Bajaj Allianz recently launched Shield Plus, a unit linked insurance plan (ULIP) last week. Going through the product details, it is assured to provide 170% returns on the premium paid at maturity. Policy has a fixed tenure of 10 years while the minimum premium is Rs 25,000. This is the first guaranteed product from Bajaj Allianz Life on the ULIP, which guarantees returns. Here is a deeper look at this policy and my observations in the form of a review.
An official statement about the Bajaj Allianz Shield Plus product by its chief investment officer states – “A minimum 170 per cent for a 10-year period equals to a year-over-year growth rate of 5.45 per cent. The Shield Plus Fund I is a fund with a medium risk profile because it will invest 50-100 per cent in debt securities. We are guaranteeing the minimum return as we are confident of building a portfolio out of AAA-rated, high-yielding debt”.
Now let us understand what this growth rate of 5.45 percent means. The returns of this product at 5.45% can be compared to that of a bank or a post office deposit. However, given that the product has an equity exposure, there is a strong possibility of outperforming over bank or post office deposits in the long term. Again this comes at a risk based on the fund selection, allocation and management.
Coming to the insurance cover, the sum assured in this plan could be equal to 1.1 or 5 times of the single premium paid. Bajaj Allianz has capped the maximum sum assured at 1.1 times the single premium for individuals in the age group of 56-65 years. That means if you take a policy by paying a single premium amount of Rs 25,000/-, your insurance cover is just Rs 27,500/-. However if your age is upto 55 years, the cover would be 5 times the premium – ie., Rs 1,25,000/- Also, this policy offers a choice of selecting between 6 funds as mentioned below under the charges section.
- The surrender value of the policy will be equal to the Fund Value as on date of surrender less surrender charge, if any.
- No surrender allowed in the first 3 years after the policy commencement.
- Anytime after three years from the date of commencement of the policy, the Policyholder will have the option to avail of surrender benefit by complete surrender of units.
- No guarantee shall be applicable on surrender of the policy.
- If the policy surrendered in 4th year, 6% of the premium paid would be deducted, while in 5th year it would be 3%
Anytime after three years from date of commencement of the policy, the policy holder can opt to partially withdraw units from his/her fund subject to following conditions:
- No NAV guarantee will be available on the fund withdrawn. The partial withdrawal would be at the prevailing unit price.
- The premium fund value should not fall below 1/5th the premium (NAV) across all funds after a partial withdrawal.
- The minimum amount of withdrawal is Rs 5000/- (NAV).
- In case of minor life, partial withdrawal is allowed after attaining age 18 years.
- If invested in more than one fund, the Policyholder will have the option to choose the fund he wants to do partial withdrawals from.
- No charge is applicable on partial withdrawal
Various charges on this ULIP
Policy Administration Charge : 2% of premium pa for first 5 years, 1.15% from 6th year onwards inflating @ 5% p.a at every policy anniversary
The Fund Management Charge:
– Shield Plus Fund: 1.35%
– Growth Plus Fund: 1.35%
– Asset Allocation Fund: 1.25%
– Equity Growth Fund: 1.35%
– Bond Fund: 0.95%
– Liquid Fund: 0.95%
Switching Charges: Nil! Unlimited free switches allowed under this policy.
My take on the policy :
Stick to the thumb rules of investment. Don’t combine insurance with investment. This policy is providing such low returns, while the insurance cover is even worse. While reviewing this policy, I found their website to be really bad in providing all the details online. Not sure when the insurance companies learn to provide a good navigation and product details online. Don’t get fooled by agents, they may mis-sell the product. Verify their words on the site before buying a policy. Now you decide if you really need such a policy. You can take a look at my other insurance plan reviews here. Also, here is a quick guide that you can refer to while purchasing any insurance policy.
if i paid 3 years policy amount of 30000 what value of amount i will get now i can
vivek sarda says
I have 2 Kotak policies of Super advantage. I have paid 2 annual premiums of 100000 each. I had clearly mentioned that i will pay premiums for 3 years and withdraw after 5 years. i wa spromised a lot and now i come to know that full first year premium will not be paid.What is the best i can do. I am really in a fix.
kishore kumar says
Dear Mohan, I took a Bajaj Allianz Unitgain ULIP in 2006. Paid annual premium of Rs.199,960.00 for 3 years. Initially I did not seen the policy in detail. Now I see that 1st year only 28.5 % was allocated for investment. 2nd and 3rd year some 90+ % was allocated. Is this the norm or have I been taken for a ride? How much do Bajaj pay as their agent commission.
rishabh mishra says
I invested rs.300000 in future plus plan on 21 march 2009 i subsiquently paid the next two installments of rs.15000 in march 2010 and 2011 I want to take out my money back after 3 years kindly tell me the sum assured in march 2012 i got my policy switched off in december 2010.thank you please reply
Mr BJM says
I have bajaj allianz unit plus gold fund with annual premium of 1 lakh for 3 years,as on the documents its written the sum assured is 7 lakh?
as per there policy u can withdraw the money any time after 3 years,my 3 years is finished and paid up my premiums too,but the current value of the fund is just little more than 3 lakh to b presice Rs 3,00882.73,den how can i get 7 lakh?
and suggest how this fund is doin??
does sum assured 7lakh means its the money we will get incase of any death or is it the money we goin to get after certain period??/
You shoudl be happy that your funds are grown a bit, most of their products are bellow the investment. while applying the bajaj allianz form ask you to select the funds, that means you are solely responsible for what fund you chose to float in the money market. you may also change the fund later if it is in bad shape. I would sugges you get rid of Bajaj Allianz as soon as possible without delay.
deepak garg says
sir i read your replies, i appreciate your efforts. now i invested rs 10000 per year regularly since 28 march 2007 total 30000 rs in bajaj allianz capital unit gain plan.but now total fund value is 27000 rs in march 2010. i am very puzzle about to invest new instalment or surrender it. please suggest me what i do? i am 40 years old. thanks
Deepak, it all depends on the fund you choose. Sorry, I wouldn’t be in a position to say whether to stay or quit since it is all risk based and no body has a thought on how the fund would perform in future.
Am reflecting on Kala’s and various other’s queries on Bajaj Allianz Max Gain policy. I would appreciate if you could provide us your insight into this policy…
How is bajal alliance Max gain policy iam 30 yrs lady wish to invets 50000/- is it oky
Hi Kala, I haven’t looked at that policy details. I will write a review if I get to go through all the details on Max Gain.
Jayant Bhat says
Trust you have gone through all the articles on investment published by Mohan and Guests. You need a professional financial planning who would recommend you the plans based on the short, medium and long term goals. You need to diversify funds but only after good understanding of where you are investing your money.
Before you talk to an advisor, pl have the following things in mind:
Do you have emergency funds for not so fortunate days?
Do you have plans for pension?
Do you have health policy in addition to you company’s regular mediclaim benefits(in case you are salaried)?
Many such instances to be kept in mind when you want to invest.
I do agree with Jayant. It is not suggested to get into something without proper knowledge and a good assessment by a helping hand. Always know the needs, limitations & expectations known before getting into investment.
Iam 50 and would like to retire by 10years. Iam looking for a solid investment plan to keep me going after retirement. Can you suggest a plan for me…….I can invest upto 12000 per month and my time frame is 10 years.
Thanks for the advice
Hi malati, see the reply to your query by Jayant below.
@Jayant: Your reply is more on investment planing of an individual, which we are all sure depends on case to case basis as something which is working for you may or may not wok for others.But it still leaves my questions unanswered.
May be Mohan can shed some light on the ULIP’s gurantees and post his replies on my comments.
There is a good discussion on my other article about LIC Wealth Plus. Some comments highlight how exactly some ULIPs are coming up with guaranteed returns. I suggest you read through them to understand the logic of these schemes. I will shortly plan for an article on those lines.
Jayant Bhat says
Its not the question of wrong or right. Mohan has provided a platform where readers themselves encourage open debate/discussion. Thanks to Mohan that we all get to know about our investment patterns, the rights and wrongs etc.
By the way, with regards to our investment safety, (I have said this earlier too but still would like to repeat). Our risk taking ability naturally drifts from Highly Risky to Less Risky options as we mature. All these years, I have a serious risk taker in equities and related tools. Now that my daughter is six and responsibilities are growing in terms of educational expenditure etc, I am getting a feel that I should have more funds readily available that previous year and at the same time, I need to plan for life.
Now from high risk and persistant investments in equities, I have tried out a new pattern of investments myself: There are times when we earn more than 20% per annum from our investments. Without waiting for further profits, I withdraw the profits and park them in FDs of big Pvt companies. Whilst I am of firm view that equity investment would surpass all inflationary tools but i might not be in a position to withdraw money required during emergency needs. In short, we need minimum three to six months income in emergency funds.
While it is just 8-10 months that i am trying out this new formula for myself, I invite suggestions from Seniors or intellects to opine on whether i am thinking wise or not.
Thanks Jayant. The DNA article really highlights one point which I had missed. Shifting the portfolio weight towards debt when the gain in equity is “satisfactorily achieved” as the maturity nears. But isn’t it upto the investor to decide in which type of plan does one want to invest. Considering an aggressive plan (100% in Equities) and continuing the same till maturity, the investor seems to be on winning egde (assuming that the insurance company on its self doesn’t automatically change a.k.a ‘switch’ your investments into more conservative portfolio)
Don’t get me wrong here, as I’m neither a opponent nor a proponent of ULIP, but just trying to understand real facts that insurance companies try to disguise/hide and some which we may misunderstand.
Jayant Bhat says
I liked this article from DNAindia.
While I am still trying to figure the exact modus operandi of NAV guarantees, I somehow am not convinced to invest huge money in guaranteed schemes. If I ve to invest in ULIPs then i would park my money in Non guaranteed ULIPs. But yes, I wont shy away from Mutual Funds or ULIPs as I am thouroughly convinced that in the long run we are all going to benefit from equity market more than any liquid investment tool and never enter endowments or money back.
You regularly mention not to consider investment+insurance together. Ok.
But then if we go with the approach of MF+term insurance, can you tell me which MF guarantees highest NAV for any time period??
I’m awaiting your review on Bajaj Max gain policy, but my initial study says that its offering highest NAV recorded daily in 10 yrs (7 yrs being minimum premium paying period. I’ll not go further into this).
My question is not just for Bajaj’policy but for all such policy types in which the investment automatically gets protected when the amount doubles/triples or so on.
Don’t we have a case here (in some ULIPS) where we are totally protected from the downside?
MFs are always subjected to fund performance which cannot be chosen for 100% investment. You should always consider a diversified portfolio to reap the best. I am not aware of any such product that gives you a possibility to cap your returns when they hit the highest. Either you max out with penalty or stay invested for the entire term.
Exactly. MF investments should be diversified which can be (obviously) understood by any smart investor. Since its not possible in MF to cap the returns, ULIPs are exactly betting on this (though I’m skeptic about it). Anyways,I’ll give a look to your “LIC Wealth Plus” review & view its comments. I may discuss more on this topic here when there’s an appropriate post against the same.
Sure, I would live to hear the diversified opinions. That brings in a better & healthy information for investors. Look forward to hear from you more!
Jayant Bhat says
These days you get variouus kinds of ULIPs and Mutual Funds. So it is difficult and not prudent to give a generic statement. Whatever may be the type of investment, one has to remain invested for longer term only. Advantage or a basic difference of ULIP and Mutual Fund is the additional insurance cover in the former which can be enhanced or decreased(depending on the product guideline) as per our need and age.
Since last year, I am experimenting on a new way to safeguard my money from extremities of market. Since, I am more into financial industry, I have been able to successfully invest in equity mkt, when mkts have fallen. The moment I earn 20% return(if it is within one year),then I withdraw my profit and invest the same into PPF and Pvt Finance companies like L&T or TATA finance which give slightly better returns than bank FDs.
If our money is invested in ULIPs and ELSS MF, then it is possible only after a year. But still though it is a successful formula for me, If anybody wants to try this model, then it can be tried for a small percentage of investment. I dont wait for getting more profits as I dont trust markets blindly.
Daulat Ram Ahuja says
I am a non-resident Indian and am looking for investment in India upto US$ 100,000 in mutual fund or any other safe product. I am around 68 years male. Please advise
Jayant Bhat says
Dear Mr. Ahuja,
I reiterate my caution again. Please do not advise on adhoc basis. Please seek proper financial advise through a financial planner/advisor. Trust you have gone through all articles published on this.
Jayant Bhat says
Please read the second sentence with the correction: Please do not invest on adhoc basis.
HI Jyant & Mohan,
Does in long term (lets say form 10yrs) ULIP & Mutual funds give same returns
on invested money ?
Am I Right ? OR in long term mutual is more netter than ULIP?
Yogesh, it is very subjective. It all depends on the fund manager and a number of parameters that the provider operates on. Sorry, i have little knowledge on comparing these two for long term.
Hi Jyant Bhat & Mohan,
Out of ULIP & Mutual fund..which one is better for investment point of view and from return point of view ?
Jyant Bhat..U r correct shd put more money in case market crashes. I think
we shd put more money & if we have switching option shd switch to debt fund
also.. Am I right ?Whats ur view Plz give detail on this?
Jayant Bhat says
With regards to switches, I feel one should be careful. There are limited number of free switches allowed. Though the charges percentile of switches may seem less, converting the same in Rupees amounts a bit high. So, switches should be opted by those who think are aware about market trends, both present and future i.e. Financial planners and advisors AND Fund managers. Rest of those who are not market savy should take few chances.
E.g.: The current trend (since last 6-8 months) of nifty is seen at a range of 4800 and 5200. So at nifty 5000, where would you switch. It depends on that months inflation scenario, political and global situation.
Take this months situation, now nifty is at 4700 odd range. Bulls speculate that market would reach 5000 before budget and Bears feel that first market would reach 4400 before rallying up.
I am not trying to confuse, but giving some realtime scenarios. Hence I suggest that you use the switchover option after good study. Also, you need to check with the company representative if you dont have a good advisor, about the estimated profit that you would be making by switching.
Simranjeet Singh says
Its informative post.The company & it’s policies sound good . Here is an online tool which I think you might be interested in which helps people to plan their insurance according to their needs & budget, especially ULIP.
Jayant Bhat says
These days almost all companies are offering more of investment products rather than promoting insurance. Buy a pure term incase u dont ve sufficient cover.
Dont Panic incase u have already invested in some ULIP. Whichever be the ULIP and what the advisor might have told, be ready to invest for minimum 7-10 years.
Whatever charges are charged initially by the companies will look negligible once you the end result. Whatever may be the market scenario, Equity will always surpass inflation so we all will definitely get much better returns. In case market collapses, dont withdraw your money, infact invest more money at such times.
Gurumantra of investment in equities:
Be greedy and buy when others panic and sell. Sell when market goes up coz that is when most people want to buy. In both the scenario, you become a SAINT 🙂 by fulfilling majority people’s requirements.
Mohan – I was just wondering if it would be possible to add ages automatically of those who comment on your site. You know it becomes to analyses ones financial needs and comment according to the age.
that can be done, but not many would be interested in sharing their age. If anyone needs better understanding/help, they can always quote their age in comment.
Mohanji, what is your opinion about Kotak Super Advantage Fund? I already invested 40K Cannot I combine investment and insurance?
Dear Bala, I haven’t looked at Kotak Super Advantage fund. I will post my review on that sometime soon. Why not… It is upto you to decide on how much you want to invest. If you already have a good insurance cover, i don’t see a point in going for insurance linked plans again.
Mohan, what about the Max Gain I from Bajaj Allianz? Is it also like the above plan?
Hi Ahmed, I haven’t reviewed the Bajaj Allianz Max Gain plan yet. Stay tuned for that review soon.
Can you give me comparison between SBI’s SMART ULIP and Bajaj Allianz’s Max gain schemes? i want to invest in one of them but could not decide which is the better bet.
I haven’t done a comparative study of Smart ULIP and Max Gain plans. Will do it sometime soon.
Plz provide ur views on my previous comment.Thanks
Which one is better ?Endowesement plan or PPF+Term ??
Yogesh, the projected return is an estimate based on the expected performance of LIC in future. Now, that is again subjective as that number is only an indicator based on current scenarios. In case of of PPF, the rate of interest will be varied too by govt agency once in a year. Money is safe in PPF and guaranteed based on whatever the interest rates are announced. You can already see 1lakh + difference with your calculations… so, why do you want to compromise by opting for endowments?
Krishna Raju R says
First of all congratulations for this wonderful blog.
I would like to clarify that money is safe in LIC also.
With govt. guarentee you can always be safe
Jayant Bhat says
Can you give me exact details of which term plan you are talking about? Is it a single premium of 18k per 5 lac. What is your age? If you are less than 40 then i think max premium of 5000 is more than sufficient.
I can help you upfront if you tell me your age? Premium depends on age and sum assured. You have given sum assured but I need to know your age to clarify your doubt. My answer (Ofcourse a lot depends on age)- if you have 20,000 to invest for 25 years, then take a cover of 10 lacs, premium should be less than 7k for sure if you are less than 40. Invest 5k every month mutual fund or ULIP, 5k in gold etf and 3k in PPF. After 25 years remember me, for the returns you get.
Thanks for info.I got info frm Rupee talk
If any one take Jeevan Anand for tenure of 25 year for sum assured 5 lachs will get rs13,37,500 and need to pay rs20,808 yearly more details here.
Now suppose he opt for Term + PPF instead of endowsement plan. He need to invest 1800rs for sum assured of 5 lachs in term insurance plan. and rest (rs 19,008) he put in PPF and get rs 15,00,765.52.
So money earned from Jeevan anand by same amt(20,808) is 13,37,500 and from term + PPF(interest rate is 8%) is 15,00,765.52.
There is difference of rs1,63,265.52 approx which i think its not a big difference.
Why still people suggest not to take endowment insurance plan and take term insurance + PPF or mutual fund options.
Am i missing anything here ?
Whats ur view on this comparative study ? Thanks.
I am having Jeevan Anand Lic policy .paying premium of 20,808 yearly and policy tenure is 25 year.Sun assured is rs 5 lachs.
I want to know at the end of 25 year how much money i will get.
I treid to check on apnainsurance.com but it doesn’t help to know abt final amount.
Can u let me know any suitable link or if u have any doc to know the final amt.
Yogesh, it depends on the individual’s age, term and company performance to arrive at the final maturity amount. You can check with your agent who sold this product to you to get appoximate value.
Nalini Hebbar says
a neat and complete analysis…you have become an expert…now I know who to go to if I need to invest…at present I am only buying land…have no other investments …Thanks for the info
Hehehe.. thanks Nalini. Sure, anytime. Under current situations, it is best to get going with investments on land 🙂
Seema Syed says
Very good review and good facts put forward. I appreciate your take on this. Definitely not worthy enough.
AshaLatha R K Prasad says
Thanks for dropping by my blog …. & sharing your appreciation, on my post….. Hope 2 c u around…. U have an intellectual blog….. & write well too….
Hey Asha! Welcome to my blog too 🙂 Thanks!
Roshmi Sinha says
Yet another enlightening post…
Thanks Roshmi 🙂
Good to read such reviews. I am understanding the basics atleast. Now I know what all to consider while looking to buy a policy. Thanks for the details Mohan.
Good to hear that. I m happy to see some financially educated folks here now 🙂
You know I have to say this.. Apart from just listing out general details, you even made it a point to add a personal touch by mentioning factors you liked/disliked. That’s what makes it an excellent review. Your blog is getting richer & richer in content. Thank U for sharing this!!!
Thanks dear.. My pleasure to provide such insights 🙂
Thanks for your expert guidance Mohan. I want to ask one more thing, as per your suggestion “Don’t combine insurance with investment” I want to make only investment in mutual fund. So I am a just a beginner,can you please help me how to proceed in this field..
Well, you shouldn’t go with just one product for better results. Always have diversified portfolio to reap better benefits. There are a number of articles on financial planning on this blog… just take time to understand them. That should help you better.
that was quite Informative Mohan..
You are most welcome 🙂
Is there any good guranteed return policy in market right now ?
If yes can u share the policy .Thanks
Yogesh, the whole idea of combining investment and insurance is a bad idea. Read my article on Guide to buy insurances. That should answer your question better.
Mohan..Thanks for description..
So yearly rate of interest in this policy is 5.45% which will be compunded for 10 years and at the end of 10years it will be 170% return.
How u calculated the yearly interest rate?Can u share the formula.
Yes u r correct.Sum assured look very less.
Yogesh, 170% is the assured returns no matter how the fund performs. Based on the assured limit, if you do reverse calculation the interest boils down to 5.45%. Eg., if the premium is 25000, 170% return would equate to 42500. Now do the basic compound interest calculations for a period of 10 years. This gets you the interest rate.