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Product Review: Tata AIG Life Nirvana Pension Plan Tensionless Pension

Monday, June 06, 2011
By Manoj Aswani

Today a lot of insurance policies carry the tag of “Guarantee returns” on them but still it leaves a lot of doubt in our minds. Questions like – is the premium paid by me guaranteed to be returned back or is there some fixed percentage of interest that will be guaranteed at the time of maturity? But there are some plans which have been in existence for long and continue to live up to their commitment of guaranteed returns.

Plan Summary
Tata AIG Life Nirvana is a deferred participating pension plan that helps to save for the retirement years. Tata AIG Life Nirvana gives the policyholder the flexibility of choosing his/her retirement age. It is a regular premium plan for individuals. Tata AIG Life Nirvana offers the flexibility to choose the amount of cover one wants, depending on your premium paying capacity. It also allows you to choose your retirement age and therefore, the age from when you wish to get a pension.

Key Features

  • Deferred Pension Plan which offers Sum Assured (Risk Cover)
  • Participating plan
  • Regular premium paying plan
  • Flexibility to choose suitable amount of cover
  • Choice of 8 riders available

How does one received Pension
The policy holder has to pay premiums every year till the age of retirement (which has to be selected by the policyholder). At retirement age, he/she will be allowed to withdraw 33% of the accumulated amount at vesting, as a lump sum, for any immediate needs, like paying a housing mortgage, for the wedding of a child, or whatever the immediate needs are. The balance is utilised to buy an annuity that pays back a monthly income or pension for the rest of the life of the policyholder, or the period he/she chooses. The policyholder can choose to place the annuity with Tata AIG Life or with any other insurance company in India. The rate of annuity will be determined at the time of retirement. So for example, if a person is 35 years of age and is planning to retire by age 56, then he will choose a policy term of 21 years.

Death Benefit
In the event of death before the vesting age, the nominee has the option to commute a maximum of 33% of the Sum Assured plus vested Reversionary and Terminal Bonus and Guaranteed Additions (if applicable) and the rest can be utilised as purchase price to buy annuity.

In case of death of the policy holder, the nominee gets sum assured + Bonus Benefits. In case the policy has been active for more than 10 years, a guaranteed 10% of the Sum Assured would also be received. Bonus will also be paid each year depending on the Company’s overall performance

Guaranteed Additions
Tata AIG Life Nirvana offers a Guaranteed Addition of 10% of the Sum Assured to ensure a guaranteed growth of the policyholder’s fund. This will be payable either on death or on survival at the time of retirement, provided the policy has been in force for 10 years.

Income Tax Benefit

  • Life Insurance premiums paid up to Rs. 1,00,000 are allowed as a deduction from the taxable income each year under section 80C

                                                                    Minimum                                                          Maximum
Age at entry (in years)                                         18                                                                    55
Sum Assured (in Rs.)                                      50,000                                                              No limit
Policy Term (in years)                                         10                                                                     10
Retirement Age                                                   50                                                                     65
Minimum Premium (in Rs.)                               5,000                                                               No Limit

Payment Modes                                        Monthly, Quarterly, Half-Yearly, Yearly


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