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ULIP NAV Meaning & How is the Return Calculated in ULIP

ULIP NAV - Learn how to determine net asset value in ULIPs and what it means. Your ULIP's performance is accurately reported by NAV.

  • Mar 25, 2022

Unit Linked Insurance Plan or ULIP is one of the popular investment tools that has recently gained popularity after the new regulations that the government brought in Budget 2022 to control its misuse. Also, ULIP returns are decent, making them a good choice for investors. However, it is important to understand the key details of ULIP before planning an investment in this plan.

One of the aspects of ULIP that are a bit confusing is calculating ULIP returns. In this article we will help you understand how to calculate ULIP returns. We will also discuss ULIP performance, the benefits of ULIPs, the best ULIP plans in India, and the tax advantage of ULIPs in brief.

What is Net Asset Value?

When referring to open-end or mutual funds, net asset value (NAV) is the sum of an entity’s assets less its liabilities.

The difference between assets and liabilities for businesses and other legal entities is referred to as the company’s capital, net worth, or net assets. The fund valuation and price, which are determined by dividing the difference between assets and liabilities by the number of shares held by investors, are referred to as NAV.

It is simpler to use the fund’s NAV for pricing and trading fund shares because it represents a “per-share” value of the fund.

How is ULIP calculated?

ULIP is a 2-part investment plan. It means that one part of the investor’s premium is allocated towards insurance. The remaining premium amount goes towards investment, which manages portfolios of different market funds like debts, equities, hybrid funds, etc.

The investor manages the investment part, and the return depends on how the fund portfolio is managed. The whole return calculation is based on the NAV of the ULIP policy.

NAV or Net Asset Value is the value of assets of your ULIP funds, excluding its liabilities. Another term used to denote NAV is book value.

ULIP NAV Formula:

NAV = (Value of Current Assets + Market Value of Investments Held) - {(Value of Current Liabilities & Provisions) / Total number of outstanding units on the date (before redemption/creation of units)}

The NAV is calculated on a daily basis as the value of market funds changes every day.

Steps to calculate ULIP returns using NAV

To check ULIP performance, it is important to understand how the value of ULIP is calculated. The simplest way to calculate the value of ULIP returns is to use an online ULIP return calculator.

However, these calculators sometimes provide very limited functionality, and if you want to calculate the exact value of your ULIP, you will have to calculate it on your own.
Choose a date for valuation that fits your needs. (As NAV is calculated on the fund valuation of a particular date)

Here is a stepwise method to calculate the exact value of your ULIP NAV:

Step 1:

Choose a date for valuation that fits your needs. (As NAV is calculated on the fund valuation of a particular date)

Step 2:

Now, calculate fund securities using the formula below:

Total Value of Fund Securities at the end of valuation date = (Cash on Hand on valuation date) + (Short-term and Long-term assets held by the fund)

Step 3:

Subtract outstanding liabilities of ULIP Funds. Use the formula below for this:

Total Value of Fund Securities at the end of valuation date = [(Cash on Hand on valuation date) + (Short-term and Long-term assets held by the fund) - Outstanding Fund liabilities]

Step 4:

Now divide the above value by the outstanding share in your ULIP funds. You will get the following:

NAV = [(Cash on Hand on valuation date) + (Short-term and Long-term assets held by the fund) - Outstanding Fund liabilities] / number of outstanding shares in the ULIP fund

Thus, the final NAV of your ULIP fund is obtained.

To obtain the market value of your investment, you will have to multiply the NAV value obtained above the number of shares you own.

The total market value of investment = NAV x Number of shares owned

Having understood calculating your investment’s market value, you can calculate the exact value of your ULIP investment and plan your next moves accordingly. Moreover, you will not have to depend on the limited features of the online ULIP return calculator to check your ULIP performance.

How is ULIP Calculated? 4 Methods to Calculate your ULIP NAV

ULIP can be considered a good option as a financial tool. However, among the various benefits of ULIPs, like good returns, one of the most important ones is the tax advantage of ULIPs. Therefore, checking these benefits, calculations, and deductions is suggested before opting for a ULIP policy.


1.What is the formula used for NAV calculation?

The total worth of all the cash and securities in a fund’s portfolio, less any liabilities, is divided by the number of outstanding shares to arrive at the NAV.

2.What is the meaning of ‘Unit’ in Unit-Linked Insurance Plans?

A ULIP is a sort of insurance that covers both investing opportunities to help you meet your long-term goals and the financial security of your family. There are two portions to the premium paid for a ULIP.

3.How is fund value calculated in ULIP?

The entire monetary value of all the units a policyholder holds is the total fund value of a ULIP. Simply multiply the number of units held by the NAV (Net Asset Value) of a single unit on that specific day to determine the fund value in a ULIP on a given day.

4.What is the formula for the calculation of NAV?

The total worth of all the cash and securities in a fund’s portfolio, less any liabilities, is divided by the number of outstanding shares to arrive at the NAV.

5.Why is net asset value important?

An investment fund’s NAV, or net asset value. NAV is used by mutual funds and ETFs to determine the cost per share of the fund.

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

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