Listen to this articleIn India education inflation is at an alarming rate of 12% p.a. This means every 6 years, the cost of education doubles (Rule of 72). The various uncertainties of life and the rising cost of education directly affect your child’s future.
Securing your child’s dream is important. For this, you need to invest. Will investment in Max Life Future Genius plan help in fulfilling your child’s dream?
What are the Advantages(pros) and Disadvantages(cons) of Max Life’s Future Genius Education Plan?
Can you be worry-free by investing in this plan? In this article, we shall discover the good and not-so-good aspects of the Max Life Future Genius Education plan, and how this plan works.
Let’s get started!
Table of Contents
1.)An Overview of Max Life Future Genius Education Plan
2.)Features of Max Life Future Genius Education Plan – Analysis
3.)Eligibility Criteria Max Life Future Genius Education Plan – Analysis
4.)Review of Benefits in detail under Max Life Future Genius Education Plan
5.)The Grace Period, Discontinuance and Revival of Max Life Future Genius Education Plan
6.)Free Look Period of Max Life Future Genius Education Plan
7.)Surrendering Max Life Genius Education Plan – Analysis
8.)Advantages of Max Life Genius Education Plan – Analysis
9.)Disadvantages of Max Life Genius Education Plan – Analysis
10.)Research Methodology of Max Life Future Genius Education Plan
- Benefit Illustration – IRR (Internal Rate of Return i.e. Interest Rate) analysis of Max Life Future Genius Education Plan
11.)Max Life Future Genius Education Plan vs. Other Investment Products
- Max Life Future Genius Education Plan Alternative – Term Insurance Plan + PPF / ELSS
- ICICI Pru Smart Kid Solution vs. Max Life Future Genius Education Plan
- SBI Life Insurance Child Plan – Smart Scholar vs. Max Life Future Genius Education Plan
12.)Max Life Future Genius Education Plan vs. Other Investment Products – Review Conclusion
13.)Final Verdict on Max Life Future Genius Education Plan – Good or Bad?
1. An Overview of Max Life Future Genius Education Plan
Max Life Future Genius Education Plan is a Non-Linked Participating Individual Life Insurance Savings Plan. It offers Four annual guaranteed moneybacks each equal to 25% of the Sum Assured payable in the last four years of the Policy Term.
You can find the official brochure of Max Life Future Genius Education Plan here, for more Policy Details.
2. Features of Max Life Future Genius Education Plan – Analysis
The product offers you the freedom to choose your own policy term and customize the product.
It offers the flexibility to discount or defer their money-back payments.
The cash bonus will be declared every year from the end of the second policy year and thereafter every year-end and gets accrued.
3. Eligibility Criteria Max Life Future Genius Education Plan – Analysis
| Minimum | Maximum | |
| Age at Entry | 21 years | 45 years |
| Maximum Maturity Age | 66 years | |
| Policy Term | 13 years to 21 years | |
| Premium Payment Term of Max Life Future Genius Education | 8 Pay variant – 8 years or Limited Pay variant – Policy Term less than 3 years |
|
| Annualised Premium | For 8 pay variants – 40,000 For Limited pay variant – 20,000 |
No limit |
| Sum Assured (SA) | For 8 pay variants – 3,27,000 For the Limited pay variant – 2,12,000 |
No limit |
| Premium Payment Mode | Yearly, half-yearly, quarterly, and monthly premium paying modes. | |
4. Review of Benefits in detail under Max Life Future Genius Education Plan
Death benefit – Analysis
It includes a Death Benefit plus a Policy Continuance Benefit.
Death Benefit is payable immediately on the death of the Life Insured and is defined as higher of:
- 11 times the (Annualised Premium plus underwriting extra premiums^ (if any)),
- 105% of (Total premiums paid plus underwriting extra premiums plus loadings for modal premiums paid as on the date of death of the Life Insured,
- Guaranteed Sum Assured on Maturity
- Any absolute amount assured to be paid on death (this is equal to the Sum Assured)
Policy Continuance Benefit – On the death of the Life Insured, all future premiums will be waived and the policy will continue as it is. Money back(s) and Maturity Benefit shall be payable to the beneficiary as and when due.
Money Back Benefits – Analysis
Four (4) moneybacks each equal to 25% of the Sum Assured are payable in the last four policy years. Each money back is scheduled to be paid at the end of each policy year as shown below:
Moneyback 1 (Max Life Future Genius Education Policy Term less than 3 years)
Moneyback 2 (Max Life Future Genius Education Policy Term less than 2 years)
Moneyback 3 (Max Life Future Genius Education Policy Term less 1 year)
Moneyback 4 (at the end of Max Life Future Genius Education Policy Term)
Maturity Benefit – Analysis
On Maturity, in addition to any installment of the Money Back payment which is due on the Maturity Date, the sum total of the following is paid:
Accrued Paid-up Additions, if any, Or Cash Bonus (if any), whichever is applicable; and Terminal Bonus, if any.
5. The Grace Period, Discontinuance and Revival of Max Life Future Genius Education Plan
Grace period
A grace period of 30 days (15 days in case of monthly premium payment mode) from the due date for payment of each premium will be allowed to the Policyholder for payment of premium.
Discontinuance
Discontinuance of Payment of Premium before the Max Life Future Genius Education Policy has acquired surrender value – In case of non-receipt of two full year’s premiums in case of the 8 Pay variant and two full years’ premiums in case of the Limited Pay variant, the Max Life Future Genius Education policy will lapse and no benefits are payable.
Discontinuance of Payment of Premium after the Max Life Future Genius Education Policy has acquired surrender value – Once the Max Life Future Genius Education Policy acquires a surrender value, by default the Policy will become a Reduced paid-up policy (RPU) in case of non-payment of any further premium.
Revival
Once the Max Life Future Genius Education policy has lapsed, it can only be revived within a revival period of five years from the due date of the first unpaid premium.
6. Free Look Period of Max Life Future Genius Education Plan
You have a period of 15 days (30 days in case the Policy has been bought through Distance Marketing) from the date of receipt of the Max Life Future Genius Education Policy document, to review the terms and conditions of the Policy, if you disagree with any of those terms and conditions, you have the option to return the Max Life Future Genius Education Policy.
7. Surrendering Max Life Genius Education Plan – Analysis
The Max Life Genius Education Policy cannot be surrendered before it has acquired the Surrender Value. However, if the Max Life Genius Education Policy has been surrendered post it has acquired the Surrender Value, then the same shall be payable to you.
The higher Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV) is referred to as Surrender Value.
8. Advantages of Max Life Genius Education Plan – Analysis
- Nominees can choose to take 1% of Death Benefit as monthly income which will be payable for 135 months.
- Premium waiver is an inbuilt option in the policy.
- Three rider options are available.
9. Disadvantages of Max Life Genius Education Plan – Analysis
- Loan provision is not available under this plan.
- The sum assured is too low in the Max Life Future Genius Education Plan.
- The first money-back payment can’t be discounted and similarly, the last money-back payment can’t be deferred. So, within that period you can either pre-pone or postpone the money-back payment.
10. Research Methodology of Max Life Future Genius Education Plan
Instead of getting the Maturity Benefit at the end of the Policy Term, Money policies offer periodic cash flows to meet your requirements. Here, in Max Life Future Genius Education Plan the payouts are curated at the end of the Policy Term i.e., the last 4 years.
All the payouts are guaranteed – 25 % of Sum Assured. Along with the last payout you receive a bonus. Let us work out the Internal rate of return and figure out how this plan is beneficial in terms of investment.
Benefit Illustration – IRR (Internal Rate of Return i.e. Interest Rate) analysis of Max Life Future Genius Education Plan
Mr. A, aged 35 years, wants to plan for his son Avinash’s (age 3 years) graduation. He invests 1,00,000 per annum in the Max Life Future Genius Education Plan. He chooses the Limited Pay variant with a policy term of 18 years and a mode of premium payment as annual. His Premium Payment Term is 15 years and Sum Assured equals ₹ 16,85,772.
| Age | 35 years |
| Sum Assured | 16,85,772 |
| Policy Term | 18 years |
| Premium paying Term | 15 years |
| Annualised premium | ₹ 1,00,000 |
He is entitled to receive ₹4,21,443 each year for the last 4 policy years. The bonus is payable along with the last payout. These bonuses are non-guaranteed.
The scenarios are depicted at 4% and 8% investment returns with no PUA (bonus Paid-Up Additions) withdrawals during the Policy Term. These illustrated rates of investment returns are not guaranteed.
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 a number of factors including future investment performance.
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -1,00,000 | 16,85,772 | -1,00,000 | 16,85,772 |
| 36 | 2 | -1,00,000 | 16,85,772 | -1,00,000 | 16,85,772 |
| 37 | 3 | -1,00,000 | 16,85,772 | -1,00,000 | 16,85,772 |
| 38 | 4 | -1,00,000 | 16,85,772 | -1,00,000 | 16,85,772 |
| 39 | 5 | -1,00,000 | 16,85,772 | -1,00,000 | 16,85,772 |
| 40 | 6 | -1,00,000 | 16,85,772 | -1,00,000 | 16,85,772 |
| 41 | 7 | -1,00,000 | 16,85,772 | -1,00,000 | 16,85,772 |
| 42 | 8 | -1,00,000 | 16,85,772 | -1,00,000 | 16,85,772 |
| 43 | 9 | -1,00,000 | 16,85,772 | -1,00,000 | 16,85,772 |
| 44 | 10 | -1,00,000 | 16,85,772 | -1,00,000 | 16,85,772 |
| 45 | 11 | -1,00,000 | 16,85,772 | -1,00,000 | 16,85,772 |
| 46 | 12 | -1,00,000 | 16,85,772 | -1,00,000 | 16,85,772 |
| 47 | 13 | -1,00,000 | 16,85,772 | -1,00,000 | 16,85,772 |
| 48 | 14 | -1,00,000 | 16,85,772 | -1,00,000 | 16,85,772 |
| 49 | 15 | -1,00,000 | 16,85,772 | -1,00,000 | 16,85,772 |
| 50 | 16 | 4,21,443 | 16,85,772 | 4,21,443 | 16,85,772 |
| 51 | 17 | 4,21,443 | 16,85,772 | 4,21,443 | 16,85,772 |
| 52 | 18 | 4,21,443 | 16,85,772 | 4,21,443 | 16,85,772 |
| 5,13,488 | 13,01,574 | ||||
| IRR | 1.76% | 5.27% | |||
In the above illustration, the IRR (Internal Rate of Return ie. Interest Rate) is calculated at 5.27%.
In the above IRR calculation, the final payout varies due to the bonus amount. In the 4% scenario, the IRR is 1.76%. Your savings bank account yields better interest than your Investment in Max Life Future Genius education plan.
In the 8% scenario, the IRR is 5.27%. Even a bank fixed deposit earns a better return than your Investment in Max Life Future Genius education plan. Moreover, to meet the skyrocketing education expense, investment in this plan is not a good option, as the returns are lesser than the inflation rate.
11. Max Life Future Genius Education Plan vs. Other Investment Products
Instead of investing in the Max Life Future Genius Education plan, there are better alternate options available in the market. Now, let us do a small comparison and figure out the returns if the same premium amount is invested elsewhere.
i.) Max Life Future Genius Education Plan Alternative – Term Insurance Plan + PPF / ELSS
For comparison purposes, let us assume all the metrics similar to the above illustration. So, to have a life cover for a sum assured of around ₹ 17 lakhs, the premium amount would be 12,000 per annum for 10 years.
In the earlier illustration, the annualized premium is ₹ 1 lakh and the Premium Paying Term is 15 years. This leaves us with 88,000 for investment in the first 10 years and ₹ 1 lakh fully available for investment in the last 5 years.
| Pure Term Insurance | |
| Sum Assured | 17,00,000 |
| Policy Term | 18 years |
| Premium paying Term | 10 years |
| Annualised premium | ₹ 12,000 |
| Investment | ₹ 88,000 |
The investment can be made into a PPF account or an ELSS fund depending on your risk appetite. Here, we have worked out both scenarios. The amount accumulated under these scenarios is invested in a 7% return, to withdraw annually to match the payout in the last 4 years in Max Life Future Genius Education Plan.
Under the PPF account, the final Maturity Value is ₹ 24.60 lakhs and this amount is invested in a 7% return instrument. After withdrawing ₹ 4.21 lakhs similar to the above illustration for the first 3 years, the final value of ₹ 15.64 lakhs is taken out fully in the fourth year.
Under ELSS, the final maturity value is ₹ 37.59 lakhs (pre-tax value). The capital gains tax is payable while exiting the fund. This leaves you a post-value of ₹34.77 lakhs.
This amount is invested in a 7% return instrument. After withdrawing ₹ 4.21 lakhs similar to the above illustration for the first 3 years, the final value of ₹ 28.10 lakhs is taken out fully in the fourth year.
|
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 |
17,00,000 |
-1,00,000 |
17,00,000 |
|
36 |
2 |
-1,00,000 |
17,00,000 |
-1,00,000 |
17,00,000 |
|
37 |
3 |
-1,00,000 |
17,00,000 |
-1,00,000 |
17,00,000 |
|
38 |
4 |
-1,00,000 |
17,00,000 |
-1,00,000 |
17,00,000 |
|
39 |
5 |
-1,00,000 |
17,00,000 |
-1,00,000 |
17,00,000 |
|
40 |
6 |
-1,00,000 |
17,00,000 |
-1,00,000 |
17,00,000 |
|
41 |
7 |
-1,00,000 |
17,00,000 |
-1,00,000 |
17,00,000 |
|
42 |
8 |
-1,00,000 |
17,00,000 |
-1,00,000 |
17,00,000 |
|
43 |
9 |
-1,00,000 |
17,00,000 |
-1,00,000 |
17,00,000 |
|
44 |
10 |
-1,00,000 |
17,00,000 |
-1,00,000 |
17,00,000 |
|
45 |
11 |
-1,00,000 |
17,00,000 |
-1,00,000 |
17,00,000 |
|
46 |
12 |
-1,00,000 |
17,00,000 |
-1,00,000 |
17,00,000 |
|
47 |
13 |
-1,00,000 |
17,00,000 |
-1,00,000 |
17,00,000 |
|
48 |
14 |
-1,00,000 |
17,00,000 |
-1,00,000 |
17,00,000 |
|
49 |
15 |
-1,00,000 |
17,00,000 |
-1,00,000 |
17,00,000 |
|
50 |
16 |
4,21,443 |
17,00,000 |
4,21,443 |
17,00,000 |
|
51 |
17 |
4,21,443 |
17,00,000 |
4,21,443 |
17,00,000 |
|
52 |
18 |
4,21,443 |
17,00,000 |
4,21,443 |
17,00,000 |
|
53 |
15,64,771 |
28,10,760 |
|||
|
IRR |
6.16% |
9.37% |
|||
In the above illustration, the IRR for Term Insurance + PPF is calculated at 6.16% and Term Insurance + ELSS is calculated at 9.37%.
ELSS Tax calculation
|
ELSS Tax Calculation |
|
|
Maturity value after 15 years |
37,59,671 |
|
Purchase price |
13,80,000 |
|
Long-Term Capital Gains |
23,79,671 |
|
Exemption limit |
1,25,000 |
|
Taxable LTCG |
22,54,671 |
|
Tax paid on LTCG |
2,81,834 |
|
Maturity value after tax |
34,77,837 |
In the above illustration, the Maturity Value after tax is calculated at 34,77,837.
The IRR under Pure Term Insurance along with PPF investment is 6.11%. The IRR under Pure Term Insurance along with ELSS investment is 9.37% (Post-Tax Return).
This IRR analysis shows that buying a ready-made child education will not aid you in meeting your child’s dream. Ideally, you need an adequate life cover to protect your family. Along with that, a goal-based investment portfolio will help you in achieving all your dreams.
ii) ICICI Pru Smart Kid Solution vs. Max Life Future Genius Education Plan
Read the complete review of ICICI Pru Smart Kid Solution here. A unit-linked, non-participating individual savings life insurance plan. This strategy offers you several options for saving money so you can accumulate funds for your desired goals, as well as a life insurance policy to safeguard your family even in the unfortunate event of your loss.
iii) SBI Life Insurance Child Plan – Smart Scholar vs. Max Life Future Genius Education Plan
Some of the features of SBI Life Insurance Child Plan – Smart Scholar are,
It provides market-linked earnings in addition to insurance protection.
The benefits of the policy would remain in effect while you could only pay premiums for a short time.
Integrated Premium Waiver to guarantee the continuation of your coverage.
Click Here to read the complete review of SBI Life Insurance Child Plan – Smart Scholar
12. Max Life Future Genius Education Plan vs. Other Investment Products – Review Conclusion
We have compared and analyzed Max Life Future Genius Education Plan with all other investment alternatives and the combination of Term Insurance + PPF or ELSS is a far better option because it keeps the insurance and investment component separate.
13. Final Verdict on Max Life Future Genius Education Plan – Good or Bad?
This plan provides a means to save money specifically for your child’s education. Besides being an education savings plan, it may also provide life insurance coverage. This ensures that in case of an unfortunate event, your child’s education fund is protected.
It offers payouts at specific intervals to meet educational expenses or other financial needs. The pay-outs are guaranteed but the bonuses are non-guaranteed.
The returns are not satisfactory for a long-term investment. The education inflation leaves you grappling with the aftermath. Max Life Future Genius Education Plan is not a savior that protects your child’s dream. It is a savior of Insurance agents who get high agent commissions.
Investing separately in your children’s education goal is the best way to tackle inflation. These ready-made children’s education plans will derail all your financial plans.
Avoid making emotional decisions especially related to kids’ education. Choose your investments with the help of Certified Financial Planners rather than searching for financial advice on Quora, Facebook, Twitter, etc.
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