How to Calculate Absolute Return in ULIP?

IndiaFirst Life
• 03 Jul, 2024

Unit Linked Insurance Plans (ULIPs) are popular investment-cum-insurance products offering policyholders the benefit of life insurance along with investment returns. Understanding what absolute return is in ULIPs is crucial for evaluating the performance of your ULIP investment. Here's a quick guide.

What is Absolute Return in ULIP?

It refers to the total return on investment over a specific period, expressed as a percentage. It measures the growth in the value of the investment from the initial amount, without considering the time period.

Absolute Return Meaning

Absolute return is a straightforward measure of the increase or decrease in the value of an investment. It does not account for the time factor, making it different from other performance metrics such as annualized return.

Formula for Calculating Absolute Return

The formula to calculate absolute return is:

Absolute Return (in %) = (Current NAV-Initial NAV / Initial NAV)×100

Here, NAV is the Net Asset Value of the ULIP units.

For precise and quick ULIP returns calculations you can use the above formula.

Steps to Calculate Absolute Return in ULIP

Determine Initial NAV:

Find out the NAV of the ULIP units at the time of investment.
Determine Current NAV:

Check the current NAV of the ULIP units.
Apply the Formula:

Use the absolute return formula to calculate the return.

For example, let's say you invested in a ULIP with an initial NAV of ₹20 and the current NAV is ₹30.

Absolute Return (in %) = (30-20 / 20)×100 = 50%

Thus, your absolute return is 50%.

Importance of Absolute Return

Simple Measure:

Provides a clear and straightforward understanding of the investment’s performance.
Comparison:

Helps in comparing the performance of different ULIP plans over the same period.

Using a ULIP Returns Calculator

A ULIP returns calculator can simplify the process of determining absolute returns. By inputting the initial and current NAV, the calculator provides the absolute return instantly, helping investors assess the performance of their ULIP effectively.

Absolute Return vs. Annualised Return

Feature	Absolute Return	Annualised Return
Definition	Total return over the investment period	Compounded annual growth rate of the investment
Time Factor Consideration	No	Yes
Simplicity	Simple and easy to understand	More complex due to time consideration
Usage	Short-term and clear performance measure	Long-term performance evaluation

Understanding and calculating absolute return in ULIP is essential for evaluating the performance of your ULIP investment. It provides a clear picture of the total returns without the complexity of time factors.

Disclaimers:

Unit Linked Insurance Products are different from the traditional insurance products and are subject to risk factors. The Premium paid in unit-linked life insurance policies are subject to investment risks associated with capital markets and NAVs of the units may go up or down, based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. IndiaFirst Life Insurance Company Limited is only name of the Insurance Company does not in any way indicate the quality of the contract, its future prospects, or returns. Please know the associated risks and the applicable charges from your Insurance Agent or the Intermediary or policy document issued by the Insurance Company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns. For more details on risk factors and terms and conditions, please read the sales brochure carefully before concluding the sale.

IndiaFirst Life Insurance Company Limited, IRDAI Regn No.143, CIN: U66010MH2008PLC183679, Address: 12th & 13th floor, North [C] Wing, Tower 4, Nesco IT Park, Nesco Center, Western Express Highway, Goregaon (East), Mumbai – 400 063. Toll free No – 1800 209 8700. Email Id:customer.first@indiafirstlife.com, Website :www.indiafirstlife.com, Fax No. +91226570600. Trade logo displayed above belongs to our promoter M/s Bank of Baroda and is used by IndiaFirst Life Insurance Co. Ltd. under license.

by IndiaFirst Life
Headquartered in Mumbai, IndiaFirst Life Insurance Company Limited (IndiaFirst Life), with a paid-up share capital of INR 754.37 crore, is one of the fastest growing private life insurers in India in terms of New Business IRP in Fiscal 2023. Our key differentiators are our simple, easy-to-understand products that are optimally priced. As of Sept 30, 2023, we offered 30 retail products, 13 group products along with six riders (across retail and group portfolios), along with policies under the PMJJBY scheme, catering to protection, savings, health and retirement needs of our customers, leveraging multiple distribution capabilities and augmenting various investment options. In all propositions under the categories of Participating Plans, Non-Participating Savings Plans, Non-Participating Protection Plans, Unit Linked Insurance Plans, Group Protection Plans, Corporate Funds Plans, Riders & PMJJBY form a complete suite of offerings that help our customers prepare for the certainties of life. Our products are easy to understand and optimally priced with a developed comprehensive risk management framework/policy.