Calculating ULIP In India

These days, investment trends are changing for good. More and more consumers are looking to invest their money in profitable avenues that can give them excellent returns in the long run and at the same time, secure their future. One such life insurance product that offers both these benefits is a ULIP.

What is ULIP?

ULIP stands for Unit Linked Insurance Plan. Essentially, a ULIP is an investment product that is offered by life insurance companies. It is a type of integrated plan wherein, the amount invested by the insured for an insurance plan is further invested by the insurer in other avenues such as stocks to render better returns over time.

How does a ULIP work?

A ULIP works more or less on the same principle as a mutual fund. A portion of the amount invested by the insured is kept aside for providing insurance cover while the rest of the amount is invested in financial instruments.

Insurance companies invest a part of the total amount collected from consumers in the form of premium and invest the same in such instruments.

While calculating returns, each insured is given his share of profit as per the portion of the amount that was initially invested by him in the financial instrument.

Process of Calculating ULIP

Unit Linked Insurance Plans are the best way to invest in a planned and risk-free manner for the simple reason that they let you invest with enough leeway, as per your risk appetite. If you are looking to purchase a ULIP, you can visit and compare a range of plans from the best insurance companies in the country.

Here are some benefits of investing in a Unit Linked Insurance Plan:

1. Flexibility

A ULIP lets you invest according to your financial needs. You can move your money from one fund to another at any time to attain maximum profit. There are several options of investment to choose from such as debt, equity, balanced fund, etc.

2. Choose from a range of Riders

Just like regular insurance policies, ULIPs too, offer several riders, which are actually additional benefits associated with a basic insurance plan.

For instance, a Unit Linked disability add-on ensures that your life insurance plan does not become inoperative even in the case of the inability of the insured to earn due to a physical condition.

3. Free-look Period

ULIPs have a lot in common with ordinary insurance policies. Once you have purchased a ULIP, you have a 15 day period within which you can withdraw your name from the policy in case you are dissatisfied. You are paid back the entire premium albeit, after deduction of processing charges.

4. Deductions from Taxes

Investing in ULIPs is a good option for those who are looking for a reduction in taxes. Under section 80C and 80 D of the Income Tax Act, 1961, the growth arising from an investment in ULIP is not taxed, meaning don’t incur any liability on the profits earned. This means that ULIP investments are one of the most cost-effective ways to increase your returns.

5. Encourage Targeted Savings

ULIPs are long-term investment plans. As such, they help you plan for the long run and achieve goal-based savings. By investing early in such plans, you can conveniently save for important stages in life such as the education of your child, housing requirements or even retirement.

How to Calculate ULIP Online

Calculating ULIP online is a fairly simple process. You do not have to undergo the weary process of going through scores of calculations to find out your returns.

These days, several websites offer something called as a ULIP calculator which is a pre-designed format in which you can enter relevant details and find out your amount.

  • Choose the policy or plan in which you have invested from the drop-down menu.
  • Enter the start and the end date of your investment plan.
  • Enter the amount you have invested in the ULIP.

Voila! Your returns will be on your screen in no time.

Final Take:

Unit Linked Insurance Plans are soon becoming a favourite of most investors in India. For the inherent benefits these plans provide, more and more consumers are moving away from the conventional methods of savings like Fixed Deposits towards opportunities that can render better returns in the long run.

As such, seeing the growing interest of consumers in these plans, several new brands and companies are setting up their business in India to attract the maximum number of consumers by providing hassle-free services and a smooth customer support system to be ahead of the competition.