Are you concerned about life goals?
Life is simple when there is certainty in the financial goals. Certainty in financial goals can be achieved with a proper investment plan.
Bajaj Allianz offers a plan with guaranteed return & life cover. Let us analyze whether this endowment plan helps to achieve your life goals or not.
What are the advantages(pros) and disadvantages(cons) of this ‘Bajaj Allianz Life Guaranteed Income Goal’ plan?
We are going to review this plan with the help of policy details in the official brochure, we are also going to calculate the Internal Rate of Return of this plan and find if this Bajaj Allianz Life Guaranteed Income Goal plan is good or bad for beating inflation.
Table of Contents:
1.) An overview of Bajaj Allianz Life Guaranteed Income goal
2.)Features of Bajaj Allianz Life Guaranteed Income goal Analysis
3.)Eligibility Criteria of Bajaj Allianz Life Guaranteed Income Goal Analysis with Illustration
4.) Review of Benefits under Bajaj Allianz Life Guaranteed Income Goal
5.) How to Cancel/Surrender Bajaj Allianz Life guaranteed Income Goal Plan? An Analysis
6.) Advantages(pros) of Bajaj Allianz Life Guaranteed Income Goal – Analysis
7.) Disadvantages(cons) of Bajaj Allianz Life Guaranteed Income Goal – Analysis
8.) Research Methodology on Bajaj Allianz Life Guaranteed Income Goal Analysis
9.) Benefit Illustration and IRR(Internal Rate of Return i.e. Interest Rate) of Bajaj Allianz Life Guaranteed Income Goal
10.) Bajaj Allianz Life Guaranteed Income Goal vs. Other Investments
11.)Bajaj Allianz Life Guaranteed Income Goal Vs. Bajaj Allianz Life Long-life Goal Plan – Review
12.)Bajaj Allianz Life Guaranteed Income Goal Vs. Bajaj Allianz Life Smart Wealth Goal (Wealth Variant Plan) – Review
13.)Bajaj Allianz Life Guaranteed Income Goal Vs. Other Investment Options – Review Conclusion
14.)Final Verdict on Bajaj Allianz Life Guaranteed Income Goal Good or Bad?
An overview of Bajaj Allianz Life Guaranteed Income goal:
It is a Non-Linked, Non-Participating, Endowment Life Insurance Plan. It offers guaranteed returns along with life cover. The guaranteed returns are in the form of Regular income or Lumpsum amount at the time of maturity. The life cover can be extended beyond the policy term.
You can refer to the Bajaj Allianz Life Guaranteed Income goal official brochure(pdf) for more Policy Details.
Features of Bajaj Allianz Life Guaranteed Income goal:Analysis
- The policyholder has Multiple Policy Terms & Premium Payment Terms to choose from.
- Extend the Life cover (ELC) – Option to extend your Life Cover beyond your Policy Term.
- Guaranteed benefit in the form of Income or lumpsum amount. The income benefit can be increased at a predefined percentage every year.
- Riders will enhance the life cover.
Eligibility Criteria of Bajaj Allianz Life Guaranteed Income Goal: Analysis with Illustration
|Minimum Entry Age||6 years|
|Maximum Entry Age||60 years|
|Minimum Age at Maturity||18 years|
|Maximum Age at Maturity||72 years. The maximum maturity age does not include the ELC, if opted for or Income Period.|
|Maximum Age for termination of life cover (if ELC is opted)||84 years|
|Minimum Sum Assured||1,00,000|
|Maximum Sum Assured||Based on Board Approved Underwriting Policy|
|Premium Payment Frequency||Yearly, Half yearly, Quarterly and Monthly (Quarterly & Monthly – Auto debit)|
|Policy term||Premium paying term|
|Lump sum benefit|
|10||5, 7, 10|
|12||5, 7, 8, 12|
|15||5, 7, 8, 10, 12|
|20||5, 7, 8, 10, 12|
|10||5, 7, 10|
|12||5, 7, 12|
|Lump sum benefit||22855||11656||5942||2057|
Review of Benefits under Bajaj Allianz Life Guaranteed Income Goal:
Death benefit: Review
Under Lump-sum Benefit: Analysis
If the policyholder passes away during the policy term the Sum Assured on death, as of the date of death shall be payable to the nominee.
Death Benefit during the ELC Period (only if chosen) (ELC Period is after the policy term) is the Sum Assured on Death as on the date of death.
You can find the Bajaj Allianz Death Claim form (pdf) here.
Under Income Benefit : Analysis
The nominee will receive the Sum Assured on death as on the date of death of the policyholder.
Death Benefit during the pay-out period, if ELC is chosen then the Sum Assured on Death will be paid. If ELC is not chosen, then the remaining income benefit will be paid. The policy will terminate on payment of the last Income benefit.
Sum Assured on Death payable will be the highest of the following:
- 10 times Annualized Premium
- 105% of Total Premiums paid as of the date of death
- Sum Assured
Extended Life Cover (ELC): Analysis
The ELC will begin on the Maturity Date and last for as long as the PPT, plus an ELC Period. The amount of risk covered during the ELC Period is equal to the Sum Assured on Death.
ELC option under lump sum benefit – on the death of the Life Assured, the Sum Assured on Death will be paid and the Policy will terminate.
ELC option under Income benefit – on the death of the Life Assured, the Sum Assured on Death will be paid, the risk cover will terminate immediately and the Policy will terminate on the payment of the last Income benefit.
Guaranteed maturity benefit: Review
Under Lump-sum Benefit: Analysis
Once the policyholder pays off all the premiums, then the Guaranteed Maturity Benefit shall be paid as a lump sum. The Guaranteed Maturity Benefit will be a percentage of the policyholder’s Sum Assured. The guaranteed enhancer percentage depends on the premium paying term & policy term.
Under Income Benefit: Analysis
On the maturity date, if all premiums are paid, your Guaranteed Maturity Benefit will be paid in yearly, half-yearly, quarterly or monthly instalments (as chosen by you at the inception of the policy).
These are called Guaranteed Maturity Instalments (GMI) and will be paid at the end of the GMI year for a period equal to your Premium Payment Term (PPT).
Review of Other Benefits of Bajaj Allianz Life Guaranteed Income Goal: Analysis
- Bajaj Allianz Accidental Death Benefit Rider (UIN:116B034V02)
- Bajaj Allianz Accidental Permanent Total/Partial Disability Benefit Rider (UIN:116B036V02)
- Bajaj Allianz Critical Illness Benefit Rider (UIN:116B035V02)
- Bajaj Allianz Family Income Benefit Rider (UIN:116B037V02)
- Bajaj Allianz Waiver of Premium Benefit Rider (UIN: 116B031V02)
A loan facility is available provided that your policy has acquired a surrender benefit.
As a Bajaj Allianz Life Guaranteed Income Goal policyholder you are eligible for Tax Exemption according to the Section 80C of the Income Tax Act of India.
Review of Grace period, Discontinuance & Revival of Bajaj Allianz Life Guaranteed Income Goal
Grace period: Analysis
A grace period of 30 days for yearly, half-yearly & quarterly premium payment frequency and 15 days is available for monthly premium payment frequency from the due date of Regular Premium payment is allowed.
If you have not paid the First 2 years’ premium – Then, your policy will immediately and automatically lapse at the expiry of the grace period and no benefit will be payable under the policy.
If you have paid at least the First 2 years’ premium – Then Your policy will be immediately and automatically converted to a paid-up policy and the sum assured & sum assured on death & the GMIs under the policy will be automatically reduced, respectively, to the paid-up sum assured, paid-up sum assured on death & paid-up GMIs.
You can revive your lapsed or paid-up policy within five (5) years from the due date of the first unpaid premium, before the Maturity Date.
How to Cancel/Surrender Bajaj Allianz Life guaranteed Income Goal Plan? An Analysis
Free Look Period: Analysis
Option to return the Policy if you disagree with any of the terms and conditions, within fifteen (15) days of the receipt of this Policy and thirty (30) days in case of the policy is purchased through online or telemarketing mode.
If at least two (2) full years’ premiums have been paid the policy can be surrendered anytime during the Policy Term under Lumpsum benefit and anytime up to the end of the GMI period under Income benefit.
The surrender benefit will be higher than the Guaranteed Surrender Value (GSV) or the Special Surrender Value (SSV).
GSV factor depends on premium paying term & policy term.
Advantages(pros) of Bajaj Allianz Life Guaranteed Income Goal: Analysis
- The benefits are guaranteed & can be received as per convenience.
- Option to extend the life cover after the policy term.
- The income benefit can be a step-up income year after year to meet the growing needs.
Disadvantages(cons) of Bajaj Allianz Life Guaranteed Income Goal: Analysis
- The lock-in period is 2 years for the surrender & Loan facility.
- The investment return is comparatively low.
Research Methodology on Bajaj Allianz Life Guaranteed Income Goal: Analysis
Till now we have seen all the details on Bajaj Allianz Life Guaranteed Income Goal. Now let’s do the research analysis on the IRR of Bajaj Allianz Life Guaranteed Income Goal by using Bajaj Allianz Life Online Calculator to see how it can benefit us.
In this research, first, we are going to calculate the IRR of the Bajaj Allianz Life Guaranteed Income Goal.
Then we are going to use the same values to calculate how much return we can get from other investments.
And finally, we can see the outcome by comparing the result of Bajaj Allianz Life Guaranteed Income Goal with other investments.
It can surely help us to decide whether to buy Bajaj Allianz Life Guaranteed Income Goal or not.
Benefit Illustration and IRR(Internal Rate of Return i.e. Interest Rate) of Bajaj Allianz Life Guaranteed Income Goal:
|Policy term||15 years|
|Premium paying term||12 Years|
|Bajaj Allianz Life Guaranteed Income Goal|
|Age||Year||Annualised premium / Maturity benefit||Death benefit|
In the above illustration, the IRR(Internal Rate of Return i.e. Interest Rate) of Bajaj Allianz Life Guaranteed Income Goal is calculated at 5.43%.
At the end of the policy term, a lumpsum amount of Rs. 30.25 lakh is receivable. But the IRR is calculated to be only 5.43% which is similar to any Bank FD rate.
Locking funds for a long period at this rate is not advisable. The return on investment will be eaten away by inflation & won’t be sufficient to meet any of your dreams.
Bajaj Allianz Life Guaranteed Income Goal vs. Other Investments:
In the Bajaj Allianz Life Guaranteed Income goal, the potential rate of return is less compared to another investment vehicle.
If we invest the same amount in any other equity or debt vehicle then the capital appreciation would be better.
Since the policy has a life cover, we can take a pure term life cover for the same period & invest separately in an appropriate asset class for growth.
Bajaj Allianz Life Guaranteed Income Goal Vs. PPF Vs. ELSS:
The annual premium invested in Bajaj Allianz Life Guaranteed Income Goal is Rs. 1,50,000. This amount can be divided and invested in a Pure Term for life cover of Rs 15 Lakhs for a period of 15 years and PPF or ELSS.
The premium for the pure term is Rs. 7500. The balance amount of Rs. 142500 can be invested either in PPF or ELSS based on the investor’s risk appetite & time horizon.
|Term Insurance + PPF||Term insurance + ELSS|
|Age||Year||Term Insurance premium + PPF||Death benefit||Term Insurance premium + ELSS||Death benefit|
The IRR of Term Insurance + PPF is calculated at 6.47% and the IRR of Term Insurance + ELSS is calculated at 9.73%.
All the metrics like premium paying term, Annual cash outflow are assumed similar to Bajaj Allianz Life Guaranteed Income goal. But consider taking a pure term with adequate life cover (here, the life cover is just Rs. 15 lakhs).
The IRR works out to be 6.47% for PPF & 9.73% for ELSS. These are better than Bajaj Allianz Life Guaranteed Income Goal & inflation beating one as well.
Bajaj Allianz Life Guaranteed Income Goal Vs. Bajaj Allianz Life Long-life Goal Plan – Review
‘Life Guaranteed Income Goal’ is a Non-Linked, Non-Participating, Endowment Life Insurance Plan whereas ‘Life Long-life Goal Plan’ is a Non-participating, Life, Individual, Whole Life, Unit-Linked, Regular Premium Payment, and Endowment plan.
Bajaj Allianz Life Guaranteed Income Goal Vs. Bajaj Allianz Life Smart Wealth Goal (Wealth Variant Plan) – Review
‘Life Smart Wealth Goal -Wealth Variant Plan’ is a Unit-Linked, Non-Participating, Life Insurance Plan.
Read the complete review below in which we have dissected the good and bad aspects of this policy in detail.
Bajaj Allianz Life Guaranteed Income Goal Vs. Other Investment Options – Review Conclusion
As we have discussed earlier,
A lump sum payment in the amount of Rs. 30.25 lakh is due at the conclusion of the policy period. However, the IRR is only estimated to be 5.43%, which is comparable to any bank FD rate.
Term insurance plus PPF has an IRR of 6.47% and term insurance plus ELSS has an IRR of 9.73%. These are without a doubt superior to Bajaj Allianz Life’s Guaranteed Income Goal and also inflation-beating investment option.
So it is clear that taking Term Insurance for Life cover and investing separately in PPF or ELSS is a far better investment option.
Final Verdict on Bajaj Allianz Life Guaranteed Income Goal: Good or Bad?
Bajaj Allianz Life Guaranteed Income Goal is an endowment life insurance policy with additional features such as Regular Income & Extended Life Cover.
But at the end of the day, the investor earns a very meager amount in terms of capital appreciation or regular income. The life cover is also not adequate.
So, like many policies in the bazaar, Bajaj Allianz Life Guaranteed Income Goal neither serves the purpose of life insurance coverage adequately nor serves as a good investment option for wealth accumulation.
But still, insurance agents will try to lure you into Bajaj Allianz Life Guaranteed Income Goal Policy for their agent commission. Please Beware!
A pure-term policy will protect your family when you are not around. It provides high coverage at the cost of an affordable premium.
Investors should understand the importance of pure-term life insurance which is hardly sold by any agents.
Investors shouldn’t get trapped in any of the traditional life insurance policies because they give neither insurance nor good returns.
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