Any life goals require proper planning both in terms of action and in terms of financing the goal. You need to choose the right investment product that aligns with your personal risk appetite and life goals.
In this article, we shall review Bajaj Allianz Life Magnum Fortune Plus II with its Advantages (pros) and Disadvantages(cons) and analyse the suitability of the plan. This will guide you in determining whether the Bajaj Allianz Life Magnum Fortune Plus II will be a good or bad investment choice for your Future.
Table of Contents
1.)An Overview of Bajaj Allianz Life Magnum Fortune Plus II
2.)What are the Features of Bajaj Allianz Life Magnum Fortune Plus II? A Crisp Analysis
3.)Who is Eligible for Bajaj Allianz Life Magnum Fortune Plus II? Analysis with Illustration.
4.)Review of Key benefits under Bajaj Allianz Life Magnum Fortune Plus II
5.)Review of Additional Benefits under Bajaj Allianz Life Magnum Fortune Plus II
6.)Investment Strategies and Fund Options under Bajaj Allianz Life Magnum Fortune Plus II
7.)What are the Various charges under Bajaj Allianz Life Magnum Fortune Plus II?
8.)Bajaj Allianz Life Magnum Fortune Plus II Review – Grace period, Discontinuance and Revival
9.)Free Look-Up Period of Bajaj Life Magnum Fortune Plus II
10.)What Happens After You Surrender the Bajaj Allianz Life Magnum Fortune Plus II Policy?
11.)A Look into the Advantages of Bajaj Allianz Life Magnum Fortune Plus II
12.)A Look into the Disadvantages of Bajaj Allianz Life Magnum Fortune Plus II
13.)Research Methodology of Bajaj Allianz Life Magnum Fortune Plus II
- Bajaj Allianz Life Magnum Fortune Plus II Benefit Illustration – IRR (Internal Rate of Return i.e Interest Rate) Analysis
- i) Bajaj Allianz Life Magnum Fortune Plus II Vs. Term Insurance + ELSS
- ii) Bajaj Allianz Life Magnum Fortune Plus II Vs. Bajaj Allianz Life Long-life Goal Plan
- iii) Bajaj Allianz Life Magnum Fortune Plus II Vs. Bajaj Allianz Life ACE
1. An Overview of Bajaj Allianz Life Magnum Fortune Plus II
It is a Unit-linked Non-Participating Individual Life Savings Insurance Plan. It offers life insurance during the entire Policy Term and the flexibility to choose from a wide range of funds to meet your future goals. The plan invests in market-related instruments.
Please refer to the Bajaj Allianz Life Magnum Fortune Plus II official brochure for more policy details.
2. What are the Features of Bajaj Allianz Life Magnum Fortune Plus II? A Crisp Analysis
- You get a Life insurance cover throughout the Policy Term for the financial protection of your loved ones.
- You can choose from a wide range of fund and portfolio strategies to suit your saving needs.
- Loyalty additions and maturity boosters enhance your fund value.
- By staying invested till maturity, the mortality charges are returned.
- Three premium bands are available.
3. Who is Eligible for Bajaj Allianz Life Magnum Fortune Plus II? Analysis with Illustration.
|Min/ Max age at entry||0/65|
|Min/ Max age at maturity||18/75|
|Policy Term / Premium Paying Term||PT||PPT|
|10||5 to 7|
|15||5 to 10|
|20||5 to 15|
|25||5 to 20|
|30||5 to 25|
|Minimum Sum Assured||7 times of annualized premium|
|Maximum Sum Assured||Age||Premium Multiplier|
|0 to30||40 times|
|31 to 40||30 times|
|41 to 45||15 times|
|46 to 65||10 times|
|Premium payment frequency||Yearly, half-yearly, quarterly, monthly|
4. Review of Key benefits under Bajaj Allianz Life Magnum Fortune Plus II
Maturity Benefit – Analysis
On Maturity of the Magnum Fortune Plus II Policy, you will receive the Fund Value including the Top-Up Premium Fund Value, if any. You may choose to use the Settlement Option to receive the Maturity Benefit in a structured distribution over a maximum of five years or as a lump sum
Death benefit – Analysis
In the unfortunate event of death of the life assured during the Magnum Fortune Plus II Policy Term, the Death Benefit paid to the nominee will be higher of
- Sum Assured, including top-up sum assured, if any under Magnum Fortune Plus II
- A minimum guaranteed death benefit is available under Magnum Fortune Plus II
- Fund value including the Top – up premium fund value, if any under Magnum Fortune Plus II
The minimum death benefit will be 105% of the total premium including the top-up premium received up to the date of death. For a maximum of five years, your nominee will have the choice to take the death benefit as a lump sum or as a structured payout through the settlement option.
Loyalty Additions under Bajaj Allianz Life Magnum Fortune Plus II
Loyalty additions are done by allocating additional units to your Magnum Fortune Plus II policy from the end of the 10th policy year, every year till the end of the Policy Term. If the annualised premium is less than ₹ 1 lakh – 0.50% of the Fund Value and if the annualised premium is more than ₹ 1 lakh – 0.70% of the fund value is added.
At the end of the Magnum Fortune Plus II Policy Term, a Maturity Booster will be added to your Fund Value to reward you for staying invested. Your chosen Policy Term will determine how much of a maturity booster you receive.
If any of your family members is an existing policyholder of Bajaj Allianz Life Insurance Company Limited, you will be entitled to a family benefit. When the fund matures, you will receive the benefit, which will be added to the standard premium fund value.
Return of Mortality Charges
At the end of the Magnum Fortune Plus II Policy Term, on the date of Maturity of your Policy, the total amount of Mortality charges deducted in respect of life cover provided throughout the Magnum Fortune Plus II Policy Term will be added back as ROMC, to the Fund Value.
5. Review of Additional Benefits under Bajaj Allianz Life Magnum Fortune Plus II
i) Partial withdrawal: Partial withdrawal is allowed after completion of 5 years.
ii) Decrease in Sum Assured: You can choose to reduce the Sum Assured at any policy anniversary during the Policy Term.
iii) Top-up premium: You can save your surplus money as a top-up premium into the Magnum Fortune Plus II policy, over and above the base premium.
iv) PPT: You have the option to change the premium payment term in Bajaj Allianz Life Magnum Fortune Plus II.
v) Increase in Policy Term: You will have the option to increase the Magnum Fortune Plus II Policy Term anytime during the tenure of the policy.
vi) Option to reduce the premium: You will have the option to reduce the prevailing premium under the policy after the completion of the first five Policy Term in Magnum Fortune Plus II.
vii) Settlement Option: The settlement option is available both for Maturity Benefit and Death Benefit.
6. Investment Strategies and Fund Options under Bajaj Allianz Life Magnum Fortune Plus II
Investor selectable portfolio strategy – Analysis with Illustration
This strategy enables you to manage your money actively. You have the option to allocate your savings under this approach to any of the following funds in the amount of your choosing. You can find the Risk Profile and Portfolio Allocation of different funds analysed in the below illustration.
|Fund Name||Risk Profile||Portfolio Allocation|
|Equity||Bank Deposit||Money Market|
|Equity Growth Fund II||Very High||Not less than 60%||0-40%||0-40%|
|Accelerator Mid-Cap Fund II||Very High||Not less than 60% (50% in Mid-Cap)||0-40%||0-40%|
|Pure Stock Fund||Very High||Not less than 60%||0-40%||0-40%|
|Pure Stock Fund ll||Very High||Not less than 75%||_||0-25%|
|Blue-chip Equity Fund||High||Not less than 60%||0-40%||0-40%|
|Asset Allocation Fund II||High||40-90%||0-60%||0-50%|
|Flexi Cap Fund||Very High||65-100%||0-35%||0-35%|
|Sustainable Equity Fund||Very High||65-100%||0-35%||0-35%|
|Small Cap Fund||Very High||65-100%||0-35%||0-35%|
|Dynamic Asset Allocation||High||10-90%||10-90%||0-80%|
|Individual Short term debt Fund||Moderate||_||40-100%||0-60%|
Target Asset Allocation Strategy – Analysis
This strategy enables you to choose an Asset Allocation that is best suited to your risk appetite and maintain it throughout the Policy Term. The premium can be split in any combination between any two of the eligible funds under this policy. Every three months, the portfolio will be rebalanced to make sure that this asset allocation is kept.
Automatic Transfer Portfolio Strategy – Analysis
This method assists you in making systematic investments by automatically moving your funds each month from a low-risk fund to the fund or funds of your choice. Under this portfolio strategy, you have to choose the following:
The low-risk fund (i.e., Bond Fund or Liquid Fund)
The fund(s) to which the money will be transferred every month
At the start of each monthly anniversary of the Policy, a proportion (as mentioned below) of Fund value in the Bond Fund and/or Liquid Fund as on that date will be switched to the other Fund/s (available in the plan) as specified by you.
The proportion of Fund value = 1/ Outstanding no. of months till the next premium due date.
7. What are the Various charges under Bajaj Allianz Life Magnum Fortune Plus II?
i) Premium Allocation Charge
The Premium Allocation Charges depend upon the premium amount. The Premium Allocation Charge is deducted from the premium amount at the time of premium payment and units are allocated to the chosen fund thereafter.
ii) Policy Administration Charge
The charge is applicable throughout the Policy Term and will be deducted at each monthly anniversary by the cancellation of units at a prevailing unit price. 2.1% of the prevailing annualized premium or Rs 500 per month, whichever is lower
iii) Fund Management Charges
0.95% for Individual short-term Debt funds, Debt funds, and Liquid funds.
1.35% for all other funds.
0.5% for Discontinued fund
iv) Mortality Charges
Mortality Charges will be deducted at each monthly anniversary by the cancellation of units. Female Life Assured will be eligible for an age setback of 3 years.
v) Premium discontinuance/ surrender charges
It depends on the year of discontinuance and the premium amount. From the 5th policy year, there are no Premium discontinuance/ surrender charges.
vi) Miscellaneous charge
The miscellaneous charge would be charged at the rate of Rs.100/- per transaction.
Inference from the charges: The above charges form part of ULIPs. Other investment options don’t levy such charges. Other than the Fund management charge and Mortality charge, all other charges are burdens to investors. These charges will bring down the investment return. This makes ULIPs unattractive.
8. Bajaj Allianz Life Magnum Fortune Plus II Review – Grace period, Discontinuance and Revival
- Grace period
A Grace Period of 30 days for yearly, half-yearly, and quarterly Premium payment frequency, and 15 days are available for monthly Premium payment frequency from the due date of the Regular Premium payment.
On Discontinuance of Regular Premiums due during the first 5 Policy years – the Policy will be converted immediately to a Discontinued Policy at the end of the Grace period. The Fund Value less the Discontinuance/Surrender charge, will be transferred to the Discontinued Life Policy fund. The Discontinuance Value shall be payable as the Surrender Benefit at the end of the lock-in period of 5 Policy years.
On Discontinuance of Regular Premiums due after the lock-in period of 5 Policy years – the Policy will be converted to a Paid-up Policy at the end of the grace period. The Paid-up Sum Assured will be the prevailing Sum Assured in the Policy multiplied by the proportion of the number of Premiums paid to the number of Premiums payable in the Policy.
Bajaj Life Magnum Fortune Plus II Policy can be revived within 3 years from the date of the first unpaid premium.
9. Free Look-Up Period of Bajaj Life Magnum Fortune Plus II
If you are not satisfied with the terms and conditions of the policy, then it can be returned within 15 days of the receipt of this Policy and 30 days in case of an electronic Policy or a Policy obtained through distance mode.
10. What Happens After You Surrender Your Bajaj Allianz Life Magnum Fortune Plus II Policy?
On surrender during the lock-in period of the first five years of your Policy, the Fund Value, less the applicable Discontinuance/Surrender charge, as on the Date of Surrender, will be transferred to the Discontinued Life Policy Fund and risk cover under the Policy shall cease immediately.
On surrender after the lock-in period of the first five years of your Policy, the surrender value available will be Fund Value, as on the date of surrender, and will be payable immediately.
11. A Look into the Advantages of Bajaj Allianz Life Magnum Fortune Plus II
Advantages of Magnum Fortune Plus II in short and crisp points after a comprehensive analysis.
- You may, at any time, change the proportion of limited and top-up premiums to the funds you wish to invest.
- Top-up premiums enhance your fund value.
- You are allowed to switch between funds without any charges
12. A Look into the Disadvantages of Bajaj Allianz Life Magnum Fortune Plus II
Please find below the disadvantages of Magnum Fortune Plus II in short and crisp points after a comprehensive analysis.
- The lock-in period is 5 years.
- No loan facility is available under this plan.
- The premium is invested after the deduction of charges. Even though they assure you to return the mortality charges, the time value of money is not considered.
13. Research Methodology of Bajaj Allianz Life Magnum Fortune Plus II
Bajaj Allianz Life Magnum Fortune Plus is a market-linked product. The returns are non-guaranteed. The fund’s performance decides your final fund value. Now, let us try to estimate the returns using the assumed rate of return of the fund.
The assumed rate of returns indicated at 4% and 8% are illustrative and not guaranteed. They do not indicate the upper or lower limits of returns under the policy.
Bajaj Allianz Life Magnum Fortune Plus II Benefit Illustration – IRR (Internal Rate of Return i.e Interest Rate) Analysis
Mr. A aged 35 years plans to save for his child’s higher education which is expected in the next 15 years. He decided to pay the premium of ₹ 2.5 Lakhs for a period of 10 years with a Policy Term of 15 years. The total premium that will be paid by Mr. A throughout the Policy Term will be Rs. 25,00,000.
|Policy Tern||15 Years|
|Premium Paying Term||10 years|
|Age||Year||At 4% p.a.||At 8% p.a.|
|Annualised premium / Maturity benefit||Death benefit||Annualised premium / Maturity benefit||Death benefit|
If he pays a premium regularly for 10 years, he will receive the fund value at the end of 15 years. The fund value at the assumed rate of 4% is ₹ 31.63 Lakhs. In the above illustration, The IRR(Internal Rate of Return i.e. Interest Rate) for the 4% scenario is calculated at 2.25%. The fund value at the assumed rate of 8% is ₹ 47.59 Lakhs. The IRR for the 8% scenario is calculated at 6.17%.
The returns from Bajaj Allianz Life Magnum Fortune Plus II do not even match a debt instrument return. A long-term investment that too a market product offering a low return will not be beneficial for an investor.
14. Bajaj Allianz Life Magnum Fortune Plus II vs Other Investment Products
Now, let us compare other market-related products with Bajaj Allianz Life Magnum Fortune Plus II. One who is ready to take risks and invest in market-linked products will expect returns in accordance with the risk taken. The alpha generation is more important for a market-linked product. So, let us figure out other alternate options
i) Bajaj Allianz Life Magnum Fortune Plus II Vs. Term Insurance + ELSS
Bajaj Allianz Life Magnum Fortune Plus II offers both life cover and investment opportunities. To match that, a pure term life insurance for a sum assured of ₹ 25 lakhs would cost ₹15,500 per annum. The Policy Term is 15 years and the premium paying term is 10 years. So, you will be left with ₹ 2,34,500 could be invested as per your choice.
|Pure Term Insurance|
|Policy Tern||15 Years|
|Premium Paying Term||10 years|
ELSS fund is chosen here for investment. Similarly, you can pick any other equity or debt instrument as per your risk appetite. ELSS funds are subject to Capital Gains Tax at the time of redemption. Tax calculation is given below.
|Age||Year||Term insurance + ELSS|
|Term Insurance premium + ELSS||Death benefit|
|ELSS Tax Calculations|
|Maturity value after 15 years||81,22,632|
|Long-term capital gains||57,77,632|
|Tax paid on LTCG||5,67,763|
|Maturity value after tax||75,54,869|
The final maturity value at the end of 15 years is ₹ 81.22 Lakhs. After paying the capital gains tax, the final value available for you is ₹ 75.54 Lakhs. The IRR for this cash flow is calculated at 10.66% in the above illustration.
This rate of return is inflation beating one. In the long run, the cost of your goals will be higher than what it is today. In order to meet the inflated cost of your goals, you need to invest in better-yielding products.
This IRR analysis clearly shows that investing in Bajaj Allianz Life Magnum Fortune Plus II is not beneficial as the potential return is lesser than the inflation rate.
ii) Bajaj Allianz Life Magnum Fortune Plus II Vs. Bajaj Allianz Life Long-life Goal Plan
Let’s see some of the features of Bajaj Allianz Life Long-life Goal Plan,
- Long-life Goals without Waiver of Premium and Long-life Goals with Waiver of Premium are the 2 plan options available.
- There are 4 investment portfolio strategies and 10 fund options available to you.
- Loyalty Additions are yearly additions to your fund value from the fifth policy year through the twenty-fifth policy year.
You can read the complete review of Bajaj Allianz’s Life Long-life Goal Plan here.
iii) Bajaj Allianz Life Magnum Fortune Plus II Vs. Bajaj Allianz Life ACE
Some of the features of Bajaj Allianz Life ACE are,
- Throughout the Policy Term, which can last up to 100 years, guard your loved ones with a Life Cover.
- The Income choice, Lump Sum benefit, or perhaps both, are your options.
You can read the complete review of Bajaj Allianz Life ACE here.
15. Bajaj Allianz Life Magnum Fortune Plus II Vs. Other Investment Products – Review Conclusion
Bajaj Allianz Life Magnum Fortune Plus II returns do not even come close to matching a return on a debt instrument. An investor will not benefit from a long-term investment in a market product with a low return.
As you can see, we have compared and analysed all the alternate investment options for Bajaj Allianz Life Magnum Fortune Plus II, we have concluded that taking Term Insurance for life cover and using ELSS as an investment vehicle will give you the best possible Life protection and returns.
16. Final verdict on Bajaj Allianz Life Magnum Fortune Plus II – Good or Bad?
Everyone wants to achieve all their life goals. For that, you need to be a little cautious in choosing the investment products. Bajaj Allianz Life Magnum Fortune Plus II is a market-linked product. It offers a wide range of fund options. But while analysing the plan, it is clear that the potential return of this plan is substantially low.
The main reason behind this, there is no transparency in investment. A major portion of your premium goes into the fund administration and other charges. The balance is utilized for investment. Insurance agents will not warn you for fear of losing their agent commission. In other market-related instruments, charges are less compared to ULIPs. This makes Bajaj Allianz Life Magnum Fortune Plus II unattractive.
As an investor, you need a better risk-adjusted return from the product. This is also missing in Bajaj Allianz Life Magnum Fortune Plus II.
Building a well-diversified portfolio is the best option to achieve your goals and it cannot be achieved just by surfing social media sites like Quora, Facebook, Twitter, etc. Consult your financial advisor for building your investment portfolio, he will choose the right product for you.