How is ULIP NAV calculated? How is the Return Calculated in ULIP?
Close

Buy a Life Insurance Plan in a few clicks

Close

Now you can buy life insurance plan online.

  • Icon for Kotak Preferred e-Term Plan

    Kotak e-Term Plan

    Kotak e-Term Plan provides a high level of protection to your loved ones in your absence.

  • Kotak E-Invest Plan

    Kotak e-Invest plan is a complete Unit-Linked Insurance Plan that can be customized as per your goals and needs.

  • Icon for Kotak Guaranteed Savings Plan

    Kotak Guaranteed Savings Plan

    Kotak Guaranteed Savings Plan is a savings and protection plan that helps you achieve long-term financial goals and provides an insurance cover against any eventuality.

  • Icon for Kotak Preferred e-Term Plan

    Kotak Lifetime Income Plan

    Kotak Lifetime Income Plan gives you the security of your income continuing thru your life and in your absence throughout your spouse's lifetime!

  • Icon for Kotak Preferred e-Term Plan

    Kotak Health Shield

    Kotak Health Shield Plan helps secure your finances in sudden medical expenses such as Cardiac, Liver, Neuro, and Cancer (all early and significant illness stages/conditions of cancer), along with offering protection for personal accidents - in case of accidental death or disability.

Close

Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

Back

How is ULIP NAV calculated? How is the return calculated in ULIP?

View Plans
  • 25th Mar 2022
  • 166

How is ULIP NAV calculated? How is the return calculated in ULIP?

Unit Linked Insurance Plan or ULIP is one of the popular investment tools that has recently gained popularity after the new regulations that the government brought in Budget 2022 to control its misuse. Investors now find ULIP as a good long-term investment tool that offers dual benefits of insurance and investment in a single premium. Also, ULIP returns are decent, making them a good choice for investors. However, it is important to understand the key details about ULIP before planning an investment in this plan.

Calculation of returns is a crucial factor that one must be aware of in any financial plan as an investor. However, there are some financial plans in which hidden costs are involved; the investor is unaware of it and wrongly calculates the returns.

If you were wondering about calculating ULIP returns, or about how are ULIP returns calculated, you have landed at the right spot. We will discuss ULIP performance, benefits of ULIPs, best ULIP Plans in India, and the tax advantage of ULIPs in brief.

How is ULIP Calculated? 4 Methods to Calculate your ULIP NAV

How is ULIP calculated?

ULIP is a 2-part investment plan. This means that one part of the investor’s premium is allocated towards insurance. In contrast, the remaining premium amount goes towards investment, which manages portfolios of different market funds like debts, equities, hybrid funds, etc.

The investor manages the investment part, and the return depends on how the fund portfolio is managed. The whole calculation of the return is based on the NAV of the whole ULIP policy.

NAV or Net Asset Value is the value of assets of your ULIP funds excluding its liabilities. Another term used to denote NAV is book value.

ULIP NAV Formula:

NAV = (Value of Current Assets + Market Value of Investments Held) - {(Value of Current Liabilities & Provisions) / Total number of outstanding units on the date (before redemption/creation of units)}

The NAV is calculated on a daily basis as the value of market funds change every day.

Steps to calculate ULIP returns using NAV

To check ULIP performance, it is important to understand how the value of ULIP is calculated. The simplest way to calculate the value of ULIP returns is to use an online ULIP return calculator.

However, at times these calculators provide very limited functionality, and if you want to calculate the exact value of your ULIP, you will have to calculate it on your own.

Here is a stepwise method to calculate the exact value of your ULIP NAV:

Step 1:

Choose a date for valuation that fits your needs. (As NAV is calculated on the fund valuation of a particular date)

Step 2:

Now, calculate fund securities using the formula below:

Total Value of Fund Securities at the end of valuation date = (Cash on Hand on valuation date) + (Short-term and Long-term assets held by the fund)

Step 3:

Subtract outstanding liabilities of ULIP Funds. Use the formula below for this:

Total Value of Fund Securities at the end of valuation date = [(Cash on Hand on valuation date) + (Short-term and Long-term assets held by the fund) - Outstanding Fund liabilities]

Step 4:

Now divide the value obtained above by the outstanding share in your ULIP funds. You will get:

NAV = [(Cash on Hand on valuation date) + (Short-term and Long-term assets held by the fund) - Outstanding Fund liabilities] / number of outstanding shares in the ULIP fund

Thus, the final NAV of your ULIP fund is obtained.

To obtain the market value of your investment, you will have to multiply the NAV value obtained above the number of shares you own.

The total market value of investment = NAV x Number of shares owned

Having understood calculating your investment’s market value, you can calculate the exact value of your ULIP investment and plan your next moves accordingly. Moreover, you will not have to depend on the limited features of the online ULIP return calculator to check your ULIP performance.

ULIP can be considered a good option as a financial tool. However, among various benefits of ULIPs, like good returns, one of the most important ones is the tax advantage of ULIPs. Therefore, checking these benefits, calculations, and deductions is suggested before opting for a ULIP policy.

- A Consumer Education Initiative series by Kotak Life

Also read

    • 22nd Dec 2021
    • 642

    How To Calculate The Present Value And Future Value Of Annuities?

    Present value is the amount of money needed to generate a specific return. Future value is the balance an account will accrue over time. Here are how ...

    Read more
    • 2nd Mar 2022
    • 348

    Why Should I Invest in ULIP?

    The earnings from a debt fund in ULIP is tax-free for investors, setting it apart from all other market-related investments. Read more to know about w...

    Read more
  • Retirement Planning Guide for Working Men and Women

    Read here some essential tips for retirement planning for working men and women on this article. Visit Kotak Life to know more on Retirement Plans

    Read more

Related Plans

  • Kotak Classic Endowment Plan

    Kotak Classic Endowment Plan

    Kotak Classic Endowment Plan is a long term protection cum savings plan that offers protection benefit while earning bonuses during the policy term.

    Know more
  • Kotak Complete Cover Group Plan

    Kotak Complete Cover Group Plan

    Kotak Complete Cover Group Plan is a non-participating single-premium plan that provides life cover to a group of borrowers of the credit /lending ins...

    Know more
  • Kotak Platinum

    Kotak Platinum

    Kotak Platinum is an investment plan with an unmatched combination of three investment strategies and flexibilities for complete control over your inv...

    Know more
  • Kotak Health Shield

    Kotak Health Shield

    Health is the greatest blessing for all human beings. Today, every individual is aware that the number of illnesses are increasing day by day and so a...

    Know more