In today’s time, it has become the need of the hour for women to be financially independent. A Unit Linked Insurance Plan helps women in such initiatives by addressing their problems & fulfilling responsibilities. ULIP, in simple words, is an investment that covers both insurance & an investment component. This plan is flexible & can be customised depending on the financial requirements, risk tolerance level, & investment horizon.
One should compare the costs involved & returns received before investing your funds in any of the financial products. This is where a ULIP return calculator comes into the picture, which is an online tool that helps calculate the potential returns on investment made. By just entering the desired amount of investment & its tenure, the calculator will assess the maturity value. Thus, it helps in making well-informed decisions to attain financial security.
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Factors to be considered while choosing a ULIP for Women
Provided are the factors to be considered while choosing the Best ULIP Plans for a woman:
- Financial Objectives
Evaluate your financial objectives to choose a ULIP that best aligns with your investment horizon as a woman.
- Risk Tolerance Level
Always choose a plan that best suits your risk tolerance level. This means that risk-averse individuals may choose debt funds, while those willing to take risks may opt for equity.
- Affordable Premiums
Opt for an affordable premium amount that best suits your budget & will help maintain consistency in making its payment throughout the policy tenure.
- Policy Charges
Review the associated charges with the plan to analyse the additional costs, such as administration charges, fund management fees, allocation charges, etc.
Characteristics of a ULIP Calculator
- Flexible
The ULIP calculator is flexible when it comes to deciding the investment amount, which can be changed depending on the requirements.
- Transparent
A ULIP calculator offers transparency, which allows us to determine the returns on investments for a specified tenure.
- Flexible Investment Tenure
Input the preferred investment tenure as you choose to get the expected returns.
- Easy to Use
It is a simple-to-use tool that requires you to enter some basic details to know the number of returns.
- Real-Time Calculations
It instantly provides real-time results, i.e. expected returns, when parameters such as investment tenure, amount, expected rate of returns, etc., are entered.
Reasons to Use the ULIP Calculator
- Objective Setting
It helps in setting realistic objectives & analysing the amount of investment required to achieve them. It helps calculate the investment amount required to achieve goals such as a child’s education, buying a house, & retirement planning.
- Financial Planning
By providing the amount to be invested, investment tenure, & expected rate of return, one can ascertain the maturity amount. ULIP calculator also helps with financial planning, by evaluating different investment options & hence making well-informed decisions.
- Risk Assessment
ULIP calculators also help to assess the risk associated with different investment plans. It allows for assessing what market fluctuations will result from a change in the expected rate of return. By assessing the risk, one can make a well-informed decision depending on the risk acceptance level & investment goals.
- Investment Comparison
Provide investment-related data for all suitable investment plans that are under consideration to compare their potential return amounts. It allows you to evaluate & select the plan that best suits your needs & risk tolerance level.
- Investment Monitoring
It acts as a tool that can be used to monitor the investment’s progress by providing the actual returns & thereafter making adjustments.
- Flexibility Analysis
It helps to analyse the flexibility of ULIP plans by assessing the outcome of switching between the funds. Additionally, it helps evaluate the number of potential returns depending on the provided date.
Formula to Calculate ULIP Returns
There are two formulas available to calculate ULIP returns using a ULIP Return Calculator:
- Absolute Returns
It depicts the percentage increase in the value of ULIP 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%
- CAGR ( Compound Annual Growth Rate)
The compounded annual growth rate depicts the annual growth of an investment over a specified period of time.
CAGR = {[(Current value / Value at the time of purchase) ^ (1 / number of years)] – 1} 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%
How should we calculate ULIP Returns Online using the ULIP Calculator?
- Collect Relevant Information
Collect all relevant details required to input into the ULIP calculator, such as age, premium payment tenure, premium amount, desired policy tenure, etc.
- Choose a Reliable ULIP Calculator
Choose the ULIP calculator that is the most reliable one available online & provides accurate results.
- Input the Required Details
Now, input the required details, such as age, premium amount, policy tenure, expected ROR, premium payment tenure, etc., to get the relevant results.
- Ascertain the Results
The ULIP return calculator will provide you with the details of the premium allocation, projected returns, maturity amount, applicable charges, fund value, etc.
- Try Different Situations
The ULIP calculator also lets you try different situations, such as changing the premium amount, changing the policy tenure, or analysing the outcome of different rates of return. It will help you make informed decisions depending on the financial & investment objectives.
Conclusion
Nowadays, women are equally involving themselves into the workforce with restrictions getting loosened. ULIPs help them to gain financial independence & security, along with taxation benefits, market-linked returns, & flexibility in allocating funds. Hence, to assess the returns on investments made by them, there comes a financial tool known as the ULIP Return Calculator. It is a simple & easy-to-understand & financial tool that helps us ascertain the premium amount & the expected rate of return. It also helps in choosing a portfolio that will depend on the investor’s acceptance of taking the risk.
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