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Is Guaranteed Savings with Bajaj Allianz Life Plan Really Guaranteed?
Does Bajaj Allianz Life Guaranteed Savings Plan deliver Guaranteed Savings or Guaranteed Erosion of Purchasing Power?
Could the Bajaj Allianz Life Guaranteed Savings Plan be that pivotal decision in your investment journey?
This detailed review delves into the features, costs, advantages, disadvantages, and potential returns of the Bajaj Allianz Life Guaranteed Savings Plan, including an IRR analysis. Let’s dive in and explore this plan in depth.
Table of Contents:
What is the Bajaj Allianz Life Guaranteed Savings Plan?
What are the features of the Bajaj Allianz Life Guaranteed Savings Plan?
Who is Eligible for Bajaj Allianz Life Guaranteed Savings Plan?
What are the benefits of the Bajaj Allianz Life Guaranteed Savings Plan?
Free Look Period of Bajaj Allianz Life Guaranteed Savings Plan
Surrendering Bajaj Allianz Life Guaranteed Savings Plan
What are the Advantages of the Bajaj Allianz Life Guaranteed Savings Plan?
What are the Disadvantages of the Bajaj Allianz Life Guaranteed Savings Plan?
Research Methodology of the Bajaj Allianz Life Guaranteed Savings Plan
Benefit Illustration – IRR Analysis of Bajaj Allianz Life Guaranteed Savings Plan
Bajaj Allianz Life Guaranteed Savings Plan Vs. Other Investments
Bajaj Allianz Life Guaranteed Savings Plan Vs. Pure term + ELSS
Final Verdict on Bajaj Allianz Life Guaranteed Savings Plan
What is the Bajaj Allianz Life Guaranteed Savings Plan?
Bajaj Allianz Life Guaranteed Savings Goal Plan is a non-linked, non-participating, individual life insurance, savings plan. Bajaj Allianz Life Guaranteed Savings Goal Plan offers you a life cover to secure your family along with the surety of a lumpsum on maturity through a single premium.
What are the features of the Bajaj Allianz Life Guaranteed Savings Plan?
- Get Guaranteed Maturity Benefits including Guaranteed Enhancer
- Choice of two Sum Assured options – Sum Assured (1.5 times the single premium) and Enhanced Sum Assured (10 times the Single Premium)
- Option to choose from multiple Policy Terms
- Higher Maturity Benefit for female lives
Who is Eligible for Bajaj Allianz Life Guaranteed Savings Plan?
| Minimum | Maximum | |
| Age at Entry | 0 | Sum Assured: 60 years Enhanced Sum Assured: 44/50 years |
| Age at Maturity | 18 | Sum Assured: 80/65 years Enhanced Sum Assured: 64/70 years |
| Premium | 25000 | As per Board |
| Premium Paying Term | Single Pay | |
| Policy Term | 5 to 20 years | |
| Sum Assured | Sum Assured: 1.5 times the Single Premium Enhanced Sum Assured: 10 times the Single Premium |
|
What are the benefits of the Bajaj Allianz Life Guaranteed Savings Plan?
i.) Maturity benefit
On survival of the Life Assured till the end of the Bajaj Allianz Life Guaranteed Savings Goal Plan Policy Term, provided the Policy is in force, a Single Premium * Guaranteed Enhancer (GE %), will be payable. The GE% will be based on your Age, chosen Sum Assured option, Policy Term and Single Premium paid.
ii.) Death benefit
At Bajaj Allianz Life Guaranteed Savings Goal Plan policy inception, you can choose from the below two Sum Assured options –
Enhanced Sum Assured – 10 times of the Single Premium
Sum Assured – 1.5 times of the Single Premium
Sum Assured on Death will be higher than:
- Sum Assured or Enhanced Sum Assured as chosen or
- Guaranteed Maturity Benefit
Free Look Period of Bajaj Allianz Life Guaranteed Savings Plan
If the Bajaj Allianz Life Guaranteed Savings Goal Plan Policyholder disagrees to any of those terms & conditions, he has the option to return the Bajaj Allianz Life Guaranteed Savings Goal Plan Policy within a period of 15 days from the date of receipt of the Policy document and a period of 30 days in case of electronic Policies and Policies obtained through distance mode.
Surrendering Bajaj Allianz Life Guaranteed Savings Plan
You can surrender the Bajaj Allianz Life Guaranteed Savings Goal Plan policy at any time during the policy term, during the policy year. The surrender benefit will be higher than the guaranteed surrender value (GSV) or special surrender value (SSV).
What are the Advantages of the Bajaj Allianz Life Guaranteed Savings Plan?
- Hassle-free single investment process.
- Option to take a policy loan, subject to a maximum limit of 80% of the surrender benefit.
What are the Disadvantages of the Bajaj Allianz Life Guaranteed Savings Plan?
- There is no loyalty addition for staying committed to the investment.
- The returns are not satisfactory.
Research Methodology of the Bajaj Allianz Life Guaranteed Savings Plan
So far, we have reviewed the features, advantages, and disadvantages of the Bajaj Allianz Life Guaranteed Savings Plan. Now, let’s evaluate the return on investment using the figures provided in the Bajaj Allianz Life Guaranteed Savings Plan policy brochure.
The comparison with other investment returns will help you make an informed decision. The Internal Rate of Return (IRR) calculation for the benefit illustration is as follows:
Benefit Illustration – IRR Analysis of Bajaj Allianz Life Guaranteed Savings Plan
A 30-year-old male purchases the Bajaj Allianz Life Guaranteed Savings Plan with a sum assured of ₹50 Lakhs. The policy term is 10 years, with a single premium payment of ₹5 Lakhs.
| Male | 30 years |
| Sum Assured | ₹ 50,00,000 |
| Policy Term | 10 |
| Premium Paying Term | Single Premium |
| Single Premium | ₹ 5,00,000 |
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 30 | 1 | -5,00,000 | 50,00,000 |
| 31 | 2 | 0 | 50,00,000 |
| 32 | 3 | 0 | 50,00,000 |
| 33 | 4 | 0 | 50,00,000 |
| 34 | 5 | 0 | 50,00,000 |
| 35 | 6 | 0 | 50,00,000 |
| 36 | 7 | 0 | 50,00,000 |
| 37 | 8 | 0 | 50,00,000 |
| 38 | 9 | 0 | 50,00,000 |
| 39 | 10 | 0 | 50,00,000 |
| 40 | 8,67,300 | ||
| IRR | 5.66% |
At the end of the policy term, he receives a maturity benefit of ₹8.67 Lakhs. The IRR for this cash flow is 5.66% as per the Bajaj Allianz Life Guaranteed Savings Goal Plan maturity calculator. In comparison, a Bank Fixed Deposit (FD) can double your capital in 10 years with returns of around 6%-7%.
Earning less than the inflation rate is not a sound investment strategy. Therefore, the Bajaj Allianz Life Guaranteed Savings Plan may not be suitable for your investment portfolio, even for debt allocation.
Bajaj Allianz Life Guaranteed Savings Plan Vs. Other Investments
Now, let’s move into the comparison part. The investment return of the Bajaj Allianz Life Guaranteed Savings Plan is lower than expected. This section will explore other investment options and calculate their returns.
Comparing these returns will provide a clearer understanding and help you make a more informed decision.
Bajaj Allianz Life Guaranteed Savings Plan Vs. Pure term + ELSS
The Bajaj Allianz Life Guaranteed Savings Plan provides life cover protection and investment opportunities with a single premium payment.
Let’s separate the insurance and investment components. To better understand this, we shall use the same figures from the earlier illustration.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 50,00,000 |
| Policy Term | 10 |
| Premium Paying Term | Single Premium |
| Single Premium | ₹ 59,000 |
| Investment | ₹ 4,41,000 |
A pure term life insurance policy with a sum assured of ₹50 Lakhs costs a single premium of ₹59,000. After paying the insurance premium from the ₹5 Lakhs, you are left with ₹4.41 Lakhs for investment. This remaining amount can be invested according to your goals and time frame.
| Age | Year | Term Insurance premium + ELSS | Death benefit |
| 30 | 1 | -5,00,000 | 50,00,000 |
| 31 | 2 | 0 | 50,00,000 |
| 32 | 3 | 0 | 50,00,000 |
| 33 | 4 | 0 | 50,00,000 |
| 34 | 5 | 0 | 50,00,000 |
| 35 | 6 | 0 | 50,00,000 |
| 36 | 7 | 0 | 50,00,000 |
| 37 | 8 | 0 | 50,00,000 |
| 38 | 9 | 0 | 50,00,000 |
| 39 | 10 | 0 | 50,00,000 |
| 40 | 12,86,811 | ||
| IRR | 9.91% |
For illustrative purposes, let’s consider investing in an Equity Linked Savings Scheme (ELSS). After 10 years, the maturity proceeds of the ELSS fund will be subject to capital gains tax. The tax calculation shows that after paying the tax, the maturity value is ₹12.86 Lakhs.
The IRR for the ELSS investment, combined with the Pure Term Life Insurance Policy, is 9.91%.
| ELSS Tax Calculation | |
| Maturity value after 10 years | 13,69,679 |
| Purchase price | 4,41,000 |
| Long-Term Capital Gains | 9,28,679 |
| Exemption limit | 1,00,000 |
| Taxable LTCG | 8,28,679 |
| Tax paid on LTCG | 82,868 |
| Maturity value after tax | 12,86,811 |
This comparison highlights the importance of a goal-based investment strategy. Such a strategy is recommended as it yields better returns than an endowment plan.
These calculations suggest that the Bajaj Allianz Life Guaranteed Savings Plan may not be the best option for your investment portfolio.
Final Verdict on Bajaj Allianz Life Guaranteed Savings Plan
The Bajaj Allianz Life Guaranteed Savings Plan is a single premium endowment plan with a straightforward approach: you pay the premium once, receive life cover during the policy term, and obtain the maturity benefit at the end of the term. This simplicity can be appealing for investing your lump sum.
However, upon analysing the plan, it becomes evident that the investment returns are not as favourable. The percentage return is relatively low compared to other investment options due to high agent commissions and other reasons.
A better strategy involves securing adequate life and health insurance along with an emergency fund as the foundation of your investment journey. Goal-based investing, tailored to your risk appetite and time frame, is more advantageous.
Is it wise to rely solely on platforms like Quora, Twitter, and Facebook for financial advice?
For goal-based financial planning, consulting a Certified Financial Planner is recommended. Personalized financial planning is key to achieving your life goals.
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