Categories: Insurance

Tata AIA Shubh Flexi Income Plan: Good or Bad? A Detailed Review

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Does the Tata AIA Shubh Flexi Income Plan truly offer financial flexibility, or are there hidden strings attached?

Does the Tata AIA Shubh Flexi Income Plan provide real value, or is it just marketing hype?

Can the Tata AIA Shubh Flexi Income Plan help you achieve your long-term financial goals, or will it fall short when you need it most?

In this review, we will analyse its features, benefits, and drawbacks, along with a detailed illustration.

What is the Tata AIA Shubh Flexi Income Plan?

TATA AIA Shubh Flexi Income Plan is an Individual, Non-Linked, Participating, Life Insurance Savings Plan.

It is a customizable savings plan that adapts to your financial goals, whether ensuring steady income for daily needs or planning for a comfortable retirement. It has a built-in financial security and growth potential.

What are the features of the Tata AIA Shubh Flexi Income Plan?

Three plan options to choose from:
a) Endowment – Lump sum payout at maturity
b) Early Income – Regular income starts early
c) Deferred Income – Regular income starts after deferment period
Higher Cash Bonus potential with the deferment option
Cover Continuance Benefit, ensuring:
a) Waiver of future premiums
b) Death benefit payout
c) Continuation of future benefit payouts
Waiver of Premium option to safeguard your loved ones:
a) Future premiums are waived
b) Life cover remains active
c) Benefit payouts continue
Flexibility to combine multiple plan options for a customized solution
Choice of life cover level based on individual needs

Who is eligible for the Tata AIA Shubh Flexi Income Plan?

Plan Parameters		Minimum		Maximum
Age at Entry		0 days		65 years
Age at Maturity		Cover till Age 100: 100 years		Cover till Age: 100 years
		Other than Cover till Age 100: 18 years		Other than Cover till age 100: 85 years
Premium Payment Term (PPT)	Option	Other than Cover till Age 100	Cover till Age 100	Other than Cover till Age 100	Cover till Age 100
	Option 1 – Endowment	Limited Pay –	NA	Limited Pay –	NA
		5 to 12 years		5 to 12 years
		Regular Pay: Same as Policy term		Regular Pay: Same as Policy term
		Single Pay		Single Pay
	Option 2- Early Income	Limited Pay: 5 years	Limited Pay: 5 years	Limited Pay: 12 years	Limited Pay: 12 years
		Regular Pay: Same as Policy term		Regular Pay: Same as Policy term
		Single Pay		Single Pay
	Option 3- Deferred Income	Limited Pay: 5 years		Limited Pay: 12 years
Policy Term (PT)	Option	Other than Cover till Age 100	Cover till Age 100	Other than Cover till Age 100	Cover till Age 100
	Option 1 – Endowment	10 years	NA	50 years	NA
	Option 2- Early Income	10 Years	Limited Pay: 100 minus Entry Age	Limited Pay:	Limited Pay:
			Regular Pay/Single Pay: NA	50 years, 60 – Entry Age, 85-Entry Age	100 – Entry Age
				Regular Pay/Single Pay: 50 years	Regular Pay/Single Pay: NA
	Option 3- Deferred Income	Limited Pay: 10 Years	100 minus Entry Age	Limited Pay:	100 – Entry Age
		Regular Pay/Single Pay: NA		50 years, 60 – Entry Age, 85-Entry Age
				Regular Pay/Single Pay: BA
Basic Sum Assured		Other than Single Pay:		No Limit, subject to the Board Approved Underwriting Policy (BAUP)
		Age at Entry less than 50 years:	₹ 84,000
		Age at Entry 50 years and Above:	₹ 60,000
		Single Pay: ₹ 15,000
Premium (Rs.)		Rs. 12,000 per annum		No limit, subject to the Board Approved Underwriting Policy
Premium Payment Mode		Annual / Half-yearly / Quarterly / Monthly
Income/Survival Benefit frequency		Annually in Advance/ Half-yearly in Advance / Quarterly in Advance / Monthly in Advance / Annually in Arrears / Half-yearly in Arrears / Quarterly in Arrears / Monthly in Arrears

What are the benefits of the Tata AIA Shubh Flexi Income Plan?

Death benefit

Option 1: Endowment

The Death Benefit shall be paid to the nominee, which is:

Sum Assured on Death plus:
Accrued Simple Reversionary Bonus (if any), plus
Interim Bonus (if any), plus
Terminal Bonus (if declared)

Further, the Death Benefit shall be a minimum of 105% of Total Premiums paid (excluding modal loadings).

Option 2: Early Income

The Death Benefit shall be paid to the nominee, which is:

Sum Assured on Death plus:
Interim Bonus (if any) plus
Terminal Bonus (if declared) plus
Sub-wallet Balance (if any)

Further, the Death Benefit shall be a minimum of 105% of Total Premiums paid (excluding modal loadings).

Option 3: Deferred Income

The Death Benefit shall be paid to the nominee, which is:

Sum Assured on Death plus:
Accrued Simple Reversionary Bonus (if any) plus
Interim Bonus (if any) plus iii. Terminal Bonus (if declared) plus
Sub-wallet Balance (if any)

Survival Benefit

Option 1: Endowment

No Survival Benefit is Payable

Option 2: Early Income and Option 3: Deferred Income

Provided the policy is in force and all due premiums have been paid, the TATA AIA Shubh Flexi Income Plan policyholder will receive a Cash Bonus, if declared, until death or end of policy term, whichever is earlier.

The survival benefit shall be payable after the end of the deferment period as per the payout frequency chosen by the policyholder.

Maturity Benefit

Option 1: Endowment

At the end of the TATA AIA Shubh Flexi Income Plan Policy Term, the Maturity Benefit will be:

Sum Assured on Maturity plus
Accrued Reversionary Bonus (if any), plus
Terminal Bonus on Maturity (if declared).

Option 2: Early Income

At the end of the TATA AIA Shubh Flexi Income Plan Policy Term, the Maturity Benet will be:

Sum Assured on Maturity plus
Balance in Sub-wallet (if any) plus
Terminal Bonus on Maturity (if declared).

Option 3: Deferred Income

At the end of the TATA AIA Shubh Flexi Income Plan Policy Term, the Maturity Benet will be:

Sum Assured on Maturity plus
Any Accrued Reversionary Bonus, plus
Terminal Bonus on Maturity (if declared), plus
Balance in Sub-wallet, if any

Grace Period, Lapse and Paid-up policy and Revival of Tata AIA Shubh Flexi Income Plan

Grace Period

A Grace Period of fifteen (15) days for the monthly mode and thirty (30) days for all other modes from the due date will be allowed for payment of each subsequent premium.

Lapse

On discontinuance of payment of premium during the first policy year, the TATA AIA Shubh Flexi Income Plan policy will lapse, and no further benefits shall be paid.

Paid-up

On discontinuance of payment of premium any time after the payment of the first year’s premium, it will be made Reduced Paid-up at the end of the grace period.

Revival

The TATA AIA Shubh Flexi Income Plan policy can be revived within the period of 5 years from the due date of the first unpaid premium by payment of all due premiums together.

Free Look period for Tata AIA Shubh Flexi Income Plan

If the Policyholder is not satisfied with the terms & conditions of the policy, s/he has the right to cancel the Policy within 30 days, whether received electronically or otherwise after the Policyholder receives the Policy Document.

Surrendering Tata AIA Shubh Flexi Income Plan

A Surrender value shall be payable on completion of one policy year, provided one full year’s premium is paid in case of a Regular/Limited Pay policy, and the same shall be payable immediately on payment of the single premium in case of a Single Pay policy.

The surrender value payable is higher of the Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).

What are the advantages of the Tata AIA Shubh Flexi Income Plan?

Optional Add-ons: Cover Continuance Benefit and Waiver of Premium Benefit can be added for enhanced protection.
Future Cash Bonuses will be paid on the selected Special Date.
Flexible Benefit Withdrawal: At inception or anytime during the policy term, the policyholder can choose to receive full or partial benefits in their Sub-Wallet.
Premium Adjustment Option: For non-single pay policies, cash bonuses (if any) can be used to adjust future premium payments.
Customizable Cash Bonus Payouts: Under Early Income and Deferred Income options, cash bonuses can be received annually, half-yearly, quarterly, or monthly as per preference.
Exclusive Discounts: Special discounts are available for existing customers and women policyholders.

What are the disadvantages of the Tata AIA Shubh Flexi Income Plan?

Limited Life Coverage: The plan offers inadequate protection.
Lower Returns with Early Survival Benefits: Opting for early payouts reduces overall returns.
Relatively Modest Returns: The plan may not provide competitive returns compared to other investment options.
Fluctuating Survival Benefits: Payouts vary due to the dependency on bonuses.

Research Methodology of Tata AIA Shubh Flexi Income Plan

The Tata AIA Shubh Flexi Income Plan offers a key investment feature that allows policyholders to pay premiums for a limited period while choosing to receive survival benefits early or defer them.

The maturity benefit is provided at the end of the policy term. However, to make an informed decision, it is crucial to analyse the cash flow in terms of return percentages.

Benefit Illustration – IRR Analysis of Tata AIA Shubh Flexi Income Plan

Let’s consider a 30-year-old male opting for this plan with a 30-year policy term and a 10-year premium payment term, contributing an annual premium of ₹1,00,000. The base sum assured is ₹11 lakhs, and he selects Plan Option 1: Endowment, where the payout is received only at maturity.

Male	30 years
Sum Assured	₹ 11,00,000
Policy Term	30 years
Premium Paying Term	10 years
Annualised Premium	₹ 1,00,000

The illustration assumes investment returns of 4% and 8%, though these are not guaranteed and may vary based on actual policy 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	-1,00,000	11,00,000	-1,00,000	11,00,000
41	2	-1,00,000	11,00,000	-1,00,000	11,00,000
42	3	-1,00,000	11,00,000	-1,00,000	11,00,000
43	4	-1,00,000	11,00,000	-1,00,000	11,00,000
44	5	-1,00,000	11,00,000	-1,00,000	11,00,000
45	6	-1,00,000	11,00,000	-1,00,000	11,00,000
46	7	-1,00,000	11,00,000	-1,00,000	11,00,000
47	8	-1,00,000	11,00,000	-1,00,000	11,00,000
48	9	-1,00,000	11,00,000	-1,00,000	11,00,000
49	10	-1,00,000	11,00,000	-1,00,000	11,00,000
50	11	0	11,00,000	0	11,00,000
51	12	0	11,00,000	0	11,00,000
52	13	0	11,00,000	0	11,00,000
53	14	0	11,00,000	0	11,00,000
54	15	0	11,00,000	0	11,00,000
55	16	0	11,00,000	0	11,00,000
56	17	0	11,00,000	0	11,00,000
57	18	0	11,00,000	0	11,00,000
58	19	0	11,00,000	0	11,00,000
59	20	0	11,00,000	0	11,00,000
60	21	0	11,00,000	0	11,00,000
61	22	0	11,00,000	0	11,00,000
62	23	0	11,00,000	0	11,00,000
63	24	0	11,00,000	0	11,00,000
64	25	0	11,00,000	0	11,00,000
65	26	0	11,00,000	0	11,00,000
66	27	0	11,00,000	0	11,00,000
67	28	0	11,00,000	0	11,00,000
68	29	0	11,00,000	0	11,00,000
69	30	0	11,00,000	0	11,00,000
70		20,95,620		55,96,730

	IRR	2.93%		6.91%

At a 4% return, the estimated maturity payout is ₹20.95 lakhs, resulting in an Internal Rate of Return (IRR) of 2.93% as per the TATA AIA Shubh Flexi Income Plan maturity calculator, which is lower than typical savings account interest rates.

At an 8% return, the projected maturity payout is ₹55.96 lakhs, yielding an IRR of 6.91% as per the TATA AIA Shubh Flexi Income Plan maturity calculator, which is comparable to or sometimes lower than bank fixed deposit interest rates.

Despite the long 30-year investment horizon, the returns from the Tata AIA Shubh Flexi Income Plan may struggle to keep pace with inflation, making it difficult to achieve future financial goals. Additionally, the life cover offered is insufficient.

Given the low life coverage and moderate returns, this plan may not be the most suitable choice for long-term investors looking for wealth creation and financial security

Tata AIA Shubh Flexi Income Plan Vs. Other Investments

While the Tata AIA Shubh Flexi Income Plan offers flexibility in receiving survival benefits, its returns are relatively low. The same premium could be better utilized to build a substantial corpus or generate a steady cash flow.

Although this plan combines life insurance and investment, separating these two components can lead to better financial outcomes. Let’s explore this using the same premium from the previous example.

Tata AIA Shubh Flexi Income Plan Vs. Pure-term + ELSS

A pure-term life insurance policy with a sum assured of ₹11 lakhs costs an annual premium of ₹10,800 for a 30-year term with a 10-year premium payment period. This leaves ₹89,200 annually, which can be invested based on individual risk tolerance.

Pure Term Life Insurance Policy
Sum Assured	₹ 11,00,000
Policy Term	30 years
Premium Paying Term	10 years
Annualised Premium	₹ 10,800
Investment	₹ 89,200

Low-risk investors may opt for debt instruments like the Public Provident Fund (PPF). High-risk investors could consider equity-based investments such as Equity-Linked Savings Schemes (ELSS). For this comparison, we assume investment in ELSS funds.

		Term insurance + ELSS
Age	Year	Term Insurance premium + ELSS	Death benefit
40	1	-1,00,000	11,00,000
41	2	-1,00,000	11,00,000
42	3	-1,00,000	11,00,000
43	4	-1,00,000	11,00,000
44	5	-1,00,000	11,00,000
45	6	-1,00,000	11,00,000
46	7	-1,00,000	11,00,000
47	8	-1,00,000	11,00,000
48	9	-1,00,000	11,00,000
49	10	-1,00,000	11,00,000
50	11	0	11,00,000
51	12	0	11,00,000
52	13	0	11,00,000
53	14	0	11,00,000
54	15	0	11,00,000
55	16	0	11,00,000
56	17	0	11,00,000
57	18	0	11,00,000
58	19	0	11,00,000
59	20	0	11,00,000
60	21	0	11,00,000
61	22	0	11,00,000
62	23	0	11,00,000
63	24	0	11,00,000
64	25	0	11,00,000
65	26	0	11,00,000
66	27	0	11,00,000
67	28	0	11,00,000
68	29	0	11,00,000
69	30	0	11,00,000
70		1,49,24,927

	IRR	10.99%

Potential Wealth Creation with ELSS

Pre-tax maturity value: ₹1.69 Crores

Post-tax maturity value (after capital gains tax): ₹1.49 Crores

Post-tax Internal Rate of Return (IRR): 10.99%

ELSS Tax Calculation
Maturity value after 30 years	1,69,11,773
Purchase price	8,92,000
Long-Term Capital Gains	1,60,19,773
Exemption limit	1,25,000
Taxable LTCG	1,58,94,773
Tax paid on LTCG	19,86,847
Maturity value after tax	1,49,24,927

By adopting this term insurance + investment approach, the accumulated corpus is substantially higher than the Tata AIA Shubh Flexi Income Plan.

The higher return rate outpaces inflation, making it a far more effective strategy for wealth creation and financial growth.

Final Verdict on Tata AIA Shubh Flexi Income Plan

The Tata AIA Shubh Flexi Income Plan offers three options, allowing policyholders to choose based on their cash flow needs. While the plan’s cash flow design may appear attractive, its benefits are not guaranteed as they depend on bonuses.

A detailed returns analysis reveals that the returns are lower than inflation, limiting long-term wealth creation. The sum assured is inadequate, offering insufficient financial protection.

Both the insurance and investment aspects of the Tata AIA Shubh Flexi Income plan are not favourable for investors seeking growth and security and it also has a high agent commission.

As an investor, it is essential to align your financial choices with life goals and cash flow needs. Instead of combining insurance and investment, investing separately allows for better returns and flexibility.

Your investment selection should be based on risk tolerance and time horizon.

To ensure financial security, opt for pure-term life insurance, which provides adequate coverage at a lower cost.

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For strategic financial planning, consulting a Certified Financial Planner (CFP) can help you identify the right investment products tailored to your specific goals.