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Is the Aviva Smart Monthly Income Plan the right choice for earning a regular monthly income?
Can the Aviva Smart Monthly Income Plan provide long-term financial security?
What are the features, benefits, and drawbacks of the Aviva Smart Monthly Income Plan?
Does the Aviva Smart Monthly Income Plan truly deliver the financial peace of mind it promises?
In this article, we take a closer look at the plan’s features, benefits, limitations, and provide a detailed illustration to help you evaluate whether it is the right choice for your financial needs.
Table of Contents
1. What is the Aviva Smart Monthly Income?
2. What are the Features of the Aviva Smart Monthly Income?
3. Who is Eligible for the Aviva Smart Monthly Income?
4. What are the Benefits of the Aviva Smart Monthly Income?
5. Grace Period, Discontinuance and Revival of the Aviva Smart Monthly Income
6. Free Look Period for the Aviva Smart Monthly Income
7. Surrendering the Aviva Smart Monthly Income
8. What are the Advantages of the Aviva Smart Monthly Income?
9. What are the Disadvantages of the Aviva Smart Monthly Income?
10. Research Methodology of Aviva Smart Monthly Income Plan
Benefit Illustration – IRR Analysis of Aviva Smart Monthly Income Plan
11. Aviva Smart Monthly Income Plan Vs. Other Investments
Aviva Smart Monthly Income Plan Vs. Pure-term + Equity Mutual Fund
12. Final Verdict on the Aviva Smart Monthly Income Plan
1. What is the Aviva Smart Monthly Income?
Aviva Smart Monthly Income is an Individual Non-Linked, Non-Participating Savings Life Insurance Plan.
It is a traditional Savings Life Insurance Plan that starts rewarding you from month one with regular guaranteed income, while ensuring life cover throughout the Policy Term.
2. What are the features of the Aviva Smart Monthly Income?
- Life Insurance Protection: Provides life insurance cover to help safeguard your family’s financial future.
- Regular Income Stream: Receive a guaranteed income starting as early as the month following policy issuance and continuing until the end of the policy term.
- Flexible Income Payout: Choose to receive your income either monthly or annually, based on your financial requirements.
- Return of Premium: Get back the total premiums paid at the end of the policy term, subject to the policy terms and conditions.
- Customisable Income: Opting for a lower life cover allows you to receive a higher regular income.
3. Who is eligible for the Aviva Smart Monthly Income?
|
Parameters |
Minimum | Maximum |
| Entry Age | 18 years last birthday |
55 years last birthday |
|
Maturity Age |
38 years | 75 years |
| Premium Payment Term |
7 /10/12 / 15 years |
|
|
Policy Term |
20 / 25 / 30 years | |
| Minimum Annualised Premium |
₹60,000 (₹1,00,000 for PPT:7 years) |
|
|
Base Annualised Premium shall be in multiples of 5000 |
||
| Maximum Annualised Premium |
No Limit subject to Board Approved Underwriting Policy |
|
|
Base Sum Assured |
7 Times / 10 Times of the Annualised Premium | |
| Premium Payment Mode |
Yearly, half-yearly and monthly |
|
|
Income Payout Mode |
Yearly, monthly |
|
4. What are the benefits of the Aviva Smart Monthly Income?
Survival Benefit
On survival of the Life Insured on each Policy monthly/yearly anniversary after the Policy commencement date, provided all due Premiums have been paid, a level regular monthly / yearly (as opted) guaranteed income is payable to the policyholder.
Maturity Benefit
On survival of the Life Insured till the maturity date, provided all due Premiums have been paid, the Maturity Sum Assured Viz.
Total Premiums Paid excluding any extra Premium, any Rider Premium and taxes shall be paid to the policyholder along with Survival Benefit, if any.
Death benefit
In case the Life Insured dies during the Aviva Smart Monthly Income Plan Policy Term, provided all due Premiums have been paid till the date of death, the highest of the following amounts shall be paid immediately as Lump sum.
- Death Sum Assured, or;
- 105% of the Total Premiums Paid, or;
- Surrender Value (Higher of Guaranteed Surrender Value or Special Surrender Value) as on date of death.
5. Grace Period, Discontinuance and Revival of the Aviva Smart Monthly Income
Grace Period
The grace period for the payment of Premium shall be 30 days and is allowed for payment of yearly, half yearly, quarterly Premiums and 15 days for monthly payments.
Discontinuance
If less than one year’s premium has been paid: If the due Premium of the first Policy Year has not been paid before the expiry of the grace period, then the Aviva Smart Monthly Income Plan Policy will lapse without acquiring any benefit.
If at least one year’s Premium has been paid: If all due Premiums of the first Policy Year have been paid and any subsequent due Premium is not paid before expiry of the grace period, the Policy will become a Paid-Up Policy with reduced benefits.
Revival
The policyholder will have five years from the date of First Unpaid Premium (FUP) to revive the Paid-Up Policy by paying all due Premiums along with interest.
6. Free Look Period for the Aviva Smart Monthly Income
The policyholder has a free-look period of 30 days from the date of receipt of the Policy Document, to review the terms and conditions of the Aviva Smart Monthly Income Plan Policy and where the policyholder disagrees with any of those terms and conditions, the policyholder has the option to return the Policy.
7. Surrendering the Aviva Smart Monthly Income
The Aviva Smart Monthly Income Plan policy can be surrendered anytime during the Policy Term by the policyholder provided one full year Premium has been received.
However, Surrender Value is payable after completion of the first Policy Year.
SV = Highest of Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV)
8. What are the advantages of the Aviva Smart Monthly Income?
- Flexible Premium Payment Mode: You can change the premium payment mode at each policy anniversary to suit your convenience.
- Policy Loan Facility: The policy allows you to avail of a loan of up to 80% of the policy’s surrender value, subject to the insurer’s terms and conditions.
- Optional Rider Benefits: Enhance your insurance coverage by adding optional riders at an additional cost.
- Tax Benefits: Premiums paid and policy benefits may qualify for tax benefits as per the prevailing income tax laws.
9. What are the disadvantages of the Aviva Smart Monthly Income?
- Limited Life Cover: The policy offers a relatively low sum assured, which may not provide adequate financial protection for your family’s future.
- Risk of Spending Survival Benefits: Regular survival benefits may encourage discretionary spending instead of promoting disciplined, long-term wealth creation.
- Reduced Compounding Potential: Since a portion of the investment is paid out as periodic income during the policy term, the remaining corpus has less opportunity to benefit from the power of compounding, which can reduce overall wealth accumulation.
10. Research Methodology of Aviva Smart Monthly Income Plan
The Aviva Smart Monthly Income Plan offers guaranteed regular income along with a maturity benefit.
While the assurance of periodic payouts may seem appealing, it is important to evaluate whether the plan generates adequate returns to meet long-term financial goals.
To assess its effectiveness, we analyse the Internal Rate of Return (IRR) based on an illustration obtained from the insurer’s portal.
Benefit Illustration – IRR Analysis of Aviva Smart Monthly Income Plan
Consider a 25-year-old male purchasing the plan with a sum assured of ₹10 lakh.
The policy has a fixed term of 25 years, with premiums payable for the first 15 years.
The annual premium is ₹1,00,000.
|
Male |
25 years |
| Sum Assured |
₹ 10,00,000 |
|
Policy Term |
25 years |
| Premium Paying Term |
15 years |
|
Annualised Premium |
₹ 1,00,000 |
|
Age |
Year | Annualised premium / Maturity benefit | Death benefit |
| 25 | 1 | -1,00,000 |
10,00,000 |
|
26 |
2 | -56,057 | 10,00,000 |
| 27 | 3 | -56,057 |
10,00,000 |
|
28 |
4 | -56,057 | 10,00,000 |
| 29 | 5 | -56,057 |
10,00,000 |
|
30 |
6 | -56,057 | 10,00,000 |
| 31 | 7 | -56,057 |
10,00,000 |
|
32 |
8 | -56,057 | 10,00,000 |
| 33 | 9 | -56,057 |
10,00,000 |
|
34 |
10 | -56,057 | 10,00,000 |
| 35 | 11 | -56,057 |
10,00,000 |
|
36 |
12 | -56,057 | 10,00,000 |
| 37 | 13 | -56,057 |
10,00,000 |
|
38 |
14 | -56,057 | 10,00,000 |
| 39 | 15 | -56,057 |
10,00,000 |
|
40 |
16 | 43,943 | 10,00,000 |
| 41 | 17 | 43,943 |
10,00,000 |
|
42 |
18 | 43,943 | 10,00,000 |
| 43 | 19 | 43,943 |
10,00,000 |
|
44 |
20 | 43,943 | 10,00,000 |
| 45 | 21 | 43,943 |
10,00,000 |
|
46 |
22 | 43,943 | 10,00,000 |
| 47 | 23 | 43,943 |
10,00,000 |
|
48 |
24 | 43,943 | 10,00,000 |
| 49 | 25 | 43,943 |
10,00,000 |
|
50 |
15,43,943 | ||
| IRR | 4.74% |
Under this illustration, the policyholder receives a guaranteed annual income of ₹43,943 during the income period and a maturity benefit of ₹15 lakh, payable along with the final income instalment.
Based on these cash flows, the plan generates an IRR of approximately 4.74% as per the Aviva Smart Monthly Income Plan maturity calculator.
Although the returns are guaranteed, the plan has several notable drawbacks.
An IRR of 4.74% is relatively low and is unlikely to help investors build meaningful long-term wealth or outpace inflation over extended periods.
In addition, the sum assured is modest.
Overall, the Aviva Smart Monthly Income Plan scores poorly on both investment returns and insurance protection. Its low return potential, limited life cover, and lack of flexibility make it a less effective solution for achieving long-term financial objectives.
Investors seeking wealth creation and adequate family protection may be better served by combining a pure term insurance plan with suitable investment products, rather than relying on a traditional guaranteed income policy.
11. Aviva Smart Monthly Income Plan Vs. Other Investments
The Aviva Smart Monthly Income Plan delivers modest returns and limited life insurance protection because it combines investment and insurance into a single product.
Instead of locking your savings into such a plan, allocating the same premium separately towards term insurance and investments can result in significantly better financial outcomes.
Aviva Smart Monthly Income Plan Vs. Pure-term + Equity Mutual Fund
A pure-term life insurance policy with a sum assured of ₹10 lakh costs approximately ₹5,800 per year for a 25-year policy term, with premiums payable for 10 years.
This leaves an annual surplus of around ₹94,200 available for investment during the first 10 years.
During the remaining five years, when no term insurance premiums are payable, the entire ₹1,00,000 annual amount can be invested.
|
Pure Term Life Insurance Policy |
|
| Sum Assured |
₹ 10,00,000 |
|
Policy Term |
25 years |
| Premium Paying Term |
10 years |
|
Annualised Premium |
₹ 5,800 |
| Investment |
₹ 94,200 |
The investment surplus is allocated to an equity mutual fund. Systematic withdrawals are then planned to mirror the annual income provided by the Aviva Smart Monthly Income Plan.
At the end of the 15-year accumulation period, the remaining investment corpus is redeemed and reinvested in a fixed-income instrument earning 7% per annum.
The analysis also factors in capital gains tax at the final redemption after considering the annual long-term capital gains exemption of ₹1.25 lakh.
|
Equity Mutual Fund Tax Calculation |
|
| Maturity value after 15 years |
23,80,188 |
|
Purchase price |
14,42,000 |
| Long-Term Capital Gains |
9,38,188 |
|
Exemption limit |
1,25,000 |
| Taxable LTCG |
8,13,188 |
|
Tax paid on LTCG |
1,01,648 |
| Maturity value after tax |
22,78,539 |
| Term insurance + Equity Mutual Fund | |||
| Age | Year | Term Insurance premium + Equity Mutual Fund |
Death benefit |
|
25 |
1 | -1,00,000 | 10,00,000 |
| 26 | 2 | -56,057 |
10,00,000 |
|
27 |
3 | -56,057 | 10,00,000 |
| 28 | 4 | -56,057 |
10,00,000 |
|
29 |
5 | -56,057 | 10,00,000 |
| 30 | 6 | -56,057 |
10,00,000 |
|
31 |
7 | -56,057 | 10,00,000 |
| 32 | 8 | -56,057 |
10,00,000 |
|
33 |
9 | -56,057 | 10,00,000 |
| 34 | 10 | -56,057 |
10,00,000 |
|
35 |
11 | -56,057 | 10,00,000 |
| 36 | 12 | -56,057 |
10,00,000 |
|
37 |
13 | -56,057 | 10,00,000 |
| 38 | 14 | -56,057 |
10,00,000 |
|
39 |
15 | -56,057 | 10,00,000 |
| 40 | 16 | 43,943 |
10,00,000 |
|
41 |
17 | 43,943 | 10,00,000 |
| 42 | 18 | 43,943 |
10,00,000 |
|
43 |
19 | 43,943 | 10,00,000 |
| 44 | 20 | 43,943 |
10,00,000 |
|
45 |
21 | 43,943 | 10,00,000 |
| 46 | 22 | 43,943 |
10,00,000 |
|
47 |
23 | 43,943 | 10,00,000 |
| 48 | 24 | 43,943 |
10,00,000 |
|
49 |
25 | 43,943 | 10,00,000 |
| 50 | 38,32,596 | ||
| IRR | 8.92% | ||
This strategy generates a regular income comparable to the Aviva Smart Monthly Income Plan while allowing the investment corpus to continue creating wealth. Based on these assumptions, the strategy delivers an estimated IRR of 8.92% and a maturity corpus of approximately ₹38.32 lakh—substantially higher than the return of premiums offered under the Aviva Smart Monthly Income Plan.
Beyond the higher returns, this approach also offers greater flexibility.
Investors retain control over their money and can modify the timing or amount of withdrawals based on their financial needs, unlike the fixed and inflexible payout structure of the insurance policy.
In conclusion, the Aviva Smart Monthly Income Plan falls short in terms of investment returns, flexibility, and life insurance protection.
Separating insurance from investments by combining a pure-term insurance policy with equity mutual funds provides a more efficient solution, delivering higher long-term wealth creation, adequate life cover, and greater financial flexibility.
12. Final Verdict on the Aviva Smart Monthly Income Plan
The Aviva Smart Monthly Income Plan combines regular survival benefits, a maturity benefit, and life insurance coverage into a single product.
The guaranteed income starts from the first policy year, and the plan also promises a return of the total premiums paid at the end of the policy term.
At first glance, these features may appear attractive to investors seeking both income and security.
However, the plan is fundamentally similar to a traditional money-back policy. It offers relatively low investment returns and a modest sum assured, making it ineffective for long-term wealth creation.
While the periodic payouts may provide regular cash flow, they also reduce the opportunity for investments to benefit from compounding. Furthermore, the life insurance cover is limited.
As a result, the plan performs poorly on both investment efficiency and insurance adequacy, making it difficult to justify as part of a well-diversified financial portfolio and it also has a high agent commission.
A more effective approach is to separate insurance from investments.
A pure-term life insurance policy provides substantially higher life cover at a fraction of the cost, ensuring adequate financial security for your family.
The premium savings can then be invested in a diversified portfolio of mutual funds or other suitable investment products based on your financial goals, investment horizon, and risk appetite.
This strategy offers greater flexibility, higher wealth creation potential, and better alignment with long-term financial objectives.
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A personalised financial plan prepared by a Certified Financial Planner (CFP) can help you select the right combination of products to achieve your long-term financial goals while maintaining adequate protection for your family.
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