULIP of your investment over time. To compute the CAGR, you’ll require essential values like the beginning investment amount, estimated ultimate investment amount, and time length.

The CAGR calculator provides a CAGR formula where you can enter the investment’s start and end values. You must also choose the number of years for which the investment will be made. The CAGR calculator will show you your investment’s yearly rate of increase. You can use the compound annual growth rate (CAGR) to evaluate the return on investment to a standard.

Benefits of Using CAGR in ULIP

The CAGR calculator will help you make the best investing selections. It assists you in calculating your investment’s yearly rate of return. In addition, you may evaluate your investment choices by comparing the investment returns to a suitable point of reference with the help of CAGR.

CAGR Formula

CAGR = [(Ending Value/Beginning Value) ^ (1/N)]-1

To summarise, there are a variety of methods for calculating the growth rate of your ULIP plan; nevertheless, accuracy is what matters and allows you to maximise your investment earnings. Therefore, Compound Annual Growth Rate is the best approach to receive precise figures that make a difference in how you make money on your investments since it is incredibly important to use the efficient method.

Kotak e-Term Plan


  • Nominal Cost
  • Multiple Plan Options
  • Flexible Payout Options
  • Critical Illness Rider
  • Tax Savings
  • Long term Coverage

Ref. No. KLI/22-23/E-BB/492


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