ULIP, despite being one of the more reliable and safe wealth creation plans, doesn’t restrict itself as an investment instrument. Instead, ULIPs or rather Unit Linked Insurance Policies, quite appropriately, also offer life cover to you and your family.

Sounds intriguing, right! Yes, ULIPs are intriguing and extremely useful if you have a medium-risk appetite for wealth creation. Plus, the flexibility of life insurance clubbed with systematic, market-linked investments and returns, ensures that you get the best of debt and equity funds, rolled into one.

But then, being invested in a ULIP isn’t good enough. You need to track the policy performance every now and then to determine how the equity and even debt funds linked to the policy are performing. As ULIP subtly combines the principles of investment and insurance, you can track the performance of an ULIP to suit your preferences, accordingly.

Why Track a ULIP?

ULIPs are flexible. If you are an investor, ULIP lets you select the equity-specific portion of the plan, according to your risk appetite. But, your willingness to amplify or minimize risks might vary depending on your age and financial stead.

Therefore, if you can track the ULIP performances quarterly and annually via statements, you can decide for yourself if the existing investment plan is working for you or it is time for something more aggressive or passive. To simplify, tracking the ULIP lets you manage the risk spread, accordingly.

How to Track ULIP performance, both directly and indirectly?

Tracking the performance of a ULIP can be both qualitative and quantitative. As the ULIP full form reads as Unit Linked Insurance Policy, you should go about tracking the Unit Linked part to analyze the investments and returns better.

Nonetheless, there are the strategies to follow:

• Mathematical Computation

You can always preempt the absolute returns and CAGR of any given ULIP plan before even contemplating a change in strategy. To ascertain the absolute returns, you must identify the Net Asset Value of a ULIP at any given point in time, using statements. The current NAV should then be subtracted from the initial NAV.

Once the value is determined, divide the same from the reference or initial NAV and multiply the same by 100 to reach a concrete figure. This process of calculating absolute return is handy during the initial phase.

The CAGR or the Compounded Annual Growth Rate helps you look at the bigger picture. To calculate using this computational method, you must divide the current NAV by the initial NAV, raise it by (1/number of years -1), and then multiply by 100. While this can be applied at any given instant, CAGR doesn’t take the volatility of the equity market into account.

• Switch Funds

You can keep a track of how the market is performing and eventually make switches between the secure debt funds and the more volatile equity funds. As a standard ULIP plan lets you make four switches in a given financial year, you can easily track the quarterly performances and decide accordingly.

• Allocate Funds with Precision

Passive tracking of a ULIP often signifies a more balanced allocation of funds. If you have eyes set on long-term gains, investing a bigger chunk in the equity funds is advisable. Also, if you are a conservative investor, balancing the equity investments with sizable debt funds is essential. Overall, it all depends on how quickly and reliably you want the money to appreciate.

• Get Updates

If you are serious about tracking the performance of your ULIPs, you must be aware of the market outlook and volatility, across the entire tenure of investment. A good approach here is to track the statements and analyze how the funds are performing, in short, and medium intervals.

• Refrain from Surrendering

It takes no advanced tracking strategy to know that surrendering the ULIP within the 5 year lock-in period is a dumb decision to make. Therefore, if you really want to track the gains or even ensure that there are profits to keep a track of, go long.

Final Words

ULIPs are lucrative financial instruments that even let you enjoy tax rebates as per Section 80C guidelines. Plus, the sum received upon maturity is tax-free, provided you go beyond the 5-year mark. Regardless of the perks, tracking the ULIP performance is pivotal as you would want to make the most of a bullish market and allocate funds accordingly.

To simplify things concerning a ULIP, it is recommended to purchase one from the Finserv MARKETS, owing to the transparent approach and better control over the finances.

As the market is at an all-time high, you should stop speculating anymore and go ahead with the ULIP purchase, stat.