A ULIP plan is a one-of-a-kind option which ensures both life coverage and investment returns for the policyholder. But how do you calculate the amount that you will get at the time of maturity? How will you select the right policy for your needs? It is only possible when you get an idea of what you have to invest and what you can expect in return. If you are worried about this count, then don’t be! A ULIP calculator will solve this dilemma to a large extent. Here’s learning more about the same.
What Is ULIP Policy?
Before we get down to analyzing ULIP calculators and how they help, let us quickly go over what is a ULIP policy:
- You get life coverage throughout the policy tenure, with a sum assured payout to the nominee in case of your demise within this period.
- For Type-1 ULIPs, this can be either the sum assured or the ULIP’s fund value, whichever is more.
- For Type-2 ULIPs, it is only the sum assured.
- You can choose the funds to invest in, i.e. equity, debt, a mix of these two, or liquid funds.
- You can also periodically switch your funds in response to market conditions.
- You get tax benefits on your premium payments up to Rs. 1.5 lakh under Section 80C. Furthermore, the maturity proceeds and the death benefit are exempt from taxation under section 10D of the Income Tax Act.
What is a ULIP Calculator?
While investing in ULIPs, the most crucial question is how much we need to invest and how we can know about our anticipated returns in the future. A ULIP calculator can provide the answer to all these queries. This simple tool requires details like the current age, investment amount, frequency of payment, maturity period, and period of investment.
After analyzing all these factors, the calculator will give an estimated return on the investment amount. However, one must remember that it is only an estimated amount rather than the exact one since markets can never be fully predicted.
This amount can differ on the basis of the market trends, funds we choose, the period we choose, whether we switch funds or not, and whether there is any surplus investment.
Hence, it only gives you a basic idea of what you can expect.
What are the advantages of a ULIP calculator?
Here are some advantages of using these ULIP calculators:
- It offers transparency
Every insurance company has its own set of parameters for the calculator. However, some key details are the same. This offers transparency to the buyers who need to know about their expected investments and returns per their chosen tenure.
- Works as a planning tool
When you know how much time and investment you need to achieve the desired return amount, you can plan your premiums accordingly. A ULIP calculator thus works as a financial planning tool for the future.
- Appropriate decision making
When you can analyze your investment and its returns, you can get an idea of what will work for you, like the fund you should choose and the tenure that will suit your needs. All this will facilitate better decision-making and help you take an appropriate decision for your future goals.
- Offers flexibility
In ULIP plans, you can choose what fund you want to invest in and even switch between funds later on, according to market trends, along with your preferences and future goals. This makes a ULIP stand out from other types of plans, i.e. its flexibility.
- It is easy to understand and compare
A ULIP calculator is not hard to get and takes very little time to give results. So you will find it easier to calculate various options and compare them easily. This further improves decision-making from several angles.
- It is completely free
Every insurance company or other platforms have ULIP calculators that can be used free of cost. You do not have to pay any charges for the same. If you think of it that way, your ULIP calculator becomes a free consultant. You can keep putting in different amounts and variables until you find the best option for your needs. This is why it is regarded as a silent but immensely helpful consultant!
These are some benefits you will get from a ULIP calculator, a handy tool many do not use to its fullest potential. So before investing in any ULIP plan, make sure to give it a go!
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