“You have worked hard and smart to earn your money. With Tata AIA Fortune Pro, let your money work smartly as you do.” Says the official brochure of Tata AIA Fortune Pro.

It is not only a statement; it is also an indirect promise from Tata AIA Life Insurance.

But, can Tata AIA Fortune Pro fulfill this promise of bringing you a fortune?

There is only one way to find out.

Read this detailed review of Tata AIA Fortune Pro with examples and in-depth illustrations.

Table of Contents:

1.)Features of Tata AIA Fortune Pro

2.)Benefits of Tata AIA Life Fortune Pro

3.)Tata AIA Fortune Pro Policy Benefits Review:

4.)Taxation of Tata AIA Fortune Pro

5.)Charges under Tata AIA Life Fortune Pro

6.)Comparison of Tata AIA Fortune Pro Returns against PPF

7.)Comparison of Tata AIA Fortune Pro Returns against ELSS Mutual Fund

8.)Verdict

9.)How to surrender your Tata AIA Fortune Pro policy?

10.)Conclusion

To understand whether it is worth investing in this ULIP policy, let’s take a closer look. Here is the Tata AIA Fortune Pro review, starting with the policy features.

Features of Tata AIA Fortune Pro:

The Tata AIA Fortune Pro has no minimum age eligibility to buy this policy. 

However, it has maximum age eligibility and maximum age at maturity. Also, it offers a range of policy terms, starting from 15 years to 40 years. 

Hence, for people over 35 years of age, the policy term will be based on their age. 

The table below shows the eligibility conditions and other features of Tata AIA Fortune Pro.

You should note that you cannot increase or decrease the premium once you buy this policy. 

Funds in Tata AIA Fortune Pro Policy:

Tata AIA Fortune Pro offers eleven different funds to invest in the premium. You can choose to invest in any number of funds among these eleven funds. 

Different funds have different risk profiles based on their asset allocation. 

The table below shows the 11 different funds available under Tata AIA Fortune Pro. The table also includes their asset allocation and risk profiles. 

Tata AIA Fortune Pro plan allows a systematic investment strategy, for lumpsum investments, called Enhanced SMART. 

It is abbreviated as Enhanced Systematic Money Allocation & Regular Transfer (Enhanced SMART). It is nothing but a fancy name for the STP (Systematic Transfer Plan) in mutual funds. 

It helps the investors choose single and annual premium payment options to spread their investments over a period. 

In Enhanced SMART, the premium is first directed to any of the two debt funds. The amount is then transferred to any chosen equity fund systematically over a period. 

It is not available for the monthly and quarterly premium payment options. 

Benefits of Tata AIA Life Fortune Pro:

Death benefit:

In the case of the policyholder’s untimely death, the nominee will receive the sum assured amount. Once the sum assured amount is paid, the policy will terminate.

Tata AIA Fortune Pro Policy Benefits Review:

Hopefully, on surviving the policy term, the policyholder will receive the fund value as of date. 

Below is an illustration of the potential maturity benefit from the Tata AIA Fortune Pro policy. We shall take the single premium option followed by the regular premium option. 

Benefit Illustration of Single Premium Option:

Suppose your age is 35 years. You opt for the single, one-time premium option for your Tata AIA Life Fortune Pro Policy. 

Your one-time premium is ₹1,00,000. And the policy term is 20 years. Your assured benefit, in this case, will be 1.25 times your single premium amount, i.e. ₹1,25,000. 

On surviving the policy term, your maturity benefit will depend on the fund performance.  And unlike an endowment policy, these returns are not guaranteed. The official policy brochure of Tata AIA Life Insurance Pro gives an assumed return rate of 8% as the higher end and 4% as the lower end. 

Assuming the funds you choose is giving a return of 8% CAGR, your maturity value will be ₹3,35,903. 

Even though the fund return is 8% CAGR, it is not the return rate in the hands of the investors. It is because a significant portion of your premium will be deducted to provide life cover, and as a premium allocation charge. Moreover, every year, other charges will eat into your fund returns. 

This will result in a net annual return of 6.25% in 20 years. 

On the other hand, debt funds are more likely to give a 4% CAGR. 

In such a case, your premium will grow to ₹1,50,865 at the end of 20 years. And as always, the net annual return in the hands of the investor will be just 2.07%. 

Investment return rates of 6.25% and 2.07% after 20 long years does not look attractive, does it? 

Let’s see if it gets better if you choose a regular premium payment option. 

Benefit Illustration of Limited Premium Option:

Let’s say you pay an annual premium of ₹1,00,000 for fifteen years. And the policy term is 20 years. 

Your assured benefit will be 10 times the annual premium amount—₹10,00,000. 

On surviving the policy term, you will get your fund value. Again, this is non-guaranteed and only an assumption. 

Let’s assume your fund of choice gives 8% CAGR. In that case, your maturity value will be ₹32,56,363. But in the hands of the investor, the 8% fund return will come down to a net return rate of 6.36%. 

Table showing the calculation of a net annual rate of return (IRR) in case your funds get a higher return of 8%:

Note: Minus sign before premium payment in the above table simply means it will be an outflow for you.

Considering the policy term and the premium paid, neither the ‘single pay’ nor the ‘limited pay’ options give a fair return. The deduction of different charges, risk charges, and the GST on charges brings down the net investment return rate. 

Taxation of Tata AIA Fortune Pro:

Tata AIA Life Insurance Fortune Pro premiums up to ₹1.5 lakh per annum are deductible under Section 80C of the Income Tax Act. 

The maturity amount is exempt under Section 10(10D). 

However, the maturity amount is tax-exempt only if the annual premium amount is less than ₹2.5 lakhs. If the premium amount in any year exceeds ₹2.5 lakhs, you will be liable to pay the Long Term Capital Gains tax. The LTCG tax for ULIPs is set at a rate of 20% before indexation or 10% after indexation. 

Indexation means adjusting the amounts you paid for premiums for inflation to bring them in present value terms, for calculating the capital gains that you realized from your maturity benefit. 

Charges under Tata AIA Life Fortune Pro:

Premium allocation charge will be deducted from all the premiums you pay in this policy. 

The single-pay option will incur a premium allocation charge of 3% of the premium amount. 

For the other premium payment options, the premium allocation charge ranges from 6% to 2% of the premium amount as an annual premium charge. 

Besides the premium allocation charge, you also have to pay a fund administration charge. For the single pay option, the fund administration charge is 0.90% of the premium amount per annum, for the entire policy term. For the other premium payment options, the fund administration charge will be 0.75% of the annual premium amount throughout the policy term. 

The fund administration charge is deducted by cancelling the units of your investments every month.

Besides, the mortality charge is also levied by cancelling your fund units. The mortality charge is levied to provide the life cover to the policyholder. 

The mortality charge varies based on the Sum Assured and the age of the policyholder. 

Hidden charges in investment insurance policies are one of the major reasons for their poor returns. Some charges reduce your investment capital, while others eat into your investment returns for years. 

In the illustration section, we have seen that the fund return is not the same as the investment return. In such a case, it is necessary to look for better alternatives. 

Let’s compare the Tata AIA Fortune Pro against the alternative options. It will help you make a better decision on whether to buy the Tata AIA Fortune Pro or not. 

Comparison of Tata AIA Fortune Pro Returns against PPF:

Public Provident Fund is an investment instrument from the Govt. of India. It offers guaranteed returns, along with tax exemptions. 

The Tata AIA Fortune Pro also offers a life cover, which the PPF does not. Hence, you can take a term insurance plan for an assured value of ₹10,00,000 along with your PPF investment. The term of this policy is 20 years. 

This term insurance plan is not a savings plan. It will give your nominees ₹10,00,000 in case of your death during the policy term. There are no survival benefits. 

The term insurance policy premium will be much lesser than the Tata AIA Life Insurance Fortune Pro premium. Therefore, you can invest the remaining of your premium amount in PPF. 

Let’s see the return you can get by investing in this combo of term life insurance and PPF, for the same premium amount, sum assured, and investment term. 

The prevailing interest rate of PPF is 7.1% p.a. And unlike the Tata AIA Fortune Pro, there are no hidden charges and deductions. So you can get a higher return by buying a term insurance plan and investing in PPF, rather than in the Tata AIA Life Insurance Fortune Pro.

The table below shows the returns from PPF alongside the returns from Tata AIA Fortune Pro, for the same investment and period. 

The added advantage of the PPF investment is that there is no risk on this return, unlike the Tata AIA Life Insurance Fortune Pro. 

Also, its investment, interest, and maturity amount are tax-free.

The term insurance will take care of your life insurance needs. The PPF will take care of your saving needs. And the risk will be zero in the PPF option.

Comparison of Tata AIA Fortune Pro Returns against ELSS Mutual Fund:

Now suppose if you have the risk tolerance, you may choose to invest in an ELSS mutual fund scheme for even better returns. 

To be fair, you don’t need any more risk tolerance than needed to invest in ULIP policy like the Tata AIA Fortune Pro. Since both are equity-linked investment instruments, they have the same investment risk levels. 

Now instead of buying Tata AIA Life Insurance Fortune Pro, invest in an equity-linked savings scheme (ELSS). And, of course, with a term life insurance to provide the same life cover for a far lesser premium. 

Like the Tata AIA Fortune Pro, the ELSS mutual fund returns are not guaranteed. Their returns are dependent on the performance of the stocks that they invest in. 

A well-managed ELSS mutual fund can give you an annual return in the range of 12% – 15% or sometimes even higher. 

The table below shows the potential return from an average ELSS mutual fund scheme in comparison with the Tata AIA Fortune Pro. 

The investment amount is ₹1 Lakh, and the investment period is 15 years. 

Long term Capital Gains Tax (LTCG) on mutual fund returns is 10%. After this tax, you can get a net return of 13.5% on your ELSS investment. 

Even with the LTCG tax @ 10%, the returns from an average ELSS Mutual Fund scheme is more than twice that of the Tata AIA Fortune Pro. 

One of the added advantages of investing in the ELSS Mutual Fund scheme is liquidity and flexibility. 

If you are investing in Tata AIA Fortune Pro policy, you will have to face a 5 year lock-in period. On the other hand, ELSS Mutual Funds have a lock-in period of only 3 years. It is the lowest for any investment option with Section 80C tax benefit. 

Also, when you surrender your ULIP policy because of poor performance, it may incur some charges. Thereby reducing your returns. But you can choose to stop investing in an ELSS fund and invest in a better performing one at any time. 

Such flexibility to the investors makes the ELSS scheme fund managers deliver good performance consistently. ULIPs lack this compulsion because of the lack of flexibility. Hence ULIP funds consistently underperform even an average performing ELSS Mutual Fund Scheme.

Verdict:

The verdict is clear by now. 

Tata AIA Life Insurance Fortune Pro is not a sound investment option. 

A combination of term insurance policy with PPF investment is a better investment option. It gives a slightly better return for absolutely no risk. 

But, a combination of term insurance with ELSS mutual fund is a far better option. Considering that the Tata AIA Fortune Pro is a ULIP, it has the same investment risks as an ELSS Mutual Fund. 

By choosing to buy a term life insurance plan and investing in ELSS Mutual Fund, you get the benefit of better returns and investment flexibility. 

But if you have already bought the Tata AIA Fortune Pro, you can always surrender it and go for the better alternatives. More about surrendering your Tata AIA Fortune Pro and its implications below. 

How to surrender your Tata AIA Fortune Pro policy?

You can surrender your Tata AIA Life Insurance Policy back to the company. And there are two options to do it, based on when you bought this policy. 

Surrendering during the Free Look Period:

The free look period is within 15 days of purchasing the policy. 

If you are within the free lookout period, then you can immediately surrender the policy. No questions asked. 

You can return your policy document with a request to surrender your policy. Your premium amount will be returned to you minus any writing charges and the risk charge for the number of days covered. 

For purchases through distance mode, such as online purchases, the free look period is 30 days.

If you are in the free look period, do not hesitate and surrender your policy if you are convinced to have better alternatives. Otherwise, your huge premium amount will be locked-in for 5 years in a below-par investment product. And you will have no choice but wait for years

Surrendering after the Free Look Period:

You already know there is a 5 year lock-in period after the free look period. 

But if you still proceed to surrender the policy, your investments will be moved to a Discontinued Policy Fund. Discontinued policy fund earns returns in the range of 4%. Of course, the net return will be even lesser—probably even lesser than a savings bank account interest rate. 

At the end of five years, the fund value will be paid to you and the policy terminated. 

If your lock-in period has also passed, then you can surrender the policy and the company will return you the balance amount in your funds after deducting discontinued policy charges. 

To surrender your policy, walk into any Tata AIA Life Insurance branch and submit your surrender request. They may ask for proof of ID and address and the original policy document. You may also request for policy surrender by emailing them to customercare@tataaia.com

Conclusion:

ULIP policies fall short as insurance products and as investments. 

The Tata AIA Fortune Pro is no exception. 

All they can bring is hidden charges and complications to your investment portfolio. Hence, it is always wise to keep your insurances and investments separate. 

But before you surrender your Tata AIA Fortune Pro, consult your financial advisor. They can help you take the best course of action and avoid unprecedented financial complications.  More importantly, help you make the right investment decision. 

In case you want to explore better investment options or create a financial plan to achieve your financial goals faster, make use of our FREE 30 Minute Consultation. Click the “Register Now!” below.