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We all have different dreams at different stages of life.
We need a considerable amount of corpus to fulfill our dreams.
Tata AIA Life Insurance Plan Value Income plan assures you to take care of your financial dreams.
It is an endowment plan with a whole life option. It assures you of protecting your dreams at various stages of life without compromising on your needs through financial resources.
Let us look into the plan’s highlights & benefit options in detail.
Table of Contents:
1.) What is Tata AIA Life Insurance Value Income Plan?
2.) Features of Tata AIA Life Insurance Value Income Plan
3.) Eligibility Criteria & Other Details of Tata AIA Life Insurance Value Income Plan
4.) Benefits of Tata AIA Life Insurance Value Income Plan
5.) Additional Features & Benefits of Tata AIA Life Insurance Value Income Plan
6.) The grace Period, Revival & Reduced Paid-up of Tata AIA Life Insurance Value Income Plan
7.) Surrender Benefit of Tata AIA Life Insurance Value Income Plan
8.) Free look-up Period of Tata AIA Life Insurance Value Income Plan
9.) Advantages of Tata AIA Life Insurance Value Income Plan
10.) Disadvantages of Tata AIA Life Insurance Value Income Plan
12.) IRR of Tata AIA Life Insurance Value Income Plan
13.) Tata AIA Life Insurance Value Income Plan Vs Other Investment Products
14.) Tata AIA Life Insurance Value Income Plan Vs PPF Vs ELSS
What is Tata AIA Life Insurance Value Income plan?
Tata AIA Life Insurance Value Income Plan is an individual, non-linked, participating life insurance savings plan.
It is an endowment policy, which allows you to get the cash bonus on your policy anniversary, or you can accumulate the cash bonus for a bigger corpus to receive as your maturity value. These cash bonuses will help you to have a stress-free life.
Features of Tata AIA Life Insurance Value Income Plan:
- There are 2 plan options: Endowment or Endowment with extended life cover till the age of 100
- Option to receive the cash bonus or to let it accumulate every year to receive it on maturity.
- A Cash bonus can be received either on the policy anniversary or on Birthdays following the second policy anniversary.
- Flexibility to choose your premium paying term & policy term
- The Policy Cover can be enhanced through optional riders.
Eligibility Criteria & Other Details of Tata AIA Life Insurance Value Income Plan:
| Plan Parameters | Minimum | Maximum |
| Age at Entry (years) | 30 days | 55 years for 5 PPT 58 years for 6 PPT 62 years for 7 PPT 65 years for 8 to 15 PPT |
| Age at Maturity (years) | 18 | 80 |
| Policy Term (PT) | 10 to 40 (Minimum Policy term: Premium Paying Term + 5 years) | |
| Premium Payment Term (PPT) | 5 – 15 Years | |
| Premium | PPT- 5 to 8: Rs. 50,000/- p.a. PPT- 9 to 15: Rs. 24,000/- p.a. |
No Limit (subject to Underwriting Policy) |
| Premium Payment Mode | Annual/ Half-yearly / Quarterly/ Monthly | |
| Plan Option | Option 1 – Endowment Option 2 – Endowment with Extended Life Cover (ELC) till age 100 |
|
Benefits of Tata AIA Life Insurance Value Income Plan:
Survival benefit:
Survival benefit is paid as Cash bonuses, which are not guaranteed in nature. The Company may declare the Cash Bonus rate annually in advance. The Cash Bonuses if declared will be applicable provided all due premiums have been paid.
In case, a cash bonus is opted: At inception, the policyholder can choose if he wants to take a cash bonus if declared yes, each year on the policy anniversary or his/her birthday following the second policy anniversary. It is expressed as % of the Basic Sum Assured.
In case, an accumulated cash bonus has opted: It gets vested at policy anniversary and subsequently gets accumulated at a non-participating accumulation rate. The Accumulated Cash Bonus, if declared is payable at the time of Death/Surrender/Maturity.
Under the whole life option, survival benefit equals to Basic Sum Assured which is payable on the life insured attaining the age of 100 years, and the policy is terminated. No bonuses shall be payable during the Extended Life Cover period.
Maturity benefit:
In case cash bonus opts:
Guaranteed Maturity Benefit
Terminal Bonus, if declared
In case accumulated cash bonus opts:
Guaranteed Maturity Benefit
Accumulated Cash Bonus, if declared
Terminal Bonus, if declared
Under the whole life option, there will be two pay-outs of the Basic Sum Assured, first pay-out is on maturity and another pay-out shall be payable upon the death of the life insured during the ELC period or upon the life insured surviving to 100 years of age, whichever is earlier. No bonuses are payable during the ELC period.
Death benefit:
The following shall be payable provided the policy is in force
The Sum Assured on Death + Accumulated Cash Bonus and Terminal Bonus, if declared,
The Sum assured on death is higher of,
- 11 times the Annualised Premium
- Guaranteed Maturity Benefit
- 105% of Total premiums paid
- Basic Sum Assured
Under Option 2, an additional benefit equal to Basic Sum Assured shall be payable upon the death of the life insured during the ELC period
Additional features & benefits of Tata AIA Life Insurance Value Income Plan:
Flexible premium payment mode:
| Annual Premium Rate | Multiply Annual Premium Rate by 1 (i.e., No loading) |
| Half Yearly Premium Rate | Multiply Annual Premium Rate by 0.51 |
| Quarterly Premium Rate | Multiply Annual Premium Rate by 0.26 |
| Monthly Premium Rate | Multiply Annual Premium Rate by 0.0883 |
Additional riders:
- Tata AIA Life Insurance Accidental Death and Dismemberment (Long Scale) (ADDL) Rider
- Tata AIA Life Insurance Waiver of Premium Plus (WOPP) Rider
Policy loan:
Tata AIA Life Insurance Value Income Plan will acquire a Surrender Value based on your premium-paying term; policyholders may apply for a policy loan for such an amount within the extent of 80% of the Surrender Value.
The grace period, Revival & Reduced paid-up of Tata AIA Life insurance Value Income Plan:
Grace period:
A grace period of 15 days will be offered to the policyholder if they bought the policy under the monthly mode and 30 days will be offered in case they bought it from other modes.
Revival:
If a premium is in default beyond the policyholder’s Grace period, it may be revived, within five years after the due date of the first unpaid premium and before the date of maturity.
Reduced Paid-Up:
Tata AIA Life Insurance Value Income Plan will be converted into a reduced paid-up policy by default, provided the policy has acquired a surrender value and its subsequent premiums remain unpaid by the policyholder.
Surrender Benefit of Tata AIA Life Insurance Value Income Plan:
Tata AIA Life Insurance Value Income Plan shall acquire a surrender value during the Policy Term provided at least 2 full years of premiums have been paid.
The surrender value payable is higher than the Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).
Free Look-up Period of Tata AIA Life Insurance Value Income Plan:
If the policyholder is not satisfied with the features of the Tata AIA Life Insurance Value Income Plan, then the policyholder can cancel the policy by proving the written statement to the company.
The policyholder will get a refund of the premium after deducting the charges.
The free look period is 15 days from the date of receipt of the policy document if the policy is purchased directly. It will be extended up to 30 days if the policy is purchased through electronic or distance mode.
Advantages of Tata AIA Life Insurance Value Income Plan:
- You will have the flexibility in choosing the premium paying frequency – Annual/ Half-yearly / Quarterly/ Monthly.
- There are two options to choose from – Endowment & Endowment with an extended life cover of 100 years
- You can choose between taking a cash bonus or letting the amount accumulate till maturity for a lump sum pay-out.
- Cash bonus starts from the 2nd policy anniversary & continues till maturity.
- A cash bonus can be received on Birthdays following the 2nd policy year.
- To meet any emergency, a loan facility is available.
- Riders will enhance the cover.
- Tax benefit as per Sec 80 C & Sec 10 (10D) of Income tax act.
Disadvantages of Tata AIA Life Insurance Value Income Plan:
- All the cash bonuses and terminal bonuses are non-guaranteed benefits. So, these bonuses are not uniform all through the policy years.
- The survival benefit may not be sufficient to meet your financial goals.
- The lock-in period is 2 years for loan & surrender.
- The sum assured can’t be changed post inception of the policy.
- The sum assured is too low. In case of death, the death benefit may not be sufficient to meet any of your future financial goals.
For further details, you can read Tata AIA Life Insurance Value Income Plan’s brochure.
Research Methodology:
Now we have seen all the necessary details that we need to know about Tata AIA Life Insurance Value Income Plan. But it is not enough to decide whether we should buy this plan or not. So, now let us do a detailed analysis.
First, you are going to discover the IRR of Tata AIA Life Insurance Value Income Plan for the best-case scenario and the worst-case scenario.
Then we are going to find out the IRR of other risk-free and risk-oriented investments to discover which gives the better investment return.
Later, we are going to compare the factors such as affordability, tax benefit, long-term performance, and tax benefit for all the investment options to see which will be the better investment option for you.
IRR of Tata AIA Life Insurance Value Income Plan:
Option 1 Endowment with Accumulated cash bonus
| Age | 40 years | Annualised premium | 1,00,000 |
| Gender | Male | Basic sum assured | 9,52,381 |
| Premium paying term | 10 Years | Premium frequency | Annual |
| Policy term | 20 Years | Plan option | Endowment |
| Bonus option | Accumulated cash bonus |
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 40 | 1 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 41 | 2 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 42 | 3 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 43 | 4 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 44 | 5 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 45 | 6 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 46 | 7 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 47 | 8 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 48 | 9 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 49 | 10 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 50 | 11 | 0 | 11,00,000 | 0 | 11,00,000 |
| 51 | 12 | 0 | 11,00,000 | 0 | 11,00,000 |
| 52 | 13 | 0 | 11,00,000 | 0 | 11,00,000 |
| 53 | 14 | 0 | 11,00,000 | 0 | 11,00,000 |
| 54 | 15 | 0 | 11,00,000 | 0 | 11,00,000 |
| 55 | 16 | 0 | 11,00,000 | 0 | 11,00,000 |
| 56 | 17 | 0 | 11,00,000 | 0 | 11,00,000 |
| 57 | 18 | 0 | 11,00,000 | 0 | 11,00,000 |
| 58 | 19 | 0 | 11,00,000 | 0 | 11,00,000 |
| 59 | 20 | 0 | 11,00,000 | 0 | 11,00,000 |
| 14,56,456 | 22,22,647 | ||||
| IRR | 2.44% | 5.22% | |||
These assumed returns are not guaranteed returns. The returns from this policy are solely dependent on its actual future investment performance.
From analysing the IRR, it is clear that Tata AIA Life Insurance Value Income Plan does not provide an inflation-beating return. It provides which are some similar savings bank interest rates & FD interest rates.
Tata AIA Life Insurance Value Income Plan Vs Other Investment Choices:
In the Tata AIA Life Insurance value Income plan, the Sum assured is very low. Instead of opting for this, you can take pure term insurance for Rs. 1 crore cover.
The premium for this would be approx. Rs. 21,000. Here, the annual premium is Rs. 1 lakh. We can assume a similar cash outflow each year. So, after paying Rs. 21000 as a term insurance premium, the balance amount of Rs. 79,000 can be invested in other products for corpus accumulation.
Risk-averse investors can choose PPF as an investment choice, but we have to pay a minimum of 15 years. In order to have a similar cash outflow of 10 years as in the illustration benefit, we have assumed to pay Rs. 500 (minimum investment) in the 11th to 15th year. This amount (500*5 =Rs 2500) is deducted from the 10th-year contribution.
If you are a risk-tolerant investor and have good knowledge about market-related products, you can choose the ELSS option to invest the balance amount of Rs. 79,000.
Now let us see the IRR of PPF and ELSS in the below-mentioned table.
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 40 | 1 | -1,00,000 | 1,00,00,000 | -1,00,000 | 1,00,00,000 |
| 41 | 2 | -1,00,000 | 1,00,00,000 | -1,00,000 | 1,00,00,000 |
| 42 | 3 | -1,00,000 | 1,00,00,000 | -1,00,000 | 1,00,00,000 |
| 43 | 4 | -1,00,000 | 1,00,00,000 | -1,00,000 | 1,00,00,000 |
| 44 | 5 | -1,00,000 | 1,00,00,000 | -1,00,000 | 1,00,00,000 |
| 45 | 6 | -1,00,000 | 1,00,00,000 | -1,00,000 | 1,00,00,000 |
| 46 | 7 | -1,00,000 | 1,00,00,000 | -1,00,000 | 1,00,00,000 |
| 47 | 8 | -1,00,000 | 1,00,00,000 | -1,00,000 | 1,00,00,000 |
| 48 | 9 | -1,00,000 | 1,00,00,000 | -1,00,000 | 1,00,00,000 |
| 49 | 10 | -97,500 | 1,00,00,000 | -1,00,000 | 1,00,00,000 |
| 50 | 11 | -500 | 0 | ||
| 51 | 12 | -500 | 0 | ||
| 52 | 13 | -500 | 0 | ||
| 53 | 14 | -500 | 0 | ||
| 54 | 15 | -500 | 0 | ||
| 55 | 16 | 0 | 0 | ||
| 56 | 17 | 0 | 0 | ||
| 57 | 18 | 0 | 0 | ||
| 58 | 19 | 0 | 0 | ||
| 59 | 20 | 0 | 0 | ||
| 23,31,198 | 59,05,680 | ||||
| IRR | 5.53% | 11.77% | |||
Tata AIA Value Income Plan Vs. PPF Vs. ELSS:
| IRR (post tax) | Maturity Value (post tax) | Sum Assured | |
| Tata AIA Value Income plan @ 4% | 2.44% | 14,56,456 | 11,00,000 |
| Tata AIA Value Income plan @ 8% | 5.22% | 22,22,647 | 11,00,000 |
| PPF | 5.53% | 23,36,515 | 1,00,00,000 |
| ELSS | 11.77% | 59,05,680 | 1,00,00,000 |
Comparing Tata AIA Value Income Plan’s IRR (Post-tax), Maturity, and sum assured along with ELSS and PPF makes it clear that the returns provided by this policy are not sufficient to consider it a good long-term investment.
Final Verdict:
Tata AIA Value Income plan provides twin benefits of the Life insurance cover & regular pay-outs as you wish. This plan claims to help you achieve your financial goals. But, in reality, this plan is a participating endowment policy where the returns are not guaranteed. Moreover, the sum assured is very meagre to take care of your family in case of any eventuality.
It is always better to invest separately, in order to accumulate a corpus for your life goals and to have an adequate life cover to protect your loved ones.
Depending on your risk appetite & investment horizon, choose an investment vehicle. Plan your investment portfolio to give an inflation-beating return.
If you have any comments or questions, write them in the comment box below.
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