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How ULIP funds are calculated to generate returns?

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Buying Properties in Mumbai

article Mumbai has always been the hub for selling and buying properties. Various locations in Mumbai are in demand by lots of local investors; foreign investors like Donald Trump are also willing to invest in the real estate sector in Mumbai. The real estate sector in Mumbai has always given high returns compared to other states or cities in the country. Mumbai is also amongst the top cities in the world with highest real estate rates. Earlier, properties used to be a bit cheaper in the suburbs of Mumbai but now even rates in the suburbs have increased because of great demands from local investors who invest in under construction flats and when the time is right, they plan to sell it at a good price. Now, people prefer to go online for almost anything. Earlier, one could easily ge... Read more

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Insurance plans are the best way to build financial security for our family. But due to the rising inflation costs, improvised lifestyle, growing aspirations of people, and ever-increasing needs, it becomes imperative to have a steady income that apart from insurance to match the pace of the rising living standards. We all want to see our money grow each day just like a money plant.

With this though in mind, insurance companies have introduced Unit Linked Insurance Plan (ULIPs). ULIPs not only offer insurance cover but give assured returns. ULIPs are just like Mutual funds, where investors purchase units at their Net Asset Value (NAV) from a fund, along with added advantage of having a life cover from an insurance company.
That’s, why the term linked is involved. Your insurance component is linked to a ULIP fund. Insurance companies promise you guaranteed ULIP NAV returns. But it is advisable to talk to a financial expert and understand the conceptualization of a ULIP NAV and then go for investments.

ULIP NAV is calculated by adding the ULIP funds for a particular day and deducting charges like management fees, operating expenses, marketing costs and other expenses incurred. Net Asset Value represents the value of the total holding of the ULIP fund. It is divided by the number of units held by investors. This represents the NAV per unit.

Most people think higher ULIP NAV would include investment in expensive funds and often choose to skip it from the investment agenda. They opt for an investment with a lower NAV just to save costs on premiums. However, let's understand that the NAV is merely the book value of the ULIP fund investment minus the related expenses. It only represents the fair price of the asset should the mutual liquate the investments on a particular day. Investors don’t have to be worried about the price being too low or high. Instead, the significance of your investment should not be the basis for choosing the right ULIP fund. Therefore, a higher or lower ULIP NAV holds no importance and should not be the basis for identifying the right ULIP fund.


Expert suggest when there are no major movements in markets, your product will work at its best as the ULIP NAV will go up in a steady manner. If the market falls, your debt earnings will be locked. Once the market recovers your equity earnings will rise. Remember, the debt part of your portfolio has secured bonds that ensure the highest Net Asset Value at maturity. So over a period of time, in your portfolio equity funds will shrink and shift towards debt based funds. Depending upon how much the market falls, at that point during the tenure, companies usually make a smooth exit from the stock market and invest in secured funds.

Saving on the costs of charges associated with Ulip Plan Comparison will ensure higher returns. Ideally, there is premium allocation, administrative, management, upfront, partial withdraw, fund switching or surrender charges associated with the plan. Ensure that your charges should not eat away the entire profit, else there is no point in making the investment. Your ULIP policy should have a minimum charge and provide better flexibility in terms of cash withdrawal, bonus receipt, and term of policy.
Added 7 months ago
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