ULIP Return Percentage

Name: ULIP Return Percentage
Brand: Axis Max Life Insurance
Rating: 4.5 (1651 reviews)

Invest ₹10K/Month & get ₹4.46Cr^*8 Now!

While evaluating a Unit Linked Insurance Plan, a ULIP return percentage is often the first metric people consider. However, the reported return percentage does not present the complete picture. Several other factors, like the fund selection, market performance, and tenure of the investment, influence the actual outcome. This guide explains how the ULIP return percentage is calculated so that policyholders can evaluate performance for informed investment decisions. show less ...Read More

Tax Savings

upto Rs 46,800^~#

BSE 500

Value 50 Index Fund II^*8

17+ Funds

Options

Unlimited Free

Fund Switches

Invest ₹10K/Month & get ₹4.46Cr^*8 Now!

₹10k/Month invested since 2005
is now worth ₹4.46 Cr^8

Unlimited Free Switches

27.4%^8 Past Returns

EFO CLOSES IN
Closes 27^th July

06

DAYS

:

01

HRS

:

34

MINS

:

23

SECS

Your Name

Are you an NRI

NoYes

Residence Country

Select Country

I've read and accepted all the Terms and Conditions. I authorise Axis Max Life Insurance to contact me via SMS/Email/Phone/WhatsApp/Facebook or any other modes overriding my'DND'.

Axis Max Life Savings Plans

Trust of 20+ Years in Industry

Written bySumit Narula

Investment Writer

Published 21st July 2026

Reviewed byPrateek Pandey

Last Modified 21st July 2026

Investment Expert

SIP Calculator Smart FD Plan Investment Calculator Investment Plans

What Is ULIP Return Percentage?

The ULIP return percentage indicates the increase or decrease in the value of the investment in a Unit Linked Insurance Plan over a certain period. ULIPs combine life insurance with market-linked investments. Their returns depend on the performance of the underlying equity, debt, or balanced funds selected by the policyholder.

When a policyholder pays a premium for the ULIP, a part of the amount is allocated towards providing the life insurance coverage. The remaining amount is invested in the selected funds. Over time, the Net Asset Value (NAV) of these funds fluctuates with market movements, which leads to a corresponding change in the value of the investment.

ULIP return percentage shows this change, helping policyholders understand how their investment performed. Many investors use a ULIP calculator to get an estimate of the expected returns.

ULIPs are different from traditional insurance plans or fixed-income products, as their returns are not predetermined. Several factors determine the estimated return on ULIP, which include:

Market conditions
Fund allocation
Investment tenure
Applicable policy charges

As per IRDAI regulations, ULIPs issued in India have a mandatory lock-in period of five years. The compounding effect of time makes the returns more visible over long investment horizons.

Understanding ULIP Return Percentage Correctly

Many investors evaluate the ULIP return percentage based only on the overall gain in their investment. This approach may be misleading, particularly when a person compares investments held for different durations over an investment period.

The total percentage gain or loss between the initial investment and the current value of the fund is expressed in terms of absolute return. Investors get a quick overview of the overall performance, but this calculation does not factor in the time needed to generate that return.

CAGR expresses the annualised returns, as it factors in the investment period and compounding effect. As a result, investors consider CAGR as the preferred metric when they compare ULIPs. The following are the key differences between absolute returns and CAGR:

Parameter	Absolute Returns	CAGR (Compound Annual Growth Rate)
What Does It Measure?	Measures the total gain or loss from the date of investment to the current date, but does not consider time	Expresses the annualised rate of return earned over the investment period
Formula	(Current Value − Initial Value) ÷ Initial Value × 100	[(Current NAV ÷ Initial NAV)^(1/n) − 1] × 100
When To Use	Useful for understanding total gain/loss over a specific period, but less suitable for comparing investments with different durations	Investment periods exceeding one year and long-term comparisons
Common Mistake	Policyholders often compare investments with different tenures using only total returns	Investors may assume that CAGR represents a fixed or guaranteed annual return
Use Case	Provides a quick snapshot of performance	Used for evaluating the ULIP return percentage over the long term

Understanding the difference between Absolute Return and Compound Annual Growth Rate (CAGR) is equally important as knowing what is investment.

Consider a situation where an investment of ₹1,00,000 grows to ₹1,40,000 over five years. Here, the absolute return is 40%, but the CAGR is around 6.96% per annum. Therefore, CAGR provides investors with a more useful insight, as it shows the annual growth over the entire holding period.

Investors should avoid comparing two ULIP plans based only on absolute returns, as this may lead to incorrect conclusions.

For instance, if Fund A delivered an absolute return of 50% in three years, and Fund B delivered an 80% absolute return in six years, the annualised return is higher for Fund A. When both the figures are converted to CAGR, investors can perform a fair comparison.

Note: CAGR represents a constant rate of growth over a period of time and is not a projection of actual past performance.

Estimated Return Percentage on ULIP by Fund Type

The type of fund chosen by the investor largely influences the estimated return percentage on ULIP. While the risk associated with equity funds is usually higher, they also offer better growth potential over the long term.

Debt funds, which primarily invest in fixed-income securities, provide relatively stable returns to investors. Balanced or hybrid funds strike a balance between growth and stability, and these are available across both equity and debt categories.

The following are approximate historical CAGR ranges across different investment horizons. These figures can help investors compare the behaviour of different asset classes based on historical market performance.

Fund Type	5-Year CAGR	10-Year CAGR	15-Year CAGR	20-Year CAGR	35-Year CAGR
Equity Fund	12%-20%	10%-15%	10%-13%	10%-12%	10%-13%
Balanced / Hybrid Fund	8%-14%	8%-12%	8%-11%	8%-11%	8%-11%
Debt Fund	5%-8%	5%-8%	5%-8%	5%-7%	5%-7%
Nifty 50 Benchmark (Proxy for top equity ULIP funds)	~14.6%	~13.7%	~10.9%	~11.1%	~12.7%

Disclaimer: The date displayed above is based on broad historical benchmarks for fund categories. Individual ULIP funds may offer different returns based on their investment strategy, portfolio composition, and market conditions.

When investors evaluate the data over multiple time horizons, a few useful trends are visible.

Equity-oriented ULIP funds have historically delivered the strongest long-term growth
Five-year equity CAGR has exceeded 12% during certain strong market periods
Investors can reduce the volatility of their portfolios as they allocate their assets across balanced or hybrid funds
Conservative investors with a low risk profile may opt for debt funds
Nifty 50 is widely used as a broad market indicator of large-cap equity performance

Therefore, the choice of funds must depend on the financial goals, investment horizon, and risk tolerance of the investor. Those with a long-term perspective may go for equity-oriented funds that have higher growth potential. Balanced or debt funds may be considered by policyholders looking for relatively lower volatility.

How Charges Reduce Your Net ULIP Return Percentage

Investors often look at the published return when they evaluate the historical performance of a fund. However, this figure does not necessarily show the actual return earned by the policyholder. While understanding the ULIP returns detailed guide, investors must note how the final corpus is influenced by policy charges.

The following charges influence the overall ULIP return percentage, reducing the perceived return for the policyholder:

Premium Allocation Charge

The premium allocation charge is deducted from the premium before the rest is invested in the fund chosen by the policyholder. Therefore, the full premium does not always get invested.

Fund Management Charge (FMC)

Insurers manage the underlying ULIP investment. The fund management charge is deducted as per policy terms and is reflected in the calculation of the daily NAV.

Mortality Charge

The life insurance protection that the policyholder gets under the ULIP is included under mortality charges. The amount depends on factors like the age of the policyholder, chosen sum assured, health profile, and policy features of the policy.

The mortality charge is generally deducted every month as the insurer redeems a corresponding number of units from the investment fund. This charge tends to rise gradually over the tenure of the policy as the risk of mortality increases with age.

Policy Administration Charge

The costs associated with routine servicing and administration of the policy, like maintaining records and transaction processing, are covered under policy administration charges. The insurance company redeems the corresponding number of units from the fund to adjust the charge every month.

Fund Switching Charge

With ULIP funds, policyholders get the opportunity to switch between equity, debt, and balanced funds. Many ULIPs allow a certain number of free switches, after which charges may apply as per policy terms.

Discontinuance Charge

While ULIPs are long-term investment products, some policyholders may have to discontinue the policy before the mandatory lock-in period. In these situations, a discontinuance charge may apply. During the first year of the policy, this charge is usually the highest. It reduces progressively in subsequent years.

How to Calculate Your ULIP Return Percentage - Step-by-Step

Policyholders can calculate the ULIP return percentage using the details available in their policy statement. Many investors also calculate the returns during retirement planning to make realistic calculations. To illustrate the calculation, the same example discussed earlier has been carried forward. Assume the initial investment ₹1,00,000 that grows to ₹1,40,000, with an investment horizon of 5 years.

Step 1: Note Your Initial NAV / Investment Value

First, investors must note the initial investment amount and the NAV at which units were purchased. In the given example, the initial investment amount is ₹1,00,000.

Step 2: Note Your Current NAV / Fund Value

Policyholders can find the current fund value in their latest policy statement or mobile application. In this case, the current value is ₹1,40,000.

Step 3: Calculate Absolute Return

The absolute return can be calculated using the following formula.

(Current Value − Initial Value) ÷ Initial Value × 100

In the given example, the absolute return is 40%.

Step 4: Calculate the Holding Period (n)

Determine the number of years through which the amount has remained invested. In this context, the holding period is 5 years.

Step 5: Calculate CAGR

The annualised growth formula to calculate the CAGR is:

[(Current NAV ÷ Initial NAV)^(1/n) − 1] × 100

For this example, it comes to 6.96%.

The annualised return provides a more valuable measure of the estimated return on ULIP than the absolute return, particularly for long-term investments.

Note: The calculation above assumes a single lump-sum investment. XIRR (Extended Internal Rate of Return) is a more accurate measure of returns for regular-premium ULIPs, where premiums are paid at periodic intervals; it takes into account the time value of each premium payment. The XIRR is also shown by many insurers in policy statements.

Step 6: Compare with a Benchmark

After calculating the CAGR, compare it with a benchmark to understand whether the return is impressive or satisfactory. For an equity-oriented ULIP fund, a policyholder can compare its CAGR with a relevant benchmark, such as Nifty 50. Debt and balanced ULIP funds should be compared with appropriate debt or hybrid benchmarks for meaningful comparison.

If a fund consistently underperforms the benchmark, policyholders may consider reviewing their strategy using the fund-switching facility.

Conclusion

The ULIP return percentage shows the combined effect of the performance of the market, fund selection, duration of the investment, and changes in the policy over time. Policyholders shouldn’t consider it to be a standalone number. It’s more important to know the relationship between these factors to evaluate a ULIP more realistically.

While evaluating investment plans , policyholders must consider the five-year lock-in period for ULIPs. The discontinuation charge is also higher in the initial years. Those with long-term financial goals like retirement or a child’s education can benefit from the effect of compounding with the right policy.

Compare all the fund options and understand the applicable charges to make a strategic investment decision.

Frequently Asked Questions

What is the estimated return percentage on ULIP?

The type of fund that has been selected largely determines the estimated return percentage on ULIP. The overall returns depend on market performance, investment tenure, and additional charges. Historical trends show that equity-oriented ULIP funds deliver 10% to 15% CAGR over 10-year investment periods. The returns for balanced funds range from 8% to 12%, while debt funds have generated a CAGR between 5% and 8%. These figures have been recorded in the past, but they do not guarantee future returns.

What is a good ULIP return percentage?

A good ULIP return percentage can be any amount that consistently performs in line with its benchmark or above it. For equity-oriented funds, a CAGR of 10%-12% over a 10-year period is considered healthy, while the range varies between 6% and 8% for debt funds. Policyholders should review the rolling returns of three to five years to evaluate consistency.

How is ULIP return percentage calculated?

There are two popular methods to calculate the ULIP return percentage. Absolute return is used to measure the total increase in value. The following formula is used to calculate absolute returns:

(Current Value − Initial Value) ÷ Initial Value × 100.
CAGR calculates the annualised growth rate after considering the investment period using the formula:

[(Current NAV ÷ Initial NAV)^(1/n) − 1] × 100

For instance, if ₹1,00,000 grows to ₹1,40,000 in five years, the absolute return is 40%, and the CAGR is approximately 6.96% per annum. Policyholders may also use a ULIP calculator for this purpose.

What is the difference between CAGR and absolute return in ULIP?

Absolute return is used to measure the growth of an investment, but it does not factor in the time a fund requires to achieve that growth. CAGR converts the return to an annualised growth rate that ensures a fair comparison. This makes it easier to compare investments with different holding periods. CAGR is commonly used to evaluate the performance of long-term products like ULIPs, as it reflects annualised growth over the investment period. CAGR also establishes a more logical basis for comparison.

Do ULIP returns beat mutual fund returns?

The purpose of ULIPs and mutual funds is different. These products should not be compared solely on the basis of returns. ULIPs combine market-linked investment with insurance protection. Investors also benefit from tax savings and features like fund switching in these policies. Therefore, it’s important to evaluate these products based on the financial goals and not returns alone.

Disclaimer: Deductions under Section 123 of the Income Tax Act, 2025 (previously Section 80C of the Income Tax Act, 1961) are not available under the new tax regime.

What is the average ULIP return in 10 years?

The historical returns for equity-oriented ULIP funds range from 10% to 13% over a 10-year period. Balanced funds have generated 8% to 11% returns, while debt funds offer around 5% to 8% returns. As of early 2026, the Nifty 50 recorded an approximate 13.7% CAGR.

Why does my ULIP return percentage seem lower than the fund's advertised return?

The return of a fund that policyholders see generally shows the performance of the investment fund itself. The overall return for the investor factors in other deductions, such as premium allocation charges, mortality charges, policy administration charges, and other applicable costs. The performance of an individual investment may also be influenced by the timing of premium payments and market movements. As a policyholder remains invested over the long term, the relative impact of some charges may be reduced compared to the accumulated corpus, depending on the policy structure and fund performance.

Is ULIP return guaranteed?

No, a ULIP return percentage is not guaranteed, as these are insurance products linked to the market. The performance of the underlying equity, debt, or balanced funds determines the value of your investment. When markets are volatile, the value of the fund may rise or fall. The return from the investment is dependent on the market, but the life insurance component offers financial protection based on the terms of the policy. That’s why ULIPs are ideal for investors with long-term financial goals.

ARN: Jun26/Bg/30SN2

Sources:

https://groww.in/mutual-funds/category/best-equity-mutual-funds

https://groww.in/mutual-funds/category/best-balanced-hybrid-mutual-funds

https://groww.in/mutual-funds/category/best-debt-mutual-funds

https://www.bajajamc.com/knowledge-centre/nifty-50-historical-returns

Share your Valuable Feedback

4.5

Rated by 1651 customers

Was the Information Helpful?

Very Good

Online Sales Helpline

Whatsapp: +91-7428396005Send ‘Quick Help’ from your registered mobile number
Phone: +91-124-648-890009:30 AM to 06:30 PM
(Monday to Sunday except National Holidays)
service.helpdesk@axismaxlife.comPlease write to us incase of any escalation/feedback/queries.

Customer Service

Whatsapp: +91-7428396005Send ‘Hi’ from your registered mobile number
1860-120-55779:00 AM to 6:00 PM
(Monday to Saturday)
service.helpdesk@axismaxlife.comPlease write to us incase of any escalation/feedback/queries.

NRI Helpdesk

+91-11-71025900 , +91-11-61329950 (Available 24X7 Monday to Sunday)
nri.helpdesk@axismaxlife.comPlease write to us incase of any escalation/feedback/queries.