Tata AIA Fortune Guarantee Retirement Ready Plan: Good or Bad? An Insightful Review

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Can the Tata AIA Fortune Guarantee Retirement Ready Plan help you achieve your retirement dreams with a guaranteed income stream just a plan away?

Can Tata AIA Fortune Guarantee Retirement Ready Plan ensure your loved one is financially protected after your retirement?

Is the Tata AIA Fortune Guarantee Retirement Ready Plan a good investment to help you realize your dream retirement?

This article explores the plan’s features, benefits, drawbacks, and potential returns through an Internal Rate of Return (IRR) analysis. Let’s dive into the details to determine if this plan suits your retirement needs.

What is the Tata AIA Fortune Guarantee Retirement Ready?

Tata AIA Fortune Guarantee Retirement Ready is an Individual Non-Linked, Non-participating, Pension Plan. Tata AIA Fortune Guarantee Retirement Ready Plan is designed to make you retirement-ready for your golden years with guaranteed benefits and attractive features.

What are the features of the Tata AIA Fortune Guarantee Retirement Ready?

Flexibility to choose from 3 Plan Options: My Pension, Partner Pension and Partner Pension Plus
Guaranteed Additions of 6% of the sum assured on vesting to boost your retirement corpus
A lump sum Vesting Addition payable at vesting
Option to choose premium payment terms from Single, Limited and Regular pay
Special discounts for Women, Transgender and the Super Youth who know the value of planning ahead.

Who is eligible for the Tata AIA Fortune Guarantee Retirement Ready?

Plan option	Minimum	Maximum
Age at Entry	18 years	Option 1 & 2 – 75 years Option 3 – 65/75 years
Age at Vesting	40 years	85 years
Premium Paying Term	Single pay Regular pay – 5 years Limited pay – 5 years	Single pay Regular pay – 15 years Limited pay – 15 years
Policy Term	Single pay – 5 years Regular pay – 5 years Limited pay – 6 years	Single pay – 50 years Regular pay – 15 years Limited pay – 50 years
Sum Assured on Vesting	₹ 30,000	No Limit
Premium Payment Mode	Single, Annually, Half-yearly, Quarterly and Monthly modes.

Plan options under the Tata AIA Fortune Guarantee Retirement Ready

Option 1 – My Pension

This is a single-life option where on vesting (at the end of the policy term), ‘Assured Benefit on Vesting’ shall vest. In case of death of the life assured during the term of the Tata AIA Fortune Guarantee Retirement Ready Plan policy, the death benefit shall be payable.

Option 2 – Partner Pension

This is a joint life option where on vesting, ‘Assured Benefit on Vesting’ shall vest. In case of death of the last surviving life during the Tata AIA Fortune Guarantee Retirement Ready Plan policy term, the death benefit shall be payable.

Option 3 – Partner Pension Plus

This is a joint life option where on vesting, ‘Assured Benefit on Vesting’ shall vest. This option also provides a Waiver of Premium (WOP) benefit in case of death of the primary life assured during the Premium Payment Term.

In case of death of the last surviving life during the Tata AIA Fortune Guarantee Retirement Ready Plan policy term, the death benefit shall be payable.

What are the benefits of the Tata AIA Fortune Guarantee Retirement Ready?

1.) Death benefit

Option 1:

In case of death of the life insured during the Tata AIA Fortune Guarantee Retirement Ready Plan policy term for an in-force policy, the death benefit payable shall be the Highest of:

Total Premiums Paid up to the date of death accumulated at a rate of 7% per annum compounded annually; or
105% of Total Premiums Paid up to the date of death; or
Surrender Value on the date of death.

Option 2 & 3:

In case of death of the last surviving life during the Tata AIA Fortune Guarantee Retirement Ready Plan policy term

If the last surviving life is Primary Life Assured: Highest of:

Total Premiums Paid up to the date of death accumulated at a rate of 7% per annum compounded annually; or
105% of Total Premiums Paid (excluding loading for modal premiums and discount) up to the date of death; or
Surrender Value on the date of death.

If the last surviving life is Secondary Life Assured: Highest of:

Total Premiums Paid up to the date of death accumulated at a rate of 7% per annum compounded annually; or
‘Secondary Life Death Benefit; or
Surrender Value on the date of death.

Options to avail of Death benefit

If the life insured(s) dies during the Tata AIA Fortune Guarantee Retirement Ready Plan policy term, the nominee shall exercise one of the following options:

To utilize the entire proceeds of the policy or part thereof for purchasing an immediate annuity or deferred annuity from the Company or another insurer (50%) at the then prevailing rate.
Withdraw the entire proceeds of the Tata AIA Fortune Guarantee Retirement Ready Plan policy

2.) Assured Benefit on Vesting

Assured benefit on vesting is defined as sum of:

Sum Assured on vesting
Accrued Guaranteed Additions
Vesting Addition

Options to avail of Vesting Benefit

On vesting, the Tata AIA Fortune Guarantee Retirement Ready Plan policyholder shall exercise one of the following options:

To utilize the entire proceeds to purchase an immediate annuity or deferred annuity from the company at the then prevailing annuity rate.
To commute up to 60% and utilize the balance amount to purchase an immediate annuity or deferred annuity from the company at the then prevailing annuity rates.
To purchase an immediate annuity or deferred annuity from another insurer at the then prevailing annuity rate (minimum 50% of entire proceeds)

3.) Guaranteed Additions and Vesting Additions

Guaranteed Additions shall be 6% of the Sum Assured on Vesting which shall accrue at the end of each completed policy year

Vesting Addition varies by policy term and shall be payable on vesting provided all due premiums have been paid

Grace Period, Lapse, Reduced Paid Up and Revival of the Tata AIA Fortune Guarantee Retirement Ready

Grace Period

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.

Lapse

On discontinuance of payment of premium during the first 2 policy years, the Tata AIA Fortune Guarantee Retirement Ready Plan policy will lapse and no further benefits shall be paid.

Reduced Paid Up

If you stop paying premiums after the policy has acquired a surrender value (after paying 2 policy years’ premium), your Tata AIA Fortune Guarantee Retirement Ready Plan policy will be made paid up at the end of the grace period.

Revival

The Tata AIA Fortune Guarantee Retirement Ready Plan policy may be reinstated/revived, within five years after the due date of the first unpaid premium and before the date of maturity.

Free Look period of the Tata AIA Fortune Guarantee Retirement Ready

If the Tata AIA Fortune Guarantee Retirement Ready Plan Policyholder is not satisfied with the terms & conditions of the policy, s/he has the right to cancel the Policy within 15 days after the Policyholder receives the Policy Document.

The said period of 15 days shall stand extended to 30 days if the policy is sourced through electronic or distance marketing mode.

Surrendering the Tata AIA Fortune Guarantee Retirement Ready

The Tata AIA Fortune Guarantee Retirement Ready Plan policy will acquire a surrender value during the policy term basis the premium paying term as defined below

Premium Paying Term	Surrender Value
Single Pay	Payable at any point during the policy term
Other than Single-pay	Payable provided at least 2 full years’ premiums have been paid

The surrender value payable is higher than the Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).

What are the advantages of the Tata AIA Fortune Guarantee Retirement Ready?

Policyholders can apply for a loan against the Tata AIA Fortune Guarantee Retirement Ready Plan policy, up to 80% of the surrender value.
Additional riders can be added to the base policy.

What are the disadvantages of the Tata AIA Fortune Guarantee Retirement Ready?

At the end of the Tata AIA Fortune Guarantee Retirement Ready Plan policy term, the plan’s benefits vest but are not fully available for disbursement.
The sum assured on vesting is relatively low.

Research Methodology of Tata AIA Fortune Guarantee Retirement Ready

The Tata AIA Fortune Guarantee Retirement Ready Plan allows you to start planning and saving for your retirement early.

By investing in either a lump sum or regular payments, you can build a retirement corpus that provides a steady income during your retirement years. To move forward, it’s important to evaluate the plan’s returns. Let’s calculate the Internal Rate of Return (IRR) for this plan.

Benefit Illustration – IRR Analysis of Tata AIA Fortune Guarantee Retirement Ready

Consider a 45-year-old male who invests ₹50,000 annually in the Tata AIA Fortune Guarantee Retirement Ready Plan. The policy term is 25 years, with a premium payment period of 12 years. The sum assured at vesting is approximately ₹5 lakhs.

Male	45 years
Sum Assured	₹ 5,00,000
Policy Term	25 years
Premium Paying Term	12 years
Annualised Premium	₹ 50,000

At the end of the policy term, the benefits vest, meaning they can be fully or partially used to purchase an annuity plan.

In this scenario, the final vesting benefit amounts to ₹19.88 lakhs, resulting in an IRR of 6.22% as per the Tata AIA Fortune Guarantee Retirement Ready Plan maturity calculator.

Age	Year	Annualised premium / Maturity benefit	Death benefit
45	1	-50,000	5,00,000
46	2	-50,000	5,00,000
47	3	-50,000	5,00,000
48	4	-50,000	5,00,000
49	5	-50,000	5,00,000
50	6	-50,000	5,00,000
51	7	-50,000	5,00,000
52	8	-50,000	5,00,000
53	9	-50,000	5,00,000
54	10	-50,000	5,00,000
55	11	-50,000	5,00,000
56	12	-50,000	5,00,000
57	13	0	5,00,000
58	14	0	5,00,000
59	15	0	5,00,000
60	16	0	5,00,000
61	17	0	5,00,000
62	18	0	5,00,000
63	19	0	5,00,000
64	20	0	5,00,000
65	21	0	5,00,000
66	22	0	5,00,000
67	23	0	5,00,000
68	24	0	5,00,000
69	25	0	5,00,000
70		19,88,876	5,00,000

	IRR	6.22%

While the IRR matches the inflation rate, it’s considered notional. This is because the redemption of funds is restricted—you are required to purchase an annuity plan at the rates prevailing at the time of vesting.

Since the annuity rate is not guaranteed, this limitation on fund usage makes the Tata AIA Fortune Guarantee Retirement Ready Plan a less attractive investment.

Tata AIA Fortune Guarantee Retirement Ready Vs. Other Investments

The Tata AIA Fortune Guarantee Retirement Ready Plan restricts how you can invest your accumulated retirement corpus. To bypass this limitation, consider an alternative investment strategy that offers greater liquidity.

Using the same parameters from the previous example, we can separate insurance and investment to achieve better returns and flexibility.

Tata AIA Fortune Guarantee Retirement Ready Vs. Pure term + ELSS

Life Insurance Component: opt for a pure-term life insurance policy with a sum assured of ₹5 lakhs, which costs an annual premium of ₹11,100. The policy term is 25 years with a premium payment period of 10 years.

In the first 10 years, after paying the term insurance premium, the remaining amount can be invested. For the subsequent 2 years, the full amount is allocated to investments.

Pure Term Life Insurance Policy
Sum Assured	₹ 5,00,000
Policy Term	25 years
Premium Paying Term	10 years
Annualised Premium	₹ 11,100
Investment	₹ 38,900

Investment Component: Depending on your risk tolerance, high-risk investors might choose equity investments, while risk-averse individuals could opt for debt instruments. In this scenario, the funds are invested in an Equity-Linked Savings Scheme (ELSS).

		Term insurance + ELSS
Age	Year	Term Insurance premium + ELSS	Death benefit
45	1	-50,000	5,00,000
46	2	-50,000	5,00,000
47	3	-50,000	5,00,000
48	4	-50,000	5,00,000
49	5	-50,000	5,00,000
50	6	-50,000	5,00,000
51	7	-50,000	5,00,000
52	8	-50,000	5,00,000
53	9	-50,000	5,00,000
54	10	-50,000	5,00,000
55	11	-50,000	5,00,000
56	12	-50,000	5,00,000
57	13	0	5,00,000
58	14	0	5,00,000
59	15	0	5,00,000
60	16	0	5,00,000
61	17	0	5,00,000
62	18	0	5,00,000
63	19	0	5,00,000
64	20	0	5,00,000
65	21	0	5,00,000
66	22	0	5,00,000
67	23	0	5,00,000
68	24	0	5,00,000
69	25	0	5,00,000
70		41,91,806	5,00,000

	IRR	10.17%

After 25 years, the ELSS investment yields a pre-tax value of ₹47.02 lakhs. Accounting for capital gains tax, the post-tax value stands at ₹41.91 lakhs.

This approach results in an Internal Rate of Return (IRR) of 10.17% post-tax, significantly outperforming the Tata AIA Fortune Guarantee Retirement Ready plan.

ELSS Tax Calculation
Maturity value after 25 years	47,02,921
Purchase price	4,89,000
Long-Term Capital Gains	42,13,921
Exemption limit	1,25,000
Taxable LTCG	40,88,921
Tax paid on LTCG	5,11,115
Maturity value after tax	41,91,806

This calculation demonstrates that this alternative investment strategy offers significantly higher returns without restrictions on fund usage. You have the flexibility to withdraw your investment whenever needed.

In contrast, the Tata AIA Fortune Guarantee Retirement Ready Plan’s requirement to purchase an annuity makes it a less attractive option for building a retirement corpus.

Final Verdict on Tata AIA Fortune Guarantee Retirement Ready

Retirement planning consists of two key phases: accumulation and distribution. During your working years, you set aside money for your retirement, which is known as the accumulation phase.

Once you’ve built up the necessary corpus, it is then invested to provide a steady income during retirement, referred to as the distribution phase.

The Tata AIA Fortune Guarantee Retirement Ready Plan only addresses the accumulation phase, and even then, it comes with restrictions on how you can use the accumulated corpus.

Although the plan offers guaranteed benefits, it does not give you the freedom to invest your corpus as you see fit. Additionally, the plan does not cover the distribution phase, and the annuity rates are not guaranteed also it has a high agent commission.

These limitations make the Tata AIA Fortune Guarantee Retirement Ready Plan less appealing as an investment option. A better approach would be to secure an adequate term insurance policy and build an investment portfolio for your retirement corpus based on your personal risk tolerance.

Are Facebook, Twitter, and Quora the last word when it comes to financial advice?

By starting early and maintaining disciplined investment habits, you can accumulate a substantial retirement corpus and achieve financial independence sooner. For tailored retirement planning, it’s advisable to consult a certified financial planner.

Tata AIA Fortune Guarantee Retirement Ready Plan: Good or Bad? An Insightful Review

Table of Contents:

What is the Tata AIA Fortune Guarantee Retirement Ready?

What are the features of the Tata AIA Fortune Guarantee Retirement Ready?

Who is eligible for the Tata AIA Fortune Guarantee Retirement Ready?