Thoughts On Bajaj Allianz Life Future Wealth Gain

Bajaj Allianz Life Insurance ,via their ULIPs offers you a total choice of  8 funds and their combinations.

The newly launched Future Wealth Gain ULIP and its variant Wealth Plus Care , offers you the chance to invest in 8 different funds, including the newly launched fund- Pure Stock Fund II.

Of all these funds which ones do I find attractive ?

-The Bond Fund to hold the money in and the Accelerator Mid Cap Fund II to invest the money in.

And the reasons ?

The bond  fund is turning out decent returns compared to equivalent FDs and bond mutual funds and in this case returns aren’t being eaten into by taxes. I believe that we have to wait for lower interest rates and a further rise in stock prices can’t be ruled out, before we can expect bargains in the equity space from market crashes. So best wait in the Bond Fund till it’s better and safer to move into the Accelerator Mid Cap Fund II .A closer look at the 2 graphs below shows how their might be chances for switching into the Accelerator Mid Cap Fund II when NAVs are down. This way, hopefully I won’t be shaving off too much out of mid-cap investment returns by investing at higher valuations in a market awash with liquidity.

And why a mid-cap ULIP fund at all ?

-Simply,the equity-like returns. And the fact that risk and returns are comparable to my long term holdings in a comparable mutual fund product. Also, their portfolio as reported by Morningstar had a bunch of stocks I have and am happy to keep for a long time in my equity portfolio. In fact, their portfolio included my absolute favourite, a not so common choice,incidentally a Buffett stock too !

Best yet : that with this ULIP there are no costs to adjust your holdings this way from bonds to equities, subject to a minimum switching amount of Rs5000/-. You can make unlimited free switches during the policy tenure.

Also there is always the Pure Stock II to check out in future, even as banks face the challenges of bad debts and the disruptions caused by fintech start-ups that’s bound to create special situations in the immediate future. Having had occasion to chat with their CIO Mr Sampath Reddy and get a feel of his investment temperament and watch the Bajaj-Allianz Life team-work during simulation games, I’m inclined to trust them with my money to invest in special situations and generally not give me unnecessary stress.

Moreover,if I have cause to regret or revise any of my thinking of today, Bajaj Allianz Life Insurance has 7 other funds for me to switch-into.

So this takes care of the investment angle………..so what about the insurance part?

From Mr Rituraj Bhattacharya, AVP product development team, I understand that with this ULIP ,life cover is paid for by deducting units. This deduction is proportional to the difference between the sum assured and the fund value at that point in time, as that is the full extent of the payout the company will have to bear in case of the occurrence of an unfortunate event in the life of the life insured. This deduction stops if the fund value reaches or exceeds the sum assured.Further, from the point of risk-cover, this product is most advantageous for covering lives aged 0-35 as the mortality charges are less. But, that’s not to say that the product may not be of tremendous use to older people in their prime earning years and looking for a financially savvy way to provide for the life goals of self and family.

Personally, I’m inclined to favour the 25year tenure version. And go in for the 15 years premium payment term. That way I’d be able to capture the benefits of time in the market. I think this product would serve me well as a means to grow a retirement corpus that I can tap into in my mid-sixties, even as I enjoy insurance cover in the intervening years.Basically, set myself up to #jiyobefikar.

But I must say that I’ll be able to #investbefikar only when I have in hand the information of how much I’d be paying for each lakh of cover per year.  On asking, a copy of this table is simply given across the table by mutual funds offering ULIPs. Unfortunately, this is not quite the case with ULIPs from insurance companies. Without this information at hand, I find myself often unable to calculate estimated survival benefits with the sort of closeness I like and to monitor that at intermediate stages my assets are behaving in the way that I believed they would at the time of purchase.