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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
A 10-year ULIP plan lets you grow your money through market investments, with returns typically ranging from 10-12% per year over a decade. These long-term returns often outperform traditional savings options like PPF and NSC. Investing for 10 years in ULIPs allows you to benefit from compounding and market growth while enjoying life insurance and tax advantages. This makes it a smart choice for building wealth and financial security over the long term.
A 10-year ULIP policy is a financial product that combines insurance coverage with investment opportunities. ULIP stands for Unit Linked Insurance Plan, where part of your premium goes towards securing your life, and the remaining amount is invested in market-linked funds like equity, debt, or hybrid funds.
The “10-year” part signifies that you stay invested in this plan for at least ten years, allowing your money to grow while enjoying insurance protection. Unlike traditional insurance plans, ULIPs give you the dual benefit of life coverage and potential wealth generation, making them a flexible option for long-term financial planning. Since it also offers life coverage, it helps ensure that your family receives a payout if anything happens to you during the policy term. This makes it a great option for achieving long-term financial goals while securing your loved ones’ future.
The returns from your ULIP majorly depend on the performance of the chosen funds. To further understand how ULIP works, think of it as a mix of a savings jar and a security blanket. Here is how ULIP works:
When you pay your premium, it gets split into two parts:
You choose where your money goes:
Your investment is converted into “units” based on the ULIP NAV (Net Asset Value). NAV is the value of one unit at a given time, and it changes daily based on market performance.
Over the 10 years, your units grow (or shrink) based on market trends. Since ULIPs are long-term investments, the power of compounding helps boost returns over time.
After 10 years, you receive the accumulated fund value, which includes your initial investment and any returns earned over the decade.
Opting for a 10-year ULIP offers numerous benefits. Here is why you should consider purchasing such a policy:
Unlike fixed deposits or traditional insurance plans, ULIPs offer returns tied to the performance of the financial market. This means higher growth potential, especially for long-term investors. Over 10 years, fluctuations in the market tend to even out which offers you a good chance at significant wealth creation.
ULIPs offer the flexibility to choose your investment options and switch between them based on market conditions. Some ULIPs limit the number of switches during the policy term, while others offer unlimited changes. Choose a plan that aligns with your investment strategy.
According to the Income Tax law, ULIPs are classified under the EEE (exempt-exempt-exempt) category. Your investments are eligible for tax deductions under Section 80C of the Income Tax Act. Additionally, proceeds received upon surrender, partial withdrawal, or maturity of the ULIP plan are tax-exempt under Section 10(10D), provided the premium for any policy year does not exceed 10% of the death sum assured.
A ULIP is not just an investment but also an insurance plan. If something happens to you during the policy term, your family receives a death benefit, either the sum assured or the fund value, whichever is higher.
By locking in your funds for 10 years, ULIPs encourage disciplined investing. Plus, the longer you stay invested, the better your returns, thanks to the power of compounding and market recovery cycles.
Unit Linked Insurance Plans (ULIPs) offer a unique combination of investment and life insurance, with the potential to generate annual returns of 10-12% over a 10-year period. The actual ULIP returns in 10 years depends on factors such as fund selection, market performance, and policy charges. For investors seeking long-term growth, ULIPs present an attractive opportunity.
While ULIP returns in 5 years have been competitive, a 10-year investment horizon often yields stronger results due to compounding and reduced market volatility. Compared to traditional options like the Public Provident Fund (PPF) and National Savings Certificate (NSC), ULIP returns in 10 years tend to be significantly higher.
Additionally, ULIPs provide the dual advantage of wealth creation and life coverage, ensuring both financial security and investment growth.
Over the past decade, ULIPs have evolved into one of the best-performing insurance-cum-investment products. In fact, some ULIPs have delivered returns comparable to mutual funds while offering the added advantage of insurance. Let us explore more:
These facts highlight the potential of ULIPs as wealth-generating tools, especially when held for a longer period.
Investors should regularly track their ULIP returns to evaluate how well their funds are performing. Understanding ULIP returns in 10 years helps in making informed financial decisions and optimizing investment strategies.
To measure ULIP performance, two key methods are commonly used:
Let’s explore how these methods can help you accurately calculate and analyze your ULIP returns in 10 years.
Using this method, you only need the scheme’s current Net Asset Value (NAV) and its initial NAV to calculate absolute returns. However, a few simple steps are required:
The mathematical formula for absolute returns is:
[(Current NAV - Initial NAV) / Initial NAV] x 100
This method is a great way to assess the performance of a ULIP held for a short period.
CAGR reflects the annual growth of the investment over a specific time frame. Calculating CAGR involves using the following mathematical formula:
CAGR = [(Current NAV value / Initial NAV value) (1 / number of years)] - 1 x 100
This calculation considers the scheme’s starting and ending values and the years the investment spans.
If you are looking for a mix of investment and insurance benefits, a 10-year unit linked health insurance plan is worth considering. But remember that while it is tempting to expect sky-high returns, it is also essential to maintain a realistic outlook. A 10-year period can smoothen out market fluctuations, but it does not eliminate risk. ULIPs are not guaranteed return products, and the returns will depend on market conditions and your investment choices.
Remember, it is always a good idea to consult a financial counselor who can help you make better decisions based on your circumstances and goals. ULIPs can be a valuable addition to your investment portfolio, but like any investment, they have pros and cons. Plan wisely and stay committed for the long haul, and your ULIP may yield satisfying returns over a decade.
1
Market experts estimate annual returns of 10-12% for a 10-year ULIP plan. However, actual returns depend on the performance of your chosen investment funds.
2
To maximize ULIP returns in 10 years, diversify your investments across equity and debt funds, make timely switches based on market conditions, and regularly review your portfolio to align with your financial goals.
3
Several factors influence ULIP returns in 10 years, including the performance of equity and debt markets, the fund management strategy, the allocation of funds, and the economic environment.
4
ULIP returns after 10 years are tax-exempt under Section 10(10D) of the Income Tax Act, provided the annual premium does not exceed 10% of the sum assured. Additionally, premiums paid are eligible for deductions under Section 80C.
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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