How To Get Better Returns on ULIP Investments 1

How To Get Better Returns on ULIP Investments

Any individual who invests does so to earn a good amount of returns. The first step in the process is to select the right kind of investment scheme. One option that is popular amongst people is a ULIP investment plan. Unlike other investment options, a ULIP is not just for market-linked returns but also offers the advantage of life insurance. This is a great way to check off any financial portfolio’s two most important elements. Not only do you benefit from market gains, but your loved ones also have financial security if anything happens to you. There are many ways you can receive better returns on your ULIP investments. In this article, we take a look at some of them.

How does a ULIP policy work? 

Let’s first understand how a ULIP policy works so that you can implement better investment strategies. The insurer’s premium of a ULIP policy is used for two reasons: to build the life insurance corpus and to invest in your chosen instruments. Insurers invest their money in equity, debt, or a mix of both. Your ULIP returns 10 or 15 years deep, depending on the fund’s market performance, your chosen funds, and the number of units you own. Do note that the life cover is unaffected, regardless of how your investment performs.

Ways to increase your ULIP returns 

  • Invest for the long-term.

Any asset kept for a longer period enjoys the benefit of compounding. For the unaware, compounding refers to earning interest on not just your principal amount but also on the previous claim that has already been gained on the principal amount. Ask any expert which is a more beneficial option—short-term or long-term investment—and they will point to the latter.

So, the longer you hold the investment, the more the effect of compounding will be, as it keeps getting calculated on a larger amount every year.

  • Make use of the ULIP return calculator. 

These days, several tools, such as the ULIP return calculator, help the investor make a more informed decision. You must enter the required details into the calculator, such as the principal amount, tenure duration, and the kinds of instruments you opt for (market-linked or risk-free). The calculator will come with an estimated amount based on the information you provided. If you are not satisfied with the results provided by the calculator, then you can modify the variables to suit your needs.

It would help if you curated an investment plan to receive good ULIP returns in around ten years without overshooting on your budget for premium.

  • Take advantage of the fund-switching option.

ULIPs offer an amazing feature called the fund-switching option, which allows you to transfer your funds from one asset class to another. So, let’s assume that you have invested mainly in equity funds. However, you feel bad about the markets in the coming weeks. In such a situation, you can shift your money to debt funds rather than allowing your money to bear the brunt of bad market performance. You can also change the money in your ULIP investment plan from debt to equity funds per your needs.

  • Analyze the ULIP benefit illustration.

Before signing the ULIP proposal form, ask the insurer for a comprehensive ULIP benefit illustration. This document provides a 360-degree overview of the different aspects of your ULIP. It will help you understand where your money will be invested, the charges you will be paying, and the returns you can expect at different stages of your tenure.

As with the ULIP return calculator, you should modify your plan if the figures are insufficient. You can use a top-up facility and opt for more market-linked options and similar strategies.

Another important tip is to opt for a reliable insurer only. You are more likely to receive better returns if the insurer’s past performance regarding ULIPs has been good. Remember to read the terms and conditions of the policy before proceeding.


I am a writer, financial consultant, husband, father, and avid surfer. I am also a long-time entrepreneur, investor, and trader. For almost two decades, I have worked in the financial sector, and now I focus on making money through investing in stock trading.