For a higher cover

The new ULIP from Bajaj Allianz offers a higher insurance cover in the latter years, is it for you?

ULIPS are growing in popularity as they are more profitable for insurance companies. New insurance schemes are being launched regularly. A recent launch in this space, which has some unique propositions, is Bajaj Allianz’s Unit Gain Plus Gold policy. It’s like any other ULIP policy of Allianz Bajaj Life except that the entry level premium is lower. The overheads— premium allocation charge, policy administration charge, mortality charges—have, however, been tweaked to make it more expensive.

Fund management charges are same for most of the company’s ULIP policies, including the UG Plus Gold policy. The fund charges 1.75 per cent for its equity growth fund, 1.25 per cent for equity index fund and asset allocation funds, and 0.95 per cent for bond and liquid funds. This fee is charged daily and adjusted in the unit price.

Says Sam Ghosh, the new CEO of Allianz Middle East, soon after introducing this product: “The asset allocation fund (which was introduced with this product) gives flexibility to the fund manager to capitalise on the changing financial markets, ride the market waves and get returns without worrying about switching from fund to fund.”

The fund will adjust its weights in the three classes of equity, bonds and cash depending on the attractiveness of each class. Overall, this policy offers six funds to invest in, including the accelerator mid-cap fund, as also an option of switching freely three times a year with a subsequent charge of Rs 100 or a percentage of the asset managed, whichever is lower.

There is a wide choice of riders on offer, for which you have to pay additional premia. In the case of death, there is a family income benefit and if there is a total disability, a waiver of premium benefit.

The other riders on offer include accidental death and disability benefits, critical illness and hospital cash benefits. In fact, the policies introduced earlier did not have as many options. (A premium waiver rider comes in handy if the policy is being taken in the name of a minor—but a separate accident insurance policy by a general insurer in place of other riders is usually a better option.)

Among the best features of this policy is the maximum insurance entitlement for every rupee of premium. For instance, on a premium of Rs 1,000 a month, a policyholder gets a life insurance cover of up to 70 times between the age of 36 and 40.

This decreases progressively and comes down to 20 times the annual premium between the 56 and 60 age group. Other policies allow for far less multiplier effect. Therefore, this policy recognises a policyholder’s need for a higher insurance and also takes care of his investment requirements.