Kotak Assured Savings Plan
A plan that offer guaranteed returns and financial protection for your family.
Kotak Guaranteed Savings Plan
A plan that offers long term savings and insurance in one premium.
Kotak Health Shield
Insurance against medical expenses related to heart, brain, liver and Cancer.
ULIPs have provided an average return of 10%-12% p.a. in the past. Going by the past records, you can expect a moderately high return from these investments. Keep reading to know more.
The benefits of a ULIP are not restricted to high returns. In addition to this, you can enjoy a life cover, tax exemptions and many more. Here are the major benefits of a ULIP.
Investing in ULIPs gives you the dual advantage of a life cover and investment returns.
Usually, the life cover provided is 10 times the annual premium. This amount is payable to the nominee in case of the policyholder’s demise during the policy term.
The major portion of the premium is invested, primarily in equity markets. This helps in generating higher returns. Historically, ULIPs have grown at 10%-12% p.a. on an average.
a) Premium:
The amount paid by you as a premium is exempt from tax up to Rs. 1.50 lakhs per year.
Since the returns of a ULIP are linked to the market, most ULIPs provide free fund switch options. As a result, you can change your exposure according to the market movements and your requirements.
A lock-in period of 5 years is applicable on ULIP investments. Hence, by default, ULIPs are for the long term. In fact, experts advise that an investment period of 10-20 years is ideal for ULIPs.
Generally, you will find 6 types of charges associated with ULIPs.
The initial expenses incurred by the insurance company for underwriting, documentation, policy issuing, etc. This amount is charged upfront from the first premium. On average, the charges are approx. 1.5%-4% of the premium.
In order to provide the life cover, ULIPs deduct a mortality charge from the premiums paid by you. Usually, this charge is calculated on every Rs. 1,000 of the life covers. This depends on your age, health risk and the mortality table.
As per the IRDAI, ULIPs cannot charge more than 1.50% of the fund value towards the fund management charges. This includes the salary of experts and other professionals who manage your investment.
A monthly charge is levied on your account for administration purposes, like record-keeping, paperwork etc. For this purpose, the proportionate units are sold. The amount can either be fixed or variable as per the insurer’s policy.
A surrender charge is levied, if you surrender your policy within the lock-in period of 5 years.
The insurer provides some free fund switches within a specified time fram. If your switches exceed this, you may be charged a pre-defined amount.
Assuming the expected rate of return to be 10% (after charging all the expenses) and you pay a premium of Rs. 60,000 annually, your final corpus can look like this,
Date |
Opening Investment |
Invested Premium |
Returns |
Closing Investment |
1-Jan-21 |
₹ - |
₹ 60,000.00 |
₹ 6,000.00 |
₹ 66,000.00 |
1-Jan-22 |
₹ 66,000.00 |
₹ 60,000.00 |
₹ 12,600.00 |
₹ 138,600.00 |
1-Jan-23 |
₹ 138,600.00 |
₹ 60,000.00 |
₹ 19,860.00 |
₹ 218,460.00 |
1-Jan-24 |
₹ 218,460.00 |
₹ 60,000.00 |
₹ 27,846.00 |
₹ 306,306.00 |
1-Jan-25 |
₹ 306,306.00 |
₹ 60,000.00 |
₹ 36,630.60 |
₹ 402,936.60 |
1-Jan-26 |
₹ 402,936.60 |
₹ 60,000.00 |
₹ 46,293.66 |
₹ 509,230.26 |
1-Jan-27 |
₹ 509,230.26 |
₹ 60,000.00 |
₹ 56,923.03 |
₹ 626,153.29 |
1-Jan-28 |
₹ 626,153.29 |
₹ 60,000.00 |
₹ 68,615.33 |
₹ 754,768.61 |
1-Jan-29 |
₹ 754,768.61 |
₹ 60,000.00 |
₹ 81,476.86 |
₹ 896,245.48 |
1-Jan-30 |
₹ 896,245.48 |
₹ 60,000.00 |
₹ 95,624.55 |
₹ 1,051,870.02 |
The frequency of compounding is a determining factor to calculate the returns. If you pay a monthly premium of Rs. 5,000 instead, your final corpus will be ₹ 1,204,255/-.
In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Ref. No. KLI/22-23/E-BB/521
