TATA AIA Life Insurance Secure 7 Plan

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TATA AIA Life Insurance Secure 7 Plan Review

TATA AIA Life Insurance Secure 7 Plan is a traditional, non-participating Endowment Insurance Plan which provides guaranteed incomes along with life insurance coverage.


Highlights of the TATA AIA Life Insurance Secure 7 Plan

  • This is a traditional Endowment Plan which does not participate in bonus declarations. 
  • Premiums under the plan are paid only for a limited tenure which is fixed for 7 years.
  • Guaranteed Incomes accrue after the completion of the premium paying term and till the end of the plan term for 7 years. 
  • Riders are available under the plan for a more comprehensive coverage.


Working of the TATA AIA Life Insurance Secure 7 Plan

  • The policyholder chooses the Sum Assured based on which the premium amount is calculated.
  • On death during the period, the death benefit is paid.
  • On maturity, the maturity benefit is paid.
  • Guaranteed Annual Incomes are paid for 7 years after the end of the premium paying term.

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Benefits and Features of TATA AIA Life Insurance Secure 7 Plan

  • Maturity Benefit – When the plan matures and the premiums have been duly paid, 25% of the Basic Sum Assured and the last installment of the Guaranteed Annual Income is paid to the policyholder. 
  • Death Benefit – If the insured dies during plan term and the policy is in-force, Sum Assured on Death is paid irrespective of the Guaranteed Annual Incomes already paid.
    The Sum Assured on Death under the plan would be higher of the following:
    • Maturity Sum Assured 
    • Basic Sum Assured 
    • 105% of total premiums paid till death 
    • 10 times the annual premium paid.
  • Guaranteed Annual Income – The policyholder is entitled to receive Guaranteed Annual Incomes after the completion of the premium paying term and till the end of the plan term. The Guaranteed Annual Incomes accrue from the 8th policy year and continue till the 14th policy year starting @50% of the annual premium and then increasing every year such that the total Guaranteed Annual Incomes paid equal the aggregate premiums paid under the plan. The rate of Guaranteed Annual Incomes in each policy year is as follows:
Policy year Guaranteed Annual Incomes as a % of the annual premium
8th 50%
9th 70%
10th 90%
11th 100%
12th 110%
13th 130%
14th 150%
 
  • Bonus – The plan does not earn bonuses as it is a non-participating plan. 
  • Loan –Loans are available under the plan if the policyholder wishes to avail it. 
  • Tax benefit – Premiums paid under the plan would be exempt from tax under Section 80C up to a limit of Rs.1.5 lakhs. The death benefit or the maturity benefit received and the Survival benefit received would also be tax exempt under Section 10(10D) of the Income Tax Act.


Eligibility Criteria of TATA AIA Life Insurance Secure 7 Plan

The plan can be bought only by Resident Indians. The other eligibility criteria of the plan includes:
  Minimum Maximum
Entry age (Last Birthday) 18 years 55 years
Maturity Age (Last Birthday) NA 69 years
Plan tenure 14 years
Premium payable Rs.40,000 No limit
Premium Paying Term (PPT) 7 years
Sum Assured Rs.2.5 lakhs No limit
Premium payment mode Monthly, quarterly, half-yearlyand annually



Additional Benefits of TATA AIA Life Insurance Secure 7 Plan

  • Riders –The TATA AIA Life Insurance Accidental Death and Dismemberment (Long Scale) Rider is available under the policy for enhanced benefits. 
  • Large Sum Assured Discount – If the policyholder selects a high level of Sum Assured, he would get a discount in the premium rate. The discount rate is expressed per Rs.1000 Sum Assured and is as follows:
Sum Assured Level Premium Rebate
Less than Rs.7 lakhs  Nil
Rs.7 lakhs to Rs.999,999 Rs.5
Rs.10 lakhs to Rs.14,99,999 Rs.8
Rs.15 lakhs and above Rs.12
 
  • Grace Period – A grace period of 30 days is allowed for payment of premium after the due date for all modes except monthly mode where the allowed period is 15 days. The life cover under the policy would continue during the grace period.
  • Free Look Period – A cooling off period or a free look period of 15 days (30 days for distance marketing channels) is granted to the policyholder after the policy issuance to review the policy terms and conditions. If found unsatisfactory, the plan can be cancelled within this period and the premium paid would be refunded after deducting the relevant mortality charge, service tax, cess and stamp duty paid.


Premium Illustration

Here is the chart showing the Premium Rates payable by an individual at different combinations of age and Sum Assured



Here is also the table for a quick reference:
Age Sum Assured – Rs.5 lakhs Sum Assured – Rs.7.5 lakhs Sum Assured – Rs.10 lakhs
30 years 47,075 66,863 86,150
40 years 50,560 72,090 93,120
50 years 66,585 96,128 125,170



Exclusions in TATA AIA Life Insurance Secure 7 Plan

  • If the insured commits suicide within a year of policy issuance, the premiums paid would be refunded and the policy would become void.
  • If suicide is committed within a year of policy revival, higher of the premiums paid till death or the Surrender Value acquired would be paid provided the policy is in force


Non-Payment of premium in TATA AIA Life Insurance Secure 7 Plan

Premiums have to be paid for at least one full year otherwise the policy lapses and no benefit is payable. After this compulsory period, the policyholder can surrender the policy or make it paid-up if the premiums are not paid. 

Making the policy Paid-up

If at least one full years’ premium has been paid, the policy would become a paid-up policy if future premiums are not paid. The facility of loan cannot be availed in a paid-up policy. The benefits payable under the plan would be reduced and called Paid-up Benefits which are calculated as follows:
  • Death Benefit – The death benefit would be reduced and calculated as follows:
    {Sum Assured on Death *(number of premiums paid/total number of premiums payable)} subject to a minimum of 105% of all premiums paid till death
  • Survival Benefit – Reduced Guaranteed Annual Incomes would be payable which would be calculated as follows:
    Guaranteed Annual Income Percentage as per the policy year * (number of premiums paid/total number of premiums payable) * Annual Premium
  • Maturity Benefit – The maturity benefit would be calculated as follows:
    25% of the basic Sum Assured * (number of premiums paid/total number of premiums payable)


Surrendering the policy

Surrender is allowed only after the policy becomes paid-up, i.e. after one full year’s premiums have been paid. On surrendering the policy, higher of the Guaranteed Surrender Value (GSV) or the Special Surrender Value (SSV) would be paid.
  • GSV would depend on the policy year in which the plan is surrendered and is expressed as follows:
    (Total premiums paid* GSV Factor of premiums) – Survival benefits already paid
  • The SSV factors would be declared by the company based on its performance and would be calculated as follows:
    SSV Factor * * (number of premiums paid / total number of premiums payable) * (total guaranteed benefits payable under the plan) – Survival benefits already paid.


Revival 

Revival is allowed within 2 years from the date of the first unpaid premium. The policyholder would be required to pay the outstanding premium and any interest charged by the insurer to revive his policy.




 
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