You need a plan to achieve your Life’s Financial Goals. Based on the nature of your Financial Goal, you need either a Lump sum or Regular income.
Tata AIA Fortune Guarantee Supreme Plan is a Life Insurance cum Savings product.
What are the good and bad aspects of this Tata AIA Fortune Guarantee Supreme Plan?
What is the result of the IRR analysis?
Do the calculated returns beat other investment options?
Will this plan help provide you with the required corpus to convert your aspirations into reality?
All your questions are answered!
This in-depth review will help you to decide whether to include the Tata AIA Fortune Guarantee Supreme Plan in your portfolio or not.
Table of Contents
1.)What is Tata AIA Fortune Guarantee Supreme Plan?
2.)Features of the Tata AIA Fortune Guarantee Supreme Plan Analysis
3.)Eligibility Criteria for the Tata AIA Fortune Guarantee Supreme Plan
4.)Benefits of Tata AIA Fortune Guarantee Supreme Plan- Review in Detail
- Death Benefit of Tata AIA Fortune Guarantee Supreme Plan – Review
- Survival Benefit of Tata AIA Fortune Guarantee Supreme Plan – Review
- Maturity Benefit of Tata AIA Fortune Guarantee Supreme Plan – Review
5.)Additional benefits of the Tata AIA Fortune Guarantee Supreme Plan– Review
6.) Review of The Grace Period, Lapse, Reduced Paid-up & Revival of the Tata AIA Fortune Guarantee Supreme Plan
7.) Review of Free Look-Up Period of the Tata AIA Fortune Guarantee Supreme Plan
8.)Surrendering the Tata AIA Fortune Guarantee Supreme Plan Analysis
9.)Advantages of the Tata AIA Fortune Guarantee Supreme Plan Analysis
10.)Disadvantages of the Tata AIA Fortune Guarantee Supreme Plan Analysis
11.) Research Methodology of Tata AIA Fortune Guarantee Supreme Plan – Review
12.)IRR (Internal Rate of Return i.e. Interest Rate) Analysis of the Tata AIA Fortune Guarantee Supreme Plan
13.)Tata AIA Fortune Guarantee Supreme Plan Vs Other Investment Options
- Tata AIA Fortune Guarantee Supreme Plan vs Tata AIA Life Insurance Fortune Pro
- Tata AIA Fortune Guarantee Supreme Plan vs Tata AIA Life Insurance Value Income Plan
- Tata AIA Fortune Guarantee Supreme Plan vs Other Investment Plans – Review Conclusion
What is Tata AIA Fortune Guarantee Supreme Plan?
It is an Individual, Non-Linked, Non-participating, Life Insurance Savings Plan.
It provides guaranteed returns and life cover throughout the policy tenure.
You have the freedom to take your benefits either as regular income or as a lump sum amount.
Features of the Tata AIA Fortune Guarantee Supreme Plan: Analysis
- There are two plan options: Option 1: Immediate Income & Option 2: My Income
- To meet your financial needs, there is flexibility in choosing the guaranteed benefit in the form of a lump sum or regular income.
- Income benefits can be accumulated through the Sub-wallet feature & withdraw as & when required.
- Survival benefits can be utilized to offset your premium.
- For women customers, there is a 2% special discount available on their first year’s premium.
- Tax benefit as per Sec 80 C & Sec 10 (10D)
Eligibility Criteria for the Tata AIA Fortune Guarantee Supreme Plan
|Age at Entry||30 days||55 years|
|Age at Maturity||18 years||65 years|
|Premium Payment Term (PPT)||For Option 1: 5 years
For Option 2:
Single Pay: 1 year
Regular/Limited Pay: 5 years
|For Option 1: 10 years
For Option 2:
Regular Pay: 20 years
Limited pay: 19 years
|Policy Term (PT)||For Option 1: 10 years
For Option 2:
Single Pay: 5 years
Regular pay: Equal to PPT Limited Pay: PPT+1
|For Option 1: 20 years
For Option 2:
Single Pay: 20 years
Regular pay: Equal to PPT Limited Pay: 20 years
|Basic Sum Assured||Single pay – Single Life:
Sum Assured 50,000 – 10 X
Sum Assured 6250 – 1.25 X
Joint Life – 1st death -6250
2nd death – 50,000
Limited / Regular pay – 2,40,000
|Corresponding to a maximum Death Benefit of ₹25 lakhs|
|Premium (R) (excluding discount)||Single Pay – 5,000
Limited Pay /Regular Pay – 24,000 p.a.
|Corresponding to a maximum Death Benefit of ₹25 lakhs|
|Premium Payment Mode||Annual / Half-yearly / Quarterly / Monthly|
|Income/ Survival Benefit, if chosen (R)||Rs. 1,000 per annum||10 times of Total premiums payable during the entire policy term|
|Income/ Survival Benefit frequency||Annual / Half-yearly / Quarterly / Monthly|
Benefits of Tata AIA Fortune Guarantee Supreme Plan – Review in Detail
Death Benefit of Tata AIA Fortune Guarantee Supreme Plan – Review
In case of death of the life insured during the policy term for an in-force policy (all due premiums have been paid), the death benefit payable is the highest of the following:
- 1.25 x Single Premium (excluding discount) or 10 x Annualised Premium (excluding discount); or
- 105% of Total Premiums Paid (excluding loading for modal premiums and discount) up to the date of death; or
- Basic Sum Assured
Death Benefit Multiple:
Single Pay: – Single Life – 10 or 1.25 as chosen by the policyholder at inception
Joint Life –1.25 in case of First death and 10 in case of Second death
Limited and Regular Pay: 10
Survival Benefit of Tata AIA Fortune Guarantee Supreme Plan – Review
Survival Benefits are payable on the survival of the life insured during the policy term.
Option 1: Immediate Income: Provided the policy is in force and all due premiums have been paid, the survival benefit in the form of level Guaranteed Immediate Income (GII) and Guaranteed Income (GI) shall be payable.
Under this plan option, you will receive a Guaranteed Immediate Income (GII) in advance from 2nd year as given in the table below & it will be the same as premium payment frequency.
Additionally, during the policy term, you will also receive a Guaranteed Income (GI) in arrears as per the table given below.
The frequency of GI can be different from GII and hence can be Annual, Semi-annual, Quarterly, or Monthly, as chosen by you.
|PPT||PT||GII as a % of Annualized Premium||GII Years of payment (in advance)||GI years of Payment (in arrears)|
|5||10||10%||2nd year till 6th year||6th year till 10th year|
|6||12||15%||2nd year till 7th year||7th year till 12th year|
|7||14||20%||2nd year till 8th year||8th year till 14th year|
|8||16||20%||2nd year till 9th year||9th year till 16th year|
|9||18||20%||2nd year till 10th year||10th year till 18th year|
|10||20||25%||2nd year till 11th year||11th year till 20th year|
|11||22||25%||2nd year till 12th year||12th year till 22th year|
|12||24||25%||2nd year till 13th year||13th year till 24th year|
Option 2: My Income: For Single Life Policies, While the Life Assured is alive & For Joint Life policies, while one of the Life Assureds is alive, Survival Benefits are payable provided the policy is in force and all due premiums have been paid.
Under this plan option, you will receive Guaranteed Benefits in the form of Survival Benefits and/or lump sum maturity benefits, subject to payment of all due premiums.
Maturity Benefit of Tata AIA Fortune Guarantee Supreme Plan – Review
Maturity Benefit as chosen under the My Income option is payable on survival of the Life Assured or at least one of the life assured in case of Joint Life, till the end of the policy term, provided all due premiums under the policy have been paid.
The maturity benefit is not applicable for the Immediate Income option.
Additional benefits of the Tata AIA Fortune Guarantee Supreme Plan – Review
This is an option to receive any benefit due on maturity date in equal installments for a period of 3 to 5 years instead of a lump sum amount under an in-force as well as a Paid-up policy.
In case the Income or Survival Benefit Frequency is chosen as Annual, then at the time of purchase the policyholder will have the option to choose to receive survival benefits on a “Special Date” as per their choice, instead of policy anniversary.
The policyholder can choose to receive full or part of his benefits in his ‘Sub-Wallet’. The Sub-wallet will earn a loyalty addition that will accrue daily. The policyholder can withdraw the balance from the Sub-wallet, in part or in full, anytime during the policy term.
Under a non-Single Pay policy, the policyholder will be able to adjust the premium payable in the policy to the extent of benefits payable by the company, if any.
The frequency and timing of the benefit payment must match that of the premium payment under this option.
Review of The Grace Period, Lapse, Reduced Paid-up & Revival of the Tata AIA Fortune Guarantee Supreme Plan
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.
On discontinuance of payment of premium during the first 2 policy years, the policy will lapse and no further benefits shall be paid.
If at least the first 2 full years’ premiums have been paid and subsequent premiums remain unpaid where the Policy has not been surrendered, the Policy will be converted into a Reduced Paid-up Policy by default.
If a premium is in default beyond the Grace Period and subject to the Policy not having been surrendered, it may be reinstated/revived, within five years after the due date of the first unpaid premium and before the date of maturity.
Review of Free Look-Up Period of the Tata AIA Fortune Guarantee Supreme Plan
If you are not satisfied with the terms & conditions/features of the Tata AIA Fortune Guarantee Supreme Policy, you have the right to cancel your 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 electronic or distance marketing mode.
Surrendering the Tata AIA Fortune Guarantee Supreme Plan: Analysis
The policy shall acquire a surrender value immediately on payment of Single Premium in case of Single Pay and on payment of at least 2 full years’ premiums in case of Regular/Limited Pay.
The surrender value payable is higher than the Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).
Advantages of Tata AIA Fortune Guarantee Supreme Plan: Analysis
- Option to pay the premiums either Annually, Half-yearly, Quarterly, and Monthly modes.
- Flexibility to enhance your coverage by adding optional riders, by paying additional rider premium over and above your base policy premium.
- Income/Survival Benefits will be payable annually, by default. However, the policyholder will have the option to receive half-yearly, quarterly, or monthly installments.
- Policy Loan is available subject to a maximum of 80% of Surrender Value.
Disadvantages of Tata AIA Fortune Guarantee Supreme Plan: Analysis
- The survival benefit couldn’t be utilized for any big-ticket expense if you have opted for an Immediate income benefit Plan Option.
- The Sum assured is not adequate.
- There is no maturity benefit under the Immediate Benefit Option.
You can read the Tata AIA Fortune Guarantee Supreme Policy Brochure for further details.
Research Methodology of Tata AIA Fortune Guarantee Supreme Plan – Review
Tata AIA Fortune Guarantee Supreme Plan gives you a regular income in the form of survival benefits even during your premium paying term. The premium offset option can be utilized to adjust your premium against the survival benefit.
Let us understand the cash flow of the Tata AIA Fortune Guarantee Supreme Plan with the help of the benefit illustration given in the policy brochure.
This will give a clear picture of what would be your annual cash flow & what would be the potential return.
The calculated return can be compared with other investment options as the next step of the analytical approach in our analysis.
You can also check out our youtube video review for an expert analysis of the Tata AIA Fortune Guarantee Supreme Plan with voice-over and PowerPoint illustrations.
IRR (Internal Rate of Return i.e. Interest Rate) Analysis of the Tata AIA Fortune Guarantee Supreme Plan
Let us assume that a 25-year-old male opts to purchase the Tata AIA Fortune Guarantee Supreme Plan.
He wishes for one pay-out when he is 50 years of age so he opted for option 2: My Income. The policy term is for 25 years & the Premium Paying Term is for 12 years
|Sum Assured||Rs 12,72,500|
|Policy term||25 years|
|Premium Paying term||12 years|
|Annual Premium||Rs 1,27,250|
|Plan option||Option 2: My income|
If he pays a premium for 12 years, at the end of the policy term (25 years) he receives the Maturity Benefit along with the accumulated income benefit.
|Tata AIA Fortune Guarantee Supreme Plan|
|Age||Year||Annualized premium / Maturity benefit||Death benefit|
From the above illustration, the IRR(Internal Rate of Return i.e. Interest Rate) for the above cash flow is calculated at 6.16%.
It may seem a better return because here the policyholder has accumulated the survival benefit.
So, the compounding effect has given a better IRR. If he chooses the Immediate income option, the IRR might be lesser.
Even though the IRR is similar to a fixed-income instrument, this IRR is not beneficial to the investor. Because here the policy term is 25 years. For long-term investment, this return is not efficient.
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Tata AIA Fortune Guarantee Supreme Plan Vs Other Investment Options – Review
For long-term investment, the return from the Tata AIA Fortune Guarantee Supreme Plan will not beat inflation in the long run.
So, let us look for other investment options where you get a better return. The Tata AIA Fortune Guarantee Supreme Plan is a Life Insurance cum Savings Product.
To match this plan, let us take a Pure Term Insurance Policy for life cover and invest separately for wealth creation purposely.
Tata AIA Fortune Guarantee Supreme Plan Vs. Pure Term Insurance + PPF/ELSS
All the metrics are assumed similar to the Benefit Illustration given above from the Tata AIA Fortune Guarantee Supreme Policy Brochure.
After paying the premium for the pure-term policy, the balance premium could be utilized for investment (PPF/ELSS).
The Premium Paying Term is 12 years in the Illustration.
But, here in the Term Insurance Plan, the Premium Paying Term is 10 years.
So, in the next 2 years, the entire amount is utilized for investment.
|Pure Term Insurance|
|Sum Assured||Rs 15,00,000|
|Policy term||25 years|
|Premium Paying term||10 years|
|Annual Premium||Rs 9,300|
|Balance amount||Rs 1,17,950|
Under PPF, the lock-in period is for 15 years & it can be extended in a block of 5 years.
In the illustration, the premium paying term is for 12 years.
To complete the lock-in period (15 years), in the last 3 years, a minimum contribution of Rs. 500 is made to the PPF account.
After the lock-in period, it is assumed to extend for 10 more years without annual contribution.
Under ELSS, the maturity benefit is taxable.
The tax calculation of ELSS is considered to find the IRR.
Refer to the ELSS Tax calculation section.
|Term Insurance + PPF||Term insurance + ELSS|
|Age||Year||Term Insurance premium + PPF||Death benefit||Term Insurance premium + ELSS||Death benefit|
In the above illustration, the IRR for Term Insurance + PPF is calculated at 6.75% and the IRR for Term Insurance + ELSS is calculated at 11.13%.
The IRR under both investment options is better than the Tata AIA Fortune Guarantee Supreme Plan. The ELSS (post-tax) return is 11.13%. This rate is beneficial as it is higher than inflation in the long run.
Let us look at the tax calculation of ELSS maturity value in detail.
|ELSS Tax Calculation|
|Pre-tax maturity value||1,40,07,534.43|
|Long-term capital gains||1,25,73,534|
|Tax paid on LTCG||12,47,353|
|Maturity value after tax||1,27,60,181|
In the above illustration the Post-Tax IRR of ELSS is calculated at 11.13%.
On the whole, the IRR is better than the Tata AIA Fortune Guarantee Supreme Plan. And also, offers liquidity which is absent in the Tata AIA Fortune Guarantee Supreme Plan.
Tata AIA Fortune Guarantee Supreme Plan vs Tata AIA Life Insurance Fortune Pro
Tata AIA Life Insurance Fortune Pro is a ULIP whereas Tata AIA Fortune Guarantee Supreme Plan is an Individual, Non-Linked, Non-participating, Life Insurance Savings Plan.
One of the main advantages of ‘Fortune Pro’ is that it has 11 different fund options to choose from.
Click below for a complete analysis of this plan.
Tata AIA Fortune Guarantee Supreme Plan vs Tata AIA Life Insurance Value Income Plan
‘Value Income Plan’ is an endowment plan which is predominately about protection for the whole life.
Benefit can be acquired as either income or a lump sum amount in the ‘Guarantee Supreme Plan’
Click below to read the complete analysis and precise calculations of all variables.
Tata AIA Fortune Guarantee Supreme Plan vs Other Investment Plans – Review Conclusion
As we discussed earlier,
“The IRR under both investment options is better than the Tata AIA Fortune Guarantee Supreme Plan. The ELSS (post-tax) return is 11.13%. This rate is beneficial as it is higher than inflation in the long run”
Term Insurance + PPF or ELSS seem to be far better options compared to Tata AIA Fortune Guarantee Supreme Plan.
Please compare and review a new plan with other similar investment options for a comprehensive analysis.
Final Verdict on the Tata AIA Fortune Guarantee Supreme Plan: Good or Bad?
This plan offers life protection for the policy term. There is more flexibility in receiving the Survival Benefit.
You can line up the Survival Benefits based on your financial need. You can even offset the premium against the Survival Benefit.
These are the special features of the Tata AIA Fortune Guarantee Supreme Policy.
But from an investment perspective, like many policies in the bazaar, the returns do not beat inflation in the long run. This may result in a deficit in the required corpus to meet your Life’s Financial Goals.
Beware of Insurance agents who force you into buying this plan for their agent commission.
Do not mix your Life Insurance with your Investment. A Pure Term Insurance Policy offers high life cover at an affordable premium.
Make sure to pick your investments based on the time horizon & risk profile.
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A Professional Financial Planner can help you in choosing a Term Plan & building an Investment Portfolio.