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ULIP Returns in 15 Years

Dual benefit plans, like a ULIP scheme, that enable wealth creation as well as insurance protection, are an ideal investment choice. But what is it, and how is it calculated? Let us find out here.

  • 3,987 Views | Updated on: Mar 14, 2024

Key takeaways

  • Over a 15-year term, a ULIP presents the chance to diversify your investments across a wide array of market-linked funds, all while securing life coverage.
  • Your premium amount is divided into two components: a smaller portion goes towards covering the insurance charges, while the remaining portion is directed towards investments in a variety of market-linked funds.
  • ULIPs come with the added advantage of tax benefits under Section 80C of the Income Tax Act, which apply to premium payments.
  • The rates of ULIP returns over a 15-year period are influenced by various factors, including the policyholder’s age, the chosen sum assured, and the selected premium amount.

Imagine investing your hard-earned money with the promise of not only securing your financial future but also its gradual growth over time. Now, fast forward 15 years, and you find yourself on the precipice of financial achievement. This captivating journey is the essence of ULIP returns in 15 years – a compelling tale of wealth creation, financial security, and the power of smart investments.

In this article, we will delve into the world of Unit Linked Insurance Plans, or ULIPs, and explore the intriguing facets of their returns over a decade and a half.

What is a 15-Year ULIP?

A 15-year ULIP offers you the opportunity to invest in a diverse range of market-linked funds while simultaneously providing you with life coverage over a period of 15 years. As ULIPs are essentially insurance plans, you commit to making regular premium payments. These payments can be scheduled on a monthly, quarterly, biannual, or annual basis, depending on your preference.

How Does a 15-Year ULIP Work?

ULIP returns in 15 years are achieved through the allocation of a portion of your premium to provide life insurance protection while the remaining funds are invested in your selected investment vehicles.

ULIPs typically offer a range of options, including various equity and debt funds. You also have the flexibility to create a customized investment portfolio by diversifying your investments between these fund types, aligning with your individual risk tolerance. The returns generated by your ULIP are contingent on the performance of the specific fund or funds you have chosen.

The ULIP returns can be calculated using two methods:

Absolute Returns:

Absolute returns = [(Current value- Value at the time of purchase)/Value at the time of purchase] x 100

Compound Annual Growth Rate:

CAGR = {[(Current value/Value at the time of purchase) ^ (1/number of years)]-1} x 100

Now that you know how 15-year ULIP works let us find out how much will you get from investing in ULIP for 15 Years.

Let us understand it through different scenarios:

Monthly Contribution

Investment Period

Estimated Returns at 4%

Estimated Returns at 8%

₹2,63,000

15 Years

6,47,21,798

9,10,08,052

₹1,45,000

15 Years

3,56,83,121

5,01,75,542

₹96,000

15 Years

2,36,24,687

3,32,19,669

₹,70,000

15 Years

1,72,26,334

2,42,22,676

Benefits of Investing in 15-Year ULIP

The decision to invest in ULIPs for a 15-year horizon can be a strategic one, offering a multitude of benefits that extend well beyond financial security.

Wealth Accumulation

ULIPs provide an opportunity for long-term wealth creation. With the compounding effect, your investments can grow significantly over two decades.

Tax Benefits

ULIPs offer tax benefits under Section 80C of the Income Tax Act for premium payments and tax-free maturity proceeds under Section 10(10D). This can help you save on taxes while building wealth.

Partial Withdrawals

Some ULIPs offer the option of partial withdrawals after a certain lock-in period, providing liquidity in times of need.

Wrapping Up

Investing in ULIPs for 15 years can be a smart financial decision, provided you carefully select the right ULIP, manage your funds wisely, and stay invested for the long term. ULIPs offer the dual benefit of insurance coverage and wealth creation, making them a versatile investment option.

However, it is essential to understand the nuances of ULIPs, including charges and fund selection, to make informed decisions. Over the years, ULIPs have evolved to become more investor-friendly, and with prudent planning, they can help you achieve your long-term financial goals while providing financial security for your loved ones.

- 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

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