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Safeguarding your dreams at different life stages without sacrificing your basic needs requires a solid financial foundation. Creating a protection plan and building financial resources are both essential components of this process.
Can the Tata AIA POS Smart Income Plus plan provide financial security that guarantees a steady income stream?
Can the Tata AIA POS Smart Income Plus plan secure your family’s future while also building wealth?
Can the Tata AIA POS Smart Income Plus plan ensure financial stability while planning for life’s uncertainties?
In this detailed review, we will examine the plan’s features, advantages, disadvantages, and analyse the returns. We will also compare these returns with those of other investment options to provide a comprehensive understanding of the Tata AIA POS Smart Income Plus Plan.
Table of Contents:
What is the TATA AIA POS Smart Income Plus?
What are the features of the Tata AIA POS Smart Income Plus?
Who is eligible for the Tata AIA POS Smart Income Plus?
What are the benefits of the Tata AIA POS Smart Income Plus?
Grace period, Lapse and Reduced paid-up and Revival of Tata AIA POS Smart Income Plus
Free Look period of Tata AIA POS Smart Income Plus
Surrendering Tata AIA POS Smart Income Plus
What are the advantages of the Tata AIA POS Smart Income Plus?
What are the disadvantages of the Tata AIA POS Smart Income Plus?
Research Methodology of Tata AIA POS Smart Income Plus
Benefit Illustration – IRR Analysis of Tata AIA POS Smart Income Plus
Tata AIA POS Smart Income Plus vs. Other Investment
Tata AIA POS Smart Income Plus vs. Pure-term + ELSS
Final Verdict on Tata AIA POS Smart Income Plus
What is the TATA AIA POS Smart Income Plus?
Tata AIA POS Smart Income Plus is a Non-linked Non-participating Individual Life Insurance Savings Plan. Tata AIA POS Smart Income Plus Plan is a limited-pay income plan that meets tomorrow’s requirements along with protecting your loved ones and dreams as it ensures you guaranteed returns for the premium paid.
What are the features of the Tata AIA POS Smart Income Plus?
- Two Plan Options: Regular Income Benefit and Endowment Benefit
- Receive a Guaranteed Payout of 120% of the one Annualised premium under the Regular Income Benefit option
- Pay for 7 years, get life cover for 15 years
- Higher benefits for females between the ages of 11 to 50 years
- No medical examination of the life insured is required under the Tata AIA POS Smart Income Plus plan
- Tax benefit as per Sec 80C and Sec 10(10D)
Who is eligible for the Tata AIA POS Smart Income Plus?
| Minimum | Maximum | |
| Age at entry | 3years | 50 years |
| Age at Maturity | 18 years | 65 years |
| Policy Term | 15 years | |
| Premium paying term | 7 years | |
| Basic Sum Assured | 11 times the annualised premium | |
| Premium | ₹ 8,000 | ₹ 2,27,000 |
| Premium paying mode | Annual, Half-yearly, Quarterly, Monthly | |
What are the benefits of the Tata AIA POS Smart Income Plus?
1.) Survival benefit
Option1: Regular income benefit
Provided the Policy is in force and all due premiums have been paid, a Guaranteed Payout (GP) of 120% of the one Annualised Premium (AP) shall be payable annually.
The Income shall commence from the end of Policy year 9 and shall continue to be paid till maturity or the death of the Life Assured, whichever is earlier.
Option2: Endowment benefit
Provided the Policy is in force and all due premiums have been paid, a Guaranteed Payout (GP) determined as a multiple of the one Annualised Premium will be paid at the end of the Tata AIA POS Smart Income Plus Plan policy year preceding the year of Maturity. The GP factors vary by the chosen age and gender.
2.) Maturity benefit
Option1: Regular income benefit
Provided the Policy is in force and all due premiums have been paid, an amount equal to the Guaranteed Maturity Payout (GMP) will be paid as a lump sum at Maturity.
The last instalment of Guaranteed Payout will be paid along with the maturity benefit. The GMP will be equal to the GMP factor multiplied by one Annualised Premium.
Option 2: Endowment benefit
Provided the Policy is in force and all due premiums have been paid, the Guaranteed Sum Assured on Maturity which is equal to the Guaranteed Maturity Payout (GMP) will be paid at maturity. GMP is equal to Guaranteed Payout which was paid in the previous year.
3.) Death benefit
For Option I & Option II: On death of the Life Assured during the Tata AIA POS Smart Income Plus policy term, provided the policy is in force as of the date of death; the Sum Assured on death shall be payable irrespective of the survival benefits already paid.
“Sum Assured on Death” shall be the highest of the following:
- 11 times the Annualised Premium
- 105% of the Total Premiums Paid up to the date of death
- Guaranteed Sum Assured on Maturity; and
- The absolute amount assured to be paid on death
Grace period, Lapse and Reduced paid-up and Revival of Tata AIA POS Smart Income Plus
Grace Period
A grace period of 15 days for monthly mode and 30 days for all other modes, from the due date will be allowed for payment of each subsequent premium.
Lapse
When all the premiums for at least two (2) Policy years are not paid, including within the Grace Period, the Tata AIA POS Smart Income Plus policy shall lapse from the due date of the first unpaid premium and no benefits shall be payable.
However, if full premiums for at least two (2) Policy years have been paid and the subsequent premium remains unpaid within the Grace Period, the Tata AIA POS Smart Income Plus Policy will be converted into a Reduced Paid-up Policy by default
Revival
The Tata AIA POS Smart Income Plus policy may be revived, within 5 years after the due date of the first unpaid premium and before the date of maturity.
Free Look period of Tata AIA POS Smart Income Plus
You have a free look period of 15 days from the date of receipt of the policy document and a period of 30 days in case of Policy is obtained electronically or in distance mode, to review the terms and conditions of the Policy and if you disagree with any of those terms or conditions, you have the option to return the Policy.
Surrendering Tata AIA POS Smart Income Plus
The Tata AIA POS Smart Income Plus Policy can be surrendered at any time during the term of the Policy, provided total premiums of at least two (2) years have been paid. The Surrender Value payable is higher of Guaranteed Surrender Value or Special Surrender Value.
What are the advantages of the Tata AIA POS Smart Income Plus?
- Enjoy significant premium boosters for enhanced benefits.
- Access a policy loan of up to 80% of the surrender value.
- Customize your maturity benefits to suit your specific needs.
What are the disadvantages of the Tata AIA POS Smart Income Plus?
- The Tata AIA POS Smart Income Plus policy term and premium payment period are inflexible.
- The sum assured is relatively low.
- There is no lump sum maturity benefit, only the last instalment of survival benefit is given as maturity benefit.
Research Methodology of Tata AIA POS Smart Income Plus
The Tata AIA POS Smart Income Plan offers guaranteed benefits. However, it’s important to evaluate the plan in terms of the return percentage to ensure that you receive a fair maturity benefit at the end of the policy term and successfully achieve your financial goals.
Let’s calculate the Internal Rate of Return (IRR) based on the figures provided in the policy brochure.
Benefit Illustration – IRR Analysis of Tata AIA POS Smart Income Plus
A 35-year-old male purchases the Tata AIA POS Smart Income Plus plan with a sum assured of ₹5.5 lakhs. The policy term is 15 years, with a premium paying term of 7 years, and an annual premium of ₹50,000. He opts for the Endowment benefit option.
| Male | 35 years |
| Sum Assured | ₹ 5,50,000 |
| Policy Term | 15 years |
| Premium Paying Term | 7 years |
| Annualised Premium | ₹ 50,000 |
By consistently paying premiums, he becomes eligible for a maturity benefit at the end of the 14th and 15th years, receiving ₹2,76,500 annually in the final 2 years.
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -50,000 | 5,50,000 |
| 36 | 2 | -50,000 | 5,50,000 |
| 37 | 3 | -50,000 | 5,50,000 |
| 38 | 4 | -50,000 | 5,50,000 |
| 39 | 5 | -50,000 | 5,50,000 |
| 40 | 6 | -50,000 | 5,50,000 |
| 41 | 7 | -50,000 | 5,50,000 |
| 42 | 8 | 0 | 5,50,000 |
| 43 | 9 | 0 | 5,50,000 |
| 44 | 10 | 0 | 5,50,000 |
| 45 | 11 | 0 | 5,50,000 |
| 46 | 12 | 0 | 5,50,000 |
| 47 | 13 | 0 | 5,50,000 |
| 48 | 14 | 0 | 5,50,000 |
| 49 | 15 | 2,76,500 | 5,50,000 |
| 50 | 2,76,500 | ||
| IRR | 4.03% |
In this scenario, the IRR for the cash flow is calculated to be 4.03% as per the Tata AIA POS Smart Income Plus Plan maturity calculator.
Although the benefits are guaranteed, the return percentage is relatively low for a long-term investment.
Over the 15-year period, inflation is likely to increase the cost of your goals, making the maturity benefits from the Tata AIA POS Smart Income Plus plan insufficient to meet those objectives.
Tata AIA POS Smart Income Plus vs. Other Investment
Since the returns from the Tata AIA POS Smart Income Plus are not favourable for long-term investors, it’s essential to explore alternative investments and calculate their returns.
Endowment plans typically combine insurance and investment, but this alternative strategy separates them to assess their effectiveness individually.
Tata AIA POS Smart Income Plus vs. Pure-term + ELSS
For life coverage, a pure-term life insurance plan with a sum assured of ₹5.50 lakhs is available at an annual premium of ₹6,200. The policy term is 15 years, with a premium payment term of 5 years. In the previous example, the premium payment term was 7 years.
By choosing pure-term life insurance, you can invest the balance after paying the premium in the first five years, with the full amount available for investment in the following 2 years. This approach allows you to save ₹43,800 annually, which can be invested according to your risk tolerance.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 5,50,000 |
| Policy Term | 15 years |
| Premium Paying Term | 5 years |
| Annualised Premium | ₹ 6,200 |
| Investment | ₹ 43,800 |
| Age | Year | Term Insurance premium + ELSS | Death benefit |
| 35 | 1 | -50,000 | 5,50,000 |
| 36 | 2 | -50,000 | 5,50,000 |
| 37 | 3 | -50,000 | 5,50,000 |
| 38 | 4 | -50,000 | 5,50,000 |
| 39 | 5 | -50,000 | 5,50,000 |
| 40 | 6 | -50,000 | 5,50,000 |
| 41 | 7 | -50,000 | 5,50,000 |
| 42 | 8 | 0 | 5,50,000 |
| 43 | 9 | 0 | 5,50,000 |
| 44 | 10 | 0 | 5,50,000 |
| 45 | 11 | 0 | 5,50,000 |
| 46 | 12 | 0 | 5,50,000 |
| 47 | 13 | 0 | 5,50,000 |
| 48 | 14 | 0 | 5,50,000 |
| 49 | 15 | 5,20,668 | 5,50,000 |
| 50 | 5,20,668 | ||
| IRR | 9.79% |
In this scenario, an Equity Linked Savings Scheme (ELSS) fund, an equity-based instrument, is considered for investment. The redemption of the ELSS fund at maturity is subject to capital gains tax, with the pre-tax value of the fund at ₹11.26 lakhs and the post-tax value at ₹10.41 lakhs.
Similar to the Tata AIA POS Smart Income Plus, where the maturity benefit is received over the last 2 years, the ELSS redemption is also split over the last 2 years in this scenario. The IRR for this cash flow is 9.79% (post-tax return).
| ELSS Tax Calculation | |
| Maturity value after 14 years | 11,26,669 |
| Purchase price | 3,19,000 |
| Long-Term Capital Gains | 8,07,669 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 6,82,669 |
| Tax paid on LTCG | 85,334 |
| Maturity value after tax | 10,41,335 |
This alternative strategy underscores the advantages of separating insurance from investment, as the returns significantly outperform the rate of inflation.
The final maturity value helps you achieve your long-term financial goals. In contrast, the Tata AIA POS Smart Income Plus plan, with its lower returns, may not adequately support you in reaching your objectives.
Final Verdict on Tata AIA POS Smart Income Plus
Guaranteed payouts are a key feature of the Tata AIA Smart Income Plus Plan. These payouts can be customized according to your needs, either as regular income or through the endowment option.
However, while the guaranteed cash flow is appealing, it shouldn’t be the sole reason to invest in this plan. Return analysis reveals that it is a low-yield product.
The returns from the Tata AIA POS Smart Income Plan are generally low for a long-term investment. Additionally, aligning the guaranteed benefits with your financial goals can be challenging, and the life cover provided is insufficient and also has a high agent commission.
Overall, the Tata AIA POS Smart Income Plan is not an ideal choice for investors.
There are more effective investment options that can yield returns surpassing the inflation rate. Before investing, it’s crucial to evaluate your risk tolerance, time horizon, and life goals to select the most suitable products.
Adequate life cover is essential to support your financial plan, acting as a safety net during times of uncertainty.
A well-rounded financial plan is key to achieving all your goals. To build such a plan, consider consulting a Certified Financial Planner who can help you create a personalized financial strategy.
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