ULIPs or Unit Linked Insurance Plans are a popular investment choice. They combine the benefits of insurance and investment to provide both security and high returns. In a ULIP, a part of the premium is directed towards a life cover~ while the rest is invested in funds of your choice. You can choose between debt, equity or balanced funds as per your financial goals and risk appetite. However, before you invest in a ULIP, you must understand how ULIPs work and generate returns.

What is the meaning of ULIP returns?

ULIPs provide you with a life cover~ for the financial security of your family while also boosting your income and helping you realise your long-term investment goals. The returns from your ULIP will be based on your investment choices as well as factors like ULIP charges and market performance.

How are ULIP returns calculated?

There are two ways to measure your ULIP returns:

Absolute returns:

This is the percentage increase in the total value of the ULIP. This total value is considered after deducting expenses like management fees and operating charges.

Absolute returns = [(Current value- Value at the time of purchase)/Value at the time of purchase] x 100

For example, if the value of your ULIP at the time of purchase was ₹ 250/- and one year later it becomes ₹ 350/-, in this case, your absolute return is 40% in a year. This method is useful for a plan which has a short tenure.

CAGR (Compound Annual Growth Rate):

As the name suggests, the CAGR method helps in evaluating the annual growth of your investment during a specific period. It helps you determine the rate of return received from your plan year on year.

CAGR = {[(Current value/Value at the time of purchase) ^ (1/number of years)]-1} x 100

For example, if the value of your ULIP at the time of purchase was ₹ 250/- and after five years its value is ₹ 350/-, in this case, the CAGR is 6.96%.

Alternatively, you can also use an online ULIP plans returns calculator to calculate your earnings.

Different Risks & Returns involved in ULIP

In a ULIP, you get multiple investment options. You have the option to choose between low-risk debt funds, equity funds that provide high returns or balanced funds. All funds are different in nature and carry varied risks and rewards. Generally, high-risk funds offer greater returns, and low-risk funds give out stable but lower returns. Hence, ULIP returns depend on the funds you choose.

How to ensure high returns in ULIP?#

  • Market outlook - You should keep a check on the market to determine the best time to invest in equity, debt and balanced funds. If you assess that the equity market is overvalued and expensive, you should switch to debt funds and later invest in equity when the equity market reaches the right level.
  • Switch funds to gain an advantage - Most ULIPs allow you to switch between funds without any cost, giving you the option to change your asset allocation as per the market conditions. This can help you tap into opportunities as well as protect your funds.
  • Stability in debt and equity ratio - Your ULIP can fetch better returns if you balance the amount you invest in equity and debt. At a lower age, a substantial percentage of your funds can be allocated to equity. As your age increases, your focus on equity funds should reduce and investment in debt funds should increase.


As an investor, you must evaluate market conditions and understand how to allocate your funds to get the maximum returns from your ULIP. ULIPs like ICICI Pru Signature provide higher returns while shielding your loved ones with a life cover~. You get four portfolio strategies and several fund options to choose from that can help to maximise your earnings. The ICICI Pru Signature plan also offers unlimited free switches between funds, low charges, wealth boosters**, systematic withdrawals and tax* benefits, making this plan ideal for your needs.

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* Tax benefits under the policy are subject to conditions under Sections 80C, 10(10D), 115BAC and other provisions of the Income Tax Act, 1961. Goods and Services Tax and cesses, if any, will be charged extra by redemption of units, as per applicable rates. Tax laws are subject to amendments from time to time. Please consult your tax advisor for more details

** Wealth Boosters equal to 3.25% of the average of the Fund Values including Top-up Fund Value, if any, on the last business day of the last eight policy quarters will be allocated as extra units to your policy at the end of every 5th policy year starting from the end of 10th policy year till the end of your policy term

#These are general practices for good returns

~Life Cover is the benefit payable on death of the life assured during the policy term.

ICICI Pru Signature UIN: 105L177V03


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