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Pension Plan

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Bajaj Allianz Retire Rich Plan

Bajaj Allianz Retire Rich is unit linked pension plan which provides market linked returns while at the same time guaranteeing the vesting benefit and death benefit. The plan allows a flexible premium payment term thus enabling the policyholder to afford the plan easily. Top-ups can also be paid under the plan to increase the Fund Value.

Key features of the plan

  • The minimum death benefit and Vesting Benefit under the plan are guaranteed.
  • Premiums can be paid only once, for a limited tenure or throughout the term of the plan.
  • Loyalty Additions are added to the Fund Value on maturity which further enhances the vesting corpus.
  • The premium payment frequency and term can be changed during the plan tenure.
  • Additional premiums can also be invested in the plan through top-ups.

How does the plan work?

Step 1 – the policyholder chooses the premium amount, the plan term, premium paying term and frequency.

Step 2 – the premiums paid are deducted for premium allocation charges and then invested in the Pension Builder Fund.

Step 3 – the policyholder can make additional investments into the plan through top-ups.

Step 4 – in case of death during the plan term, the death benefit is paid which is higher of the Fund Value or Guaranteed Death Benefit. The Guaranteed Death Benefit is 105% of total premiums paid till death.

Step 5 – if the insured survives the plan tenure, the maturity benefit is paid which is higher of the Fund Value or the Guaranteed Vesting Benefit. The Guaranteed Vesting Benefit is equal to 101% of premiums paid during the term. The policyholder has to avail the vesting benefit in any of the options provided under the plan.

Example

Tarun, aged 30 years, buys the plan and pays a regular premium of Rs.50, 000. The tenure selected is 20 years.
Option 1 – If Tarun dies during the term, higher of the Fund Value including any top-up premium Fund Value or 105% of premiums paid till death is paid to the nominee.
Option 2 – If Tarun survives the plan tenure, higher of the Fund Value including any top-up premium Fund Value or the Guaranteed Vesting Benefit of 101% of premiums paid is paid to Tarun. Loyalty Additions are also added on vesting.
Tarun can choose to receive the Vesting benefit in any of the following manners:

  • He can commute 1/3rd of the benefit and withdraw it in cash. This commuted benefit would be tax-free. The remaining 2/3rd of the benefit can then be used to avail annuity payouts from the insurance company.
  • He can use the entire benefit to buy a Single Premium Deferred Annuity Plan from the insurance company.
  • Since Tarun is below 55 years of age, he can defer the vesting age to a later tenure.

Plan benefits

  • Death benefit – if the insured dies during the term of the plan, higher of the Fund Value including any top-up Fund Value or Guaranteed Death Benefit is paid. The Guaranteed Death Benefit is 105% of premiums paid till death is paid as death benefit. The nominee can use the death benefit to avail annuity payouts from the company by purchasing an annuity plan or can withdraw the benefit in lump sum.
  • Maturity/Vesting Benefit – when the plan matures it is said to vest. On vesting, the Vesting Benefit is paid which is higher of the Fund Value including any top-up Fund Value or the Guaranteed Vesting Benefit. The Guaranteed Vesting Benefit 101% of all premiums paid during the plan tenure including any top-up premium paid.
  • The Vesting Benefit could then be used by the policyholder in any of the following options:

    1. 1/3rd of the benefit can be withdrawn in cash which would be tax-free. This is called commutation of pension. The remaining 2/3rd of the benefit should then be used to avail immediate annuity payouts
    2. The entire benefit can be used to buy a Single Premium Deferred Pension Plan from the company
    3. The Vesting age can be deferred if the insured is aged below 55 years.
  • Top-ups – if desired, the policyholder can make additional investments in the plan over and above the premiums paid through top-up premiums. The minimum top-up allowed is Rs.5000.
  • Loyalty Additions – Loyalty Additions are also added to the Fund Value when the plan matures. The additions are calculated as a percentage of the annual premium or single premium paid and the rate of additions depends on policy term, premium mode and premium amount. Here are the applicable rates of Loyalty Additions:
Term of the plan Regular or Limited premium Single Premium
Premium below Rs.10 lakhs Premium Rs.10 lakhs and above
7-10 years Nil Nil Nil
11-15 years 8.5% 25.5% 3%
16-20 years 9% 27% 3.5%
21-25 years 10% 30% 4%
26-30 years 11% 33% 4.5%

Eligibility Criteria

  Minimum Maximum
Age at entry (in completed years) 30 years 73 years
Age at maturity (in completed years) 37 years 80 years
Term of the plan 7 years 30 years
Premium paying options Limited Pay, Single Pay or Regular Pay
Premium Paying term 5 years 30 years
Annual premium amount Limited and Regular Premium:
Premium paying term below 7 years – Rs.50, 000
Premium paying term 7-10 years – Rs.25,000
Premium paying term 11 years and above – Rs.15,000
Single Premium:
Term 7-10 years – Rs.1 lakh
Term 11 years and above – Rs.50,000
No limit

What is not covered in the policy?

In case of suicide committed with a year or buying a plan or within one year from the date of plan’s revival, only the Fund Value including any top-up premium Fund Value is paid to the nominee.

FAQs