Bajaj Allianz Invest Plus Plan

Beyond the fairly complex product brochure, the Invest Plus is more like a fixed deposit with a small life insurance cover built in. Not a bad idea, you might say. But given the charges hidden in this policy, it’s not worthwhile investing in it at all.

In a fixed deposit like product, you are looking at safety and modest returns (say 6%-8% every year). A low return product like this is extremely sensitive to charges and costs. The Invest Plus Plan imposes a 5% charge on each premium, thus dragging the effect return down even below savings deposit rates!

There is a distinction in the product between ‘Basic’ and ‘Enhanced’ premium. But cutting through the complications, suffice it to know that both are subject to this 5% charge, and both would return only about 6%-8% a year (and only ~3% after charges). So this distinction is a red herring.

In an amusing choice of words, there is a ‘Minimum Guaranteed Return’, but the company will only declare this rate at the beginning of every year. Thus, what you have is actually worse than a fixed deposit – lower rates of return (due to the charges) and no idea what your returns will be over the life of the product. Also, this is not a unit linked product and has no equity; so the fantastic illustrations your agent or the brochure may give of 10% and higher return every year are meaningless.

The life insurance component is miniscule, not exceeding 20 times your annual premium. If you really want life insurance, a good term plan will give you life insurance of about 500 times your annual premium – so you would rather avoid the Invest Plus.

 

Product features:

Parameter

Value

Fintotal Comment

Entry age

7-60 years

 

Life Cover

5 / 10 / 15 / 20 times annual premium

This is far too low to be of much practical use for your family

Riders available

Accidental Death Benefit

Total / Partial Disability Benefit

Critical Illness

Waiver of Premium

Hospital Cash Benefit

Family Income Benefit

If you want any of these features, you would rather take a separate insurance policy for the same, rather than Invest Plus

Minimum Premium

Rs10,000/- per year

 

Premium Allocation Charge

5% on all basic and enhanced premiums

 

This is far too high for a debt-like product

Mortality Charge

As per age

 

Surrender / Premium Discontinuance Charges

10% - 50% depending on policy term remaining

This is extremely high and makes the product inflexible

 

Illustration:

As seen, the return is much lower than even a simple fixed deposit. Worse, the lock-in period is very stringent, and you effectively cannot withdraw without severe penalty except in the last five years of the policy.

We therefore advise you stay away from this product.

Let us assume a simple case:

  • Your age: 30 years
  • Policy term: 20 years
  • Premium: Rs 20,000 per year
  • Sum assured: Rs.2 lakh
  • We assume the gross return of Invest Plus is 6% (which is a very likely scenario)
  • We assume the return on a fixed deposit is 6% (actually it could be more, but we are being conservative)

Fintotal Product Analysis is the ideal place to seek unbaised and neutral view on all financial products.

Do not get fooled by agents and distributors, just check here before you make any purchases.


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