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In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Kotak e-Invest
Features
Ref. No. KLI/22-23/E-BB/492
Net Asset Value (NAV) in a ULIP (Unit Linked Insurance Plan) represents the per-unit value of the assets in which your money is invested.
Who does not want to grow wealth! It can help you achieve long-term goals like funding higher education, retirement, buying a house, and more. But what if you can do all this while ensuring financial security for your loved ones? The best of both worlds, right? This is what Unit Linked Insurance Plans are designed for. They combine investment and insurance in a single package.
If you want to avail these dual benefits, you should start by understanding of the concept of Net Asset Value (NAV). ULIP NAV can help you track your investment growth and check if any modifications are needed. You will encounter this term no matter which ULIP you decide to buy.
Net Asset Value (NAV) in Unit Linked Insurance Plans (ULIPs) is the per-unit value of the fund's assets. When people invest in a ULIP, their money is pooled together and invested in a diversified portfolio of assets. The insurer then issues ULIP units to investors based on their contribution.
NAV can help determine how much your ULIP units are worth at any given time based on the market value of the portfolio’s assets. It fluctuates according to market conditions and the performance of the assets, giving you a clear picture of your investment’s value.
The NAV in insurance is calculated on a daily basis as the value of market funds changes every day. It is determined by dividing the difference between assets and liabilities by the total number of units issued to all policyholders.
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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) |
Here, the value of assets represents the combined value of the underlying securities in the ULIP portfolio (stocks, bonds, etc.) based on their current market prices. Liabilities refer to any costs or charges associated with managing the ULIP, such as fund management fees.
To illustrate, let us assume the following:
Now, applying the ULIP NAV formula:
NAV = (Total Market Value of Assets − Liabilities) / Total Number of Units Outstanding
NAV = (₹10,00,000 - ₹50,000) / 20,000 = ₹9,50,000 / 20,000 = ₹47.50
So, the ULIP NAV in this example is ₹47.50 per unit. If you hold 100 ULIP units, it means your investment's current market value is calculated as follows:
Total Value = NAV × Number of Units
Total Value=₹47.50 × 100 = ₹4,750
This means that your 100 ULIP units are currently worth ₹4,750 based on the NAV.
You must regularly monitor the NAV to assess whether your ULIP aligns with your financial goals and risk appetite. You can explore other investment products or ULIPs with better performance metrics if the current NAV does not meet your expectations.
In addition to the above formula, you can calculate the NAV using an online ULIP calculator as well. You can also contact a financial advisor if you have questions about your ULIP plan NAV or how it fits into your investment strategy.
1
The total worth of all the cash and securities in a fund’s portfolio, less any liabilities, is divided by the number of outstanding units to arrive at the NAV.
2
In ULIPs, a "unit" functions like a share in an investment fund. The number of units you hold represents your share of the overall investment and determines the proportion of profits you will receive. As you invest more money into the ULIP, you accumulate additional units based on the current NAV.
3
The fund value in a ULIP is the total monetary value of all the units a policyholder holds. To calculate the fund value on a specific day, simply multiply the number of units you own by the NAV of a single unit on that day.
Formula: Fund Value = Number of Units × NAV
4
The total worth of all the cash and securities in a fund’s portfolio, less any liabilities, is divided by the number of outstanding units to arrive at the NAV.
5
Understanding what is NAV in ULIP helps in assessing the performance of the fund over time and is essential for making informed buying or selling decisions. Regularly monitoring NAV allows you to track your investments and make changes as per market conditions.
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.
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
Features
Ref. No. KLI/22-23/E-BB/521
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
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