Tata AIA Fortune Guarantee Plan
Does the Tata AIA Fortune Guarantee Plan guarantee not just return but also lifelong financial security?
Can the Tata AIA Fortune Guarantee Plan guarantee financial stability and peace of mind?
Can the Tata AIA Fortune Guarantee Plan offer guaranteed returns and the flexibility to secure our family’s future?
A comprehensive review of the Tata AIA Fortune Guarantee Plan will help you understand its features, benefits, and drawbacks. Additionally, an Internal Rate of Return (IRR) analysis will offer deeper insights into the plan’s performance.
Let’s dive into the detailed review and explore how this plan works.
What is the Tata AIA Fortune Guarantee?
What are the features of the Tata AIA Fortune Guarantee?
Who is eligible for the Tata AIA Fortune Guarantee?
What are the benefits of the Tata AIA Fortune Guarantee?
Grace period, Discontinuance and Revival of Tata AIA Fortune Guarantee
Free Look Period of Tata AIA Fortune Guarantee
Surrendering Tata AIA Fortune Guarantee
What are the advantages of the Tata AIA Fortune Guarantee?
What are the disadvantages of the Tata AIA Fortune Guarantee?
Research Methodology of Tata AIA Fortune Guarantee
Benefit illustration – IRR Analysis of Tata AIA Fortune Guarantee
Tata AIA Fortune Guarantee Vs. Other Investments
Tata AIA Fortune Guarantee Vs. Pure-term + ELSS
Final Verdict on Tata AIA Fortune Guarantee
Tata AIA Fortune Guarantee is a Non-Linked Non-Participating Individual; Life Insurance Savings plan. Tata AIA Fortune Guarantee Plan provides life insurance coverage throughout the policy term for the financial security of your family and a Guaranteed lump sum benefit on maturity to fulfil your future goals.
| Single Pay (SA I) | Single Pay (SA II) | Limited / Regular Pay | |
| Minimum Entry Age | 18 years | ||
| Maximum Issue Age | 50 years | 70 years | 80 Less policy term or 60 years whichever is lower |
| Max Maturity Age | 70 years | 80 years | 80 years |
| Policy term and Premium paying term | Premium paying term | Policy term | |
| Single Pay (SA I) | 5 to 20 years | ||
| Single Pay (SA II) | 5 to 20 years | ||
| 5 to 10 years | 10 to 40 years | ||
| 11 to 20 years | PPT to 40 years | ||
| Premium Payment Term | Single Pay Limited Pay: 5 to 20 years Regular Pay: 10 to 20 years | ||
| Premium Mode | Single, Annual, Semi-annual, Quarterly & Monthly | ||
| Basic Sum Assured | Premium Payment Term | Basic Sum Assured | |
| Single Pay (SA I) | 10 times Single premium | ||
| Single Pay (SA II) | Death Benefit Multiple times the single premium | ||
| Limited Pay | 10 times the annualised premium | ||
| Regular pay | 10 times the annualised premium | ||
| Minimum Annualised/ Single Premium | For Single Premium (SA-II): ₹ 5,000 Other PPT options: – ₹ 24,000 | ||
| Maximum Annualised/ Single Premium | No Limit | ||
Sum Assured will be paid on maturity. The “Maturity Sum Assured” is equal to the maturity benefit factor multiplied by the Total Premiums Paid, where the maturity benefit factor varies as per the policy term, premium paying term, gender, annualised/Single premium band & entry age.
In case of the unfortunate event of the death of the insured; during the term of the Tata AIA Fortune Guarantee policy, the Sum Assured on death as defined below shall be payable.
“Sum Assured on death” shall be the highest of the following:
A Grace Period of 15 days for monthly mode and 30 days for all other modes, from the due date will be allowed for payment of each subsequent premium.
If the full premiums for the first two policy years are not paid within the grace period, the Tata AIA Fortune Guarantee policy shall lapse from the due date of the first unpaid premium and no benefits will be payable.
The Tata AIA Fortune Guarantee policy will be converted into a Reduced Paid-up policy by default, provided full premiums for the first two policy years are paid and if the subsequent premiums remain unpaid.
You may reinstate/revive the same within 5 years after the due date of the first unpaid premium and before the date of maturity.
If You are not satisfied with the terms & conditions/ features of the Policy, you have the right to cancel the Tata AIA Fortune Guarantee Policy within 15 days after you receive the policy document.
The said period of 15 days shall stand extended to 30 days if the Policy is sourced through Distance Marketing mode
Single Pay: A Single Pay policy acquires Surrender value immediately on payment of Single Premium and hence can be surrendered at any time during the term of the Tata AIA Fortune Guarantee policy.
Limited/Regular Pay: The Tata AIA Fortune Guarantee policy can be surrendered at any time during the term of the policy, provided at least two full year’s premiums have been paid.
The surrender value payable is higher than the Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).
We’ve discussed the features and benefits of the Tata AIA Fortune Guarantee plan, but to determine its suitability, it’s essential to evaluate its performance. The Internal Rate of Return (IRR) calculation helps estimate the returns and allows for comparison with other investment options.
Let’s proceed with the calculation using figures from the policy brochure. A 35-year-old male purchases the Tata AIA Fortune Guarantee Plan with a sum assured of ₹10 lakhs. The policy term is 15 years, with a premium payment period of 5 years, and an annual premium of ₹1 lakh.
| Male | 35 years |
| Sum Assured | ₹ 10,00,000 |
| Policy Term | 15 years |
| Premium Paying Term | 5 years |
| Annualised Premium | ₹ 1,00,000 |
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -1,00,000 | 10,00,000 |
| 36 | 2 | -1,00,000 | 10,00,000 |
| 37 | 3 | -1,00,000 | 10,00,000 |
| 38 | 4 | -1,00,000 | 10,00,000 |
| 39 | 5 | -1,00,000 | 10,00,000 |
| 40 | 6 | 0 | 10,00,000 |
| 41 | 7 | 0 | 10,00,000 |
| 42 | 8 | 0 | 10,00,000 |
| 43 | 9 | 0 | 10,00,000 |
| 44 | 10 | 0 | 10,00,000 |
| 45 | 11 | 0 | 10,00,000 |
| 46 | 12 | 0 | 10,00,000 |
| 47 | 13 | 0 | 10,00,000 |
| 48 | 14 | 0 | 10,00,000 |
| 49 | 15 | 0 | 10,00,000 |
| 50 | 9,82,350 | ||
| IRR | 5.31% |
The maturity benefit, available at the end of the policy term, is ₹9.82 lakhs, assuming all premiums are paid. The IRR for this cash flow is 5.31% as per the Tata AIA Fortune Guarantee Plan maturity calculator. This return is lower than what you might earn from a bank Fixed Deposit.
Given the 15-year policy term, this is a long-term investment, but the returns don’t justify the duration. Moreover, the sum assured is too low to adequately cover the basic needs of a family in case of unforeseen events.
Although the benefits are guaranteed, the combination of low returns and insufficient sum assured makes the Tata AIA Fortune Guarantee Plan an unsuitable choice for both life insurance and savings.
Instead of investing ₹1 lakh annually in the Tata AIA Fortune Guarantee Plan, let’s explore an alternative approach and compare the potential returns.
In this scenario, the insurance and investment components are not bundled together, as they are in the Tata AIA plan. We’ll see if this split strategy yields better results.
For life cover, we opt for a pure-term life insurance policy with a sum assured of ₹10 lakhs, costing ₹7,900 annually. The policy term is 15 years, with a premium payment term of 5 years. This leaves a balance of ₹92,100, which can be invested elsewhere.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 10,00,000 |
| Policy Term | 15 years |
| Premium Paying Term | 5 years |
| Annualised Premium | ₹ 7,900 |
| Investment | ₹ 92,100 |
You can choose your investment based on your risk tolerance—debt instruments for low-risk investors or equity instruments for those willing to take on more risk. In this example, we’ll invest the remaining amount in an Equity Linked Savings Scheme (ELSS) fund.
| Age | Year | Term Insurance premium + ELSS | Death benefit |
| 35 | 1 | -1,00,000 | 10,00,000 |
| 36 | 2 | -1,00,000 | 10,00,000 |
| 37 | 3 | -1,00,000 | 10,00,000 |
| 38 | 4 | -1,00,000 | 10,00,000 |
| 39 | 5 | -1,00,000 | 10,00,000 |
| 40 | 6 | 0 | 10,00,000 |
| 41 | 7 | 0 | 10,00,000 |
| 42 | 8 | 0 | 10,00,000 |
| 43 | 9 | 0 | 10,00,000 |
| 44 | 10 | 0 | 10,00,000 |
| 45 | 11 | 0 | 10,00,000 |
| 46 | 12 | 0 | 10,00,000 |
| 47 | 13 | 0 | 10,00,000 |
| 48 | 14 | 0 | 10,00,000 |
| 49 | 15 | 0 | 10,00,000 |
| 50 | 18,54,066 | ||
| IRR | 10.52% |
After paying the premium for the pure-term policy, the balance is invested in the ELSS fund. Upon redemption, capital gains tax is applied. The pre-tax value of the ELSS investment is ₹20.35 lakhs, with a post-tax value of ₹18.54 lakhs.
The post-tax return (IRR) for this combination of the pure-term policy and ELSS investment is 10.52%.
| ELSS Tax Calculation | |
| Maturity value after 15 years | 20,35,290 |
| Purchase price | 4,60,500 |
| Long-Term Capital Gains | 15,74,790 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 14,49,790 |
| Tax paid on LTCG | 1,81,224 |
| Maturity value after tax | 18,54,066 |
This approach results in a final value that is double that of the Tata AIA Fortune Guarantee Plan, with the added benefit of flexibility in redeeming your investment as needed. The returns also exceed the inflation rate, a significant advantage for long-term investments.
From this comparison, it’s clear that the Tata AIA Fortune Guarantee falls short in terms of life cover, returns, and redemption flexibility, making it an inferior choice.
The Tata AIA Fortune Guarantee is a traditional life insurance policy that combines life cover with savings opportunities. However, it doesn’t offer any standout features compared to other plans on the market. The IRR analysis reveals that the returns are not favourable for long-term investors.
These low returns could hinder your investment strategy, potentially leaving you with a shortfall in the corpus needed to achieve your financial goals. Additionally, the life cover provided by this plan may not adequately support your family.
This indicates that the Tata AIA Fortune Guarantee falls short of meeting investors’ needs, both in terms of insurance and investment and also it has a high agent commission.
Rather than investing in a subpar plan, consider redirecting your savings into a more rewarding product.
Opting for a pure-term life insurance policy can save you on premiums, allowing you to allocate more funds towards wealth accumulation. A well-diversified investment portfolio is key to achieving your goals with confidence.
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Choosing the right product, building a solid investment portfolio, and regularly reviewing your strategy are crucial steps in securing your financial future.
If you need professional guidance, consider consulting a Certified Financial Planner who can tailor a plan based on your risk tolerance, time horizon, and life goals.
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