Review – Bajaj Allianz Shield Plus

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.

Surrender

• 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%

Partial Withdrawal
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.