“You can’t afford to go wrong when it comes to planning for one’s Life Goals…”
It is a compelling statement from the Bajaj Allianz Goal Assure policy brochure.
Well, I agree!
And it is exactly why I chose to review this policy. After all the ULIP policy is suggesting Goal Assurance in its name.
Can the Bajaj Allianz Goal Assure help you achieve your goals optimally?
Table of Contents:
Bajaj Alliance Life Goal Assure is a Unit Linked Insurance Plan (ULIP). And this Bajaj Allianz Goal Assure review is probably the most detailed one with illustrations and examples.
So let’s start with…
Key features of Bajaj Alliance Life Goal Assure
The table below shows the key features and the eligibility criteria for the Bajaj Allianz Goal Assure policy.
The other notable features of the Bajaj Allianz Goal Assure policy are:
Option to reduce the premium amount—after the completion of the 5year lock-in period.
Option to change the premium paying term—after the completion of the 5year lock-in period.
Option of partial withdrawal—with certain restrictions as mentioned in the policy document.
Option to top-up your premium—in the form of a lump-sum payment.
Option to reduce your Sum Assured—provided it is not lesser than 10x of your annual premium.
On surviving the policy term, all the mortality charges will be paid back on policy maturity.
Option to receive maturity benefits in instalments—over a maximum period of 5 years.
Read more about the Bajaj Allianz Goal Assure in the official policy brochure pdf in detail.
Funds of Bajaj Allianz Life Goal Assure Policy:
The Bajaj Allianz Goal Assure policy offers 8 different fund options with varying return-risk levels.
The funds in this policy are listed below.
There is also the feature of a fund booster in this policy.
The fund booster is that, at the time of maturity, the insurer will pay a non-guaranteed bonus under certain conditions.
If your policy premium is ₹5 lakh p.a. or above with the policy term 10 years or more, your policy will be eligible for loyalty additions.
Investment Strategies of Bajaj Allianz Goal Assure:
This policy gives you the option to choose from four portfolio investment strategies. Your premiums will be invested according to the portfolio investment strategy that you have chosen. The four portfolio investment strategies that you can choose from are:
- Investor Selectable Portfolio Strategy
- Wheel of life Portfolio Strategy
- Trigger Based Portfolio Strategy
- Auto Transfer Portfolio Strategy
Investor Selectable Portfolio Strategy:
Under the Investor Selectable Portfolio Strategy option, you can choose to invest your premium in any of the 8 funds available. No specific investment strategy will be employed by the policy in this option.
Wheel of life Portfolio Strategy:
In the Wheel of Life portfolio strategy, your premiums will be invested across equity and debt fundsbased on years to maturity.
If the years to maturity is higher, a higher allocation is given to the equity funds and vice versa. This helps in reducing the portfolio volatility as the policy nears maturity.
Trigger Based Portfolio Strategy:
In the Trigger-based portfolio strategy, your investments will follow a fixed 75%: 25% asset allocation ratio. That is 75% towards Equity Growth Fund II, and 25% towards the Bond fund.
Whenever the equity allocation increases by 15%, the asset allocation will be rebalanced.
By rebalancing periodically, this strategy helps book profit by moving fund from the high-risk equity fund to the low-risk Bund fund.
Auto Transfer Portfolio Strategy
In the auto-transfer portfolio investment strategy your premium is invested in a low-risk bond or liquid fund. And at the beginning of every month, the money in the low-risk fund will be transferred to a high-risk/high-return fund of your choice systematically.
You can switch from your selected portfolio investment strategy to another portfolio investment strategy during the term of your policy.
Benefits Review of Bajaj Allianz Life Goal Assure Policy:
Since the Bajaj Allianz Goal Assure is an investment insurance policy.
The benefit can be either the death benefit or the maturity benefit. Let’s see what’s inside each of these benefit alternatives?
The nominee will receive the death benefit in case of the policyholder’s demise while the policy is active.
The death benefit will be the higher sum assured in the policy or the fund value on that date.
Suppose you take a Bajaj Allianz Life Goal Assure policy with a policy term of 15 years. Your premium payment term is 10 years. And your annual premium is ₹1,00,000. Your assured benefit is likely to be 10 times the annual premium. I.e., the Sum Assured will be ₹10 Lakhs.
Maturity Benefits Review of Bajaj Allianz Goal Assure:
On surviving the policy term, you will receive the maturity value of your policy.
The maturity value will be the fund value of the policy as of maturity date.
For example, let’s assume that you buy the Bajaj Allianz Goal Assure policy. The policy term is 15 years with a 10-year premium paying term. And you are paying ₹1 lakh per annum as the policy premium for a life cover of ₹10 lakhs.
We shall assume that your fund choice gives an 8% CAGR—as suggested in the official policy brochure. In that case, the maturity benefit at the end of 15 years will be ₹19,28,142.
It looks pretty straightforward. However, if we calculate the actual return from the policy, things get complicated.
The table below shows the actual net IRR from Bajaj Allianz Goal Assure policy in the hand of the investor. I.e., it accounts for the different hidden charges levied on your premium amount and the fund value over the years.
For an 8% fund return, your policy will give you a return of only 5.92%.
It is often even lesser since the IRR calculation here has accounted only for the Policy administration charge and the fund management charge.
If we include the risk charge, other miscellaneous charges, and the 18% GST on all the charges, it will be significantly lesser than 5.92%.
Hidden charges are one of the most misleading and unattractive features of Bajaj Allianz Life Goal Assure or any other ULIP.
Charges under Bajaj Allianz Life Goal Assure:
You should also note that, even though ULIPs have tax benefits, and 18% GST is levied on all the charge deductions. And it shall be payable from the hands of the investor.
Taxation of Bajaj Allianz Goal Assure:
Premium payments up to ₹1.5 Lakhs per annum is exempt from income tax u/s 80C.
The entire maturity benefit from Bajaj Allianz Goal Assure is exempt under section 10(10D). However, this exemption is applicable only if the annual premium is less than ₹2.5 Lakhs—per The Financial Act 2021.
In case the annual premium is over₹2.5 Lakhs, 10% LTCG tax will be levied on the capital gains—with an exemption on ₹1 lakh of the capital gains.
On the other hand, the Sum Assured for the death benefit is entirely exempt from income tax u/s 10(10D)
Comparison of Bajaj Allianz Goal Assure against PPF:
Before making any long-term investment or financial decision you should do some comparison checks.
Let’s compare the investment aspect of Bajaj Allianz Goal Assure against PPF. Since PPF does not offer life cover, like the Goal Assure plan, you can buy a term insurance plan for the same sum assured for a far lesser premium.
For example, the annual premium for a life cover of ₹10 lakhs of a term insurance policy will be lesser than ₹5000 per annum.
Public Provident Fund is an investment instrument offered by the Govt. of India giving guaranteed returns. The current interest rate of PPF is set at 7.1% p.a.
Investments in PPF also has the same benefit of tax exemption u/s 80C up to ₹1.5 lakh per annum.
The table below shows the return from PPF for the same investment amount, for the same investment period as shown in the policy illustration.
The return from PPF is more than ₹1 lakh higher than the return from Bajaj Allianz Goal Assure as shown in the illustration earlier.
Also, there turn from PPF is guaranteed and are entirely exempt from income tax. On the other hand, there is no guarantee of the return that you will generate on your Bajaj Allianz Life Goal Assure policy. You may end up getting a return as low as 4% or even lower. Also, the returns that you will get on PPF are exempt from taxation.
Comparison of Bajaj Allianz Goal Assure against ELSS Mutual Fund:
ELSS mutual funds are equity-linked funds that invest shares.
As an alternate option to the Goal Assure plan, you can choose a mix of term life insurance policy and ELSS Mutual Fund.
Equity mutual funds on average offer 12%-15% CAGR. Assuming a conservative 12% CAGR, the potential return from an ELSS mutual fund is shown in the table below.
You can see that the ₹34 Lakh return from the ELSS fund is almost ₹15 lakhs more than the Bajaj Allianz Goal Assure plan.
Even more, interestingly enough, ELSS mutual funds do not have any hidden charges. Hence, the return you see is what you get.
Additionally, ELSS mutual funds have a lock-in period of only 3 years. Whereas, Bajaj Allianz Life Goal Assure has a lock-in period of 5 years.
ELSS mutual funds have the same tax benefit as the Bajaj Allianz Goal Assure u/s 80C. Investments up to ₹1.5 lakh per annum is exempt from income tax.
However, the returns from the ELSS mutual funds are not entirely tax-free. Even if the investment is below ₹1.5 lakhs per annum. And the capital gains are taxed at 10% for the long term gains.
Should this make a difference to an investor?
Let’s find out!
Capital Gains on your ELSS investment are tax-exempt to the limit of ₹1 lakh in a financial year. Capital Gains over and above ₹1 lakh are taxed at 10%.
The table below shows the post-tax return from the ELSS mutual fund investment.
Even with LTCG tax @ 10%, ELSS mutual funds deliver a far higher return than the Bajaj Allianz Goal Assure policy—₹13 lakh more return. And the risk involved is the same as the policy.
And to be fair, with the implementation of ‘The Finance Act 2021’, the tax treatment of ULIP plans and ELSS Mutual Funds are not much different from each other. It is explained above under the Taxation of Bajaj Allianz Goal Assure
The fact is very clear now. Almost all of the time, ULIP policies are affecting your investment portfolio, instead of helping it.
So what is the verdict?
Do not go for the Bajaj Allianz Life Goal Assure policy.
There is no guarantee of the amount of maturity benefit that you will get. It is to compensate those who pay high premiums for the disappointment of earning a less than expected maturity benefit that the policy offers a fund booster.
If your risk tolerance is low, you can get guaranteed and probably higher returns by investing in a mix of PPF and term life insurance.
If you have higher risk tolerance you can get a much higher return by investing in a mix of term life insurance and ELSS.
How to Surrender your Bajaj Allianz Life Goal Assure Policy?
To surrender your Bajaj Allianz Goal Assure, you can directly contact any branch of Bajaj Allianz Life.
You may also call their customer service at 1-800-209-7272 (Toll-Free). Or you can send an email to firstname.lastname@example.org with your query.
During the Free-look period:
- If you have just bought the policy, you have the 15 day free-look period—since the date of purchase—to surrender your policy.
- Submit a surrender request with the original policy documents at any branch of Bajaj Allianz Life.
- On surrendering your policy, your life cover will cease and you will receive your premium back minus any underwriting charges.
- The free-look period is 30 days if you had bought the policy online or over telemarketing.
After the Free-look period:
- After the free-look period, you can surrender your Bajaj Allianz Goal Assure plan only after the completion of 5 year lock-in period.
- On surrendering, you will receive your fund value in the policy as on the surrender date.
- If you submit a surrender request during the lock-in period, your policy will become a paid-up policy.
- Your investments will be moved to the discontinued policy fund—earning a 4% return.
Your life cover will cease once you submit your surrender request. Hence it is wise to buy a term insurance plan before you submit the policy surrender request.
Here is a Cheat Sheet to Select the Best Term Insurance Plan.
You aim to achieve your financial goals—it’s not about who is paying the least amount of tax.
The only edge ULIPs, like the Bajaj Allianz Goal Assure, had was severely reduced by the Finance Act 2021. And you know that ELSS mutual funds deliver far better post-tax returns.
Get insured with a term insurance plan, assess your risk tolerance, and invest accordingly. You can achieve your financial goals faster than you expect.
If you have any comments or questions, write them in the comment box below.
Or are you interested in creating a Comprehensive Financial Plan for your financial goals?
Skip the queue by registering for your 30 Minute FREE Financial Plan Consultation. Click the ‘Register Now!’ button below.