Policy Review: Tata AIA Sampoorna Raksha, a term insurance that returns your premiumTerm Life Insurance is insurance in its purest form. It only pays out in case of your death and offers no maturity value if you survive. In return for this, premiums are much lower than insurance policies which have a maturity value. However, this leads many people to ask, ‘if I live, my money is wasted?’. Tata AIA Sampoorna Raksha Plus seeks to address precisely this concern.

The policy offers life cover for a period of 10 – 30 years or up to the age of 80 years. You can sign up to pay premiums for the entire duration of your policy or for only a limited term of five or 10 years. If you opt for a limited premium payment of 10 years, the policy term can be 15-30 years. Non-smokers and women will be charged lower premiums.

Lump sum or Income

You can let your nominee take the life insurance money as a lump sum or as regular income on your death, for up to 10 years.

Premiums

A 30-year-old non-smoker (male) will be charged an annual premium of Rs 19,040 for a life cover of 1 crore. If he wishes to pay premiums for only 5 or 10 years, he will have to pay Rs 42,755 per annum or Rs 25,415 respectively. The premiums change with age and factors such as gender and smoking habits.

High Cover Discount

Customers opting for a cover of Rs 75-99 lakhs will get a discount of 12.5% on their premiums. Those opting for a cover of Rs 1 crore and above will be offered a discount of 15%.

Lapse

The policy will lapse for the regular or 10-year limited pay option if premiums are not paid for 3 years. For the 5-year limited pay option, the policy will lapse if premiums are not paid for 2 years. After these periods, the policy acquires a surrender value in which you get back a fraction of your premiums.

Tax

Life insurance premiums are tax deductible up to Rs 1.5 lakh per annum under Section 80C. The proceeds of life insurance policies are exempt under Section 10(10)(D) provided the life cover is at least 10 times the annual premiums. This is usually the case with term life insurance policies such as Tata AIA Sampoorna Raksha.

RupeeIQ Take:

Return of premium is a welcome feature providing psychological comfort to someone who survives the policy term. This does, however, drive up the premiums. Premiums on policies without this feature tend to be as much as 50% cheaper. However, it is entirely a matter of personal preference as to which variant is better.

Author
Neil Borate

Neil Borate is Deputy Editor, RupeeIQ. He can be contacted at neil@rupeeiq.com.