How Much Wealth Can You Create from ULIP in 10 years?
Close
Close

Buy a life insurance plan in a few clicks

Now you can buy life insurance plans completely online right here.

  • Icon for Kotak Preferred e-Term Plan

    Kotak e-Term Plan

    Kotak e-Term Plan is a pure term plan that provides a high level of protection to your loved ones in your absence.

  • Icon for Kotak Preferred e-Term Plan

    Kotak Health Shield

    The Kotak Health Shield Plan helps secure your finances in times of sudden medical expenses related to illness such as Cardiac, Liver, Neuro and Cancer (all early and major stages of illness /conditions of Cancer); along with offering protection for Personal Accident - in case of accidental death or disability.

  • Icon for Kotak Preferred e-Term Plan

    Kotak Lifetime Income Plan

    Kotak Lifetime Income Plan gives you the assurance of your income continuing throughout your life and in your absence throughout the lifetime of your spouse!

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.

How Much Wealth Can You Create from ULIP in 10 years?

Summary:

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

Content:

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

Benefits of Investing in ULIPs

1) Dual Advantage


Investing in ULIPs gives you the dual advantage of a life cover and investment returns.

a) Life Cover:

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.

b) High Returns:

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.

2) Tax Benefits:


a)Premium: The amount paid by you as a premium is exempt from tax up to Rs. 1.50 lakhs per year.

b)Maturity Value:

  • The maturity value of ULIPs purchased before 1st February 2021, is exempt from tax under Section 10(10D) of the Income Tax Act, 1961.
  • The maturity value of ULIPs purchased after 1st February 2021, attracts 10% LTCG tax if the gains are above Rs. 1 lakh.

3) Flexibility to Switch Funds


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.

4)Long-Term Investments


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.

What are the Charges for ULIP Investment?

Generally, you will find 6 types of charges associated with ULIPs.

1) Premium Allocation Charges


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.

2) Mortality charges


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.

3) Fund Management Charges


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.

4) Policy Administration Charges


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.

5) Surrender Charges


A surrender charge is levied, if you surrender your policy within the lock-in period of 5 years.

6) Switch Charges


The insurer provides some free fund switches within a specified time frame. If your switches exceed this, you may be charged a pre-defined amount.

Example: Wealth creation from ULIP in 10 Years

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/td> ₹ 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/td> ₹ 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/-.

Need help with life insurance?

Request a Life Advisor

Savings and Investments Plans
Select City
New

Get details of your policy on WhatsApp

Send a "Hi" to 93210 03007, from your registered mobile number.

Get in touch with our Customer Care team

Click Here

Call on toll free number 1800 209 8800(8:00 am to 10:00pm)

Call our toll free number and our representative will help you buy the most suitable plan.

Get Answers to the commonly asked questions

Policy FAQs

Similar plans

  • Kotak Single Invest Plus

    Kotak Single Invest Plus is a single premium unit linked plan where, by just paying once, you can reap benefits and also stay protected.

    Know more
  • Kotak POS Bachat Bima

    Kotak Life Insurance presents a simple savings and protection oriented plan, which provides all guaranteed benefits while giving life insurance cover – Kotak POS Bachat Bima.

    Know more
  • Kotak Ace Investment

    Kotak Ace Investment Plan is designed with the clear objective of helping you accumulate wealth and provide you adequate life cover.

    Know more
  • Kotak Premier Endowment Plan

    Kotak Premier Endowment Plan offers Guaranteed Additions in the first 5 policy years and also works to provide you a corpus through continued bonuses.

    Know more
  • Kotak Premier Moneyback Plan

    Kotak Premier Moneyback Plan is a limited pay plan that provides lump sum payouts at regular intervals to meet your interim financial requirements and let you offer the best to your family.

    Know more
  • 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 Premier Income Plan

    Kotak Life Insurance presents Kotak Premier Income Plan a savings and protection oriented plan that provides Guaranteed Annual Income immediately after the premium payment term to provide you with an additional annual income.

    Know more
  • Kotak SmartLife Plan

    A Limited Pay Non-Linked Participating Life Insurance plan. You earn and work hard to accomplish your dreams and aspirations at every stage of life.

    Know more
  • Kotak Premier Life Plan

    Kotak Premier Life Plan is a limited premium paying participating whole life plan, where you can choose to receive bonus payouts even after premium payment term expires.

    Know more
  • Kotak Sampoorn Bima Micro-Insurance Plan

    Kotak Sampoorn Bima Micro Insurance Plan is a single premium plan with fixed term of 5 years to cater to the needs of low-income customers.

    Know more
  • Kotak Guaranteed Savings Plan

    A Non-Linked Non-Participating Life Insurance plan

    Know more
  • Kotak Single Invest Advantage

    Kotak Single Invest Advantage is a hassle-free unit linked plan, where you invest once and reap the benefits throughout the policy term.

    Know more
  • Kotak e-Invest

    Kotak e-Invest - a comprehensive Unit Linked Life Insurance Plan that can be customized as per your goals and requirements.

    Know more
  • Kotak Wealth Optima Plan

    Kotak Wealth Optima Plan is a protection and savings oriented unit linked insurance plan. The plan provides life insurance cover to protect your family in case of your unfortunate demise. It also provides the flexibility of choosing premium payment term, investment strategy and investment horizon.

    Know more
  • Kotak Invest Maxima

    Kotak Invest Maxima is an investment oriented unit-linked life insurance plan with maximum premium allocation and a Systematic Switching Strategy that allows you to enter the equity market in a systematic manner.

    Know more
  • Kotak Platinum

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

    Know more
  • Kotak Assured Savings Plan

    Kotak Assured Savings Plan is an affordable protection plan that enables you to accumulate wealth and strengthens your finances for the future.

    Know more
  • Kotak Assured Income Accelerator

    Kotak Assured Income Accelerator ensures that you get Guaranteed Income every year on the same amount of savings and that the Guaranteed Income increases year on year.

    Know more