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8 Important Tips to Maximize Gains with ULIP Investments

A ULIP is one of the financial products with one of the fastest-growing consumer markets in terms of life insurance and investing. In addition to giving your family lifelong security in the case of your death, it also allows you to invest and grow your for

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

Simply investing your money in financial tools isn’t enough - understanding how to maximize your investment returns is the actual key. For example, the popularity of ULIP plans has climbed to unprecedented heights. ULIP returns have become everyone’s favourite and a household name for a plan that comes with a mandated 5-year lock-in period that offers both investment and a life insurance plan.

    Key takeaways

    Important Tips to Maximize Gains with ULIP Investments:

  • Don’t Shy Away from Switching Funds
  • Examining The Economic Scenario is Your Best Friend
  • Longer The Tenure Greater The Returns
  • Stay Aligned With Your Goals
  • Start Investing As Soon As Possible
  • Maximize the Amount of Investment
  • Invest in Equity Funds
  • Change your investments to safeguard your gains before maturity

The benefits of insurance and market-linked profits plus partial withdrawals are an amazing combination for an efficient financial plan. We will share all of the secrets and tips you need to know to make a significant capital gain on ULIP returns in this article.

Don’t Shy Away from Switching Funds

Switching funds is a word that refers to diversifying your assets across several asset types. It is a big part of determining a portfolio’s risk-reward ratio. You may build a big portfolio by diversifying your assets over various asset classes, thereby enabling the benefit of one asset class to compensate for the loss of another. As a result, your investment’s overall risk is lowered, adding to the ULIP long-term capital gain.

Another advantage of holding a Unit linked insurance plan in India is that policyholders have unrestricted access to switching between various funds. You can modify the debt and equity fund options in your ULIP plan at any time throughout the policy’s duration for capital gain on ULIP performance.

Examining the Economic Scenario is Your Best Friend

This step works in combination with the switch option. You must be knowledgeable of the present economic atmosphere as well as the prediction for both national and worldwide markets to swap your finances effectively.

Leading indicators, such as the price of crude oil and the increase in international political tension, are critical in predicting market performance and, as a result, the gain on ULIP returns.

Longer the Tenure Greater the Returns

You are aware that ULIP investment aids in wealth growth; therefore, you must invest in ULIP insurance for a longer period of time for long-term capital gain on ULIP. It has a five-year lock-in term which implies that you may only make partial withdrawals from your ULIP returns insurance once five years have passed.

This lock-in period enables investors to pay premiums on a regular basis and to think about wealth growth as a long-term capital gain on unit-linked insurance.

Stay Aligned With Your Goals

Your income composition, appetite for risk, long-term financial goals, and investment objective must all be considered when choosing a policy. When picking a plan, keep your financial objectives in mind, whether they are definite events like a child’s wedding or more ambiguous ones like building money for the future. The ideal strategy aids you in achieving your objective and gets you there with the least amount of obstacles and the most gain on ULIP investments. To make your selection, look at the plan’s investment ratio in both equity and debt funds.

Maximizing gain on ULIP is not as complex as it may appear. All you have to do is stay updated with market circumstances, align them with your financial goals, and research and make the best decision possible to benefit from long-term capital gain on ULIP returns.

Start Investing As Soon As Possible

Any investment professional will tell you that “yesterday” is the best time to start investing. Essentially, this indicates that the longer you wait to start investing, the more money you can make. Regarding ULIPs, the earlier you enrol, the more you can get out of your ULIP. You have a longer time horizon to gain profits on your investment when you invest early.

Additionally, you can maximise the wealth-building benefits of compounding with a ULIP. For instance, if you begin investing a percentage of your income as soon as you begin working, you are not only developing a wise habit of saving but also increasing your wealth.

Maximize the Amount of Investment

A decent general rule of thumb is to start out by investing a sizable sum, as much as you can, in a ULIP. Your ULIP’s potential returns can be maximised if you can set aside a sizeable sum for it. Over a lengthy period of time, consistent small-capital investments grow your wealth into a sound corpus.

Invest in Equity Funds

History teaches us that, as long as equity is kept for a long time, investing in equities may produce excellent returns. Equity investments also carry risks, but if you keep equities patiently, you can reduce them. In a ULIP, a portion of your plan corresponds to an investment (in equity funds, debt funds, or a combination of the two), and the remaining portion relates to life insurance.

You might see strong returns if you decide to invest only in stock, but there are associated market-related dangers. There are methods that various ULIPs might reduce the risk element in your plan while still enabling you to make significant gains.

Reinvesting Returns

There is an additional method to make the most of your ULIP investment portion. If your returns exceed a predetermined threshold, you can reinvest them or book gains.

Fund Rebalancing

Your funds can be rebalanced in a way that provides you with appropriate returns to diversify your fund portfolio in a ULIP and to maximise your ULIP. To lower the risk factor, investments in a mix of debt and equity in various ratios might be made.

Change your investments to safeguard your gains before maturity

The auto rebalancing of funds option keeps your ULIP portfolio’s assets practically risk-free, while it may not always do so. In addition to having your portfolio automatically rebalanced, ULIPs also give you the option of switching funds. Depending on your insurance provider, you may be able to effectively utilise this to further reduce your risk.

This simply causes your capital allocation to automatically transfer to a liquid or debt fund if there is a particular potential risk from markets. This can lower your exposure to market risk and strengthen your portfolio, allowing you to maximise the value of your ULIP when it matures.

This automatic fund-switching feature in ULIPS kicks in four years before your ULIP insurance is scheduled to mature. This will ensure that your money is protected from market volatility and that you can generate money without taking any risks until your maturity date.


There are several ways to make the most of your ULIP that provide you with the chance to amass riches. Additionally, you benefit from having life insurance protection and may stop worrying about your loved ones. The most serious investors are the only ones who may find value in such twin advantages.

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

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- A Consumer Education Initiative series by Kotak Life