The Hindu Business Line : Tata AIG's Nirvana Plus

TATA AIG's Nirvana Plus is an improved version of its existing retirement policy `Nirvana'. Nirvana Plus offers additional benefits such as a free Critical Illness benefit for Rs 1 lakh for the first three years and double the sum assured in case of death due to accident. Moreover, you do not have to undergo a medical test to take the policy.

How it works?

Under Nirvana Plus you can choose from three cover levels or sum assured (SA) — Rs 1 lakh, Rs 2 lakh or Rs 4 lakh — and the age of retirement: 55, 58 or 60 years. You pay regular premiums till the retirement age. The premiums paid are eligible for deductions up to Rs 10,000 from the total income for tax purposes (Section 80 CCC). On maturity, you can encash up to one-third of the sum assured.

This amount is tax-free under current tax laws. The balance is used to buy a monthly income plan. In case of death during the plan period, the SA plus the guaranteed additions and bonuses till date are paid out.

Additions and bonuses

A guaranteed addition of 10 per cent of the SA is added to the benefit every five years. Assume you take a policy for Rs 1 lakh at age 45 and opt a retirement age of 60. A guaranteed addition of Rs 10,000 is added to your SA at age 50, 55 and 60. In effect you get a total 130 per cent of your SA on maturity (age 60).

In addition you may also get a regular bonus and a terminal bonus. The bonus is paid either on maturity or on death but only after 10 years.

The regular bonus is non-guaranteed and accrues from the sixth policy anniversary onwards and is compounded. The terminal bonus is based on the regular bonus.

Freebies

The freebies that accompany the plan are

Critical Illness Cover: If you contract any of the critical illnesses covered after 180 days of signing of the policy and before three years, then you get an amount of Rs 1 lakh upfront.

This amount is paid out regardless of the costs that you are likely to incur on treatment. The benefit is paid only if the insured survives for 30 days after contracting the illness. If you wish to continue with the rider after three years, you can do so by paying an additional premium.

Double Accident Benefit: In case of death by accident during the plan period, double the SA is paid out in addition to guaranteed additions and bonuses (if any).

(Readers are requested to compare products featured under this column with similar ones offered by other players.)

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