Some of the primary reasons for buying a ULIP could be market-linked maturity benefits, tax benefits, or the life insurance aspect it offers. If you are a policyholder who is keen on earning investment returns from your ULIP, you may have opted for this plan with the ease of function it offers alongside its other features.
While your fund manager could manage your ULIP investments and you can rest easy, it may give you more peace of mind to track and analyse your ULIP fund performance. This can give you a better understanding of whether your investments are growing the way you expected. Furthermore, you can also make decisions about how to rebalance your portfolio based on the trends and overall performance.
· Understand the Fund Value and NAV
The most common way to evaluate a ULIP’s performance is by examining the Net Asset Value (NAV). It reflects the per-unit value of your investments in the ULIP. A rise in NAV indicates a gain in the value of your fund. NAV is usually calculated as the market value of the assets held (minus any liabilities), divided by the number of outstanding units. Keep track of changes in the NAV of your ULIP to better understand its performance.
· Use a ULIP Calculator
A ULIP calculator is an essential tool for tracking the projected returns and growth of your fund. It helps you estimate the maturity value of your ULIP based on different assumptions, such as the premium amount, policy duration, and rate of return. While these are only estimates, they can help you build a clearer understanding of what to expect from your ULIP.
· Compare Fund Performance with Benchmarks
One of the effective ways to measure your ULIP’s performance is to compare it with relevant benchmarks like stock market indices or peer funds. If your ULIP consistently outperforms the benchmark, it indicates solid performance. Ensure that you also consider the actual investment aspect of the ULIP, which is your initial investment minus the fees and charges drawn from the premium.
· Evaluate Historical Returns
The historical performance of the ULIP is another useful indicator. Review the annualised returns of your ULIP over a period (3, 5, or 10 years). Consistent returns signal stability, while frequent dips may indicate high risk.
· Assess Fund Manager Expertise
The performance of your ULIP depends heavily on the expertise of the fund manager. Check the track record of the fund manager and the asset management company’s credibility. It is ideal to assess your choices when buying the plan.
· Review Life Insurance Coverage
Don’t overlook the life insurance aspect of your ULIP. In addition to tracking fund performance, ensure that the life cover provided by the policy is sufficient for your needs.
By closely monitoring the various aspects that influence as well as indicate the performance of your ULIP funds, you can accurately gauge the performance of your ULIP. Additionally, it’s crucial to balance both the investment and life cover components of your plan, ensuring that your life insurance plans provide adequate coverage while offering long-term growth. Remember that ULIPS tend to offer better returns in the long run, so take the time to understand the growth trends.
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