What is NAV in ULIPs?

ULIPs offer the dual benefit of life coverage and investments under one plan. Besides, they also provide policyholders with the flexibility to switch funds, make partial withdrawals, and avail of tax benefits. If maintained rightly, the investment component of ULIP can generate good returns.

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Understanding the concept of NAV (Net Asset Value) is crucial in determining the returns generated by ULIP investments.

What is NAV?

Net Asset Value (NAV) is the value of a single unit of an asset minus liabilities of the investment fund. It helps in tracking the performance of a fund an individual has or wants to invest in.

In the case of ULIPs, the investment component has a NAV. Units under a fund are allotted based on the premium paid by the policyholder. It includes all investments held under a Unit Linked Insurance Plan, such as stocks and mutual funds. 

The value of each unit held under the policy is the NAV of ULIP. It reflects the current market value of the underlying investments in the plan.

The Net Asset Value in ULIPs changes daily as it is influenced by the performance of the underlying assets held by the fund. If the fund performs well, the NAV will increase and vice-versa.

How is NAV in ULIPs Calculated?

The formulae to calculate ULIP NAV is: 

NAV = (Total market value of investments held by the fund + Value of any current assets - Value of any current liabilities - Expenses) / Number of units existing on the valuation date

NAV in ULIPs can be calculated in the following steps:

Step 1: The value of all the investments made by the fund is added up, including stocks, bonds, and other securities. Any income earned from these investments is also included.

Step 2: The fund's liabilities, such as operating expenses, are subtracted from the total value of the investments.

Step 3: The resulting amount is divided by the total number of units issued by the fund. This gives the NAV of each unit of the fund.


Let's assume that a ULIP has:

Total Investment value = Rs. 50 crores

Liabilities = Rs. 1 crore

Total Units Issued = Rs. 5 crore 

Calculation Step Formula Used Value
Total Value of Investments Total Value of Assets + Income Earned INR 60 crores
Liabilities Operating Expenses INR 1 crore
Net Value of the Fund (Total Value of Investments - Liabilities) INR 59 crores
NAV per Unit (Net Value of the Fund / Total Number of Units Issued) INR 9.8

Detailed illustration of calculations:

Total Value of Investments

Total Value of Investments = Rs. 55 crores (Value of Assets) + Rs. 5 crores (Income Earned) = RS. 60 crores


Liabilities = Rs. 1 crore

Net Value of Fund

Net Value of the Fund = Total Value of Investments - Liabilities = Rs. 60 crores - Rs. 1 crore = Rs. 59 crores

Net Asset Value per Unit

NAV per Unit = Net Value of the Fund / Total Number of Units Issued = Rs. 59 crores / 5 crores = Rs. 9.8

Therefore, the NAV per unit of the ULIP in this example is Rs 9.8.

Importance of NAV in ULIPs

The Net Asset Value (NAV) of ULIP is calculated daily. It is therefore important for all investors to keep an eye on it to make informed decisions. Here are a few reasons why monitoring NAV is essential in ULIPs:

  • Helps in tracking the fund performance 

  • Helps in making informed investment decisions

  • Helps in assessing risk

  • Helps in managing costs 

In Conclusion

Investors should keep in mind that NAV can be influenced by market fluctuations and changes in the value of the underlying assets of the fund. NAV in ULIP is a key component to determine a fund’s future performance. It is important to carefully assess the risk profile and investment objectives before a ULIP scheme.

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