Investment Plans 792 views November 26, 2020

Tata AIA Smart 7 Plan

Tata AIA Smart 7 Plan is a participating endowment assurance plan that helps fulfill your multiple aspirations such as retirement planning, education of your kids while ensuring protection in case an unfortunate incident like a death happens. Through the power of shorter- term premium payments & maturity, you can achieve all this in Tata AIA Smart 7 Plan. Read this post further and know details about it.

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Key Features

  1. Limited pay of 7 years
  2. Reap benefits for another 5 years
  3. Growth of corpus over 12 years
  4. Compounding Annual Bonus
  5. Lump sum amount on the maturity
  6. Life protection of 12 years
  7. Enhanced protection through the rider
  8. Enhanced corpus with Additional Bonus at maturity
  9. Tax Benefits are available under Section 80C and section 10 (10D) (as per prevailing tax law)

Benefits of Tata AIA Smart 7 Plan

When you buy this policy, you will get the following benefits –

On Maturity – You will get a Guaranteed Sum Assured + vested Compound Reversionary Bonus + Terminal Bonus (if any), provided the policy is in force and all dues have been paid.

Note – Guaranteed Sum Assured on maturity is the Basic Sum Assured of Tata AIA Smart 7 Plan.

On Death – If the insured dies before the maturity of the policy, the nominee will get a Sum Assured on death + vested Compound Reversionary Bonus + Terminal Bonus (if any), provided the policy is in force.

The total amount on death will be a minimum of 105% of Total Paid Premiums, as on the date of death. And this policy will terminate upon the death of the insured and no other benefit under the policy shall be payable. A Sum Assured on death is the higher of the following:

  1. 10X Annualised Premium
  2. 1.75X Basic Sum Assured

Bonus on Tata AIA Smart 7 Plan

Your plan will accrue a Compound Reversionary Bonus (CRB) every year from the 1st policy anniversary provided the policy is in force. This accrued CRB is payable to the insured or claimant on either death or maturity. This bonus will be declared by the company annually and credited on the policy anniversary. And in this, Terminal Bonus is a percentage of the accrued Compound Reversionary Bonus, which is payable on death (if the policy is in force for 8 years) or on maturity.

Tata AIA Smart 7 Plan Premium Payment

An annualised premium is the premium which is paid in a year concerning the basic sum assured chosen by the policyholder, excluding the underwriting extra premiums and loading for modal premiums (if any). Whereas the Total Paid Premium is the amount equal to the total paid premium during the premium payment term and the amount excludes interest, tax, underwriting extra premiums and loading for modal premiums (if any). The payment mode for Tata AIA Smart 7 Plan Premium is annual, semi-annual, quarterly, or monthly.

Modal loading for Tata AIA Smart 7 Plan Premium is as follows:

  1.  Annual Premium Rate  – No loading
  2.  Semi-Annual Premium Rate – Annual Premium Rate x 0.51
  3.  Quarterly Premium Rate – Annual Premium Rate x 0.26
  4.  Monthly Premium Rate –  Annual Premium Rate x 0.0883

Tata AIA Life Insurance Smart 7 Plan Additional Benefits

You can customize your policy by adding the following optional riders. And these riders can be attached only at the policy inception.

Tata AIA Life Insurance Accidental Death & Dismemberment  – The rider ensures protection to your family by providing your nominee an amount equal to the rider sum assured in case the insured dies in an accident. Whereas in case of severe dismemberment such as loss of limbs, bodily functions, or severe burns from accident, the company will pay a percentage of the rider sum assured. The rider benefits will double in the case of certain accidental death or dismemberments. Your Premium Payment Term under a rider will be the same as the premium paying term of the base policy.

Tata AIA Life Insurance Smart 7 Plan Surrender

You can surrender the policy any time during the policy term, provided at least the first full year’s premiums are paid. A minimum guaranteed surrender value is equal to the sum of guaranteed surrender value and the surrender value of any subsisting bonus.

Guaranteed Surrender Value = (Total Paid Premiums x GSV factor for Premiums) + (vested Compound Reversionary Bonus (if any) x GSV factor for Compound Reversionary Bonus)

In this below formula –

Reduced Paid-up Sum Assured = Basic Sum Assured x (t/n)

t= Number of paid premiums

n= Number of payable premium for the entire policy  term

Special Surrender Value = Special Surrender Value Factor x (Reduced Paid-up Sum Assured + Vested Compound Reversionary Bonuses (if any)

Note – The Special Surrender Value Factors may vary according to the policy term and the year of policy surrender. And the company has the right to review the basis of calculating factors and this will be subject to prior approval of the IRDAI.

Grace Period

A Grace Period of 15 days for monthly payment mode and 30 days for all other payment modes are provided to the policyholder from the due date of the first unpaid premium. During the grace period, your policy is considered to be in force with the risk cover.  And if any premium remains unpaid at the end of the grace period, the policy shall lapse and have no further value except for the Non-Forfeiture Provisions.

Non-forfeiture Provisions

When the premium for the first policy year is not paid, the policy shall lapse (within the grace period) and the insured will not get any benefits. And it will be converted into a Reduced Paid-up by default, provided the premium for the first policy year is paid and subsequent premiums are unpaid.

You should know that the Reduced Paid-up is a default nonforfeiture benefit where the policy can be revived within 2 years from the due date of the first unpaid premium, and when your policy becomes Reduced Paid-up and not revived within these 2 years, it will continue to be in Reduced Paid-up status. Because of which the policy shall not be entitled to any further Compound Reversionary Bonuses and Terminal Bonus. Otherwise, the benefits under Reduced Paid-up will be as follows:

Death benefit = Sum Assured on death x (Number of paid premiums)/ (Number of payable premiums during the entire policy term) + Vested Compound Reversionary Bonus.

Maturity benefit  = Guaranteed Sum Assured on maturity x (Number of paid premiums) / (Number of payable premiums during the entire policy term) + vested Compound Reversionary Bonus.

Tata AIA Life Insurance Smart 7 Plan Reinstatement

When your premium is in default beyond the Grace Period, and your policy is not surrendered, you may reinstate or revive the same. This can be done within two years after the due date of the first unpaid premium and before the maturity. However, the company would need a written application from the insured for reinstatement or revival. Also, provide the current health certificate and other evidence of insurability. And make sure the payment of all overdue premiums with interest is done. Repayment of any indebtedness outstanding at the due date of the premium at default includes the interest. Any reinstatement or revival will cover only loss or insured events that have occurred after the reinstatement date.

Tata AIA Life Insurance Smart 7 Plan Free Look Period

You can cancel the policy by sending written notice to the company. When the company approves the cancellation, you will receive a refund of all paid premiums without interest after a deduction of the proportionate risk premium, stamp duty and medical examination costs. Such notice must be given to the company within 15 days of the free look period. The said free look period can be extended to 30 days if the policy is sourced through distance marketing mode.

Policy Loan on Tata AIA Life Insurance Smart 7 Plan

If your policy has acquired a surrender value, you can pledge your policy to borrow a lump sum of funds from the bank or NBFC. Under this, you can borrow up to 80% of the policy surrender value.

Tata AIA Smart 7 Plan Exclusions

In case the insured dies due to suicide within 12 months from the date of policy commencement, the nominee will get “Total Paid Premiums “, provided the policy is in force. In the case of death due to suicide by the insured from the date of reinstatement or revival, the nominee will be entitled to the higher of the following –

  1. Total Paid Premiums
  2. Surrender Value (as on the date of death)

Tata AIA Smart 7 Plan Tax Benefits

If you have paid all the premiums under this plan, you are eligible for tax benefits under Section 80C of the Income Tax Act, 1961. And along with this, you can get tax benefits under Section 10(10D) of the Income Tax Act, 1961. Tata AIA Life Insurance Company Ltd. is not responsible for tax implications. Please consult your own tax consultant to know the tax benefits available to you in Tata AIA Smart 7 plan.

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