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F-14/15, Orbit Mall, Civil Lines, Jaipur-302006 support@thetaxheaven.comWhile choosing a ULIP, it is a financial tool that provides financial security along with market-linked returns & taxation benefits. But, it becomes essential to know how the premium amount, policy tenure, & expected be well aligned for informed decision-making. To resolve this problem, an ULIP calculator can be used to estimate returns & compare different options available, letting you choose the best financial plan.
A ULIP calculator is an online tool that lets an investor calculate the potential returns on investment made under ULIPs. It requires the investor to enter the desired investment amount along with the policy tenure. The ULIP calculator will assess the maturity value, which helps make well-informed decisions & achieve better financial security. It also helps in comparing different investment options available & evaluating the potential for achieving financial objectives.
Provided are the reasons to use a ULIP Calculator:
A ULIP calculator includes entering the details, including amount, premium payment frequency, policy tenure, expected return rate, etc. This is done to compare different plans available & select one that best suits the policyholder’s financial objectives.
This calculator lets you align your financial objectives, such as wealth creation, retirement, children’s education, etc., within a stipulated time.
This calculator eases the calculation process against manual calculations, which may result in errors & can be time-consuming.
A ULIP calculator lets policyholders assess the risk by evaluating different return rates over time. By making a risk assessment, one can choose an appropriate type of fund depending on the policyholder’s financial objectives.
A ULIP calculator charges certain returns, such as mortality charges, fund management charges, etc. The ULIP calculator also provides clarity on such returns, providing all the necessary details required.
It involves various factors, such as market performance, allocation of premium, charges, type of fund, etc. A ULIP calculator will take into consideration these factors & provide a clear picture of the maturity value.
Provided is the formula used to calculate the ULIP return:
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)] 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%
It depicts the percentage increase in the value of the ULIPs 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%
Provided are the features & benefits of the ULIP return calculator:
A ULIP calculator is an easy-to-use financial tool in which a policyholder is required to input the details into the calculator to get the output.
A ULIP calculator also allows to assess the amount of funds to be allocated, which can be changed by the investors according to their needs.
A ULIP calculator offers transparency in determining the return amount, which is dependent on the market fluctuations
An investor can determine the estimated returns of available ULIP Plans in the market, helping them with financial planning.
As it doesn’t involve manual calculations, leading to a saving of time & a hassle-free process.
A ULIP calculator helps an investor to well align the plan with their financial objectives, such as a child’s education, child’s marriage, buying a property, retirement, etc.
Provided are the steps that should be followed while using a ULIP Calculator:
Step 1: Input premium Details
Provide some premium-related details, such as the amount of premium & desirable frequency, i.e. semi-annually, annually, or monthly.
Step 2: Choose Policy Tenure
Mention the desirable policy tenure & premium payment tenure.
Step 3: Choose the Type of Fund
Choose the type of fund, i.e. debt, equity, or balanced funds.
Step 4: Set Expected Rate of Return
Provide the expected return rate depending on the market scenario.
Step 5: View Results
The calculator will provide you with the result, i.e., maturity value estimated, fund performance, coverage amount, etc.
Step 6: Adjust Inputs
Lastly, you can adjust the inputs to assess the different situations & select the one that suits you best.
Provided are the factors that affect ULIP returns while making calculations:
ULIPs offer multiple options to choose from, i.e. debt, equity, or both.
As the ULIPs are market-linked, their returns depend on market conditions
The amount invested & the tenure selected have a direct relationship with the maturity value. A higher premium amount paid along with a longer tenure results in better accumulation of wealth.
The longer the policy tenure, the better the returns due to the power of compounding.
It includes multiple charges, such as mortality charges, premium allocation charges, fund management fees, etc., which reduce the investment amount, & hence returns.
ULIPs allow switching between the funds depending on the market fluctuations.
A ULIP Calculator is a simple, easy-to-understand & hassle-free financial tool that lets you calculate the premium amount along with the expected rate of return. An investor can select a portfolio depending on their financial objectives, risk tolerance level, & investment horizon. 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.
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