Life Insurance


NAV in Unit Linked Insurance Plan (ULIP) Do you want to make a smart investment and have gone through various life insurance types available? Are you still unsure what plan you should pick to invest…

NAV in Unit Linked Insurance Plan (ULIP)

Do you want to make a smart investment and have gone through various life insurance types available? Are you still unsure what plan you should pick to invest in? Then, consider investing in Unit Linked Insurance Plans (ULIPs)

ULIPs are the financial vehicle combining the benefits of life risk cover and investment, which will help you ensure the financial protection of your family against life uncertainties and provide market-linked benefits just like a mutual fund.

What is NAV in ULIP?

In ULIP, a part of your premium secures the life risk cover, and the remaining is invested in various market-linked instruments. You can choose your investment based on the expected return and risk appetite. The policyholder can switch between the funds and make partial withdrawals. Also, the policyholder can gain tax benefits on the premiums paid and benefits received. 

Once the investment period is completed, you receive returns based on the fund value. The amount received depends on the NAV of the units invested at the time of the inception of the policy. Let’s understand the concept of NAV to determine the returns. 

Understand the Concept of NAV 

NAV refers to the Net Asset Value, which is the value of total holding assets after deducting the liabilities and expenses. The value of NAV per unit helps the investor track the fund performance. To better under the concept of NAV, you need to understand the basic functioning of Unit Linked Plans. 

In ULIP, several investors pay premiums for a ULIP. You are one of them contributing to the ULIP value. The investor then collects the amount and invests the whole amount into various market-linked instruments. 

Now, to divide the returns among all the investors, the insurer divides the accumulated amount into small units with a face value. The value of each unit is known as the Net Asset Value or NAV of the ULIP. Each investor gets a specific number of units depending on the fund invested. 

The value of NAV changes daily per the market experience of the fund's assets. If the fund performs well, the NAV increases and vice versa. 

How is NAV in ULIP Calculated?

The net asset value is calculated daily after deducting any expenses. The formula to calculate NAV in ULIP, as mentioned

NAV = (Value of Current Assets + Market Value of the Investment Held by the Fund) – (Value of Current Liabilities and Provisions) / Total number of units on the evaluation date

NAV indicates the market value of the units in a fund. The following factors are included for accurate results when calculating NAV in ULIP.

Step 1: Add up all the value of investments made by the fund, including stocks, bonds, and short-term and long-term assets held. 

Step 2: Subtract all liabilities, such as operating expenses, etc. 

Step 3: The obtained value is now divided by the total number of units issued by the fund. 

Here, you get the NAV of each fund issued. 

Example of NAV Calculation

Let’s understand the workings of the net asset value (NAV) formula with the following example. 

Say a life insurance company XYZ issues a ULIP to the investors. Two investors, A and B, have invested in the plan. 

Investor A paid Rs. 80,000, while Investor B paid Rs. 60,000 to buy the ULIP plan offered. 

After deducting the applicable charges from the total value of the investment, let’s consider the remaining investment amount becomes Rs. 79,500 for Investor A and Rs. 59,600 for Investor B.

The total fund for the investment in a market fund is Rs. 1,39,100. This amount is called Net Investment Value. 

Say the insurer decides the face value of each unit of Rs. 10 on the first day of investment. 

This way, the total number of units invested is 1,39,100/10 = 13,910 units. So, the units held by Investor A and Investor B are in the following way


Fund Investment 

Invested Units


Rs. 79,500



Rs. 59,600


Say the investment brings profit, increasing the fund net value to Rs. 1,70,000. The new NAV ULIP will be Rs. 1,70,000/ 13,910 = Rs. 12.22. 

Now, the investor's profit will be in the following way


Fund per New NAV

Outstanding Investment


7,950 X 12.22

Rs. 97,271.2


5,960 X 12.22

Rs. 72,831.2

Why is it Important to Check NAV in ULIP?

NAV is the fundamental element to measure the market value of the ULIP fund invested. By calculating NAV, the investors can track the market performance of the ULIP. 

If the ULIP performs well, the NAV value increases over time. The calculation of NAV helps determine the profit their investment has made over a definite time. 

Checking NAV history when buying a ULIP can help make better investment decisions. You can know the potential return you can secure while investing in a ULIP within a predetermined period. 

Based on the performance of the funds, you can make the fund switches and change the fund allocation if required.  

What if NAV in ULIP Doesn’t Perform Well?

There might be chances that, due to the market volatility, the NAV of a ULIP may not perform well. The daily value of your NAV may reduce in such conditions. 

When the fund is not aligned with your risk appetite, and you do not meet the return expectations, you can change your ULIP asset allocation. You can opt for premium redirection or a fund-switching option. 


Hence, Net Asset Value (NAV) is the per unit value of the investment fund after deducing any liabilities and expenses. Note that the NAV calculation in ULIP is on a daily basis. Hence, you can track the performance of your investment and make decisions to manage your returns at the right time to yield maximum benefits. 

In case you need expert assistance while selecting the right ULIP plan based on the NAV performance, connect with one of our professional RenewBuy POSP Advisors, who will help you make wiser decisions. 

Frequently Asked Questions

What is NAV meaning?

  1. The NAV means the current market value of each unit of fund. Based on the NAV, you can calculate the total value you will get based on the number of units you want to redeem/withdraw. 

What is the Net Asset Value formula in ULIP?

  1. The formula used to calculate the NAV in ULIP is

NAV = (Value of Current Assets + Market Value of Investments Held) – (Value of Current Liabilities and Expenses) / Total Number of Units on the Date 

What is NAV value in insurance?

  1. Net Asset Value in insurance stands for the per-unit value of an asset, deducting the value of any liabilities or expenses on an investment fund. 

When can investors calculate the NAV on an investment?

  1. The prices of market instruments keep changing throughout the day. Hence, the investors can only calculate the NAV of mutual funds or ULIP after closing the stock market on a particular day. They cannot calculate NAV in mutual funds or ULIPs during market hours. 

How can I calculate the total fund value using NAV?

  1. To calculate the total fund value of your investment, you can use the following formula:

Total fund value = NAV X Total Number of Units


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