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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
ULIPs (Unit Linked Insurance Plans) offer a blend of life insurance and market-linked investment. Over a 10 year period, ULIPs have the potential to generate competitive returns, especially when invested in equity or balanced funds. Features like fund switching, partial withdrawals after 5 years, and optional riders enhance flexibility and financial security. With disciplined investing and market growth, ULIPs can help build a solid financial corpus while providing life cover throughout the policy 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.
ULIPs let you switch between equity, debt, or balanced funds based on market performance and risk appetite. This flexibility helps you optimize returns over the years, which is especially useful during market ups and downs.
After the 5 year lock-in, you can withdraw some funds without ending the policy. This feature is handy for emergencies or unexpected expenses while your investment and life cover continue.
Riders like critical illness cover, accidental death benefit, or waiver of premium enhance your ULIP’s protection. They offer extra security without disrupting your investment growth.
The potential returns from a ULIP over a 10 year period depend greatly on the type of funds you invest in. ULIPs give you the flexibility to choose from equity, debt, or balanced funds, each offering different levels of risk and reward. Since your returns are directly tied to how these funds perform in the market, the choice you make plays a big role in shaping your outcome.
Moreover, your portfolio decisions, such as switching funds or adjusting allocations based on market trends, can significantly impact the final value over time. It’s also worth noting that ULIPs come with certain charges and fees, like fund management and policy administration costs. These expenses can affect your net returns, so it's wise to factor them in when planning for long-term gains.
When evaluating any investment, understanding the potential returns is key, but estimating ROI (Return on Investment) isn’t just about looking at past performance. Several factors come into play that can influence how your money grows over time. Let’s take a closer look at the major elements that help determine ROI estimates and why they matter in making informed financial decisions.
Insurance companies deduct various charges from your ULIP premium, and these charges can vary from one provider to another. Common deductions include policy administration fees, fund management charges, premium allocation costs, fund switching fees, mortality charges, and charges for policy discontinuation.
While past performance doesn’t guarantee future results, reviewing the historical trends of specific fund schemes can give you a clearer picture and help you track your investment returns more effectively.
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 generally estimate that a ULIP can offer annual returns of around 10–12% over a 10 year period. However, this is not a fixed rate and should be seen as an indicative range. The actual returns depend largely on the type of funds you choose—equity funds have higher growth potential but come with more risk, while debt funds offer stability with relatively lower returns. If you actively manage your fund allocation and take advantage of market opportunities, you could potentially earn returns at the higher end of the range.
2
To get the most out of your ULIP over 10 years, consider a diversified investment approach by allocating your premium between equity and debt funds based on your risk appetite. Use the fund switching option to shift funds when market conditions change—this helps capture growth in rising markets and protect your capital during downturns. Additionally, review your portfolio regularly to make sure it aligns with your evolving financial goals, such as saving for a child's education, buying a home, or retirement planning. Staying invested for the long term also benefits from the power of compounding.
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 enjoy attractive tax benefits in India. If you hold your policy for 10 years, the maturity proceeds are tax-free under Section 10(10D) of the Income Tax Act—as long as the annual premium is less than or equal to 10% of the sum assured. This makes ULIPs a tax-efficient investment compared to other market-linked options.
Moreover, the premiums you pay are eligible for a deduction under Section 80C, up to a limit of ₹1.5 lakh per year. This dual benefit of tax deduction on premiums and tax-free maturity makes ULIPs a compelling choice for long-term investors seeking both growth and tax savings.
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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