Do you have a financial dream to achieve?
Do you want to invest to fulfil your dreams?
Tata AIA Life Insurance Smart Income Plus promises to help you to achieve these dreams through a stream of guaranteed income.
Will it help to achieve your goals?
Let us explore.
Table Of Contents:
1.) Overview Of Tata Aia – Smart Income Plus Plan
2.) Features Of Tata Aia Smart Income Plus
3.) Eligibility Criteria Of Tata Aia Smart Income Plus
4.) Benefits Of Tata Aia Smart Income Plus
5.) Additional Benefits Of Tata Aia Smart Income Plus
6.) The Grace Period, Revival, Paid-up
7.) Advantages Of Tata Aia Smart Income Plus
8.) Disadvantages Of Tata Aia Smart Income Plus
9.) Research Methodology On Tata Aia Smart Income Plus
10.) Benefit Illustration Analysis Of Tata Aia Smart Income Plus
11.) Tata Aia Smart Income Plus Vs. Other Investments
12.) Tata Aia Smart Income Plus Vs. Ppf Vs. Elss
13.) Final Verdict On Tata Aia Smart Income Plus
Overview of Tata AIA – Smart Income Plus Plan:
TATA AIA Smart Income Plus is a Non-Linked, Non-Participating, Individual Life Insurance Savings Plan. Investment in this plan protects your life & helps you fulfil your medium to long-term goals. It ensures a guaranteed return for the money invested.
Features of TATA AIA Smart Income Plus:
- Pay for limited years – 7/10/12 years & get guaranteed life cover for 15/21/25 years.
- Flexibility to choose between 2 benefit options – Regular Income or Endowment option.
- optional Riders – can be added to the base cover.
- Guaranteed payouts ranging from 120% – 160% of Annualised premium under the regular income options.
Eligibility Criteria of TATA AIA Smart Income Plus:
| Plan Options | Option I: Regular Income
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| Option II: Endowment
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| Plan Parameters | Minimum | Maximum |
| Age at Entry | Premium Payment Term 7yrs – 3 yrs | 50 |
| Premium Payment Term 10 and 12 years – 0 (30 days) | ||
| Age at Maturity (years) | 18 | For PT 15: 65 |
| For PT 21: 71 | ||
| For PT 25: 75 | ||
| Policy Term (PT) (years) | 15/21/25 | |
| Premium Payment Term (PPT) (years) | 7 for PT 15
10 for PT 21 12 for PT 25 |
|
| Basic Sum Assured | 11 times Annualised Premium | |
| Premium (in multiples of 1000) | For Option I: 18,000 | No Limit
|
| For Option II: 36,000 | ||
| Premium Payment Mode | Annual/ Half-yearly / Quarterly/ Monthly | |
Benefits of TATA AIA Smart Income Plus:
Survival benefit:
Option I: Regular Income (Guaranteed Pay-outs)
Guaranteed Pay-outs as a percentage of the Annualised Premium (AP) shall be payable annually. For premium-paying periods of 7, 10, or 12 years, respectively, the income will start to accrue at the end of the policy year 9/12/14. It will continue to accrue until maturity as shown in the table below.
| Policy Term | 15 | 21 | 25 |
| Premium Payment Term | 7 | 10 | 12 |
| Guaranteed Pay-outs as % of the AP | 120% | 140% | 160% |
Option II: Endowment
Guaranteed Pay-outs determined as a multiple of the Annualised Premium will be paid at the end of the policy year preceding the year of Maturity. Age, gender, and the period you choose for paying your premium all affect the Guaranteed Payout criteria.Maturity Benefit:
Option I: Regular Income
An amount equal to the Guaranteed Maturity Pay-out (GMP) will be paid as a lump sum at Maturity. The last instalment of Guaranteed Pay-out will be paid along with the above-mentioned Maturity Benefit. GMP = GMP multiplied by Annualised Premium.
Option II: Endowment
The Minimum Guaranteed Sum Assured on Maturity which is equal to the Guaranteed Maturity Pay-out (GMP) will be paid at Maturity. The amount of benefit shall be equal to the Guaranteed Pay-out paid under Option II.
Death Benefit:
For Option I & Option II – On the death of the Life Assured during the policy term:
Regardless of any previously paid Survival Benefits, the Sum Assured on Death will be paid. “Sum Assured on death” shall be payable as the highest of the following:
- 11 times Annualised Premium
- 105% of the Total Premiums paid up to the date of death
- Minimum Guaranteed Sum Assured on Maturity
- Absolute amount assured to be paid on death
Additional benefits of TATA AIA Smart Income Plus:
Large premium boost:
An additional benefit will be payable on payment of a higher premium.
For Option I – Regular Payout Option
| Annualized Premium | Large Premium Boost |
| Rs.18,000 to Rs.49,999 | 0% |
| Rs.50,000 to Rs.99,999 | 5% |
| Rs.1 lakh to Rs.199,999 | 20% |
| Rs.2 lakhs and above | 30% |
For Option II – Endowment Option
| Annualized Premium | Large Premium Boost |
| Rs.36,000 to Rs.74,999 | 0% |
| Rs.75,000 to Rs.99,999 | 1% |
| Rs.1 lakh to Rs.199,999 | 2% |
| Rs.2 lakhs and above | 3% |
Flexible premium payment modes:
| Mode | Annual | Half – Yearly | Quarterly | Monthly |
| Modal Loading | 0% | 2% | 4% | 6% |
Riders:
Tata AIA Life Insurance Accidental Death and Dismemberment
Tata AIA Life Insurance Waiver of Premium Plus
Policy Loan:
A policy Loan is available provided that the policy acquires Surrender Value. Policy Loan amount shall be within the extent of 65% of Surrender Value.
The Grace period, Revival, Paid-up
Grace period:
If the policyholder is unable to pay the Premium on time, starting from the premium pay-to-date, a Grace Period of 15 days for monthly mode and 30 days for all other modes will be offered.
Revival:
If the policyholder did not pay the remaining premium at the end of the Grace Period, and the policy has not acquired a Surrender Value, then the policy shall lapse and no benefits will be paid.
Paid-up:
If any subsequent premiums remain unpaid the Policy will be converted into a Reduced Paid-Up Policy by default, provided the policy has acquired surrender value.
Advantages of TATA AIA Smart Income Plus:
- Higher benefits for female life.
- Flexibility in receiving the benefits of either lump sum or regular income.
- Premium paying term is limited but the life cover is for the entire policy term.
- Rider options enhance the cover.
- To cater for liquidity, a loan option is available.
- Tax benefit under sec 80C & Sec 10 (10D)
Disadvantages of TATA AIA Smart Income Plus:
- Though all the future benefits are a guarantee, they are not adjusted to inflation.
- The lock-in period is 2 years for Surrender & loan.
Research Methodology on TATA AIA Smart Income Plus:
Till now, we have gone through all the important details that we need to know about the TATA AIA Smart Income Plus. But, these details are not enough to decide whether to purchase this plan or not.
So, now we are going to do more research on TATA AIA Smart Income Plus.
In this research, first, we are going to calculate the IRR of the TATA AIA Smart Income Plus Plan to see how much return we will get in this plan by using the TATA AIA Smart Income Plus online calculator.
Then, we are going to see how much return we will get if we invest the same value in risk-free investment and risk-oriented investment plans.
Then we are going to compare the IRR of TATA AIA Smart Income Plus with other investments to see which performs better.
This way can help us to decide whether we should buy this plan or not.
Benefit Illustration Analysis of TATA AIA Smart Income Plus:
| Male | 35 years |
| Premium paying term | 10 years |
| Policy term | 21 years |
| Sum Assured | 11 Lakhs |
| Annual premium | 1 lakh |
| Option1: Regular Income | Option 2: Endowment | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 35 | 0 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 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 | 0 | 11,00,000 | 0 | 11,00,000 |
| 46 | 11 | 0 | 11,00,000 | 0 | 11,00,000 |
| 47 | 12 | 0 | 11,00,000 | 0 | 11,00,000 |
| 48 | 13 | 1,40,000 | 11,00,000 | 0 | 11,00,000 |
| 49 | 14 | 1,40,000 | 11,00,000 | 0 | 11,00,000 |
| 50 | 15 | 1,40,000 | 11,00,000 | 0 | 11,00,000 |
| 51 | 16 | 1,40,000 | 11,00,000 | 0 | 11,00,000 |
| 52 | 17 | 1,40,000 | 11,00,000 | 0 | 11,00,000 |
| 53 | 18 | 1,40,000 | 11,00,000 | 0 | 11,00,000 |
| 54 | 19 | 1,40,000 | 11,00,000 | 0 | 11,00,000 |
| 55 | 20 | 1,40,000 | 11,00,000 | 0 | 11,00,000 |
| 56 | 21 | 1,40,000 | 11,00,000 | 10,56,720 | 11,00,000 |
| 57 | 22 | 4,95,200 | 10,56,720 | ||
| IRR | 4.14% | 4.45% | |||
The above is the working of both endowment & regular income options. The IRR for Regular income is 4.14% & for the Endowment option is 4.45%. These rates are far below the bank FD rates. The pay-out which you receive will be meagre to meet any life goals.
TATA AIA Smart Income Plus vs. Other Investments:
When we analysed the IRR of Benefit illustration, they are not favourable to investors. So, investors need to look for other products for wealth creation. A similar cash flow as in the benefit illustration can be assumed.
An annualised premium of Rs.1 lakh can be split & invested. The sum assured for the pure term is Rs. 11 lakhs & the annual premium for the same is Rs. 10K. The term period is 21 years & the premium paying term is 10 years. For easy comparison, all assumptions are made similar to the illustration.
After paying the premium for the pure term insurance policy, the balance amount of Rs. 90 k can be invested in other investment products like PPF / ELSS.
Tata AIA Smart Income Plus Vs. PPF Vs. ELSS
Since investment in PPF has to be done for 15 years. A minimum subscription of Rs.500 is invested in the last 5 years. All other cash flows are assumed similar to the above illustration (endowment option).
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 35 | 0 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 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 | -97,500 | 11,00,000 | -1,00,000 | 11,00,000 |
| 45 | 10 | -500 | 11,00,000 | 0 | 11,00,000 |
| 46 | 11 | -500 | 11,00,000 | 0 | 11,00,000 |
| 47 | 12 | -500 | 11,00,000 | 0 | 11,00,000 |
| 48 | 13 | -500 | 11,00,000 | 0 | 11,00,000 |
| 49 | 14 | -500 | 11,00,000 | 0 | 11,00,000 |
| 50 | 15 | 0 | 11,00,000 | 0 | 11,00,000 |
| 51 | 16 | 0 | 11,00,000 | 0 | 11,00,000 |
| 52 | 17 | 0 | 11,00,000 | 0 | 11,00,000 |
| 53 | 18 | 0 | 11,00,000 | 0 | 11,00,000 |
| 54 | 19 | 0 | 11,00,000 | 0 | 11,00,000 |
| 55 | 20 | 0 | 11,00,000 | 0 | 11,00,000 |
| 56 | 21 | 24,79,860 | 11,00,000 | 66,36,598 | 11,00,000 |
| 57 | 22 | ||||
| IRR | 5.58% | 11.81% | |||
The IRR for Term insurance + PPF option is 5.58% & for Term insurance + ELSS is 11.81%. These investments help to have both life cover & wealth accumulation. The return on these investments is comparatively better than the Tata AIA Smart income plus. The return on the ELSS option is an inflation-beating rating.
Final Verdict on TATA AIA Smart Income Plus:
The lucidity of Tata AIA Smart Income Plus portrays it as a lucrative option for investors. All the benefits like Survival benefit, Maturity benefit & Death benefits under Tata AIA Smart Income Plus are defined & guaranteed. Investors are obsessed with the dual benefit of life protection & guaranteed maturity benefit. But, the point to be noted is the return on investment of Tata AIA Smart Income Plus is not even on par with Bank FD rates. Also, the life insurance coverage is inadequate.
Pure term insurance offers high coverage at a low premium than these endowment policies. So, investors should get a pure term insurance policy with adequate life cover. And the investment for future life goals has to be done separately. According to the risk appetite & time horizon, a suitable product with proper asset allocation helps achieve all your life goals.
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