A child’s overseas degree. A house in the hills. A retirement fund that doesn’t depend on anyone else. Plenty of goals sit about fifteen years away, and most of them cost more by the time they arrive.
A ULIP plan is one way to save for them because it combines market-linked investing with life cover. Its returns are not guaranteed, though, and its charges matter. So the useful question is not just whether it suits your goal, but how much you need to invest each month.
This blog explains the steps for working that out and what to check along the way.
How a ULIP Works Over 15 Years
Each premium is subject to applicable policy charges, including the cost of life cover. The amount allocated for investment buys units in the funds you choose, whether equity, debt or a mix, at the applicable NAV. Your fund value is the number of units multiplied by the current NAV, which moves with market performance.
For the first five years, the money is locked in. If premiums are discontinued during this period, the applicable fund value, after discontinuance charges, is transferred to the discontinued policy fund. The fund currently has a minimum guaranteed interest rate of 4% annually, and insurance risk cover ceases upon discontinuance.
The discontinued fund proceeds are generally payable after completion of the five-year lock-in, subject to applicable policy conditions. Partial withdrawals are permitted only after the lock-in period and according to the policy terms.
Staying with a ULIP plan for the full 15 years is therefore a long-term financial commitment.
What Time Can and Cannot Do
Fifteen years provides time for investments to grow and offers a longer period to manage market fluctuations. However, it does not guarantee recovery from losses or a particular return.
ULIPs also have charges that affect the amount invested and the final fund value. These can include premium allocation charges, policy administration charges, fund management charges and mortality charges, depending on the product.
IRDAI regulates these charges, including a fund management charge cap of 1.35% annually for applicable ULIP funds and limits on the reduction in yield. The actual charges depend on the policy.
The benefit illustration shows projected values at assumed gross investment returns of 4% and 8% annually, along with the effect of applicable charges. Neither return is a forecast.
A ULIP held for 15 years can benefit from consistent investing, but the final result still depends on market performance and policy costs.
Working Out the Monthly Amount
Start With the Goal and Inflation
First, write down the objective in present-day rupees. Suppose your goal costs ₹50 lakh today.
Now estimate what the same goal could cost 15 years from now. At an assumed annual inflation rate of 6%, its future cost would be approximately ₹1.2 crore.
Education and housing costs can increase at rates different from general inflation, so use an assumption appropriate to your goal.
Choose a Return Assumption
Your expected investment return significantly affects the monthly amount required.
For illustration, consider annual return assumptions of 4% and 8%. These are also the gross return scenarios used in ULIP benefit illustrations.
However, the calculations below are simplified investment projections. They assume monthly compounding and do not account for ULIP charges, taxes or insurance costs. Your actual premium requirement could therefore be higher.
Calculate the Monthly Amount
To accumulate approximately ₹1.2 crore over 15 years, you would need to invest around ₹34,600 per month at an assumed 8% annual return or ₹48,700 per month at 4%, before charges.
Ignoring inflation changes the calculation considerably. A target of ₹50 lakh would require approximately ₹14,400 per month at 8% or ₹20,300 per month at 4%.
These calculations assume contributions at the end of each month and are intended only to illustrate how the investment requirement changes with the target amount and return assumption.
A ULIP calculator can help estimate the premium and projected maturity value based on factors such as age, premium payment term, policy term, fund selection and applicable charges.
Running projections at both 4% and 8% can show how much the outcome changes under different assumptions. Check the insurer’s benefit illustration for projections after charges.
Tax, Switching and Top-Ups
Tax deductions on eligible ULIP premiums are available under the old tax regime, subject to applicable conditions and limits.
For ULIPs issued on or after 1 February 2021, maturity proceeds can qualify for tax exemption if the applicable annual premium does not exceed ₹2.5 lakh and other conditions are satisfied. These include the premium-to-sum-assured requirement and aggregate premium rules when multiple ULIPs are held.
In the earlier example, investing approximately ₹34,600 per month would mean paying over ₹4 lakh annually. This exceeds the ₹2.5 lakh threshold, so the maturity proceeds would not qualify for exemption under the premium-threshold condition. Gains would be subject to the applicable capital gains tax provisions.
Death benefits are generally exempt from income tax, subject to the relevant provisions. The Income-tax Act, 2025 came into effect on 1 April 2026, so the applicable tax rules should be checked when making an investment decision.
Switching between equity and debt funds within the same ULIP generally does not trigger an immediate capital gains tax liability. Insurers can provide a specified number of free switches per year, with charges for additional switches depending on the policy.
Certain ULIPs also allow top-up premiums. These are generally subject to a separate five-year lock-in and other policy conditions. Top-ups can also affect the aggregate premium considered for tax exemption.
Managing the Plan Over 15 Years
As the financial goal approaches, investors can consider gradually shifting part of their investments from equity to debt funds to reduce exposure to market fluctuations. The appropriate allocation depends on the remaining investment period and individual risk tolerance.
Exiting early can also affect the amount accumulated. During the first five years, discontinuance can result in the fund value being transferred to the discontinued policy fund, with insurance risk cover ceasing. Even after the lock-in period, withdrawals reduce the fund value available for future growth.
Review the fund’s performance against its relevant benchmark at least once a year. Also check the charges, existing fund allocation and whether the investment is progressing towards your target. If your income increases, you can consider additional investments or permitted top-ups, after checking the applicable policy and tax conditions.
Final Thoughts
A 15-year financial goal requires three important calculations: the future cost of the goal, an assumed investment return and the time available to accumulate the required amount. A ULIP calculator can help estimate the monthly premium, while projections at 4% and 8% illustrate how different return assumptions affect the outcome.
Before choosing a ULIP plan, account for policy charges, review the tax implications of your proposed premium and consider whether the five-year lock-in fits your financial needs. Once you have established an affordable investment amount, review your progress periodically and adjust your approach as your goal gets closer.
