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It is always wise to plan for important occasions such as saving for your children’s education, developing their careers, planning their wedding, a family vacation, owning a dream house, etc.
For this, you need to save & invest, so that no financial constraint comes in the way of the dreams and aspirations of your loved ones.
“Tata AIA Life Insurance Money Back Plus” assures you that you leave no stone unturned to add colors to your dreams!
What are the advantages(pros) and disadvantages(cons) of Tata AIA Life Insurance Money Back Plus?
We are also going to find out whether the IRR calculation of Tata AIA Life Insurance Money Back Plus is good or bad than the IRR of Term Insurance + PPF or ELSS.
This article will analyze whether this plan helps you build a strong savings foundation with adequate financial protection.
Table of Contents:
1.)An Overview of Tata AIA Money Back Plus
2.)Features of Tata AIA Money Back Plus Analysis
3.)Eligibility Criteria of Tata AIA Money Back Plus – Analysis
4.)Review of Benefits under Tata AIA Money Back Plus
- Survival Benefit Analysis
- Maturity Benefit Analysis
- Death Benefit Analysis
- Bonus Analysis
5.)Review of Grace Period, Lapse, Reduced paid-up & Revival- Tata AIA Money Back Plus
6.)Free Look Period of Tata AIA Money Back Plus – Analysis
7.)Surrendering Tata AIA Life Insurance Money Back Plus- Analysis
8.)Advantages of Tata AIA Money back Plus- Analysis
9.)Disadvantages of Tata AIA Money Back Plus- Analysis
10.)Benefit Illustration of Tata AIA Money Back Plus
- Benefit Illustration – IRR Analysis(Internal Rate of Return i.e. Interest Rate)
11.)Comparison with other investment Tata AIA Money Back Plus vs Other Investment Options
- Tata AIA Money back policy Vs. Term Insurance + PPF / ELSS
- Tata AIA Money Back Plus vs Tata AIA Life Guaranteed Return Plan
- Tata AIA Money Back Plus vs Tata AIA Life Insurance Value Income Plan
12.)Tata AIA Money Back Plus vs Other Investment Plans – Review Conclusion
13.)Final verdict on Tata AIA Money Back Policy– Good or Bad?
An Overview of Tata AIA Money Back Plus
It is a Non-Linked, Participating, Individual Life Insurance Savings Plan. It caters to your need for guaranteed cash inflow at regular intervals along with the protection of a life cover from uncertainties of life.
This plan gives you the flexibility to choose from various term options to suit your financial needs. This plan will enhance your savings through the accumulation of Compound Reversionary Bonuses throughout the term.
Please refer to the official brochure(pdf) of TATA AIA Money Back Plus for more information.
Features of Tata AIA Money Back Plus – Analysis
- Limited premium payment equal to half the Tata AIA Money Back Plus policy term.
- Life covers throughout the Tata AIA Money Back Plus policy term regardless of the survival payouts already paid.
- Survival payouts of up to 130% of the Sum are assured at regular intervals throughout the term.
- Additional protection in case of Accidental death through inbuilt Accident Benefit.
- Limited premium payment equal to half the Tata AIA Money Back Plus policy term.
- Lumpsum Maturity addition to meet your needs.
- Option to enhance protection through riders
- Tax benefits u/s 80C & 10(10D) of the Income-Tax Act, 1961.
Eligibility Criteria of Tata AIA Money Back Plus – Analysis
| Option 1 | Option 2 | Option 3 | |
| Policy Term | 16 years | 20 years | 24 years |
| Premium Payment Term | 8 years | 10 years | 12 years |
| Min Entry Age | 2 years | 0 years (30 days) | 0 years (30 days) |
| Max Entry Age | 51 years | ||
| Min Maturity Age | 18 years | ||
| Max Maturity Age | 75 years | ||
| Payment Mode | Annual/Semi-Annual/Monthly | ||
| Minimum Basic Sum Assured (in multiples of 1,000) | 2,00,000 | ||
| Maximum Basic Sum Assured | No limit | ||
Review of Benefits under Tata AIA Money Back Plus
Survival Benefit – Analysis
This Tata AIA Money Back Plus plan provides you with regular payouts as a percentage of the Basic Sum Assured (BSA) at equal intervals depending on the policy term chosen.
- Option 1: Policy Term 16 years – 20% of basic sum assured at the end of the 4th, 8th & 12th policy year.
- Option 2: Policy Term 20 years – 20% of basic sum assured at the end of the 5th, 10th & 15th Tata AIA Money Back Plus policy year.
- Option 3: Policy Term 24 years – 20% of basic sum assured at the end of the 6th, 12th & 18th Tata AIA Money Back Plus policy year.
Maturity Benefit – Analysis
On maturity (at the end of Tata AIA Money Back Plus policy term), Guaranteed Sum Assured on maturity along with vested Compound Reversionary Bonus and Terminal Bonus, if any, is payable.
Where, the “Guaranteed Sum Assured on maturity” shall be defined as a percentage of the Basic Sum Assured, depending on the option chosen, as provided below:
- Option 1: 50% of the Basic Sum Assured
- Option 2: 60% of the Basic Sum Assured
- Option 3: 70% of the Basic Sum Assured
Death Benefit – Analysis
In case of the unfortunate event of the death of the insured; the Sum Assured on death plus vested Compound Reversionary Bonus and Terminal Bonus, if any, will be payable. This total amount will be subject to a minimum of 105% of total premiums received up to the date of death.
Where “Sum Assured on death” shall be the higher of the following in Tata AIA Life Insurance Money Back Plus Policy :
- 10 times Annualised Premium
- Basic Sum Assured
Bonus – Analysis
Compound Reversionary Bonus (CRB): As long as the Tata AIA Money Back Plus insurance is active, CRB will begin to accrue annually as of the first policy anniversary. It will be payable on death or maturity or Surrender.
Terminal Bonus – Terminal Bonus will be a percentage of the vested Compound Reversionary Bonus. It will be payable on death, if the Tata AIA Money Back Plus policy is in force for 10 years, or on maturity
Review of Grace Period, Lapse, Reduced paid-up & Revival – Tata AIA Money Back Plus
Grace Period – Analysis
If you are unable to pay your Tata AIA Money Back Plus 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 in Tata AIA Money Back Plus Policy.
Lapse – Analysis
If the full premium for the first Tata AIA Money Back Plus policy year is not paid within the grace period, the policy will lapse from the due date of the first unpaid premium and no benefits will be payable.
Reduced Paid-up – Analysis
The Tata AIA Money Back Plus policy will be converted into a Reduced Paid-up policy by default, provided the full premium for at least the first Tata AIA Money Back Plus policy year is paid and subsequent premiums remain unpaid.
Revival- Analysis
Tata AIA Money Back Plus Policies can be revived within five years from the payment of all due premiums and interest by the first unpaid premium’s due date.
Free Look Period of Tata AIA Money Back Plus – Analysis
If you are not satisfied with the terms & conditions/features of the Tata AIA Money Back Plus Policy, you have the right to cancel the Tata AIA Money Back Plus 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 Policy is sourced through Sales other than in person.
Surrendering Tata AIA Life Insurance Money Back Plus – Analysis
The Tata AIA Life Insurance Money Back Plus 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 surrender value payable in TATA AIA Money Back Plus Policy is higher than the Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).
Advantages of Tata AIA Money back Plus – Analysis
- Premium paying & Tata AIA Money Back Plus policy terms can be chosen based on your convenience.
- Guaranteed benefit at regular intervals.
- Accidental death benefit is an in-built rider.
- 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.
Disadvantages of Tata AIA Money Back Plus – Analysis
- Compound Reversionary Bonus will be declared by the Company annually & it will vary.
- The survival benefit doesn’t help to meet your timely requirement.
- Though the maturity benefit is guaranteed, it will not suffice to meet your goals.
Benefit Illustration of Tata AIA Money Back Plus
Any investment plan needs to be analyzed based on the cash flow & the return percentage. Here, in Tata AIA Money back policy, you get regular cash flow at a predetermined interval. Also, the final maturity amount includes a bonus. Let us understand how the cash flow works under Tata AIA’s money-back policy using a benefit illustration.
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Benefit Illustration – IRR Analysis(Internal Rate of Return i.e. Interest Rate)
A 35-year-old male purchases a Tata AIA Money back policy for a basic sum assured of 10 lakhs. The premium paying term is 10 years & the policy term is 20 years.
The annualised premium is ₹ 1,16,200. He gets survival benefit (20% of Basic Sum Assured) at the end of the 5th, 10th & 15th year & the final maturity at the end of the 20th year.
| Male | 35 years old |
| Basic Sum Assured | 10,00,000 |
| Annualised premium | 1,16,200 |
| Policy term | 20 years |
| Premium Paying Term | 10 years |
The above bonus illustration has been determined using assumed future investment returns of 8% and 4% respectively. There are no upper and lower limits to what you might get at maturity, and these aforementioned rates of return are not guaranteed. Future investment performance is one of many variables that will affect how much your policy is worth.
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -1,16,200 | 10,00,000 | -1,16,200 | 10,00,000 |
| 36 | 2 | -1,16,200 | 10,00,000 | -1,16,200 | 10,00,000 |
| 37 | 3 | -1,16,200 | 10,00,000 | -1,16,200 | 10,00,000 |
| 38 | 4 | -1,16,200 | 10,00,000 | -1,16,200 | 10,00,000 |
| 39 | 5 | -1,16,200 | 10,00,000 | -1,16,200 | 10,00,000 |
| 40 | 6 | 83,800 | 10,00,000 | 83,800 | 10,00,000 |
| 41 | 7 | -1,16,200 | 10,00,000 | -1,16,200 | 10,00,000 |
| 42 | 8 | -1,16,200 | 10,00,000 | -1,16,200 | 10,00,000 |
| 43 | 9 | -1,16,200 | 10,00,000 | -1,16,200 | 10,00,000 |
| 44 | 10 | -1,16,200 | 10,00,000 | -1,16,200 | 10,00,000 |
| 45 | 11 | 2,00,000 | 10,00,000 | 2,00,000 | 10,00,000 |
| 46 | 12 | 0 | 10,00,000 | 0 | 10,00,000 |
| 47 | 13 | 0 | 10,00,000 | 0 | 10,00,000 |
| 48 | 14 | 0 | 10,00,000 | 0 | 10,00,000 |
| 49 | 15 | 0 | 10,00,000 | 0 | 10,00,000 |
| 50 | 16 | 2,00,000 | 10,00,000 | 2,00,000 | 10,00,000 |
| 51 | 17 | 0 | 10,00,000 | 0 | 10,00,000 |
| 52 | 18 | 0 | 10,00,000 | 0 | 10,00,000 |
| 53 | 19 | 0 | 10,00,000 | 0 | 10,00,000 |
| 54 | 20 | 0 | 10,00,000 | 0 | 10,00,000 |
| 10,23,966 | 10,00,000 | 17,06,965 | 10,00,000 | ||
| IRR | 2.96% | 5.70% | |||
In the above illustration, The IRR under the 4% scenario is calculated at 2.96% & The IRR under the 8% scenario is calculated at 5.7%.
Even though you get regular cash flow, if you work out the Internal Rate of Return, it is evident that the return couldn’t beat inflation.
Tata AIA Money Back Plus vs Other Investment Options
In this segment, we will try to match the cash flow of Tata AIA Money Back Plus in other investments for comparison. So, that we can have a better idea & clear picture. The Annual premium of 1.16 lakhs is utilised for life cover & investment.
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Tata AIA Money Back Plus policy Vs. Term Insurance + PPF / ELSS
A pure term policy for a sum assured of 10 lakhs would cost ₹ 8,700 p.a. Out of 1.16 lakhs after the payment of the Term insurance premium, the balance amount of 1,07,500 can be utilised for wealth accumulation.
| Pure Term Insurance | |
| Basic Sum Assured | 10,00,000 |
| Annualised premium | 8,700 |
| Policy term | 20 years |
| Premium Paying Term | 10 years |
| Investment | 107500 |
PPF
Lock-in period – 15 years & then extended for 5 years.
Since the premium paying term & the lock-in don’t match. So, during the 11 -15 years period, a minor adjustment was made. A minimum contribution of ₹ 500 is invested.
Withdrawal (to match the survival benefit)-
Partial withdrawals from PPF can be made from the 6th financial year after the account is opened. The maximum amount that can be withdrawn per financial year is the lower of the following:
50% of the account balance as at the end of the financial year, preceding the current year, or
50% of the account balance as of the end of the 4th financial year, preceding the current year.
ELSS
Withdrawal (to match the survival benefit)-
Units are withdrawn in the respective year. Here there may not arise a chance of capital gains tax. Because there is an exemption of gains up to ₹ 1 lakh in a financial year.
In the final maturity proceed, there is a capital gains tax. We have given the tax calculation below. The post-tax maturity value is taken for IRR calculation.
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 35 | 1 | -1,16,200 | 10,00,000 | -1,16,200 | 10,00,000 |
| 36 | 2 | -1,16,200 | 10,00,000 | -1,16,200 | 10,00,000 |
| 37 | 3 | -1,16,200 | 10,00,000 | -1,16,200 | 10,00,000 |
| 38 | 4 | -1,16,200 | 10,00,000 | -1,16,200 | 10,00,000 |
| 39 | 5 | -1,16,200 | 10,00,000 | -1,16,200 | 10,00,000 |
| 40 | 6 | 83,800 | 10,00,000 | 83,800 | 10,00,000 |
| 41 | 7 | -1,16,200 | 10,00,000 | -1,16,200 | 10,00,000 |
| 42 | 8 | -1,16,200 | 10,00,000 | -1,16,200 | 10,00,000 |
| 43 | 9 | -1,16,200 | 10,00,000 | -1,16,200 | 10,00,000 |
| 44 | 10 | -1,13,700 | 10,00,000 | -1,16,200 | 10,00,000 |
| 45 | 11 | 1,99,500 | 10,00,000 | 2,00,000 | 10,00,000 |
| 46 | 12 | -500 | 10,00,000 | 0 | 10,00,000 |
| 47 | 13 | -500 | 10,00,000 | 0 | 10,00,000 |
| 48 | 14 | -500 | 10,00,000 | 0 | 10,00,000 |
| 49 | 15 | -500 | 10,00,000 | 0 | 10,00,000 |
| 50 | 16 | 2,00,000 | 10,00,000 | 2,00,000 | 10,00,000 |
| 51 | 17 | 0 | 10,00,000 | 0 | 10,00,000 |
| 52 | 18 | 0 | 10,00,000 | 0 | 10,00,000 |
| 53 | 19 | 0 | 10,00,000 | 0 | 10,00,000 |
| 54 | 20 | 0 | 10,00,000 | 0 | 10,00,000 |
| 19,34,010 | 10,00,000 | 41,75,949 | 10,00,000 | ||
| IRR | 6.40% | 10.88% | |||
ELSS Tax calculation
| Maturity value after 20 years | 44,83,895.00 |
| Less | |
| Purchase price | 13,04,436.00 |
| Long-term capital gains | 31,79,459.00 |
| Exemption limit | 1,00,000.00 |
| Taxable LTCG | 30,79,459.00 |
| Tax paid on LTCG | 3,07,945.90 |
| Maturity value after tax | 41,75,949.10 |
The IRR of the PPF investment component is calculated at 6.40%. The IRR of the ELSS investment component is calculated at 10.88%.
The returns would be even higher if we do not disturb the growth of the investment. Tata AIA money back yields lesser return because it disturbs the power of compounding (dispersal of survival benefit).
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Tata AIA Money Back Plus vs Tata AIA Life Guaranteed Return Plan
Both the plans are individual, non-linked, life insurance savings plans but ‘Money Back’ is a participating plan whereas ‘Guaranteed Return’ is a non-participating plan.
Please check out our review below for the good and bad aspects of this 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|
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Tata AIA Money Back Plus vs Tata AIA Life Insurance Value Income Plan
Both the ‘Money Back’ and ‘Value Income’ policies are individual, non-linked, participating life insurance savings plans. The Value Income plan has 2 plan options which are Endowment and Endowment with life insurance that lasts until age 100.
Tata AIA Life Insurance Value Income Plan – Review (2023) – Is it Good or Bad?
Tata AIA Life Insurance Value Income Plan – Review – Is it Good or Bad? |Youtube Review|
Tata AIA Money Back Plus vs Other Investment Plans – Review Conclusion
After a thorough and deep analysis of all other alternative investment options for Tata AIA Money Back Policy, as we have discussed earlier, the IRR(Internal Rate of Return i.e. Interest Rate) of the PPF investment component is calculated at 6.40%. The IRR of the ELSS investment component is calculated at 10.88%.
The returns would be even higher if we do not disturb the growth of the investment. Tata AIA money back yields lesser return because it disturbs the power of compounding (dispersal of survival benefit).
Term Insurance + PPF or ELSS is a far better option compared to Tata AIA Money Back Policy.
Final verdict on Tata AIA Money Back Plus Policy – Good or Bad?
Tata AIA Money back policy comes under cashback policies or endowment plans which provide periodic payments to the policyholder during the policy term.
The survival benefit often ended up in utilising for the discretionary expense. Moreover, the final maturity amount is non-guaranteed.
The periodic payments provided by this policy may not keep pace with inflation.
By investing in this Tata AIA Money Back Plus policy, you may miss out on potentially higher returns from other investment avenues. Even to receive the full benefits, you need to continue the plan till maturity.
But still, why do insurance agents keep pushing this plan to you? Like many policies in the bazaar, this Tata AIA Money Back Plus Policy pays them a high agent commission.
It’s essential to carefully assess your financial goals, risk tolerance, and investment options before opting for a money-back policy or any other financial product. Consulting with a financial advisor can help you make an informed decision based on your specific circumstances.
Are you someone who is drowned in social media sites like Facebook, Twitter, Quora, etc to find a comprehensive financial planning option? Please come out of it and consult a professional financial planner.
Good review with Great insights!