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ULIP Returns in 10 Years

ULIP investments for ten years can be the best option if you are looking for a long-term investment. Find out more about returns from a 10-year ULIP plan.

  • 1,673 Views | Updated on: Dec 07, 2023

After earning money, the next most challenging task is to invest wisely in the right plans. You always look for plans that offer safe investment options with the highest returns. ULIP (Unit Linked Insurance Plans) is one of the most researched investment plans that can provide the benefits of investment and insurance simultaneously.

Key Takeaways

  • ULIP is a financial tool that combines the benefits of insurance and investment.
  • It helps you accumulate wealth per market conditions and investment choices and provides insurance safety.
  • You may face surrender charges if you cash out your ULIP before a specific period.
  • ULIP returns in 10 years can be your best option for investing for a longer period of time with substantial benefits.

If you have been exploring investment options, chances are you have come across the term ULIP. ULIP, or Unit Linked Insurance Plan, is a financial product that combines insurance and investment. Over time, your investments can grow, and the insurance coverage stays intact. But what can you expect from your ULIP returns over a span of 10 years? Investing in this long period can create wealth for future generations.

Understanding ULIP returns in 10 years

ULIP is like a two-in-one deal for investment. A part of your money goes into insurance coverage, while the other part gets invested in various funds of your choice, such as debt, equity, or hybrid funds. ULIP returns in 10 years can be your best investment as you are assigning a long period of ten years for your money to grow. Investing your money in a ULIP for this long time can result in the generation of a huge corpus that can prove beneficial for the future.

Calculating ULIP Returns in 10 Years

Investors should be able to gauge their gains when investing in ULIPs quickly. Measuring ULIP returns enables policyholders to track how well their funds are performing.

So, let us explore two practical methods for calculating 10-year ULIP returns.

If you assess returns within a year, you can consider the complete return. However, if the returns span over a year, the Compound Annual Growth Rate (CAGR) may be more suitable. Let us delve into these methods:

Absolute Returns

To calculate absolute returns, the policyholder only needs the scheme’s current Net Asset Value (NAV) and its initial NAV. However, a few simple steps are required:

  • Subtract the initial NAV from the current NAV.
  • Then, subtract the result from the initial NAV.
  • To express this as a percentage, multiply the obtained value by 100.

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.

Compounded Annual Growth Rate (CAGR)

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 number of years the investment spans.

Way Forward

While it is tempting to expect sky-high returns, it is 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.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

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.

Amit Raje
Reviewed By :
Prasad Pimple

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.

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