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TATA AIA Life Insurance Smart 7Plan

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TATA AIA Life Insurance Smart 7Plan Review

TATA AIA Life Insurance Smart 7 Plan is a traditional, participating Endowment Insurance plan which aims to create a savings corpus for the policyholder besides providing him with insurance coverage.


Highlights of the TATA AIA Life Insurance Smart 7Plan

  • This is a traditional endowment plan where reversionary compound bonus and Terminal bonus are declared. 
  • Premiums under the plan are payable only for a limited tenure which is fixed at 7 years.
  • Riders are available under the plan for enhanced coverage.


Working of the TATA AIA Life Insurance Smart 7Plan

  • The policyholder chooses the Sum Assured. Based on the coverage level and the insured’s age, the premium amount is computed.
  • Bonuses accrue throughout the plan tenure if the due premiums are paid.
  • On death during the period, the death benefit is paid 
  • On maturity, the maturity benefit is paid.


Benefits and Features of TATA AIA Life Insurance Smart 7Plan

  • Maturity Benefit – When the plan matures and the premiums have been duly paid, the Guaranteed Sum Assured on Maturity is paid along with the vested bonuses and any Terminal Bonus. The Guaranteed Sum Assured on Maturity is equivalent to the Basic Sum Assured. 
  • Death Benefit – If the insured dies during plan term and the policy is in force, the death benefit payable would be the Sum Assured on Death + vested reversionary bonuses till death + Terminal Bonus, if any subject to a minimum of 105% of premiums paid till death.
    The Sum Assured on Death is higher of the following:
    • 10 times the annual premium 
    • 1.75 times the Basic Sum Assured
  • Bonus – Compound reversionary bonuses are added every year provided the policy is in-force and all due premiums have been paid under the plan. These bonuses accrue from the first policy year and continue till plan maturity. A Terminal Bonus may also be paid on maturity or death if the policy remains in force for a minimum of 8 years.
  • Loan –Loans are available under the plan. 
  • 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.
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Eligibility Criteria of TATA AIA Life Insurance Smart 7Plan

The plan can be bought only by Resident Indians. The other eligibility criteria of the plan includes:
  Minimum Maximum
Entry age (Last Birthday) 6 years 55 years
Maturity Age (Last Birthday) NA 67 years
Plan tenure 12 years
Premium payable Depends on age, term and Sum Assured
Premium Paying Term (PPT) 7 years
Sum Assured Rs.2 lakhs No limit
Premium payment mode Monthly, half-yearly, quarterly or yearly
 


Additional Benefits of TATA AIA Life Insurance Smart 7Plan

  • Riders – TATA AIA Life Insurance Accidental Death and Dismemberment (Long Scale) (ADDL) Rider can be attached to the basic policy to increase the scope of coverage. 
  • Grace Period – A grace period of 30 days is allowed for payment of premium after the due date in case of every mode except monthly mode in which case the 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

The chart below shows the premium rates at different levels of Sum Assured and for different ages.



The premium rates are also tabulated hereunder for a quick reference:
Age SA 2 lakhs SA 5 lakhs SA 10 lakhs
35 years 30,816 77,040 154,080
45 years 32,200 80,500 161,000
55 years 35,292 88,230 176,460


Exclusions in TATA AIA Life Insurance Smart 7Plan

  • 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 Smart 7Plan

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 and bonuses would also not accrue. 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)+ vested reversionary bonus + Terminal Bonus, if any} subject to a minimum of 105% of all premiums paid till death
  • Maturity Benefit – The maturity benefit would  be calculated as follows:
    Guaranteed Sum Assure don Maturity * (number of premiums paid/total number of premiums payable) + vested reversionary bonus + Terminal Bonus, if any


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 with the minimum being the sum of the GSV and the SSV. 
  • GSV is expressed as follows:
    {(Total premiums paid* GSV Factor of premiums) + (reversionary bonus * GSV Factor of bonus)}.
  • The SSV factors would be declared by the company based on its performance and would be calculated as follows:
    SSV Factor * (Reduced Paid-up Sum Assured + vested reversionary bonuses)


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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