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Can a single financial product help you build wealth while also providing life insurance protection?
Or does combining investing and insurance involve trade-offs that investors should carefully evaluate?
As more people look for solutions that address both long-term financial goals and family security, Unit Linked Insurance Plans (ULIPs) often emerge as a popular option.
Bandhan Life iInvest II is one such ULIP that offers market-linked investment opportunities alongside life insurance coverage.
But how does the plan actually work?
What charges will impact your returns?
And how does it compare with other ways of investing for goals such as retirement, children’s education, or wealth creation?
In this review, we’ll break down the plan’s features, costs, benefits, and limitations to help you assess whether it aligns with your financial objectives.
Table of Contents:
What is the Bandhan Life IInvest II Plan?
What are the features of the Bandhan Life IInvest II Plan?
Who is eligible for the Bandhan Life IInvest II Plan?
What are the benefits of the Bandhan Life IInvest II Plan?
What are the investment strategies in the Bandhan Life IInvest II Plan?
What are the charges in the Bandhan Life IInvest II Plan?
Grace Period, Discontinuance and Revival of the Bandhan Life IInvest II Plan
Free Look Period for the Bandhan Life IInvest II Plan
Surrendering the Bandhan Life IInvest II Plan
What are the advantages of the Bandhan Life IInvest II Plan?
What are the disadvantages of the Bandhan Life IInvest II Plan?
Research Methodology of Bandhan Life iInvest II Plan
Benefit Illustration – IRR Analysis of Bandhan Life iInvest II Plan
Bandhan Life Invest II Plan Vs. Other Investments
Bandhan Life Invest II Plan Vs. Pure-term + PPF/Equity Mutual Fund
Final Verdict on Bandhan Life Invest II Plan
What is the Bandhan Life IInvest II Plan?
Bandhan Life IInvest II Plan is a Unit -Linked Non-Participating Individual Life Insurance Savings Plan.
You can remain insured while creating your wealth. You have a choice of investment strategies to suit your investment needs.
What are the features of the Bandhan Life IInvest II Plan?
- Offers access to a diverse range of funds, allowing you to choose investments that align with your risk appetite and financial objectives.
- Provides the flexibility to switch between available funds based on changing market conditions or investment preferences.
- Returns the mortality charges paid during the policy term upon maturity, subject to the plan’s terms and conditions.
- Rewards long-term policyholders with loyalty additions from the 15th policy year onwards, enhancing the maturity value.
- Refunds applicable premium allocation charges at the end of the 10th policy year.
- Includes a settlement option that allows the maturity proceeds to be received in instalments instead of a lump-sum payout.
- Offers tax benefits as per the prevailing provisions of the Income Tax Act.
Who is eligible for the Bandhan Life IInvest II Plan?
|
Minimum |
Maximum | |
| Entry Age | 3 months |
60 years |
|
Maturity Age |
18 years | 75 years |
| Policy Term | 10 years (when the sum assured multiple is between 7 – 14) |
40 years, subject to maximum maturity age |
|
15 years (when the sum assured multiple is between 15 – 20) |
||
|
Premium |
Annual Mode: ₹36,000 |
No limit, subject to Board-approved underwriting Policy. |
|
Half-Yearly Mode: ₹18,000 |
||
|
Quarterly mode: ₹9,000 |
||
|
Monthly Mode: ₹3,000 |
||
|
Premium Pay Term |
Premium paying term | Policy term |
| Sum Assured Multiple: 7 -10: 5, 7, 10 years – 39 years |
10 years – 40 years |
|
|
Sum Assured Multiple: 11-14: 7, 10 years – 39 years |
10 years – 40 years | |
| Sum Assured Multiple: 15-20: 7, 10 years – 39 years |
15 years – 40 years |
|
|
Top-up Premium |
₹ 5,000 | No limit, subject to Board-approved underwriting Policy. |
| Premium Payment Mode |
Monthly, Quarterly, Half-Yearly & Annual. |
|
|
Base Sum Assured |
7 times of Annualised Premium | 20 times of Annualised Premium, subject to Board-approved Underwriting Policy |
| Top-up Sum assured |
1.25 times the Top-up Premium |
|
What are the benefits of the Bandhan Life IInvest II Plan?
1. Death Benefit
In case of death of the life assured during the policy term, provided the policy is in force as on the date of death, the company will pay the claimant the sum of base death benefit and top-up death benefit (if any), (as applicable on the date of intimation of the death of the life assured):
The base death benefit is the highest of: Base Fund Value or Base sum assured on death, where
The base sum assured on death is the highest of: Base Sum Assured and 105% of the premiums paid up to the date of death.
The top-up death benefit is the highest of the Top-Up Sum Assured and Top-Up Fund Value.
2. Maturity Benefit
On survival of life assured till the end of the policy term, provided all the premiums are paid and the policy is in force, the Total Fund Value would be paid as a lump sum amount.
The policyholder will also have an option to receive the maturity benefit as a systematic pay-out for a maximum of five years under the settlement option
Total Fund Value = Base Fund Value + Top-up Fund Value
Return of Mortality Charges: An amount equal to the total of mortality charges, which were deducted from the fund during the policy term, will be added back to the Base Fund Value and Top-up Fund Value (if any) at maturity, provided all due premiums have been received.
Return of Premium Allocation Charges (if applicable): An amount equal to the total of premium allocation charges deducted during the policy term will be added back to the Base Fund value at the end of the 10th policy year in the same proportion as the value of the total units held in each fund at the time of allocation, provided all the due premiums have been received. Allocation charges pertaining to Top-up Premium will not be refunded.
Loyalty Additions: Policyholder will receive loyalty units, which will be added at the end of the 15th policy year and every 5th policy year thereafter till maturity.
|
End of Policy Year |
15th year | 20th year | 25th year | 30th year | 35th year | 40th year |
| Loyalty Addition | 1.00% | 1.25% | 1.50% | 1.75% | 2.00% |
2.25% |
What are the investment strategies in the Bandhan Life IInvest II Plan?
You have the option to choose from two portfolio strategies:
- Self-Managed Portfolio Strategy
- Lifestyle Portfolio Strategy
A. Self-Managed Portfolio Strategy
Under this portfolio strategy, you have the option to allocate your premium in any of the 9 segregated funds and tailor your investment approach to meet your financial objectives.
The asset allocation under each segregated fund is provided in the table below. You can choose one or more funds and, in any proportion (as %, in whole numbers) within the Self-Managed Portfolio Strategy.
You will have to specify the premium allocation in each fund chosen.
|
S.no |
Fund Name | Asset Allocation | Risk Profile | ||
| Equities | Fixed Interest Securities |
Money Market Instruments |
|||
|
1 |
Blue Chip Equity Fund | 80-100% | 0% | 0-20% | High |
| 2 | Accelerator Fund | 80-100% | 0% | 0-20% |
High |
|
3 |
Opportunity Fund | 80-100% | 0% | 0-20% | High |
| 4 | Stable Fund | 20-80% | 20-80% |
Moderate |
|
|
5 |
Secure Fund | 0% | 60-100% | 0-40% | Low |
| 6 | Debt Fund | 0% | 60-100% | 0-40% |
Moderate |
|
7 |
Flexi Cap Fund | 65-100% | 0% | 0-35% | Very High |
| 8 | Liquid Fund | 0% | 0% | 100% |
Low |
|
9 |
Mid Cap Fund | 80-100% | 0% | 0-20% |
Very High |
B. Lifestyle Portfolio Strategy
The Lifestyle Portfolio Strategy addresses the same by providing you with the right mix between Equity and Debt, based on the duration of your investment.
This helps you automatically decrease your exposure to Equity and increase your exposure to Debt as your age increases and your policy nears maturity.
Under this strategy, depending on the duration of your policy, the premium paid, subject to deduction of charges, if any, will be allocated between the 3 investment funds as per a pre-defined strategy as mentioned in the table below.
| Allocation in various Funds | |||
| Years to Maturity | Secure Fund | Debt Fund |
Blue Chip Equity Fund |
|
40 |
0% | 0% | 100% |
| 39 to 11 | 0% | 0% |
100% |
|
10 |
0% | 10% | 90% |
| 9 | 0% | 20% |
80% |
|
8 |
0% | 30% | 70% |
| 7 | 0% | 40% |
60% |
|
6 |
0% | 50% | 50% |
| 5 | 0% | 60% |
40% |
|
4 |
0% | 70% | 30% |
| 3 | 10% | 70% |
20% |
|
2 |
30% | 60% | 10% |
| 1 | 40% | 60% |
0% |
What are the charges in the Bandhan Life IInvest II Plan?
i. Premium Allocation Charge (as applicable)
The premium allocation charge (as a % of annualised premium) is deducted from the premium amount at the time of premium payment, and units are allocated in the chosen fund thereafter.
|
Premium Payment Mode |
1st – 5th year | 6th policy year onwards |
|
Yearly Mode |
6% | NIL |
| Other Modes |
5% |
|
| Top-up premium |
2% |
|
ii. Fund Management Charge (FMC)
| Fund Name | Fund Management Charge (FMC) | |
| 1 | Blue Chip Equity Fund |
1.35% |
|
2 |
Accelerator Fund | 1.35% |
| 3 | Opportunity Fund |
1.35% |
|
4 |
Stable Fund | 1.35% |
| 5 | Secure Fund |
1.00% |
|
6 |
Debt Fund | 1.10% |
| 7 | Flexi Cap Fund |
1.35% |
|
8 |
Liquid Fund | 0.50% |
| 9 | Mid Cap Fund |
1.35% |
|
Discontinued Policy fund |
0.50% |
iii. Policy Administration Charge
No charge
iv. Mortality Charge
This charge is deducted by cancellation of units at the prevailing Unit Price at the beginning of every policy month as 1/12th of the Annual Mortality Charge.
It will depend on your age and the sum at risk, which is the base death benefit in excess of Base Fund Value.
v. Discontinuance/Surrender Charge
This charge will depend on the year in which the policy was discontinued.
This charge is deducted by cancellation of Units at the prevailing Unit Price.
Inference from the Charges: These charges are deducted throughout the policy term, reducing the amount available for investment and consequently impacting the long-term growth of the fund.
Although certain charges are refunded at a later stage, the benefit is limited because the time value of money is ignored.
The amounts deducted in the early years lose the opportunity to compound and generate returns over time.
As a result, even after the refund of charges, the overall return potential of the plan remains adversely affected.
Grace Period, Discontinuance and Revival of the Bandhan Life IInvest II Plan
Grace Period
Grace period is a period of 15 days for monthly premium payment frequency and 30 days for all other frequencies, from the due date for payment of policy premium.
Discontinuance
Discontinuance of Premium During Lock-In Period of the Policy: transfer the Total Fund Value by creation of units into the Discontinuance Policy Fund after deducting applicable discontinuance/surrender charges.
The risk cover and rider cover, if any, will terminate on the date of discontinuance.
No further charges will be levied by us other than the fund management charge applicable to the Discontinuance Policy Fund.
At the end of the lock-in period, the proceeds of the Discontinuance Policy Fund shall be paid to the policyholder, and the policy shall terminate.
Discontinuance of Premium After Lock-In Period of the Policy: The policy will be converted into a reduced paid-up policy with the paid-up sum assured, i.e. (original sum assured) multiplied by a ratio of the total period for which premiums have already been paid to the maximum period for which premiums were originally payable.
Revival
You can revive the lapsed or paid-up policy within 3 consecutive years from the due date of the first unpaid premium and before the expiry of the policy term.
Free Look Period for the Bandhan Life IInvest II Plan
Free Look means a period of thirty (30) days from the date of receipt of the policy, to review the terms and conditions of the policy, where if you disagree with any of the terms and conditions, you have the option to return the policy stating the reasons for objection.
Surrendering the Bandhan Life IInvest II Plan
If the policy is surrendered during the Lock-in Period: The Total Fund Value less the Discontinuance/ Surrender Charge will be transferred to the Discontinuance Policy Fund.
Proceeds of the Discontinuance Policy Fund will be payable to the policyholder as surrender value at the end of the lock-in period.
If the policy is surrendered after the completion of the Lock-in Period: The Surrender Value payable to the policyholder will be the Total Fund Value as on the date of surrender
What are the advantages of the Bandhan Life IInvest II Plan?
- The plan allows a free switch from the Lifestyle Portfolio Strategy to the Self-Managed Portfolio Strategy once every policy year at any time during the policy term.
- Policyholders have the option to invest additional Top-up Premiums to increase the fund value and potentially enhance the maturity corpus.
- Partial withdrawals can be made from the fund value after the completion of the mandatory 5-year lock-in period.
- Through the Settlement Option, the maturity proceeds can be received in periodic instalments over a selected duration, up to a maximum of 5 years from the maturity date.
- The plan offers flexibility to alter the Premium Paying Term, reduce future premiums, and switch between available funds based on changing financial needs.
- Investors can also modify the premium allocation among different segregated funds to align the portfolio with their investment objectives and risk tolerance.
What are the disadvantages of the Bandhan Life IInvest II Plan?
- The plan does not offer a loan facility, preventing policyholders from borrowing against the policy value during the term.
- Liquidity is restricted during the initial years due to the mandatory lock-in period, limiting access to invested funds.
- The life insurance coverage provided under the plan may not be sufficient to adequately protect against major financial obligations or long-term family needs.
- Premiums are invested only after deducting applicable charges, which means the actual amount allocated towards investments is lower than the premium paid.
Research Methodology of Bandhan Life iInvest II Plan
Since this is a market-linked insurance plan, evaluating its return potential is essential before making an investment decision.
In this section, we analyse the investment component of the Bandhan Life iInvest II Plan and compare its return potential with alternative investment avenues.
The Internal Rate of Return (IRR) calculations below are based on the illustrations provided in the policy brochure.
Benefit Illustration – IRR Analysis of Bandhan Life iInvest II Plan
Let us consider a 35-year-old male who purchases the plan with a sum assured of ₹10 lakhs, a policy term of 20 years, a premium paying term of 10 years, and an annual premium of ₹1 lakh.
|
Male |
35 years |
| Sum Assured |
₹ 10,00,000 |
|
Policy Term |
20 years |
| Premium Paying Term |
10 years |
|
Annualised Premium |
₹ 1,00,000 |
Assuming all premiums are paid regularly, the policy brochure projects the fund value at two illustrative growth rates—4% and 8%.
These are only assumed rates of return and do not represent guaranteed outcomes, as the actual fund value will depend on market performance and the underlying fund’s returns.
|
At 4% p.a. |
At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit |
Death benefit |
|
35 |
1 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 36 | 2 | -1,00,000 | 10,00,000 | -1,00,000 |
10,00,000 |
|
37 |
3 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 38 | 4 | -1,00,000 | 10,00,000 | -1,00,000 |
10,00,000 |
|
39 |
5 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 40 | 6 | -1,00,000 | 10,00,000 | -1,00,000 |
10,00,000 |
|
41 |
7 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 42 | 8 | -1,00,000 | 10,00,000 | -1,00,000 |
10,00,000 |
|
43 |
9 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 44 | 10 | -1,00,000 | 10,00,000 | -1,00,000 |
10,00,000 |
|
45 |
11 | 0 | 10,00,000 | 0 | 10,00,000 |
| 46 | 12 | 0 | 10,00,000 | 0 |
10,00,000 |
|
47 |
13 | 0 | 10,00,000 | 0 | 10,00,000 |
| 48 | 14 | 0 | 10,00,000 | 0 |
10,00,000 |
|
49 |
15 | 0 | 10,00,000 | 0 | 10,00,000 |
| 50 | 16 | 0 | 10,00,000 | 0 |
10,00,000 |
|
51 |
17 | 0 | 10,00,000 | 0 | 10,00,000 |
| 52 | 18 | 0 | 10,00,000 | 0 |
10,00,000 |
|
53 |
19 | 0 | 10,00,000 | 0 | 10,00,000 |
| 54 | 20 | 0 | 10,00,000 | 0 |
10,00,000 |
|
55 |
15,11,750 | 27,20,913 | |||
| IRR | 2.68% |
6.56% |
|||
- At an assumed growth rate of 4%, the projected fund value at maturity is ₹15.11 lakhs. This translates into an IRR of 2.68%, which is lower than the interest rate offered by most savings bank accounts.
- At an assumed growth rate of 8%, the projected fund value increases to ₹27.20 lakhs, resulting in an IRR of 6.56%, which is broadly comparable to, or even lower than, the returns offered by many banks’ fixed deposits.
Although the plan is positioned as a long-term market-linked investment solution, the return potential appears relatively modest.
Equity-oriented investments are generally expected to deliver superior long-term wealth creation, but the impact of various policy charges significantly reduces the effective returns generated for the investor.
From a financial planning perspective, the Bandhan Life iInvest II Plan struggles to meet two important objectives—it neither delivers strong inflation-beating returns nor provides a sufficiently large life cover to adequately protect a family’s long-term financial needs.
Bandhan Life iInvest II Plan Vs. Other Investments
The Bandhan Life iInvest II Plan falls short on several critical parameters.
Its modest return potential, limited liquidity, and inadequate life cover make it an inefficient choice for both wealth creation and financial protection.
Like many insurance-cum-investment products, it attempts to serve two objectives simultaneously but ultimately fails to excel at either.
A more effective approach is to keep insurance and investments separate, allowing each to perform its intended role efficiently.
Bandhan Life iInvest II Plan Vs. Pure-term + PPF/Equity Mutual Fund
Consider purchasing a pure-term life insurance policy with a sum assured of ₹10 lakhs.
Such a policy would cost approximately ₹7,500 per year for a 20-year term with a 10-year premium payment period.
This leaves ₹92,500 annually available for investments that can be tailored to your financial goals and risk tolerance.
|
Pure Term Life Insurance Policy |
|
| Sum Assured |
₹ 10,00,000 |
|
Policy Term |
20 years |
| Premium Paying Term |
10 years |
|
Annualised Premium |
₹ 7,500 |
| Investment |
₹ 92,500 |
|
Term Insurance + PPF |
Term insurance + Equity Mutual Fund | ||||
|
Age |
Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + Equity Mutual Fund |
Death benefit |
| 35 | 1 | -1,00,000 | 10,00,000 |
-1,00,000 |
10,00,000 |
|
36 |
2 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 37 | 3 | -1,00,000 | 10,00,000 | -1,00,000 |
10,00,000 |
|
38 |
4 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 39 | 5 | -1,00,000 | 10,00,000 | -1,00,000 |
10,00,000 |
|
40 |
6 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 41 | 7 | -1,00,000 | 10,00,000 | -1,00,000 |
10,00,000 |
|
42 |
8 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 43 | 9 | -1,00,000 | 10,00,000 | -1,00,000 |
10,00,000 |
|
44 |
10 | -97,500 | 10,00,000 | -1,00,000 | 10,00,000 |
| 45 | 11 | -500 | 10,00,000 | 0 |
10,00,000 |
|
46 |
12 | -500 | 10,00,000 | 0 | 10,00,000 |
| 47 | 13 | -500 | 10,00,000 | 0 |
10,00,000 |
|
48 |
14 | -500 | 10,00,000 | 0 | 10,00,000 |
| 49 | 15 | -500 | 10,00,000 | 0 |
10,00,000 |
|
50 |
16 | 0 | 10,00,000 | 0 | 10,00,000 |
| 51 | 17 | 0 | 10,00,000 | 0 |
10,00,000 |
|
52 |
18 | 0 | 10,00,000 | 0 | 10,00,000 |
| 53 | 19 | 0 | 10,00,000 | 0 |
10,00,000 |
|
54 |
20 | 0 | 10,00,000 | 0 | 10,00,000 |
| 55 | 27,29,733 | 50,72,011 | |||
|
IRR |
6.58% |
10.74% |
|||
PPF Investment
If the remaining ₹92,500 is invested annually in a Public Provident Fund (PPF), the corpus at the end of 20 years would grow to approximately ₹27.29 lakhs, generating an IRR of 6.58%.
Notably, this return is comparable to the IRR achieved under the 8% illustration of the Bandhan Life iInvest II Plan, despite PPF being a government-backed debt instrument with significantly lower risk.
Equity Mutual Fund Investment
Alternatively, investing the same amount in an equity mutual fund can produce substantially better outcomes.
Assuming reasonable long-term equity market returns, the investment could accumulate to ₹56.46 lakhs before tax.
After factoring in capital gains tax, the post-tax maturity value would still be around ₹50.72 lakhs, translating into an IRR of 10.74%.
|
Equity Mutual Fund Tax Calculation |
|
| Maturity value after 20 years |
56,46,584 |
|
Purchase price |
9,25,000 |
| Long-Term Capital Gains |
47,21,584 |
|
Exemption limit |
1,25,000 |
| Taxable LTCG |
45,96,584 |
|
Tax paid on LTCG |
5,74,573 |
| Maturity value after tax |
50,72,011 |
Apart from the potential for higher returns, equity mutual funds also offer greater flexibility, better liquidity, and complete transparency.
Investors have the freedom to choose, modify, or redeem investments without being constrained by the rigid structure of an insurance-linked product.
When compared with these alternatives, the Bandhan Life iInvest II Plan offers neither meaningful wealth creation nor sufficient financial protection.
Therefore, adopting a strategy that combines a pure-term insurance policy with a well-designed investment portfolio is a far more effective way to achieve long-term financial goals while ensuring adequate protection for your family.
Final Verdict on Bandhan Life iInvest II Plan
The Bandhan Life iInvest II Plan is a conventional Unit-Linked Insurance Plan (ULIP) that combines life insurance protection with market-linked investments.
Like most ULIPs, it comes with multiple charges that impact the investment component.
Although the plan offers a refund of certain charges, such as mortality and premium allocation charges, at a later stage, this feature appears more attractive on paper than in practice.
The impact of the time value of money is often overlooked, as money returned years later does not compensate for the growth potential lost during the investment period.
Under the plan, premiums are paid for a limited period, and upon maturity, the policyholder receives the accumulated fund value along with the return of mortality charges, applicable premium allocation charges, and loyalty additions.
However, a detailed analysis reveals that these benefits do little to offset the plan’s primary drawback—its relatively low return potential.
The plan also falls short from a protection standpoint.
The life cover offered is generally inadequate when compared with the level of coverage required to secure a family’s long-term financial needs.
As a result, by combining insurance and investment into a single product, the plan compromises on both wealth creation and financial protection.
A more effective strategy is to separate insurance from investment.
Adequate financial protection can be achieved through a pure-term life insurance policy, which provides a substantially higher sum assured at a significantly lower cost.
The savings generated can then be invested in suitable financial instruments, such as equity mutual funds, hybrid funds, or other investments aligned with your risk profile and financial goals.
Before investing in any financial product, it is important to evaluate its return potential, costs, liquidity, and flexibility rather than relying solely on projected illustrations or promotional features.
If you are uncertain about selecting the right combination of insurance and investments, consulting a Certified Financial Planner (CFP) can help you build a personalised, goal-oriented financial plan.
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