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How to maximize ULIP returns in 10 years?


The Unit Linked Insurance Plan (ULIP) has become a popular financial product over the last few years due to its financial protection and great returns. ULIP combines the benefits of an insurance policy (mostly life insurance) with an investment option, giving the policyholder significant returns in the long run. The ULIP’s premium price payment will split itself into providing life coverage and serving as investments in various funds available in the market.

The insured member can choose the type of funds they would want to invest in, or else the insurance company itself will invest in the best plan available in the current financial market. The different types of funds include equity funds, balanced funds, money market funds, and fixed interest debt funds. The total value of any ULIP will depend on the market value of the underlying funds and is always equal to the product of the number of units the policyholder has allotted and the Net Asset Value (NAV) of those units in the current market. The idea is to choose a plan that can enhance your ULIP returns significantly, in the long run, to get the most out of your invested finances.

Valuable tips to maximize ULIP returns in 10 years

Determine your financial goals :

Planning your financial goals well in advance will help you gain better returns from all your ULIP investments. A goal-based investment will help you stay invested in the entire plan’s duration, select the suitable fund options, and inculcate a savings habit for achieving the desired goal or objective.

For instance, if you want to start saving for your child’s higher education and need a large amount of money ten years from now, you can opt for a ULIP investment with a 10-year term. The ULIP returns in 10 years will ensure that you will have the sizeable amount at the right time for fulfilling your child’s needs and requirements.

Invest long-term to benefit from the power of compounding :

The ULIP scheme will have a five-year lock-in period to help the policyholders reap the best benefits if invested in a long-term plan. People investing in these extended policy term tend to get the best returns from the power of compounding.

For example, if you stay invested in a ULIP for 10 to 15 years, the money that you had invested in the plan will be reinvested for the principal amount to grow year after year. Many people withdraw the compounded money immediately after the lock-in period is over, which significantly impacts the overall earning of the ULIP.

Selecting the right fund options :

As mentioned above, ULIP has majorly four different fund options, but the most popular investment choices vary between equity and debt funds. The equity plans can offer the policyholder a higher return only in the condition of high-risk value funds. In contrast, the debt schemes can provide the insured member a comparatively lower but stable return over a period of time with lower risk funds.

So, splitting the amount into both schemes in a balanced manner can guarantee a good amount at the time of the plan’s maturity.

Keep a lookout on the market trends :

ULIP returns in the last 10 years promise a 10 to 12% rise in any long-term ULIP investments. It is because the ULIP offers a fund switching option that allows the policyholders to change the funds multiple times a year, enabling them to get the best possible returns on their invested money.

Understanding the ups and downs of the market and knowing the current market trends will help you boost your earnings in the right and significant ways. By analysing the rise and fall of the market, you can decide whether you want to invest in equity or debt schemes.

Tax benefits :

The ULIP is also a life insurance product which makes it eligible for tax benefits. The ULIP return and premium price are also exempted from tax, saving you a considerable amount that can be put to use for various other purposes.

According to a recent amendment to the Income Tax Act, 1961, gains from a ULIP policy will be treated as capital gains and thus taxable, if the premium paid for any year exceeds Rs 2.5 Lakhs., However, premiums under Rs. 2.5 lakhs are eligible for tax benefits that will significantly increase your savings pool and help you maximize your ULIP returns over a period of time. This will provide financial security to the family receiving it to satisfy all their future financial goals and dreams.

ULIP is considered the top choice for investment, but life insurance are not limited to that. Many ULIPs offer great returns but finding the proper one to meet all your demands is challenging. Also, to get the highest ULIP returns out of the investment, you must select the right funding option at the right time, keeping the market in mind. So, purchase the best ULIP that suits all your requirements, needs, and budget to get the maximum returns.


*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.

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