Bajaj Allianz iGain III Insurance Plan is a ULIP with high returns

Tuesday, April 5, 2011, 12:32 by Business Editor

Bajaj Allianz iGain III Insurance Plan is an online ULIP that promises high returns.

Since this plan can be purchased online through credit card/debit card, it is hassle free compared to other ULIP plans that involve intermediaries like insurance agents etc.

In short, this is really an investment plan with a pretence of insurance. So if you have already covered yourself and are now looking to basically invest your money for higher returns, this could be one option.

The advantage of the plan is that it gives you access to some rather well-performing funds. And depending on your risk appetite at given point in time, you could always switch between them.

Let us look at some of the key benefits of Bajaj Allianz iGain III Insurance Plan

Ø  This plan offers a high allocation of 98% of the premium paid from the start itself.

Ø  From the 6th policy year, this plan offers 100% allocation.

Ø  Inbuilt accidental death cover.

Ø  This plan provides policyholders the flexibility of selecting policy term of 10/ 15 or 20 years and premium paying term of 5 years to policy term.

Ø  An automatic annual increase in sum assured from 6th policy anniversary is provided to suit the policyholder’s needs.

Ø  You can choose between 7 investment funds to invest as per the risk appetite of the policyholder.

Ø  Maturity Benefit – Upon the maturity of your policy, you receives the Fund Value as on the maturity date.

Ø  Two investment portfolio strategies to manage the policyholder’s investments better; including the Wheel of Life portfolio strategy, which will help the policyholder to balance and safeguard his investment.

Ø  Surrender Benefit – This policy allows a policyholder to opt out of the policy anytime after the 6th year. The surrender value in that case would be equal to the Fund value as on the date of surrender of the policy.

Ø  Optional Riders for the benefit of the policyholder

Ø  Flexibility of

  • Partial withdrawals anytime after five years from the commencement of the policy.
  • Top-up premium payment over and above regular premiums
  • Unlimited free switches
  • Changing your premium paying term
  • Decrease in sum assured
  • Changing your premium payment frequency

Having gone through the key benefits of Bajaj Allianz iGain III Insurance Plan, let’s now examine its various aspects in detail.

Parameter Details
Minimum Entry Age 1 years(18 years in case of Additional Rider Benefits)
Maximum Entry Age 60 years (50 years in case of Additional Rider Benefits)
Minimum Age at Maturity 18 years
Maximum Age at Maturity 75 years (Additional Rider Benefits ceasing Age 65 years)
Policy Term 10, 15 and 20 years
Minimum Regular Premium
Mode For Premium Paying

Term 5 to 9 years

For Premium Paying

Term 10 years and above

Yearly Rs.15,000 Rs. 10,000
Half Yearly Rs. 8,000 Rs. 6,000
Quarterly Rs. 5,000 Rs. 4,000
Monthly Rs. 1,700 Rs. 1,500
Maximum Regular Premium No Limit
Minimum Premium Paying Term 5 years
Maximum Premium Paying Term Policy Term
Premium Payment Frequency Yearly, half-yearly, quarterly and monthly. The monthly

mode will be allowed through ECS only

Premium Frequency factor for

alteration from yearly to other mode

Monthly Quarterly Half yearly
1/12 1/4 1/2
Minimum Top Up Premium Rs. 5,000
Maximum Top Up Premium No Limit
Minimum Sum Assured 10 times of Annualized Premium for entry age below 45 years

7 times of Annualized Premium for entry age 45 years & above

Maximum Sum Assured Policy Term times Annualized Premium with base cover only

[Only 10 times of Annualized Premium if any Rider has been

opted for]

Investment Options (Funds)

This unit-linked policy gives you the following array of 7 investment options (funds), each having a varied proportion of equity and debt, for you to choose from (based on your risk appetite and expectations of returns) –

Fund name Asset classes invested in (as a % of overall fund portfolio)
Bank Deposits & Money Market Instruments Equities Government Securitiess, Bonds, Fixed Deposits
Pure Stock Fund (shuns unethical sectors like gambling) 0-40% 60-100%
Bluechip Equity Fund (invests in NSE NIFTY-listed stocks, seeking to replicate returns registered by the benchmark index) 0-40% 60-100%
Equity Growth Fund II (investment in specific equity stocks having high growth potential) 0-40% 60-100%
Bond Fund (invests in high-quality fixed income securities) 0-100% 0-100%
Liquid Fund (invests in liquid money market and short-term instruments) 0-100%
Accelerator Mid-Cap Fund II (invests in a diversified pool of mid-cap and large-cap stocks, with at least 50% of equities exposure to mid-cap companies) 0-40% 60-100%
Asset Allocation Fund (allocates assets across equities, bonds and cash to build a balanced portfolio) 0-100% 0-100% 0-100%

Test case for investment returns

Age – 30 Years; Policy term – 10 years; Annual Premium – Rs. 10,000; Sum Assured -  Rs 100,000

Fund name Fund track record (rate of returns delivered till date from inception) Projected Maturity Benefit (based on fund track record till date; no guarantee, however) (in Rs.)
Pure Stock Fund 23.24% 342,962
Bluechip Equity Fund
Equity Growth Fund II 18.07% 254,544
Bond Fund 11.16% 171,156
Liquid Fund 10.58% 165,581
Accelerator Mid-Cap Fund II 11.41% 173,619
Asset Allocation Fund 8.86% 150,131

Premium Apportionment:

  • As a policy holder, you can choose whether she invests the entire amount in one fund or across funds in desired proportion. In case of the latter, you’ll however need to make sure you invest a a minimum of 5% of premium into any fund.
  • The policyholder may at any policy anniversary, change the proportion of premium to the funds he wants to invest in.
  • If you choose the Wheel of Life Portfolio Strategy, then you will not have the option to choose where and to what extent you invest in a particular fund. In effect, you are entrusting your fund managers to manage your money for you—not a bad option if you are not heavily in markets or don’t have enough time. You can however opt of Wheel of Life Portfolio Strategy at each policy anniversary.

Switching Option

If the policyholder has chosen Investor selectable portfolio strategy:

  • You have the flexibility to switch between funds. You are allowed to make unlimited free switches.
  • But every time you switch, you will need to move a minimum of Rs. 5000/equivalent units.
  • You can switch in/out of this Portfolio Strategy at any Policy Anniversary by giving a 30-day advance notice to the company.

Partial Withdrawals

The Bajaj Allianz iGain III Insurance Plan policy holder is entitled to making any number of partial withdrawals he wants, anytime after the fifth policy year–conditional upon several factors, a few of which are shortlisted below:

  • The minimum amount of partial withdrawal is Rs. 5,000 and the policyholder’s regular premium fund value after any partial withdrawal should not fall below 3 times of the annual premium (NAV) across all funds. So if you are paying Rs. 10,000 as annual premium, you will need to make sure there is at least Rs 30,000 left in your policy account after withdrawl.
  • All partial withdrawals will be first made from the eligible top up premium fund value, if any, on First in First out basis. Once this fund value is exhausted, further partial withdrawals will be made from the regular premium fund value.

Surrender Benefit

You can, if you want, surrender the Bajaj Allianz iGain III Insurance policy after five years. In that case, you’ll get your money back with whatever returns the fund generates.

Tax Benefits

Premiums paid towards the Bajaj Allianz Wealth Insurance Plan are eligible for tax benefits under section 80C. On the other hand, you can claim tax relief for maturity benefit, death benefit and surrender value under section 10(10) D of the Income Tax Act.

Policy Termination

The Bajaj Allianz iGain III Insurance Plan shall automatically become void on the earlier occurrence of either of the following events:

  • The units in the policy are fully surrendered;
  • Upon death of the life assured;
  • Upon Maturity
  • Upon payment of discontinuance value
  • Upon foreclosure.

Appendix – Wheel of Life Portfolio Strategy

  • The company provides the policyholder with “Years to maturity based portfolio management”.
  • At the commencement of the Policy, the policyholder’s premium (regular premium and top up premium, if any) would be allocated in various funds (namely Blue-chip Equity Fund, Equity Growth Fund II& Accelerator Mid-Cap Fund II) in the proportion as mentioned below.
  • On each policy anniversary, the company will reallocate the policyholder’s fund value among various funds in the proportion based on the policyholder’s outstanding years to maturity.
  • The premiums (regular premium and top up premium, if any) paid in that particular policy year will also be allocated in the same proportion.
  • This will ensure that a balance is maintained between the policyholder’s “years to maturity” and level of risk to his investments to optimize the returns
  • The rates of allocation/reallocation of the policyholder’s premium /fund value into various funds based on his outstanding years to maturity will be as follows:
Years to Maturity Proportion in following three Funds (%) Bond Fund (%) Liquid Fund

(%)

Blue-chip Equity Fund Equity Growth Fund 2 Accelerator Mid-Cap Fund 2 Total
20 20 50 30 100 0 0
19 30 50 20 100 0 0
18 30 50 20 100 0 0
17 30 50 20 100 0 0
16 30 50 20 100 0 0
15 40 40 15 95 5 0
14 40 40 10 90 10 0
13 40 40 5 85 15 0
12 40 40 0 80 20 0
11 40 35 0 75 25 0
10 40 30 0 70 30 0
9 40 25 0 65 35 0
8 40 20 0 60 40 0
7 40 15 0 55 45 0
6 40 10 0 50 50 0
5 40 0 0 40 55 5
4 30 0 0 30 60 10
3 20 0 0 20 65 15
2 10 0 0 10 70 20
1 0 0 0 0 80 20

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