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How is the Fund Value Calculated in ULIP?

As the future cannot be predicted, it becomes a must for us to financially plan it well in advance. Hence, one can invest their money in different plans and policies, such as life insurance, PPFs, retirement policies, pension policies, etc., and reap its benefits. But apart from life insurance, one plan which stands out is ULIP. So, what exactly is a ULIP plan? 

A ULIP or Unit Linked Investment Plan is a hybrid product because it includes both investment and insurance. In this product, the premium that is paid by the policyholder splits into two parts. Some amount of the premium takes care of life cover. However, the remaining amount is invested in an investment fund that promises wealth creation.

As the returns in ULIP are market-linked, they fulfill requirements pertaining to buying a house, retirement, child education, medical expenses, etc. There are several insurance companies, such as Tata AIA Insurance and many others, that provide ULIP plans. Moreover, before investing the money, the policyholder is required to compare both returns and costs. One can easily calculate the ULIP Fund value with the help of a ULIP calculator. 

What is ULIP Calculation Tool?

The ULIP calculator assists investors in determining the maturity amount based on their anticipated future investment value and returns. You need to understand what the fund value in a ULIP does before you can calculate it. The ULIP calculator aids in return-based comparisons of various ULIP policies. People frequently mix up the fund value and sum assured in ULIPs. The total amount paid to the beneficiary in the event of the policyholder’s death is known as the sum assured. 

In contrast, the fund value of ULIP meaning is the net asset value on a given day divided by the number of units held. It is the total monetary value of the units that the policyholder owns.

The net asset value (NAV) of each unit on a given day is multiplied by the number of units held to calculate the fund value in ULIP on that day. The fund value fluctuates based on the NAV. When it comes to investing in ULIP, the policyholder can select from a variety of funds to invest in depending on his/her risk tolerance and the state of the market. 

The Different Cases of ULIP Roll-Out 

To make it easier for the policyholders, there are three different roll-outs for ULIP plans. The details of these have been listed below-

Upon policy Surrender

When the lock-in period is over, the insurer pays the surrender value after deducting the applicable fees from the fund value in the event that the policy owner surrenders the policy during that time. The lock-in term for ULIPs is 5 years.

Upon Policyholder’s demise

The sum assured or fund value in ULIP plans, whichever is bigger, is paid to the policyholder’s family in the event of his passing while the policy is still in effect. As a result, the sum assured will be paid if the fund has been underperforming and the fund value is less than the sum assured.

Upon maturity

The fund value is paid to the policyholder at the end of the insurance period. The ULIP is thus a life insurance policy that benefits the users to a great extent.

Wrapping It Up

Now that our readers know how to calculate the fund value in ULIP, they can accordingly do the same and buy ULIPs. Moreover, if you are unable to do so, then you can take the help of an expert and learn to do it.

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