When you start a job, plans for your future start to take shape. Things like investment options and insurance policies become a part of your daily concerns. While you surely know about different Insurance Plans, Best Term Insurance Plans, Unit Linked Insurance Plan (ULIP Plan) and various schemes to invest in, have you heard about a product that enables you to do both simultaneously?
Yes! You heard right.
The United Linked Insurance or ULIP Plan is a scheme offered by various insurance companies that provide the options of investment and insurance under one single scheme. Let us take a deeper look at ULIP plans!
What is ULIP plan?
In India, the United Trust of India was the first bank to launch the ULIP plan. However, in the year 2001 when the insurance sector was opened up to the foreign investors, several insurance companies launched their ULIP Plans to aid people looking to invest in insurance cum investment schemes.
ULIP is essentially a combination of insurance and investment schemes. When a person decides to invest in ULIP, he gets an insurance cover alongside the rest of his investment put into debt and equity securities of his choosing. With ULIP you get to choose the schemes you want to invest in, depending on your risk and profit appetite.
Some of the key features / benefits of ULIP plan include:
- A section of the premium you pay for ULIP goes to provide life cover or insurance.
- The rest of the premium is invested in a scheme of the investor’s choice. The investor then makes profit, gains, losses etc. according to the market linked returns of the investment.
- The policyholders have the opportunity to use features like tax benefits, switching funds during the policy period, top up facilities, increase or decrease the protection levels etc.
Thus the ULIP plan is an excellent option for people looking to invest their money as well as get insurance.
What is the ULIP calculator?
When you choose to invest in a ULIP plan, your first expectation will be to get the maximum return out of it. But how do you calculate how much your returns will be before you invest in a plan?
Don’t worry, because there is a perfect tool that allows you to do that!
The ULIP calculator helps you to calculate the amount of premium and check the returns you will get from a specific ULIP plan. Using the online ULIP calculator, people can decide on the amount they need to invest, that will help them to achieve their short and long-term financial goals.
But how does one use the ULIP calculator? Let’s take a look!
Steps for using ULIP calculator for your ULIP Plan:
Before getting on to calculate your returns from ULIP, it is crucial for you to keep some details hand, for example:
- The frequency of premium payment,
- The amount of funds / money you want to invest,
- Type of funds you want to invest in,
- Your expected return on investment etc.
Knowing these details is important because you will need to enter them in the ULIP calculator to know your return.
When you have these details at hand, you can follow the next steps to calculate your ULIP investment returns:
Step 1: The first step is to find a trustworthy online calculator which is free of cost. Next, you need to log in to it. You will need to enter your details like name, DoB, smoking habits etc. to log in.
Step 2: Next, you need to enter the premium amount that you can realistically invest. This step requires careful deliberation on your part because the final return of investment will be calculated by the premium you can pay. Consider things like your expenses and financial liabilities before putting in the premium amount.
Step 3: After premium amount, you need to fill in the frequency of your premium payments. You can choose to make the payments as a lump sum amount or in monthly, quarterly or annual installments. Choose the option that will suit your financial abilities the best.
Step 4: You now have to choose the tenure for your policy. In this step, you need to consider your short and long-term goals from the investment. With the goals in mind, choose your policy term.
Step 5: Now, subtract all the applicable charges from your ULIP investment and then choose the amount you want to invest in the insurance policy and the fraction you want to put in investment funds.
Step 6: Now choose the funds you want to invest your premium in. The ULIP plan allows you to invest in both debt and equity funds. Make sure that you know about the past performances of these funds before choosing to invest in them.
Step 7: The final step is to decide the lock-in period for your ULIP plan investment. The minimum time offered by ULIP plans as lock-in period is of 5 years. So you need to choose either five years or more for your investment.
These are the seven steps you need to follow to use the ULIP calculator. It is quite a simple way to form an idea about your return of investment from ULIP.
Advantages of ULIP Calculator?
The ULIP calculator has several features that make it an important tool in the process of investment. For example:
- It is transparent in its ways. It offers clear-cut answers for your investment queries.
- The ULIP calculator is flexible because it allows you to make investments according to the policy tenure, the amount you want to invest etc.
- It helps you to choose the safe option for investment by calculating the various options of a fund.
- It helps you to make a goal-oriented decision about your investment by letting you know about the maximum returns you can expect from a fund.
- It allows you, the policyholder, to have the full control over the functions of the calculator. The ULIP calculator even allows policyholders to change between funds without charging anything extra!
Therefore, if you are thinking of investing in a ULIP plan, the ULIP calculator is a useful instrument of investment that will help you form a comprehensive idea about your return on investment.