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Is investing in a comprehensive insurance plan an effective way to secure your child’s future?
Is Bajaj Allianz Young Assure Plan a life insurance plan that grows with you and adapts to your changing needs?
Can Bajaj Allianz Young Assure Plan provide a solution for your confusion about choosing a complex financial product and being worried about high premiums?
In this article, we will examine the Bajaj Allianz Life Young Assure plan’s features, advantages, disadvantages, and potential returns through an IRR (Internal Rate of Return) analysis. Let’s determine if the Bajaj Allianz Life Young Assure Plan is a suitable choice to help you achieve your child’s aspirations.
Table of Contents:
What is the Bajaj Allianz Life Young Assure Plan?
What are the Features of the Bajaj Allianz Life Young Assure Plan?
Who is Eligible for the Bajaj Allianz Life Young Assure Plan?
What are the benefits of Bajaj Allianz Life Young Assure Plan?
3. Accidental Permanent Total Disability benefit
Grace Period, Discontinuance and Revival of the Bajaj Allianz Life Young Assure
Free look period of the Bajaj Allianz Life Young Assure
Surrendering the Bajaj Allianz Life Young Assure
What are the advantages of the Bajaj Allianz Life Young Assure?
What are the disadvantages of the Bajaj Allianz Life Young Assure?
Research methodology of Bajaj Allianz Life Young Assure
Benefit illustration – IRR Analysis of Bajaj Allianz Life Young Assure
Bajaj Allianz Life Young Assure Vs. Other Investment Product
Bajaj Allianz Life Young Assure Vs. Pure Term + PPF / ELSS
Final Verdict on Bajaj Allianz Life Young Assure Plan
What is the Bajaj Allianz Life Young Assure Plan?
Bajaj Allianz Life Young Assure Plan is a Non-Linked, Participating, Life Insurance Plan. It is a savings insurance plan that ensures your kid’s dreams are fulfilled irrespective of any eventualities. Bajaj Allianz Life Young Assure Plan is a traditional endowment plan with limited premium payment.
What are the Features of the Bajaj Allianz Life Young Assure Plan?
- Multiple premium payment and policy term options
- Guaranteed Maturity Benefit (GMB), Guaranteed Additions (GA) and bonuses to ensure a good return
- Cash Instalment Options to choose from to match future financial needs
- Comprehensive coverage in case of death or accidental disability
- Option to enhance your coverage with rider benefits
- Special rates for female policyholders
Who is Eligible for the Bajaj Allianz Life Young Assure Plan?
| Minimum Entry Age | 18 years | |
| Maximum Entry Age | 50 years | |
| Minimum age at Maturity | 28 years | |
| Maximum age at Maturity | 60 years | |
| Sum assured | 10 times the annualised premium | |
| Guaranteed Maturity Benefit | Minimum – 1,00,000 Maximum – No limit |
|
| Policy Term & Premium Paying Term | Policy term | Premium Paying term |
| 10 | 5, 7 | |
| 15 | 12, 15 | |
| 20 | 12, 15, 20 | |
| Premium Payment Frequency | Yearly, Half-yearly, Quarterly and Monthly | |
What are the benefits of Bajaj Allianz Life Young Assure Plan?
i.) Maturity benefit
The Maturity Benefit is Guaranteed Maturity Benefit (GMB) plus Guaranteed Additions (GA) plus Vested Bonus (VB) plus Interim Bonus (IB), if any, plus Terminal Bonus (TB), if any.
You will receive the Maturity Benefit as per one of the three Cash instalment options chosen by you at inception. The first annual instalment will commence at the end of the policy term.
ii.) Death benefit
If all due premiums are paid, then, in case of unfortunate death of the Life Assured, the benefit payable will be the Sum Assured on Death, subject to the guaranteed death benefit of 105% of the total premiums paid till date of death, will be paid immediately and the Bajaj Allianz Life Young Assure Plan policy will be converted to a fully paid-up policy
As a fully paid-up policy all future GA, Vested Bonus and Terminal Bonus, if any, will continue to accrue in the policy. At the end of the policy term, the Maturity Benefit will be payable.
iii.) Accidental Permanent Total Disability benefit
If all due premiums are paid, then, in case of Accidental Permanent Total Disability of the Life Assured during the policy term, the Bajaj Allianz Life Young Assure Plan policy will be converted to a fully paid-up policy and will continue to accrue all future GA, and Vested Bonus and Terminal Bonus, if any.
At the end of the Bajaj Allianz Life Young Assure Plan policy term, the Maturity Benefit will be payable
Grace Period, Discontinuance and Revival of the Bajaj Allianz Life Young Assure Plan
Grace Period
A grace period of 30 days for premium payment frequencies other than monthly and 15 days for monthly frequency will be allowed to pay the due premium.
Discontinuance
If you have not paid at least 1 year’s premium in full for a premium paying term less than 10 years or at least 2 years premium in full for a premium paying term of 10 years and above, then your Bajaj Allianz Life Young Assure Plan policy will lapse at the expiry of the grace period and no benefit will be payable under the policy.
If you have paid at least 1 year’s premium in full for a premium paying term less than 10 years or at least 2 years’ premium in full for a premium paying term of 10 years and above, then your policy will be made paid up at the expiry of the grace period.
The Sum Assured on Death and the GMB under the Bajaj Allianz Life Young Assure Plan policy will be reduced to the Paid-up Sum Assured on Death and Paid-up GMB, respectively.
The vested Bonuses (if any) as on the Paid-up date shall remain attached to the Bajaj Allianz Life Young Assure Plan policy. A Paid-up policy will not accrue any further Bonus.
Revival
You may revive your paid-up/lapsed policy during the revival period of 5 years from the due date of the first unpaid premium.
Free look period of the Bajaj Allianz Life Young Assure Plan
If you disagree with any of the terms & conditions, you will have the option to return the Bajaj Allianz Life Young Assure Plan policy within 15 days of the receipt of this policy and 30 days in case of electronic policy and policy obtained through distance mode.
Surrendering the Bajaj Allianz Life Young Assure Plan
You will have the option to surrender your Bajaj Allianz Life Young Assure Plan policy anytime, provided at least 1 full year’s premium has been paid if the premium payment term is less than 10 years or at least 2 full years’ premiums have been paid if the premium payment term is 10 years or more
The surrender value shall be higher than:
- Guaranteed Surrender Value (GSV) or
- Special Surrender Value (SSV).
What are the advantages of the Bajaj Allianz Life Young Assure Plan?
- You can avail of loans under your Bajaj Allianz Life Young Assure Plan policy, up to 90% of surrender value.
- Option to take the Maturity Benefit in lump-sum on the maturity date.
- You can opt to alter your premium payment frequency to any other frequency
- You can enjoy extra coverage by choosing the optional additional rider benefits
- The plan offers a Premium Rebate if your chosen GMB is greater than ₹ 1,00,000.
- Waiver of premium and Accident permanent total disability benefits are in-built features.
What are the disadvantages of the Bajaj Allianz Life Young Assure Plan?
- There might be a mismatch between the instalments and the actual requirement
- The longer the disbursement period, the better the total Guaranteed Maturity Benefit (GMB). This may force you to choose the longer one even if you do not need it.
Research methodology of Bajaj Allianz Life Young Assure Plan
Let’s examine the cash flow pattern and evaluate the potential return using the figures provided in the policy brochure. The following illustration will help you understand how the plan works in detail, aiding you in making an informed decision.
Benefit illustration – IRR Analysis of Bajaj Allianz Life Young Assure Plan
A 30-year-old male has taken the Bajaj Allianz Life Young Assure plan for his 1-year-old son. He opted for a policy term of 20 years with a premium paying term of 15 years. He chose a Guaranteed Maturity Benefit (GMB) of ₹3,00,000, for which he will need to pay an annual premium of ₹24,363. Additionally, he selected the Cash Instalment option over 5 years.
| Male | 30 years |
| Sum Assured | ₹ 2,43,630 |
| Policy Term | 20 years |
| Premium Paying Term | 15 years |
| Annualised Premium | ₹ 24,363 |
The plan offers 5 instalments starting from the beginning of the 21st year. The first instalment includes Guaranteed Additions, Vested Bonus, and Interim Bonus, if any. The 2nd, 3rd, 4th, and 5th instalments are 22%, 24%, 28%, and 34% of the GMB, respectively.
The illustration assumes investment returns of 8% p.a. and 4% p.a. These returns are not guaranteed and are for illustrative purposes only.
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 30 | 1 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 31 | 2 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 32 | 3 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 33 | 4 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 34 | 5 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 35 | 6 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 36 | 7 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 37 | 8 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 38 | 9 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 39 | 10 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 40 | 11 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 41 | 12 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 42 | 13 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 43 | 14 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 44 | 15 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 45 | 16 | 0 | 2,43,630 | 0 | 2,43,630 |
| 46 | 17 | 0 | 2,43,630 | 0 | 2,43,630 |
| 47 | 18 | 0 | 2,43,630 | 0 | 2,43,630 |
| 48 | 19 | 0 | 2,43,630 | 0 | 2,43,630 |
| 49 | 20 | 0 | 2,43,630 | 0 | 2,43,630 |
| 50 | 21 | 1,80,000 | 2,43,630 | 4,21,833 | 2,43,630 |
| 51 | 22 | 66,000 | 2,43,630 | 66,000 | 2,43,630 |
| 52 | 23 | 75,000 | 2,43,630 | 75,000 | 2,43,630 |
| 53 | 24 | 84,000 | 2,43,630 | 84,000 | 2,43,630 |
| 54 | 25 | 1,02,000 | 2,43,630 | 1,02,000 | 2,43,630 |
| IRR | 2.22% | 5.05% | |||
In the 4% scenario, the Internal Rate of Return (IRR) for the given cash flow is 2.2% as per the Bajaj Allianz Life Young Assure Plan maturity calculator. In the 8% scenario, the IRR is 5.05% as per the Bajaj Allianz Life Young Assure Plan maturity calculator.
As an investor aiming to fund your child’s education, these potential returns may not be sufficient to accumulate the required corpus. Therefore, opting for the Bajaj Allianz Life Young Assure plan may not fully cover future expenses when they become due.
Bajaj Allianz Life Young Assure Plan Vs. Other Investment Product
In the earlier illustration, if an eventuality occurs, the nominee would receive a death benefit, and the policy would continue until the nominee receives the final instalment.
Therefore, when comparing plans, we should consider a pure term policy for a sum assured that equals an amount covering the instalment benefits.
In the best-case scenario (8% return), the total benefits received equal to ₹7.48 lakhs. To make a fair comparison, let’s consider a pure term life insurance policy with a sum assured of ₹7.5 lakhs.
Bajaj Allianz Life Young Assure Plan Vs. Pure Term + PPF / ELSS
A pure term life insurance policy with a sum assured of ₹7.5 lakhs costs an annual premium of ₹4,900, with a premium paying term of 10 years and a policy term of 20 years.
This leaves you with ₹19,463 annually to invest for your child. In the previous illustration, the premium paying term was 15 years, so for the next 5 years, you can invest the entire amount.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 7,50,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 4,900 |
| Investment | ₹ 19,463 |
We have chosen PPF (Public Provident Fund) and ELSS (Equity Linked Savings Scheme) as investment vehicles for corpus accumulation. The PPF final maturity value at the end of 20 years is ₹7.86 lakhs, while the post-tax maturity value for ELSS is ₹13.85 lakhs.
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 30 | 1 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 31 | 2 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 32 | 3 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 33 | 4 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 34 | 5 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 35 | 6 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 36 | 7 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 37 | 8 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 38 | 9 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 39 | 10 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 40 | 11 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 41 | 12 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 42 | 13 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 43 | 14 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 44 | 15 | -24,363 | 2,43,630 | -24,363 | 2,43,630 |
| 45 | 16 | 0 | 2,43,630 | 0 | 2,43,630 |
| 46 | 17 | 0 | 2,43,630 | 0 | 2,43,630 |
| 47 | 18 | 0 | 2,43,630 | 0 | 2,43,630 |
| 48 | 19 | 0 | 2,43,630 | 0 | 2,43,630 |
| 49 | 20 | 0 | 2,43,630 | 0 | 2,43,630 |
| 50 | 21 | 5,12,859 | 2,43,630 | 11,12,310 | 2,43,630 |
| 51 | 22 | 66,000 | 2,43,630 | 66,000 | 2,43,630 |
| 52 | 23 | 75,000 | 2,43,630 | 75,000 | 2,43,630 |
| 53 | 24 | 84,000 | 2,43,630 | 84,000 | 2,43,630 |
| 54 | 25 | 1,02,000 | 2,43,630 | 1,02,000 | 2,43,630 |
| IRR | 5.90% | 9.98% | |||
This accumulated corpus is then invested in an instrument yielding a 7% return, from which annual withdrawals can be made to match the cash instalments of the Bajaj Allianz Life Young Assure Plan.
For comparison purposes, the instalment amounts are assumed to be the same as in the previous illustration, with only the first-year instalment varying based on the accumulated corpus in each investment.
The IRR for the pure term policy combined with PPF investment results in 5.90%. The IRR for the pure term policy combined with ELSS investment results in 9.98%. These returns are higher than those in the Bajaj Allianz Life Young Assure scenarios.
The major advantage of this investment strategy is the liquidity it offers. For comparison purposes, we assumed the same instalment amounts, but you have the flexibility to withdraw based on your requirements, a feature that is missing in the Bajaj Allianz Life Young Assure Plan.
Final Verdict on Bajaj Allianz Life Young Assure Plan
The Bajaj Allianz Life Young Assure Plan is a traditional endowment plan with periodic cash payments.
It offers life cover and guarantees that the nominee will receive all cash payments regardless of the policyholder’s survival. This is the primary advantage of the Bajaj Allianz Life Young Assure Plan.
However, education costs are rising rapidly, with inflation rates around 10% to 12%, while the returns from the Bajaj Allianz Life Young Assure Plan are relatively low. Additionally, the lack of liquidity can significantly impact your cash flow needs and also this plan has a high agent commission
For important life goals, especially those related to your children, it is crucial to invest wisely. Starting early ensures that you can achieve your targeted corpus.
Don’t let your child’s aspirations falter due to poor investment choices. Avoid children’s education plans like the Bajaj Allianz Life Young Assure Plan.
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For personalized financial planning, consult a Certified Financial Planner. Planning and starting early ensures you are on the right track to achieving your financial goals.
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