A ULIP return calculator is an online tool that helps calculate the potential returns on investment made under ULIPs. By just entering the desired amount of investment & its tenure, the calculator will assess the maturity value. Thus, it helps in making well-informed decisions to attain financial security. It also helps in comparing different investment options available & evaluating the potential for achieving financial objectives.
One should compare the costs involved & returns received before investing your funds in any financial product. A ULIP Calculator is one of the most popular financial tools that can be used to help you plan & evaluate investments in ULIPs, considering various factors, such as premium amount, tenure, age, and rate of return.
Reasons to Use the ULIP Calculator
Objective Setting
It helps in setting realistic objectives & analysing the amount of investment required to achieve them. It helps calculate the investment amount required to achieve goals such as a child’s education, buying a house, and retirement planning.
Financial Planning
By providing the amount to be invested, investment tenure, & expected rate of return, one can ascertain the maturity amount. ULIP calculator also helps with financial planning, by evaluating different investment options & hence making well-informed decisions.
Risk Assessment
ULIP calculators also help to assess the risk associated with different investment plans. It allows for assessing what market fluctuations will result from a change in the expected rate of return. By assessing the risk, one can make a well-informed decision depending on the risk acceptance level & investment goals.
Investment Comparison
Provide investment-related data for all suitable investment plans that are under consideration to compare their potential return amounts. It allows you to evaluate & select the plan that best suits your needs & risk tolerance level.
Investment Monitoring
It acts as a tool that can be used to monitor the investment’s progress by providing the actual returns & thereafter making adjustments.
Flexibility Analysis
It helps to analyse the flexibility of ULIP plans by assessing the outcome of switching between the funds. Additionally, it helps evaluate the number of potential returns depending on the provided date.
Formula to Calculate ULIP Returns
- CAGR ( Compound Annual Growth Rate)
The compound annual growth rate represents the annual growth of an investment over a specified period.
CAGR = {[(Current value / Value at the time of purchase) ^ (1 / number of years)] – 1} x 100
For instance, the initial NAV = INR 25
Number of Years = 5
Current ULIP NAV = INR 35
Absolute Returns = {[(35 / 25) ^ (1 / 5)] – 1} * 100 = 6.96%
- Absolute Returns
It depicts the percentage increase in the value of ULIP over a period of time. The negative return shows depreciation, & the positive one shows an appreciation in the value of an asset.
Absolute returns = [(Current value – Value at the time of purchase) / Value at the time of purchase] x 100
For instance, the initial NAV = INR 250
Current ULIP NAV = INR 350
Absolute Returns = {(350 – 250) / 250} * 100 = 40%
How should we calculate ULIP Returns Online using the ULIP Calculator?
Collect Relevant Information
Collect all relevant details required to input into the ULIP calculator, such as age, premium payment tenure, premium amount, desired policy tenure, etc.
Choose a Reliable ULIP Calculator
Select the most reliable ULIP calculator available online that provides accurate results.
Input the Required Details
Now, input the required details, such as age, premium amount, policy tenure, expected ROR, premium payment tenure, etc., to get the relevant results.
Ascertain the Results
The ULIP return calculator will provide you with details on premium allocation, projected returns, maturity amount, applicable charges, fund value, etc.
Try Different Situations
The ULIP calculator also allows you to try different situations, such as changing the premium amount, changing the policy tenure, or analysing the outcome of different rates of return. It will help you make informed decisions depending on the financial & investment objectives.
Benefits of ULIP Calculator
Easy to Use
It helps make a choice from the available plans, making it easy to select the most suitable plan recommended by the calculator instead of browsing through many plans.
Quick & Convenient
It is an online tool that provides results quickly based on the details provided, making calculations convenient.
No Charges
These calculators are available online for free & do not require any fees to be paid.
Financial Planning
It helps you perform financial planning in the long run, because after knowing how much returns would be generated, you can plan your future commitments & obligations.
Investment Tenure
They also help in assessing the investment tenure, as many investors struggle to determine the time period for which funds should remain invested to achieve the desired returns.
Make Informed Decisions
It also helps in making well-informed decisions by enabling the comparison of different available plans on the basis of their returns.
How to Use a ULIP Calculator?
Fill out the Basic Details
To start with, enter the details such as the premium amount to be invested, policy tenure, & the expected rate of return to get an estimate of the potential returns.
Choose the Funds
Now, select the type of funds in which investment is to be made, like debt, equity, or balanced funds, depending upon your risk tolerance level. The risk & return of the investments will depend upon the funds selected.
Choose the Rate of Interest
Select the rate of interest to ascertain the returns on investment with the help of the ULIP calculator.
Click on the Submit Button
Click “Submit” to get the returns on investment & know the different plans available.
Evaluation Details
Review the details received by entering the details into the calculator, i.e., the principal amount plus the total amount of interest to be received.
Adjust Parameters
You can also adjust the premium amount, expected rate of return, or policy tenure to ascertain how investment returns are affected in different situations.
Conclusion
ULIP Return Calculator is a simple, easy-to-understand, and effective tool that helps us ascertain the premium amount along with the expected rate of return. It also helps in selecting a portfolio based on the investor’s willingness to take the risk. However, these calculators also work on a presumption & past performance basis, & they may not deliver accurate results. Hence, it is advisable to exercise greater caution when using calculators before investing in ULIPs.
