Max Life Online Savings Plan Review: Should You Invest?

You need a personalized investment plan designed for you to grow your savings. At the same time, you also need to protect your family’s financial future, even in your absence.

In order to meet the Key milestones of life, you need a proper investment plan & insurance plan covering both health & life.

Max Life Insurance offers a dual-benefit product named Max Life Online Savings Plan. Will this be suitable for your insurance basket & investment basket?

We are going to do a thorough and detailed analysis to find the advantages(pros) and disadvantages(cons) of the Max Life Online Savings Plan. This will help you a get thorough understanding of whether this Max Life Online Savings Plan is a Good or Bad option to meet the demand for both investment as well as long-term financial protection.

Let’s get started!

Table of Contents

1.)An Overview of Max Life Online Savings Plan
2.)Features of Max Life Online Savings Plan – Analysis
3.)Eligibility Criteria Of Max Life Online Savings Plan – Analysis With Illustration
4.)Benefits Of Max Life Online Savings Plan – Analysis in detail

• Death Benefit Review
• Maturity Benefit Review

5.)Additional Benefits Of Max Life Online Savings Plan – Review
6.)Investment Strategies & Fund Options of Max Life Online Savings Plan – Analysis With Illustration
7.)Various charges under the Max Life Online Savings Plan
8.)The Grace period, Discontinuance & paid-up, Revival Of Max Life Online Savings Plan – Analysis
9.)Free Look period of the Max Life Online Savings Plan – Analysis
10.)Surrendering the Max Life Online Savings Plan – Analysis
11.)Advantages of the Max Life Online Savings Plan – Analysis
12.)Disadvantages of Max Life Online Saving Plan – Analysis
13.)Research Methodology Of Max Life Online Savings Plan
14.)Benefit Illustration Of Max Life Online Savings Plan -IRR(Internal Rate Of Return i.e. Interest Rate) Analysis
15.)Max Life Online Savings Plan Vs Other Investment Products

i) Max Life Online Savings Plan Vs. Term Insurance + PPF / ELSS
ii) Max Life Online Savings Plan Vs Max Life Smart Wealth Plan
iii) Max Life Online Savings Plan Vs Max Life Guaranteed Lifetime Income Plan

16.)Max Life Online Savings Plan Vs Other Investment Products – Review Conclusion
17.)Final verdict on Max Life Online Savings Plan – Good or Bad?

1. An Overview of Max Life Online Savings Plan

It is a Unit Linked Non-Participating Individual Life Insurance Plan that offers life insurance protection for your family and provides market-linked returns. You can select your Death Benefit and Fund Option under this plan based on your needs.

Two variants

Variant 1 – Under this variant, Death Benefit is defined as the highest of Sum Assured or 105% of total premiums paid till the date of death or Total Fund Value as of the date of death.

Variant 2 – In this variation, the Death Benefit consists of a lump sum payment made immediately after the death of the policyholder, followed by periodic payments in the form of the Family Income Benefit and the Fund Value at the conclusion of the Policy Term. Additionally, the Company will pay all unpaid premiums after the date of the Life Insured’s passing.

For more details, you can look into the Max Life Online Savings Plan Brochure(pdf).

2. Features of Max Life Online Savings Plan – Analysis

• The plan offers two variants.

• You have the choice to choose the Policy Term and the Premium Payment Term. Choose from 11 Funds as per risk appetite. As an alternative, you can safeguard your investments from market volatility by choosing the Dynamic Fund Allocation investing strategy.

• There is no limit on the number of switches between funds done in a policy year.

• There is no Premium Allocation and Policy Administration charge under the Life Online Savings Plan. There will be only Mortality and Fund Management Charges.

3. Eligibility Criteria Of Max Life Online Savings Plan – Analysis With Illustration

Minimum Age at Entry	18 years
Maximum Age at Entry	Variant 1: 60 years Variant 2: 54 years
Maximum Maturity Age	Variant 1: 85 Years Variant 2: 64 years
Policy Term	Variant 1- Minimum 5 years; Maximum 52 years for Maturity Age <=70 Years Minimum 10 years; Maximum 67 years for Maturity Age > 70 years
	Variant 2- Minimum – 5 years; Maximum – 30 years
Premium Payment Term	Variant 1 Minimum – 5 years; Maximum – 52 years for Maturity Age <=70 years Minimum 10 years; Maximum – 67 years for Maturity Age > 70 years
	Variant 2- Minimum – 5 years; Maximum – 30 years
Minimum Annualised Premium	Annual Mode: ₹ 12,000 Semi-Annual mode: ₹ 6,000 Quarterly mode: ₹ 3,000 Monthly mode: ₹ 1,000
Maximum Annualised Premium	No limit
Premium Payment mode	Annual, Semi-Annual, Quarterly, and Monthly
Minimum Sum Assured	₹ 1,20,000
Maximum Sum Assured	No limit

4. Benefits Of Max Life Online Savings Plan – Analysis in detail

Death Benefit Review

Variant 1:

On the death of the Life Insured anytime during the term of the Max Life Online Savings policy, the nominee shall get the highest of the following benefits:

• Sum Assured equal to higher of Cover multiple times the Annualised Premium or 0.5 times the product of Max Life Online Savings Policy Term and Annualised Premium (reduced by applicable partial withdrawals, if any), or
• 105% of Total Premiums received up to the date of death, or
• Total Fund Value (as of the date of death).

Variant 2:

On the death of the Life Insured anytime during the term of the Max Life Online Savings policy, the policy shall continue till the end of the Policy Term and the nominee shall get the following benefits:

Lump Sum Benefit: Immediately on the death of the Life Insured, the highest Sum Assured (equal to a higher of 10 times the Annualised Premium or 0.5 times the product of Max Life Online Savings Policy Term and Annualised Premium), or 105% of Total Premiums received up to the date of death will be paid.

Family Income Benefit: A Family Income Benefit equal to 1% of the Sum Assured will be paid each month starting from the Max Life Online Savings Policy anniversary date of every month following or coinciding with the date of death of the Life Insured till the end of the Max Life Online Savings Policy Term, subject to a minimum of 36 monthly payments and a maximum of 120 monthly payments.

Funding of Premium: Under this benefit, the Company will fund all future outstanding premiums as and when due under the Policy Fund Value shall be paid as on the date of maturity

Maturity Benefit Review

On maturity, you will be eligible to receive the Fund Value, where the Fund Value will be calculated as:

Fund Value = Summation of the Number of Units in Fund(s) multiplied by the respective NAV of the Fund(s) as of the date of maturity.

5. Additional Benefits Of Max Life Online Savings Plan – Review

Switch:

You may Switch between available Funds at any time during the Max Life Online Savings Policy Term, subject to a minimum Switch amount of Rs.5,000. There is no limit on the number of switches done in a Max Life Online Savings policy year.

Premium Redirection:

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

Partial Withdrawal:

No partial withdrawals are allowed in the first five Max Life Online Savings policy years and then a maximum of two partial withdrawals with a minimum of Rs. 5000 are permitted in any Max Life Online Savings policy year.

Settlement Option:

The Max Life Online Savings Policy will continue after the maturity date for a period not exceeding 5 years from the maturity date if the settlement option is chosen.

The first installment will be paid out on the Date of Maturity. During the Max Life Online Savings settlement period, you will not be entitled to effect partial withdrawal or smart withdrawal but Switches will be allowed.

All inherent investment risks of the Max Life Online Savings Policy 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 Max Life Online Savings Policy period.

Premium Reduction:

Available after completion of the first five Max Life Online Savings Policy years. Option to decrease the premium up to 50% of your original Annualized Premium, subject to the minimum premium limit is available in Max Life Online Savings Plan.

This option can opt only once during the term of the contract, and the premium once reduced, cannot be subsequently increased in Max Life Online Savings Plan. In proportion to the reduction in premium, the base plan’s sum assured will also be reduced.

Additional rider benefit:

Max Life Critical Illness and Disability Secure Rider are the additional rider benefits in Max Life Online Savings Plan.

6. Investment Strategies & Fund Options Of Max Life Online Savings Plan – Analysis With Illustration

In Max Life Online Savings Plan you can choose your Investment Strategy. You may choose to invest in the following eleven (11) Funds available in this plan. You can also choose the Dynamic Fund Allocation option as an alternative.

The Fund details in decreasing order of potential risk in Max Life Online Savings Plan are as follows:

		Investment Mix of Funds (in %)
Funds	Risk profile	Govt Sec	Corporate bond	Money Market	Equities
High Growth	Very High	0-30	0-30	0-30	70-100
Nifty Small Cap Quality Index Fund	Very High	0	0	0-20	80-100
Diversified Equity	High	0-20	0-20	0-30	70-100
Growth super	High	0-20	0-20	0-30	70-100
Growth	High	0-30	0-30	0-40	20-70
Sustainable Equity	High	0-20	0-20	0-30	70-100
Pure Growth	High	0	0	0-40	60-100
Balanced	Medium	20-50	20-40	0-40	10 – 40
Dynamic Bond	Low	60-100		0-40	0
Secure	Low	50-100	0-50	0-40	0
Money Market II	Low	0	0	0-100	0

Dynamic Fund Allocation – Review

Only at the start of the policy may you select the Dynamic Fund Allocation option. According to the matrix below, assets under management will be maintained between the Growth Super Fund and the Secure Fund in a predetermined ratio that varies depending on the number of years left to maturity.

Number of Years to Maturity	Proportion in Growth Super Fund	Proportion in Secure Fund
16 – 30 years	80%	20%
11 – 15 years	70%	30%
6 – 10 years	50%	50%
0 – 5 years	20%	80%

7. Various charges under the Max Life Online Savings Plan

Premium Allocation Charge

Nil

Policy Administration Charge (All Years)

Nil

Fund Management Charge

Fund	Charge (per annum) as % of Fund Value
High Growth	1.25%
Nifty Small Cap Quality Index Fund	1.00%
Diversified Equity	1.25%
Growth super	1.25%
Growth	1.25%
Sustainable Equity	1.25%
Pure Growth	1.25%
Balanced	1.10%
Dynamic Bond	0.90%
Secure	0.90%
Money Market II	0.90%
Discontinued Policy fund	0.50%

Mortality Charge – Analysis

On each monthly anniversary, a Mortality Charge based on the “Sum at Risk” will be levied. by canceling units from the unit account starting from the date of commencement of the Max Life Online Savings policy. Throughout the contract, the Mortality Charge will be calculated based on an attained age basis.

Surrender / Discontinuance Charge – Analysis

When the Max Life Online Savings Policy is discontinued, this fee will be levied on the Fund Value or effecting Complete Withdrawal (Surrender) whichever is earlier. There is no surrender / Discontinuance charge from the 5th Max Life Online Savings policy year onwards.

Switch Charge

All switches will be free of charge in the Max Life Online Savings plan.

Premium Redirection Charge

There is no charge for premium redirection in the Max Life Online Savings Policy. A maximum of six premium redirections are allowed in any Max Life Online Savings Policy year.

Partial Withdrawal

Partial withdrawals are free of any charge. A maximum of two partial withdrawals are allowed in any Max Life Online Savings Policy year.

Miscellaneous Charges

There are no miscellaneous charges in the Max Life Online Savings Policy.

Inference from these charges, Evaluation:

Some of the Max Life Online Savings Policy charges are essential to run the plan like mortality charges, and fund management charges.

But some charges like premium allocation charges, policy administration charges & discontinuance/ surrender charges are not levied under other market-linked investments. This will pull down your overall fund value.

8. The Grace period, Discontinuance & paid-up, Revival Of Max Life Online Savings Plan – Analysis

Grace period:

There will be a Grace Period of 30 days starting on the due date of the first unpaid premium. It will be reduced to 15 days if the Max Life Online Savings policyholder uses the monthly mode.

Discontinuance & Paid-up:

Discontinuance of payment of premium during the first five Max Life Online Savings policy years (Lock-in Period) – Upon the expiry of the Max Life Online Savings policy Grace Period, the Fund Value, by the creation of units will be credited into the Discontinued Policy Fund after deducting applicable Discontinuance Charges in Max Life Online Savings Policy.

The risk cover under the Max Life Online Savings policy will stop and no further charges will be levied other than the Fund Management Charge.

Discontinuance of payment of premium post the first five Max Life Online Savings policy years (i.e., after the expiry of the Lock in Period) – The Max Life Online Savings policy shall be converted into a reduced paid-up policy with the paid-up sum assured i.e.,

The current Max Life Online Savings policy sum assured multiplied by the total number of the premiums paid to the original number of premiums payable as per the terms and conditions of the Max Life Online Savings policy.

Revival:

You will have a Revival Period of three years from the Date of Discontinuance to revive your Max Life Online Savings policy.

9. Free Look period of the Max Life Online Savings Plan – Analysis

If you disagree with the terms and conditions of the Max Life Online Savings policy, you can return the Max Life Online Savings Policy within a period of 15 days from the date of receipt of the policy. The free look period will be extended up to 30 days if the Max Life Online Savings policyholder buys the plan online or through distance mode.

10. Surrendering the Max Life Online Savings Plan – Analysis

You have the right to surrender the Max Life Online Savings policy at any time during the Policy Term. The Max Life Online Savings policy Surrender Benefit is equal to the Fund Value less applicable to surrender / discontinuance charges.

Surrendering within five years of the Effective Date of the Max Life Online Savings Policy (i.e., within the Lock-in Period) – the Fund Value will be credited to the Discontinuance Policy Fund after deducting applicable Surrender / Discontinuance Charges in Max Life Online Savings Policy.

At the expiry of five years from the effective date of the Max Life Online Savings Policy (i.e., at the expiry of the Max Life Online Savings Policy Lock-in Period), you will receive the value of units in the Discontinuance Policy Fund.

Surrender after five years of the Effective Date of the Policy (i.e., after the completion of the Max Life Online Savings Policy Lock-in Period) – Surrender Value which is equal to the Fund Value of the Units in the Segregated Fund(s) is receivable in Max Life Online Savings Policy.

11. Advantages of the Max Life Online Savings Plan – Analysis

• You have a choice of 11 funds & 2 Investment Strategies
• Apart from the lump sum Death Benefit, there is the funding of premium & Monthly Income Benefits under Variant 2.
• Unlimited free switches, 6 premium redirections & 2 partial withdrawals (after the lock-in period) are allowed in a policy year.
• A settlement option can be exercised during maturity.

12. Disadvantages of Max Life Online Saving Plan – Analysis

• No liquidity in the first 5 years of the policy.
• There are no loyalty additions.
• After deducting all the charges, only the net premium will be invested.
• The loan option is not available.
• During the settlement period, the investor should bear the investment risk.
• The top-up premium option is not available under the plan.

13. Research Methodology Of Max Life Online Savings Plan

As an investor, you need to fully understand the product & estimate the potential return before investing in any product. Max Life Online savings plan is a market-linked product.

There is no guaranteed benefit under this plan. So, we can estimate the potential return. For this, we have analyzed the Benefit Illustration given in the Sales Brochure.

14.Benefit Illustration Of Max Life Online Savings Plan IRR(Internal Rate Of Return i.e. Interest Rate) Analysis

A 35-year-old male opts for Max Life Online Savings Plan for an annualised premium of ₹ 50,000. He pays a premium for 10 years & gets the fund value at the end of 20 years. He chooses a balanced fund. The life cover is 10 times the annualised cover i.e., Rs. 5 Lakhs.

Male	35 years
Sum Assured	5,00,000
Annualised premium	50,000
Premium Paying Term	10 years
Policy Term	20 years

The assumed rates of return @ 4% and 8% p.a. respectively, for Balanced Fund These rates are gross rate of return i.e before expenses.These are not guaranteed, and neither are they the maximum or minimum returns that may be received from the Funds you have chosen in your Max Life Online Savings Policy because several factors like future investment performance affect your returns.

		At 4% p.a.		At 8% p.a.
Age	Year	Annualised premium / Maturity benefit	Death Benefit	Annualised premium / Maturity benefit	Death Benefit
35	1	-50,000	5,00,000	-50,000	5,00,000
36	2	-50,000	5,00,000	-50,000	5,00,000
37	3	-50,000	5,00,000	-50,000	5,00,000
38	4	-50,000	5,00,000	-50,000	5,00,000
39	5	-50,000	5,00,000	-50,000	5,00,000
40	6	-50,000	5,00,000	-50,000	5,00,000
41	7	-50,000	5,00,000	-50,000	5,00,000
42	8	-50,000	5,00,000	-50,000	5,00,000
43	9	-50,000	5,00,000	-50,000	5,00,000
44	10	-50,000	5,00,000	-50,000	5,00,000
45	11	0	5,00,000	0	5,00,000
46	12	0	5,00,000	0	5,00,000
47	13	0	5,00,000	0	5,00,000
48	14	0	5,00,000	0	5,00,000
49	15	0	5,00,000	0	5,00,000
50	16	0	5,00,000	0	5,00,000
51	17	0	5,00,000	0	5,00,000
52	18	0	5,00,000	0	5,00,000
53	19	0	5,00,000	0	5,00,000
54	20	0	5,00,000	0	5,00,000
		7,38,000	5,00,000	13,21,010	5,00,000
	IRR	2.53%		6.36%

In the above illustration, the IRR for 4% p.a. is calculated at 2.53% while the IRR (Internal Rate of Return i.e. Interest Rate) at 8% p.a. is calculated at 6.36%.

Under the assumer rate of 4% return, the fund value at the end of 20 years is ₹ 7..38 Lakhs & the IRR is 2.53%.

Under the assumer rate of 8% return, the fund value at the end of 20 years is ₹ 13.21 Lakhs & the IRR is 6.36%.

Max Life Online Savings Plan is a market-linked return but the IRR that we calculated in the above scenarios is far lower than a debt instrument return. A long-term investment fetching lower returns will affect your financial goals. Also, the sum assured is too low.

15. Max Life Online Savings Plan vs Other Investment Products

Let us make an analogy between Max Life Online Savings Plan & other similar investments. Max Life Online savings plan neither provides adequate life insurance protection for your family nor provides returns on par with other market-linked returns.

So, let us calculate, what if we invest the same amount in other products. Will you get a better return?

Let us assume all the metrics similar to the benefit illustration seen in the Max Life Online Savings plan. The sum assured was ₹ 5 Lakhs & the annualised premium is ₹ 50,000.

i) Max Life Online Savings Plan Vs. Term Insurance + PPF / ELSS

In order to get life cover, a Pure Term Policy will give you high coverage at a low premium. Pure Term Life Insurance for ₹ 5 lakhs cover would cost an annual premium of ₹ 4,500. The Premium Paying Term is 10 years & the Policy Term is 20 years.

After paying the annual premium, the balance amount of ₹ 45,500 could be invested as per your choice. Here, we have shown both debt instrument & equity instrument returns.

Pure Term Insurance Policy
Sum Assured	5,00,000
Annualised premium	4,500
Premium Paying Term	10 years
Policy Term	20 years
Investment	45,500

Debt Instrument – PPF

It has a lock-in of 15 years & then it could be extended for a period of 5 years Batch. In the earlier illustration, the Premium Paying Term is 10 years. So, in the year 11 -15 a minimum contribution of ₹ 500 per year is made (Adjustments were made in the calculation). The final maturity is available at the end of 20 years.

Equity Instrument – ELSS

In the first 10 years, after paying the Pure Term Insurance Premium the balance just goes into the ELSS fund. For the next 10 years, the fund grows as such without any investments. At the end of 20 years, the fund value is subject to tax. The tax calculation is given below.

		Term Insurance + PPF		Term insurance + ELSS
Age	Year	Term Insurance premium + PPF	Death Benefit	Term Insurance premium + ELSS	Death Benefit
35	1	-50,000	5,00,000	-50,000	5,00,000
36	2	-50,000	5,00,000	-50,000	5,00,000
37	3	-50,000	5,00,000	-50,000	5,00,000
38	4	-50,000	5,00,000	-50,000	5,00,000
39	5	-50,000	5,00,000	-50,000	5,00,000
40	6	-50,000	5,00,000	-50,000	5,00,000
41	7	-50,000	5,00,000	-50,000	5,00,000
42	8	-50,000	5,00,000	-50,000	5,00,000
43	9	-50,000	5,00,000	-50,000	5,00,000
44	10	-47,500	5,00,000	-50,000	5,00,000
45	11	-500	5,00,000	0	5,00,000
46	12	-500	5,00,000	0	5,00,000
47	13	-500	5,00,000	0	5,00,000
48	14	-500	5,00,000	0	5,00,000
49	15	-500	5,00,000	0	5,00,000
50	16	0	5,00,000	0	5,00,000
51	17	0	5,00,000	0	5,00,000
52	18	0	5,00,000	0	5,00,000
53	19	0	5,00,000	0	5,00,000
54	20	0	5,00,000	0	5,00,000
		13,42,241	5,00,000	25,55,258	5,00,000
	IRR	6.47%		10.79%

In the above illustration, the IRR(Internal Rate of Return) for Term Insurance + PPF is calculated at 6.47% and the IRR(Internal Rate of Return) of Term Insurance + ELSS is calculated at 10.79%.

Under Pure Term + PPF Investment, the final maturity value is ₹ 13.42 lakhs. The IRR (Internal Rate of Return i.e. Interest Rate) is 6.47%. This may seem similar to the benefit illustration 8% scenario. But bear in mind that PPF is a debt instrument where as the Max Life Online Savings Plan is a market-linked product.

Under Mutual Fund ELSS, the Pre-Tax Maturity value is ₹ 27.77 Lakhs. After the deduction of capital gains tax, the final Maturity Value is ₹ 25.55 Lakhs.

The IRR is 10.79% (Post-Tax Return). This rate is far above than inflation rate. Any long-term investment return beating inflation comfortably can help in meeting your goals.

ELSS Tax Calculation

Maturity value after 20 years	27,77,509
Less
Purchase price	4,55,000
Long-term capital gains	23,22,509
Exemption limit	1,00,000
Taxable LTCG	22,22,509
Tax paid on LTCG	2,22,251
Maturity value after tax	25,55,258

In the above illustration, the maturity value after tax is calculated at ₹ 25,55,258.

ii) Max Life Online Savings Plan Vs Max Life Smart Wealth Plan

You can read the review of the Max Life Smart Wealth Plan which explains the key aspects, benefits, and returns in detail.

iii) Max Life Online Savings Plan Vs Max Life Guaranteed Lifetime Income Plan

You can read the review of the Max Life Guaranteed Lifetime Income Plan. which is a Non-Linked, Non-Participating, Individual, General Annuity Savings Plan. It is a traditional Annuity Plan that promises to provide a regular stream of income after your retirement.

16. Max Life Online Savings Plan Vs Other Investment Products – Review Conclusion

After a thorough analysis of various other alternative investment options for the Max Life Online Savings Plan, we have concluded that Term Insurance + PPF or ELSS is a better option with better returns because the insurance component and investment are separate in this option.

17. Final verdict on Max Life Online Savings Plan – Good or Bad?

Under Max Life Insurance Savings Plan, a portion of the premium paid is allocated towards life cover & balance toward savings or investment. This investment component helps policyholders build a corpus over time, which can be utilized to meet various financial goals.

The plan offers different investment fund options, such as equity funds, debt funds, and balanced funds. Policyholders can choose funds based on their risk appetite and financial objectives.

It’s crucial to review the plan’s terms and conditions, investment options, charges, and benefits in detail before making a decision. The plan levies various charges. This pulls down the return.

Also, the plan doesn’t offer adequate life cover. In case of eventualities, the sum assured will not suffice the family’s basic needs.

A Pure Term policy is the most appropriate life insurance plan where you get high coverage at an affordable premium. It is advisable to buy a Term Plan for your insurance basket. And a tailor-made investment portfolio will be the best choice for your investment basket.

Are you tired of searching for the best investment strategy on social media sites like Quora, Facebook, Twitter etc? A professional financial planner is an expert who can provide you with the best investment strategy to achieve your financial goals.