Tata
AIA has recently launched a new non linked participating endowment assurance plan.
There are two options in the plan. Option I is purely endowment option and
option II is endowment with inbuilt accidental death benefit. The plan offers term
of 10 years to 30 years. Minimum entry age in the plan is 30 days in option I
and 18 years in option II. Maximum sge at entry is 50 years in both options. Maximum
age at maturity is 65 years. Minimum sum assured is 1.50 lakhs and there is no
limit to maximum sum assured but the same is subject to underwriting. The
minimum premium requirement is Rs. 10,000 p.a. The plan also gives the option
of choosing three different options for payment i.e. Annual, Semi Annual and
monthly. The policy holder has to pay higher premium in case he/she chooses
option other than yearly option. The policy also offers large sum assured
discount above the sum assured of Rs. 2 lakhs. The plan offers minimum
guaranteed addition in the first 5years @5.5% p.a. of basic This will be paid
with sum assured at the time of maturity. However the reversionary and terminal
bonus depends on the performance and profit of the company.
The
points to know before investing in the plan. The service tax of 3.09% in first year and
1.545 second year is payable over and above basic premium, which is also likely
to increase from April’2015 onwards. The return is very poor as illustrated
below The same can be understood with the help of following example. If a 30
year healthy male takes this plan for sum assured of Rs. 5lakhs for 25 years,
then his annual premium will be Rs. 31,020/- exclusive of service tax payable. He
will get guaranteed amount of the sum assured i.e. Rs. 5 lakhs at maturity and
plan also may give non guaranteed bonus which is assumed in the illustration at
4% and 8% p.a. The IRR is of the plan is only 2.40% considering return on
investment @4% p.a. and 5.53% considering return on investment @8% p.a. which
is calculated with the help of excel and using IRR formula. The detail is as
under. The premium is taken inclusive of service tax.
|
Year
|
@4%
|
@8%
|
|
1
|
-31,979
|
-31,979
|
|
2
|
-31,501
|
-31,501
|
|
3
|
-31,501
|
-31,501
|
|
4
|
-31,501
|
-31,501
|
|
5
|
-31,501
|
-31,501
|
|
6
|
-31,501
|
-31,501
|
|
7
|
-31,501
|
-31,501
|
|
8
|
-31,501
|
-31,501
|
|
9
|
-31,501
|
-31,501
|
|
10
|
-31,501
|
-31,501
|
|
11
|
-31,501
|
-31,501
|
|
12
|
-31,501
|
-31,501
|
|
13
|
-31,501
|
-31,501
|
|
14
|
-31,501
|
-31,501
|
|
15
|
-31501
|
-31,501
|
|
16
|
-31,501
|
-31,501
|
|
17
|
-31,501
|
-31,501
|
|
18
|
-31,501
|
-31,501
|
|
19
|
-31,501
|
-31,501
|
|
20
|
-31,501
|
-31,501
|
|
21
|
-31,501
|
-31,501
|
|
22
|
-31,501
|
-31,501
|
|
23
|
-31,501
|
-31,501
|
|
24
|
-31,501
|
-31,501
|
|
25
|
-31,501
|
-31,501
|
|
26
|
10,88,556
|
17,08,551
|
|
|
2.40%
|
5.53%
|
