Retirement life is the second inning of our life.
We need to stay financially prepared so that our lifestyle goals are not compromised in this phase of life.
Will Bajaj Allianz Life Guaranteed Pension Goal Plan will help you to maintain your lifestyle?
Let us take a deep look at this plan and conduct a comparative analysis of Bajaj Allianz Life Guaranteed Pension Goal with other Investment Avenues available in the market.
Table of Contents:
1.) What is Bajaj Allianz Life Guaranteed Pension Goal Plan?
2.) Features of the Bajaj Allianz Life Guaranteed Pension Goal Plan
3.Annuity plans of the Bajaj Allianz Life Guaranteed Pension Goal Plan in detail
4.) Eligibility Criteria of the Bajaj Allianz Life Guaranteed Pension Goal Plan
5.) Advantages of the Bajaj Allianz Life Guaranteed Pension Goal Plan
6.)Disadvantages of the Bajaj Allianz Life Guaranteed Pension Goal Plan
7.) A Grace Period, Revival & Paid-up of the Bajaj Allianz Life Guaranteed Pension Goal Plan
8.)Free Look Period of the Bajaj Allianz Life Guaranteed Pension Goal Plan
9.) Surrendering the Bajaj Allianz Life Guaranteed Pension Goal Plan
10.) Research Methodology
11.) IRR of the Bajaj Allianz Life Guaranteed Pension Goal Life Plan
12.)Bajaj Allianz Life Guaranteed Pension Goal Plan Vs Other Investment
13.)Final Verdict of the Bajaj Allianz Life Guaranteed Pension Goal Plan
It is a Non-Linked, Non- Participating, Deferred & Immediate Annuity plan.
The Bajaj Allianz Life Guaranteed Pension Goal Plan offers guaranteed income throughout life. There is a wide range of annuity options.
The annuity period starts as per your choice either immediate annuity (Single pay) or Deferred annuity (Limited / Regular pay).
- Option to take a Joint life annuity with 50% or 100% annuity payable to your spouse after your death.
- Your annuity amount is guaranteed at policy inception and is paid regularly as per your choice and need (Yearly/Half-yearly/Quarterly/Monthly).
- Choose from a wide range of Annuity options (Nine options) to meet your requirement.
- Option to receive Return of Purchase Price (ROP) on death or as Survival Benefit.
Annuity option available for all channels (excluding POS channel):
|Immediate Annuity||Deferred Annuity (Single Pay)||Deferred Annuity (Regular Pay)|
|B||Life Annuity with ROP on death||✔||✔||✔|
|C||Annuity Certain (5/10/15/20 yrs.) and life thereafter||✔||✖||✖|
|D||Joint Life Last Survivor with 50% of Annuity to spouse||✔||✖||✖|
|E||Joint Life Last Survivor with 100% of Annuity to spouse||✔||✖||✖|
|F||Joint Life Last Survivor with 100% of Annuity to spouse & with ROP on the death of Last Survivor||✔||✔||✖|
|G||Life Annuity with ROP on death or survival||✔||✔||✖|
|H||Life Annuity with ROP on death or in instalments on survival||✔||✔||✖|
Life Annuity: Annuity – Throughout life
Life Annuity with return of purchase price: Annuity – Throughout life & on death purchase price will be returned to your nominee
Annuity Certain & Life thereafter – Annuity – Certain period 5/10/15/20 years. Death during annuity certain period – Annuity Instalments will be paid to your nominee.
Joint Life Survivor with 50% of Annuity to Spouse: Annuity – Throughout life & on death your spouse will receive 50% of the prevailing Annuity throughout his/her life.
Joint Life Last Survivor with 100% of Annuity to spouse: Annuity – Throughout life & on death your spouse will receive 100% of the prevailing Annuity throughout his/her life.
Joint Life Last Survivor with 100% of Annuity to spouse & with Return of Purchase Price (ROP) on the death of Last Survivor: Annuity – Throughout life & on death your spouse will receive 100% of the prevailing Annuity throughout his/her life. On the death of the last survivor, the purchase price will be returned to your nominee.
Life Annuity with Return of Purchase Price (ROP) on death or survival: Annuity – Throughout life and on additionally on the policy anniversary after the 25th policy year or the policy anniversary after attaining Age 85 (whichever 2 is later), the Purchase Price will be returned to you as Survival benefit with annuity continuing subsequently.
- Option H
Life Annuity with Return of Purchase Price (ROP) on death or in instalments on survival: Annuity – Throughout life and additionally, starting from the policy anniversary after the 15th Policy Year or the policy anniversary after 2 attaining Age 70 (whichever is later), Survival benefit would be payable to you at each policy anniversary in instalments as per the Annuity payment frequency with Annuity continuing subsequently.
- Option I
Family Pension: (Only for NPS subscribers): If the NPS subscriber has a spouse/spouse is alive – The annuity will be payable as per the Annuity option, Option F and if his/her spouse is not alive – Annuity will be payable as per the annuity option, Option B. On the death of both the policyholder and spouse, the purchase price of this plan shall be used to purchase an Annuity under Option B, on the dependent mother/father whoever is alive.
An annuity will be payable to you on each Annuity instalment date according to the Annuity payment frequency opted for by you at the inception of the policy.
An annuity will be payable to you on each Annuity instalment date, post-completion of the Deferment period, and according to the Annuity payment frequency opted by you at the inception of the policy. On death during the Deferment period, an amount equal to the Purchase price plus attached Guaranteed Additions, subject to a minimum of 105% of Total Premiums paid, shall be paid to your nominee.
Let us take a look at the basic information we need to know about entering this plan at a glance below;
|Immediate Annuity||Deferred Annuity|
|Minimum Age at entry||30 years||45 years|
|Maximum Age at entry||85 years||84 years|
|Minimum Annuity||Yearly -12,000|
|Half-yearly – 6,000|
|Quarterly – 3,000|
|Monthly – 1000|
|Maximum Annuity||No Limit|
|Purchase Price||As per the prevailing Board Approved Underwriting Policy|
|Premium paying Term||Single premium||Single/Regular/ Limited Pay|
|Minimum – 5 Years|
|Maximum – 10 years|
|Modes of Payment of Premium||Not Applicable||Yearly, half-yearly, quarterly, monthly|
|Deferment Period||Not Applicable||Single premium – 1 year|
|Regular/ Limited premium – PPT Chosen / 10 years|
|Pension Mode||Yearly, half-yearly, quarterly, monthly||Yearly, half-yearly, quarterly, monthly|
- You can customize it as per your requirement. Both the Premium paying term (Accumulation phase) & Annuity period (Distribution Phase) can be customized.
- Guaranteed income throughout your life.
- Option to pay Top-up Premiums any time after the Policy Commencement Date under the existing Immediate or Deferred Annuity Policy.
- At any policy anniversary, Annuity payment frequency can be changed.
- During the deferment period, Guaranteed Additions will be added to the Policy at the end of every month. (Applicable only for deferred Annuity).
- Annuity can’t be relied on as the only source of income. It can be counted as an additional source of income.
- The annuity amount is fixed throughout your life & not adjusted to inflation.
- Some of the annuity options are available only for Immediate annuity & Single pay deferred annuity.
- Annuity rate prevailing at the time of inception will be locked.
- Annuity is taxable as per your slab rate.
For more details, you can refer to the Bajaj Allianz Life Guaranteed Pension Goal Policy Brochure.
A Grace Period, Revival & Paid-up of the Bajaj Allianz Life Guaranteed Pension Goal Plan
The below information is only applicable under the Deferred Annuity – Limited / Regular pay options.
The grace period is 30 days for payment frequencies other than a monthly mode of payment and 15 days for a monthly frequency mode of payment.
Revival can be done within five (5) years of the due date of the first unpaid Premium and before the end of the Deferment Period.
If you have not paid at least two full years’ Premiums, the Policy will be converted to a lapsed Policy at the end of the grace period, and no benefit will be payable.
If you have paid at least two full years’ Premiums, and subsequent Premiums have not been paid, your Policy will be converted to a Paid-up Policy at the end of the grace period.The annuity will be a converted to paid-up annuity.
If the policyholder disagrees with any of the terms & conditions, he/she will have the option to return the Bajaj Allianz Life Guaranteed Pension Goal Policy Within 15 days of the date of receipt of the policy.
The Free Look Period will be extended up to 30 days in case the policy was bought online or through distance mode.
For Immediate Annuity – The Surrender Value will be the Special Surrender Value (SSV)
For Deferred Annuities,
- On surrender during the deferment period – the Surrender Value will be higher than the Guaranteed Surrender Value (GSV) or the Special Surrender Value (SSV).
- On surrender after the deferment period- the Surrender Value will be the Special Surrender Value (SSV).
Surrender Value is applicable –
Under Annuity Options B, F, G, H & I during the Annuity period (for immediate and deferred Annuity).
All annuities during the deferment period (under deferred Annuity).
Estimating the internal rate of return will help you to find out the suitability of the Bajaj Allianz Life Guaranteed Pension Goal Plan for the long-Term.
After estimating the IRR, we can compare it with other investment avenues to see if there are other instruments available in the market that will provide us with a better return than the Bajaj Allianz Life Guaranteed Pension Goal plan. After the IRR & Comparative Analysis, you can make an informed decision on your investments.
The Assumptions for Comparisons
|Premium Paying Term||Single pay|
|Purchase Price||25 Lakhs|
|Assumed Life Expectancy||85 years|
The illustration below is worked out for a 50-year-old male. The purchase price under a Single premium is Rs. 25 Lakhs. The annuity frequency chosen in the example below is for the Yearly mode.
Let us work out the IRR for Immediate & Deferred annuity under Plan options A & B. Let us assume the Life Expectancy for the Life insured as 85 years.
|Immediate Annuity||Deferred Annuity (Deferment period – 10 Years)|
|Age||Year||Option A Life Annuity||Option B Life Annuity with ROP||Option A Life Annuity||Option B Life Annuity with ROP|
We can infer from the above table that the IRR under any option hovers around 6 – 6.7% which is equivalent to the bank FD rate (for non-senior citizens).
The post office schemes offer better returns than this rate of return. Here one more point to be noted is that the Bajaj Allianz Life Guaranteed Pension Goal Plan locks your fund for a lifetime.
In the raising interest scenario, this is a major roadblock to your finances. You may lose other Better Investment Opportunities.
Bajaj Allianz Life Guaranteed Pension Goal Plan offers mediocre returns at best. Let us look for other investment avenues where you can get a regular payout. We can consider other fixed-income securities like Senior Citizen Savings Scheme (SCSS) & RBI Floating Rate Bonds.
|Annuity||SCSS||RBI floating rate Bond|
|Interest Rate (As on Feb 2023)||6 – 6.7%||8%||7.35%|
|Tenure||Perpetual||5 years||7 years|
|Frequency of Pay-out||Yearly, half-yearly, quarterly, monthly||Quarterly||Half-yearly|
|Maximum Investment Amount||No Limit||Rs. 30 Lakhs||No Limit|
|Taxation||Fully Taxable||Exempt up to Rs. 50 K as Per Sec 80 TTB||Fully Taxable|
|Premature Withdrawal||Surrender||Allowed||Allowed (For Senior citizens)|
|Return on the Purchase price (Investment Amount)||Only if opted||Returned at the end of Tenure|
By inferring the table, it is evident that there are other better alternate investments in terms of return & liquidity.
Especially during your retirement period, factors like;
- Cash flow
- Rate of Return
Everything should be considered before investing.
So, if you consider all these factors, then the Bajaj Allianz Life Guaranteed Pension Goal wouldn’t be the right choice to be chosen as an Investment Choice in your Retirement Period.
The above analysis clearly shows that the Bajaj Allianz Life Guaranteed Pension Goal Plan is a hassle-free investment. But from the Interest & liquidity perspective, it is unfit to be in your retirement portfolio.
Unforeseen medical expenses are common in old age. Moreover, the inflation rate is soaring. To combat inflation, the retirement portfolio should be well diversified.
These types of annuity plans will not diversify your portfolio & will not yield an inflation-adjusted return in the long run. The retirement corpus should be invested in a well-diversified portfolio & rebalance at regular intervals.
The pragmatic approach is investing the corpus in equity to beat inflation & invest in debt instruments for regular cash flow. After regular withdrawals from debt, it can be refilled from your equity portfolio. The corpus will outlive you in this pragmatic approach.