ULIP Retirement Plan

Starting early is always advisable, but nevertheless, if you haven’t, it’s never too late! As the average life expectancy continues to increase, life post-employment is a crucial period and needs rather serious planning. While there is no regular source of income, expenses continue to exist (if not increase), post retirement. Moreover, gone are those days when one would depend on his/her child/children for financial assistance. Citing these reasons, it is essential that you have a retirement plan in place and build a fund corpus to ensure that you continue to live the way you do now, even after employment.

If long-term financial planning and creation of wealth is your goal then ULIP’s are the best investment option for you. In simple words, if you are looking to buy a house or build a corpus to fund your child’s education as well as take care of your life post-retirement, then investing in ULIP plans is the way to go. Coming to the benefits, these plans come with a 5-year lock in period. However, the longer the period of investment, the more you earn. To add to this, ULIP policies are flexible and allow the policy holder to switch funds based on market performance and one’s risk appetite, unlike mutual funds. As for time, the earlier you start, the better it is for you!

Funds that are part of a ULIP investment plan are linked to the share market and thus their performance is directly affected by the same. Hence, ULIPs are often referred to as being market-driven.

Contrary to what you may think, this is the best time for you to start planning for your retirement. When you are single, the responsibilities that you shoulder are lesser as compared to someone who has a family to take care of. Moreover, the earlier you start, the more you save, the better for you during retirement. Being financially stable when there is no regular source of income is imperative and thus early planning is the way to go!

The truth is, everyone needs a retirement plan. A retirement/pension plan is different from a pension plan in terms of the purpose it serves. It prepares and provides you with the financial security you need when there is no regular source of income. In conjunction with Bajaj Allianz, we provide some of the best retirement plans online that will help you save for life post-employment.

Though there are plenty of benefits, let us deal with the following four to understand the need and importance of investing in a pension plan/retirement plan. 1. Compounding Effect: Like we have mentioned time and again, the earlier you start, the more you save and the better the effect of compounding on your investments. We would encourage you to opt for the pension plans offered by our partner Bajaj Allianz the moment you start earning. This helps as you can set aside a certain amount and regularly invest over a long period of time. You can then imagine the gains you’d receive on retirement. 2. Managing unforeseen expenses: The best way to dealing with unexpected and unforeseen expenses that may crop up during your retired life. This could be medical bills, costs related to treatment/hospitalization, or any other financial expense. When you opt for a retirement plan, you build a corpus of funds that will help take care of such expenses, especially during retirement. Should you need to relocate post-employment, a pension plan is sure to be of great help. 3. Protecting your property and assets: Imagine not having sufficient funds to deal with a serious medical ailment during your retirement. What would you do? If you have property, you’d probably liquidate the same to meet your expenses. When you have a retirement plan in place, you will have the financial capability of dealing with such situations leaving your property and assets to be enjoyed by your children/family.

A Retired Life Income is a regular income-like pay out, that you get through systematic partial withdrawal. You can decide when you want to receive this RLI at any policy anniversary, when you turn 55 years or after the 10th policy year, whichever is later. This retirement income constitutes of a percentage of your fund value (ranging from 0 to 12% per annum), as chosen by you, and is paid yearly, half-yearly, quarterly or monthly. The instalment is paid by redeeming units from the funds in the same proportion as the fund value in each fund and will be redeemed at the unit price applicable on the date of each RLI instalment. RLI payment is through Systematic Partial Withdrawal and the percentage can be changed anytime during the policy term or even after starting RLI. However, the fund value after payment of the instalment of RLI should not drop below 105% of total premiums paid till date, otherwise your Bajaj Allianz ULIP return gets deeply impacted.

Bajaj Allianz ULIPs available on Finserv MARKETS, offer the dynamic option of switching only under the investor selectable portfolio strategy, which adds the much-needed flexibility to ULIP plans. As an investor it helps you to optimize asset allocation by allocating funds between equity and debt funds to best leverage the market scenario. Switches under this whole life insurance plan allow you to move your investments from one fund to another, within one plan, without any additional charge. You can transfer units fully or partially between fund options - equity, debt or a combination of both. If you opt for Investor Selectable Portfolio Strategy, you also have the flexibility of switching units between the investment funds as per your choice. However, this option is not available in other portfolio strategies. The minimum switching amount is Rs 5,000 or the value of units in the fund to be switched from, whichever is lower. You can make unlimited free switches during the policy term by giving a written notice to Bajaj Allianz Life. You will need to mention the exact amount to be switched and the name of the existing and the new fund. You can also avail this option through our customer portal, where you can manage this whole life insurance plan. In addition to market fluctuations, the decision to switch funds should also be based upon your risk appetite and life goals.

As a Bajaj Allianz ULIP policyholder you have the option of switching between any of the following portfolio strategies - Investor Selectable Portfolio Strategy, Wheel of Life Portfolio Strategy II, Auto Transfer Portfolio Strategy, except for Trigger Based Portfolio Strategy. You can opt for Trigger Based Portfolio Strategy only at the time of the start of the ULIP plan. You will need to give 30-days written notice before the policy anniversary to exercise the switching option.

The PROMC enhances your ULIP returns by periodically adding back the mortality charges to the fund value. The first addition is when you, as a policyholder attain 60 years of age or at the end of the 15th policy year, whichever is later. The next additions are at the end of each subsequent 10th year, and the last addition is on the date of maturity. However, PROMC is not applicable in case of a surrendered, discontinued or paid-up policy and will be payable provided all due premiums under your ULIP plan have been paid up to date.