Retirement is many nice things, but it is also a time when your salary stops. Your expenses, however, don't stop. You will still need to buy groceries. The medical bills will be bigger. Electricity, water, and other utility expenses will remain. Most importantly, one will try to maintain a lifestyle that they enjoyed pre-retirement. Despite individuals knowing that there is no pension in private sector jobs, only 33 per cent of us in India are saving regularly for retirement, says Dheeraj Sehgal, chief institutional business officer, Bajaj Allianz Life Insurance. Pitching life insurance products like ULIPs as a good option for retirement corpus building and as a source of tax-free retired life income, Sehgal in an interview with Kumar Shankar Roy talks about the gaps in retirement planning and existing retirement products. Read on to know more.
Is India prepared for retirement?
In India, only 33 per cent of us are saving regularly for retirement. As more jobs are coming into the corporate sector where pension is not provided, it is important that all of us as citizens start systematically saving for our retirement needs. Why no need to save for retirement? One thing is that we are living longer. Life expectancy is increasing and if we live longer, then we have to be dependent on our savings for a more number of years. The whole Indian concept of joint families is getting dismantled. There is a rising number of nuclear families in India today. This means we will not have the family ecosystem to offer or provide for the financial support, which was given to generations prior to us. Also, do remember that a lot of us have the aspiration of not working till the age of 60. We want to retire early so that we can pursue all the other hobbies and interests that we have.
So, we should all start planning for retirement today. But do we have good retirement product options?
There are products available today, but there are gaps. So, there are products that offer you guaranteed income post retirement but they give me income at a fixed rate. They do not adjust payout to inflation. There are products that help you plan for a comfortable retired life but they are tax inefficient. Every time, you withdraw money in lump sum or in parts, there is a tax. There are products that give fixed monthly income, which does not allow you to withdraw less if your expenses are lower. They also do not allow you to withdraw higher if in some months the expenses rise due to various reasons. One more important thing to consider is that you may be planning for retirement, but what if something happens to you tomorrow? Is your family going to be safe? We have looked at these gaps, and we tried to address them in our product.
But why use life insurance product for retirement planning?
We looked at some data and that shows some very interesting results. Firstly, a high number of us have always in some form or the other used life insurance as a category to do our retirement plan. So, we as a company are extending the same.
Tell us about Bajaj Allianz Life LongLife Goal. You call it a new-age whole-life ULIP. Why?
Our philosophy to offer living benefits to our customers is well reflected in this product. This ULIP is an ideal investment option for those looking to enjoy a comfortable retired life, no matter when they plan to retire. Being cognizant of our increased life span, we believe it is essential to save and invest in simple, yet value-packed investments’ product, which will offer you a retired life income to make the most of your retired years. We took a good look of what is available in the market and mapped it against what the customers are looking for when it comes to retirement planning. Bajaj Allianz Life LongLife Goal bridges the gaps, and its unique features ensure that the product will become an essential product amongst our customers’ portfolio when it comes to planning for their retirement life goals.”
What are its special features?
This is a non-participating, individual, whole life unit-linked, regular premium payment endowment plan. You can get 'tax-free retired life income' as this product will enable you to enjoy the benefits of investing in market-linked funds, and build a corpus to tide inflation and rising costs, thereby enabling you better to meet future needs. Further, retired life income is tax-free. It can be opted to be received as regular income for whole life, starting from the age of 55 years or as soon as you complete 10 policy years, whichever is later. To ensure you have the funds to meet any emergency, you can make partial withdrawals anytime after 5 years including the retired life income period. In case, as a policyholder, something were to happen to you where you are unable to pay the premium, like death or total disability, even then your spouse or child will continue to be protected and will enjoy the benefits that come with this policy. In case of total disability with this waiver of premium feature, you will also get to enjoy all the benefits of the policy. Also, there is life cover till the age of 99 years. This means that you pay a premium for a limited term ranging from 10 years to 25 years, and the policy will continue to cover you till you turn 99 years and ensures you can continue to keep your family’s life goals on track.
There are ULIPs offered by many life insurance firms. Why should a customer choose Bajaj Allianz?
The ULIP Funds of Bajaj Allianz Life Insurance have consistently delivered one of the best CAGR returns, beating the benchmark indices over a longer horizon of three, five and ten years. Further, most of its funds enjoy high ratings from the coveted Morningstar rating agency.
Can you explain what is the 'return enhancer feature' in the ULIP?
Return enhancer is where each installment of the retired life income is increased by 0.5 per cent over and above the percentage chosen by you.
What is periodical return of life cover charge feature?
We are saying that the life cover charges or the mortality charges are returned periodically every 10th policy year, after the life assured attains 60 years of age or the policy has completed 15 years, whichever is later and at maturity. This helps you add back to your retirement corpus.
You also said that there will be a periodical return of waiver of premium charge. How does that work?
When you have opted for the policy with Waiver of Premium, then the total amount of waiver of premium charges deducted in the policy, will be added back to the Fund Value at regular intervals and at maturity
Are there any loyalty additions in the ULIP?
Yes, there is. Loyalty additions are added to your fund value for paying premiums regularly and staying invested in the policy. It is applicable from the 6th policy year till the 25th year, and is calculated as a percentage of the annual premium every year.