Close Button Close Button
X
NRI Services Helpline

Calling FromPhone Number
Calling us from INDIA18002097272 (Toll Free)
Rest of the World+912067871700
(Call charges apply)

IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER.

Know How a 5-Year ULIP Policy May Help You Grow Your Money with Life Cover

When you are planning for your future, it is important to choose a plan that offers more than just financial protection for your family. A 5-year ULIP policy gives life insurance coverage along with market-linked return. It is easy to use, simple to manage, and ideal for reaching your short-term financial objectives. Many people evaluate ULIP returns in 5 years to understand potential outcomes. If you are considering this plan, this guide will help you learn about how a 5-year ULIP policy works, how to check its returns, and what to keep in mind before you purchasing one.

Get in Touch to Know More
I agree and consent to the Terms & Conditions, Privacy Policy
Get Your Life Goals, Done!

Tailored Life Insurance Solutions for your long-term Life Goals.

Written ByPalak Bagadia
AboutPalak Bagadia
LinkedIn Icon
Palak Bagadia, Associate – Digital Marketing at Bajaj Allianz Life, with experience spanning content and performance marketing, recruitment, employee engagement in the BFSI industry.
Reviewed ByRituraj Singh
AboutRituraj Singh
LinkedIn Icon
Rituraj Singh,With over 6.5 years of experience in the insurance industry, Rituraj Singh, Manager- Product & Brand Marketing at Bajaj Allianz Life Insurance overlooks new product launches, compliance, and brand projects, leveraging artificial intelligence and technology to enhance outcomes.
Written on: 12th February 2025
Modified on: 12th February 2025
Reading Time: 15 Mins
Share

What Is a 5-Year ULIP Policy? 


A 5-year ULIP policy is a type of life insurance that invests your money in funds like equity, debt, or a combination of both. ULIP stands for Unit Linked Insurance Plan. The word “unit-linked” means your money is linked to funds in the market. This plan has a minimum lock-in period of 5 years. After which, partial withdrawals can be made.

The main objective of this policy is to offer the benefit of life cover and the chance to grow your invested money during the policy term with market fluctuations. A part of your premium goes towards the insurance cover, and the remaining amount is invested in the funds you choose.

Due to the 5-year lock-in period, it's crucial to stay invested until the end to fully benefit from the policy's performance.


How Does a 5-Year ULIP Policy Work? 


Understanding how a 5-year ULIP policy works is easy. When you buy this plan, you pay a premium either monthly, quarterly, or yearly. A small part of this premium provides life cover. The rest is used to buy units in funds like equity or debt, based on your risk tolerance.

Here’s what happens step-by-step:

  1. Premium Payment 


    You pay a fixed amount regularly. This premium is split into two parts: one for insurance and the other for fund allocation.

  2. Fund Choice 


    You get to choose the type of fund.

○ Equity funds carry more risk but may give higher growth.

○ Debt funds are safer and offer steady returns.

○ Balanced funds offer a mix of both.

  1. Fund Management 


    Experts manage your money to help it grow. You can also switch funds if needed, based on market conditions or your risk level.

  2. Lock-in Period 


    This plan has a 5-year lock-in. You cannot take out your money during this time. After that, you can withdraw the fund value, stay invested, or make partial withdrawals.

  3. Maturity or Death Benefit 


    In an unfortunate incident of death of the life insured during the policy term, the nominee will receive the higher of the sum assured or fund value. Specific terms and conditions can differ based on the particular plan.


Why Choose a 5-Year ULIP Policy? 


A 5-year ULIP policy offers multiple benefits. It is not just a life insurance plan, but also a simple way to plan short-term financial goals. Let’s look at why this option is useful:


1. Short-Term Investment Horizon 


Not everyone wants to commit to a plan for 10-20 years. A 5-year ULIP helps you with the opportunity to grow your money in a shorter time. It is ideal for goals like buying a vehicle, taking a short trip, or building a small emergency fund.


2. Life Insurance Cover 


This plan provides insurance coverage, which means your family is financially protected. In case of occurrence of the death of the insured person, the sum assured or the fund value, whichever is higher, is given to your nominee. However, specific terms and conditions can differ based on the insurer and the particular plan.


3. Market-Linked Growth


You have the chance to earn better returns than traditional options. Your premium is used to buy market-linked funds that can grow based on market performance.


4. Flexibility


You can switch between funds anytime during the policy term basis the policy terms and conditions. If the market fluctuates or your risk tolerance level changes, you can adjust your investments easily.


5. Tax Benefits


The premium paid under the policy is eligible for tax deductions under Section 80C of the Income Tax Act under the old tax regime.


6. Savings Habit


The 5-year lock-in helps build the habit of saving regularly. This can be useful in developing financial discipline.


7. Ease of Management


Fund managers take care of your investments. You don’t need to track the market every day. You can also use tools like a ULIP calculator to check how your money might grow.


How Are 5-Year ULIP Return Rates Calculated? 


When people look for ULIP returns in 5 years, they want to estimate the potential returns they might get at the end of the policy term. There are two primary methods to calculate the return:


1. Absolute Return


If you wish to calculate the absolute returns on ULIP, you will need the current NAV and the initial NAV of the scheme. This method can be used to figure out the ULIP performance if it is held for a short period of time.

Absolute Returns = [(Current NAV – Initial NAV)/Initial NAV]*100

Example:
If your ULIP NAV was ₹100 at the beginning of the policy and now it is ₹120, then
[(120 - 100) / 100] * 100 = 20% return


2. CAGR (Compound Annual Growth Rate)


Compounded Annual Growth Rate (CAGR): This is the measure of the annual growth of an investment over a specific period of time. Here is the formula for the same:

CAGR = {[(Current NAV/Initial NAV)^(1/Number of Years)] – 1}*100

Example:
If NAV grew from ₹100 to ₹135 in 5 years, CAGR = approx. 6.2%

The returns vary depending on your fund selection, market conditions, charges, and how long you stay invested in the plan.


Conclusion 


A 5-year ULIP policy can help you plan for short-term goals while providing life cover. It is a useful plan if you want flexibility, easy management, and the potential for better growth. The ULIP returns in 5 years depend on your fund type chosen, charges, and the duration you stay invested.

This plan suits those who want to help grow their money over five years while also needing life insurance. Whether it’s saving for a goal or building a cushion, a ULIP may help you take that step—slowly, safely, and smartly.


FAQs



What is the average return of ULIP?


Average ULIP returns vary based on the type of fund. Equity ULIPs may offer higher returns than debt ULIPs. Historically, long-term equity ULIPs have been estimated to yield average returns of around 8% to 10%. Please note that these returns are not guaranteed and these returns depend on market performance.


Is ULIP good for 5 years?


A 5-year ULIP can be good for achieving short-term goals and providing basic life cover. It gives you flexibility and the chance to grow your money based on market performance.


What is the return of ULIP for 10 years?


ULIPs held for 10 years may provide higher returns compared to 5-year plans. Over 10 years, the market performance tends to balance out short-term fluctuations, potentially yielding around 8% to 10% returns annually, depending on your fund choice and market conditions.


Is ULIP better than FD?


ULIP and Fixed Deposits serve different purposes. ULIPs offer life cover and market-linked returns, while FDs offer fixed interest. It is better to assess your financial goals before making any decision.

Bajaj Allianz Life Goal Assure IV with 10X Life Cover2

BUY NOW
Reshot Illustration Discover Mountain

IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER.


Bajaj Allianz Life Goal Assure IV with 10X Life Cover2
Starting from ₹ 3000/ Month1
Zero LTCG Tax$
Buy Now

Disclaimer
BJAZ-WB-EC-13662/25

close

New Fund Launched!

Market Linked Returns upto 29.6%*

Avail @10 NAV, valid till 30th May^

calendar_icon

Are you an NRI?

Select Country

I agree and consent to the Terms & Conditions, Privacy Policy

*,1,^,#T&C Apply

Gender

I agree and consent to the Terms & Conditions, Privacy Policy

*,1,^,#T&C Apply

X
Disclaimer

^Not available if policy issued after 30th May 2025 | *As on 28th March 2025 Past 5 Year CAGR returns in Benchmark Nifty 200 Alpha 30 Index. Please note that the fund aims to replicate the performance of benchmark index fund, subject to tracking error. Past returns of a fund are not necessarily indicative of the future performance of the fund. | Please consult the financial advisor before investing.

The Unit Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of the fifth year

ULIPs are different from the traditional insurance products and are subject to the risk factors. The premium paid in ULIPs are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Bajaj Allianz Life Insurance Company Limited is only the name of the Life Insurance Company and Bajaj Allianz Life Smart Pension- A Unit -Linked, Non-Participating Individual Pension Plan (UIN- 116L209V01) is only the name of the unit linked insurance contracts and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

For more details on risk factors, terms and conditions please read sales brochure & policy document (available on www.bajajallianzlife.com) carefully before concluding a sale.

Nifty 200 Alpha 30 Index Pension Fund is available only with Bajaj Allianz Life Smart Pension- A Unit -Linked, Non-Participating Individual Pension Plan (UIN: 116L209V01).

In addition to other funds, Nifty 200 Alpha 30 Index Pension Fund is now available with Bajaj Allianz Life Smart Pension. Customer has an option to choose from other available funds apart from Nifty 200 Alpha 30 Index Pension Fund.

Death Benefit shall be the Fund Value, subject to a minimum of the 105% of Total Premiums Paid, as on the date of death.

X
Terms & Conditions

I hereby authorize Bajaj Allianz Life Insurance Co. Ltd. to call me on the contact number made available by me on the website with a specific request to call back. I further declare that, irrespective of my contact number being registered on National Customer Preference Register (NCPR) or on National Do Not Call Registry (NDNC), any Call made, including via Voice over Internet Protocol & WhatsApp, SMS or WhatsApp messages, in response to my request shall not be construed as an Unsolicited Commercial Communication even though the content of the call may be for the purposes of explaining various insurance products and services or solicitation and procurement of insurance business

X
Disclaimer

The Unit Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of the fifth year.

ULIPs are different from the traditional insurance products and are subject to the risk factors. The premium paid in ULIPs are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Bajaj Allianz Life Insurance Company Limited is only the name of the Life Insurance Company and  Bajaj Allianz Life Goal Assure IV - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L204V01) is only the name of the unit linked insurance contracts and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns. 

$Subject to Section 10 (10D) conditions i.e. aggregate annual premium for ULIP policies issued on or after 1st February 2021 does not exceed Rs. 2.5 Lakhs.

2Source: https://economictimes.indiatimes.com/investments-marts/eight-crucial-numbers-to-ensure-financial-success/10-times-the-annual-income-is-your-life-insurance/slideshow/16699748.cms. Subject to availability in Bajaj Allianz Life ULIP Plans. For more details on risk factors, terms and conditions please read sales brochure & policy document (available on www.bajajallianzlife.com ) carefully before concluding a sale.

1Minimum premium mentioned is applicable for Bajaj Allianz Life Goal Assure IV - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L204V01) and is subject to policy terms and conditions.

Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

Disclaimers:
Plus Symbol
Minus Symbol

IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER

The Unit Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of the fifth year.

ULIPs are different from the traditional insurance products and are subject to the risk factors. The premium paid in ULIPs are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

 The views stated in this article are not to be construed as investment advice and readers are suggested to seek independent financial advice before making any investment decisions. For more details on risk factors, terms and conditions please read the sales brochure & policy document (available on www.bajajallianzlife.com) carefully before concluding a sale. Bajaj Allianz Life Insurance Company Ltd., Regd. office Address: Bajaj Allianz House, Airport Road, Yerawada, Pune - 411006, Reg. No.: 116, CIN: U66010PN2001PLC015959, Call us on toll free No.: 1800 209 7272, Mail us: customercare@bajajallianz.co.in

Tax benefits as per prevailing Section 80C (under old tax regime) of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy

 

Reference

1.https://cleartax.in/s/unit-link-insurance-plan-ulip#:~:text=Here%20are%20two,Years)%5D%20%E2%80%93%201%7D*100

BJAZ-WEB-EC-15678/25

X
Disclaimer

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

X
Terms & Conditions

I hereby authorize Bajaj Allianz Life Insurance Co. Ltd. to call me on the contact number made available by me on the website with a specific request to call back. I further declare that, irrespective of my contact number being registered on National Customer Preference Register (NCPR) or on National Do Not Call Registry (NDNC), any call made, SMS or WhatsApp sent in response to my request shall not be construed as an Unsolicited Commercial Communication even though the content of the call may be for the purposes of explaining various insurance products and services or solicitation and procurement of insurance business

 

Please refer to BALIC Privacy Policy

X
Disclaimer

%%Above illustration is for Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V03) considering Male aged 25 years | Non-Smoker | Policy Term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Standard Life | 1st Year Premium is Rs. 6,238. 2nd Year onwards premium is Rs. 6,659. Total Premium Paid is Rs. 1,99,349 | Medical Rates | Yearly Premium Payment Mode | Death benefit opted is lumpsum payout and monthly installments (Lumpsum Payout Percentage : 45, Income Payout Percentage : 55) | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only. This is inclusive of all the discounts mentioned above.

##Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

@Term Insurance plan bought online directly from Bajaj Allianz Life Insurance has no commissions involved.

^^The Return of Premium amount is total of all the premiums received, exclusive of extra premium, rider premium and GST & /any other applicable tax levied, subject to changes in tax laws
Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

X
Disclaimer

The Unit Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of the fifth year.

ULIPs are different from the traditional insurance products and are subject to the risk factors. The premium paid in ULIPs are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Bajaj Allianz Life Insurance Company Limited is only the name of the Life Insurance Company and Bajaj Allianz Life Goal Assure II- A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN No.: 116L180V02) is only the name of the unit linked insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

Bajaj Allianz Life Goal Assure II - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L180V02)

**Return of Mortality Charges at Maturity (ROMC) is payable at maturity, provided all due premiums have been paid

Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

X
Disclaimer

Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V04)

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116


close
Ask for an Agent
Sign up for personal visit and tailored advice from our expert agents

Claim Settlement Ratio of 99.29%~