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Bajaj Allianz Retire Rich Plan
Bajaj Allianz Retire Rich Review
Bajaj Allianz Retire Rich is a Unit Linked Pension Plan which aims at providing a retirement corpus which grows as per the market performance. The plan also provides insurance coverage during the plan tenure.
Highlights of the Bajaj Allianz Retire Rich Plan
This is a Unit Linked Plan where premiums can be paid regularly, for a limited tenure or at one lump sum under the regular, limited and single premium paying options respectively.
The premium paying term can be changed under the plan.
Loyalty Additions are added under the plan to increase the corpus.
Working of the Bajaj Allianz Retire Rich Plan
The policyholder decides on the amount of premium he wants to pay and the premium paying mode.
The premium paid, after deducting the allocation charge is invested in the Pension Builder Fund.
If the policyholder dies during the tenure of the plan the death benefit is paid.
When the plan tenure ends, the Vesting benefit is paid.
COMPARE THIS PLAN WITH OTHER PENSION PLANS
Benefits and Features of Bajaj Allianz Retire Rich Plan
Vesting Benefit – The date when the plan term ends is called the Vesting date and on that date the Vesting Benefit is paid to the policyholder. The benefit would be higher of the following:
Total Fund Value as on that date, or
The Guaranteed Vesting Benefit which is equal to 101% of all premiums, including any top-up premiums, paid till the Vesting Date.
On the vesting date, the policyholder would have to choose any one of the following options of availing the vesting benefit. The options are:
1/3rd of the vesting benefit could be withdrawn as lump sum and the remaining 2/3rd of the benefit could be used to buy an Immediate Annuity plan from the company
The entire amount of vesting benefit can be used to purchase a Single Premium Deferred Annuity Plan from the company
If the policyholder is aged less than 55 years on the vesting date, he may choose to extend the vesting date to another available period. This would be the deferment period during which no premiums are required to be paid. However, the charges related to the fund would be deducted during this period.
Death Benefit – If the insured dies before the vesting date, higher of the following would be paid as death benefit:
Fund Value as on the date of death, or
Guaranteed Death Benefit which is equal to 105% of all premiums paid till death.
The nominee can either withdraw the entire death benefit in one lump sum or use it entirely or partially to purchase an annuity plan from the company.
Bonus – Being a ULIP plan, bonus is not declared.
Loyalty Additions – Loyalty Additions are payable under the plan on the actual vesting date of the plan. Loyalty Additions are expressed as a percentage of the annual or single premium paid under the plan and depend on the amount of premium and the chosen policy tenure.
Claw-back Additions – As per the IRDA regulations, non-negative additions would be added to the Single Premium Fund Value to fulfill the maximum reduction in yield criteria from the end of the 5th policy year.
Loan –Loan is not available under the plan.
Tax benefit – Premiums paid under the plan would be exempt from tax under Section 80CCC. The part of vesting benefit commuted (1/3rd part which is taken as lump sum) would be exempt from tax under Section 10(10A).
Eligibility Criteria of Bajaj Allianz Retire Rich Plan
The plan can be bought only by Resident Indians. The other eligibility criteria of the plan includes:
Entry age (Last Birthday)
Maturity Age (Last Birthday)
For regular and limited premium paying terms (PPT):
Less than 7 years
11 years and above
For Single Premium plans:
Term – 7-10 years – Rs.1 lakh
Term - 11 years and above – Rs.50,000
Premium Paying Term
5 years to 30 years
Premium payment mode
Single Premium or yearly, half-yearly, quarterly or monthly
Applicable charges in Bajaj Allianz Retire Rich Plan
Being a ULIP plan, there are certain charges applicable. The charges include the following:
Premium Allocation Charge – This charge is deducted on receipt of each premium before the premium is credited into the fund. The charges is:
Regular or Limited Premium Plans
Single premium plans
2 - 5
6 and above
Top-up premiums would attract a charge of 2%.
Policy Administration Charge – A monthly charge of 1.7% per annum of the annual premium paid to a maximum of Rs.6000 is deducted from the 6th policy year in regular or limited premium plans. For single premium plans, 0.80% per annum of the single premium paid would be deducted in the first 5 years after which 0.38% per annum of the single premium increasing @5% per annum would be charged from the 6th year.
Fund management Charge – These charges depend on the type of fund selected and are charged on a daily basis. The applicable charges are:
Pension Builder Fund
1.25% per annum
0.50% per annum
Miscellaneous Charges – A charge of Rs.100 per transaction for changes in the premium paying term or changes in the premium paying frequency.
Guarantee Charge – 0.25% per annum of the fund value and any top-up fund value would be deducted as Guarantee Charge.
Discontinuance Charge – Applicable for policies in which premiums are discontinued. The charges are:
Year of Discontinuance
Annual Premiums up to Rs.25,000
Annual Premiums above Rs.25,000
Lower of 20% of annual premium or Fund Value up to a maximum of Rs.3000
Lower of 6% of annual premium or Fund Value up to a maximum of Rs.6000
Lower of 15% of annual premium or Fund Value up to a maximum of Rs.2000
Lower of 4% of annual premium or Fund Value up to a maximum of Rs.5000
Lower of 10% of annual premium or Fund Value up to a maximum of Rs.1500
Lower of 3% of annual premium or Fund Value up to a maximum of Rs.4000
Lower of 5% of annual premium or Fund Value up to a maximum of Rs.1000
Lower of 2% of annual premium or Fund Value up to a maximum of Rs.2000
5 year onwards
For Single Premium Plans
Year of Discontinuance
Single Premiums above Rs.25,000
Lower of 1% of single premium or Fund Value up to a maximum of Rs.6000
Lower of 0.50% of singlepremium or Fund Value up to a maximum of Rs.5000
Lower of 0.25% of single premium or Fund Value up to a maximum of Rs.4000
Lower of 0.10% of singlepremium or Fund Value up to a maximum of Rs.2000
5 year onwards
Mortality charge – This charge is deducted on the first day of each month based on the Sum at Risk and the policyholder’s age
Additional Benefits of Bajaj Allianz Retire Rich Plan
Riders – There are no riders under this plan.
Top-up Premiums – Additional premiums by way of top-up premiums are allowed anytime except in the last 5 policy years. The minimum amount of top-up is Rs.5000.
Change in Premium Payment Term (PPT) – The PPT of the plan can be changed provided the changed tenure lies within the maximum and the minimum allowed PPT. A miscellaneous charge would be applicable for such change.
Grace Period – A grace period of 30 days is allowed for annual, half-yearly and quarterly payment of premium and 15 days for monthly mode of premium payment.
Free Look Period – A cooling off period or a free look period of 15 days is granted to the policyholder after the policy issuance to review the policy terms and conditions. If found unsatisfactory, the plan can be cancelled within this period and the premium paid would be refunded after deducting the relevant mortality charge, service tax, cess and stamp duty paid.
Let's Understand The Plan With An Example:
Subhash aged 35 years has taken Bajaj Allianz Retire Rich for a Policy Term (PT) of 24 years. Subhash has decided to pay
Rs.1,00,000 as annual premium for a premium paying term of 20 years. On vesting date, Subhash??s vesting benefit may be
Rs.26,95,412 at 4% and Rs.48,81,293 at 8% investment return respectively.
Above illustrations is at a Fund Management Charge of 1.25%
Exclusions in Bajaj Allianz Retire Rich Plan
If the policyholder commits suicide anytime during the plan tenure, the available Fund Value and any top-up premium Fund Value would be paid to the nominee.
Surrendering the policy
Within the first 5 policy years
The policy has a 5 year lock-in period. If the policy is surrendered within the first 5 years, the funds in the Fund Value and any top-up premium Fund Value would be transferred to the Discontinuance Policy Fund after deducting the Discontinuation charges. The money would remain in the Discontinuance Policy Fund till the completion of 5 years and the Fund Management charges would be deducted as and when applicable. If the policyholder dies during this period, the Fund Value as on the date of death would be paid. Otherwise, after the completion of the lock-in period of 5 years, the Fund Value would be available as the Surrender Value.
After 5 years
If the plan is surrendered any time after the completion of 5 years, the available Fund Value and any top-up premium Fund Value would be available as Surrender Value.
The policyholder can use the Surrender Value in any of the following ways:
1/3rd of the surrender value could be withdrawn as lump sum and the remaining 2/3rd of the value could be used to buy an Immediate Annuity plan from the company
The entire amount of surrender value can be used to purchase a Single Premium Deferred Annuity Plan from the company
Making the policy Paid-up
Paid-up is allowed only if premiums are paid for the first 5 years of the plan. If the policyholder does not want to revive or surrender his policy, the policy would be converted to a paid-up policy and no further premiums would be payable under the plan.
Revival is allowed within 2 years from the date of the first unpaid premium. The policyholder would be required to pay the outstanding premium and any interest charged by the insurer to revive his policy.