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Can the Bajaj Allianz Life Guaranteed Wealth Goal Plan offer guaranteed returns, life cover, and tax benefits all in one?
Can the Bajaj Allianz Life Guaranteed Wealth Goal Plan secure your family’s future while building wealth a goal worth pursuing?
Is the Bajaj Allianz Life Guaranteed Wealth Goal Plan the right choice to meet your financial goals?
This article explores the plan’s features, advantages, and disadvantages, along with an Internal Rate of Return (IRR) analysis for a comprehensive evaluation.
Table of Contents:
What is the Bajaj Allianz Life Guaranteed Wealth Goal Plan?
What are the features of the Bajaj Allianz Life Guaranteed Wealth Goal Plan?
Who is eligible for the Bajaj Allianz Life Guaranteed Wealth Goal Plan?
What are the benefits of the Bajaj Allianz Life Guaranteed Wealth Goal Plan?
Grace Period, Discontinuance and Revival of the Bajaj Allianz Life Guaranteed Wealth Goal Plan
Free Loo Period for Bajaj Allianz Life Guaranteed Wealth Goal Plan
Surrendering Bajaj Allianz Life Guaranteed Wealth Goal Plan
What are the advantages of the Bajaj Allianz Life Guaranteed Wealth Goal Plan?
What are the disadvantages of the Bajaj Allianz Life Guaranteed Wealth Goal Plan?
Research Methodology of Bajaj Allianz Life Guaranteed Wealth Goal Plan
Benefit Illustration – IRR Analysis of Bajaj Allianz Guaranteed Wealth Goal Plan
Bajaj Allianz Life Guaranteed Wealth Goal Plan Vs. Other Investments
Bajaj Allianz Life Guaranteed Wealth Goal Plan Vs. Pure-term + PPF / ELSS
Final Verdict on Bajaj Allianz Life Guaranteed Wealth Goal Plan
What is the Bajaj Allianz Life Guaranteed Wealth Goal Plan?
Bajaj Allianz Life Guaranteed Wealth Goal is a non-linked, non-participating, individual life insurance savings product. Bajaj Allianz Life Guaranteed Wealth Goal Plan is designed with guaranteed benefits while safeguarding your family’s future against unforeseen events.
What are the features of the Bajaj Allianz Life Guaranteed Wealth Goal Plan?
- Enjoy life insurance coverage throughout the Bajaj Allianz Life Guaranteed Wealth Goal Plan policy term, ensuring your family’s financial security.
- Choose from three plan variants tailored to suit your financial requirements.
- Receive guaranteed benefits under the Bajaj Allianz Life Guaranteed Wealth Goal Plan policy.
- Avail tax benefits as per the prevailing tax laws, subject to amendments.
Who is eligible for the Bajaj Allianz Life Guaranteed Wealth Goal Plan?
What are the benefits of the Bajaj Allianz Life Guaranteed Wealth Goal Plan?
1. Variant 1: Wealth Creation
Maturity Benefit:
Guaranteed Maturity Benefit (GMB) Plus Accrued Guaranteed Additions.
Guaranteed Maturity Benefit (GMB) is equal to the GMB factor multiplied by the Total Premiums Paid till the end of the Bajaj Allianz Life Guaranteed Wealth Goal Plan Policy Term.
The GMB factor varies based on the age of the Life Assured, Premium Payment Term, Policy Term and Chosen Sum Assured Multiple.
Guaranteed Additions (GA) will be added to the Bajaj Allianz Life Guaranteed Wealth Goal Plan Policy at the end of each policy year, starting from the end of the second policy year throughout the Policy Term.
It will be calculated as a percentage of Total Premiums Paid till the date of addition and will vary basis the Policy Term.
Death Benefit:
In case of death, the nominee(s) shall receive a Sum Assured on Death as a lumpsum benefit. Sum Assured on Death is equal to Sum Assured (i.e. Annualized Premium X Sum Assured Multiple)
| Age at entry of the Life Assured (years) | Sum Assured Multiple |
| 0 to 50 | 7 / 11 / 15 / 20 |
| 51 to 60 | 5 / 11 / 15 / 20 |
At no time the total Death Benefit will be less than the Guaranteed Death Benefit of 105% of the Total Premiums Paid, up to the date of death or the Surrender Value available then, whichever is higher.
2. Variant 2: Assured Income
Maturity Benefit:
Income Instalments shall be payable in arrears during the Income Period, as per the chosen Income Instalment frequency.
Income Instalment = Base Income Plus Accrued Income Boosters.
Base Income = Base Income% multiplied by the Total Premiums Paid.
Total Premiums Paid under the Bajaj Allianz Life Guaranteed Wealth Goal Plan Policy will be returned as the ROP (Return of Premium) along with the last Income Instalment
Income Booster (IB): It will accrue at the end of each policy year from the end of the 2nd policy year till the end of the Deferment Period and is paid to the Bajaj Allianz Life Guaranteed Wealth Goal Plan Policyholder as a part of every Income Instalment.
It is calculated as a percentage of Total Premiums Paid to date. The IB is available in the policy provided at least two full policy years’ premiums are paid.
Death Benefit:
Death Benefit Instalments (as a percentage of Annualized Premium) shall be payable annually during the Death Benefit Instalment Period (i.e. the chosen Income Period). The first Death Benefit Instalment will be due on the date of death of the life assured.
The ROP (Return of Premium) on Death i.e. Total Premiums payable will be paid along with the last Death Benefit Instalment.
At the time of intimation of death, the nominee has the option to take the Death Benefit Instalments and ROP on Death as a lump sum.
3. Variant 3: Second Income
Survival Benefit:
Income Instalments are paid during the chosen income period (post the end of the deferment period), as per the chosen Income Instalment frequency.
Income Instalment = Base Income Plus Accrued Income Boosters
Base Income = Base Income% multiplied by the Total Premiums Paid.
Income Booster (IB): It will accrue at the end of each policy year from the end of the 2nd policy year till the end of the Deferment Period and is paid to the Policyholder as a part of every Income Instalment.
It is calculated as a percentage of Total Premiums Paid to date. The IB is available in the Bajaj Allianz Life Guaranteed Wealth Goal Plan policy provided at least two full policy years’ premiums are paid.
Maturity Benefit:
The maturity benefit (if selected with the ROP option) is payable at the end of the Policy term along with the last Income Instalment and is equal to the Return of Premium (ROP i.e. Total Premiums Paid). If ROP has not been chosen, no Maturity Benefit shall be payable.
Death Benefit:
In case of death, nominee(s) shall receive the Sum Assured on Death i.e. Annualized Premium X Sum Assured Multiple (chosen by the Life Assured at the inception of the Policy), as a lumpsum benefit.
At no time the total Death Benefit will be less than the Guaranteed Death Benefit of 105% of the Total Premiums Paid up to the date of death or the Surrender Value available then, whichever is higher.
Grace Period, Discontinuance and Revival of the Bajaj Allianz Life Guaranteed Wealth Goal Plan
Grace Period
The Grace Period is thirty (30) days for frequencies other than monthly and fifteen (15) days for monthly frequencies during which the Bajaj Allianz Life Guaranteed Wealth Goal Plan Policy is considered to be in force with the risk cover.
Discontinuance
If you have not paid first at least 1 full year’s premium, then, your Bajaj Allianz Life Guaranteed Wealth Goal Plan Policy will immediately and automatically lapse at the expiry of the grace period and no benefit will be payable under the Policy.
If you have paid at least 1 full year’s premium, and subsequent premiums have not been paid (i.e. the policy which acquired a surrender value) the policy shall not lapse by reason of the non-payment of future premiums, instead, your Policy will be immediately and automatically converted to a paid-up policy at the expiry of the grace period.
Revival
You can revive your lapsed or paid-up Policy within five (5) years from the due date of the first unpaid premium, before the Maturity Date.
Free Loo Period for Bajaj Allianz Life Guaranteed Wealth Goal Plan
In the event you disagree with any of the policy terms or conditions, or otherwise, you shall have the option to return the policy within thirty (30) days beginning from the date of receipt of the Policy Document, whether received electronically or otherwise.
Surrendering Bajaj Allianz Life Guaranteed Wealth Goal Plan
You can surrender the policy at any time during the Bajaj Allianz Life Guaranteed Wealth Goal Plan policy term after completion of the first policy year provided one full year’s premium has been received.
The Policy will acquire a Surrender Value (i.e. Special Surrender Value SSV) after completion of the first policy year provided one full-year premium has been received.
The Bajaj Allianz Life Guaranteed Wealth Goal Plan Policy will acquire a Guaranteed Surrender Value provided two (2) full years’ premiums have been paid. The Surrender Value payable will be higher than Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).
What are the advantages of the Bajaj Allianz Life Guaranteed Wealth Goal Plan?
- Flexibility to receive income on a date of your choice (available under the Second Income and Assured Income variants).
- Option to receive Death Benefit or Maturity Benefit as a lump sum or in instalments (under the Assured Income variant).
- Default yearly income or death benefit instalment frequency can be changed to other available frequencies.
- Enhance your coverage by adding riders to the base policy.
- Modify the premium payment frequency and income payout frequency at your convenience.
- Access a policy loan of up to 80% of the surrender value, subject to terms and conditions.
What are the disadvantages of the Bajaj Allianz Life Guaranteed Wealth Goal Plan?
- The income benefit is typically used for discretionary expenses.
- There is no substantial maturity benefit; only the premiums paid are returned at maturity.
- While the benefits are guaranteed, the returns are relatively low.
- The sum assured may not be sufficient to meet financial needs.
Research Methodology of Bajaj Allianz Life Guaranteed Wealth Goal Plan
When choosing a plan variant, it’s essential to consider your cash flow requirements. However, evaluating the returns alongside the cash flow pattern is equally important.
Let’s analyse a benefit illustration from the Bajaj Allianz Life Guaranteed Wealth Goal Plan policy brochure to assess the cash flow pattern and its value.
Benefit Illustration – IRR Analysis of Bajaj Allianz Guaranteed Wealth Goal Plan
Consider a 30-year-old male who opts for the Bajaj Allianz Life Guaranteed Wealth Goal Plan under the Wealth Creation variant. He selects a sum assured of ₹10 lakhs with a policy term of 15 years and a premium-paying term of 12 years, paying an annual premium of ₹1 lakh.
| Male | 30 years |
| Sum Assured | ₹ 11,00,000 |
| Policy Term | 15 years |
| Premium Paying Term | 12 years |
| Annualised Premium | ₹ 1,00,000 |
In the Wealth Creation variant, the benefits are received as a lump sum at the end of the policy term. At maturity, he receives ₹19,61,092, which includes:
- Accrued Guaranteed Additions: ₹9,04,000
- Guaranteed Maturity Benefit: ₹10,57,092
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -1,00,000 | 11,00,000 |
| 36 | 2 | -1,00,000 | 11,00,000 |
| 37 | 3 | -1,00,000 | 11,00,000 |
| 38 | 4 | -1,00,000 | 11,00,000 |
| 39 | 5 | -1,00,000 | 11,00,000 |
| 40 | 6 | -1,00,000 | 11,00,000 |
| 41 | 7 | -1,00,000 | 11,00,000 |
| 42 | 8 | -1,00,000 | 11,00,000 |
| 43 | 9 | -1,00,000 | 11,00,000 |
| 44 | 10 | -1,00,000 | 11,00,000 |
| 45 | 11 | -1,00,000 | 11,00,000 |
| 46 | 12 | -1,00,000 | 11,00,000 |
| 47 | 13 | 0 | 11,00,000 |
| 48 | 14 | 0 | 11,00,000 |
| 49 | 15 | 0 | 11,00,000 |
| 50 | 19,61,092 | ||
| IRR | 5.14% |
The Internal Rate of Return (IRR) for this cash flow is calculated at 5.14% as per the Bajaj Allianz Life Guaranteed Wealth Goal Plan maturity calculator.
This variant does not provide regular income (survival benefits); however, the IRR is low. Even the lump sum maturity benefit is unattractive for a long-term investor.
It indicates that the IRR for other plan variants, which offer additional cash flow flexibility, would be even lower.
Given the low returns, the Bajaj Allianz Life Guaranteed Wealth Goal Plan is not an appealing option for achieving long-term financial goals.
Bajaj Allianz Life Guaranteed Wealth Goal Plan Vs. Other Investments
Analysing cash flow and comparing returns across different investment options is essential for making well-informed financial decisions.
To ensure an effective comparison, it is important to use consistent metrics, as demonstrated in the earlier illustration.
The Bajaj Allianz Life Guaranteed Wealth Goal Plan combines life insurance and guaranteed benefits. For a fair comparison, we separate these components.
Bajaj Allianz Life Guaranteed Wealth Goal Plan Vs. Pure-term + PPF / ELSS
A pure-term life insurance policy with a sum assured of ₹11 lakhs costs an annual premium of ₹5,800, with a premium-paying term of 10 years and a policy term of 15 years.
This leaves ₹94,200 annually for investment during the first 10 years. In the next 2 years, as the premium-paying term for the plan in the earlier illustration is 12 years, the entire ₹1 lakh is available for investment.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 11,00,000 |
| Policy Term | 15 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 5,800 |
| Investment | ₹ 94,200 |
Investments can be chosen based on your risk profile. High-risk investors can opt for equity instruments, while low-risk investors may prefer debt instruments. For this comparison, we consider PPF for debt and ELSS for equity investments.
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 35 | 1 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 36 | 2 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 37 | 3 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 38 | 4 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 39 | 5 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 40 | 6 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 41 | 7 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 42 | 8 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 43 | 9 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 44 | 10 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 45 | 11 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 46 | 12 | -98,500 | 11,00,000 | -1,00,000 | 11,00,000 |
| 47 | 13 | -500 | 11,00,000 | 0 | 11,00,000 |
| 48 | 14 | -500 | 11,00,000 | 0 | 11,00,000 |
| 49 | 15 | -500 | 11,00,000 | 0 | 11,00,000 |
| 50 | 22,45,727 | 33,05,308 | |||
| IRR | 6.55% | 10.56% | |||
PPF (Public Provident Fund): After making necessary adjustments for the minimum required contribution of ₹500 annually, the final maturity value is ₹22.45 lakhs, yielding an IRR of 6.55%.
ELSS (Equity Linked Savings Scheme): The accumulated corpus grows to ₹35.96 lakhs. After accounting for capital gains tax, the post-tax value is ₹33.05 lakhs, resulting in a post-tax IRR of 10.56%.
| ELSS Tax Calculation | |
| Maturity value after 15 years | 35,96,494 |
| Purchase price | 11,42,000 |
| Long-Term Capital Gains | 24,54,494 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 23,29,494 |
| Tax paid on LTCG | 2,91,187 |
| Maturity value after tax | 33,05,308 |
This alternative approach not only provides higher returns but also offers greater flexibility to adjust withdrawals based on your needs.
In contrast, the Bajaj Allianz Life Guaranteed Wealth Goal Plan falls short in both returns and withdrawal flexibility, making it less effective for long-term wealth accumulation.
Final Verdict on Bajaj Allianz Life Guaranteed Wealth Goal Plan
The Bajaj Allianz Life Guaranteed Wealth Goal Plan is designed to provide regular income and/or maturity benefits to address your financial needs, with the flexibility to select a plan variant based on your desired cash flow.
However, the plan offers relatively low returns, making it less appealing as an investment option.
Additionally, the sum assured is insufficient to adequately protect your family’s financial needs in case of unforeseen events.
Neither the insurance component nor the investment component of this plan provides significant benefits to investors, rendering it unsuitable for inclusion in your investment portfolio and it also has a high agent commission.
For regular income needs, consider building a corpus through investment products aligned with your risk tolerance. This strategy provides better liquidity and higher returns.
Alongside your investment strategy, ensure you have adequate life insurance coverage to safeguard your family’s future.
When it comes to financial advice, are Quora, Facebook, and Twitter the final word?
Selecting the right investment and insurance products is a key part of effective financial planning. Consult a certified Financial Planner to create a personalized financial plan that aligns with your risk profile and long-term goals.
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