Max Life Monthly Income Advantage Plan is a life insurance cum monthly income plan from Max Life Insurance.
The policy promises to offer guaranteed monthly income till the end of the policy term and a Lumpsum on maturity. The promise looks attractive, but is the policy benefit as good?
Should you buy this Max Life Monthly Income Advantage Plan?
Read this detailed Max Life Monthly Income Advantage Plan review to make an informed decision.
The Max Life Monthly Income Advantage Plan offers 15 different plan options called variants.
These variants differ with the premium payment term and policy term.
The lowest policy variant is ‘6-Pay-16’—which means the premium payment term is 6 years and the policy term is 10 years. Whereas the highest is the ‘15-Pay-45’ policy variant. On completion of the premium payment term, the policyholder will start receiving monthly income until the end of the policy term.
The fundamental features of the policy are shown in the table below.
| Features | Max Life Monthly Income Advantage Plan |
| Type of Plan | A Non-Linked Participating Savings Insurance Plan |
| Coverage | All individuals in accordance with Board-approved underwriting policy of the Company |
| Age at Entry | Minimum: 18 years; |
| Maximum Maturity Age | 12 Pay variant: 77 years |
| Premium Payment Term | 12 years or 15 years |
| Policy Term | Premium Payment Term plus 10 years, i.e., 12 Pay variant – 22 years; 15 Pay variant – 25 years |
| Premium Payment Modes | Annual, Semi-Annual, Quarterly and Monthly Premium Paying Modes |
| Minimum Annual Premium | ₹25,000 excluding extra premium, modal extra and all applicable taxes, cesses and levies as imposed by the Government |
| Maximum Annual Premium | No limit |
| Sum Assured | Minimum: 12 Pay variant – ₹3,24,000; 15 Pay variant – ₹4,05,000 |
| Maximum: No limit, subject to the Board-approved underwriting policy of the Company |
For a complete list of all the policy variants and other policy details, read the official policy brochure document here: Max Life Monthly Income Advantage Plan PDF.
In case of the death of the policyholder during the policy term, the rightful nominee will receive a lumpsum as the death benefit.
The lump-sum payable on the death of the policyholder will be the higher of,
In case of the policyholder’s death during the premium payment term. The remaining premium payments will be waived off. The nominee will receive the monthly income benefits and the maturity benefits on policy maturity.
The monthly income from the Max life Monthly Income Advantage plan is calculated by taking 10% of the sum assured and dividing it by 12 (Monthly income you will get = 10%*Sum assured/12).
In case you are buying the Max Life Monthly Income Advantage Plan, you will receive the monthly income for the period from completion of the premium payment term till policy maturity.
If you survive the term of your Max Life Monthly Income Advantage Plan, at the end of the policy term, you may or may not get maturity benefit.
The maturity benefit will be the accrued Revisionary Bonus and terminal bonus.
Max Life holds the right to declare the revisionary bonus or terminal bonus. If no revisionary or terminal bonus is announced during the term of your policy, you will not receive any maturity benefit at the end of your policy term.
Also, your assured sum will already have been paid out to you in the form of monthly income payments that you get during the term of your policy. This payment will be made over a minimum of 10years, and it does not discount the present value factor.
The present value factor means that a future income of ₹ 1 is worth less than income of ₹ 1 in the present. So if you earn ₹ 1 five years from now, you discount this amount by a present value factor to calculate its value today.
In this case, the assured benefit that you will get over 10 years will be less in present value terms than if you had received the entire assured benefit today. Also, the interest rate used for compounding the revisionary and terminal bonus, if you get one, will not be guaranteed.
Let’s say you are a 35-year-old buying the Max Life Monthly Income Advantage Plan.
The term of the policy is 25 years. The premium payment term is 15 years, i.e., 15-Pay-25. And the Annual premium is ₹75,000. The sum assured is ₹14,16,966.
| Male | 35 years |
| Sum Assured | ₹ 14,16,966 |
| Policy Term | 25 years |
| Premium Paying Term | 15 years |
| Annualised Premium | ₹ 75,000 |
From the 16th year onwards, you will start receiving a monthly income of ₹11,808 (₹ 1.41 Lakhs per annum). You will receive this monthly income for 10 years i.e., till the 25th year.
Under Section 80C of the Income Tax Act 1961, premiums paid upto ₹1.5 lakhs per annum are exempted from tax. Whereas, the maturity benefits or the death benefits are exempted under Section 10(10D) of the Income Tax Act 1961. It is the same as with any life insurance policy.
The table below shows the actual return rate from the Max Life Monthly Income Advantage Plan for the policy option chosen above.
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -75,000 | 14,16,966 | -75,000 | 14,16,966 |
| 36 | 2 | -75,000 | 14,16,966 | -75,000 | 14,16,966 |
| 37 | 3 | -75,000 | 14,16,966 | -75,000 | 14,16,966 |
| 38 | 4 | -75,000 | 14,16,966 | -75,000 | 14,16,966 |
| 39 | 5 | -75,000 | 14,16,966 | -75,000 | 14,16,966 |
| 40 | 6 | -75,000 | 14,16,966 | -75,000 | 14,16,966 |
| 41 | 7 | -75,000 | 14,16,966 | -75,000 | 14,16,966 |
| 42 | 8 | -75,000 | 14,16,966 | -75,000 | 14,16,966 |
| 43 | 9 | -75,000 | 14,16,966 | -75,000 | 14,16,966 |
| 44 | 10 | -75,000 | 14,16,966 | -75,000 | 14,16,966 |
| 45 | 11 | -75,000 | 14,16,966 | -75,000 | 14,16,966 |
| 46 | 12 | -75,000 | 14,16,966 | -75,000 | 14,16,966 |
| 47 | 13 | -75,000 | 14,16,966 | -75,000 | 14,16,966 |
| 48 | 14 | -75,000 | 14,16,966 | -75,000 | 14,16,966 |
| 49 | 15 | -75,000 | 14,16,966 | -75,000 | 14,16,966 |
| 50 | 16 | 0 | 14,16,966 | 0 | 14,16,966 |
| 51 | 17 | 1,41,696 | 14,16,966 | 1,41,696 | 14,16,966 |
| 52 | 18 | 1,41,696 | 14,16,966 | 1,41,696 | 14,16,966 |
| 53 | 19 | 1,41,696 | 14,16,966 | 1,41,696 | 14,16,966 |
| 54 | 20 | 1,41,696 | 14,16,966 | 1,41,696 | 14,16,966 |
| 55 | 21 | 1,41,696 | 14,16,966 | 1,41,696 | 14,16,966 |
| 56 | 22 | 1,41,696 | 14,16,966 | 1,41,696 | 14,16,966 |
| 57 | 23 | 1,41,696 | 14,16,966 | 1,41,696 | 14,16,966 |
| 58 | 24 | 1,41,696 | 14,16,966 | 1,41,696 | 14,16,966 |
| 59 | 25 | 1,41,696 | 14,16,966 | 1,41,696 | 14,16,966 |
| 60 | 2,54,619 | 14,99,921 | |||
| IRR | 2.23% | 5.82% | |||
Even though the policy benefits looked attractive, on doing the calculation, it is straightforward that the return rate is just 2.23%. For an investment of 25 long years, a 2.23% return is far below average and not worthy of any investor’s consideration.
In case revisionary bonuses and terminal bonuses are given by Max Life during the term of your policy, you will also receive ₹2.54 Lakhs at the time of the maturity of your policy, assuming the bonuses are compounded at a rate of 4% p.a. But you should remember that compounding rate is not certain, and only assumptions.
Suppose you died at the end of the 17th year, your nominee will receive a lump-sum amount as an insurance benefit. This lump-sum amount is likely to be equal to the assured benefit of ₹14,16,966. Your nominee will also keep receiving the monthly income of ₹11,808 per month for the remaining period.
Now suppose you died at the end of the 8th year after taking the policy. So you died after paying only 8 annual premiums of ₹75,000. Even without paying the annual premiums for 15 years, your nominee will receive the full assured benefits (death, survival and maturity benefit). The remaining premiums will also be waived off. And from the beginning of the 16th year, your nominee will also receive a monthly income of ₹11,808 for the next 10 years.
Max Life Monthly Income Advantage Plan combines life insurance with investment, but separating these components can lead to better financial outcomes. The same premium can be strategically reallocated to generate similar or even superior cash flows through more efficient alternatives. Let’s explore this by reallocating the premium from the previous example.
A pure-term life insurance policy with a ₹14.50 lakh sum assured costs ₹16,700 annually for a 25-year term with a 10-year premium payment period. This leaves ₹58,300 annually for investment, plus an additional ₹75,000 in the final 5 years since the term plan’s premium-paying period is shorter (10 years vs. 15 years in the Max Life Monthly Income Advantage Plan).
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 14,50,000 |
| Policy Term | 25 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 16,700 |
| Investment | ₹ 58,300 |
Low-risk investors might prefer debt instruments like the Public Provident Fund (PPF), while high-risk investors could opt for equity-based options such as an Equity Mutual Fund. For this analysis, we consider the Equity Mutual Fund route.
| Term insurance + Equity Mutual Fund | |||
| Age | Year | Term Insurance premium + Equity Mutual Fund | Death benefit |
| 35 | 1 | -75,000 | 14,50,000 |
| 36 | 2 | -75,000 | 14,50,000 |
| 37 | 3 | -75,000 | 14,50,000 |
| 38 | 4 | -75,000 | 14,50,000 |
| 39 | 5 | -75,000 | 14,50,000 |
| 40 | 6 | -75,000 | 14,50,000 |
| 41 | 7 | -75,000 | 14,50,000 |
| 42 | 8 | -75,000 | 14,50,000 |
| 43 | 9 | -75,000 | 14,50,000 |
| 44 | 10 | -75,000 | 14,50,000 |
| 45 | 11 | -75,000 | 14,50,000 |
| 46 | 12 | -75,000 | 14,50,000 |
| 47 | 13 | -75,000 | 14,50,000 |
| 48 | 14 | -75,000 | 14,50,000 |
| 49 | 15 | -75,000 | 14,50,000 |
| 50 | 16 | 0 | 14,50,000 |
| 51 | 17 | 1,41,696 | 14,50,000 |
| 52 | 18 | 1,41,696 | 14,50,000 |
| 53 | 19 | 1,41,696 | 14,50,000 |
| 54 | 20 | 1,41,696 | 14,50,000 |
| 55 | 21 | 1,41,696 | 14,50,000 |
| 56 | 22 | 1,41,696 | 14,50,000 |
| 57 | 23 | 1,41,696 | 14,50,000 |
| 58 | 24 | 1,41,696 | 14,50,000 |
| 59 | 25 | 1,41,696 | 14,50,000 |
| 60 | 28,44,703 | ||
| IRR | 8.01% | ||
The accumulated Equity Mutual Fund corpus is later transferred to an investment yielding 7% annually, serving as a source for regular withdrawals while ensuring a final lump sum withdrawal at maturity.
The pre-tax maturity value of the Equity mutual fund investment reaches ₹25.53 Lakhs. After the capital gains tax, the post-tax maturity value stands at ₹23.69 Lakhs. This corpus, when shifted to a 7% yielding investment, generates annual withdrawals similar to the annual income of the Max Life Monthly Income Advantage plan, followed by a full withdrawal at maturity. The resulting Internal Rate of Return (IRR) is 8.01%.
| Equity Mutual Fund Tax Calculation | |
| Maturity value after 15 years | 25,53,040 |
| Purchase price | 9,58,000 |
| Long-Term Capital Gains | 15,95,040 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 14,70,040 |
| Tax paid on LTCG | 1,83,755 |
| Maturity value after tax | 23,69,285 |
This return could be even higher if withdrawals are avoided, providing greater flexibility to manage cash flow as needed. In contrast, the Max Life Monthly Income Advantage Plan lacks flexibility and offers relatively lower returns, making it a less favourable choice.
The clear answer to this question is No.
I believe the reason is obvious by now, but I want to reiterate.
From the investment perspective, you can earn a much higher return by investing in alternative investment instruments.
If you are a risk-averse conservative investor, you may consider investing in PPF. With a slightly better risk tolerance, you may choose to invest in an Equity mutual fund.
If regular monthly income is your need, you can always set up a systematic withdrawal plan and get monthly income along with higher growth in the long term.
On the other hand, you can get a far higher life cover from a term insurance plan by paying a far lesser premium. Just as I stated earlier, Max Life Monthly Income Plan is a below-average investment option even for an endowment policy. It is better to avoid such policies.
But if you have already bought this policy, you can always surrender your policy and invest in better alternative options.
Max Life Monthly Income Advantage Plan has a 15 dayfree-look period. A free-look period is the number of days after you receive the policy in which you can return the policy without incurring any charge. In case you have bought the policy through any distance marketing channel your free-look period will be of 30 days.
You can surrender your Max Life Monthly Income Advantage Plan any time you want.
You have to return the original copy of the plan with a written request for cancellation to Max Life Insurance.
Upon termination of the policy, Max Life Insurance will return the surrender value at the time of cancellation. It may include deduction of the proportional risk premium and stamp duty charges, and any other expense incurred on your medical examination.
Like the Max Life Monthly Income Advantage Plan, endowment insurance policies are abundant.
Despite their different policy structures and attractive names, their fundamentals are the same. Their return generating potential will also be the same.
Max Life Monthly Income Advantage Plan review showed that this policy is no exception. Always look for better investment instruments rather than nicely wrapped investment products.
If you have any comments or questions, write them in the comment box below.
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View Comments
You are comparing Apples with Oranges. Neither PPF nor ELSS provide Insurance to the investor. Moreover you have just taken into consideration the Guaranteed Returns to assume a return of 1.97 %. And you have at a later stage mentioned that this Plan ( MIAP ) gives a Return of 8.7 %. Isn't 8.7% Return with an Assurance of Insurance, from Day One, a good proposition and priceless compared to the other options you had mentioned ?
Investments are of various types. Insurance is one amongst them to take care of the needs of the Family, if the Investor lose his life. You have deliberated only on WEALTH CREATION. And this is not the forte of Life Insurance.
In our comparison, we specifically aimed to highlight how a combination of term insurance with PPF or ELSS can provide a more focused and often better financial strategy. Here’s why:
Clear Separation: By separating term insurance from investments, you get dedicated, high-cover life insurance at a lower cost compared to bundled plans like MIAP.
Higher Returns: While MIAP offers an 8.7% return with insurance, combining term insurance with ELSS can potentially provide higher returns due to the aggressive market exposure of ELSS, along with robust life coverage.
Flexibility and Transparency: Standalone investments like PPF or ELSS provide greater transparency in returns and flexibility in management, unlike bundled plans that might have complex structures and fees.
Better Coverage: Term insurance generally offers higher life cover for a lower premium, ensuring your family's needs are well taken care of without compromising on investment returns.
In essence, our suggested approach allows you to maximize investment growth through PPF or ELSS, while securing comprehensive life cover through term insurance, making it a more tailored and potentially rewarding financial strategy.
Truly appreciated for this detailed post and the analysis.
Can you also help and throw some light on surrendering the policy to Max life Insurance.
Thanks
Thank you for your kind words and for engaging with the post!
For information on surrendering your policy with Max Life Insurance, I recommend checking out this helpful video: How to Surrender Max Life Insurance Policy https://www.youtube.com/watch?v=3DkCw7glgi8 . It provides a detailed walkthrough of the steps involved in the process. If you have any further questions, feel free to ask!
very well explained. I did not go through the plan and stuck up in paying the premiums. after reading this, it looks better to surrender the policy and invest the amount in equities/MFs/PPF/ELSS.