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ULIP Calculator – Know All About It

ULIP calculator guide

ULIP Calculator – Know All About It


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March 18, 2020

By : Bajaj Allianz Life

Unit Linked Insurance Plans (ULIPs) are one of the preferred investment options available to investors who wish to obtain the dual benefit of insurance combined with capital appreciation. In a ULIP plan, a part of the premium you pay goes towards providing you with a life cover, while the rest of the premium is invested in market-linked funds. The returns from this investment is what you get to enjoy as maturity benefits when the tenure of the plan is completed.

Before you invest in a ULIP scheme, it’s advisable to use a ULIP calculator to estimate the level of returns you can obtain for a given amount of premium payment. This way, you can get a fair idea of how a particular ULIP scheme fits into your overall financial plan.

What is a ULIP calculator?

Also known as a ULIP return calculator, this is essentially an online tool that can be used free of charge. Investors can make use of this tool to obtain a fair approximation of the returns they can obtain from a ULIP plan of their choice.

Here’s what ULIP return calculation tool requires as inputs to determine the expected returns.

• The amount you intend to invest in your ULIP plan

• The tenure of the ULIP plan you’re considering

• The frequency of your premium payments

• The type of ULIP funds you wish to invest in using your scheme

• The approximate rate of returns expected

Some ULIP calculation tools go a mile beyond simply assessing the returns a ULIP policy can give you. They help you compare different Unit Linked Insurance Plans, so you can figure out which scheme delivers the highest returns for the level of premium you’ve set. .

Why should policyholders use a ULIP calculator?

Before investing in a Unit Linked Insurance Plan, investors and potential policyholders can benefit greatly from an online ULIP return calculator. Here are some reasons why you should try this online tool before you park your funds in a ULIP investment.

1. It’s simple and easy to use

ULIP plan calculators are simple tools that can be used without any hassle. Even investors who’re only beginning to discover ULIPs will find that using this online tool is a straightforward process. All you need to do is input the required details, sit back, and let the ULIP calculator do the heavy lifting. With just the click of a button, you can get to know the returns expected from the ULIP schemes you’re considering. Because of how easy it is to use, a ULIP calculation tool is one of the most valuable tools available to investors who’re considering Unit Linked Insurance Plans.

2. It costs practically nothing

Using a ULIP calculation tool costs practically nothing, since it’s an online tool that’s available free of charge. Most banks, life insurance companies and financial institutions offer different variants of this calculator on their web portals. So, potential investors can simply head to the website of any investment service provider and enter the required details without spending a penny. The dual advantage of affordability and accessibility makes ULIP calculation tools one of the convenient online solution for potential investors, irrespective of whether they’re beginners or experts in this area of finance.

3. It helps make important investment decisions

This is one of the primary reasons why you should take the help of an online ULIP calculator before you actually invest in a Unit Linked Insurance Plan. It helps you figure out how much you stand to earn at the end of the investment period from the ULIP plan you’re considering, so you can decide whether or not to keep the plan in your investment portfolio. It also helps you get a fair idea of the return on your investment, so you can align your future financial goals accordingly. With this tool, you reduce your risk of overestimating your ULIP returns. So, you can plan the rest of your investment portfolio without any bias.

4. It’s a user-friendly tool

Online ULIP return calculators are not only simple to use, but they’re also extremely user-friendly. The entire process from the input to the results takes place quite quickly, so you can get on with your investment planning without any interruption. It’s also possible for even the most inexperienced investors to use the tool without any prior training or assistance. This way, every potential policyholder can quickly head to the web portal of their preferred bank, life insurance company or financial institution and take a look at the returns a ULIP plan is likely to deliver. So, it’s a convenient way to gain some insight without any difficulty.

5. It helps compare different plans

Potential investors should also use ULIP plan calculators before actually investing in a Unit Linked Insurance Plan because they can help compare multiple schemes simultaneously. The financial market offers investors various plans, each with different rates of return and varying kinds of ULIP benefits. ULIP calculation tools are just what you need to discover which of the many ULIP plans in the market fits right into your investment budget and aligns perfectly with your long-term financial goals. By comparing different Unit Linked Insurance Plans, you can maximize your returns without compromising on the affordability factor.

What are the features of a ULIP calculator?

ULIP calculation tools come with many distinct features that make them extremely useful for investors keen on parking their funds in Unit Linked Insurance Plans. Here’s a closer look at the main features of a ULIP calculator.

1. Flexibility in calculation

ULIP calculation tools offer a great degree of flexibility when it comes to assessing the returns offered by different Unit Linked Insurance Plans. You can run multiple simulations using this tool by changing various parameters such as the amount of premium, the frequency of payment, and the tenure of the investment. You can use the tool to understand how changing different parameters can alter the return on investment on your ULIP scheme. This level of flexibility also helps you compare different plans simultaneously.

2. Transparent computation

When you use a ULIP plan calculator, the computation involved in arriving at the return on investment is made transparent to the user. This is one of the defining features of the ULIP online return calculator. The details of the investment scheme considered are made available to the investor in a comprehensive manner, so there’s no aspect of the calculation that’s vague or unclear. Because of this degree of transparency, investors can make clear and informed decisions.

3. Life Goal-oriented analysis

ULIP return calculators also help investors analyse their overall financial planning to achieve their life goals. One can utilize the calculator to have an idea of how much corpus he/she would need to get their life goals done basis on their risk appetite and investment potential.

4. Quick assessment

ULIP calculation tools also help you to get a quick look at how your investment will grow under the ULIP policy you’re considering. The assessment is also as close to accurate, since the tool takes into account the current rate of return on investment. By getting to know the level of returns on your investment amount, you can plan the rest of your investment portfolio in a manner that helps you achieve the level of wealth you need to retire comfortably in your late fifties or early sixties.

5. Complete control over decision-making

You also get to exercise complete control over the process of decision-making. As an investor, you’re free to choose the details required to calculate the return on your investment. Right from the amount of premium you can invest to the manner in which you wish to allocate your funds between the insurance and investment aspects of the ULIP scheme, it’s all under your control. This way, you have the opportunity to figure out how best to invest your money without any external influence or bias.

6. Effective financial planning

Another defining feature of online ULIP calculation tool is that they’re effective at helping you with financial planning. Since they give you the option of using the expected rate of return, it’s possible to get a near-accurate estimate of how much you can earn from the ULIP scheme of your choice. Knowing this parameter can be a game-changer, since it makes financial planning extremely easy even for an investor who is entirely new to investing in Unit Linked Insurance Plans.

How do you use a ULIP return calculator?

Using a ULIP return calculator is really quite simple. The following step-by-step process will give you a fair idea of how to use this calculator online.

Step 1: Log into any one of the several ULIP return calculators available online. You can find them on the web portals of banks, life insurance companies and financial institutions. Some tools might initially ask you for personal details such as your name and your date of birth, while others may require you to disclose your lifestyle habits, such as whether you’re a smoker or not.

Step 2: Once you’ve entered all the preliminary details required, the tool may then ask you to specify the amount of annual premium that you’re ready to contribute to a ULIP scheme.

Step 3: The tool will then ask you to select the frequency of payment of the premium amount. Based on your financial situation and stability, you can choose to pay the amount in monthly, quarterly, or annual instalments. You can also choose to make a single lump-sum payment.

Step 4: The next step in the ULIP return calculator will require you to choose the tenure of the ULIP. You can pick an investment tenure that fits in well with your overall financial goals. Make sure that you choose the right investment period, because remaining invested for too long may mean that your money stays locked up for an extended period, while exiting the scheme too early may not leave you with enough time to spread your risk adequately.

Step 5: After selecting the tenure, the tool will then ask you to specify the amount of premium that you’re willing to invest to get your Life Goals Done.

Step 6: Once you’re done with the above steps, the next thing that you’ll need to do is select the period of your investment. With respect to ULIPs, there is a minimum lock-in tenure of 5 years during which you cannot make any premature withdrawals. It is advisable to remain invested for a longer period of time, so your investments can overcome market risks and grow significantly.

Step 7: The final step in a ULIP return calculator deals with the type of funds that you wish to invest your money in. You can choose to invest in equity instruments, debt funds, or a combination of both. While selecting the funds, it is prudent to always exercise caution. Before you decide to make an investment in a ULIP, ensure that the funds that you have opted for have a good performance record.

Once you’ve entered all the details required by the ULIP return calculator, the tool calculates the estimated returns based on the options that you’ve selected.

Conclusion

ULIP plan calculators thus offer a host of benefits to investors. By taking a few minutes to assess and compare different ULIP policies, you can invest your funds in a manner that maximizes your returns without hurting your investment budget. It’s only a small step between deciding to invest in a Unit Linked Insurance Plan and actually parking your funds in the scheme, but it can make a world of difference in how your capital grows.

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