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What is NAV in ULIP, and How is it calculated?

What is NAV in ULIP, and How is it calculated?
  • 14th Apr 2022 |
  • 3,632

One of the most powerful motivators to work hard in life is the desire to amass a considerable amount of wealth so that you may provide a comfortable life for your loved ones while also meeting all the needs, wants, and desires for you and your family.

Investing in financial instruments that help you double your wealth and establish a lucrative asset portfolio is always suggested, regardless of how much money you make.

ULIP is one such financial tool distinctive in its style and comes with a Net Asset Value (NAV) that plays a significant role.

Basics of ULIP

Unit Linked Insurance Plans (ULIPs) is a financial tool that integrates life insurance and investing in providing protection and wealth growth in one package. The profits from this methodical investment are often called ULIP fund performance and might aid in achieving long-term objectives.

A chunk of the funds paid for ULIP premiums is used to provide life insurance, while the rest is invested in funds. You may also create your investment mix depending on the predicted returns and risk tolerance.

What is ULIP NAV?

NAV stands for Net Asset Value in ULIP. The NAV in ULIP funds, also known as ULIP NAV, is the value of your fund’s assets less its liabilities. The NAV is frequently referred to as the ‘book value.’ It is critical to comprehend the functioning of unit funds to comprehend Net Asset Value properly. In ULIP investments, assets from multiple investors are pooled to generate a huge sum of money, which is subsequently invested in a variety of market products. The entire investment is then split into numerous tiny units with a certain face value by the fund manager to authorize the firm to share the ULIP fund performance gains among investors.

NAV Calculation

The value of all units is evaluated regularly, and all expenses are deducted, post which the total units are divided by it. The value you then obtain is the ULIP NAV. So, the NAV in ULIP is the market value of its units, which aids investors in tracking their fund’s growth. By calculating the percentage increase in NAV, an investor may determine the real increase in the value of their investment. As a result, NAV provides reliable information about your ULIP fund performance.

You can calculate the net asset value using the below-mentioned formula:-

{(Market value of the investment held by the fund + value of current assets) – (Value of current liabilities and provisions, if any)} / Number of units existing on the valuation date

Myths About NAV of ULIP

A high NAV does not always imply ‘expensiveness.’ It is just the ULIP’s face value after deducting expenditures. A high NAV is also not a misrepresentation. It simply shows the fair value of assets if your chosen ULIP liquidates all of its holdings on a given day. Whether high or low, the cost has no bearing on the mutual fund’s performance.

In addition, after required deductions, NAV for each form of application (surrender, maturity claim, or switch) is computed in the same way.

ULIP plans are the best way to strike two birds with one stone, and NAV adds to their appeal.

Kotak e-Term Plan

Features

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

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

T&C

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