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In life, we often stuck with making a choice among two given options. It is hard to get the best of both worlds. Tata AIA helps to get the best of both the world i.e., wealth creation & life cover.
Tata AIA i-Systematic Investment Plan provides you the opportunity to build your wealth, along with an opportunity to keep the dreams of your loved ones alive even when you are not.
What are the pros(advantages) and cons(disadvantages) of this Tata AIA i-SIP?
Will it beat the calculated returns of ELSS & PPF?
This article will analyse all the aspects including wealth creation. Will this plan help you in wealth accumulation in the long run? Buckle up & let’s get started.
Table of Contents
1.)An overview of Tata AIA i-SIP
2.)Features of Tata AIA i-SIP- Analysis
3.)Eligibility criteria of Tata AIA i-SIP
4.)Plan options in Tata AIA i-SIP – Analysis
5.)Review of Benefits available under Tata AIA i-SIP
- Maturity Benefit
- Death Benefit
- Other benefits
- Review of Other Benefits
- Options of Tata AIA i-SIP Plan – Review
6.)Review of Various charges under Tata AIA i-SIP Plan
7.)Review of Grace Period, Discontinuance & paid-up, Revival Review of Grace Period, Discontinuance & paid-up, Revival – Tata AIA i-SIP Plan – Good or Bad?
8.)Free look period for Tata AIA i-SIP Plan
9.)Surrendering Tata AIA i-SIP Plan Analysis
10.)Disadvantages of Tata AIA i-SIP plan Analysis
11.)Research methodology of Tata AIA i-SIP plan
12.)Tata AIA i-SIP Plan – Benefit Illustration &– IRR(Internal Rate of Return i.e Interest Rate) analysis with illustration
13.)Comparison with other investment products Tata AIA i-SIP vs Other investment products
- Tata AIA i-SIP plan Vs. Tata AIA Life Guaranteed Return Insurance Plan
- Tata AIA i-SIP plan Vs. Other Investment Options – Review Conclusion
- Tata AIA i-SIP plan Vs. term Insurance + PPF / ELSS
14.)Final Verdict on TATA AIA i-SIP Plan– Good or Bad?
An overview of Tata AIA i-SIP
Tata AIA i-SIP is a Unit Linked, Individual Life Insurance Savings plan. It offers the dual benefit of extensive life insurance coverage, enhanced by adding optional riders and market-linked wealth creation opportunities on your policy.
Check this official link for more details about the TATA AIA i- SIP brochure with Premium Calculator.
Features of Tata AIA i-SIP – Analysis
- In Tata AIA i-SIP there are no fees for the allocation of premiums or policy administration.
- Enjoy extra allocation of units with the Return of mortality charges.
- Wealth boosters will enhance your fund.
- Extra allocation in the first-year premiums for female lives.
- Wellness benefits with the Vitality Riders.
- Partial withdrawals are allowed which acts as a second source of income.
Eligibility criteria of Tata AIA i-SIP
| Plan Option | Option 1: i-SIP Wealth
Option 2: i-SIP Young Genius |
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| Minimum Entry Age | i-SIP Wealth: 0 years (30 days)
i-SIP Young Genius: 18 years |
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| Minimum Maturity Age | i-SIP Wealth: 18 years
i-SIP Young Genius: 28 years |
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| Premium payment | Basic Sum Assured | Option 1 | Option 2 | |
| Maximum Entry Age | Single Pay | 1.25 times Single premium | NWL/WOL – 60 years | NA |
| 10 times Single premium | NWL/WOL – 50 years | |||
| Regular pay | All | NWL/WOL – 60 years | 60 years | |
| Limited pay | All | NWL – 60 years
WOL – 50 / 60 years |
60 years | |
| Maximum Maturity Age | Single Pay | 1.25 times Single premium | NWL/WOL – 85 / 100 years | NA |
| 10 times Single premium | NWL/WOL – 60 years | |||
| Regular pay | All | NWL/WOL – 85 years | 80 years | |
| Limited pay | All | NWL – 85 years
WOL – 100 years |
80 years | |
| Minimum Policy Term | Single Pay: 5 years
Limited/ Regular Pay: 10 years |
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| Maximum Policy Term | WLP – 100 Minus Entry age
NWL – 40 years |
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| Premium Paying Term | Single Pay
Limited Pay – 5 – 20 years Regular – Equal to the policy term |
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| Pay Mode | Single, Annual, Semi-Annual, Quarterly, Monthly | |||
| Minimum Premium | Option 1: Single Pay -1000, Limited & Regular pay – 1200
Option 2: Single pay – NA, Regular & Limited pay – 6000 |
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| Maximum Premium | As per BAUP | |||
| Minimum Basic Sum Assured | For Single Pay – 1.25 times the Single Premium
For Regular / Limited Pay – 7*Annualized Premium (7*AP) |
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NWL -Non-Whole Life
WOL – Whole Life
Plan options in Tata AIA i-SIP – Analysis
Option 1: i-SIP Wealth
You have the chance to invest your money with the i-SIP wealth option and receive returns that are tied to the market by investing your entire premium amount in the fund of your choice.
Option 2: i-SIP Young Genius
The i-SIP Young Genius option provides you with a benefit for securing your child’s future with the continuity of policy even when you are not around along with the benefits of the i-SIP wealth option. In case of death of the life assured, the death benefit is paid out, the TATA AIA life insurance company will pay the future premiums, and the policy benefit will remain the same.
Review of Benefits available under Tata AIA i-SIP
Maturity Benefit in Tata AIA i-SIP
You shall get the Fund Value, including Top-Up Premium Fund Value, if any, valued at applicable NAV on the date of Maturity.
Plan option1: i-SIP wealth – Payable to the policyholder
Plan option 2: i-SIP Young Genius – Payable to Nominee in case of death of the policyholder or otherwise payable to the policyholder
Death Benefit in Tata AIA i-SIP – Review
i-SIP Wealth:
In case of your death during the policy term and while the policy is in force, the nominee shall get, Highest of,
- the Basic Sum Assured, or
- The fund value of Tata AIA i-SIP Plan in Regular/Single Premium or
- 105 percent of the total Regular/Single Premiums received up to the date of death
In addition to this, the Top-up premium fund value is also payable. Highest of
- the approved top-up sum assured(s) or
- top-up Premium fund value of Tata AIA i-SIP Plan or
- 105 percent of the total top-up premium paid up to the date of death.
i-SIP Young Genius:
In case of your death during the policy term and while the policy is in force, the nominee shall get a lumpsum benefit (as described below) immediately on death and the policy shall continue till the end of the policy term. Tata AIA will fund the future premiums.
The lump sum benefit shall be the Highest of,
- the Basic Sum Assured, or
- the Regular/Single Premium Fund Value of thisTata AIA i-SIP Plan or
- 105 percent of the total Regular/Single Premiums received up to the date of death
In addition to this, the Top-up premium fund value is also payable. Highest of
- the approved top-up sum assured(s) or
- top-up Premium fund value of this policy or
- 105 percent of the total top-up premium paid up to the date of death.
Review of Other Benefits
The top-up facility of Tata AIA i-SIP Plan
The lock-in term for each top-up premium is 5 years. During the final five years of the policy’s term, it is not permitted. In a policy year, you may top up, up to four times. The minimum top-up premium amount is Rs. 1000. Top-up Sum Assured = 1.25 * Top-up premium.
Wealth Boosters in Tata AIA i-SIP Plan
Every 5th policy year, starting from the end of the 10th Policy year till the end of the policy term, “x%” of the average of the Fund Values including Top-up Fund Value, if any, on the last business day of the last eight policy quarters will be added to the Fund value in the form of addition of units after every 5 years.
The flexibility of Premium Mode in Tata AIA i-SIP Plan:
The policyholder can pay Tata AIA i-SIP Plan premium on yearly, half-yearly, quarterly, and monthly modes.
Monthly Premium = 0.0833 of Annualised Premium,
Quarterly Premium = 0.25 of Annualised Premium,
Semi-annual premium = 0.50 of Annualised Premium
Settlement Option
Provided the insured is alive on the maturity date, there is an option to receive Maturity Benet either in a lump sum or in the form of periodical payments over a Settlement Period of five years from the Maturity Date.
The Flexibility of Additional Coverage in Tata AIA i-SIP Plan :
The set of unit-deducting riders is as below:
- Tata AIA Life Insurance Waiver of Premium (Linked) Rider
- Tata AIA Life Insurance Waiver of Premium Plus (Linked) Rider
- Tata AIA Life Insurance Accidental Death and Dismemberment (Long Scale) (ADDL) Linked Rider
The set of premium-paying riders is as below:
- Tata AIA Life Linked Comprehensive Health Rider
- Tata AIA Life Linked Comprehensive Protection Rider
- Tata AIA Vitality Health Plus
- Tata AIA Vitality Protect Plus
Investment Strategies & Fund Options of Tata AIA i-SIP Plan – Review
This product gives you the freedom to make investments in line with your personal needs and investment risk profile.
- You can choose from the 14 investment fund options.
- Choose any one of the following PORTFOLIO STRATEGIES
- Enhanced Systematic Money Allocation & Regular Transfer (Enhanced SMART)
- Life-stage-based Portfolio Strategy
14 fund options: Review with illustration
You have several funds to pick from. According to the asset allocation strategy you’ve selected, your allocated Regular/ Single Premium and Top-Ups (if applicable) are invested in one or more investment funds. You can decide to select one or more or all of the 14 Funds.
| Fund Name | Risk Profile | Asset Allocation | |||
| Equity | Debt | Money Market | |||
| Emerging opportunities Fund | High | 80-100% | 0-10% | 0-20% | |
| Sustainable Equity Fund | High | 80-100% | 0-20% | 0-20% | |
| Multi Cap Fund | High | 60-100% | 0-40% | 0-40% | |
| India Consumption Fund | High | 60-100% | 0-40% | 0-40% | |
| Top 50 Fund | High | 60-100% | – | 0-40% | |
| Top 200 fund | High | 60-100% | – | 0-40% | |
| Super Select Equity Fund | High | 60-100% | 0-40% | 0-40% | |
| Large Cap Equity Fund | High | 80-100% | – | 0-20% | |
| Whole Life Mid-Cap Equity Fund | High | 60-100% | – | 0-40% | |
| Dynamic Advantage Plan | Medium | 20-80% | 20-80% | 0-20% | |
| Whole Life Aggressive Growth Fund | Medium to High | 50-80% | 20-50% | 0-30% | |
| Whole Life Stable Growth Fund | Low to Medium | 30-50% | 50-70% | 0-20% | |
| Whole Life Income Fund | Low | – | 60-100% | 0-40% | |
| Whole Life Short-Term Fixed Income Fund | Low | – | 60-100% | 0-40% | |
| Govt Sec | Money market | ||||
| Discontinued policy fund | 60-100% | 0-40% | |||
Enhanced SMART option: Review with illustration
This option is applicable till PPT only. An enhanced SMART strategy is not available with top-up premium funds. The policyholder gets the choice between two funds—a debt-oriented fund and an equity-oriented fund—under the Enhanced SMART option. For the variety of available funding, please see the table below:
| Debt oriented funds | Equity oriented funds |
| Whole Life Income Fund | Large Cap Equity Fund |
| Whole Life Short-Term Fixed Income Fund | Whole Life Mid-Cap Equity Fund |
| Multi Cap Fund | |
| India Consumption Fund | |
| Top 50 Fund | |
| Top 200 fund | |
| Super Select Equity Fund | |
| Emerging opportunities Fund | |
| Sustainable Equity Fund |
Here, the entire annual/single allocable premium is parked in the selected debt-oriented fund before being systematically transferred into the policyholder’s preferred equity fund It allows you to enter the volatile equity market in a structured manner.
Life-Stage based Portfolio Strategy: Review with illustration
Under this Strategy, your portfolio will be structured as per your age and risk profile selected by you (Conservative, Moderate, or Aggressive). We will automatically shift your investments from riskier assets to safer assets progressively as you age.
We will invest your Single Premium/Annualized Premium between the two funds, an equity fund, and a debt fund (as selected by you from our range of funds) in a predetermined proportion.
| Debt oriented funds | Equity oriented funds |
| Whole Life Income Fund | Large Cap Equity Fund |
| Whole Life Short-Term Fixed Income Fund | Whole Life Mid-Cap Equity Fund |
| Multi Cap Fund | |
| India Consumption Fund | |
| Top 50 Fund | |
| Top 200 fund | |
| Super Select Equity Fund | |
| Emerging opportunities Fund | |
| Sustainable Equity Fund |
| Age | Aggressive | Moderate | Conservative | |||
| Equity | Debt | Equity | Debt | Equity | Debt | |
| 01 to 30 | 90% | 10% | 70% | 30% | 50% | 50% |
| 31-40 | 80% | 20% | 60% | 40% | 50% | 50% |
| 41-50 | 70% | 30% | 50% | 50% | 30% | 70% |
| 51-60 | 55% | 45% | 35% | 65% | 15% | 85% |
| 61-70 | 40% | 60% | 20% | 80% | 0% | 100% |
| 70 & above | 25% | 75% | 5% | 95% | 0% | 100% |
Review of Various charges under Tata AIA i-SIP Plan
Premium Allocation Charge
There are no Premium Allocation Charge(s) on base premium and Top-up premium.
Policy Administration Charge
There are no Policy Administration Charges (s)
Fund Management Charge – illustration
| Sr. No | Fund Name | Fund Management Charge p.a. |
| 1 | Multi Cap Fund | 1.20% |
| 2 | India Consumption Fund | 1.20% |
| 3 | Top 50 Fund | 1.20% |
| 4 | Top 200 fund | 1.20% |
| 5 | Super Select Equity Fund | 1.20% |
| 6 | Large Cap Equity Fund | 1.20% |
| 7 | Whole Life Mid-Cap Equity Fund | 1.20% |
| 8 | Whole Life Aggressive Growth Fund | 1.10% |
| 9 | Whole Life Stable Growth Fund | 1.00% |
| 10 | Whole Life Income Fund | 0.80% |
| 11 | Whole Life Short-Term Fixed Income Fund | 0.65% |
| 12 | Emerging opportunities Funds | 1.20% |
| 13 | Sustainable Equity Fund | 1.20% |
| 14 | Dynamic Advantage Fund | 1.35% |
| Discontinued policy fund | 0.50% |
Mortality Charge Calculation :
Mortality charge = Sum at Risk (SAR) multiplied by the appropriate Mortality Rate for the month, based on the attained age of the insured.
Discontinuance charges:
The discontinuance charge in Tata AIA i-SIP depends on the year of discontinuance, premium amount & premium paying term. There is no discontinuance charge after the 5th policy year in Tata AIA i-SIP Policy.
Partial Withdrawal Charge
There are no partial withdrawal charges inTata AIA i-SIP Plan
Fund Switching Charge
There are no fund-switching charges.
Miscellaneous Charge: Nil
Premium Re-direction Charge
There is no fund re-direction charge applicable under this Product If Enhanced SMART is selected, Premium Re-direction will not be permitted.
Inference from the charges:
Compared to other ULIP plans available in the market, this plan doesn’t levy many charges. But discontinuance charge makes the plan unattractive when compared to other investments.
Review of Grace Period, Discontinuance & paid-up Revival – Tata AIA i-SIP Plan – Good or Bad?
Grace period:
A Grace Period of 30 days (15 days for monthly mode) from the due date of the first unpaid premium will be allowed in Tata AIA i-SIP Policy.
Discontinuance & Paid-up:
For Regular / Limited pay policies
Discontinuance of payment of premium during first five Tata AIA i-SIP policy years (Lock-in Period) – Upon the expiry of the grace period, the Fund Value, by the creation of units will be credited into the Discontinued Policy Fund of Tata AIA i-SIP Policy after deducting applicable Discontinuance Charges.
The risk cover under the Tata AIA i-SIP Plan will stop and no further charges will be levied other than the Fund Management Charge. The Policyholder is not permitted to exercise Switches or Partial Withdrawals during this time.
Discontinuance of payment of premium post first five Tata AIA i-SIP policy years (i.e., after the expiry of the Lock in Period) – the Tata AIA i-SIP policy shall be converted into a reduced paid-up policy with the paid-up sum assured i.e., current sum assured multiplied by the total number of premiums paid to the original number of premiums payable as per the terms and conditions of the Tata AIA i-SIP Policy.
Revival:
You will have the Revival Period of three years from the Date of Discontinuance to revive your Tata AIA i-SIP policy.
Free look period for Tata AIA i-SIP Plan – Analysis
If you disagree with the terms of the policy, you can return the Tata AIA i-SIP policy within a period of 15 days (30 days if the policy is sourced through distance marketing mode) from the date of receipt of the policy.
Surrendering Tata AIA i-SIP Plan – Analysis
Within the lock-in period of Tata AIA i-SIP Policy (5 years) – The “Discontinued Policy Fund,” which is kept by the Company, will be credited with the fund value less any applicable discontinuance charges as of the date of discontinuance.
The ‘Proceeds of the Discontinued Policy’, or the fund value as of the date of discontinuance plus all income collected after deducting fund management fees, shall be paid to the Tata AIA i-SIP policyholder after completion of the lock-in period.
After the Lock-in Period (5 years) – the total fund value as of the date of complete withdrawal shall be paid to the Tata AIA i-SIP policyholder.
Let’s analyze the pros(advantages) and cons(disadvantages) of the Tata AIA i-SIP Plan in short and crisp points.
Advantages of Tata AIA i-SIP plan – Analysis
- There is no premium allocation charge, policy administration charge, partial withdrawal charge, fund switching charge, or premium redirection charge.
- The plan allows add-on riders.
- There are 14 fund options & 2 investment strategies to choose.
- A whole life option is available.
- Premium waiver benefit is an in-built option under i-SIP young genius plan.
- There is no restriction in fund switching & premium redirection in a particular year.
Disadvantages of Tata AIA i-SIP plan – Analysis
- A loan facility is not available.
- The lock period is five years.
- During the settlement term, the policyholder bears the investment risk in the investment portfolio.
Research Methodology of Tata AIA i-SIP Plan
Under Tata AIA i-SIP, the mortality charge is first deducted & the rest of the premium is invested in the market. Any investment should be evaluated in terms of safety, liquidity & returns. Since it is a long-term investment & also a market-linked product, you need to figure out the returns before purchasing it. For this, we shall compute the Internal Rate of Return (IRR).
After computing the returns, first, we should look at whether it is higher than the inflation rate. Then, we should compare it with other investment returns.
Tata AIA i-SIP Plan – Benefit Illustration & IRR(Internal Rate of Return i.e Interest Rate) analysis with Illustration
A 30-year-old male buys Tata AIA i-SIP Plan for a sum assured of ₹ 10 lakhs. The premium paying term is 10 years & the policy term is 30 years. The annual premium is ₹ 1 lakh for this Tata AIA i-SIP policy. If he pays a premium for 10 years, he would be receiving the fund value after 30 years.
| Male | 30 years old |
| Sum Assured | ₹ 10 lakhs |
| Policy term | 30 years |
| Premium paying term | 10 years |
| Annual Premium | ₹ 1 lakh |
In The above illustration of the Tata AIA i-SIP Plan, Annual Premium has been calculated using assumed future investment returns of 8% and 4% respectively.
There are no upper and lower limits to the amount you might receive back at maturity, and these projected rates of return are not guaranteed. , Because, the value of your Policy is dependent on several factors including future investment performance.
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 30 | 1 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 31 | 2 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 32 | 3 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 33 | 4 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 34 | 5 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 35 | 6 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 36 | 7 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 37 | 8 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 38 | 9 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 39 | 10 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 40 | 11 | 0 | 10,00,000 | 0 | 10,00,000 |
| 41 | 12 | 0 | 10,00,000 | 0 | 10,00,000 |
| 42 | 13 | 0 | 10,00,000 | 0 | 10,00,000 |
| 43 | 14 | 0 | 10,00,000 | 0 | 10,00,000 |
| 44 | 15 | 0 | 10,00,000 | 0 | 10,00,000 |
| 45 | 16 | 0 | 10,00,000 | 0 | 10,00,000 |
| 46 | 17 | 0 | 10,00,000 | 0 | 10,00,000 |
| 47 | 18 | 0 | 10,00,000 | 0 | 10,00,000 |
| 48 | 19 | 0 | 10,00,000 | 0 | 10,00,000 |
| 49 | 20 | 0 | 10,00,000 | 0 | 10,00,000 |
| 50 | 21 | 0 | 10,00,000 | 0 | 10,00,000 |
| 51 | 22 | 0 | 10,00,000 | 0 | 10,00,000 |
| 52 | 23 | 0 | 10,00,000 | 0 | 10,00,000 |
| 53 | 24 | 0 | 10,00,000 | 0 | 10,00,000 |
| 54 | 25 | 0 | 10,00,000 | 0 | 10,00,000 |
| 55 | 26 | 0 | 10,00,000 | 0 | 10,00,000 |
| 56 | 27 | 0 | 10,00,000 | 0 | 10,00,000 |
| 57 | 28 | 0 | 10,00,000 | 0 | 10,00,000 |
| 58 | 29 | 0 | 10,00,000 | 0 | 10,00,000 |
| 59 | 30 | 0 | 10,00,000 | 0 | 10,00,000 |
| 60 | 31 | 20,84,002 | 10,00,000 | 55,04,686 | 10,00,000 |
| IRR | 2.91% | 6.84% | |||
The IRR(Internal Rate of Return i.e. Interest Rate) for 4% p.a. is calculated at 2.91% and the IRR at 8% p.a is calculated at 6.84%.
At the end of 30 years, 4% scenario, the fund value would be 20.84 lakhs & the IRR works out to be 2.91%.
At the end of 30 years, 8% scenario, the fund value would be 55.04 lakhs & the IRR works out to be 6.84%.
Tata AIA i-SIP plan is a long-term investment product (policy term 30 years), the above return is not sufficient to meet your long-term goals.
Other market-linked product offers better return when compared to Tata AIA i-SIP Plan. In the next segment, let us compute other investment returns including market-linked returns.
Tata AIA i-SIP vs Other investment products
The annual premium for TATA AIA i-SIP is Rs. 1 lakh. Alternatively, this amount can be invested in other investments which fetch better returns. Also, we should remember the fact that the Tata AIA i-SIP plan offers life cover protection during the policy term.
To meet these criteria let us take out a pure term life insurance policy for a sum assured of ₹ 10 lakhs (same as in the illustration). The total 1 lakh is split & utilized for life cover & investment.
Tata AIA i-SIP plan Vs. Term Insurance + PPF / ELSS
Pure term insurance for a sum assured of ₹ 10 lakhs will cost ₹ 9900. The policy term is 30 years & the premium paying term is 10 years (similar to the benefit illustration). So, the balance amount of ₹ 90,100 can be invested as per your risk appetite.
| Pure term policy | |
| Sum Assured | ₹ 10 lakhs |
| Policy term | 30 years |
| Premium paying term | 10 years |
| Annual Premium | 9,900 |
| Investment | 90,100 |
Here, the investment choices are PPF & ELSS. You can choose any investment as per your risk profile & goal.
Under PPF, a 15-year minimum contribution is compulsory. But here the premium paying term is 10 years, So, in the last 5 years, a minimum contribution of ₹ 500 is made into the PPF account.
ELSS redemptions are subject to capital gain tax. Here, the post-tax value is taken for IRR calculation. The ELSS tax calculation is given in the below illustration.
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 30 | 1 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 31 | 2 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 32 | 3 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 33 | 4 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 34 | 5 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 35 | 6 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 36 | 7 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 37 | 8 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 38 | 9 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 39 | 10 | -97,500 | 10,00,000 | -1,00,000 | 10,00,000 |
| 40 | 11 | -500 | 10,00,000 | 0 | 10,00,000 |
| 41 | 12 | -500 | 10,00,000 | 0 | 10,00,000 |
| 42 | 13 | -500 | 10,00,000 | 0 | 10,00,000 |
| 43 | 14 | -500 | 10,00,000 | 0 | 10,00,000 |
| 44 | 15 | -500 | 10,00,000 | 0 | 10,00,000 |
| 45 | 16 | 0 | 10,00,000 | 0 | 10,00,000 |
| 46 | 17 | 0 | 10,00,000 | 0 | 10,00,000 |
| 47 | 18 | 0 | 10,00,000 | 0 | 10,00,000 |
| 48 | 19 | 0 | 10,00,000 | 0 | 10,00,000 |
| 49 | 20 | 0 | 10,00,000 | 0 | 10,00,000 |
| 50 | 21 | 0 | 10,00,000 | 0 | 10,00,000 |
| 51 | 22 | 0 | 10,00,000 | 0 | 10,00,000 |
| 52 | 23 | 0 | 10,00,000 | 0 | 10,00,000 |
| 53 | 24 | 0 | 10,00,000 | 0 | 10,00,000 |
| 54 | 25 | 0 | 10,00,000 | 0 | 10,00,000 |
| 55 | 26 | 0 | 10,00,000 | 0 | 10,00,000 |
| 56 | 27 | 0 | 10,00,000 | 0 | 10,00,000 |
| 57 | 28 | 0 | 10,00,000 | 0 | 10,00,000 |
| 58 | 29 | 0 | 10,00,000 | 0 | 10,00,000 |
| 59 | 30 | 0 | 10,00,000 | 0 | 10,00,000 |
| 60 | 31 | 52,79,512 | 10,00,000 | 1,54,74,267 | 10,00,000 |
| IRR | 6.67% | 11.14% | |||
In the above illustration, the IRR of Term Insurance + PPF is calculated at 6.67%, and the IRR of Term Insurance + ELSS is calculated at 11.14%.
ELSS Tax calculation
| Maturity value after 30 years | 1,70,82,408 |
| Less | |
| Purchase price | 9,01,000 |
| Long-term capital gains | 1,61,81,408 |
| Exemption limit | 1,00,000 |
| Taxable LTCG | 1,60,81,408 |
| Tax paid on LTCG | 16,08,141 |
| Maturity value after tax | 1,54,74,267 |
In the above illustration, the Maturity Value after tax is calculated at ₹ 1,54,74,267.
Term Insurance + PPF combo earns an IRR of 6.67%. This is similar to the TATA AIA i-SIP plan 8% scenario. But Tata AIA i-SIP plan is a market-linked product whereas PPF is a debt instrument.
Term insurance + ELSS combo earns an IRR of 11.14% (post-tax return). This is an inflation-beating return & helps in wealth accumulation in the long run.
As we discussed already, these alternate investment offers better risk-adjusted return & also inflation-beating.
Tata AIA i-SIP plan Vs. Tata AIA Life Guaranteed Return Insurance Plan
An individual, Non-Linked, Non-Participating life insurance savings plan is Tata AIA Life Insurance Guaranteed Return.
According to Tata AIA life insurance guaranteed return, you can get the protection of life insurance and a guaranteed stream of income to use as an investment to help you reach your medium- and long-term financial objectives. equipping you with features for both life protection and saving.
Please read the complete review below for the calculation of returns made easy with illustrations.
Tata AIA Life Guaranteed Return Insurance Plan: Review (2023) – Is It Good Or Bad?
Tata AIA i-SIP plan Vs. Other Investment Options – Review Conclusion
Through the analysis of various investment options with calculations and illustrations
As we discussed earlier, Term insurance + ELSS combo earns an IRR of 11.14% (post-tax return). This is an inflation-beating return & helps in wealth accumulation in the long run.
So it is better to take Term Insurance and invest in ELSS or PPF for high returns with less risk compared to the Tata AIA i-SIP plan.
You can refer to our article below for a comprehensive understanding of ULIP policies.
Should You Continue to Have Faith in Your ULIP Policy or You are Thinking of Surrendering it?
Final Verdict on TATA AIA i-SIP Plan – Good or Bad?
Tata AIA i-SIP plan provides a dual benefit of life insurance coverage and investment growth.
A portion of the premium paid goes towards providing life insurance protection, while the remaining amount is invested in the chosen investment funds.
But it doesn’t offer better risk-adjusted returns. The risk & return is not proportionate under this plan.
The return for any long-term investment should comfortably beat inflation. Otherwise, it is difficult to meet out the goals.
Also, liquidity in the first years is a big question mark. All these factors make it unattractive among its competitors.
The life cover under TATA AIA i-SIP is also low when compared to pure-term life insurance policies. A term plan offers high coverage at an affordable premium.
Like many policies in the bazaar, the insurance agents would push you to try this “Great?” new plan for their high agent commission. Please beware!
You can find much inauthentic investment advice on social media platforms like Facebook, Quora, Twitter, etc. Are you going to follow them or consult a professional financial planner for comprehensive financial planning? It’s up to you!
And for investment, choose products based on analyzing risk, return & liquidity. The probability of achieving the goal is high with a better risk-adjusted return product.
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