What are the Benefits of the Max Life Fast Track Super Plan?

Advantages of the Max Life Fast Track Super Plan This policy allows you to invest in different Investment Strategies based on your risk appetite. Settlement options can be exercised during maturity. It offers guaranteed loyalty additions. 12 switches, 6 premium redirections & 2 partial withdrawals (post lock-in) are allowed in a policy year.

Is It Wise to Invest in the Max Life Fast Track Super Plan?

Planning for your Financial Future is the crux of Financial Planning.
Financial Planning includes selecting appropriate investments.
All your investments should be aligned with your financial goals.
Will Max Life Fast Track Super Plan help you in planning your finances?
Let us figure it out with this in-depth analysis.

What is Max Life Fast Track Super Plan?

It is a Unit Linked, Non-Participating, Individual, Life Insurance Plan.
It aims to provide you with insurance options which has a simplistic and safe approach to investing in the market with multiple fund options.
You can invest in any of the six funds & earn market-linked returns. You also get additional loyalty rewards for staying invested.

Features of the Max Life Fast Track Super Plan

Comprehensive Life insurance coverage is provided to the policyholder.
Options to choose your Policy Term and Premium Payment Term at your convenience.
The choice to choose from 2 investment strategies & 6 Funds for investors with different risk appetites.
Flexibility to make Partial Withdrawals to meet your unplanned expenses.
Loyalty additions are included in your fund value.

Eligibility Criteria of the Max Life Fast Track Super Plan

Let us look at some of the basic information needed to enter this plan at a glance below;

Product Type	A Unit Linked Non-Participating Individual Life Insurance Plan
Coverage	Individual
Min. age at entry	91 days
Max. age at entry	Premium payment term	Max. entry age
	Single pay/limited pay (5 years)	60
	Regular Pay	50
Maturity age	Min -18 years; Max – 70 years
Premium payment term/policy term	Premium payment term	Policy term
	Single pay	10
	5 Pay	10
	Regular pay (20 Pay)	20
Minimum Annualised premium	Single pay	1,00,000
	5 pay	50,000
	Regular pay (20 Pay)	25,000
Maximum Annualised premium	No limit
Premium payment mode	Single pay – Premium payment is on a one-time basis
Premium payment mode	Limited pay (5 years) / Regular pay – Annual, Semi-Annual, Quarterly, or Monthly
Sum Assured Multiple	Single pay	1.25 * Single premium
	5 pay	10 * Annualised premium
	Regular pay (20 Pay)	10 * Annualised premium
Minimum Fixed Sum Assured Multiple	Single pay	1,25,000
	5 pay	5,00,000
	Regular pay (20 Pay)	2,50,000
Maximum Fixed Sum Assured Multiple	No limit

Two investment Strategies of the Max Life Fast Track Super Plan

The Systematic Transfer Plan

It allows the policyholder to duplicate the rupee cost-averaging approach on the policyholder’s annualized premium.

First, units will be acquired in Secure Plus, then on each consecutive monthly anniversary, units available in Secure Plus Fund will be progressively moved to Growth Super Fund based on the following formula:

[1 / (13–month number in the policy year)]

Dynamic Fund Allocation (DFA) strategy

This strategy can help the policyholder to strike the right balance between debt and equity by rebalancing on yearly basis till the end of the policy maturity.

The funds will be divided between the Growth Super Fund and the Secure Fund in a predetermined proportion that varies according to the number of years before the maturity.

	Regular pay
Number of Years to Maturity	Proportion in Growth Super Fund	Proportion in Secure Fund
16 – 20 years	80%	20%
8 – 15 y	60%	40%
4 – 7 y	60%	40%
0 – 3 y	20%	80%

	Single pay / 5 Pay
Number of Years to Maturity	Proportion in Growth Super Fund	Proportion in Secure Fund
8 – 10 y	70%	30%
4 – 7 y	50%	50%
0 – 3 y	30%	70%

6 Fund Options of the Max Life Fast Track Super Plan

Let us look at what are some of the fund options available under this plan in the table below;

Funds	Equities	Govt Sec	Corporate bond	Money Market	Risk profile
High Growth	70-100	0-30	0-30	0-30	Very High
Growth super	70-100	0-20	0-20	0-30	High
Growth	20-70	0-30	0-30	0-40	High
Balanced	10 – 40	20-50	20-40	0-40	Medium
Conservative	0-15	50-80	0-50	0-40	Low
Secure	0	50-100	0-50	0-40	Low

Benefits of the Max Life Fast Track Super Plan

Maturity Benefit

On maturity, you will be eligible to receive the Fund value, provided the settlement option has not been exercised.

Death Benefit

In case of Death of the Life Insured anytime during the term of the Policy, higher of Sum Assured or Fund Value (as on the date of death), subject to a minimum of 105% of the total premiums received up to the date of death, shall be payable.

For this purpose, the sum assured will be reduced by the partial withdrawals made during the two years immediately preceding the date of death of the Life Insured.

Guaranteed Loyalty Additions

0.30% of Fund Value shall be added to the Fund by the creation of additional units, at the end of every policy year starting from the 11th policy year.

The loyalty additions increase by 0.02% (absolute) each year thereafter.

Other Benefits of the Max Life Fast Track Super Plan

Switch

You may Switch between available Funds at any time during the Policy Term, subject to a minimum Switch amount of Rs. 5,000.

A maximum of twelve Switches are allowed in a Policy Year and they are free of charge.

Premium Redirection

You may redirect your future premiums between available Funds at any time. A maximum of six Premium Redirections are allowed for free in a policy year.

Partial Withdrawal

No partial withdrawals are allowed in the first five policy years and thereafter a maximum of two partial withdrawals with a minimum amount of Rs.5000 & a maximum of 50% of the fund value are allowed in any policy year.

Partial withdrawals shall not be allowed until the minor life insured attains majority i.e., on or after attainment of age 18.

Settlement Option

“If settlement option is chosen, the policy will continue after the maturity date for a period not exceeding 5 years from the maturity date”. The first instalment will be paid out on the Date of Maturity. You can choose monthly, quarterly, semi-annual, or annual pay-out. During the settlement period, you will not be entitled to effect partial withdrawal or smart withdrawal but Switches will be allowed.

All inherent investment risks shall continue to be borne by the investor. Only Fund Management Charges, switching charges (if any), and mortality charges on death benefits will be deducted during this period.

Option to reduce premium post-lock-in

Option to decrease the premium up to 50% of your original Annualized Premium, subject to the minimum premium limit.

This option can opt only once during the term of the contract, and the premium once reduced, cannot be subsequently increased. The sum assured of the base plan will be reduced in the same proportion as the reduction in premium.

Various charges under the Max Life Fast Track Super Plan

1.Premium Allocation Charge

The premium allocation charge is levied as a % of each premium paid. The rate of premium allocation charge depends on the premium paying term & policy term, it ranges between 3% & 4%. There is no premium allocation charge from the 11th policy year onwards.

2.Fund Management Charge

The annual rate of the Fund Management Charge is as below:

Fund Management Charge (% of Fund Value)
Fund Name	Fund Management Charge (p.a.)
High Growth Fund	1.25%
Growth Super Fund	1.25%
Growth Fund	1.25%
Balanced Fund	1.10%
Conservative Fund	0.90%
Secure Fund	0.90%
Secure Plus Fund	0.90%
Discontinuance Policy Fund	0.50%

3. Policy Administration Charge

This is a charge expressed as a percentage of premiums paid for all variants and is levied at each monthly anniversary by cancelling proportionate Units starting from the date of commencement of the policy.

It ranges between 0.05% p.m. of Single Premium compounding at 3% p.a. from the second year onwards up to a maximum of 200 per month or 0.24% / 0.33% p.m. of Annualised Premium compounding at 4% p.a. from second year onwards up to a maximum of `500 per month

4. Mortality Charge

This charge is unisex and is levied on the attained age of the Life Insured on the Sum at Risk and these charges are guaranteed for the entire Policy Term.

Age (in years)	Mortality charge (per₹ 1,000 Sum at Risk)
0 (91 days)	4.45
8	0.59
17	0.74
25	0.98
30	1.06
35	1.28
40	1.80
45	2.87
50	4.95

5. Surrender / Discontinuance Charge

This charge shall be levied on the Fund Value at the time of Discontinuance of policy or effecting Complete Withdrawal (Surrender) whichever is earlier. There is no surrender / Discontinuance charge from the 5th policy year onwards.

6. Switching Charge

A maximum of twelve Switches are allowed in any policy year and are free of charge

7. Premium Redirection Charge

A maximum of six Premium Redirections are allowed in each policy year and are free of any charge.

8. Partial Withdrawal

After the first five policy years, a maximum of two Partial Withdrawals are allowed in a policy year and are free of any charge.

9. Miscellaneous Charges

There are no Miscellaneous charges in this policy.

Inference from these charges: Some of the charges are justifiable like mortality charges, and fund management charges. Discontinuance/ surrender charges and policy administration charges are unjustifiable. Other investment products do not impose these charges.

A Grace Period, Discontinuance & Paid-up, Revival of the Max Life Fast Track Super Plan

Grace period:

A Grace Period of 30 days (15 days for the monthly mode) from the due date of the first unpaid premium will be allowed.

Discontinuance & Paid-up:

Discontinuance of payment of premium during first five policy years (Lock-in Period) – Upon the expiry of the grace period, the Fund Value, by the creation of units will be credited into the Discontinued Policy Fund after deducting applicable Discontinuance Charges. The risk cover under the policy will stop and no further charges will be levied other than the Fund Management Charge. During this period, the Policyholder shall not be allowed to exercise Switches or Partial Withdrawals

Discontinuance of payment of premium post first five policy years (i.e., after the expiry of the Lock in Period) – the policy shall be converted into a reduced paid-up policy with the paid-up sum assured i.e., current sum assured multiplied by the total number of premiums paid to the original number of premiums payable as per the terms and conditions of the policy.

Revival:

You will have the Revival Period of three years from the Date of Discontinuance to revive your policy.

Free look period of Max Life Fast Track Super Plan

If you are not satisfied with the terms of the Max Life Fast Track Super policy, you can return your policy within 15 days from the date of receipt of the policy.
The Free-look period will be extended up to 30 days if you bought the policy online or through distance mode.

Surrendering the Max Life Fast Track Super Plan

You have the right to surrender the policy at any time during the Policy Term. The surrender benefit is equal to Fund Value less applicable surrender/discontinuance charges. Surrender within five years of the Effective Date.

Advantages of the Max Life Fast Track Super Plan

This policy allows you to invest in different Investment Strategies based on your risk appetite.
Settlement options can be exercised during maturity.
It offers guaranteed loyalty additions.
12 switches, 6 premium redirections & 2 partial withdrawals (post lock-in) are allowed in a policy year.

Disadvantages of the Max Life Fast Track Super Plan

The lock-in period is for 5 years.
Loan option is not available.
The risk is borne by the investor during the settlement period.
The charges in the fund may reduce the potential return of this policy.

For more details, you can read the Max Life Fast Track Super Policy Brochure.

Research Methodology

Investors should look for the risk, liquidity & return of the investment product before deciding to invest in it. Here the Max Life Fast Track Super policy invests in the equity market which holds risks to the policyholder & the pay-out is provided only at the end of the policy term.

To better understand this policy from the return perspective, we need to calculate its Internal Rate of Return to find out how beneficial is this policy in the long run to achieve your financial goals.

IRR Analysis of the Max Life Fast Track Super Plan

The below benefit illustration is taken from the Max Life policy brochure. Analyzing this will help to estimate the potential return of this policy.

Here a 35-year-old male buys this policy for a sum assured of Rs. 10 lakhs, the policy term is 20 years, the premium paying term is 20 years & the annual premium is Rs. 1 lakh.

Male	35 years
Policy term	20 years
Premium paying term	20 years
Sum Assured	Rs. 10 lakhs
Annual premium	Rs. 1 lakh

Let’s calculate the Internal Rate of Return (IRR) of the Max Life Fast Track Super Plan below;

		At 4% p.a.		At 8% p.a.
Age	Year	Annualized premium / Maturity benefit	Death benefit	Annualized premium / Maturity benefit	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	-1,00,000	10,00,000	-1,00,000	10,00,000
45	11	-1,00,000	10,00,000	-1,00,000	10,00,000
46	12	-1,00,000	10,00,000	-1,00,000	10,00,000
47	13	-1,00,000	10,00,000	-1,00,000	10,00,000
48	14	-1,00,000	10,00,000	-1,00,000	10,00,000
49	15	-1,00,000	10,00,000	-1,00,000	10,00,000
50	16	-1,00,000	10,00,000	-1,00,000	10,00,000
51	17	-1,00,000	10,00,000	-1,00,000	10,00,000
52	18	-1,00,000	10,00,000	-1,00,000	10,00,000
53	19	-1,00,000	10,00,000	-1,00,000	10,00,000
54	20	-1,00,000	10,00,000	-1,00,000	10,00,000
		25,10,543		39,47,877

	IRR	2.12%		6.11%

The above-assumed rates of return @ 4% and 8% p.a. are only for the worst and best-case scenarios respectively.

These are not guaranteed rates of return and they are not the upper or lower limits of returns of the Funds selected in your policy, as the performance of the Funds is dependent on several factors including future investment performance.
At the assumed rate of 4% in the worst-case scenario, the IRR works out to be 2.12% & for 8% in the best-case scenario, it works out to be 6.11%.

These rates of return are not enough to combat inflation in the long run. The returns we get from a risk premium policy like the Max Life Fast Track Super Plan is not even matching a debt instrument’s rate of return.

But the underlying investment is made in equity instruments. This clearly shows that even if you are ready to take the risk, the return is not on par with other equity-related instruments.

Max Life Fast Track Super Plan Vs Other Investment Alternatives

Max Life Fast Track Super Plan is not beneficial in the long run.

Comparison with other investment avenues will give you an even more clear picture. Max Life Fast Track Super Plan has both life cover & investment options.

So, for life cover, a Pure Term Insurance Plan will serve the purpose & for investment purposes, let us take debt or equity instruments. Investors depending on their risk appetite can choose either debt or equity instruments.

Max Life Fast Track Super Plan Vs. Pure Term Insurance + PPF / ELSS

The annual cash flow is Rs. 1 lakh in the Max Life Fast Track Super Plan. The same can be split & invested.

For Pure Term Insurance of Rs. 10 lakhs life cover, a premium is for Rs. 5500. So, the balance amount of Rs. 94,500 can be invested for wealth creation purposes. By doing this way, both the purpose of life protection & investment is served.

Pure term insurance
Sum Assured	Rs. 10 lakhs
Policy term	20 years
Premium paying term	20 years
Annual premium	Rs. 5,500
Balance amount (investment)	94,500

Now, let’s take a look at the Internal Rate of Return we might get by investing the same amount we invested in the Max Life Fast Track Super Plan in a Pure Term Insurance + PPF/ELSS combination below;

		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	-1,00,000	10,00,000	-1,00,000	10,00,000
45	11	-1,00,000	10,00,000	-1,00,000	10,00,000
46	12	-1,00,000	10,00,000	-1,00,000	10,00,000
47	13	-1,00,000	10,00,000	-1,00,000	10,00,000
48	14	-1,00,000	10,00,000	-1,00,000	10,00,000
49	15	-1,00,000	10,00,000	-1,00,000	10,00,000
50	16	-1,00,000	10,00,000	-1,00,000	10,00,000
51	17	-1,00,000	10,00,000	-1,00,000	10,00,000
52	18	-1,00,000	10,00,000	-1,00,000	10,00,000
53	19	-1,00,000	10,00,000	-1,00,000	10,00,000
54	20	-1,00,000	10,00,000	-1,00,000	10,00,000
		41,94,722		70,62,427

	IRR	6.62%		10.93%

Here the IRR for a combination of Pure Term Insurance + PPF works outs to be 6.62% Which is considerably a good yield for a debt instrument.
The combination of Pure Term Insurance + ELSS yields 10.93% which is an inflation-beating return for the long term.
This combination has a higher edge than the Max Life Fast Track Super Plan. And it also offers a better risk-adjusted return for our investment.

Final Verdict of the Max Life Fast Track Super Plan

Max Life Fast Track Super Plan offers both life protection & savings for your life’s financial goals. The net premium after the reduction of charges is invested. This brings down your yield. So, investing in the Max Life Fast Track Super Plan for your life’s financial goals is not the right decision.

To attain your life goals, build a separate investment portfolio based on your risk appetite. Also, have an adequate life cover through investing in a Pure Term Insurance Policy. This approach will help you in attaining your life’s financial goals.

You can always consult with your Financial Advisor if you need guidance on customizing your Financial Plan according to your Risk Appetite and Financial Goals within your timeframe to achieve them.

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