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An adequate life cover & investments that generate inflation-beating returns are the two basic factors to help you be financially worry-free.
As this could be the main focus in your working life to protect your life’s financial dreams.
Will Tata AIA Life Insurance Diamond Savings Plan help you fulfill your medium- and long-term financial goals such as your child’s education or your retirement planning?
Let us find out whether this plan protects your financial dreams at various stages of life without making you compromise.
Table of Contents:
1.)What is Tata AIA Life Insurance Diamond Savings Plan?
2.)Features of Tata AIA Life Insurance Diamond Savings Plan
3.) Eligibility Criteria of Tata AIA Life Insurance Diamond Savings Plan
4.) Benefits of the Tata AIA Life Insurance Diamond Savings Plan
- Death Benefit
- Surfival Benefit
- Maturity Benefit
5.) Advantages of the Tata AIA Life Insurance Diamond Savings Plan
6.)Disadvantages of the Tata AIA Life Insurance Diamond Savings Plan
7.) A grace period, Lapse, Revival, or Reduced paid-up of the Tata AIA Life Insurance Diamond Savings Plan
8.) Surrendering the Tata AIA Life Insurance Diamond Savings Plan
9.) Free Look Period of the Tata AIA Life Insurance Diamond Savings Plan
10.) Research Methodology
11.) Tata AIA Life Insurance Diamond Savings Plan – IRR Analysis
12.) Tata AIA Life Insurance Diamond Savings Plan Vs. Other Investment Alternatives
13.) Tata AIA Life Insurance Diamond Savings Plan Vs. Pure Term Insurance + PPF/ELSS
14.) Final Verdict
What is Tata AIA Life Insurance Diamond Savings Plan?
It is a Non-Linked, Participating, Individual, Life Insurance Savings Plan.
It is a savings cum insurance product. It is a limited-pay insurance plan that claims to help you meet your future financial requirements along with protecting your loved ones in the case of your unfortunate absence.
Features of the Tata AIA Life Insurance Diamond Savings Plan
- There is a life cover provided for the entire policy term.
- There is flexibility in choosing your premium paying term & policy term.
- After the Premium Payment Term ends, you will be receiving guaranteed income.
- You can get a vested Compound Reversionary Bonus and Terminal Bonus if any; on maturity or death.
- Life cover could be enhanced with optional Riders.
- This policy is eligible for tax benefits under Section 80C.
Eligibility Criteria for Tata AIA Life Insurance Diamond Savings Plan
Now let us look at the basic information about this plan at a glance below:
| Payment Term (PPT)/ Policy Term (PT)/Min/Max Entry Age (Age as on last birthday) | Premium Payment Term | Policy Term | Income Term | Minimum Entry Age | Maximum Entry Age |
| 5 | 15 | 10 | 3 | 55 | |
| 5 | 20 | 15 | 0 | 55 | |
| 6 | 15 | 9 | 3 | 55 | |
| 8 | 18 | 10 | 0 | 60 | |
| 12 | 25 | 13 | 0 | 60 | |
| Premium (₹) (Premium in multiples of 10000) | Minimum: ₹18,000/- per annum | ||||
| 11 times the Annualised Premium | |||||
| Basic Sum Assured | Maximum: No Limit (subject to underwriting guidelines) | ||||
| Premium Payment Mode | Annual/Half-yearly/Quarterly/Monthly | ||||
Benefits of the Tata AIA Life Insurance Diamond Savings Plan
Death Benefit:
On the death of the Life Insured during the Policy term,
Death benefit = Sum Assured on Death + Vested Compound Reversionary Bonus (if any) + Terminal Bonus (if any)
This total amount will be subject to a minimum of 105% of the Total Premiums received up to the date of death.
The ‘Sum Assured on Death’ shall be the highest of the following:
- 11 times the Annualised Premium;
- Sum Assured on Maturity;
- Absolute amount assured to be paid on death.
Survival Benefit:
Provided your Policy is still in force and all due premiums have been paid, A Guaranteed Income as a % of Assured Benefit shall be paid as follows:
| Policy Term | Premium Payment Term | Guaranteed Income commences from the end of the year | Guaranteed Income as a % of Assured benefit |
| 15 | 5 | 6 | 10% |
| 20 | 5 | 6 | 8% |
| 15 | 6 | 7 | 15% |
| 18 | 8 | 9 | 20% |
| 25 | 12 | 13 | 25% |
Maturity Benefit:
Provided the Policy is in force and all due premiums have been paid the following benefits shall be paid on survival till maturity;
- Sum Assured on Maturity which is equal to the last Guaranteed Income installment payable on maturity;
- Vested Compound Reversionary Bonus, if any, expressed as a percentage of the Assured Benefit;
- Terminal Bonus, if any, expressed as a percentage of the Assured Benefit.
Advantages of the Tata AIA Life Insurance Diamond Savings Plan
- A large-scale discount will be applicable on premiums for policyholders opting for a large premium.
- Flexibility is available in choosing your premium paying mode – Annually, Half-yearly, Quarterly, and Monthly modes.
- Flexibility of Additional Coverage by adding riders to the base policy.
- Policy Loan is available subject to a maximum of 80% of the Surrender Value.
- Premiums paid under this plan are eligible for tax benefits under Section 80C of the Income Tax Act, 1961.
Disadvantages of the Tata AIA Life Insurance Diamond Savings Plan
- Any change in the Basic Sum Assured is not allowed post-inception of the Policy.
- Tax benefit on maturity benefit (Sec 10(10D)) does not apply to policies having a premium amount exceeding Rs. 5 lakhs payable for any one of the previous years during the policy term (Policies issued after 1 Apr 2023).
A grace period, Lapse, Revival, Reduced paid-up of the Tata AIA Life Insurance Diamond Savings Plan
Grace period:
If you are unable to pay your Premium on time, starting from the premium due date, a Grace Period of 15 days will be allowed for policyholders under the monthly mode and 30 days for the policyholders in the remaining all other modes of payment.
Lapse:
If the first 2 full years of premiums are not paid within the Grace Period, the Policy shall lapse from the due date of the first unpaid premium and no benefits will be payable.
Revival:
If a premium is in default beyond the Grace Period and subject to the Policy not having been surrendered, you may revive the same within 5 years after the due date of the first unpaid premium and before the date of Maturity.
Reduced Paid-Up:
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.
Surrendering the Tata AIA Life Insurance Diamond Savings Plan
The Policy may be surrendered at any point during the Policy term but shall acquire a surrender value only if at least the first 2 full years’ premiums have been paid.
The Surrender Value payable is higher than Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).
Free Look Period of the Tata AIA Life Insurance Diamond Savings Plan
If you are not satisfied with the terms & conditions of the Tata AIA Life Insurance Diamond Savings policy, you have all the rights to cancel this Policy free of any charge in the Free look period.
You can return this policy within a period of 15 days from the date of receipt of the policy. If you bought this policy online or through distance mode, then your Free Look period will be extended up to 30 days.
You can read the Tata AIA Life Insurance Diamond Savings Policy Brochure for more details
Research Methodology
We have covered all the necessary information that you need to know about the Tata AIA Life Insurance Diamond Savings Plan.
But is this information enough to determine whether this insurance plan suits you?
So, let us find out the Internal Rate of Return (IRR) for the Tata AIA Life Insurance Diamond Savings plan using a benefit Illustration provided on the Tata AIA Life Insurance website.
Let us analyze the IRR of Tata AIA Life Insurance Diamond Savings Plan & then compare it with other similar investment vehicles.
Tata AIA Life Insurance Diamond Savings Plan – IRR Analysis
The Assumptions for Comparison:
| Male | 35 years |
| Policy Term | 25 years |
| Premium Payment Term | 12 years |
| Annual premium | 1,00,000 |
| Sum Assured on death | 11,00,00 |
| Assured benefit | 3,52,225 |
If you pay a premium of Rs. 1 lakh in the first 12 years, then in the next 13 years you will be receiving an income benefit of Rs. 88056.
Along with the final payment, you will be receiving a bonus (Compound revisionary bonus & Terminal bonus – if any). The bonus percentage varies year after year.
The below illustration has been determined using the assumed future investment rate of return of 4% and 8%. These rates are not guaranteed.
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualized premium / Maturity benefit | Death benefit | Annualized premium / Maturity benefit | Death benefit |
| 36 | 1 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 37 | 2 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 38 | 3 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 39 | 4 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 40 | 5 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 41 | 6 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 42 | 7 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 43 | 8 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 44 | 9 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 45 | 10 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 46 | 11 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 47 | 12 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 48 | 13 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 49 | 14 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 50 | 15 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 51 | 16 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 52 | 17 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 53 | 18 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 54 | 19 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 55 | 20 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 56 | 21 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 57 | 22 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 58 | 23 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 59 | 24 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 60 | 25 | 7,02,481 | 11,00,000 | 24,24,451 | 11,00,000 |
| IRR | 2.67% | 6.69% |
The IRR in the best-case scenario is 6.69% & the worst-case scenario is 2.67%. The internal rate of return is not an inflation-beating one & the life cover is not sufficient in the Tata AIA Life Insurance Diamond Savings plan.
The best-case scenario IRR seems to be better but it is not advisable to lock the funds at this rate for the long term such as the policy term of 25 years. It is important to note that each year the bonus rate varies.
Tata AIA Life Insurance Diamond Savings Plan Vs. Other Investment Alternatives
Since the Tata AIA Insurance plan has both life cover & investment options, we can assume a Pure Term Life Insurance for life cover & other investment vehicles for corpus accumulation.
The annual premium of Rs. 1 lakh as seen in the above illustration could be utilized for a pure-term policy for life cover & the balance amount could be invested in another investment vehicle. High-risk investors can opt for Equity mutual funds & Low-risk investors can opt for debt instruments.
Tata AIA Life Insurance Diamond Savings Plan Vs. Pure Term Insurance + PPF/ELSS
Let’s assume a 35-year-old male buys Pure Term Insurance for a sum Assured of Rs. 11 lakhs for 25 years’ cover.
The annual premium to be payable for 10 years is Rs. 12,500.
Out of Rs. 1 lakh, the balance amount of Rs. 87500 can be invested based on your risk appetite.
Here, we assume this amount is invested in PPF & ELSS. The above illustration shows an annual income benefit of Rs. 88,056. Similarly, at the end of the accumulation phase (first 12 years) the corpus is invested in a 7% return instrument & the same amount is withdrawn each year.
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Agee | Year | Term Insurance Premium + PPF | Death Benefit | Term Insurance Premium + ELSS | Death Benefit |
| 36 | 1 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 37 | 2 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 38 | 3 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 39 | 4 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 40 | 5 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 41 | 6 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 42 | 7 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 43 | 8 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 44 | 9 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 45 | 10 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 46 | 11 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 47 | 12 | -98,500 | 11,00,000 | -1,00,000 | 11,00,000 |
| 48 | 13 | 87,556 | 11,00,000 | 88,056 | 11,00,000 |
| 49 | 14 | 87,556 | 11,00,000 | 88,056 | 11,00,000 |
| 50 | 15 | 87,556 | 11,00,000 | 88,056 | 11,00,000 |
| 51 | 16 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 52 | 17 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 53 | 18 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 54 | 19 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 55 | 20 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 56 | 21 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 57 | 22 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 58 | 23 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 59 | 24 | 88,056 | 11,00,000 | 88,056 | 11,00,000 |
| 60 | 25 | 22,38,124 | 11,00,000 | 35,79,336 | 11,00,000 |
| IRR | 6.38% | 8.27% |
Here the IRR (Post-tax return) for Pure Term + PPF works out to be 6.38% & for Pure term + ELSS option works out to be 8.27%.
These rates are comparatively better than the Tata AIA Life Insurance Diamond Savings Plan. Under the ELSS option, the IRR provides an inflation-beating return in the long run.
ELSS also offers liquidity which is missing in the Tata AIA Life Insurance Diamond Savings Plan where you get the bonus only at the end of 25 years.
So, it is always better to invest separately for your life’s financial goals.
Final verdict
Tata AIA Life Insurance Dimond Savings plan offers a few key benefits to the policyholder such as;
- Life Cover.
- Savings.
- Regular income after the Premium Payment Term.
But an investor can get these benefits through numerous investment vehicles that are already available in the market. No specific feature makes this Tata AIA Life Insurance Diamond Savings Plan unique. It is simply a traditional life insurance product. Moreover, the IRR is also not convincing enough to invest in this product which will lock your hard-earned money for 25 years without producing a good return at the end.
Pure Term Insurance does not have an investment component to it like this policy. But, you can get high coverage at a low premium.
Choose your investments depending on your life’s financial goals, risk appetite & time horizon.
You can always consult with your Financial Advisor to build a diversified Investment portfolio that is fully customized according to your financial goals.
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