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.
1.)What is Max Life Fast Track Super Plan?
2.)Features of the Max Life Fast Track Super Plan
3.)Eligibility Criteria of the Max Life Fast Track Super Plan
4.) Two investment Strategies of the Max Life Fast Track Super Plan
5.) 6 Fund Options of the Max Life Fast Track Super Plan
6.)Benefits of the Max Life Fast Track Super Plan
7.) Other Benefits of the Max Life Fast Track Super Plan
8.)Various charges under the Max Life Fast Track Super Plan
9.) A Grace Period, Discontinuance & Paid-up, Revival of the Max Life Fast Track Super Plan
10.) Free look period of Max Life Fast Track Super Plan
11.) Surrendering the Max Life Fast Track Super Plan
12.)Advantages of the Max Life Fast Track Super Plan
13.) Disadvantages of the Max Life Fast Track Super Plan
14.) Research Methodology
15.) IRR Analysis of the Max Life Fast Track Super Plan
16.) Max Life Fast Track Super Plan Vs Other Investment Alternatives
17.) Max Life Fast Track Super Plan Vs. Pure Term Insurance + PPF / Equity Mutual Fund
18.) Final Verdict of the 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.
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 | |
| Limited pay (5 years) / Regular pay – Annual, Semi-Annual, Quarterly, or Monthly | ||
| Sum Assured Multiple | Single pay | Entry age 49 or less -1.25 * Single premium Entry Age 50 and above – 1.1 or 1.25 * Single pay |
| 5 pay | Entry age 49 or less – 7/10 * Annualised premium Entry Age 50 and above – 5/7/10 * Annualised premium | |
| Regular pay (20 Pay) | Entry age 49 or less – 7/10 * Annualised premium Entry Age 50 and above – 5/7/10 * Annualised premium | |
| Minimum Fixed Sum Assured Multiple | Single pay | Entry age 49 or less – ₹ 1,25,000 Entry Age 50 & above – ₹1,10,00 |
| 5 pay | Entry age 49 or less – ₹ 3,50,000 Entry Age 50 & above – ₹2,50,000 | |
| Regular pay (20 Pay) | Entry age 49 or less – ₹ 1,75,000 Entry Age 50 & above – ₹1,25,000 | |
| Maximum Fixed Sum Assured Multiple | No limit | |
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)]
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% |
| 11– 15 y | 60% | 40% |
| 6 – 10 y | 40% | 60% |
| 0 – 5 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% |
Let us look at what are some of the fund options available under this plan in the table below;
| Investment Mix of the Funds (in %) | ||||||
| S no | Funds | Risk Rating | Government Securities | Corporate Bonds | Money Market & Cash Instruments | Equities |
| 1 | High Growth | Very High | 0-30 | 0-30 | 0-30 | 70-100 |
| 2 | Nifty Smallcap Quality Index fund | Very High | 0 | 0 | 0- 20 | 80-100 |
| 3 | Midcap Momentum Index Fund | Very High | 0 | 0 | 0-20 | 80-100 |
| 4 | Nifty Alpha 50 Fund | Very High | 0 | 0 | 0-20 | 80-100 |
| 5 | Nifty 500 Momentum 50 Fund | Very High | 0 | 0 | 0-20 | 80-100 |
| 6 | Nifty Momentum Quality 50 Fund | Very High | 0 | 0 | 0-20 | 80-100 |
| 7 | Growth Super | Hig | 0-20 | 0-20 | 0-30 | 70-100 |
| 8 | Growth | High | 0-30 | 0-30 | 0-40 | 20-70 |
| 9 | Diversified Equity | High | 0-20 | 0-20 | 0-30 | 70-100 |
| 10 | Sustainable Equity Fund | High | 0-20 | 0-20 | 0-30 | 70-100 |
| 11 | Pure Growth Fund | High | 0 | 0 | 0-40 | 60-100 |
| 12 | Balanced | Medium | 20-50 | 20-40 | 0-40 | 10 – 100 |
| 13 | Conservative | Low | 50-80 | 0-50 | 0-40 | 0-15 |
| 14 | Secure | Low | 50-100 | 0-50 | 0-40 | 0 |
| 15 | Dynamic Bond | Low | 60-100 | 0-40 | 0 | |
| 16 | Money Market II | Low | 0 | 0 | 100 | 0 |
On maturity, you will be eligible to receive the Fund value, provided the settlement option has not been exercised.
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.
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.
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.
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.
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.
“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 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.
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.
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% |
| Diversified Equity Fund | 1.25% |
| Sustainable Equity Fund | 1.25% |
| Pure Growth Fund | 1.25% |
| Midcap Momentum Index Fund | 1.25% |
| Nifty Alpha 50 Fund | 1.25% |
| Nifty 500 Momentum 50 Fund | 1.25% |
| Nifty Momentum Quality 50 Fund | 1.25% |
| Balanced Fund | 1.10% |
| NIFTY Smallcap Quality Index Fund | 1.00% |
| Money Market II Fund | 0.90% |
| Dynamic Bond Fund | 0.90% |
| Conservative Fund | 0.90% |
| Secure Fund | 0.90% |
| Secure Plus Fund | 0.90% |
| Discontinuance Policy Fund | 0.50% |
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
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 |
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.
A maximum of twelve Switches are allowed in any policy year and are free of charge
A maximum of six Premium Redirections are allowed in each policy year and are free of any charge.
After the first five policy years, a maximum of two Partial Withdrawals are allowed in a policy year and are free of any charge.
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 of 30 days (15 days for the monthly mode) from the due date of the first unpaid premium will be allowed.
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.
You will have the Revival Period of three years from the Date of Discontinuance to revive your policy.
If you are not satisfied with the terms of the Max Life Fast Track Super policy, you can return your policy within thirty (30) days beginning from the date of receipt of the policy document, whether received electronically or otherwise
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 of the Policy (i.e. within the Lock-in Period): the Company will credit the Fund Value to the Discontinuance Policy Fund after deducting applicable Surrender / Discontinuance Charges. At the expiry of five years (i.e. at the expiry of the Lock-in Period), the Company will pay you the value of units in the Discontinuance Policy Fund as at that date.
Surrender post first five policy years (i.e. after the expiry of the Lock-in Period): The policyholder will have the option to surrender the policy anytime, and proceeds of the policy fund shall be payable.
For more details, you can read the Max Life Fast Track Super Policy Brochure.
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.
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 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 / Equity Mutual Fund
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. 4,900. So, the balance amount of Rs. 95,100 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. 4,900 |
| Balance amount (investment) | 91,500 |
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/Equity Mutual Fund combination below;
| Term Insurance + PPF | Term insurance + Equity Mutual Fund | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + Equity Mutual Fund | 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 |
| 42,21,355 | 69,68,519 | ||||
| IRR | 6.68% | 10.82% | |||
Here the IRR for a combination of Pure Term Insurance + PPF works outs to be 6.68% Which is considerably a good yield for a debt instrument.
The combination of Pure Term Insurance + Equity Mutual Fund yields 10.82% which is an inflation-beating return for the long term.
| Equity Mutual Fund Tax Calculation | |
| Maturity value after 20 years | 76,74,450 |
| Purchase price | 19,02,000 |
| Long-Term Capital Gains | 57,72,450 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 56,47,450 |
| Tax paid on LTCG | 7,05,931 |
| Maturity value after tax | 69,68,519 |
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.
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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