Tata AIA Life Insurance Wealth Pro Plan Review: Good or Bad?

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A smart way of creating wealth is converting your savings into gains.

A wide range of investments is available in the market to convert your savings into wealth.

Tata AIA has introduced a Life Insurance Plan called Wealth Pro which claims to help you grow your savings into wealth.

Let us uncover the truth behind this claim in this article with an in-depth Comparative IRR analysis.

What is Tata AIA Life Insurance Wealth Pro Plan?

Tata AIA Life Insurance Wealth Pro Plan is a Unit Linked, Individual, Life Insurance Savings plan.

In this plan, you have the power to choose the duration of your investments as well as the premium payment term.

Savings in this plan can help you fulfil your Medium to Long Term Financial Goals.

Features of the Tata AIA Life Insurance Wealth Pro Plan

Premium payment term as per your convenience – Single or Limited pay.
You receive regular Loyalty Additions to boost your investments.
For enhanced investment opportunities, you have a choice of 14 Fund options.
Option to customize your plan with a range of riders.
You have various investment strategies like Enhanced Systematic Money Allocation & Regular Transfer Investment Portfolio Strategy.

Eligibility Criteria for the Tata AIA Life Insurance Wealth Pro Plan

Minimum Issue Age (Age last birthday)	0 years (30 days)
Maximum Issue Age (Age last birthday)	60 years
Minimum Maturity Age (Age last birthday)	18 years
Maximum Maturity Age (Age last birthday)	75 years
Policy Term	15 to 40 years
Premium Paying Term	Single Pay Limited Pay – 5 /7 and10 years Regular /Limited Pay – 15 and 20 years
Pay Mode	Single, Annual, Semi-Annual, Quarterly, Monthly
Minimum Premium	Single Pay – 5,00,000 Regular/Limited Pay – 2,50,000 p.a.
Maximum Premium	No Limit
Minimum Basic Sum Assured	For Single Pay – 1.25 times the Single Premium Regular / Limited Pay – Higher of (10AP) OR (0.5Policy Term*AP)
Maximum Basic Sum Assured	For Single Pay – 1.25 times the Single Premium
	For Regular / Limited Pay –
	Entry Age band	Maximum Multiple of AP
	0 to 30	30
	31 to 40	20
	41 to 50	Higher of (Policy Term /2 or 15)
	51 to 60	Higher of (Policy Term /2 or 10)

Benefits under the Tata AIA Life Insurance Wealth Pro Plan

Maturity Benefit

On survival to the end of the policy term, you will receive the Total Fund Value, a 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 per cent 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 per cent 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 11^th policy year.

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

Investment Avenues & Fund options of the Tata AIA Life Insurance Wealth Pro Plan

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

You can choose from the 14 Investment Fund Options OR
Choose the following PORTFOLIO STRATEGY – Enhanced Systematic Money Allocation & Regular Transfer (Enhanced SMART)
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%

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 Life Insurance Wealth Pro Plan

The flexibility of Partial Withdrawals:

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. The policyholder can top up their premium 4 times per year. The minimum top-up premium amount is Rs. 5000.

Top-up Sum Assured:

The policyholder can increase 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 Annualized Premium,

Quarterly Premium = 0.25 of Annualized Premium,

Semi-annual premium = 0.50 of Annualized Premium

Settlement option:

You have the option to receive the maturity amount either in a lump sum or in instalments over a period of five years from the date of maturity.

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 Insurance Wealth Pro 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%
11^th 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 the 5^th 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 charges, so your premium is invested after the deduction of these charges. This in turn affects your yield. When other market-related products have an inflation-beating return, the charges under ULIPs make them unattractive among their competitors.

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

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 Life Insurance Wealth Pro Plan

If you disagree with the terms and conditions of the Tata AIA Life Insurance Wealth Pro Policy, you can return the policy within a period of 15 days from the date of receipt of the policy. The free look-up period will be extended up to 30 days if the policy is sourced through the distance marketing mode.

Surrendering the Tata AIA Life Insurance Wealth Pro Plan

You have the right to surrender the policy at any time during the Policy Term. The surrender benefit is equal to the Fund Value less than the applicable surrender/discontinuance charges. You can surrender your Tata AIA Life Insurance Wealth Pro Policy within five years of the Effective Date.

Advantages of the Tata AIA Life Insurance Wealth Pro Plan

You have the option to choose from 14 funds.
Top-up premiums increase the value of your investment.
The addition of loyalty will increase the fund’s worth.
Flexibility of additional coverage through riders.
There are no fees for Switching funds, partial withdrawals, and premium redirection.
The SMART method safeguards the entire investment from market volatility.
Settlement option can be exercised for maturity benefit.

Disadvantages of the Tata AIA Life Insurance Wealth Pro Plan

No liquidity during the lock-in period of 5 years.
The loan option is not available.
The premium will be invested in funds after deducting the charges.

For further details, refer to the Tata AIA Life Insurance Wealth Pro Policy Brochure.

Research Methodology

Any life insurance policy would be beneficial to you, only if it provides you with adequate life cover. Any investment would be beneficial only if the return is better than the inflation rate.

To analyze these two components of the Tata AIA Life Insurance Wealth Pro plan, a benefit illustration is generated from the Tata AIA Website Portal. We can calculate the Internal Rate of return of this plan & also compare the rate of return with other investments. Let’s get started.

IRR Analysis of the Tata AIA Life Insurance Wealth Pro Plan

Assumptions:

Male	35 years
Sum Assured	Rs. 1 Crore
Annual Premium	Rs. 5 Lakhs
Policy Term	15 Years
Premium Term	15 Years

The annual premium for a Sum Assured of Rs. 1 crore is Rs. 5 lakhs for a 35-year-old male. The policy term & the premium paying term is 15 years.

The fund value at the end of 15 years is calculated 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 option.

		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	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		86,97,597		1,21,37,597

	IRR	1.83%		5.81%

Based on the return assumption of 4%, the IRR is 1.83% & the 8% return is 5.81%. Even in the best-case scenario, the policy is not able to deliver a fixed instrument return. The fund value at the end of 15 years is the pre-tax amount.

The Finance Act, 2021, introduced certain provisions through amendments to Section 10(10D) and the applicability is from February 1, 2021. For the 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.

So, the post-tax IRR will be even lower than what we see in the table. On the whole, Tata AIA Wealth Pro is not beneficial for an investor.

Tata AIA Life Insurance Wealth Pro Plan Vs. Other Investment Choices

An analogy with other Investments is to give an idea of what other Investment Opportunities you have in the market & what would be the probable return from those investments.

The Sum Assured in the above illustration is Rs. 1 crore for a 35-year-old male for a 15-year Policy Term. For comparison, the same figures can be assumed in the alternate Investment Option as well.

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

Pure Term Life Insurance
Sum Assured	Rs. 1 Crore
Annual Premium	Rs. 12,500
Policy Term	15 Years
Premium Term	15 Years
Amount Left for Investment	Rs.4,87,500

A Pure Term Insurance for a Sum Assured of Rs. 1 crore would cost just Rs. 12,500 p.a. So, the balance amount of Rs. 4,87,500 can be invested for wealth accumulation purposes similar to the Tata AIA wealth Pro Plan. So, that life cover & investment – both the benefits could be achieved.

		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		1,32,21,680		1,90,60,502

	IRR	6.81%		10.98% (Post-tax)

A risk-averse investor can choose PPF for Investment & those who have a long time frame to achieve their financial goals & ready to take risks can opt for the ELSS Mutual Fund option. The IRR under both scenarios is beneficial to you as it is greater than the inflation rate.

The IRR for the Pure Term + PPF combo is 6.81% & for the Pure Term + ELSS combo is 10.98%. Here an important point to be noted is, the fund value mentioned is post-tax.

The earlier illustration of Tata AIA Wealth Pro Plan doesn’t consider the tax on maturity proceeds. Finally, after analyzing the IRR & comparing it with another investment avenue, it shows that the Tata AIA Wealth Pro Plan can’t help you in your Wealth Creation Process.

Final verdict on the Tata AIA Life insurance Wealth Pro Plan

An investment should always make your wealth keep pace with your financial dreams. This Tata AIA Wealth Pro Plan fails to fulfil your financial dreams by not generating an inflation-beating return for a policy term of 15 years.

As the plan is not lucrative in terms of return, the plan can’t be a part of your investment portfolio. The reason behind this low return is, that the charges under the plan & the tax exemption on maturity proceeds will not be applicable for policies exceeding the threshold of Rs. 2.5 lakh premium per annum.

Alternative investment options which are beneficial for you are taking a combination of Pure Term Insurance for life cover & investing your surplus for your life’s financial goals. This option would be more lucrative in terms of return than an insurance cum investment product.

You can always consult with your Financial Advisor to customize your Financial Plan and achieve better results with your Wealth Building Process.

Tata AIA Life Insurance Wealth Pro Plan Review: Good or Bad?

Table of Contents:

What is Tata AIA Life Insurance Wealth Pro Plan?

Features of the Tata AIA Life Insurance Wealth Pro Plan

Eligibility Criteria for the Tata AIA Life Insurance Wealth Pro Plan