Bajaj Allianz Life Insurance Company Limited

FD

FD’s
Lose Lose proposition
For
You

Agency Training 2006

Bajaj Allianz Life Insurance Company Limited

FD victim of return & reinvestment risk

Sad as it may sound for investors who have spent a lifetime

investing in fixed return schemes, the harsh reality is that fixed

return schemes are no longer attractive options. Investment

avenues that offer fixed returns have borne the brunt of the

softer interest rate regime.

Agency Training AUGUST 2006

Bajaj Allianz Life Insurance Company Limited

FD victim of return & reinvestment risk

While net accumulation goes up ….
250000

200000

150000
Curve to Curve to show
Show rate of compounding
Return at every 100000
reinvestment Maturity after every
50000 5 years

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Your money runs into downward flip ….

6

3
East
2

0
1 5 10

Agency Training AUGUST 2006

Bajaj Allianz Life Insurance Company Limited

FD victim of return & reinvestment risk

Performance of Various Asset Classes
15.6%

10.3%
8.9%

6.7%
5.7%
3.55%

-1.1%
Inflation Gold Bank FDs BSE Sensex

Growth Real Growth

Cumulative annualized returns 1980-2004

Agency Training AUGUST 2006
Bajaj Allianz Life Insurance Company Limited

FD victim of return & reinvestment risk

Bank Rate

12%

10%
8%

6%
4%
2%
0%
1990-91

1995-96

2000-01

2005-06

2010-11

2015-16

Agency Training AUGUST 2006

Bajaj Allianz Life Insurance Company Limited

FD victim of return & reinvestment risk

Every economy needs to follow a trend
Developed
US data

Developing

Japanese data

Under developed

Indian data

Agency Training AUGUST 2006

Bajaj Allianz Life Insurance Company Limited

FD victim of return & reinvestment risk

Risk that your FD would face ….

Every reinvestment would carry a return risk

If the return goes up in the interim period you get the same
With inflationary trend, returns going down & with post tax
scenario the REAL rate of return is negative

The proposition…….. Lose Lose! if you have a life goal to fulfill, you
would find yourself stretched & you would need to considerably
increase your principal contribution

Agency Training AUGUST 2006

Bajaj Allianz Life Insurance Company Limited

FD victim of return & reinvestment risk

Now What?

Agency Training AUGUST 2006

Bajaj Allianz Life Insurance Company Limited

The Answer

Invest Gain Maxxx…

Minimum guaranteed return on your premiums paid

up to 4.17%

Minimum Post-Tax (after taking benefits of Section 80 C)

guaranteed return on premiums paid

up to 5.46%

Capital Guarantee with High Return

Agency Training AUGUST 2006

Bajaj Allianz Life Insurance Company Limited

The Answer
illustration at age 30
Year InvestGain FD
0 -898774 1000000 -1000000
1 0 0
2 0 0
3 0 0
4 0 0
5 0 1226611 0
6 0 0
FD vs Invest Gain Maxxx 7 0 0
8 0 0
9 0 0
10 0 1453667 0
11 0 0
12 0 0
13 0 0
14 0 0
15 1818493.774 1664678 1664678
Life Cover is an added BONUS!!! 4.8% 3.5%

Agency Training AUGUST 2006

Bajaj Allianz Life Insurance Company Limited

The Answer

While you invest in Invest Gain Maxxx

We give you some unique benefits

Protection against any downward revision of return

Capital guarantee clubbed with guaranteed return
Market moves up we give you more
Preponement of maturity benefit in case of Death
Limited premium liability

Net net it’s a Win Win proposition for a secured progression

Towards life goals

Agency Training AUGUST 2006

Bajaj Allianz Life Insurance Company Limited

FD vs Insurance

Sr.
Customer need to be addressed… Life Insurance Bank Deposits
No.

1 Security ( Unforeseen of Death) Yes No

2 Safety (Capital Guarantee) Yes Yes
3 Return (Making money work) Yes Partially Yes
4 Financial Planning (Life cycle needs) Yes Partially Yes
5 Emergency (Liquidity/Loan) Yes Partially Yes

Agency Training AUGUST 2006

Bajaj Allianz Life Insurance Company Limited

Potential to penetrate
Individual Investor: Savings Profile
Bank FDs
42.90%

Small Savings
17.70%

Cash
10.10%

Shares &
Debentures Contractual
1.40% Savings*
27.90%

*Contractual saving comprises Life Insurance,

Provident and Pension Funds

Current Share of Household Savings

Agency Training AUGUST 2006
Bajaj Allianz Life Insurance Company Limited

Invest now in

FD’s
Lose Lose proposition
For
You

Agency Training 2006