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Should I Invest in Bajaj Allianz Ace Plan for Retirement?

Ramalingam Kalirajan |8315 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Apr 15, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Prashanth on Apr 15, 2025Hindi

Sir is bajaj Allianz ace plan good for retirement?

Ans: It is always good to plan early for retirement. You have taken an important step by considering this.

Let’s now evaluate the Bajaj Allianz Ace plan in detail.

What Type of Plan Is This?

This is a ULIP-based retirement product.

It mixes investment with insurance.

Your money is split into charges, investment, and insurance cover.

The returns are not guaranteed.

It depends on the market and fund chosen.

How It Works for Retirement?

You pay premiums regularly.

Part of the money is invested in equity or debt funds.

The rest goes towards charges and insurance cover.

After 10–15 years, you get the fund value.

You can convert it into regular pension or take the full value.

Are There High Charges? Yes.

This plan has many layers of charges.

Premium allocation charge: Deducted before investing.

Fund management charge: Yearly deduction on fund value.

Policy admin charges: Fixed deduction regularly.

Mortality charges: Cost for life insurance cover.

Switching and partial withdrawal charges may also apply.

All these reduce your actual returns.

Transparency Is Not Clear

You won’t know how much is going to each part.

The illustration shows assumed returns of 8%.

Real return after charges could be 4% to 5%.

This is not enough to beat inflation in the long run.

Insurance + Investment Is Not a Good Mix

Insurance should be bought only for protection.

Investment should aim for growth.

Mixing both results in neither goal being achieved fully.

Instead, pure term insurance plus mutual funds work better.

More clarity, control, and better returns.

Returns Are Market-Linked, Not Guaranteed

Many people assume returns are fixed.

But ULIPs are not fixed-return products.

They are like mutual funds, but with extra charges.

There are no bonuses or loyalty additions that truly add value.

Lock-in period of 5 years.

Early surrender comes with heavy loss.

Tax Benefit – But Don’t Get Misguided by That

Yes, premiums are tax-free under 80C.

Maturity proceeds are tax-free if yearly premium is less than Rs 2.5 lakh.

But tax saving should not be the main goal of any investment.

Low-return products with tax savings are not wise.

Better to invest for real growth and pay reasonable tax later.

What Are the Better Alternatives?

Let us look at more efficient options. These offer more growth, safety, and flexibility.

SIPs in actively managed mutual funds.

Choose large cap, flexi cap, and hybrid equity funds.

Start small and increase with time.

Returns may go up to 10% or more in the long term.

Managed by experts with better fund performance tracking.

Regular funds through a Certified Financial Planner provide right guidance.

Long-term wealth creation is more likely here.

Avoid Index Funds or ETFs

Index funds only copy the index.

No expert decision-making.

They do not protect in falling markets.

Actively managed funds adjust the portfolio based on market.

More suitable for child education and retirement goals.

Avoid Direct Funds Without Guidance

Direct funds seem cheaper.

But no expert support is available.

You may choose wrong schemes or exit at wrong time.

Regular funds through a Certified Financial Planner are better.

You get personalised asset allocation.

Goal planning is better aligned.

Mistakes are fewer, and discipline is higher.

360-Degree Planning for Retirement

Let us now connect the dots for your retirement.

Decide your retirement age and lifestyle.

Calculate monthly income needed after retirement.

Estimate inflation and life expectancy.

Then work backward to know how much to invest now.

Split money between equity, debt, and short-term funds.

SIPs are best for long-term consistency.

NPS can be added for additional benefit.

But even NPS must be reviewed every 2 years.

Avoid depending only on one plan like Bajaj Allianz Ace.

Diversify and regularly review your plan.

What If You Already Have This Plan?

If you have already paid 5 years, consider stopping further premiums.

Do not surrender before 5 years.

If it is new and just started, better to stop now.

Consider switching the maturity amount to mutual funds later.

Use SIPs and STPs (systematic transfer plans) to move money wisely.

If confused, get help from a Certified Financial Planner.

What You Can Do Now

You can start with this approach instead of the ULIP.

Invest Rs 10,000 to Rs 15,000 monthly in mutual funds.

Use a mix of equity and hybrid funds.

SIPs in regular funds via a Certified Financial Planner.

This builds good wealth over 15–20 years.

Link investment to your retirement and child’s future goals.

Add term insurance for life cover separately.

Avoid policies that bundle investment and insurance.

Track growth every 6 months.

Adjust allocation as per market condition and goal timeline.

Final Insights

The Bajaj Allianz Ace Plan looks attractive due to brand and packaging.

But the plan is expensive, opaque, and inefficient.

Returns are uncertain and charges are high.

You don’t get flexibility or clarity.

For long-term goals like retirement, it is not ideal.

Better to go for mutual funds via monthly SIPs.

Keep life insurance separate and pure.

Mixing goals and tools never works well.

You have time and a clear goal.

Make use of it with the right plan and guidance.

Always keep things simple and separate.

That will help you reach financial freedom faster.

For any help, consult a Certified Financial Planner.

They will give a complete and balanced plan.

It keeps your future safe and peaceful.

Don’t run after packaged products. Run after your goals.

That is the true smart step.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.