Updated on: Wednesday, September 08, 2021, 05:04 PM IST

ULIP Calculators: Make these 5 considerations before choosing ULIP plans

ULIP Calculators: Make these 5 considerations before choosing ULIP plans | Image Courtesy: Shutterstock

ULIP Calculators: Make these 5 considerations before choosing ULIP plans | Image Courtesy: Shutterstock


It is a widely known fact by now that equity investments have proven to be one of the most effective tools when it comes to wealth building. Wealth multiplication plays a pivotal role in ensuring that your hard-earned money is also working hard to grow itself, and a ULIP plan is exactly what can help you get there.

While it may be daunting for people who have just stepped into the investment scene, but there is no need to worry in the least. Calculating the premium for ULIP plans, for example, is easily done with the help of a ULIP calculator.

Before you dive deeper into the details of the plan and begin investing, it is important to know that ULIP calculators are designed to help buyers calculate their premium amount hassle-free and check ULIP returns at ease.

Factors To Be Considered Before Choosing ULIP Plans

Are you looking to build wealth while being financially secure? If the answer is yes, then you should be looking at ULIP funds. Buying ULIP funds online is very simple, hassle-free and can be done in less than a few clicks. Moreover, you even have a ULIP calculator on most insurance companies’ websites, to help you gauge your premium in advance and plan your finances accordingly.

Here is a quick checklist you must take into consideration before you buy a ULIP plan:

  1. Evaluate Your Risk Appetite

If you are investing in ULIP funds, then keep in mind that you will have to bear the risks of a volatile market. You should start by analysing your current income, expenditure on a regular basis, emergency funds and parked money, and then consider the risk appetite for this type of plans.

Based on your risk appetite, ranging from low to high, you can then select a fund that is appropriate for investment. Alternatively, you even have fund options where the breakup comprises of 40 to 60 per cent investment in equities and the balance in a conservative fund to help mitigate the risks.

  1. Take All ULIP Charges Into Consideration

There are many charges policyholders often glance over, which later hit them very hard. Most of the ULIP charges differ from one insurance company to another, where many companies often do not levy any fund switching charges or put a cap on free switches allowed per year.

Keep an eye out for switching charges, administration charges, allocation charges and surrender charges of the policy, to name a few.

  1. Analyse The Option Of Switching Funds

If you have found yourself asking ‘what is ULIP’ and wondering what it is all about, then the answer is very simple – it is a type of fund that gives you the advantage of flexibility and transparency in one.

You can easily switch between the fund options available and try to capitalise on the opportunity. However, it is best to consult an insurance advisor before you start switching funds, as most companies cap the number of free switches allowed per year.

  1. Understand Different Options For Premium Payment

Policyholders also get to enjoy a flexible payment option for ULIP plans. You can simply use a ULIP calculator online to calculate your premiums in advance and then customise your payments accordingly. These plans work on the rupee-cost averaging principle, and hence, you can choose to pay your premium yearly, half-yearly or even monthly.

  1. Decide On An Investment Period

Many investors make the mistake of thinking that ULIP plans require premium payment for a limited time frame only, usually five years, and they stop paying after that term. However, you must have a long-term horizon in mind when you opt for a ULIP plan, use a ULIP calculator online and then

Another major benefit you get from a ULIP plan is the tax deduction of up to Rs. 1,50,000 it enjoys under Section 80C of the Income Tax Act of 1961. You can use a ULIP calculator online, run the numbers and ensure that your premium remains below Rs. 2,50,000 annually, which will allow you to claim tax-free returns under Section 10(10D).

The Bottom-Line For A ULIP Plan

When the question is about saving money, people tend to be drawn towards the instruments that naturally offer better benefits and good returns. The best thing about buying a ULIP plan is the dual benefit it offers. You can enjoy constant returns on your investment and be financially secure in the long run. Besides, if you are ever in dire need of funds, ULIP offers partial withdrawal up to 20 per cent as well.

You can also choose to make a full withdrawal and stop your premiums before the maturity date of your plan, although that will attract a few surrender charges. ULIP funds lend a major hand in your retirement planning and improving your financial condition, which makes it worth considering.

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Published on: Wednesday, September 08, 2021, 05:04 PM IST