Tata AIA Smart SIP Plan: Good or Bad? A Detailed ULIP Review

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Can the Tata AIA Smart SIP Plan benefit you with financial security and wealth accumulation?

Is Tata AIA Smart SIP the plan that grows with you and safeguards your family’s future?

Can the Tata AIA Smart SIP Plan secure your future with the power of market-linked returns?

This review covers its features, benefits, drawbacks, and potential returns through an Internal Rate of Return (IRR) analysis, providing you with valuable insights into the plan.

What is the Tata AIA Smart SIP?

Tata AIA Smart SIP is a Non-Participating, Unit Linked Individual Life Insurance savings plan. Tata AIA Smart SIP ensures a lump sum payment upon the plan’s maturity. Additionally, in the event of any unforeseen circumstance, it offers extra benefits to safeguard your family from financial difficulties in your absence.

What are the features of the Tata AIA Smart SIP?

4 plan options: Wealth Secure, Future Secure, Goal Secure and Family Secure
Option to select Waiver of Premium or income benefits to suit your needs.
Boost your fund with Zero Premium Allocation charges
Additional unit allocations for Female customers
Multiple funds and investment strategies to choose from.
Wellness benefits with Vitality Riders
Tax Benefits as per applicable tax laws

Who is eligible for the Tata AIA Smart SIP?

	Wealth Secure	Future Secure	Goal Secure	Family Secure
Minimum Entry Age	30 days	18 years	30 years	18 years
Maximum Entry Age	65 years	65 years	65 years	65 years
Minimum Maturity Age	18 years	28 years	18 years	28 years
Maximum Maturity Age	85 years	85 years	85 years	85 years
Minimum Policy term	5 years for single pay 10 years for Limited / Regular pay
Maximum Policy term	50 years
Premium paying term	Single Pay, Limited Pay – 5 to 20 years,Regular Pay – 10 to 50 years For Future Secure and Family Secure option, Single Pay is not applicable
Minimum premium	Single pay – ₹ 1000 Limited / Regular pay – ₹ 1,200	Single pay – NA Limited / Regular pay – ₹ 6000	Single pay – ₹ 1000 Limited / Regular pay – ₹ 6000	Single pay – NA Limited / Regular pay – ₹ 6000
Maximum Premium	No Limit
Minimum Sum Assured	Premium paying term	For Age 49 and below	For age 50 and above
	Single pay	1.25 times the single premium	1.1 times the single premium
	Regular pay	7 times the annualised premium	5 times the annualised premium
	Limited pay	7 times the annualised premium	5 times the annualised premium
Maximum Sum Assured	Up to 30 Times, depending upon Policy Term, Premium Paying term and Age.
Premium Payment Mode	Single Pay/Yearly/ Half-yearly/Quarterly/Monthly

What are the benefits of the Tata AIA Smart SIP?

1.) Maturity Benefit

You shall get the Fund Value, including Top-Up Premium Fund value, if any, valued at applicable NAV on the date of Maturity.

Wealth Secure and Goal Secure – if the Life Insured is alive on the Maturity Date, it shall be payable to him.

Future Secure and Family Secure – it shall be payable to the nominee (in case where the Life Insured has died before maturity); OR to the Tata AIA Smart SIP policyholder (in case the Life Insured is alive as of the Maturity date).

2.) Death benefit

A.) Wealth Secure

In case of the death of the insured during the Tata AIA Smart SIP policy term and while the policy is in force, the nominee shall get the Highest of,

The Basic Sum Assured Less partial withdrawals made during the two-year period immediately preceding the death of the life assured, or
the Regular / Single Premium Fund Value of this Tata AIA Smart SIP Policy or
105% of the total Regular / Single Premiums received up to the date of death Less partial withdrawals made during the two-year period immediately preceding the death of the life-assured

In addition to this: The Highest of

The approved Top-Up Sum Assured(s) or
Top-Up Premium Fund Value of this Tata AIA Smart SIP Policy or
105% of the total Top-up premium paid up to the date of death.

B.) Future Secure

In case of death of the insured during the Tata AIA Smart SIP policy term while the policy is in force, the nominee shall get a lumpsum benefit immediately on death and the policy shall continue till the end of the policy term.

Additionally, the Company shall fund all future due premiums after the date of death of the Life Insured.

The lump sum benefit shall be the highest of,

The Basic Sum Assured, or
105% of the total Regular/Single Premiums received up to the date of death

In addition to this: The highest of

The approved Top-Up Sum Assured(s) or
105% of the total Top-up premium paid up to the date of death. is also payable provided the Policyholder has a Top-Up Premium Fund Value

C.) Goal Secure

In case of the death of the insured during the Tata AIA Smart SIP policy term and while the policy is in force, the nominee shall get the highest of,

The Sum of the Basic Sum Assured and the Regular / Single Premium Fund Value of this Policy, or
105% of the total Regular/Single Premiums received up to the date of death

In addition to this: The highest of

The Sum of the approved Top-Up Sum Assured(s) and Top-Up Premium Fund Value of this Policy
105% of the total Top-up premium paid up to the date of death.

D.) Family Secure

In case of the death of the insured during the Tata AIA Smart SIP policy term while the policy is in force, the nominee shall get a lumpsum benefit immediately on death and the Tata AIA Smart SIP policy shall continue till the end of the policy term.

The nominee shall also get 1% of the Basic Sum Assured as guaranteed regular income per month till the end of the Tata AIA Smart SIP Policy Term subject to a minimum period of 36 months and a maximum period of 120 months from the date of death of the life insured.

The lump sum benefit shall be The Highest of,

The Basic Sum Assured, or
105% of the total Regular/Single Premiums received up to the date of death

In addition to this: The highest of

The approved Top-Up Sum Assured(s) or
105% of the total Top-up premium paid up to the date of death.

What are the investment strategies and Fund options in the Tata AIA Smart SIP?

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

You can choose from the 15 investment fund options OR
Choose any one of the following portfolio strategies.
Enhanced Systematic Money Allocation & Regular Transfer (Enhanced SMART)
Life-stage based Portfolio Strategy

Fund options

The Tata AIA Smart SIP plan offers 15 investment funds ranging from 100% debt to 100% equity to suit your particular needs and risk appetite.

S.no	Fund Name	Risk Profile	Asset Allocation
			Equity	Debt	Money Market
1	Emerging opportunities Fund	High	80-100%	0-10%	0-20%
2	Sustainable Equity Fund	High	80-100%	0-20%	0-20%
3	Multi Cap Fund	High	60-100%	0-40%	0-40%
4	India Consumption Fund	High	60-100%	0-40%	0-40%
5	Top 50 Fund	High	60-100%	–	0-40%
6	Top 200 fund	High	60-100%	–	0-40%
7	Super Select Equity Fund	High	60-100%	0-40%	0-40%
8	Large Cap Equity Fund	High	80-100%	–	0-20%
9	Whole Life Mid-Cap Equity Fund	High	60-100%	–	0-40%
10	Dynamic Advantage Plan	Medium	20-80%	20-80%	0-20%
11	Flexi Growth Fund	High	70-100%	0-10%	0-30%
12	Small cap Discovery Fund	High	70-100%	0-10%	0-30%
13	Whole Life Income Fund II	Low	–	60-100%	0-40%
14	Flexi Growth Fund II	High	70-100%	0-10%	0-30%
15	Rising India Fund	High	70-100%	0-30%	0-30%
			Govt Sec	Money market
	Discontinued policy fund		60-100%	0-40%

Enhanced SMART option

This option is applicable till PPT only. An enhanced SMART strategy is not available with top-up premium funds.

The Tata AIA Smart SIP policyholder gets the choice between two funds—a debt-oriented fund and an equity-oriented fund—under the Enhanced SMART option. For the variety of available funding, please see the table below:

Debt oriented funds	Equity oriented funds
Whole Life Income Fund II	Large Cap Equity Fund
	Whole Life Mid-Cap Equity Fund
	Multi Cap Fund
	India Consumption Fund
	Top 50 Fund
	Top 200 fund
	Super Select Equity Fund
	Emerging opportunities Fund
	Sustainable Equity Fund
	Flexi Growth Fund
	Small cap Discovery Fund
	Rising India Fund
	Flexi Growth Fund II

Life-Stage based Portfolio Strategy

Under this Strategy, your portfolio will be structured as per your age and risk profile selected by you (Conservative, Moderate, or Aggressive). We will automatically shift your investments from riskier assets to safer assets progressively as you age.

We will invest your Single Premium/Annualized Premium between the two funds, an equity fund, and a debt fund (as selected by you from our range of funds) in a predetermined proportion.

Debt oriented funds	Equity oriented funds
Whole Life Income Fund II	Large Cap Equity Fund
	Whole Life Mid-Cap Equity Fund
	Multi Cap Fund
	India Consumption Fund
	Top 50 Fund
	Top 200 fund
	Super Select Equity Fund
	Emerging opportunities Fund
	Sustainable Equity Fund
	Flexi Growth Fund
	Small cap Discovery Fund
	Rising India Fund
	Flexi Growth Fund II

Age	Aggressive		Moderate		Conservative
	Equity	Debt	Equity	Debt	Equity	Debt
01 to 30	90%	10%	70%	30%	50%	50%
31-40	80%	20%	60%	40%	50%	50%
41-50	70%	30%	50%	50%	30%	70%
51-60	55%	45%	35%	65%	15%	85%
61-70	40%	60%	20%	80%	0%	100%
70 & above	25%	75%	5%	95%	0%	100%

What are the charges under the Tata AIA Smart SIP?

i.) Premium Allocation Charge

There are no Premium Allocation Charge(s) on base premium and Top-up premium.

ii.) Policy Administration Charge

Single Pay: 0.025% of Single premium per month with a maximum capping of INR 500.

Limited Pay/Regular Pay: 0.25% of annualized premium per month with maximum capping of I₹ 500.

iii.) Fund Management Charge

Sr. No	Fund Name	Fund Management Charge p.a.
1	Whole Life Mid-Cap Equity Fund	1.20%
2	Large Cap Equity Fund	1.20%
3	Multi Cap Fund	1.20%
4	India Consumption Fund	1.20%
5	Super Select Equity Fund	1.20%
6	Top 50 Fund	1.20%
7	Top 200 fund	1.20%
8	Emerging opportunities Funds	1.20%
9	Sustainable Equity Fund	1.20%
10	Dynamic Advantage Fund	1.35%
11	Flexi Growth Fund	1.20%
12	Small cap Discovery Fund	1.20%
13	Rising India Fund	1.20%
14	Flexi Growth Fund II	1.35%
15	Whole Life Income Fund II	1.35%
	Discontinued policy fund	0.50%

iv.) Mortality charge

Mortality charge = Sum at Risk (SAR) multiplied by the appropriate Mortality Rate for the month, based on the attained age of the insured.

Age	30	35	40	45
Mortality charge per 1000 Sum at risk p.a.	1.075	1.322	1.848	2.837

v.) 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 onwards.

vi.) Partial Withdrawal Charge

There are no partial withdrawal charges under the Tata AIA Smart SIP Plan

vii.) Fund Switching Charge

There are no fund-switching charges.

viii.) Miscellaneous Charge

Nil

ix.) Premium Re-direction Charge

There is no fund re-direction charge applicable under the product.

Inference from the charges:

The Tata AIA Smart SIP Plan has relatively lower charges compared to other ULIP plans in the market. However, the inclusion of discontinuance charges, policy administration fees, and premium allocation charges makes it less appealing when compared to other market-related investments.

Grace Period, Discontinuance & paid-up and Revival for Tata AIA Smart SIP 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 in the Tata AIA Smart SIP Policy.

Discontinuance & Paid-up

For Regular / Limited pay policies

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 Tata AIA Smart SIP Plan will stop and no further charges will be levied other than the Fund Management Charge. The Tata AIA Smart SIP Policyholder is not permitted to exercise Switches or Partial Withdrawals during this time.

Discontinuance of payment of premium post first five policy years (i.e., after the expiry of the Lock in Period) – the Tata AIA Smart SIP policy shall be converted into a reduced paid-up policy with the paid-up sum assured

i.e., the 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 a Revival Period of three years from the Date of Discontinuance to revive your Tata AIA Smart SIP policy.

Free look period for Tata AIA Smart SIP Plan

If you disagree with the terms of the Tata AIA Smart SIP policy, you can return the policy within 30 days beginning from the date of receipt of the policy document, whether received electronically or otherwise.

Surrendering Tata AIA Smart SIP Plan

Within the lock-in period of Policy (5 years) – The “Discontinued Policy Fund,” which is kept by the Company, will be credited with the fund value less any applicable discontinuance charges as of the date of discontinuance.

The ‘Proceeds of the Discontinued Policy’, or the fund value as of the date of discontinuance plus all income collected after deducting fund management fees, shall be paid to the Tata AIA Smart SIP policyholder after completion of the lock-in period.

After the Lock-in Period (5 years) – the total fund value as of the date of complete withdrawal shall be paid to the Tata AIA Smart SIP policyholder.

What are the advantages of the Tata AIA Smart SIP?

You have the flexibility to pay additional premiums as a Top-up premium and the Sum assured will increase accordingly.
The systematic Withdrawal facility allows the policyholders to withdraw the funds at pre-determined intervals.
You can choose either a Systematic Withdrawal Plan (SWP) or Chosen-Rate Withdrawal plan or an Index-based withdrawal plan for withdrawing funds.
During the Tata AIA Smart SIP policy term, you may switch your investment or part of your investment from one fund to another.
Premium Re-direction facility helps you to allocate future premiums to a different fund or set of funds.
You have the option to receive the maturity benefit either in lumpsum or in the form of periodical payments over a settlement period of 5 years.

What are the disadvantages of the Tata AIA Smart SIP?

A loan facility is not available.
The lock period is five years.
During the settlement term, the policyholder bears the investment risk in the investment portfolio.

Research Methodology of Tata AIA Smart SIP

The Tata AIA Smart SIP offers four plan options, combining life coverage with investment opportunities. After a portion of the premium is allocated to life insurance, the remaining amount is invested in the market.

To evaluate the potential returns, we can use the figures provided in the policy brochure and compare them with other calculations.

Benefit illustration – IRR Analysis of the Tata AIA Smart SIP

Consider a 35-year-old male who purchases the Tata AIA Smart SIP with a sum assured of ₹10 lakhs. The policy term is 10 years, with a premium payment period of 5 years, and an annual premium of ₹1 lakh. He opts for the Wealth Secure option.

Male	35 years
Sum Assured	₹ 10,00,000
Policy Term	10 years
Premium Paying Term	5 years
Annualised Premium	₹ 1,00,000

At the end of the term, he receives the fund value. The illustrations suggest two assumed rates of return: 8% p.a. and 4% p.a. These rates are not guaranteed and do not represent the maximum or minimum potential returns.

		At 4% p.a.		At 8% p.a.
Age	Year	Annualised premium / Maturity benefit	Death benefit	Annualised premium / Maturity benefit	Death benefit
35	1	-1,00,000	10,00,000	-1,00,000	10,00,000
36	2	-1,00,000	10,00,000	-1,00,000	10,00,000
37	3	-1,00,000	10,00,000	-1,00,000	10,00,000
38	4	-1,00,000	10,00,000	-1,00,000	10,00,000
39	5	-1,00,000	10,00,000	-1,00,000	10,00,000
40	6	0	10,00,000	0	10,00,000
41	7	0	10,00,000	0	10,00,000
42	8	0	10,00,000	0	10,00,000
43	9	0	10,00,000	0	10,00,000
44	10	0	10,00,000	0	10,00,000
45		5,49,069	10,00,000	7,54,207	10,00,000

	IRR	1.18%		5.24%

With a 4% return, the fund value stands at ₹5.49 lakhs, resulting in an IRR of 1.18%, which offers minimal value addition. At an 8% return, the fund value increases to ₹7.54 lakhs, with an IRR of 5.24% as per the Tata AIA Smart SIP Plan maturity calculator.

While the Tata AIA Smart SIP is a market-linked product, the returns it generates are comparable to those of a debt instrument. For long-term investments, returns should ideally outpace inflation, which the Tata AIA Smart SIP fails to achieve.

Based on this return analysis, it can be concluded that the Tata AIA Smart SIP is a low-yielding product and may not be suitable for inclusion in your investment portfolio.

Tata AIA Smart SIP Vs. Other Investment

The potential returns from the Tata AIA Smart SIP are not compelling, as the risk does not justify the return. Let’s explore other market-linked products that offer better risk-adjusted returns.

Suppose we invest the same ₹1 lakh premium, but instead of combining insurance and investment, we allocate it as follows.

Tata AIA Smart SIP Vs. Pure Term + ELSS

Consider a pure-term life insurance policy with a sum assured of ₹10 lakhs. The premium costs ₹5,200, leaving ₹94,800 for investment. The policy term is 10 years, with a premium payment period of 5 years. The investment can be directed based on your risk appetite.

Pure Term Life Insurance Policy
Sum Assured	₹ 10,00,000
Policy Term	10 years
Premium Paying Term	5 years
Annualised Premium	₹ 5,200
Investment	₹ 94,800

Age	Year	Term Insurance premium + ELSS	Death benefit
35	1	-1,00,000	10,00,000
36	2	-1,00,000	10,00,000
37	3	-1,00,000	10,00,000
38	4	-1,00,000	10,00,000
39	5	-1,00,000	10,00,000
40	6	0	10,00,000
41	7	0	10,00,000
42	8	0	10,00,000
43	9	0	10,00,000
44	10	0	10,00,000
45		11,15,018	10,00,000

	IRR	10.41%

In this scenario, the surplus is invested in an ELSS fund. At the end of the term, after redeeming the units and accounting for capital gains tax, the post-tax value of the ELSS fund is ₹11.15 lakhs, from a pre-tax value of ₹11.88 lakhs.

ELSS Tax Calculation
Maturity value after 10 years	11,88,735
Purchase price	4,74,000
Long-Term Capital Gains	7,14,735
Exemption limit	1,25,000
Taxable LTCG	5,89,735
Tax paid on LTCG	73,717
Maturity value after tax	11,15,018

This significant corpus helps you achieve your life goals, with a high rate of return that supports long-term wealth accumulation. When compared to this strategy, the low returns of the Tata AIA Smart SIP make it a less attractive investment option.

Final Verdict on Tata AIA Smart SIP

The Tata AIA Smart plan offers life insurance coverage and financial security for your family, but upon closer analysis, it falls short in both areas.

The sum assured is too low to adequately cover a family’s basic needs, and the investment component lacks the ability to generate alpha, which is crucial for market-linked investments.

The plan’s high charges and lack of transparency in its investment strategy contribute to its poor returns and also it has a high agent commission. In contrast, other market-related products offer greater transparency and lower costs, making them more attractive options.

While the Tata AIA Smart SIP promotes systematic saving, the return comparisons suggest that an alternative investment strategy is more effective.

Opting for a pure-term life insurance policy with adequate coverage ensures your family’s protection. The lower premiums also allow for more room to invest. By building a diversified investment portfolio, you can better achieve your financial goals.

When it comes to financial advice, are Quora, Facebook, and Twitter the final word?

For goal-based financial planning, it’s wise to consult a Certified Financial Planner. They can create customized plans tailored to your personal goals, time horizon, and risk tolerance.

Tata AIA Smart SIP Plan: Good or Bad? A Detailed ULIP Review

Table of Contents:

What is the Tata AIA Smart SIP?

What are the features of the Tata AIA Smart SIP?

Who is eligible for the Tata AIA Smart SIP?