Kotak Invest Maxima: ULIP Review (2024) – Should you buy it or not?

Table of Content:

1. Introduction
2. What is Kotak Invest Maxima?
3. Features of the Kotak Invest Maxima
4. Portfolio Strategies of Kotak Invest Maxima

• Self-Management Portfolio Strategy
• Systematic Switching Strategy

5. Benefits of Kotak Invest Maxima

• Boost your savings through Survival Units
• Maturity Benefit of Kotak Invest Maxima
• Death Benefit

6. Charges of Kotak Invest Maxima

• Premium Allocation Charge
• Policy Administration Charge
• Fund Management Charge
• Switching Charge
• Partial Withdrawal Charge
• Discontinuance Charge
• Mortality Charge
• Miscellaneous Charge

7. Research Methodology of Kotak Invest Maxima
8. Analysis of Kotak Invest Maxima with Illustration
9. IRR of Kotak Invest Maxima
10. Kotak Invest Maxima vs. PPF + Term Insurance
11. Kotak Invest Maxima vs. ELSS + Term Insurance
12. Advantages of Kotak Invest Maxima
13. Disadvantages of Kotak Invest Maxima
14. Surrendering/Cancelling Kotak Invest Maxima

• Surrender/Cancel during the free look period
• Surrendering/Cancelling during the lock-in period
• Surrendering/cancelling after the lock-in period

15. Final Verdict of Kotak Invest Maxima

Kotak Invest Maxima is a ULIP that claims to maximize your investment. But, it is still an investment-oriented insurance plan. So, do you think this plan can help you to increase your money? After all, it is still not a pure investment plan or insurance plan. So, compare to separate investment and insurance plan, this Kotak Invest Maxima can give you an inflation-beating return for the long term?

This analysis on Kotak Invest Maxima can help you to discover whether you should buy this Kotak Invest Maxima or not.

What is Kotak Invest Maxima?

Kotak Invest Maxima is a ULIP that can help you to increase your premium allocation and allows you to take advantage of market volatility.

So, as an investor, you should take responsibility for the risk in your investment portfolio.

The lock-in period for the Kotak Invest Maxima is 5 years. So, during this lock-in period, you cannot avail yourself of liquidity in this policy.

If you want to withdraw or surrender the policy, then you have to wait till the end of the lock-in period.

This Kotak Invest Maxima has two portfolio strategies.

• Self-Management Portfolio Strategy
• Systematic Switching Strategy

Features of the Kotak Invest Maxima:

1.) Kotak Invest maxima is an investment-oriented unit-linked life insurance plan.

2.) There is no Premium Allocation Charge in Kotak Invest Maxima.

3.) From the 10th policy term onwards and after every 5 years, you will get paid the survival benefit up to 2% of the fund value.

4.) You have the flexibility to choose between the two portfolio strategies: a) Self-Management Strategy and b) Systematic Switching Strategy

5.) You can avail flexible premium allocation options such as regular, limited, and single pay.

6.) Option to invest in various funds.

7.) Tax Benefit

Portfolio Strategies of Kotak Invest Maxima:

Self-Management Portfolio Strategy:

In Self-Management Portfolio Strategy, a policyholder can manage their investment. This strategy offers you the flexibility to choose between 5 fund options to increase your wealth. This option allows you to balance the risk level in your investment portfolio. In the future, if you want, you can switch or you can change the premium allocation within the funds.

Systematic Switching Strategy:

If you don’t want to manage your investment yet want the best result, then you can opt for Systematic Switching Strategy. This plan allows you to invest all your money or a portion of your money in a Money Market Fund. It transfers a pre-defined amount to the either of the following:

• Classic Opportunity Fund
• Frontline Equity Fund

Systematic Exit Strategy:

During the last policy term, you have the option to switch the fund options.

Benefits of Kotak Invest Maxima:

Boost your savings through Survival Units:

To encourage policyholders for a long-term investment, Kotak Invest Maxima offers Survival Units every 5 years after the end of the 10th policy term.

Maturity Benefit of Kotak Invest Maxima:

You will get the sum of the following as a Maturity Benefit.

• The fund value in the main account plus the survival unit if any
• Any Fund Value in the top-up account

Settlement Option:

• Immediate payout as a lump sum.
• The part will be paid as a lump sum and another half as an installment of 5 years.
• The whole amount will be payable in installments over the period of 5 years.

Death Benefit:

If the policyholder passed away, unfortunately, then the nominee or the legal heir will the highest of the following as death benefit.

• The basic sum assured excludes partial withdrawal if any
• Fund value in the main account and the survival units if any will be payable
• 105% of the premium term paid

Plus the highest of the

• Top-up sum assured or
• Fund Value of the top-up premium or
• 105% of the total top-up premium paid

Charges of Kotak Invest Maxima:

Premium Allocation Charge:

The Premium Allocation Charge will be deducted from the premium as a percentage. However, there is no premium allocation charge in the Kotak Invest Maxima.

Policy Administration Charge:

The Policy Administration Charge will be deducted as a percentage from the 1st year premium paid.

For Single Pay: 0.22% p.m. for the first five policy years  

For Regular & Limited Pay: 0.60% p.m. up to the premium payment term  

These charges are subject to a maximum of ₹500 p.m.  

Fund Management Charge:

The Fund Management Charge will be deducted as a percentage every policy year from the fund value.

 Switching Charge:

The first 15 switches including 12 automatic switches are free. After that, the policyholder needs to pay Rs. 500 for every switch.

5. Partial Withdrawal Charge:

The policyholder needs to pay Rs.500 for each partial withdrawal from the main account.

6. Discontinuance Charge:

The Discontinuance charge will be deducted from the main account of the regular/limited premium payment option.

7. Mortality Charge:

The Mortality Charge is the cost for live cover.

Miscellaneous Charge:

The Miscellaneous charge will be deducted when there will be a need for policy document replacement and alteration in Basic Sum Assured. The charge will be Rs. 250 per request.

Research Methodology on Kotak Invest Maxima:

Kotak Invest Maxima claims to increase wealth in the long term. 

But, there are some loopholes in the Kotak Invest Maxima that did not make certain things clear for us.

Such as being an investment-oriented insurance plan, can it act as a regular investment product?

Can Kotak Invest Maxima give you enough return to achieve your financial goals?

Can Kotak Invest Maxima give you a return that can beat the inflation?

Is the life coverage enough for you to take care of your family’s financial needs after you?

We are not sure about the answer here!

So, now let’s do the research on Kotak Invest Maxima and decide, whether is it good or not?

Analysis of Kotak Invest Maxima with Illustration:

For instance, let’s take Mr. Arun, who is 35 years Marketing Manager with a wife and two children. 

Let’s say he purchased Kotak Investment Maxima by paying a premium of Rs. 1, 00, 000 for 20 years.

IRR of Kotak Invest Maxima:

Now, let’s see the IRR of Kotak Invest Maxima during the worst-case scenario and the best-case scenario by using the Kotak Invest Maxima return calculator provided by Kotak Life.

In the worst-case scenario of Kotak Invest Maxima, let’s take the assumed gross return as 4%.

Then,

As you can see in the above illustration, Kotak Invest Maxima gives us an IRR of 2.01% in the worst-case scenario. At the end of the policy term, Kotak Invest Maxima gives us a Maturity benefit of Rs. 24, 81, 754 and a Death Benefit of Rs. 17, 25, 251.

Now, let’s see the IRR for the best-case scenario. In the best-case scenario, let’s take the assumed gross return as 8%. Then,

At the end of the policy term, in the best-case scenario, Kotak Invest Maxima gives us an IRR of 5.99%. After 20 years, we will get Rs. 38, 95, 823 as Maturity Benefit and Rs. 24, 07, 338 as Death Benefit.

Here I have a question for you!

Even after taking the risk, do you think “is it enough to fulfill your financial needs?”

Let’s continue with our research to discover the answer.

Kotak Invest Maxima vs. PPF + Term Insurance:

Here, let’s take the overall contribution as Rs. 1, 00, 000

Term Insurance Premium: Rs. 14, 500

Sum Assured: Rs. 1, 00, 00, 000

PPF Contribution: Rs. 85, 500

Tenure: 20 years

Investment Rate of Return: 7.10% without taking any risk

Then,

At the end of the 20 years, PPF gives us an IRR of 5.77%. At the end of the investment, we will get Rs. 37, 95, 224 as investment Return. Here we get an investment return slightly less than Kotak Invest Maxima’s best-case scenario.

Ha! I know it! So, compare to PPF, Kotak Invest Maxima gives a better return.

If that’s how you think right now, then sorry to break it to you.

Compare to Kotak Invest Maxima, without taking risks PPF gives us an IRR of 5.77%. So, just imagine, after taking a risk do you think, Kotak Invest Maxima gives you a better return?

It’s still so soon to make a decision right? So now let’s compare the Kotak Invest Maxima with ELSS, another risk-oriented investment plan.

Kotak Invest Maxima vs. ELSS + Term Insurance:

Here, let’s take the overall contribution as Rs. 1, 00, 000

Term Insurance Premium: Rs. 14, 500

Sum Assured: Rs. 1, 00, 00, 000

ELSS Contribution: Rs. 85, 500

Tenure: 20 years

Assumed Investment Rate of Return: 12% with risk

Then,

As you can see in the above illustration, we get an IRR of 9.82% if we invest in ELSS. At the end of the 20 years, we will get Rs. 61, 60, 484 as investment return after taking a risk.

So, what do you think? Which investment option is better?

I will let you decide the conclusion by yourself here.

Advantages of Kotak Invest Maxima:

• Life insurance is provided during the policy period.
• There is no premium allocation fee.
• Tax advantages are available under Sections 80C and 10(10D) of the Income Tax Act.
• Multiple fund choices and limitless switching between fund options
• Maturity profits can be obtained as a lump amount or in accordance with the Settlement Options.
• Partial withdrawal is allowed after the completion of the 5th policy term.

Disadvantages of Kotak Invest Maxima:

• The policyholder bears the investment risk in the investment portfolio during the settlement term.
• During the settlement term, no life insurance or other advantages are offered, such as partial withdrawal or transferring between funds.
• For partial withdrawal or surrender, the policyholder needs to wait for the lock-in period of 5 years.
• There are several expenses linked with the scheme, such as administrative charges, mortality charges, and so on, which significantly reduce your earnings.
• Although there are possibilities to transfer between funds, each strategy has to be given ample time to perform and provide strong results.
• Because they provide minimal coverage, it is not an ideal life coverage.

Surrendering/Cancelling Kotak Invest Maxima:

Now, if you are thinking about how to surrender or cancel your Kotak Invest Maxima policy, then this may help you.

Surrender/Cancel during the free look period:

If the policyholder did not satisfy with the Kotak Invest Maxima, then he/she can return the policy by stating the reason. The free look period is 15 days from the date of policy purchased. If the policyholder purchases the policy in electronic mode, then the free look period will be 30 days.

The policyholder will be refunded the fund value on the date of cancellation plus the non-allocated premium (if any) after deducting the charges.

Surrendering/Cancelling during the lock-in period:

The policyholder can write up the insurance company to surrender the policy during the lock-in period. However, the policyholder will get paid the fund value on the date of cancellation/surrender after the charges get deducted. The policyholder will be refunded only after the end of the lock-in period.

Surrendering/canceling after the lock-in period:

The policyholder will be refunded the fund value on the date of surrender immediately. For more details, you can read the Kotak Invest Maxima brochure here.

Final Verdict of Kotak Invest Maxima:

Though Kotak Invest Maxima gives you a better return compared to PPF, still it is very low after taking a risk. After all, it’s just an investment-oriented insurance plan. Compare to separate investment and insurance, it is still underperforming. So, if you want a better performance investment option, then you can choose a mutual fund and can purchase term insurance individually.
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