We evaluate Bajaj Allianz Life Goal Assure, which offers four portfolio strategies and reduced charges
ULIPs or Unit Linked Insurance Policies offer a combination of life insurance and investment. You can invest through them in equity as well as debt, just like mutual funds. You also get life insurance cover. However overall ULIP structures can be hard-to-understand and feature hefty charges. Some ULIPs, however, do stand out on performance, simplicity and low cost. In this article, we look at how Bajaj Allianz Life Goal Assure is faring.
Bajaj Allianz Life Goal Assure has some good equity funds and a series of investment strategies that resemble their mutual fund counterparts such as Systematic Transfer Plan (STP). It has also made deep cuts to some of the common ULIP charges that pull down investor returns. On the other hand, the company’s debt funds have underperformed and some unnecessary features such ‘loyalty bonuses’ and ‘fund boosters’ add to the complexity.
One feature we particularly like lets you choose whether to receive the maturity benefit as a lump sum or as income spread over a period of five years. Choosing the income option will give you an additional 0.5% on each withdrawal (called a return enhancer).
This ULIP has premium payment terms of 5 to 20 years.
If you die during the policy term, you get the highest of:
The policy grants a ‘loyalty’ addition, a percentage of one premium from the 6th year onwards, provided all premiums have been paid up-to-date. It will also pay you a ‘fund booster’ or a top-up on the value of your annual premium after 10, 15 and 20 years from policy commencement.
The ULIP offers four portfolio strategies that move your money between the ULIP funds:
ULIP Funds and their performance
|Fund||Benchmark||5 year (%)||Benchmark (%)||Outperform?|
|Accelerator Midcap Fund II||Nifty Midcap 50||23.57||18.14||Yes|
|Equity Growth Fund II||Nifty 50||17.05||11.75||Yes|
|Pure Stock Fund||Nifty 50||19.93||11.75||Yes|
|Blue Chip Equity Fund||Nifty 50||11.38||11.75||No|
|Asset Allocation Fund II||Crisil Balanced – Aggressive Index||N/A||12.88||N/A|
|Bond Fund||Crisil Composite Bond Fund Index||8.21||8.31||No|
|Liquid Fund||Crisil Liquid Index||7.57||8.08||No|
|Pure Stock Fund II||Nifty 50 Index||N/A||11.75||N/A|
Source: Bajaj Allianz Life Insurance Company, As observed on 19th March 2018
As seems to be the case with HDFC Life Insurance as well, equity funds of ULIPs comfortably outperform their benchmarks but debt funds do not. The relatively high fund management charges on debt funds may be partly responsible. Two of the funds being recently launched have three rather than five-year data. The Pure Stock Fund II delivered 7.75% annualized compared to the Nifty 50’s 5.32% and the Asset Allocation Fund II delivered 6.47% compared to 8.47% on its benchmark, reinforcing equity fund outperformance, debt fund underperformance trend.
This ULIP goes the extra mile to cut your costs by eliminating the premium allocation charge and refunding the mortality charge. The investment strategies offered by it (especially the STP like auto-transfer strategy) give you a set of great options to reduce your risk and allocate your money. Its equity funds have done well and outperformed their benchmarks. If you are looking at ULIPs because you have both insurance and investment needs, this ULIP has plenty to offer.
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