Tata AIG Life Maha Guarantee from Tata AIG Life Insurance is an endowment plan that offers guaranteed returns throughout the tenure of the policy along with the loyalty bonus. It also offers an in-built option to increase the life cover through guaranteed additions to the sum assured every year.
How does it work. The plan offers the annual guarantee on the basic sum assured, depending on the tenure of the policy. The longer the tenure, the better is the rate offered. For instance, a 15-year-old policy receives an annual rate of 3.5 per cent while a 20-year-old policy receives an annual rate of 5 per cent. Thereafter, on maturity, the loyalty bonus is paid according to the tenure of the policy. On the flip side, the annual guarantee is offered on the basis of simple interest. It does not take into account the benefits of compounding.
Features
- Minimum entry age: 18 years
- Maximum entry age: 50/50/45 years for policy term of 10/15/20 years
- Maximum age of maturity: 60/65/65 for policy term of 10/15/20 years
- Policy term: 10/15/20 years
- Premium payment term: Regular or limited payment for 5 years
- Minimum sum assured: Rs 1 lakh
| Large Size Discount | |
| | |
| Basic Sum Assured (in Rs) | Per Rs 1000 Basic Sum Assured (in Rs) |
| <2,00,000 | 0 |
| 2,00,000 - 4,99,000 | 2.5 |
| 5,00,000 - 10,00,000 | 5 |
| >10,00,000 | 10 |
| | |
| Guaranteed Returns | ||
| | ||
| Policy Terms | Guaranteed Annual Addition (as a % of Basic Sum Assured) | Guaranteed Maturity Addition (as a % of Basic Sum Assured) |
| 10 | 2.5 | 10 |
| 15 | 3.5 | 25 |
| 20 | 5.0 | 50 |
| | ||
| Surrender Value (%) | |||
| | |||
| Completed Policy Years | Policy Term 10 | Policy Term 15 | Policy Term 20 |
| 1 to 2 | 0 | 0 | 0 |
| 3 | 55 | 36 | 24 |
| 4 | 60 | 40 | 26 |
| 5 | 65 | 45 | 28 |
| 6 | 75 | 50 | 30 |
| 7 | 80 | 55 | 33 |
| 8 | 85 | 60 | 36 |
| 9 | 92 | 65 | 40 |
| 10 | 100 | 70 | 45 |
| 11 | - | 75 | 50 |
| 12 | - | 81 | 55 |
| 13 | - | 87 | 60 |
| 14 | - | 93 | 65 |
| 15 | - | 100 | 70 |
| 16-20 | - | - | 75-100 |
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| Reading the Table: In the 3rd year, you will get 55%, 36% and 24% as surrender value for 10, 15 and 20-year plan terms, respectively. | |||
Maturity Benefit. On maturity, the policyholder gets the total sum assured plus the annual guaranteed additions and the loyalty bonus, based on certain rates (See Guaranteed Returns).
Death Benefit. In case of an early death of the policyholder, the policy pays twice the basic sum assured and the annual guaranteed additions.
Performance. The plan will give a return of Rs 8.87 lakh and Rs 12.50 lakh if a 35-year old invests Rs 43,530 and Rs 40,735 each year for 15 and 20 years, respectively, considering a sum assured of Rs 5 lakh. Within the same tenures the returns will come to 3.75 per cent and 3.92 per cent, respectively.
Comparison. If you buy a term insurance plan for a sum assured of Rs 10 lakh (at Rs 2,850 and Rs 3,220) and deposit the remaining amount in the Public Provident Fund, you will receive a corpus of around Rs 11.92 lakh and Rs 18.54 lakh in 15 years and 20 years, respectively.
What to do. The plan offers guaranteed income on the simple interest basis. Given the low rate of return, which is slightly more than the savings account rate (considering the above parameters), think twice before investing in the product.
