Bajaj Allianz Life ACE – Review: Should You Invest?

Protecting and saving for your tomorrow is one of those aspects that everyone focuses on while preparing a Financial Plan. We as Financial Planners often insist on custom–made Financial Plans as the best option instead of products that are readily available like retirement plans, children’s education plans, etc.

Keeping this in mind, Bajaj Allianz has launched a product where you can design it yourself. In Bajaj Allianz Life ACE, you are the one in charge of your Financial Plan.

Bajaj Allianz Life ACE Policy brochure promises that you can “Take Control Of The Way You Get Your Returns”. Will it stand by its word or will it be similar to any other product that is available in the market?

What are the Advantages(pros) and Disadvantages(cons) of Bajaj Allianz Life ACE? What makes Bajaj Allianz Life ACE a Good or Bad option, when compared with other endowment products available in the market?

Let’s get started & analyse the product & see whether you can design the plan & look out for the extra features that stand out from the rest of the products.

Table of Contents

1.)An overview of Bajaj Allianz Life ACE
2.)Features of Bajaj Allianz Life ACE – Analysis
3.)Four Plan Options Of Bajaj Allianz Life ACE – Analysis With Illustration
4.)Eligibility Criteria Of Bajaj Allianz Life ACE – Analysis With Illustration
5.)Bajaj Allianz Life ACE – Review Of Benefits in detail With Illustration
6.)Other benefits of Bajaj Allianz Life ACE – Analysis
7.)Grace period, Discontinuance & Revival of Bajaj Allianz Life ACE – Analysis
8.)Free Look period of Bajaj Allianz Life ACE – Analysis
9.)Surrendering Bajaj Allianz Life ACE – Analysis
10.)Advantages of Bajaj Allianz Life ACE – Analysis
11.)Disadvantages of Bajaj Allianz Life ACE– Analysis
12.)Research Methodology of Bajaj Allianz Life ACE – Analysis
13.)Benefit Illustration of Bajaj Allianz Life ACE – Analysis
14.)Benefit Illustration – IRR(Internal Rate Of Return i.e. Interest Rate) Analysis of Bajaj Allianz Life ACE

• Bajaj Allianz Life ACE vs. Bajaj Allianz Life Flexi Income Goal
• Bajaj Allianz Life ACE vs. Bajaj Allianz Life Long-life Goal

15.)Final Verdict On Bajaj Allianz Life ACE – Good Or Bad?

1. An Overview of Bajaj Allianz Life ACE

It is a Non-linked, Participating, Individual Life Insurance Savings Plan. The product offers a life cover to protect your family in the event that you pass away, a choice of income, as you would want, or a lump sum to help you achieve your goals in life. The plan offers four product options.

For more policy details, you can refer to the official Bajaj Allianz Life ACE Policy Brochure(pdf)

2. Features of Bajaj Allianz Life ACE – Analysis

• Choice of paying premiums for 5, 6, 7, 8, 9, 10 and 12 years.
• Protect your loved ones with a Life Cover throughout the Policy Term, up to 100 years.
• You can choose between the Income option or Lumpsum benefit or even both.
• Choose to receive income from the first month or after a fixed period based on your need.
• Income benefits could be a level of income or increasing income.
• You have the option to receive income for a limited period or up to 100 years of age.
• Tax benefits on premiums paid and benefits received as per Income tax laws.

3. Four Plan Options Of Bajaj Allianz Life ACE – Analysis With Illustration

You have the flexibility to choose one or more than one Product Option to create the Financial Plan that best suits your requirements. The benefits payable under the policy on survival, maturity, surrender, and death will be the sum of the respective benefits payable under each product option chosen.

Option 1: Deferred Income

An option that provides you income in arrears starting after the Premium Payment Term and Deferment period. The income will be a mix of guaranteed income and a cash bonus, (if declared).

Option 2: Early Income

An option that provides you income in arrears from the 1st policy month/ year after the deferment period by way of cash bonuses (if declared) and guaranteed income (GI).

Option 3: Increasing Income

An option that provides an increasing income in arrears starting after the Premium Payment Term and Deferment period. The income will be a mix of guaranteed income and (if declared).

Option 4: Wealth

An option that provides you a lump sum at the end of the Policy Term.

4. Eligibility Criteria Of Bajaj Allianz Life ACE– Analysis With Illustration

5. Bajaj Allianz Life ACE– Review Of Benefits In Detail With Illustration

	Option 1: Deferred Income	Option 2: Early Income	Option 3: Increasing Income	Option 4: Wealth
Maturity Benefit	On maturity of the Policy, you will receive:# Sum Assured on Maturity, i.e., 105% of total premiums paid, plus# Accumulated Income benefits, if any plus# Terminal bonus (if declared)			On maturity, you will receive a lump sum amount equal to:# Maturity Sum Assured, i.e., Maturity Sum Assured Rate X Annualised Premium, plus# Accrued Simple Reversionary Bonus (if declared), plus# Terminal Bonus (if declared)
Death Benefit	In case of death of the Life Assured during the Policy Term, The Death Benefit will be paid as:# Sum Assured on Death plus# 105% of Accumulated Income benefits, if any plus# Terminal Bonus (if declared)			In case of death of the Life Assured during the Policy Term, the Death Benefit will be paid as:# Sum Assured on Death, plus# Accrued simple reversionary bonus (if declared), plus# Terminal Bonus (if declared)
Deferment Period	You will have an option to defer the start of your income by up to 5 years			NIL
Income Benefit	Guaranteed Income = Guaranteed income factor of 4% X Benefit Sum AssuredCash Bonus payable = Declared Cash Bonus Rate X Benefit Sum Assured		# 2% of the Benefit Sum Assured.# Increase at 5% p.a.(on a compounding basis) every year	NIL

6. Other Benefits Of Bajaj Allianz Life ACE – Analysis

Option to take Income Benefit in monthly installments (for Product Option 1 to 3).

Option to take Maturity Benefit in Instalments (in all Product Options).

The nominee can receive the Death Benefit in Instalments (in all Product Options).

Policy loans can be taken up to a maximum of 80% of the surrender value.

7. Grace Period, Discontinuance & Revival Of Bajaj Allianz Life ACE – Analysis

Grace Period

The Grace Period is thirty 30 days for frequencies other than monthly and 15 days for monthly frequencies.

Discontinuance

If at least two (2) full years’ premiums are not paid, the policy will, immediately & automatically, lapse at the expiry of the grace period, and no benefit other than the Accumulated income benefit, if any, will be payable under the policy.

If at least two (2) full years’ premiums have been paid and subsequent premiums are not paid, then, the policy will be, immediately & automatically, converted to a reduced paid-up policy at the expiry of the grace period. A reduced paid-up Policy will not be eligible for any future Cash Bonus or Simple Reversionary Bonus. The benefits will be reduced to the proportion of the number of premiums paid to the total number of premiums payable under the option.

Revival

You can revive your lapsed or paid-up policy within 5 years from the due date of the first unpaid premium, before the Maturity Date.

8. Free Look Period Of Bajaj Allianz Life ACE – Analysis

The policyholder has a free look period of 15 days from the date of receipt of the Policy Document and a period of 30 days to evaluate the terms and conditions of the Policy in the case of electronic Policies and Policies obtained through distant mode.

9. Surrendering Bajaj Allianz Life ACE – Analysis

You can surrender the policy at any time during the Policy Term provided at least the first two full Policy years’ regular premiums have been paid. The surrender value payable will be the higher of the guaranteed surrender value (GSV) or the special surrender value (SSV).

10. Advantages Of Bajaj Allianz Life ACE – Analysis

• The plan offers various options that can be combined at your convenience.
• Riders can be added at extra cost.
• The Premium payment modes available are yearly, half-yearly, quarterly, and monthly.
• Option to receive the Death Benefit & Maturity Benefit in installments.
• Income Benefits can be deferred.
• A cash bonus will increase your Income Benefit.
• Loan options & Tax Benefits are added advantages.

11. Disadvantages Of Bajaj Allianz Life ACE – Analysis

• The overall structure of the product is a little confusing unless you read the full brochure.
• The income benefit is Non-Guaranteed.
• You need to trade off between the Income Benefit & Maturity Benefit.

12. Research Methodology of Bajaj Allianz Life ACE – Analysis

Generally, a benefit illustration will be provided in the policy brochure to understand the cash flow & other special features of that particular policy. This plan can be customised as per your requirement. Since you can choose two options in a desired proportion, there are “N” number of combinations.

Here, we have discussed & analysed 3 different combinations. This is just too under the cash flow patterns.

13. Benefit Illustration of Bajaj Allianz Life ACE- Analysis

A 35-year-old male buys Bajaj Allianz ACE at an annual premium of ₹ 1 Lakh. The Sum Assured is ₹ 11 Lakhs. The Premium Paying Term is 10 years & the Policy Term is 65 years (100 – 35). The deferment period is 0 years i.e., Immediately you start receiving the income benefit.

If you pay a premium regularly, you get an income benefit on an annual basis. Apart from this, you get the final Maturity Benefit at the end of the Policy Term i.e., at the age of 100 years.

In this illustration, the beneficiary has chosen Option 2: Early Income & Option 4 Wealth. The percentage of each option can be chosen according to the requirement.

Those who need regular income can give a higher allocation to the Early Income Option and those who want a lumpsum benefit can give a higher allocation to the Wealth Option.

There is no pre-allocated percentage for selection, the only limit is that the minimum percentage allocation is 5% for one of the chosen plan options.

The illustration will show two different rates of assumed future investment returns, of 8% p.a. and 4% p.a.

These assumed rates of return are not guaranteed, and they do not represent the highest or lower limits of what you could get back, as the value of your Bajaj Allianz Life ACE policy is dependent on several factors including future investment performance.

Higher-income – Early Income – 94% & wealth – 6%

At an 8% Return, the beneficiary will get an annual income of ₹38,142 for the next 65 years. The final Maturity Amount of ₹ 93.75 Lakhs is receivable at the age of 100 years.

At 4% Return, the beneficiary will get an annual income of ₹ 17,164 for the next 65 years. The final Maturity Amount of ₹ 11.24 Lakhs is receivable at the age of 100 years.

Balanced Benefits – Early Income – 80% & wealth – 20%

At 8% Return, the beneficiary will get an annual income of ₹32,460 for the next 65 years. The final Maturity Amount of ₹ 1.88 Crores is receivable at the age of 100 years.

At 4% Return, the beneficiary will get an annual income of ₹ 14,607 for the next 65 years. The final Maturity Amount of ₹ 12.99 Lakhs is receivable at the age of 100 years.

Higher Maturity – Early Income – 60% & wealth – 40%

At 8% Return, the beneficiary will get an Annual Income of ₹24,345 for the next 65 years. The final Maturity Amount of ₹ 3.73 Crores is receivable at the age of 100 years.

At 4% Return, the beneficiary will get an Annual Income of ₹ 10,955 for the next 65 years. The final Maturity Amount of ₹ 15.49 Lakhs is receivable at the age of 100 years.

14. Benefit Illustration– IRR(Internal Rate Of Return i.e. Interest Rate) Analysis of Bajaj Allianz Life ACE

We have worked the IRR for the above scenarios & listed out the IRR in the following table.

		Higher Income	Balanced Benefit	Higher Maturity
		Early Income – 94%Wealth – 6%	Early Income – 80%Wealth – 20%	Early Income – 60%Wealth – 40%
Benefit @ 8%	Annual Income	38,142	32,460	24,345
	Maturity Benefit	93,75,634	1,88,36,658	3,73,04,428
	IRR	6.54%	6.84%	7.27%
Benefit @ 4%	Annual Income	17,164	14,607	10,955
	Maturity Benefit	11,24,926	12,99,753	15,49,505
	IRR	2.09%	1.94%	1.77%

In the above illustration the IRR Benefit @ 8% for Higher Income results in t 6.54%, Balanced Benefit – 6.84%, and Higher Maturity – 7.27%.

The IRR Benefit @ 4% in the above illustration at Higher Income is resulting in 2.09%, Balanced Benefit -1.94%, and Higher Maturity – 1.77%.

From the above benefit illustration, we can infer the following factors.

The higher the allocation to regular income, the lower the final Maturity Amount.

The Maturity Amount is payable only at the end of the Policy Term i.e., completion of 99 years of age. So, unfortunately, this amount can’t be used for your personal spending.

There is no guaranteed regular income & Maturity Benefit as it is a participating policy. Each year the income benefit differs based on the rate declared.

The IRR under the 8% scenario seems good. But as we discussed earlier the final Maturity Amount will not be any of use. As long as you survive, you receive regular income & Death Benefit will be given to your nominee. No chance of receiving the final Maturity Amount at the age of 100 years. It is just notional.

Also, there is no guarantee of income benefit. The amounts mentioned here are based on the assumed rate of return.

A life insurance cover for 100 years is not required if you have a proper Financial Plan in hand. A goal-based investment portfolio will take care of your financial needs.

Retirement corpus & sufficient health insurance will take care of your Post-Retirement Period. So, a Life Cover till the age of 100 years is a big question mark at this point.

i) Bajaj Allianz Life ACE vs. Bajaj Allianz Life Flexi Income Goal

The ‘Bajaj Allianz Life Flexi Income Goal’ Plan offers either recurring or lump sum income, depending on your preference. You can find the complete review of this plan here.

ii) Bajaj Allianz Life ACE vs. Bajaj Allianz Life Long-life Goal
‘Bajaj Allianz Life Long-life Goal’ guarantees you a continual income stream that will support your lifestyle during your retirement. Please read the complete review here.

15. Final Verdict On Bajaj Allianz Life ACE – Good Or Bad?

Modern life insurance policies come with flexible features. One such policy is Bajaj Allianz Life ACE where you have the flexibility in designing your plan. This feature looks attractive at the same time you may get confused & there is a high chance of selecting an inappropriate plan option.

Bajaj Allianz Life ACE is a normal endowment Whole life policy decorated with fancy frills. End of the day, it is a participating life policy & there is no guaranteed return. This is an insurance cum investment product where neither is beneficial to the investor.

But still, insurance agents would push you into this trap for their own high agent commission. Please beware!

By following the words of Warren Buffet, don’t invest in anything that you don’t understand. Do your research before investing. Many investors often end up investing in the plan just by the words of agents or relatives & friends.

Always have adequate life insurance & health insurance separately. Build a goal-based investment portfolio based on your risk appetite. If you have any difficulties, instead of searching for answers on social media platforms like Quora, Facebook, Twitter, etc… You can consult a Financial Planner for professional guidance.