Close
Close

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Invest

Insurance and Investment in one plan.

Kotak e-Term

Protect your family's financial future.

Kotak Guaranteed Fortune Builder

A plan that offers guaranteed income for your future goals.

Kotak T.U.L.I.P

A plan that works like a term plan, and Earns like ULIP Plan.

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family.

Kotak Assured Pension

A plan that offers immediate or deferred stream of income

Kotak Lifetime Income Plan

Retirement years are the golden years of life.

Kotak Guaranteed Savings Plan

A plan that offers long term savings and life cover.

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.

What is the Estimated Return Percentage on ULIP? Do Investors Get Compound Interest?

In this article, while knowing about the ULIP returns, you will also learn about the ULIPs return percentage, the tax on ULIPs, and the interest calculation process among other things.

  • 2,659 Views | Updated on: Jan 10, 2024

Today ULIPs are considered one of the best investment options in the market. Not only because they give you the benefit of both insurance and investment at once but also because the ULIP returns percentage has been decent over time. So, as an investor, you need to understand that if you opt for good ULIP plans, then it might turn out to be a beneficial, long-term investment, given that you have managed the portfolio with the best performing ULIP funds over the period.

In this article, while knowing about the ULIP returns, you will also learn about the ULIPs return percentage, the tax on ULIPs, the interest calculation process, the provisions for ULIPs under 80C, among other things.

What are ULIP Returns?

When an individual opts for ULIP, along with an insurance policy, he gets a bundle of investment options to choose from. Now, it’s totally up to the risk-taking capability of the individual to handle the investment part of the ULIP policy. So, if you opt for good ULIP plans and want to make more profit, you may go for large-cap equity funds because these funds fall under the high-risk investment bracket. Similarly, if you want to play a little, you can invest accordingly in medium-cap equity funds or small-cap equity funds.

The ULIPs return percentage depends on the nature of investment that the policyholder is opting for. So, you need to be wise while putting the money into the market to make the most out of it. It is suggested to play safe until you completely understand ULIP funds’ nature and the financial markets.

The funds in ULIPs have different natures; some are volatile with the possibility of high returns at high risk, while others offer stable returns at a lower risk.;

ULIP Returns are stressing you out? Let’s calculate them and get an estimation.

Calculate Now!

How to measure your ULIP returns?

There are two commonly opted ways to estimate your ULIP returns, given that you pay all the premiums of the policy on time and complete the maturity period or the minimum lock-in period.

1. Absolute returns

To calculate using the current and initial NAVs of the policy.

Formula: [(Current NAV – Initial NAV)/Initial NAV] * 100

2. CAGR (Compound Annual Growth Rate)

To calculate the annual growth of the ULIP policy in a given time.

Formula: [{(Present NAV/Initial NAV)^(1/Number of years)} -1] * 100

Why are Best Performing ULIP Funds Important?

No one can predict the best performing ULIP funds, as their performance depends on various factors, and these factors may vary daily. However, the main factor determining the risk and returns of a ULIP policy is asset allocation. So, a balanced asset allocation is advised to counter the losses incurred in one asset by another asset. Additionally, the best part about ULIPS is that you get the option to switch between funds, allowing yourself to maintain pace with the market.

So, for earning decent ULIP returns, you must look for good ULIP plans, check for the portfolio of funds you will be allowed to invest in the plan you have chosen, and keep maintaining a healthy portfolio in the long term.

What are the Tax Exemptions on ULIPs?

As per the latest norms and guidelines related to ULIPs, a policyholder can get tax exemptions on investment of up to ₹1,50,000 per annum.

The ULIP premiums that a policyholder pays on a monthly or yearly basis allows them to avail tax deductions under section 80C of the Income Tax Act for a sum of up to ₹1.5 Lakh per annum. In addition to this, the maturity benefits and funds received at the closure of the policy are also exempted from tax implications under Section 10 (10D).

It is no surprise that ULIP plans offer the best of both worlds; all you must do is lay emphasis on each aspect before investing and keep track of the fund investment to ensure that the returns are sufficient for your financial needs.

- 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

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

Kotak e-Invest

Download Brochure

Features

  • Return of Mortality Charges*$
  • Enhanced Protection
  • Multiple Plan Options
  • Zero Premium Allocation Charges
  • Tax Savings^

Ref. No. KLI/22-23/E-BB/521

T&C