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How To Track ULIP Performance?

Monitor your ULIP performance by regularly reviewing the fund value and comparing it to the benchmark index to make informed decisions and ensure optimal returns.

  • 7,241 Views | Updated on: Jan 24, 2024

Unit Linked Insurance Plan or ULIP is a very popular modern financial tool that people are opting for. It is a product that offers both insurance and investment in one product. Moreover, the investment part of the ULIP policy allows you to grow with the market by investing in market-linked products like equity, bonds, debts, shares, etc.

Buying a ULIP policy is the need of the hour, and your insurance agent can easily guide you through the process. With the help of expert advice, precautionary guidelines, and predefined strategies, you can easily buy and manage your ULIP policy.

Another important aspect of ULIP is understanding how to track ULIP performance and the steps to track ULIP performance. Without learning ULIP performance tracking, there is no way you can manage your ULIP policy efficiently.

Strategies to Ensure Safe & Secure ULIP Investment

Before we move on further to discuss how to track ULIP performance, it is important to understand that there are certain strategies that every investor must follow to safeguard their investment. This will help in keeping a check on risk factors and, at the same time, guarantee stable performance. So, if you are a ULIP policyholder, the following strategies will help you ensure a safe and secure investment in the market-linked ULIP funds.

Select the Right Fund

Having the right investment is your path to achieving your financial goals. In ULIPs, you need to choose the funds. So, it is advised to make sure that you are selecting funds that offer good long-term returns and have lower risk factors. Alternatively, based on your risk appetite, you can choose different types of funds as per your goal.

Fund Switching

It is one of the best features of ULIP policies that an investor can use to minimize their losses or make profitable gains. Policyholders can switch between their ULIP funds based on their risk appetite and market trends to gain more profit or minimize loss. However, it is advised that before making a fund switch, the policyholder must investigate the history of the fund and check its performance over the years. Generally, an insurance company allows as many as four free fund switches. You can make unlimited switches between funds by paying a nominal switching charge if your free switch limit is over.

Stay Updated

Since you are dealing with market-linked funds, it is advised to keep yourself updated about the market funds and trends. Based on the movement of the market and its outlook, you can adjust the ULIP investment strategy and change the allocation of funds.

Do not Surrender Your Policy

A ULIP policy has a minimum lock-in period of five years. Also, the longer you keep the money invested in ULIPs, the better returns you can get out of it. Thus, to ensure a good return, you should stay invested in ULIP for a longer term. Surrendering the policy before five years can incur discontinuation charges and other penalties, thus leading to a loss.

How to Track ULIP Performance?

The key factors to calculate ULIP performance are the premium and the duration for which the premium is to be paid. You must calculate the Net Asset Valuev (NAV) of your ULIP policy and compare it with the initial NAV to get the absolute return value.

Regularly Review Statements

Keep a close eye on the periodic statements provided by the insurance company. These statements detail your ULIP’s fund value, NAV, and other essential information. Regular reviews ensure you stay informed about the progress of your investment.

Understand Fund Performance

Know the performance of the specific funds your ULIP invests in. Evaluate how each fund has performed over different time periods. This analysis provides insights into your chosen funds’ historical growth and risk.

Compare Against Benchmarks

Benchmark indices, such as NIFTY or Sensex, can serve as reference points to assess your ULIP’s performance. Compare the returns generated by your ULIP funds with these benchmarks to gauge their relative success.

How to track the performance of a ULIP fund

Evaluate Charges and Deductions

ULIPs come with various charges, including premium allocation, fund management, and policy administration charges. Understand these deductions and assess their impact on your overall returns.

Utilize Online Portals

Many insurance companies provide online portals where policyholders can track their ULIP performance in real time. These portals offer a comprehensive view of fund values, transaction history, and other relevant details.

Seek Professional Advice

If navigating ULIP performance seems complex, consider seeking advice from financial experts or insurance advisors. They can provide insights into market trends in fund selection and help align your investment strategy with your financial goals.

Adjust Investment Strategy

Periodically reassess your financial goals and risk tolerance. Consider adjusting your ULIP investment strategy by switching funds or altering the premium amount to better align with your evolving financial objectives if needed.

Final Words

Effectively tracking ULIP performance is integral to optimizing returns and achieving long-term financial objectives. Regular reviews, understanding fund performance, and utilizing available tools and resources empower policyholders to make informed decisions. By following these steps, you can navigate the dynamic landscape of ULIPs and ensure your investment aligns with your financial aspirations.

Key takeaways

  • Keep a consistent check on your ULIP’s fund value, monitoring fluctuations and trends over time.
  • Compare your ULIP’s performance against relevant benchmark indices to assess how well it is performing.
  • Evaluate the fund’s historical performance to understand its past behavior and make informed decisions.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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