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LIFE INSURANCE

Protect and Prosper: The Comprehensive Benefits of High Protection ULIPs

In today’s dynamic world, where financial security and growth are both top priorities, the search for a well-rounded solution can seem overwhelming. Ever wondered what investment and insurance plan would best suit your diverse needs? Look no further. HPUL (High Protection Unit Linked Insurance Plans) offer the perfect blend of insurance protection and market-linked investments, helping you secure both your financial future and that of your loved ones.

WHY HIGH PROTECTION ULIPS ARE YOUR IDEAL FINANCIAL SOLUTION:

High Protection ULIPs are designed to offer not only substantial life insurance coverage but also the potential for significant wealth accumulation.

Here’s why these plans stand out:

• Market-Linked Returns: High Protection ULIPs allow you to take advantage of market growth, potentially boosting your wealth.
• Comprehensive Protection: These plans provide high cover protection against death, total disability, and even critical illnesses, giving you and your family peace of mind.
• Liquidity and Flexibility: With partial withdrawal options after a 5-year lock-in period and flexible premium payment terms, you have the freedom to manage your investments according to your needs.
• Tax Benefits: Save on taxes while building your wealth and securing your future.
• Long-Term Security: Ensure that your financial responsibilities are fulfilled, even in your absence, by selecting a ULIP that offers customizable fund options for investments.
• Capital Guarantee Options: Some ULIPs provide capital guarantees, ensuring your principal investment is protected.
• Comprehensive Protection Riders: Add-ons like Permanent & Total Disability, Critical Illness, and Accidental Death riders enhance your policy’s protection.
• Partial Withdrawals: Access your funds after the initial 5-year lock-in period.
• Loyalty Additions & Wealth Boosters: Increase your returns over time with loyalty additions, wealth boosters, and return of charges.
• Cost Efficiency: Return of charges makes these plans cost-efficient, providing more value for your investment.
• Liberal Underwriting Guidelines: With smoother application processes and higher approval rates, applying for a ULIP is now easier than ever.
• Flexible Premium Payments: Customize your premium payment term to match your financial comfort.
• Competitive Charge Structure: The low-cost structure of High Protection ULIPs ensures better returns on your investment.

TOP HIGH PROTECTION ULIPS IN THE MARKET

TATA AIA Param Raksha Life Pro+

ICICI Prudential Protect N Gain

HDFC Life Smart Protect Plan

Bajaj Allianz Life Invest Protect Goal II

KOTAK Life T.U.L.I.P

BOUNDARY CONDITIONS

HOW DOES HPUL PLAN WORK?

Example 1: Mr. Aakash is a 35 years old salaried employee in X company. He recently got married and wants to buy Param Raksha Life Pro+ till 85 years of age. He opted for a 12 years of premium paying term (PPT) with sum assured of 1 crore.

FUND PERFORMANCE - TATA AIA PARAM RAKSHA LIFE PRO+

Example 2: Mr. Ramesh is a 35 years old government employee. With a policy term and premium paying term of 40 years, he wants to buy BALIC Invest Protect Goal II Policy for Sum Assured of Rs. 1 crore.

FUND PERFORMANCE - BAJAJ ALLIANZ INVEST PROTECT GOAL II

Example 3: Rajat, a 35 years old engineer decided to invest in KOTAK Life T.U.L.I.P. Plan for a policy term of 40 years. He chooses to pay Rs. 5 lac p.a. for 10 years and have extra benefit in the form two riders i.e., accidental cover and critical illness rider.

FUND PERFORMANCE - KOTAK LIFE T.U.L.I.P.

“HPUL - AN EXCELLENT CHOICE FOR THOSE SEEKING A DUAL BENEFIT OF INSURANCE AND INVESTMENT.”

Secure Your Future Today

A High Protection ULIP provides the perfect balance of life insurance and investment growth. Whether you’re looking for tax savings, market returns, or long-term security, a ULIP is an ideal solution to fortify your financial journey. Start planning now to ensure a safe, protected, and prosperous future for yourself and your loved ones.

FIXED INCOME

Retirement has long been envisioned as a peaceful period of self-discovery, relaxation, and enjoyment—a time to reap the rewards of a lifetime of hard work. Yet, for millions of people, this dream may turn into a financial nightmare. India, in particular, is facing a ticking time bomb with its rapidly aging population. By 2050, nearly 20% of the country’s population will be over 60, and yet, a majority are unprepared for their post-work years.

According to the 2022 India Retirement Index Study, 80% of urban respondents feared they would exhaust their retirement savings within the first decade, and shockingly, 37% of people admitted they hadn’t even begun planning for retirement. These findings underscore a looming crisis driven by a combination of cultural factors and a lack of retirement education. For many, financial priorities have long been shaped by the expectation that children would support their parents and that pensions would be guaranteed—a safety net that no longer holds in today’s economy. As a result, retirement planning has often taken a backseat to other financial goals like buying a home or funding children’s education and weddings. However, given the current economic realities of inflation and rising costs, building a retirement nest egg early is no longer optional.

THE NATIONAL PENSION SYSTEM (NPS): A MODERN SOLUTION TO RETIREMENT PLANNING

Introduced in 2004 for government employees and expanded to private-sector workers in 2009, the National Pension System (NPS) is an innovative approach to retirement planning. Unlike the traditional pension systems, which promised assured returns, NPS provides individuals the opportunity to invest a portion of their savings in equity markets. This shift towards equities is significant because, historically, stocks have delivered inflation-beating returns over the long term, making NPS a compelling option for building a substantial retirement corpus.

One of the key advantages of NPS is its flexibility. Subscribers can choose from various asset classes—equities, government bonds, and corporate bonds—depending on their risk appetite and investment horizon. For those who prefer a more hands-off approach, the Auto choice automatically adjusts asset allocation based on the individual’s age, reducing equity exposure as retirement nears. The Active choice, on the other hand, allows subscribers to take control by selecting their preferred allocation and rebalancing up to four times a year.

However, despite its many advantages, NPS has not gained as much traction as one might expect, particularly among private-sector employees. Only 20% of NPS subscribers come from the private sector, which is surprising given the potential returns and tax-saving benefits the scheme offers.

NPS VS. MUTUAL FUNDS: TAX EFFICIENCY AND THE POWER OF COMPOUNDING

When it comes to retirement planning, tax efficiency plays a crucial role in determining the final value of an individual’s corpus. Here, NPS has a distinct edge over mutual funds. Contributions made to NPS are tax-free in several key ways: employers can contribute up to 14% of an employee’s basic salary to NPS without incurring any tax liabilities, and these contributions are over and above the standard ?1.5 lakh deduction under Section 80C, making them particularly attractive for high-income earners.

In comparison, tax benefits for mutual fund investments are capped at ?1.5 lakh under Section 80C. Over a 15-year period, an NPS portfolio could generate a 34% larger corpus than mutual funds, simply due to the tax savings. In other words, by investing in NPS instead of mutual funds, you’re likely to end up with more after-tax returns, which can make a significant difference to your retirement fund.

Rebalancing—a key strategy for long-term investors to maintain the desired allocation between equities and fixed income—is another area where NPS shines. NPS allows investors to rebalance their portfolios without incurring any tax liability, offering a clear advantage over mutual funds, where frequent rebalancing can trigger taxes. Hybrid mutual funds do offer some tax efficiency, but they cannot match the level of flexibility and tax savings provided by NPS.

To illustrate, consider this example: if you had invested 30% of your salary in NPS since 2009, with a 75% allocation to equities and 14% contributed by your employer, your investment would now be worth ?3.83 crore as of August 2024. In contrast, if the same amount had been invested in mutual funds, the final value would be ?3.73 crore, and you would have paid ?4.33 lakh in taxes on rebalancing.

TAX-FREE WITHDRAWALS: A KEY NPS ADVANTAGE

One of the most significant benefits of the NPS is the ability to withdraw up to 60% of the corpus tax-free upon retirement at the age of 60. The remaining 40% must be used to purchase an annuity, which provides regular taxable payments during retirement. This tax-free lump sum withdrawal makes NPS far more appealing than mutual funds, where withdrawals are subject to long-term capital gains (LTCG) tax or, in the case of debt funds, taxed at the individual’s income slab rate.

Moreover, you don’t have to withdraw the 60% corpus all at once. NPS allows for staggered withdrawals until the age of 75 without any tax liability. This flexibility ensures that you can plan your withdrawals based on your financial needs while minimizing the tax burden, something mutual funds do not offer.

For instance, if you need a retirement corpus of ?5 crore to sustain your lifestyle, investing in NPS will help you achieve that goal more efficiently than mutual funds, where you would need a higher amount (?5.5 crore) due to taxes on withdrawals. This ?50 lakh difference may seem minor at first, but it becomes critical over time. By the age of 84, without proper tax planning, mutual fund investors could run out of money, while NPS investors would still have a financial cushion.

THE DISCIPLINE OF NPS: A BLESSING IN DISGUISE

Many mutual fund investors face the temptation to withdraw their gains when the market performs well, which can derail long-term financial plans. NPS, with its lock-in period until the age of 60, ensures that you stay invested for the long term. This forced discipline can be a blessing in disguise, particularly for those who may be tempted to cash out their investments prematurely.

In contrast, mutual funds offer more liquidity, but this flexibility can sometimes work against an investor’s best interests, especially during market downturns. NPS’s lock-in feature keeps you on track, ensuring your retirement corpus grows undisturbed over time.

NPS VS. EPF: A SUPERIOR RETIREMENT OPTION

For those comparing NPS with the Employees’ Provident Fun (EPF), NPS is the clear winner in terms of returns. Over a 15-year period, an annual contribution of ?1.5 lakh to NPS would grow to ?73 lakh, while the same investment in EPF would only amount to ?44.4 lakh—a staggering difference of almost 65%. Furthermore, the redemption process for EPF can be cumbersome, while NPS offers greater flexibility in accessing your funds.

WHAT ABOUT GOVERNMENT EMPLOYEES? THE RISE OF THE UNIFIED PENSION SCHEME (UPS)

For government employees, the recent introduction of the Unified Pension Scheme (UPS) has added another layer to the retirement planning landscape. UPS offers a guaranteed pension, but it comes with several limitations compared to NPS. For instance, upon the retiree’s death, the spouse only receives 60% of the pension, and the payments stop when the spouse passes away. NPS, on the other hand, allows for fund transfers to heirs, corpus withdrawals, and annuity options. Additionally, UPS’s lump sum withdrawal is available only at retirement, while NPS offers more flexibility in accessing funds.

CONCLUSION: EARLY PLANNING IS THE KEY TO A SECURE FUTURE

In today’s world of rising costs and uncertain pensions, early retirement planning is no longer a choice but a necessity. The NPS stands out as a highly efficient, flexible, and tax-friendly vehicle for building a substantial retirement corpus. With its advantages over mutual funds and EPF, NPS is an essential tool for securing your financial future and ensuring that your retirement years are truly a time of joy, exploration, and fulfillment.

The earlier you start, the bigger the rewards—and with the right planning, retirement can indeed be the golden years it’s meant to be.

MUTUAL FUNDS

Athematic fund is a type of mutual fund that focuses on investing in companies based on specific themes or trends. These themes could include global trends like technology, environmental sustainability, or local opportunities such as infrastructure development. The key aspect of a thematic fund is that it targets multiple sectors related to a single theme, offering investors exposure to companies that are expected to benefit from that theme in the future.

DIFFERENCE BETWEEN THEMATIC AND SECTORAL FUNDS

While both thematic and sectoral funds focus on specific areas, they differ in terms of investment scope:

• Thematic Fund: Invests across multiple sectors that align with a particular theme. For example, a “green energy” thematic fund may invest in companies involved in renewable energy, electric vehicles, and energy storage. The focus is broader, aiming to capitalize on a long-term trend that cuts across different industries.
• Sectoral Fund: Focuses solely on one sector, such as pharmaceuticals, banking, or IT. The risk is concentrated in a single industry, and the performance depends heavily on how that specific sector fares.

COMPARATIVE TABLE: THEMATIC VS SECTORAL FUND

Why Thematic Funds are Gaining Focus

In recent months, thematic funds have captured significant attention. According to industry data, thematic mutual funds saw a surge of ?70,000 crore in investments as of August 2024 [Source: SEBI Mutual Fund Report, August 2024]. The growing interest stems from:

• Sectoral Opportunities: Themes like manufacturing, defense, and infrastructure have become investment favorites due to government initiatives like the Production Linked Incentive (PLI) scheme and the ‘China+1’ strategy [Source: Ministry of Finance, India, August 2024]. For instance, manufacturing thematic funds alone received ?19,500 crore, or 28% of the total inflows [Source: Economic Times, August 2024].
• Performance: Thematic funds focusing on infrastructure and defense delivered returns of over 55% in the last 12 months, which has led to renewed interest in such niche investments [Source: Moneycontrol, Mutual Fund Tracker, August 2024].
• Economic Growth Prospects: As India continues to focus on building domestic capacity in manufacturing, defense, and renewable energy, these themes have become highly attractive for long-term investors [Source: NITI Aayog Report, 2024].

Who Should Invest in Thematic Funds?

Thematic funds are best suited for experienced investors who:

• Have a high-risk tolerance.
• Understand macroeconomic and policy trends.
• Have a well-diversified portfolio and are looking for tactical, short-term opportunities.
• Are willing to stay invested for at least 5-10 years.

Risk Profile Allocation in Thematic Funds

Here’s how a 100% investment portfolio could be allocated to thematic funds, depending on the investor’s risk profile:

GENERAL INSURANCE

Presenting a New Product from Manipal Cigna Health Insurance Co. Ltd - “Manipal Cigna SARVAH”. This specialized insurance plan is designed to cater to the unique health needs of ?BHARAT”. They understand the importance of your health and the need for comprehensive insurance that truly meets your expectations. That’s why ManipalCigna presents Sarvah Health Insurance, a complete health solution with three distinct plan options:

1. MANIPAL CIGNA SARVAH - PRATHAM

2. MANIPAL CIGNA SARVAH- UTTAM

3. MANIPAL CIGNA SARVAH - PARAM

This plan is designed to offer the right level of coverage to suit your needs. Whether you’re seeking basic care or comprehensive benefits, Sarvah has you covered. With Sarvah, you can have peace of mind knowing that ManipalCigna is with you, supporting you every step of the way.

HIGHLIGHTS OF THE PLAN

MANIPAL CIGNA SARVAH - PRATHAM - Begin your Journey with Confidence

• Hospitalization coverage up to 3 cr for 4 Major Illnesses.
• Sarathi* that reduces your waiting period to 30 days.
• Gullak* Benefits that guarantees 100% increase in the base SI, irrespective of claim
• Refill your policy for restoring* the SI even for related and unrelated illnesses.
• Surplus* Benefits that ensure additional 100% of SI from day 1 for the first claim
• Protect your family with personal accident cover* up to 3 Cr.
• No Zonal co-pay worries, ensuring faster recovery in the city of your choice.
• Get up to 7.5% discount when you renew your policy and up to 20% discount just by walking.

MANIPAL CIGNA SARVAH- UTTAM - A Health Insurance Plan to ensure you are stress-free in major illnesses.

• Anant* Care with unlimited hospitalisation coverage for 4 Major Illnesses.
• Sarathi* that reduces your waiting period to 30 days.
• Gullak* Benefits that guarantees 100% increase in the base SI, irrespective of claim
• Unlimited restoration* of SI even for related and unrelated illnesses.
• Maternity and Newborn hospitalisation and expenses* covered.
• Protect your family with personal accident cover* up to 3 Cr.
• No Zonal co-pay worries, ensuring faster recovery in the city of your choice.
• Surplus* Benefits that ensure additional 100% of SI from day 1 for the first claim.
• Get upto 2.5% discount when you renew your policy and upto 20 % discount just by walking.

MANIPAL CIGNA SARVAH - PARAM - A Health Insurance Plan that doesn’t make you wait at all

• Tatkal Benefit that ensures you have absolutely Zero Waiting Period.
• Gullak* Benefits that guarantees 100% increase in the base SI, irrespective of claims.
• Unlimited restoration* of SI even for related and unrelated illnesses.
• Protect your family with personal accident cover* up to 3 Cr.
• No Zonal co-pay worries, ensuring faster recovery in the city of your choice.
• Surplus* Benefits that ensure additional 100% of SI from day 1 for the first claim.
• Get upto 2.5% discount when you renew your policy and upto 20 % discount just by walking.

*Optional Cover on payment of additional premium

FEATURES COMPARISON OF THE PLAN

How much does it Cost - Few Examples

How much does it Cost - Few Examples

Disclaimer: Bajaj Capital Limited (‘BCL’) has taken due care and caution in presenting factually correct data contained herein above. While BCL has made every effort to ensure that the information/data being provided is accurate. BCL does not guarantee the accuracy, adequacy or completeness of any data/information in the publication and the same is meant for the use of the recipient and not for circulation. Readers are advised to satisfy themselves about the merits and details of each investment scheme, before taking any investment decision. BCL shall not be held liable for any consequences, legal or otherwise, arising out of use of any such information/ data and further states that it has no financial liability whatsoever to the recipient/ readers of this publication. Neither BCL nor any of its directors/ employees/ representatives accept any liability for any direct or consequential loss arising from the use of data/ information contained in the publication or any information/ data generated from the publication. Nothing contained in this publication shall constitute or be deemed to constitute a recommendation or an invitation or solicitation for any product or services. Any dispute arising in future shall be, subject to the Court(S) at Delhi. Views given in the articles are the personal views of the contributors and not that of the company. Readers are advised to go through the respective product brochure/ offer documents before making any investment decisions. Disclaimer: The rates of interest are applicable as on the data mentioned herein above. The rate may be revised at the sole discretion of the respective companies inviting the Fixed Deposits without further notice. Printed by, Rajiv Wadehra, Published By, Raji Wadehra on behalf of Bajaj Capital Investment Centre Limited, Bajaj House, 97 Nehru Place, New Delhi - 110019, and Printed at Sundeep press C-105/2, Naraina, Industrial Area Phase - New Delhi - 110028, and Published at Bajaj House,97 Nehru Place, New Delhi - 110019, Editor-Rajiv Wadehra (CIN: U0000DL1988PLC039417))