We all have the responsibility to fulfill the financial dreams of our family and also to provide them with financial safety in the case of our unfortunate absence.
So let’s look at the Max Life Flexi Wealth Plus Policy and see whether it caters to our dual needs.
Max life insurance claims that Flexi wealth plus is a simple & flexible solution that combines life protection & savings for you.
Will the Max Life Flexi Wealth Plus Plan really help you grow your wealth & provide life protection in one go? Let’s find out.
1.) What is Max Life Flexi Wealth Plus Plan?
2.) Features of Max Life Flexi Wealth Plus Plan
3.) Eligibility Criteria of Max Life Flexi Wealth Plus Plan
4.) Max Life Flexi Wealth Plus Plan at a Glance
5.)Five Investment Strategies of Max Life Flexi Wealth Plus Plan
6.)11 Fund options of Max Life Flexi Wealth Plus Plan
7.)Benefits under Max Life Flexi Wealth Plus Plan
8.)Other Benefits of Max Life Flexi Wealth Plus Plan
9.)Various Charges of the Max Life Wealth Plus Plan
10.)Grace Period, Discontinuance & paid-up, Revival of Max Life Flexi
Wealth Plus Plan
11.) Free look period of the Max Life Flexi Wealth Plus Plan
12.) Surrendering Max Life Flexi Wealth Plus Plan
13.) Advantages of the Max Life Flexi Wealth Plus Plan
14.)Disadvantages of Max Life Flexi Wealth Plus Plan
15.)Research Methodology
16.)IRR of Max Life Flexi Wealth Plus Plan
17.)Max Life Flexi Wealth Plus Plan Vs. Other Investment Products
18.)Max Life Flexi Wealth Plus Plan Vs. Pure Term Insurance Plan + ELSS
19.)Final Verdict on Max Life Flexi Wealth Plus Plan
It is a Unit Linked, Non – Participating, Individual, Life Insurance plan. Based on your risk appetite, you can choose your investment strategy & funds.
The sum assured on death is based on your policy term & premium paying term.
On maturity you will receive the fund value as a lump sum amount or your nominee will receive the death benefit in the unfortunate case of your death.
The below tabular column will give you a detailed comparison between the two options that is Wealth Variant and Whole Life Variant.
| Wealth Variant | Whole life Variant | |
| Minimum Age at Entry | 91 days | 18 years |
| Maximum Age at Entry | Single pay: | (65-PPT) subject to a maximum value of 55 years |
| 1.25 times cover -70 years | ||
| 10 times cover – 45 years | ||
| Limited Pay: (65-PPT) years | ||
| Regular Pay: 60 years | ||
| Minimum Maturity Age | 18 years | 100 years |
| Maximum Maturity Age | 85 years | 100 years |
| Policy Term | 10 to 67 years | 100-Entry age |
| Premium Payment mode | Single, Annual, Semi-Annual, Quarterly and Monthly. | |
| Option | Premium Paying Term | Policy term |
| Wealth Variant: Single pay | Single | 10 years to 30 years |
| Wealth Variant: Limited pay | 5 to 29 years | 10 years to 67years |
| Wealth Variant: Regular pay | 10 to 67years | 10 years to 67years |
| Whole Variant | 7 to 20 years | 100 less Age at entry |
Band 1: Annualised premium less than ₹ 100,000
Band 2: Annualised premium between ₹ 100,000 to ₹ 199,999 (both inclusive).
Band 3: Annualised/Single premium of ₹ 200,000 and above
There are two types of Variants available under this plan.
Wealth variant- You can choose from multiple options of Single, Limited, and Regular pay. This variant helps you to grow your wealth while securing your family financially for a limited-term cover.
Whole Life Variant – You can choose from multiple Limited pay options. In this option, there is a death cover that is applicable for your whole life.
In this strategy, you can manage your investments by choosing amongst the following 16 investment funds in the proportion of your choice.
High Growth
Nifty Smallcap Quality Index fund
Midcap Momentum Index Fund
Diversified Equity
Nifty Alpha 50 Fund
Nifty 500 Momentum 50 Fund
Growth Super
Growth
Sustainable Equity Fund
Pure Growth Fund
Balanced
Conservative
Dynamic Bond
Secure
Secure Plus
Money Market II
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 the Secure Plus Fund will be progressively moved to the Growth Super Fund based on the following formula:
[1 / (13 – month number in the policy year)]
Based on the life change, the policyholder can choose the funds to create a balance between equity and debt. The investments are distributed between Fund 1 and Fund 2 with their proportions varying as per your different life stages.
Fund options for Fund 1:
Fund options for Fund 2:
| Age (last Birthday) | Proportion in Fund 1 | Proportion in Fund 2 |
| Up to 25 | 85.00% | 15.00% |
| 26-30 | 80.00% | 20.00% |
| 31-35 | 75.00% | 25.00% |
| 36-40 | 70.00% | 30.00% |
| 41-45 | 65.00% | 35.00% |
| 46-50 | 50.00% | 50.00% |
| 51-55 | 35.00% | 65.00% |
| 56 & above | 30.00% | 70.00% |
This investment strategy can help you to secure your gains. Primarily this investment strategy distributes the equity and debt ratio of 75%:25% proportion.
At each monthly anniversary of the policy, the portfolio will be rebalanced and funds will be reallocated depending on a pre-defined trigger event.
Fund options for Fund 1:
a) Growth Super Fund
b) Growth Fund
c) Diversified Equity Fund
Fund options for Fund 2:
a) Secure Fund
b) Conservative Fund
c) Secure Plus Fund
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 date the policy matures.
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 policy maturity.
| Number of Years to Maturity | Proportion in Growth Super Fund | Proportion in Secure Fund |
| 16 & further | 80% | 20% |
| 11 – 15 y | 60% | 40% |
| 6 – 10 y | 40% | 60% |
| 0 – 5 y | 20% | 80% |
The following table will give you different types of Fund options that are available in the Max Life Flexi Wealth Plus.
| 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 | Diversified Equity | High | 0-20 | 0-20 | 0-30 | 70-100 |
| 5 | Nifty Alpha 50 Fund | Very High | 0 | 0 | 0-20 | 80-100 |
| 6 | Nifty 500 Momentum 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 | Sustainable Equity Fund | High | 0-20 | 0-20 | 0-30 | 70-100 |
| 10 | Pure Growth Fund | High | 0 | 0 | 0-40 | 60-100 |
| 11 | Balanced | Medium | 20-50 | 20-40 | 0-40 | 10 – 100 |
| 12 | Conservative | Low | 50-80 | 0-50 | 0-40 | 0-15 |
| 13 | Dynamic Bond | Low | 60-100 | 0-40 | 0 | |
| 14 | Secure | Low | 50-100 | 0-50 | 0-40 | 0 |
| 15 | Secure Plus | Low | 60-100 | 0-40 | 0-40 | 0 |
| 16 | Money Market II | Low | 0 | 0 | 100 | 0 |
On the death of the Life Insured anytime during the term of the policy, the nominee shall get the highest of the following benefits:
There are two maturity benefits which are Fund Value & Return of Mortality charges.
Fund Value: On maturity, you will be eligible to receive an amount, provided the settlement option has not been exercised, equal to the Fund Value.
Return of Mortality Charges (ROMC): At the end of the policy term, on the maturity date, the total amount of mortality charges deducted in respect of life cover provided throughout the policy term, will be added back as ROMC, to the Fund Value, as applicable.
Survival benefit includes Guaranteed Loyalty Additions and Guaranteed Wealth Boosters.
Guaranteed loyalty additions: These are payable as a percentage of the total fund value at the end of each policy year starting from the 6th policy year and at the end of each policy year thereafter, provided all due premiums have been paid.
Guaranteed Wealth Boosters: A percentage of the Fund Value to be added to the Fund by the creation of additional units, at the end of every 5 years starting from the 10th policy year.
| Premium Band | Guaranteed loyalty additions | Guaranteed Wealth Boosters |
| Band 1 | NA | NA |
| Band 2 | 0.25% | 2% |
| Band 3 | 0.40% | 2% |
There is no limit on the number of switches done in a policy year i.e., you may switch any number of times between the available funds without any charges being levied. The Minimum Switch amount is ₹ 5,000.
You may redirect your future premiums between available Funds at any time. A maximum of six premium redirections are allowed in any policy year and all are free of charge.
No partial withdrawals are allowed in the first five policy years and thereafter a maximum of twelve (12) partial withdrawals are allowed in any policy year.
The minimum amount of partial withdrawal allowed per transaction is ₹ 5,000 & the maximum amount is 25% of the fund value as of the date of the partial withdrawal. Not allowed during the period of discontinuance and settlement period.
An Increase or decrease is allowed in the premium payment term and policy term under this plan subject to all the due premiums being paid and completion of the lock-in period.
“If the settlement option is chosen, then the policy will continue after the maturity date for a period not exceeding 5 years from the maturity date”. The first installment will be paid out on the Date of Maturity.
Available after completion of the first five policy years. Option to decrease the premium up to 50% of your original Annualized Premium, subject to the minimum premium limit.
This option can be opted for 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.
These riders provide benefits upon diagnosis of any of the critical illnesses covered in the policy brochure.
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 4% & 6%. There is no premium allocation charge from the 11th policy year onwards.
It is a percentage of the annualized/single premium & will be deducted between year 1 and year 10 (from year 11 – zero). From the 13th month, it will inflate by 5% p.a.
The annual rate of the Fund Management Charge is as below:
| Fund Management Charge (% of Fund Value) | |
| Fund Name | Fund Management Charge (p.a.) |
| Money Market II | 0.90% |
| Secure Plus Fund | 0.90% |
| Secure Fund | 0.90% |
| Dynamic Bond Fund | 0.90% |
| Conservative Fund | 0.90% |
| Balanced Fund | 1.10% |
| Growth Fund | 1.25% |
| Growth Super Fund | 1.25% |
| Diversified Equity Fund | 1.25% |
| High Growth Fund | 1.25% |
| Sustainable Equity Fund | 1.25% |
| Discontinuance Policy Fund | 0.50% |
The charge is per 1000 of Sum at Risk and will depend on the gender and the attained age of the life insured.
Charge per 1000 of Sum at Risk;
| Attained Age | Age 25 | Age 35 | Age 45 | Age 55 |
| Male | 0.84 | 1.08 | 2.32 | 6.76 |
| Female | 0.84 | 0.94 | 1.77 | 5 |
Surrender / Discontinuance Charge:
The surrender/discontinuance charges are expressed as the lower of X% of Annualised Premium, X% of Fund Value, ‘Y’ fixed rupee amount where X and Y vary according to the year of premium discontinuance/surrender. The charge differs for Single Pay and Limited/ Regular Pay.
Switch Charge:
All switches will be free of charge.
Premium Redirection Charge:
There is no charge for premium redirection. A maximum of six premium redirections are allowed in any Policy year.
Partial Withdrawal charges:
Partial withdrawals are free of any charge. A maximum of twelve partial withdrawals are allowed in any policy year.
Miscellaneous Charges:
There are no miscellaneous charges
Inference from these charges:
Some of the charges are essential to run the plan /fund like mortality charges, and fund management charges. But most of the other charges weigh down the investment return like premium allocation charges, and policy administration charges. Even the discontinuance/ surrender charges lower your maturity value.
Grace period:
A Grace Period of 15 days from the due date of the first unpaid premium will be allowed and it will be extended up to 30 days if the policyholder uses any other mode of payment.
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.
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 a Revival Period of three years from the Date of Discontinuance to revive your policy.
If you disagree with the terms and conditions of the Max Life Flexi Wealth Plus policy, you can return the policy within a period of 30 days beginning from the date of receipt of the policy document, whether received electronically or otherwise.
During the lock-in period: You will also have the option to surrender the policy anytime and the proceeds of the Discontinuance Policy Fund shall be payable at the end of lock-in period or date of surrender, whichever is later.
After the lock-in period: You have the right to surrender the policy at any time during the Policy Term. The surrender benefit is equal to the Fund Value less applicable to surrender / discontinuance charges.
To gain more knowledge on Max Life Flexi Wealth Plan, you can read its Policy Brochure.
But will this information be enough to determine whether this insurance plan is suitable for you or not?
Whenever you plan to invest, you should always look for the potential return that you can generate from your Financial Investments.
There is also the important factor of the time value of money which has to be considered for calculating the return.
So, let us find out the Internal Rate of Return (IRR) for the Max life Flexi wealth Plus plan using a benefit Illustration provided on the Max Life website.
Let us analyze the IRR of Max Life Flexi Wealth Plus & then compare it with other similar investment avenues.
The Assumption for Comparison:
| Male | 35 years |
| Premium Payment Term | 5 years |
| Policy Term | 10 years |
| Sum Assured | ₹ 10,00,000 |
| Annualised Premium | ₹ 1,00,000 |
| Fund chosen | Balanced Fund |
| Variant | Wealth variant |
The fund value at the end of 10 years at an assumed rate of 4% in the worst case scenario will be ₹ 5,56,594 and at an assumed rate of 8% in the best case scenario will be ₹ 7,60,100.
Please note that the above-assumed rates of return of 4% and 8% p.a. respectively, for Balanced Fund, are not guaranteed and they are not the upper or lower limits of returns of the Funds.
| Wealth varient | |||||
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Sum Assured | Annualised premium / Maturity benefit | Sum Assured |
| 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 | 0 | 10,00,000 | 0 | 10,00,000 |
| 41 | 7 | 0 | 10,00,000 | 0 | 10,00,000 |
| 42 | 8 | 0 | 10,00,000 | 0 | 10,00,000 |
| 43 | 9 | 0 | 10,00,000 | 0 | 10,00,000 |
| 44 | 10 | 0 | 10,00,000 | 0 | 10,00,000 |
| 45 | 11 | 5,56,594 | 7,60,100 | ||
| 46 | |||||
| IRR | 1.35% | 5.34% | |||
Working out IRR for this annual cash flow demonstrates that the return at the worst-case scenario is at 1.35% & the best-case scenario is at 5.34%.
This proves that Max Life Flexi Wealth Plus plan couldn’t even reap a bank Savings account return @ 4% assumed rate & couldn’t even reap a bank FD rate @ assumed 8% rate which makes it difficult to beat inflation in the long run.
Since Max Life Flexi Wealth Plus is a ULIP plan, it is appropriate to compare it with any market-related investment. Also, it is important to incorporate another alternative that also provides us with life cover as the Max Life Flexi Wealth Plus Plan has life cover for the term period.
The annual premium of Rs. 1 lakh as seen in the above illustration could be utilized for a pure-term policy for life cover & the balance amount could be invested in an ELSS mutual fund for wealth accumulation purposes.
Let us assume that a Pure Term Insurance Plan with a Sum Assured of Rs.10 lakh, a policy term of 10 years & premium paying term of 5 years has been opted.
The annual premium for the same would be Rs. 7,700. The balance amount out of Rs. 92,300 could be invested in the Mutual Fund ELSS fund.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 10,00,000 |
| Policy Term | 10 years |
| Premium Paying Term | 5 years |
| Annualised Premium | ₹ 7,700 |
| Investment | ₹ 92,300 |
At the end of 10 years, the fund value (post-tax) would be Rs. 10.86 Lakhs. The IRR works out to 10.06% in the Post Tax Return. This is beneficial to the investor in the long run as the return is higher than the inflation rate.
| Term insurance + ELSS | |||
| Age | Year | Term Insurance premium + ELSS | 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 | 0 | 10,00,000 |
| 41 | 7 | 0 | 10,00,000 |
| 42 | 8 | 0 | 10,00,000 |
| 43 | 9 | 0 | 10,00,000 |
| 44 | 10 | 0 | 10,00,000 |
| 45 | 10,86,025 | ||
| IRR | 10.06% | ||
| ELSS Tax Calculation | |
| Maturity value after 10 years | 11,57,386 |
| Purchase price | 4,61,500 |
| Long-Term Capital Gains | 6,95,886 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 5,70,886 |
| Tax paid on LTCG | 71,361 |
| Maturity value after tax | 10,86,025 |
This alternate investment strategy provides better returns when compared to Max Life Flexi Wealth Plus.
This new scheme from Max Life will enable you to have flexibility in terms of the policy term, investment strategy, and also fund options.
Since this is a ULIP. It also has some complex charges and is not very transparent in its operation. The crucial factor of how you get low IRR is mainly because of charges which get deducted before being invested in the fund yielding you low returns.
Overall, we can conclude that investing in a ULIP like Max Life Flexi Wealth Plus Plan has some pros and cons.
If you are willing to take the risk, then you have much better market-related instruments in the market rather than investing in the Max Life Flexi Wealth Plus Plan.
You can invest in Mutual Funds that cater to your needs and also suits your time horizon.
Any insurance scheme which provides a combination of dual benefits will not be able to generate the inflation-beating return that you are looking for. So, it is better to keep both your Insurance and Investments separate to potentially yield better returns in the long run.
To better understand other Investment alternatives, you can discuss them with your Financial Advisor to see which will be the right fit for you.
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