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ULIP Returns in 5 Years

ULIP returns can vary widely based on market conditions, investment choices, ULIP charges, and financial goals. Explore the article ahead to know the importance of ULIP returns in 5 years.

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

Key takeaways

  • A Unit Linked Insurance Plan (ULIP) is a distinctive financial tool that blends insurance and investment, offering a dual benefit.
  • With ULIP, you have the freedom to distribute your premium among multiple funds presented by the insurance provider.
  • The mandatory 5-year lock-in period signifies that withdrawals from your investments are prohibited during this duration.
  • ULIPs offer versatility in fund allocation, enabling you to switch between funds in response to market conditions and your risk tolerance.

In this unpredictable world where securing a stable financial future is a top priority, the idea of growing our wealth naturally appeals to us all. It’s the reason why so many of us look into different ways to invest our money.

Investing is like planting seeds for our financial future. We do it with the hope that these investments will grow over time, helping us achieve our financial goals and provide security for our loved ones.

Among these plans, ULIPs have emerged as the heroes of the investment field. They are unique because of the dual advantages they offer to the investors.

What is ULIP?

Unit Linked Insurance Plan is a unique financial instrument that combines insurance and investment. When you invest in a ULIP, a portion of your premium goes towards providing life insurance coverage, while the remaining amount is invested in various market-linked funds of your choice, such as equity, debt, or hybrid funds.

How Does a 5-Year ULIP Work?

A 5-Year ULIP (Unit Linked Insurance Plan) is a specific type of ULIP that comes with a minimum lock-in period of 5 years. In this lock-in period, policyholders are generally restricted from making partial withdrawals or surrendering the policy.

Whether you are looking to secure your family’s future or aim to achieve long-term financial goals, understanding how a ULIP returns in 5 years will help you make the right financial choices.

Premium Payment

You start by paying regular premiums towards your ULIP returns. The premium amount can be chosen based on your financial goals and risk appetite.

Fund Allocation

You have the flexibility to allocate your premium across various funds offered by the insurance provider. These funds can range from equity-oriented funds with higher risk to debt-oriented funds with lower risk or a combination of both.

Lock-In Period

The 5-year lock-in period means that you cannot withdraw your investments during this time. This restriction is imposed to encourage long-term wealth accumulation.

Fund Performance

The returns from your ULIP depend on the performance of the underlying funds. Since ULIPs are market-linked, your returns can vary based on the performance of the chosen funds.

Advantages of Choosing a 5-Year ULIP

From flexibility and tax benefits to the potential for wealth creation, a 5-year ULIP can offer a unique blend of features that cater to the diverse needs of modern investors.

Wealth Creation

ULIPs offer the potential for substantial wealth creation over the long term, thanks to market-linked investments.

Tax Benefits

Premiums paid towards ULIPs are eligible for tax deductions under Section 80C of the Income Tax Act, and the maturity proceeds are tax-free under Section 10(10D).


ULIPs provide flexibility in fund allocation, allowing you to switch between funds based on market conditions and your risk tolerance.


ULIPs offer transparency in terms of fund performance, charges, and portfolio updates, allowing you to make informed investment decisions.


Strategic decisions can lead to significant ULIP return in 5 years. It can be an excellent choice for investors looking for a disciplined and long-term approach to financial planning. It combines the benefits of insurance coverage with the potential for wealth creation through market-linked investments.

While considering a 5-year ULIP, it’s crucial to assess your financial goals, risk tolerance, and the insurer’s track record. Remember that ULIP returns can be influenced by market fluctuations, so it’s essential to have a well-defined investment strategy in place.

- A Consumer Education Initiative series by Kotak Life

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

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Ref. No. KLI/22-23/E-BB/521