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Creating a secure future and a comfortable lifestyle for self and one’s loved ones is the main goal for everyone.
A well-drafted investment portfolio will enable one to fulfill one’s aspirations by being by one’s side as a long-term companion.
Will Tata AIA Maha Life Gold fulfill both short-term as well as future horizon life needs & be your companion?
What are the advantages(pros) and disadvantages(cons) of this Tata AIA Maha Life Gold plan?
We are going to calculate the Internal Rate of Return(IRR) of this plan, which will in turn help you analyze whether this plan is good or bad in the long run compared to other investment options.
This article showcases the highlights of the plan & the potential return of the plan.
Let’s get started!
Table of Contents
1.)An over view of Tata AIA Maha Life Gold
2.)Key Features of Tata AIA Maha Life Gold – Analysis
3.)Eligibility Criteria of Tata AIA Maha Life Gold – Analysis with Illustration
4.)Review of Benefits under Tata AIA Maha Life Gold
- Maturity Benefit – Analysis
- Death Benefit – Analysis
- Guaranteed annual Coupons – Analysis
- Non-Guaranteed Cash Dividends – Analysis
5.)Review of Grace Period, Lapse, Reduced paid-up & Revival – Tata AIA Maha Life Gold
6.)Surrendering Tata AIA Life Maha Life Gold
7.)Advantages of Tata AIA Maha Life Gold– Analysis
8.)Disadvantages of Tata AIA Maha Life Gold– Analysis
9.)Analysis of Methodology Tata AIA Life Maha Life Gold
- Benefit Illustration – IRR(Internal Rate of Return i.e. Interest Rate) analysis
- Tata AIA Maha Life Gold Vs. Tata AIA Life Insurance Smart Value Income Plan – Review
- Tata AIA Maha Life Gold Vs. Tata AIA Life Insurance Diamond Savings Plan – Review
- Tata AIA Maha Life Gold Vs. Other Investment Products – Review Conclusion
11.)Tata AIA Maha Life Gold Vs. Term Insurance + other investment
12.)Final verdict on Tata AIA Maha Life gold
An Overview of Tata AIA Maha Life Gold
It is a Non-Linked, Participating, Whole Life Individual Savings Plan. Tata AIA Life Insurance Maha Life Gold provides a complete solution by ensuring that one creates a legacy for the next generation through annual returns and bonuses till 85 years of age or 100 years of age.
You can refer to the official brochure(pdf) of Tata AIA Maha Life Gold Policy for more details.
Key Features of Tata AIA Maha Life Gold – Analysis
- Enjoy lifelong coverage up to age 85 or age 100 by paying a premium for 6, 8, or 15 years.
- Guaranteed Annual Coupons starting from the 10th policy anniversary till maturity.
- Non-Guaranteed Cash Dividends annually from the 6th policy anniversary till maturity.
- Regular income for yourself and your family for a long period of time.
- Receive a lump sum at maturity in addition to the regular income.
- Option to enhance protection through Riders is available in Tata AIA Maha Life Gold Policy.
- Tax benefits u/s 80C and 10 (10D) of the Income -Tax Act, 1961.
Eligibility Criteria of Tata AIA Maha Life Gold – Analysis with Illustration
| Minimum Entry Age | 0 years (30 days) | ||
| Premium Payment Term/ Maximum Entry Age | 6 years | 8 years | 15 years |
| 55 years | 60 years | ||
| Maturity Age | 85 years OR 100 years | ||
| Policy Term | 85 years minus Entry Age OR
100 years minus Entry Age |
||
| Payment Mode | Annual / Semi-Annual / Monthly | ||
| Minimum Basic Sum Assured | ₹ 1,00,000 | ||
| Maximum Basic Sum Assured | No limit | ||
Review of Benefits under Tata AIA Maha Life Gold
Maturity Benefit – Analysis
You will receive Minimum Guaranteed Sum Assured on maturity which is equal to the Basic Sum Assured provided the Tata AIA Maha Life Gold policy is in force and all due premiums have been paid.
You will also receive the last Guaranteed Annual Coupon and last Non-Guaranteed Cash Dividend, if any, along with the Maturity Benefit.
Death Benefit – Analysis
In case of the unfortunate death of the Insured, before the Maturity of the Tata AIA Maha Life Gold Policy, the Sum Assured on death, subject to a minimum of 105% of total premiums received up to the date of death, will be payable to the nominee/legal heir provided the Policy is in force.
“Sum Assured on death” shall be the higher of the following in Tata AIA Maha Life Gold Policy:
- 10 times Annualised Premium
- Minimum Guaranteed Sum Assured on maturity.
Guaranteed Annual Coupons – Analysis
It will be payable at every Tata AIA Maha Life Gold policy anniversary starting from the 10th policy anniversary till maturity or till death of the Insured, whichever is earlier, provided the policy then is in force.
The Guaranteed Annual Coupon rate is ₹ 55 per 1,000 Basic Sum Assured.
Non-Guaranteed Cash Dividends – Analysis
It will be paid annually starting from the 6th Tata AIA Maha Life Gold policy anniversary. These dividends will be paid till the maturity of the plan or till the death of the Insured, whichever is earlier provided the Tata AIA Maha Life Gold policy then is in force for full Basic Sum Assured.
These are not guaranteed and will be based on the Company’s performance.
Review of Grace Period, Lapse, Reduced paid-up & Revival – Tata AIA Maha Life Gold
Grace period – Analysis
A grace period from the due date of 15 days for monthly mode and 30 days for all other modes, will be allowed for payment of each subsequent premium in Tata AIA Maha Life Gold Policy.
Lapse – Analysis
If the full premium for the first Tata AIA Maha Life Gold policy year is not paid within the grace period, after the first unpaid premium is due, the insurance will expire and no benefits will be given.
Reduced Paid-up – Analysis
The Tata AIA Maha Life Gold policy will be converted into a Reduced Paid-up policy by default, provided the full premium for at least the first policy year is paid and subsequent premiums remain unpaid.
Revival – Analysis
You may revive the lapsed Tata AIA Maha Life Gold policy within five years before the date of maturity and five years after the first unpaid premium’s due date.
Free Look Period – Analysis
If you are not satisfied with the terms & conditions/features of the Tata AIA Maha Life Gold Policy, within 15 days of the date you received the Policy, you have the option to cancel it.
The said period of 15 days shall stand extended to 30 days if the Tata AIA Maha Life Gold Policy is sourced through Sales other than in person.
Surrendering Tata AIA Life Maha Life Gold
The Tata AIA Life Maha Life Gold policy can be surrendered at any time during the term of the policy, provided at least the first full year’s premium has been paid.
The Tata AIA Life Maha Life Gold surrender value payable is higher than the Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).
Advantages of Tata AIA Maha Life Gold – Analysis
- Guaranteed payouts during the entire policy term (Whole life) act as a second source of income.
- A loan facility is available up to a maximum of 65% of the surrender value.
- Riders are available to enhance your life cover.
- Discount on premiums for higher sum assured.
- Maturity/death benefit acts as a legacy.
Disadvantages of Tata AIA Maha Life Gold – Analysis
- The payouts contain both guaranteed coupons & non-guaranteed cash benefits. So, you can’t earmark any particular expense.
- Also, the payout is not adjusted to inflation.
Analysis of Research Methodology – Tata AIA Life Maha Life Gold
Tata AIA Maha Life Gold offers continuous survival benefits. Guaranteed Annual coupons start from the end of the 10th policy anniversary. Cash dividends vary year after year & they start from the end of the 6th policy anniversary.
All these benefits are receivable for the whole policy term. To understand the cash flow & to find the potential return let us work out the Internal Rate of Return (IRR) for Tata AIA Maha Life Gold.
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Benefit Illustration – IRR (Internal Rate of Return i.e. Interest Rate) analysis
A 40-year-old male buys Tata AIA Maha Life Gold for a basic Sum Assured of ₹ 10 lakhs. The policy term is 60 years & the premium paying term is 15 years. Annualised premium is 1,49,030.
All the bonuses are included in the following calculation. Since it is a whole policy, we have assumed the life expectancy as 85 years of age.
| Male | 40 years Old |
| Basic Sum Assured | 10,00,000 |
| Policy Term | 60 years (100-40) |
| Premium Paying Term | 15 years |
| Annualised Premium | 1,49,030 |
The above illustration has been determined and calculated using assumed future investment returns of 4% and 8%.
These assumed rates of return are not guaranteed and these are not the upper (8%) and lower (4%) limits of what you might get back at maturity, the value of your Tata AIA Life Maha Life Gold policy is dependent on several factors, including future investment performance.
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 40 | 1 | -1,49,030 | 10,00,000 | -1,49,030 | 10,00,000 |
| 41 | 2 | -1,49,030 | 10,00,000 | -1,49,030 | 10,00,000 |
| 42 | 3 | -1,49,030 | 10,00,000 | -1,49,030 | 10,00,000 |
| 43 | 4 | -1,49,030 | 10,00,000 | -1,49,030 | 10,00,000 |
| 44 | 5 | -1,49,030 | 10,00,000 | -1,49,030 | 10,00,000 |
| 45 | 6 | -1,49,030 | 10,00,000 | -1,49,030 | 10,00,000 |
| 46 | 7 | -1,31,613 | 10,00,000 | -75,238 | 10,00,000 |
| 47 | 8 | -1,31,613 | 10,00,000 | -75,238 | 10,00,000 |
| 48 | 9 | -1,31,613 | 10,00,000 | -75,238 | 10,00,000 |
| 49 | 10 | -1,31,613 | 10,00,000 | -75,238 | 10,00,000 |
| 50 | 11 | -84,863 | 10,00,000 | -28,488 | 10,00,000 |
| 51 | 12 | -84,863 | 10,00,000 | -28,488 | 10,00,000 |
| 52 | 13 | -84,863 | 10,00,000 | -28,488 | 10,00,000 |
| 53 | 14 | -84,863 | 10,00,000 | -28,488 | 10,00,000 |
| 54 | 15 | -84,863 | 10,00,000 | -28,488 | 10,00,000 |
| 55 | 16 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 56 | 17 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 57 | 18 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 58 | 19 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 59 | 20 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 60 | 21 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 61 | 22 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 62 | 23 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 63 | 24 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 64 | 25 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 65 | 26 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 66 | 27 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 67 | 28 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 68 | 29 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 69 | 30 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 70 | 31 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 71 | 32 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 72 | 33 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 73 | 34 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 74 | 35 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 75 | 36 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 76 | 37 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 77 | 38 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 78 | 39 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 79 | 40 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 80 | 41 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 81 | 42 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 82 | 43 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 83 | 44 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 84 | 45 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 85 | 46 | 64,167 | 10,00,000 | 1,20,542 | 10,00,000 |
| 10,00,000 | 10,00,000 | ||||
| IRR | 1.71% | 4.89% | |||
The Internal rate of return(IRR) at the 4% scenario is calculated at 1.71 & the IRR at the 8% scenario is calculated at 4.89%.
These rates are far below Banking saving interest rates & Fixed interest rates respectively. Locking your fund for the whole life period at these low-interest rates is not advisable.
Tata AIA Life Maha Life Gold vs Other Investment Products
Any investment should align with your goals in terms of maturity. Even during the post-retirement period, instead of depending on the survival benefits from insurance policies or annuity plans, it is wise to accumulate the retirement corpus through a diversified portfolio.
The reason behind this is,
- Insurance policies typically require regular premium payments. These payments can be expensive, especially if you opt for policies with higher coverage or longer terms. If you fail to maintain premium payments, your coverage may lapse, and you may lose the benefits altogether.
- Over time, the value of the policy’s benefits may erode due to inflation. While the policy may provide a significant survival benefit today, inflation can decrease the purchasing power of that amount in the future. It is important to factor in inflation when evaluating the long-term benefits of an insurance policy.
The money spent on insurance premiums could potentially be used for other financial goals or investments.
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Tata AIA Maha Life Gold Vs. Term Insurance + other investment
Here at Tata AIA Maha Life Gold, the sum assured is very limited. Instead of this, you can opt for a pure-term policy with adequate life cover. These policies are available at affordable premiums with high coverage.
For your life goals, opting for money-back policies, endowment policies or annuity pan is not a wise option. You need to carefully assess your financial goals before selecting the investment product.
Different products have varying terms, conditions, and features, so it’s essential to thoroughly evaluate each product based on your specific needs and circumstances.
It is worth noting that, selecting pure term policy for life cover & investing separately for life goals is a perfect choice. By implementing this option, you will be able to meet all your goals down the lane.
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Tata AIA Maha Life Gold Vs. Tata AIA Life Insurance Smart Value Income Plan – Review
By guaranteeing that one leaves a legacy for the next generation through yearly returns and bonuses till 85 or 100 years of age, Tata AIA Life Insurance Maha Life Gold offers a total solution
Whereas, ‘Smart Value Income Plan’ offers you a life insurance policy and the chance to select and receive a cash bonus (if declared) up until the age of 100.
Tata AIA Life Insurance Smart Value Income Plan: An In-depth & Insightful Review
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Tata AIA Maha Life Gold Vs. Tata AIA Life Insurance Diamond Savings Plan – Review
An interesting similarity between the ‘Maha Life Gold’ & ‘Diamond Savings plan is that the Life cover could be enhanced with optional Riders in both policies.
You can read the complete review of Tata AIA Life Insurance Diamond Savings Plan below with IRR calculation and Illustration.
Tata AIA Life Insurance Diamond Savings Plan: Review (2023) – Is It Worth Buying?
Tata AIA Life Insurance Diamond Savings Plan: Review– Is It Worth Buying?| Holistic Investment| Youtube Review|
Tata AIA Maha Life Gold Vs. Other Investment Products – Review Conclusion
As we have discussed earlier,
The internal rate of return (IRR) is determined at 1.71% for a 4% scenario and at 4.89% for an 8% scenario.
These rates are significantly lower than the interest rates for banking savings and fixed loans, respectively. It is not advised to lock your money at these low-interest rates for your entire life.
After a thorough analysis of all other alternate investment options for
Tata AIA Maha Life Gold, the above insights still hold true and it is better to take Term Insurance and invest separately in PPF or ELSS.
Final verdict on Tata AIA Maha Life Gold – Good or Bad?
Tata AIA Maha Life Gold is a whole-life policy where you get the survival benefit even before the end of the premium paying term. Getting survival benefits in the initial stage of investment will reduce your return.
In general, you pay a premium for a limited period (accumulation phase) & you wait during the deferment period when your wealth actually grows. Finally, during the disbursement period, you start receiving survival benefits.
You would receive better benefits if the investment is allowed to compound.
Here at Tata AIA Maha Life Gold, you start receiving non-guaranteed benefits from the 6th policy anniversary & guaranteed benefits at the 10th policy anniversary.
This is the reason why you get poor returns under Tata AIA Maha Life Gold.
Like many policies in the bazaar, Insurance agents will push Tata AIA Maha Life Gold solely for their agent commission, stating that you start receiving survival benefit early & continues for your whole life.
But you can logically decide by calculating the IRR.
Locking your fund for this return for the whole life period is not advisable.
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