A unit-linked insurance plan(ULIP) can be a great tool for you to invest in funds as well as get a life cover along with it. With a unit-linked insurance plan, a part of your premium is invested in funds that you choose, and another part of the premium is used for life cover. Thus, you get to enjoy the best of both worlds, investment and insurance. All you need to do is regularly check the fund performance.
1. Keep Track of Your ULIP Fund Performance
All the insurers and advisors offer regular updates about the performance of the ULIP funds. You must be very attentive while tracking the performance of your ULIP policy whenever you get your fund performance reports and updates. Make sure you check these two indicators while going through your reports. One is point-to-point returns, and another one is rolling returns. Here’s what they mean.
Point-to-point or trailing performance shows how your fund performed in a period of time. For example, the value of your fund increased by ₹200 from 1st January, 2022 to 1st March 2022.
Another fund indicator is rolling returns. Rolling returns show the fund performance at many time intervals. This helps you get a more comprehensive view of your fund performance over time. This will help you monitor your fund in a better way. It is a better way to monitor your fund performance than the point-to-point performance of your funds.
2. Measuring The True ULIP Fund Performance
In order to know your ULIP fund performance, it is recommended that you check your rolling returns. Finance and investment advisors think that this is a better indicator to judge the performance of funds as the numbers are accurate and give a better idea of the performance over time rather than just one fixed duration.
Here’s what we mean by that. You can check three-year rolling returns with daily changes over 10 years. This will help you understand how your fund performed every three years during the past 10 years. Hence, rolling returns help you in seeing the overall picture and not just for one duration of time. Now that you have all the data ready, you can see if your ULIP fund has done better than the benchmark index over a defined period of time. Thus, rolling returns come in handy.
Patience is key when you have invested in a unit-linked insurance policy. Make sure you know that it is primarily a life cover and then a medium to invest. Stay invested for a long time in order to reap higher returns on your investments. Know the fix of funds you are investing in, and make sure to get advice from a trustworthy financial advisor.