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Tata AIA Life Insurance Wealth Maxima Plan Review: Good or Bad

Tata AIA Life Insurance Wealth Maxima Plan Review: Good or Bad

by Holistic Leave a Comment | Filed Under: Insurance

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Aspiring for the best in life is a common dream for all.

A Proper Financial Plan provides you with the best under all circumstances.

Will Tata AIA Life Insurance Wealth Maxima Plan provide you with the best adequate financial support as an Investment cum Insurance Plan?

Let us review this plan and whether it could be in your Investment Portfolio or not.

Table of Contents:

1.)What is Tata AIA Wealth Maxima Plan??
2.)Features of the Tata AIA Wealth Maxima Plan
3.)Eligibility Criteria for the Tata AIA Wealth Maxima Plan
4.)Benefits under Tata AIA Wealth Maxima Plan

  • Maturity Benefit
  • Death Benefit
  • Loyalty Additions

5.)Investment Avenues & Fund options of the Tata AIA Wealth Maxima Plan
6.)Other Benefits of the Tata AIA Wealth Maxima Plan
7.)Various Charges under the Tata AIA Life Wealth Maxima Plan
8.)A Grace Period, Discontinuance & paid-up, Revival of the Tata AIA Life Insurance Wealth Maxima Plan
9.)Free Look-Up Period of the Tata AIA Wealth Maxima Plan
10.)Surrendering the Tata AIA Wealth Maxima Plan
11.) Advantages of the Tata AIA Wealth Maxima Plan
12.)Disadvantages of Tata AIA Wealth Maxima Plan
13.)Research Methodology
14.)IRR Analysis of the Tata AIA Life Insurance Wealth Maxima Plan
15.)Tata AIA Life Insurance Wealth Maxima Plan Vs Other Investments
16.)Final Verdict on the Tata AIA Wealth Maxima Plan

What is Tata AIA Wealth Maxima Plan?

It is a Unit Linked, Whole Life, Individual, Savings Plan that maximizes your long-term financial security.
It offers superlative investment avenues for all types of investors.
Savings in this plan can help you fulfil your Medium to Long Term Financial Goals such as your Children’s Education, Retirement Planning, and creating a legacy for future generations.

Features of the Tata AIA Wealth Maxima Plan

  • Whole Life Cover – Pay premiums once or for a limited period and get Insurance protection for the entire life.
  • Regular Loyalty Additions will boost your fund value.
  • It offers a wide range of investment opportunities with 14 fund options.
  • Riders can be added to the base policy.
  • Choice of Enhanced Systematic Money Allocation & Regular Transfer Investment Portfolio Strategy.
  • Tax benefit as per sec 80 C & Sec 10 (10D).

Eligibility Criteria for the Tata AIA Wealth Maxima Plan

The basic information about this plan is given at a glance below:

Minimum Issue Age (Age last birthday) 0 years (30 days)
Maximum Issue Age (Age last birthday) 60 years
Maximum Maturity Age (Age last birthday) 100 years
Policy Term 100 minus Issue Age
Premium Paying Term Single Pay
Limited Pay – 7 / 8 /9 /10 / 15 and 20 years
Pay Mode Single, Annual, Semi-Annual, Quarterly, Monthly
Minimum Premium Single Pay – 5,00,000
Limited Pay – 2,50,000 p.a.
Maximum Premium No Limit
Minimum/ Maximum Basic Sum Assured For Single Pay – 1.25 times the Single Premium
For Limited Pay – Higher of (10*AP) OR (0.5*Policy Term*AP)

Benefits under Tata AIA Wealth Maxima Plan

Maturity Benefit

On survival to the end of the policy term, you will receive the Total Fund Value which is the sum of Regular/ Single Premium Fund Value and Top-Up Premium Fund Value.

Death Benefit

In case of death of the Life Insured during the policy term and while the policy is in force, the Nominee/legal heir will get, Highest of

  • The Basic Sum Assured net of all “Deductible Partial Withdrawals,” if any, from the Regular/Single Premium Fund Value, or
  • The Regular/Single Premium Fund Value of this Policy or
  • 105 percent of the total Regular/Single Premiums paid up to the date of death.

In addition to this: The highest of the following is also payable provided the Policyholder has a Top-up Premium Fund Value.

  • The approved Top-up Sum Assured(s) or
  • Top-up Premium Fund Value of this Policy or
  • 105 percent of the total Top-up Premiums paid up to the date of death.

Loyalty Additions

Regular premium – 0.20% of the units will be credited to the respective fund every year starting from the 11th policy year till the end of the policy term.

Single premium – 0.35% of the units will be credited to the respective fund every year starting from the 6th policy year till the end of the policy term.

Investment Avenues & Fund options of the Tata AIA Wealth Maxima Plan

This product offers you the flexibility to invest in a manner that suits your investment risk profile and individual needs.

  1. You can choose from the 14 investment fund options OR
  2. Choose the following PORTFOLIO STRATEGY – Enhanced Systematic Money Allocation & Regular Transfer (Enhanced SMART)
  3. 14 Fund Options
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%
  1. Enhanced SMART option:

Under the Enhanced SMART option, the policyholder has the option to choose two funds: a debt-oriented fund and an equity-oriented fund.

Please refer to the table below for the choice of available funds:

Debt oriented funds Equity oriented funds
Whole Life Income Fund Multi Cap Fund
Whole Life Short-Term Fixed Income Fund India Consumption Fund
Top 50 Fund
Top 200 fund
Super Select Equity Fund
Large Cap Equity Fund
Whole Life Mid Cap Equity Fund

Here, the entire annual/single allocable premium will be parked in the chosen debt-oriented fund and then it will be systematically transferred into the equity fund that the policyholder chooses.

Other Benefits of the Tata AIA Wealth Maxima Plan

The flexibility of Partial Withdrawals:

Partial Withdrawals are allowed after five policy anniversaries. There are 4 partial withdrawals allowed per year. The minimum partial withdrawal amount is Rs. 5000 per year.

The flexibility of Top-ups:

Each top-up premium has 5 years lock-in period. It is not allowed during the last 5 years of the policy term. You can top up to 4 times in a policy year. The minimum top-up premium amount is Rs. 5000.

Top-up Sum Assured:

The policyholder can top up their sum assured when they top up their premium.

Top-up Sum Assured = 1.25 * Top-up premium

The flexibility of Premium Mode:

The policyholder can pay their 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

The flexibility of Additional Coverage:

The policyholder has the option to choose the optional riders.

  • 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

Single premium policyholders have an additional option to choose from.

Tata AIA Life Insurance Accidental Death and Dismemberment (Long Scale) (ADDL) Linked Rider.

Various Charges under the Tata AIA Life Wealth Maxima Plan

Premium Allocation Charges:

Premium Allocation Charge as a % of Annualised Premium
Premium Payment Term % of Annualised Premium
< 5,00,000 >=5,00,000
1 6.00% 5.5%
2 5.50% 5.0%
3 to 5 5.00% 4.5%
6 to 7 4.00% 3.5%
8 to 10 3.00% 2.5%
11th year onwards 1.50% 1.0%
Single pay 3% of Single Premium
Top-up premium 1.5% of top-up premium

Policy Administration Charge:

For Single Pay Option – 0.90% p.a. of Single Premium throughout the policy term

For Regular / Limited Pay Option – 0.75% p.a. of Annualised premium throughout the policy term

Fund Management Charges:

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:

Mortality charge = Sum at Risk (SAR) multiplied by the appropriate Mortality Rate for the month, calculated using the Life Assured’s age achieved.

Sample Age Mortality Charges per 1000 Sum at Risk (Rs) (per annum)
25 1.088
35 0.99
45 1.973
55 4.929

Discontinuance charges:

The discontinuance charge depends on the year of discontinuance, premium amount & premium paying term.

There is no discontinuance charge after 5th policy year.

Partial Withdrawal Charge:

There is no partial withdrawal charge.

Fund Switching Charge:

There are 12 switching charges free per policy term after that the policyholder needs to pay Rs. 100 per switch.

Premium Re-direction Charge:

There is no Premium Re-direction Charge.

Insight on Charges:

The plan levies various charges as discussed above. So, only the net premium is invested after the deduction of all these charges. This results in a dip in your yield. When other market-related products have an inflation-beating return, ULIPs couldn’t earn a better yield because of these charges.

A Grace Period, Discontinuance & paid-up, Revival of the Tata AIA Life Insurance Wealth Maxima Plan

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.

Discontinuance & Paid-up:

For Limited pay policies

Discontinuance of payment of premium during first five 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 after deducting applicable Discontinuance Charges.

The risk cover under the policy will stop and no further charges will be levied other than the Fund Management Charge. During this period, the Policyholder shall not be allowed to exercise Switches or Partial Withdrawals

Discontinuance of payment of premium post first five policy years (i.e., after the expiry of the Lock in Period) – the 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 policy.

Revival:

You will have the Revival Period of three years from the Date of Discontinuance to revive your policy.

Free Look-Up Period of the Tata AIA Wealth Maxima Plan

If you disagree with the terms and conditions of the Tata AIA Wealth Maxima Policy, you can return the policy within a period of 15 days from the date of receipt of the policy.

Your Free Look-Up Period will be extended up to 30 days if your policy is sourced through the distance marketing mode.

Surrendering the Tata AIA Wealth Maxima Plan

Within the lock-in period (5 years) – the surrender value i.e., the fund value less applicable discontinuance charges as on the date of discontinuance shall be credited to the ‘Discontinued Policy Fund’ as maintained by the Company.

The ‘Proceeds of the Discontinued Policy’ i.e., the fund value as on the date of discontinuance plus the entire income earned after deduction of the fund management charges, shall be paid to the 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 policyholder.

Advantages of the Tata AIA Wealth Maxima Plan

  • You get a Whole Life cover even if you pay a limited premium.
  • You have a wide spread of options to invest, there are 14 funds options.
  • Loyalty Additions increase your fund value.
  • If you have any lump sum, you can top-up the fund through the Top-up premium option.
  • The SMART investment strategy safeguards your investment from market volatility risk.
  • Riders can be added to the base policy to enhance the life cover.

There are no fees for Switching funds, partial withdrawals, and premium redirection

Disadvantages of Tata AIA Wealth Maxima Plan

  • The plan doesn’t offer liquidity in the first five policy years.
  • Your premium is not directly invested. Only the net premium after the deduction of all charges is invested.
  • Loan option is not available to meet any emergencies.
  • You cannot enjoy the benefits under the policy. The policy matures at the age of 100 years or the nominee will receive the death benefit.

You can go through the Tata AIA Wealth Maxima Policy Brochure for further details.

Research Methodology

To make an investment decision, the above information like features & benefits will not suffice.

We shall take the analysis to the next level to make an informed decision.

Let us try to estimate the return of this plan with the benefit illustration. So that we can compare the potential return of the Tata AIA Insurance Wealth Maxima with other investment alternatives.

IRR Analysis of the Tata AIA Life Insurance Wealth Maxima Plan

Assumptions for Analysis

Male 35 years
Sum Assured ₹ 87,50,000
Policy Term 65 years
Premium paying term 15 years
Annual premium ₹ 5 Lakhs

In the illustration, the policyholder is 35 years, so the policy term is 65 years (100 -35). The premium paying term is 15 years & the annualized premium is ₹ 5 lakhs. Let’s see what would be the maturity value at the age of 100 under two scenarios.

The fund value is based on the assumption that the fund earns a gross return of 8% or 4% at the best and worst-case scenarios respectively. Please note that the actual returns can vary depending on the performance of the chosen fund.

At 4% p.a. At 8% p.a.
Age Year Annualized premium / Maturity benefit Death benefit Annualized premium / Maturity benefit Death benefit
35 1 -5,00,000 87,50,000 -5,00,000 87,50,000
36 2 -5,00,000 87,50,000 -5,00,000 87,50,000
37 3 -5,00,000 87,50,000 -5,00,000 87,50,000
38 4 -5,00,000 87,50,000 -5,00,000 87,50,000
39 5 -5,00,000 87,50,000 -5,00,000 87,50,000
40 6 -5,00,000 87,50,000 -5,00,000 87,50,000
41 7 -5,00,000 87,50,000 -5,00,000 87,50,000
42 8 -5,00,000 87,50,000 -5,00,000 87,50,000
43 9 -5,00,000 87,50,000 -5,00,000 87,50,000
44 10 -5,00,000 87,50,000 -5,00,000 87,50,000
45 11 -5,00,000 87,50,000 -5,00,000 87,50,000
46 12 -5,00,000 87,50,000 -5,00,000 87,50,000
47 13 -5,00,000 87,50,000 -5,00,000 87,50,000
48 14 -5,00,000 87,50,000 -5,00,000 87,50,000
49 15 -5,00,000 87,50,000 -5,00,000 87,50,000
50 16 0 87,50,000 0 87,50,000
51 17 0 87,50,000 0 87,50,000
52 18 0 87,50,000 0 87,50,000
53 19 0 87,50,000 0 87,50,000
54 20 0 87,50,000 0 87,50,000
55 21 0 87,50,000 0 87,50,000
56 22 0 87,50,000 0 87,50,000
57 23 0 87,50,000 0 87,50,000
58 24 0 87,50,000 0 87,50,000
59 25 0 87,50,000 0 87,50,000
60 26 0 87,50,000 0 87,50,000
61 27 0 87,50,000 0 87,50,000
62 28 0 87,50,000 0 87,50,000
63 29 0 87,50,000 0 87,50,000
64 30 0 87,50,000 0 87,50,000
65 31 0 87,50,000 0 87,50,000
66 32 0 87,50,000 0 87,50,000
67 33 0 87,50,000 0 87,50,000
68 34 0 87,50,000 0 87,50,000
69 35 0 87,50,000 0 87,50,000
70 36 0 87,50,000 0 87,50,000
71 37 0 87,50,000 0 87,50,000
72 38 0 87,50,000 0 87,50,000
73 39 0 87,50,000 0 87,50,000
74 40 0 87,50,000 0 87,50,000
75 41 0 87,50,000 0 87,50,000
76 42 0 87,50,000 0 87,50,000
77 43 0 87,50,000 0 87,50,000
78 44 0 87,50,000 0 87,50,000
79 45 0 87,50,000 0 87,50,000
80 46 0 87,50,000 0 87,50,000
81 47 0 87,50,000 0 87,50,000
82 48 0 87,50,000 0 87,50,000
83 49 0 87,50,000 0 87,50,000
84 50 0 87,50,000 0 87,50,000
85 51 0 87,50,000 0 87,50,000
86 52 0 87,50,000 0 87,50,000
87 53 0 87,50,000 0 87,50,000
88 54 0 87,50,000 0 87,50,000
89 55 0 87,50,000 0 87,50,000
90 56 0 87,50,000 0 87,50,000
91 57 0 87,50,000 0 87,50,000
92 58 0 87,50,000 0 87,50,000
93 59 0 87,50,000 0 87,50,000
94 60 0 87,50,000 0 87,50,000
95 61 0 87,50,000 0 87,50,000
96 62 0 87,50,000 0 87,50,000
97 63 0 87,50,000 0 87,50,000
98 64 0 87,50,000 0 87,50,000
99 65 0 87,50,000 0 87,50,000
100 3,33,39,190 30,92,97,860
IRR 2.59% 6.55%

The IRR at the 4% scenario is 2.59% & the IRR at the 8% scenario is 6.55%. But the maturity value we have calculated is for after 50 years. Locking funds at this rate for the long term is not beneficial for an investor. Moreover, here in the illustration, the annual premium is ₹5 lakhs.

The Finance Act, 2021, introduced certain provisions through amendments to Section 10(10D) and the applicability is from February 1, 2021. For the ULIP policies issued on or after February 1, 2021, having a premium of Rs 2.5 lakh or more for any of the previous years, then the amount received (including the bonus) at the time of maturity will be taxable.

The maturity value mentioned here is a pre-tax amount. Post-tax the IRR would be even lesser than what you see in the table.

Tata AIA Life Insurance Wealth Maxima Plan Vs Other Investments

As we discussed in the previous segment, locking funds at a rate that is lower than the inflation rate is not beneficial.

Let us look for other opportunities where you get a better return. Pre-term insurance for whole life cover could be chosen similarly to the illustration.

Pure Term cover for ₹ 1 crore would cost ₹1,26,500 for a premium paying term of 10 years. The balance amount could be invested in any other investment product.

Tata AIA Life Insurance Wealth Maxima Plan Vs. Pure Term Insurance + PPF / ELSS

We have assumed all the metrics similar to the illustration. But there might be some logical errors if we assume the same as in the above illustration. (Refer to the following ‘Assumptions in detail’ part),

Assumptions for Comparative Analysis

Pure Term Insurance policy
Sum Assured ₹ 1 Crore
Policy Term 65 years
Premium paying term 10 years
Annual premium ₹ 1,26,500
Balance amount to be invested in PPF / ELSS ₹ 3,73,500

Assumptions in detail

For the Whole Life Pure Term Insurance Policy, the premium paying term is for 10 years. So, in the initial 10 years, only the amount left out is invested. In the next 5 years, the whole amount is available for investment both for PPF & ELSS.

₹ 1.5 lakhs are the maximum amount that could be invested in a PPF A/C in a financial year. Here it is assumed that whatever amount is left is assumed to be invested in PPF A/C. This is just for comparison purposes only.

PPF A/C matures after 15 years. Thereafter, you can renew in a block of 5 years. In the previous illustration, the fund stays invested till the age of 100. We can’t renew for such a long period. So, we assume that the PPF maturity proceeds (after 15 years) are invested in a 7% return instrument till the age of 100 years.

ELSS fund has no limit on the maximum investment amount. So, after paying Pure Term Insurance Premium, the balance amount is fully invested in ELSS.

At the end of 15 years, the ELSS Post-tax Fund value is invested in a 7% return instrument till the age of 100 years.

Term Insurance + PPF Term insurance + ELSS
Age Year Term Insurance premium + PPF Death benefit Term Insurance premium + ELSS Death benefit
35 1 -5,00,000 1,00,00,000 -5,00,000 1,00,00,000
36 2 -5,00,000 1,00,00,000 -5,00,000 1,00,00,000
37 3 -5,00,000 1,00,00,000 -5,00,000 1,00,00,000
38 4 -5,00,000 1,00,00,000 -5,00,000 1,00,00,000
39 5 -5,00,000 1,00,00,000 -5,00,000 1,00,00,000
40 6 -5,00,000 1,00,00,000 -5,00,000 1,00,00,000
41 7 -5,00,000 1,00,00,000 -5,00,000 1,00,00,000
42 8 -5,00,000 1,00,00,000 -5,00,000 1,00,00,000
43 9 -5,00,000 1,00,00,000 -5,00,000 1,00,00,000
44 10 -5,00,000 1,00,00,000 -5,00,000 1,00,00,000
45 11 -5,00,000 1,00,00,000 -5,00,000 1,00,00,000
46 12 -5,00,000 1,00,00,000 -5,00,000 1,00,00,000
47 13 -5,00,000 1,00,00,000 -5,00,000 1,00,00,000
48 14 -5,00,000 1,00,00,000 -5,00,000 1,00,00,000
49 15 -5,00,000 1,00,00,000 -5,00,000 1,00,00,000
50 16 0 1,00,00,000 0 1,00,00,000
51 17 0 1,00,00,000 0 1,00,00,000
52 18 0 1,00,00,000 0 1,00,00,000
53 19 0 1,00,00,000 0 1,00,00,000
54 20 0 1,00,00,000 0 1,00,00,000
55 21 0 1,00,00,000 0 1,00,00,000
56 22 0 1,00,00,000 0 1,00,00,000
57 23 0 1,00,00,000 0 1,00,00,000
58 24 0 1,00,00,000 0 1,00,00,000
59 25 0 1,00,00,000 0 1,00,00,000
60 26 0 1,00,00,000 0 1,00,00,000
61 27 0 1,00,00,000 0 1,00,00,000
62 28 0 1,00,00,000 0 1,00,00,000
63 29 0 1,00,00,000 0 1,00,00,000
64 30 0 1,00,00,000 0 1,00,00,000
65 31 0 1,00,00,000 0 1,00,00,000
66 32 0 1,00,00,000 0 1,00,00,000
67 33 0 1,00,00,000 0 1,00,00,000
68 34 0 1,00,00,000 0 1,00,00,000
69 35 0 1,00,00,000 0 1,00,00,000
70 36 0 1,00,00,000 0 1,00,00,000
71 37 0 1,00,00,000 0 1,00,00,000
72 38 0 1,00,00,000 0 1,00,00,000
73 39 0 1,00,00,000 0 1,00,00,000
74 40 0 1,00,00,000 0 1,00,00,000
75 41 0 1,00,00,000 0 1,00,00,000
76 42 0 1,00,00,000 0 1,00,00,000
77 43 0 1,00,00,000 0 1,00,00,000
78 44 0 1,00,00,000 0 1,00,00,000
79 45 0 1,00,00,000 0 1,00,00,000
80 46 0 1,00,00,000 0 1,00,00,000
81 47 0 1,00,00,000 0 1,00,00,000
82 48 0 1,00,00,000 0 1,00,00,000
83 49 0 1,00,00,000 0 1,00,00,000
84 50 0 1,00,00,000 0 1,00,00,000
85 51 0 1,00,00,000 0 1,00,00,000
86 52 0 1,00,00,000 0 1,00,00,000
87 53 0 1,00,00,000 0 1,00,00,000
88 54 0 1,00,00,000 0 1,00,00,000
89 55 0 1,00,00,000 0 1,00,00,000
90 56 0 1,00,00,000 0 1,00,00,000
91 57 0 1,00,00,000 0 1,00,00,000
92 58 0 1,00,00,000 0 1,00,00,000
93 59 0 1,00,00,000 0 1,00,00,000
94 60 0 1,00,00,000 0 1,00,00,000
95 61 0 1,00,00,000 0 1,00,00,000
96 62 0 1,00,00,000 0 1,00,00,000
97 63 0 1,00,00,000 0 1,00,00,000
98 64 0 1,00,00,000 0 1,00,00,000
99 65 0 1,00,00,000 0 1,00,00,000
100 88,67,28,840 1,25,80,16,888
IRR 6.62% 7.25%

The tax calculation for ELSS: (Post-tax Fund Value is invested for the next 50 years)

Pre-tax Fund Value 1,64,94,922
LTCG 1,02,59,922
LTCG exemption 1,00,000
Taxable Gains 1,01,59,922
Tax payable 10,15,992
Post-tax fund value 1,54,78,929

The maturity value (after 15 years) from PPF & ELSS funds are ₹ 1,09,10,516 & ₹ 1,54,78,929 respectively. This amount is invested in a 7% return instrument for another 50 years.

The maximum maturity value you can get under the Tata AIA Wealth Maxima is ₹30.92 crores. But here the maturity value at the age of 100 years in the PPF & ELSS investments are ₹ 88.67 crores & ₹ 125.80 crores. You could see a vast difference in the maturity value. It is almost 3 to 4 times the difference.

The IRR under the Pure Term Insurance + PPF is 6.62% & the Pure Term Insurance + ELSS is 7.25%. These investments comfortably beat inflation in the long run.

Hope this assumption & calculation helps you to forecast how the maturity value differs under each investment scenario in the long run. Now, you might get an idea that in the long run, the power of compounding works at its best.

Final Verdict on the Tata AIA Wealth Maxima Plan

By investing in the Tata AIA Wealth Maxima Plan, you get a whole life cover by paying a premium for a limited period. And at the same, it provides an opportunity to save for your long-term financial goal. The only advantage of this plan is it creates a lasting legacy for the next generation.

You can’t fully enjoy the maturity value. Either you can do partial withdrawal or you have to surrender the policy. The final proceeds – Maturity benefit (At the age of 100) or Death benefit could be enjoyed by your nominee or your loved ones. The fund value can’t support your emergencies in your old age.

The main negative part of combining your investment with a whole policy is that the investment gets locked during your lifetime.

Having a pure term policy for a term period that covers till your retirement will be a better alternative for life cover compared to the Tata AIA Life Insurance Wealth Maxima Plan.

You can invest in a well-diversified portfolio & build the required corpus for the rest of your life before  retirement.

You can always seek the guidance of a Professional Financial Advisor to help you with planning your life cover and retirement needs.

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