Imagine that dream vacation you’ve been planning or your child’s college education – life is full of financial goals we strive for. But with the constant buzz of uncertainty in the markets, wouldn’t it be nice to have a guaranteed path to get you there?
That’s where insurance-linked plans come in, over-promising stability alongside growth. Today, we’ll be taking a deep dive into the Max Life Assured Wealth Plan – can it truly be the key to achieving your financial dreams? Let’s unpack the details and find out!
Table of Contents:
1. An overview of Max Life Assured Wealth Plan
2. Features of Max Life Assured Wealth Plan
5. Grace Period, Reduced Paid-up & Revival
7. Surrendering Max Life Assured Wealth Plan
8. Advantages of Max Life Assured Wealth Plan
9.Disadvantages of Max Life Assured Wealth Plan
11. Benefit Illustration – IRR Analysis
12. Comparison with other investment return
13. Max Life Assured Wealth Plan Vs. Pure Term + PPF / ELSS
14. Final Verdict on Max Life Assured Wealth Plan
What is the Max Life Assured Wealth Plan?
Max Life Assured Wealth Plan is a Non-Linked, Non-Participating, Individual, Life Insurance Savings plan. Max Life Assured Wealth Plan assures you guaranteed returns to build your wealth. Max Life Assured Wealth Plan offers a guaranteed lump sum benefit at the end of the policy term.
What are the Features of Max Life Assured Wealth Plan?
- Max Life Assured Wealth Plan offers 6 different variants of premium payment terms and policy terms.
- Max Life Assured Wealth Plan provides Complete financial security in case of death.
- Max Life Assured Wealth Plan offers a fully guaranteed lump sum maturity benefit.
- Tax benefits apply to the premiums paid under Max Life Assured Wealth Plan and benefits received by you as per the prevailing tax laws.
Who is Eligible for the Max Life Assured Wealth Plan?
Entry Age & Maturity AgePolicy Term & Premium Paying Term | Premium Paying Term | Policy Term | Minimum Entry age | Maximum Entry Age | Maximum Age at maturity |
5 | 10 | 8 | 60 | 70 years | |
5 | 15 | 3 | 55 | ||
5 | 20 | 91 days | 50 | ||
8 | 16 | 2 | 54 | ||
10 | 15 | 3 | 55 | ||
10 | 20 | 91 days | 50 | ||
Premium Payment Mode | Monthly, Annual | ||||
Guaranteed Sum Assured on Maturity | Minimum: ₹ 1,61,225Maximum: No Limit |
What are the Benefits in the Max Life Assured Wealth Plan?
i.) Death benefit
The lump sum ‘Death Benefit’ is payable immediately on the death of the life insured and is defined as the higher of:
- 10 times the Sum of Annualised Premium and underwriting extra premium (if any)
- 105% of the Sum of Total Premiums Paid as of the date of death of the life insured
- Guaranteed Sum Assured on Maturity
- Any absolute amount assured to be paid on death
ii.) Maturity benefit
The maturity benefit is equal to the Guaranteed Sum Assured on Maturity (GSAM). The Max Life Assured Wealth Plan policy gets terminated after the payment of the maturity benefit.
Grace Period, Reduced Paid-up & Revival of Max Life Assured Wealth Plan
i.) Grace Period
A grace period of 30 days for annual mode and 15 days for monthly mode from the due date for payment of each premium will be allowed to the Policyholder for payment of contractual premium.
ii.) Reduced Paid-up
Once the Max Life Assured Wealth Plan policy acquires a surrender value after payment of 2 full years’ premiums, by default the policy will become Reduced Paid-Up in case of nonpayment of any further premium. The Max Life Assured Wealth Plan policy will continue with reduced benefits
iii.) Revival
Once the Max Life Assured Wealth Plan policy has lapsed, it can be revived within a revival period of five years from the due date of the first unpaid premium. Death benefit and Maturity benefit will be reduced using the proportionate premiums method.
Free Look Period of Max Life Assured Wealth Plan
You have a period of 15 days (30 days if the Max Life Assured Wealth Plan policy is sourced through Distance Marketing modes) from the date of receipt of the policy document, to review the terms and conditions of the Max Life Assured Wealth Plan policy, where if you disagree with any of those terms and conditions, you have the option to return the Max Life Assured Wealth Plan policy.
Surrendering Max Life Assured Wealth Plan
The Max Life Assured Wealth Plan policy can only be surrendered once it acquires a Guaranteed Surrender Value (GSV). i.e. on payment of the first two full year’s premium. The surrender value will be equal to the higher Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).
What are the Advantages of Max Life Assured Wealth Plan?
The Max Life Assured Wealth Plan offers additional rider(s) that can be taken with the policy to provide additional protection as per your need.
Policy loans will be available under this product subject to a maximum of 80% of the Special Surrender Value.
What are the Disadvantages of Max Life Assured Wealth Plan?
The lock-in period of investment is high i.e., you receive the benefits only at maturity.
Research Methodology of Max Life Assured Wealth Plan
In this segment, we’ll assess the Max Life Assured Wealth Plan’s returns by calculating the Internal Rate of Return based on the benefit illustration provided in the policy brochure.
The Max Life Assured Wealth Plan promises guaranteed benefits upon maturity. While these benefits are assured, it’s essential to verify whether the returns justify the investment duration.
Benefit Illustration – IRR Analysis of Max Life Assured Wealth Plan
Example: A 35-year-old male buys Max Life Assured Wealth Plan for a Sum Assured of ₹ 10 Lakhs. The Premium paying term is 10 years and the policy term is 20 years. The annualised premium is ₹ 1 Lakh.
Male | 35 years |
Sum Assured | ₹ 10 Lakhs |
Policy Term | 20 years |
Premium Paying Term | 10 years |
Annualised premium | ₹ 1,00,000 |
On payment of regular premium, the maturity benefit of ₹ 22.51 Lakhs is receivable after 20 years. The IRR for this cash flow is 5.30% based on the Max Life Assured Wealth Plan Calculator.
Age | Year | Annualised premium / Maturity benefit | Death benefit |
35 | 1 | -1,00,000 | 10,00,000 |
36 | 2 | -1,00,000 | 10,00,000 |
37 | 3 | -1,00,000 | 10,00,000 |
38 | 4 | -1,00,000 | 10,00,000 |
39 | 5 | -1,00,000 | 10,00,000 |
40 | 6 | -1,00,000 | 10,00,000 |
41 | 7 | -1,00,000 | 10,00,000 |
42 | 8 | -1,00,000 | 10,00,000 |
43 | 9 | -1,00,000 | 10,00,000 |
44 | 10 | -1,00,000 | 10,00,000 |
45 | 11 | 0 | 10,00,000 |
46 | 12 | 0 | 10,00,000 |
47 | 13 | 0 | 10,00,000 |
48 | 14 | 0 | 10,00,000 |
49 | 15 | 0 | 10,00,000 |
50 | 16 | 0 | 10,00,000 |
51 | 17 | 0 | 10,00,000 |
52 | 18 | 0 | 10,00,000 |
53 | 19 | 0 | 10,00,000 |
54 | 20 | 0 | 10,00,000 |
55 | 22,51,238 | 10,00,000 | |
IRR | 5.30% |
Despite being a long-term investment plan, the returns from Max Life Assured Wealth Plan fail to keep pace with inflation rates. Even compared to a bank fixed deposit, the returns are subpar. Additionally, bank FDs offer liquidity benefits.
The IRR analysis based on the Max Life Assured Wealth Plan calculator clearly indicates that investing in a Max Life Assured Wealth Plan may not facilitate wealth accumulation effectively.
Max Life Assured Wealth Plan Vs Other Investment Options
In this section, let us do an analogy between Max Life Assured Wealth Plan and other investments where the same premium can be channelised effectively. For this comparison, we shall take the same metrics as seen in the above illustration.
For Life cover, opting for a pure-term life insurance policy enables you to save premiums. This saved premium can be invested for wealth accumulation.
Max Life Assured Wealth Plan Vs. Pure Term + PPF / ELSS
A pure term life insurance policy for a sum of ₹ 10 Lakhs would cost ₹ 8,700. In the earlier illustration, for the same metric, the annual premium is ₹ 1 Lakh. The saved premium is utilised for wealth accumulation. You can invest ₹ 91,300 either in PPF or ELSS or any investment avenue based on your risk appetite.
Pure-term Life Insurance Policy | |
Sum Assured | ₹ 10 Lakhs |
Policy Term | 20 years |
Premium Paying Term | 10 years |
Annualised premium | ₹ 8,700 |
Investment | ₹ 91,300 |
In a PPF account, a minimum contribution of ₹500 is required for 15 years. However, the premium paying term is only 10 years. Adjustments are made in the 10th year contribution to ensure a minimum contribution of ₹500 is maintained for the next 5 years.
The final maturity value in the PPF account amounts to ₹26.94 Lakhs, with an Internal Rate of Return (IRR) of 6.5% for the Pure Term + PPF combo.
For investments in ELSS funds, the final maturity value stands at ₹55.73 Lakhs pre-tax. However, it’s important to note that capital gains tax is applicable upon redeeming units. The post-tax value comes to ₹51.17 Lakhs. The IRR for the Pure Term + ELSS combo is 10.80%.
Term Insurance + PPF | Term insurance + ELSS | ||||
Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
35 | 1 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
36 | 2 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
37 | 3 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
38 | 4 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
39 | 5 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
40 | 6 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
41 | 7 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
42 | 8 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
43 | 9 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
44 | 10 | -97,500 | 10,00,000 | -1,00,000 | 10,00,000 |
45 | 11 | -500 | 10,00,000 | 0 | 10,00,000 |
46 | 12 | -500 | 10,00,000 | 0 | 10,00,000 |
47 | 13 | -500 | 10,00,000 | 0 | 10,00,000 |
48 | 14 | -500 | 10,00,000 | 0 | 10,00,000 |
49 | 15 | -500 | 10,00,000 | 0 | 10,00,000 |
50 | 16 | 0 | 10,00,000 | 0 | 10,00,000 |
51 | 17 | 0 | 10,00,000 | 0 | 10,00,000 |
52 | 18 | 0 | 10,00,000 | 0 | 10,00,000 |
53 | 19 | 0 | 10,00,000 | 0 | 10,00,000 |
54 | 20 | 0 | 10,00,000 | 0 | 10,00,000 |
55 | 26,94,308 | 10,00,000 | 51,17,298 | 10,00,000 | |
IRR | 6.49% | 10.80% |
ELSS Tax Calculation | |
Maturity value after 20 years | 55,73,331 |
Purchase price | 9,13,000 |
Long-Term Capital Gains | 46,60,331 |
Exemption limit | 1,00,000 |
Taxable LTCG | 45,60,331 |
Tax paid on LTCG | 4,56,033 |
Maturity value after tax | 51,17,298 |
This comparative analysis clearly illustrates that there are alternative investment strategies available for allocating your savings towards long-term goals. Opting for the Max Life Assured Wealth Plan may not effectively contribute to wealth accumulation.
Final Verdict on Max Life Assured Wealth Plan
Looking at the Max Life Assured Wealth Plan, it offers life protection and assured returns, but are those returns really worth it in the long run?
With locked-in savings until the end of the policy term, it might not be the most compelling option. High agent commissions and potential shortfalls add to the concerns. Instead, wouldn’t it be wiser to explore investment avenues that outpace inflation?
Pure-term life insurance stands out for its affordability and extensive coverage. And let’s not forget the importance of diversification in wealth accumulation. But can we solely rely on social media like Quora, Twitter, and Facebook for financial advice?
It’s crucial to consult a Certified Financial Planner for a personalized plan tailored to your needs.
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