Tata AIA Life Insurance Gold Income Plan Review: Should You Invest?

Protecting your dreams at various stages of life without compromising on your current needs is a challenging task. Properly channelising the financial resources is the best way to overcome this.

Tata AIA Life Insurance Gold Income Plan helps to meet tomorrow’s requirements along with protecting your loved ones and dreams as it ensures you guaranteed returns for the money invested.

What are the pros(advantages) and cons(disadvantages) of the Tata AIA Life Insurance Gold Income Plan?

Is the result of the IRR calculation good or bad compared to the promise made in the Tata AIA Life Insurance Gold Income Plan brochure?

Will this plan help to fulfill all your dreams without compromises?

This article will figure out the answer by analysing the plan in depth.

Table of Contents:

1.)An Overview of Tata AIA Gold Income Plan
2.)Features of Tata AIA Gold Income Plan– Analysis
3.)Eligibility Criteria of Tata AIA Gold Income Plan – Analysis
4.)Review of Tata AIA Gold Income Plan Benefits in detail

• Death Benefit
• Maturity Benefit

5.)Grace Period, Lapse, Reduced Paid-up & Revival of Tata AIA Gold Income Plan – Review
6.)Free Look Period of Tata AIA Gold Income Plan– Analysis
7.)Surrendering Tata AIA Gold Income Plan– Analysis
8.)Advantages of Tata AIA Gold Income Plan– Analysis
9.)Disadvantages of Tata AIA Gold Income Plan– Analysis
10.)Research Methodology of Tata AIA Gold Income Plan– an analysis
11.)Benefit Illustration of Tata AIA Gold Income Plan – IRR(Internal Rate of Return i.e Interest Rate) Analysis
12.)Tata AIA Gold Income Plan vs other investment return

• Tata AIA Gold Income Plan Vs. Term Insurance + ELSS
• Tata AIA Gold Income Plan Vs. Tata AIA Life Guaranteed Return Insurance Plan
• Tata AIA Gold Income Plan Vs Tata AIA Life Insurance Smart Value Income Plan
• Tata AIA Gold Income Plan Vs Other investment returns – Review Conclusion

13. Final Verdict on Tata AIA Gold Income Plan– Good or Bad?

An Overview of Tata AIA Gold Income Plan

It is a Non-Linked, Non-Participating, Individual Life Insurance Savings Plan. This plan not only offers Guaranteed Lump Sum benefits on Maturity but also gives Guaranteed Income during the income term that increases every year. Investment in this plan ensures you guaranteed returns down the lane.

Features of Tata AIA Gold Income Plan – Analysis

• The premium paying term is 5/12 years for a policy term of 12/15 years.
• Guaranteed maturity benefit at the end of the policy term.
• Guaranteed income benefit for 10/15 years.
• The higher the premium payment, the higher the guaranteed income starting @ 12% of the Basic Sum assured.
• Increasing income with Income Boosters of 5% to 10% on Guaranteed Income, based on the premium amount, premium paying term & income term chosen.
• Optional riders will enhance your protection.
• Tax benefi­ts under section 80C and 10(10D), as per the applicable Income Tax laws

Eligibility Criteria of Tata AIA Gold Income Plan – Analysis

	Minimum	Maximum
Age at Entry (years)	5 Pay: 6 12 Pay: 3	5 Pay: 65 12 Pay: 55
Age at Maturity (years)	18	5 Pay: 77 12 Pay: 70
Policy Term / Premium Paying Term	Policy Term	Premium Paying Term
	12	5
	15	12
Basic Sum Assured	Annualised Premium x Basic Sum Assured Multiple.
Premium	5 Pay: 50,000 p.a. 12 Pay: 36,000 p.a.	No Limit
Premium Payment Mode	Annual/ Half-yearly / Quarterly/ Monthly

Review of Tata AIA Gold Income Plan Benefits in detail

Death benefit – Analysis

On the death of the Life Assured during the policy term, provided the Policy is in force, the Sum Assured on Death shall be payable to the Nominee/Legal heir.

The ‘Sum Assured on Death’ shall be the highest of the following:

• Eleven times of Annualised Premium
• 105% of the Total Premiums Paid up to the date of death
• Guaranteed Sum Assured on Maturity
• The absolute amount assured to be paid on death

In case of death of Life Insured post maturity, the outstanding income payments as scheduled, shall be made to the nominee/legal heir(s) of the Life Insured.

Maturity Bene­fit – Analysis

On Maturity of the policy, provided the policy is in force, 100% of the Basic Sum Assured will be paid as a lump sum, additionally a Guaranteed Income of 12% of the Basic Sum Assured, shall commence from the end of the year following Maturity, which increases annually (compounding increase) by an Income Booster.

The income Booster percentage will depend on the premium amount, premium paying term, and income term chosen by the Policyholder at the inception of the policy.

Grace Period, Lapse, Reduced Paid-up & Revival of Tata AIA Gold Income Plan – Review

Grace Period

If you are unable to pay your Premium on time, starting from the premium due date, a Grace Period of 15 days for monthly mode and 30 days for all other modes will be offered in Tata AIA Gold Income Plan.

Lapse

If 2 full years of premiums are not paid within the Grace Period, the Tata AIA Gold Income Policy shall lapse from the due date of the first unpaid premium and no benefits will be payable.

Reduced paid-up

If at least 2 full years’ premiums have been paid and subsequent premiums remain unpaid and the Tata AIA Gold Income Policy has not been surrendered, the Tata AIA Gold Income Policy will be converted into a Reduced Paid-up Policy by default.

The benefits will be reduced in the proportion of the number of premiums paid so far divided by the total number of premiums payable under the Tata AIA Gold Income policy.

Revival

If a premium is in default beyond the Grace Period and subject to the Tata AIA Gold Income Policy not having been surrendered, you may revive the same within five years after the due date of the ­first unpaid premium and before the date of Maturity.

Free Look Period of Tata AIA Gold Income Plan – Analysis

If you are not satisfied with the terms & conditions/features of the Tata AIA Gold Income Policy, you have the right to cancel the Policy within 15 days from the date of receipt of the Policy document. The said period of 15 days shall stand extended to 30 days if the Tata AIA Gold Income Policy is sourced through Sales other than in person.

Surrendering Tata AIA Gold Income Plan – Analysis

The Tata AIA Gold Income Policy may be surrendered at any point during the Policy term but shall acquire a Surrender Value only if at least 2 full years’ premiums have been paid.

The Surrender Value payable is higher than Guaranteed Surrender Value or Special Surrender Value.

Guaranteed Surrender Value = Total Premiums Paid (excluding the underwriting extra premiums and modal loading) x GSV factor

Tata AIA Gold Income Plan Special Surrender Value = Special Surrender Value Factor x (No of Premiums paid) / (No of Premiums Payable during the entire policy term) x “Guaranteed Sum Assured on Maturity”.

Advantages of Tata AIA Gold Income Plan – Analysis

• Guaranteed maturity benefit & Income benefit.
• Increasing income benefit year after year is an added advantage.
• Option to pay the premiums either Annually, Half-yearly, Quarterly, and Monthly modes is available in Tata AIA Gold Income Plan.
• Flexibility to enhance your cover by adding the following optional riders, by paying an additional rider premium.
• Policy Loan is available to the maximum of 80% of surrender value (provided that the Policy acquires Surrender Value).

Disadvantages of Tata AIA Gold Income Plan – Analysis

• Any change in the Basic Sum Assured is not allowed post-inception of the Tata AIA Gold Income policy.
• Staggered income benefits will not help to meet big-ticket expenses.
• The basic Sum Assured is too low.

Research Methodology of Tata AIA Gold Income Plan – an analysis

Assured benefits under the Tata AIA Gold Income plan may look attractive to you. The maturity benefit & the income benefit seems to be a helping hand for your mid & short-term goals.

But we need to analyze the time value of money. This can be done by calculating the Internal Rate of Return (IRR) for this plan.

In the Tata AIA Gold Income policy brochure, an example is worked out to explain the working of the policy with detailed figures. Let us work out IRR for the given cash flow.

Benefit Illustration of Tata AIA Gold Income Plan – IRR(Internal Rate of Return i.e Interest Rate) Analysis

A 35-year-old male opts for the Tata AIA Life Insurance Gold Income Plan for a Policy Term of 12 years, a Premium Payment Term of 5 years, Guaranteed Income for 10 years, and pays an Annualised Premium of ₹ 1,00,000. The Basic sum Assured Is ₹ 3,29,000.

On survival till maturity of the Tata AIA Gold Income Policy, he gets 100% of the Basic Sum Assured on Maturity and Guaranteed Income from the end of the 13th policy year.

Male	35 years
Basic Sum Assured	₹ 3,29,000
Policy Term	12 years
Premium Paying Term	5 years
Annualised Premium	₹ 1 Lakh

The Guaranteed Income @ 12% of the Basic Sum Assured increasing every year @9% with Income Booster will start after the premium paying term.

		TATA AIA GOLD INCOME PLAN
Age	Year	Annualised premium / Maturity benefit	Death benefit
35	1	-1,00,000	11,00,000
36	2	-1,00,000	11,00,000
37	3	-1,00,000	11,00,000
38	4	-1,00,000	11,00,000
39	5	-1,00,000	11,00,000
40	6	0	11,00,000
41	7	0	11,00,000
42	8	0	11,00,000
43	9	0	11,00,000
44	10	0	11,00,000
45	11	0	11,00,000
46	12	0	11,00,000
47	13	3,29,000	11,00,000
48	14	39,480	11,00,000
49	15	43,033	11,00,000
50	16	46,906	11,00,000
51	17	51,128	11,00,000
52	18	55,729	11,00,000
53	19	60,745	11,00,000
54	20	66,212	11,00,000
55	21	72,171	11,00,000
56	22	78,666	11,00,000
57	23	85,746	11,00,000
	IRR	4.61%

In the above illustration, the IRR(Internal Rate of Return i.e. Interest Rate) of Tata AIA Gold Income Plan is calculated at 4.61%.

If he pays the premium for the first 5 years, he would be receiving the maturity benefit at the end of 12 years. The income benefit starts at the end of the 13^th year & continues for the next 10 years.

The income benefit is 12% of the Basic Sum assured. The income benefit booster for this illustration is 9%.

The IRR for this cashflow is 4.61%. Though you may receive regular benefits, the return in the end is not convincing for a long-term investment. The IRR under Tata AIA is lower than the economic inflation rate. This rate will not help you in achieving your dreams.

Tata AIA Gold Income Plan vs Other investment return

Tata AIA Gold Income Plan is not beneficial in terms of benefit & the sum assured is too low. The same annual premium as seen in the illustration could be utilised in a better way to protect your dreams. Let us compute what would be the return if we invest the same ₹ 1 lakh in other products.

• Tata AIA Gold Income Plan Vs. Term Insurance + ELSS – Review

The annual premium ₹ 1 Lakh can be split into two parts. One portion is to protect your life & the other is to invest. In the earlier illustration, the death benefit is ₹ 11 lakh. Under pure term policy, the premium for the same would be just₹ 9,700.

The premium paying term is 5 years & the policy term is 12 years. In the first 5 years, after paying a premium for the life cover the balance is invested in the ELSS fund.

The accumulated corpus from the ELSS fund (at the end of 12 years) could be utilized for withdrawal i.e., similar to the Tata AIA Income benefit, you can withdraw it annually.

The accumulated corpus is invested in a safe instrument yielding 6% interest per annum.

		Term insurance + ELSS
Age	Year	Term Insurance premium + ELSS	Death benefit
35	1	-1,00,000	11,00,000
36	2	-1,00,000	11,00,000
37	3	-1,00,000	11,00,000
38	4	-1,00,000	11,00,000
39	5	-1,00,000	11,00,000
40	6	0	11,00,000
41	7	0	11,00,000
42	8	0	11,00,000
43	9	0	11,00,000
44	10	0	11,00,000
45	11	0	11,00,000
46	12	0	11,00,000
47	13	3,29,000	11,00,000
48	14	39,480	11,00,000
49	15	43,033	11,00,000
50	16	46,906	11,00,000
51	17	51,128	11,00,000
52	18	55,729	11,00,000
53	19	60,745	11,00,000
54	20	66,212	11,00,000
55	21	72,171	11,00,000
56	22	78,666	11,00,000
57	23	85,746	11,00,000
		11,02,586
	IRR	8.57%

In the above illustration, The IRR of Term Insurance + ELSS is calculated at 8.57%.

The ELSS fund at the end of 12 years would be around 14.20 Lakhs. This is subject to capital gains tax. Please refer to the following table for tax calculation. The post-tax value of ₹ 13.33 lakhs is invested @ 6% return instrument for annual withdrawal.

Here, we have assumed the same amount for annual withdrawal for easy comparison. Even after withdrawing annually for 10 years, you will be left with a corpus of ₹ 11 lakhs.

ELSS Tax calculation

Maturity Value after 12 years	14,20,366
Less
Purchase price	4,51,500
Long-term capital gains	9,68,866
Exemption limit	1,00,000
Taxable LTCG	8,68,866
Tax paid on LTCG	86,887
Maturity value after tax	13,33,480

The IRR calculation for the above cash flow is 8.57%. This rate is higher than the inflation rate. Moreover, for comparison purposes, we have staggered the benefit.

If you wish, you can utilise the accumulated corpus for any of your goals (lumpsum). In terms of returns & liquidity, the Tata AIA Gold Income plan doesn’t suit anyone who envisages their dream.

• Tata AIA Gold Income 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 whereas Tata AIA Gold Income Plan is a Non-Linked, Non-Participating, Individual Life Insurance Savings Plan.

Tata AIA Life Guaranteed Return Insurance Plan: Review (2023) – Is It Good Or Bad?

Tata AIA Life Guaranteed Return Insurance Plan – A Detailed Review| Youtube Review|

• Tata AIA Gold Income Plan Vs Tata AIA Life Insurance Smart Value Income Plan

Tata AIA Life Insurance Smart Value Income Plan is an individual, non-linked, participating life insurance savings plan whereas there is one difference in Tata AIA Gold Income Plan, it is a Non-Participating Life Insurance Savings Plan

Tata AIA Life Insurance Smart Value Income Plan: An In-depth & Insightful Review

Tata AIA Life Insurance Smart Value Income Plan: An In-depth & Insightful Review|Holistic Investment| Youtube Review|

• Tata AIA Gold Income Plan Vs Other investment returns – Review Conclusion

After a thorough review of all other alternative investment plans for Tata AIA Gold Income Plan, we have concluded that Term Insurance + PPF or ELSS is a far better investment option.

Before buying a new plan in the market it is wise to compare and analyse the reviews of the new plan with all other alternative investment options. In this way, it will be easy to evaluate the good and bad aspects of the plan in the longer run.

Final Verdict on Tata AIA Gold Income Plan – Good or Bad?

Like many policies in the bazaar, the Tata AIA Gold Income plan offers life cover, maturity benefits & income benefits. Though it may offer all these benefits, none of the benefits meet the purpose.

• The life cover is too low to meet the family’s basic needs.
• The maturity benefit is also low to meet any goal.
• The income benefit is staggered & many times, it ends up in discretionary expense.

Please beware of insurance agents who try to sell you the Tata AIA Gold Income policy for their high agent commission.

Guaranteed benefit & regular income is the sales pitch for Tata AIA’s good income plan. Be cautious & work out the IRR for the cash flow before making a decision.

Alternatively, pure-term life insurance with affordable premiums will help to protect your family’s dream. Select an investment product based on your dreams (goals) & do not mix investment with life insurance.

Are you tired of searching for the best investment plan for your future on social media platforms like Quora, Facebook, Twitter etc? A professional financial planner can guide you in comprehensive financial planning.