Bajaj Allianz Shield Insurance Plan review

Tuesday, April 5, 2011, 9:28 by Business Editor

Bajaj Allianz Shield Insurance Plan is a single premium fixed term ULIP that gives you investment benefits along with a guaranteed return on maturity (in case of Shield Plus III Fund).

This plan is best suited for those looking for a pure investment plan that also combines death benefit—though the death benefit (or risk cover bit of the plan) is probably for meeting the legal requirements. (IRDA—the insurance industry regulator—has mandated that all ULIPs must have death cover.)

Like other Bajaj Allianz plans, they have some good funds underlying them. So if you have surplus cash lying somewhere, and want to invest it, then this would be one of the options.

Key benefits of Bajaj Allianz Shield Insurance Plan

Ø  Single premium plan with fixed term of 10 years.

Ø  Sum Assured can be 1.1/1.25 to 5 times of the Single Premium.

Ø  You can choose from nine funds including Shield Plus Fund III. If you invest in Shield Plus III, then you get a guaranteed minimum return—Rs 170 after 10 years for Rs 100.

Ø  Return of up to 6.00% of the single premium at maturity as Guaranteed Addition.

Ø  Flexibility in terms of

o   Option to decrease Sum Assured—this will release more money to be invested in funds leading to more money at the end of policy term. This feature is useful in case you get yourself covered nicely with Term Plan (we like Term Plans very much and strongly recommend these) down the line.

o   Unlimited top-up premium payment.

o   Partial Withdrawals anytime after five years from the commencement of the policy—a standard feature in most such plans.

o   Unlimited Free Switches—a standard feature in most such plans.

o   Optional Rider Benefits—a standard feature in most such plans.

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

Parameter Details
Minimum Entry Age 8 years (18 years in case of Additional Rider Benefits)
Maximum Entry Age 65 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 at Age 65 years)
Policy Term 10 years
Minimum Single Premium Rs 25,000
Maximum Single Premium No Limit
Minimum Top Up Premium Rs 5000
Maximum Top Up Premium No Limit
Minimum Sum Assured Age at Entry Minimum Sum Assured
8-44 years 1.25 times single premium
45-65 years 1.1 times single premium
Maximum Sum Assured Age at Entry Maximum Sum Assured
8-55 years 5 times single premium
56-65 years 1.1 times single premium

Investment Options (Funds)

This unit-linked policy gives you the following array of 9 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).

Some of the funds have good track record so if you are looking to invest in this plan for upside, go for it. But if the guaranteed return is what you are looking for, there are other plans such as ICICI LifeLink Pension SP that offer better guarantees.

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) 60-100% 0-40%
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%
Growth Plus Fund 3 (invests in highly rated secured debentures, corporate bonds, equities and money market instruments) 0-20% 80-100% 80-100%
Shield Plus Fund 3 ( invests in debt securities, equities, mutual funds and highly rated debentures) 0-50% 0-50% 50-100%

Test case for investment returns

Age – 30 Years; Policy term – 10 years; Single Premium – Rs. 50,000; Sum Assured – Rs62,500

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% 303,588.88
Bluechip Equity Fund -26.59% - 49,708.85
Equity Growth Fund II 14.41% 114,221.94
Bond Fund 10.57% 65,067.55
Liquid Fund 10.02% 59,215.73
Accelerator Mid-Cap Fund II 9.10% 50,010.84
Asset Allocation Fund 8.86% 47,724.73
Shield Plus Fund 3 4.87% 15,871.06
Growth Plus Fund 3

Switching Option

  • The policyholder can switch in or out between Asset Allocation Fund, Equity Growth Fund II, Bond Fund, Liquid Fund, Bluechip Equity Fund, Accelerator Mid-Cap Fund II and Pure Stock Fund at any time during the term of the policy.
  • Switching into the Shield Plus Fund III or the Growth Plus Fund III is not allowed during the term of the policy but you can switch out, i.e., you can start with Shield Plus III and move into other funds but not the other way round. Switching out of Shield Plus Fund III would be at the prevailing unit price and not at any guaranteed unit price.
  • The minimum switching amount is Rs.5, 000 or the value of units held by the policyholder in the fund to be switched from, whichever is lower.

Partial Withdrawals

The Bajaj Allianz Shield 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 single premium fund value after each withdrawal should not fall below 1/5th of the Single Premium or Rs. 5000 whichever is higher across all funds after a partial withdrawal. The Company may vary the minimum value of units to be withdrawn and/or the minimum balance of value of units to be maintained after such partial withdrawals (subject to prior approval from IRDA) by giving you a written notice of three months.
  • All partial withdrawals will be first made from eligible top up premium fund value, if any. Once the eligible top up premium fund value is exhausted, further partial withdrawals will be made from the regular premium fund value.
  • In case of minor life, partial withdrawal is allowed after attaining age of 18 years.

Surrender Benefit

  • The policyholder’s surrender value will be equal to Fund Value as on date of receipt of request for surrender. No surrender charge is applicable on surrender.
  • No surrender is allowed in the first five policy years.
  • No guarantee of unit price shall be applicable on surrender of the policy.
  • The policy shall terminate upon payment of the full surrender value.

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.

Similar Posts:

Tagged with: ,

Leave a Reply