The Hindu Business Line : Allianz Bajaj

ALLIANZ Bajaj Unit Gain SP is a unit-linked plan different from other such schemes as no charges are levied on premium payments and top ups. The plan can also be surrendered anytime after the premium payment without a charge.

Being a single premium policy, one can take a tax exemption on withdrawal only if the initial premium or the top-ups in any year does not exceed one-fifth of the sum assured (SA). The product offers flexibility of withdrawal without penalty, tax advantage, the advantage of a single premium and lower charges.

The SA is a multiple of the single premium and depends on the insuree's age. The SA should be a minimum 1.01 times the initial premium payment. The maximum multiple will be between 45 and five depending on the insuree's age. For instance, for an initial single premium of Rs 25,000, the minimum SA will be Rs 25250 (25000*1.01). The maximum will be Rs 11,25,000 (25,000*45) for the 0-30 age group and Rs 1,25,000 (25,000*5) for the 46-60 age group. Even if it is a single premium policy, you can obtain tax benefits provided you choose a multiple above five. Top-ups should not exceed one-fifth the SA and will go into the savings fund.

The highlight is that 100 per cent of the premium is allocated to funds. The initial charge could be heavy in other linked policies. Allianz's earlier linked plan `Unit Gain' too had a charge as high as 70 per cent for the first year.

However, the bid/offer spread- a charge similar to a entry or exit load in mutual funds - at 5 per cent is , however, steep. The fund management fees at 2.5 per cent are also higher than that for most other unit linked plans.

Unit Gain SP is otherwise similar to other unit linked plans.

Investment funds: It has four investment funds - Equity, Debt, balanced and Cash. The premiums can be allocated between these funds or in any one fund provided a minimum of five per cent is invested in the chosen fund.

Switches: You are allowed three free switches every policy year provided a minimum of Rs 5,000 is switched. You can lower the SA any time. You can also bring back the SA to the original level.

Top-ups: You can pay additional premiums by way of top ups. This will go directly into the savings fund. No charges are levied on the top ups too.

Withdrawal: You can withdraw partially or fully anytime after payment of single premium. No surrender penalty is levied. However, if you withdraw before two years, you will not be eligible for tax rebate on the premiums paid under Section 88.

Charges: There are other charges, such as transaction, switching, fund management and mortality ones.

Benefits: On death, the SA less withdrawals or the fund value, the higher of the two is paid. The policy does not have a maturity period. When you withdraw, you get the value of the units withdrawn.

(Readers are requested to compare products featured under this column with similar ones offered by other players.)

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