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Max Life Savings Advantage Plan Review: Is It a Good Investment Choice?
A sound Financial Plan can provide support to our family if an unexpected event were to happen.
Life Insurance is a key element of any good Financial Plan.
Also, you need a Financial Instrument where you can systematically save for fulfilling all your Life’s Financial Goals.
Max Life Savings Advantage Plan provides life cover & systematic investment at the same time.
This detailed review gives you an overall idea about the benefits & helps in your final decision-making of choosing the Max Life Savings Advantage Plan as your Investment option.
Table of Contents:
1.)What is Max Life Savings Advantage Plan?
2.)Features of the Max Life Savings Advantage Plan
3.)Eligibility Criteria for the Max Life Savings Advantage Plan
4.)Benefits of the Max Life Savings Advantage Plan
- Maturity Benefits
- Death Benefit
- Terminal Illness Benefit
- Bonuses
5.)A Grace Period, Discontinuance & Revival of the Max Life Savings Advantage Plan
6.)Free look Up Period of the Max Life Savings Advantage Plan
7.)Surrendering the Max Life Savings Advantage Plan
8.)Advantages of the Max Life Savings Advantage Plan
9.)Disadvantages of the Max Life Savings Advantage Plan
10.)Research Methodology
11.) IRR Analysis of the Max Life Savings Advantage Plan
12.) Max Life Savings Advantage Plan Vs. Other Investment Alternatives
13.) Max Life Savings Advantage Plan Vs. Pure Term Insurance + PPF / ELSS
14.) Final Verdict on the Max Life Savings Advantage Plan
What is Max Life Savings Advantage Plan?
It is a Non-Linked, Participating, Individual, Life Insurance Savings Plan.
It will help you grow your systematic savings and build a corpus to address your life’s financial needs while providing for risk cover at the same time to take care of your loved ones financially in case of your unfortunate death.
Features of the Max Life Savings Advantage Plan
- Flexibility to choose your Premium Payment Term and Policy Term at your convenience.
- The plan includes both guaranteed & non-guaranteed benefits.
- It provides you with a guaranteed 5.5% of Guaranteed Sum Assured on Maturity as Guaranteed Additions, at the end of each policy year, for the first 5 policy years, to boost your benefits.
- Enjoy 110% of the Guaranteed Sum Assured on maturity along with Accrued Guaranteed Additions, Accrued Paid Up Additions & Terminal Bonus (if any).
- You have the flexibility to convert your lump sum Maturity Benefit/Death Benefit into a regular fixed income.
Eligibility Criteria for the Max Life Savings Advantage Plan
Let us look at the basic details we need to know to enter this plan at a glance below;
| Minimum | Maximum | ||
| Age at Entry | Single Pay | 8 years | 65 years |
| Limited Pay | 0 (91 Days) | 60 years | |
| Regular Pay | 0 (91 Days) | 45 years | |
| Maturity Age | Single Pay | 18 years | 75 years |
| Limited Pay | 80 years | ||
| Regular Pay | 65 years | ||
| Guaranteed Sum Assured on Maturity | Single Pay | 78,738 | No limit |
| Limited Pay & Regular Pay |
Policy Term less than 15 years: 1,69,379
Policy Term greater than and/or equal to 15 years: 24,425 |
||
| Premium Paying Term | Single Pay | Single | |
| Limited Pay | 5 – 12 years | ||
| Regular Pay | Equal to the Policy Term | ||
| Policy Term | Single Pay | 10 years | |
| Limited Pay | 10 – 30 years | ||
| Regular Pay | 20 -30 years | ||
| Premium paying Mode | Annual, Semi-Annual, Quarterly, and Monthly | ||
Benefits of the Max Life Savings Advantage Plan
Maturity Benefit
In case the life insured has survived till the end of the policy term, the following shall be payable on maturity: Sum of:
- 110% of the Guaranteed Sum Assured on Maturity
- Accrued Guaranteed Additions
- Accrued Paid Up Additions if any
- Terminal Bonus, if any
Settlement and Commutation Option: You can choose to take the ‘Maturity Benefit’ as monthly income payable over 120 months or annual income payable over 10 years.
Death Benefit
For Single Pay Variant: A sum of the following shall be payable:
- Guaranteed Death Benefit
- Accrued Guaranteed Additions
- Accrued Paid Up Additions (if any)
- Terminal Bonus (if any)
Where Guaranteed Death Benefit for the Single Pay variant is defined as higher of:
- 125% of the Single Premium
- Guaranteed Sum Assured on Maturity
- Any absolute amount assured to be paid on death (which is 110% of the Guaranteed Sum Assured on Maturity)
For Limited Pay and Regular Pay variant: A sum of the following shall be payable:
- Guaranteed Death Benefit (before or on completion of 10 policy years)/ 110% x Guaranteed Death Benefit (after completion of 10 policy years)
- Accrued Guaranteed Additions
- Accrued Paid Up Additions (if any)
- Terminal Bonus (if any)
Where Guaranteed Death Benefit for Limited Pay and Regular Pay variant is defined as higher of:
- 11 times the Annualised Premium plus underwriting extra premium
- 105% of total premiums paid plus underwriting extra premium as on the date of death of Life Insured
- Guaranteed Sum Assured on Maturity
- Any absolute amount assured to be paid on death (which is 110% of the Guaranteed Sum Assured on Maturity)
Regular Monthly/Annual Income for 10 years: You/the nominee can choose to take 12.46% of ‘Death Benefit’ as annual income payable for 10 years, or 1.07% of ‘Death Benefit’ as monthly income payable for 120 months.
Terminal Illness Benefit
If the Life Insured is diagnosed to be suffering from a disease that is likely to lead to death within 6 months of diagnosis, then the Company will advance 50% of the Guaranteed Sum Assured on Maturity upon the Policyholder’s request.
Bonuses
Annual Bonus:
Paid Up Additions: The bonus once declared shall accrue and be payable in full on earlier of death or maturity.
Premium Offset: Upon declaration of Paid-Up Additions each year, the Surrender Value of Paid-Up Additions shall be utilized to offset the future Premium.
Paid In Cash: Upon declaration of Paid-Up Additions each year, the Surrender Value of Paid-Up Additions shall be payable to Policyholder every year till the end of the Policy Term.
Terminal Bonus:
Terminal Bonus is an additional bonus paid only ONCE, on earlier of death, surrender, or maturity, provided the policy has been in force for at least 5 years.
A Grace Period, Discontinuance & Revival of the Max Life Savings Advantage Plan
Grace period:
A Grace Period of 30 days from the due date for payment of each premium will be allowed for all premium paying modes except for monthly mode, where a grace period of only 15 days will be allowed.
Discontinuance:
Discontinuance of Payment of Premium before the Policy has acquired surrender value – On the expiry of the grace period, the Policy shall lapse w.e.f. the due date of unpaid premium, insurance cover will be stopped and no benefits shall be payable.
Discontinuance of Payment of Premium after the Policy has acquired surrender value – On the expiry of the grace period, the Policy shall become Reduced Paid-Up (RPU) Policy w.e.f. the due date of unpaid premium. The Death Benefit, Survival Benefit, Maturity Benefit, and Surrender Benefit for a Policy in RPU mode will be reduced in the ratio of the total premium paid to the total premium payable under the policy.
Revival:
Once the Policy has lapsed, it can be revived within a revival period of five years from the due date of the first unpaid premium.
Free look Up Period of the Max Life Savings Advantage Plan
You have the option to return the Policy within a period of 15 days to the insurance company if you disagree with any of the terms and conditions of the policy. The Free Look-Up Period will be extended up to 30 days from the date of receipt of the Policy document in case the Policy has been bought online or through Distance Marketing.
Surrendering the Max Life Savings Advantage Plan
The Policy cannot be surrendered before it has acquired the Surrender Value. The policy acquires a Guaranteed Surrender Value on payment of two full years’ premium (For a Single premium – on payment of the premium).
If the Policy has been surrendered post it has acquired the Surrender Value, then the same shall be payable to you. Surrender Value is defined as the higher Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).
Advantages of the Max Life Savings Advantage Plan
- The plan has a component called Minimum Guaranteed Sum Assured on Maturity which ensures a guaranteed amount.
- The plan has an in-built Terminal illness benefit option.
- It also offers other riders that enhance the life cover.
- There is a loan facility to meet emergencies Post the lock-in period.
- Tax benefit Section 80(C) and Section 10(10D) of Income Tax Act 1961 on the Premiums paid and benefits received by you respectively.
Disadvantages of the Max Life Savings Advantage Plan
- The maturity benefit depends on the annual bonus rate. So, you can’t earmark the maturity amount with any of your financial goals.
- The sum assured is not adequate to protect your family financially.
- More benefits are available for policies having more than 15 years of policy term.
You can refer to the Max Life Savings Advantage Policy Brochure for further details.
Research Methodology
So far, we have discussed the features & the benefit options of the Max Life Savings Advantage Plan.
Understanding the plan with a benefit illustration will help you to estimate the return on investment. This return can be compared with other investment options for better visibility.
IRR Analysis of the Max Life Savings Advantage Plan
If a 35-year-old male buys this plan for an annualized premium of Rs.35000, then the Guaranteed Sum Assured on Maturity is Rs. 6.06 lakhs. The policy term & premium paying term is 20 years.
The Assumptions for Comparison:
| Male | 35 Years |
| Policy Term | 20 Years |
| Premium Paying Term | 20 Years |
| Annualized premium | Rs. 35000 |
| Guaranteed Sum Assured on Maturity | Rs. 6,06,796 |
Although there is a guaranteed sum assured on maturity, the maturity benefit varies depending on the bonus rate. The best- & worst-case scenarios are depicted at an assumed rate of returns of 4% and 8% and these are not the upper or lower limits of what one can expect from this policy. It is dependent on several factors including future investment performance.
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualized premium / Maturity benefit | Death benefit | Annualized premium / Maturity benefit | Death benefit |
| 35 | 1 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 36 | 2 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 37 | 3 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 38 | 4 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 39 | 5 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 40 | 6 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 41 | 7 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 42 | 8 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 43 | 9 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 44 | 10 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 45 | 11 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 46 | 12 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 47 | 13 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 48 | 14 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 49 | 15 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 50 | 16 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 51 | 17 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 52 | 18 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 53 | 19 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 54 | 20 | -35,000 | 385000 + Bonus | -35,000 | 385000 + Bonus |
| 55 | 9,19,344 | 12,99,747 | |||
| IRR | 2.53% | 5.58% | |||
The Internal Rate of Return (IRR) for the Max life Savings Advantage Plan under the worst-case scenario is 2.53% & in the best-case scenario is 5.58%.
The policy term is 20 years. At the end of the policy term, the maturity benefit will not help you to meet any of your Financial Goals. The reason behind this is the IRR in both cases is less than the inflation rate in the long term.
On the whole, the death benefit is not adequate & also the investment return is not beneficial for Investor in the long run.
Max Life Savings Advantage Plan Vs. Other Investment Alternatives
Your investment should aid you in fulfilling your Financial Dreams. Here, the Max Life Savings Advantage Plan doesn’t aid you in attaining your Financial Goals. Let us look at other Investment Options in the market that serves the purpose.
Pure Term Insurance Policy is available at an affordable price for high-life coverage. For investment, select products based on your personal risk appetite, time horizon & goals.
We have assumed the annual premium, policy term & other metrics similar to the Max Life Saving Advantage Plan. The life cover in this plan is not adequate but to have an analogy we have assumed such a low sum assured.
Max Life Savings Advantage Plan Vs. Pure Term Insurance + PPF / ELSS
The Assumptions for Comparison:
| Pure Term Policy | |
| Sum Assured | Rs. 5 Lakhs |
| Policy Term | 20 Years |
| Premium Paying Term | 20 Years |
| Annualized premium | Rs. 2800 |
| The amount left for investment | Rs. 32200 |
After paying the annualized premium of Rs. 2800, the balance amount of Rs. 33200 can be utilized for Investment Purposes. You can choose either Debt or Equity. Here, we have assumed one instrument under each category.
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 35 | 1 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 36 | 2 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 37 | 3 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 38 | 4 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 39 | 5 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 40 | 6 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 41 | 7 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 42 | 8 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 43 | 9 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 44 | 10 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 45 | 11 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 46 | 12 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 47 | 13 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 48 | 14 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 49 | 15 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 50 | 16 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 51 | 17 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 52 | 18 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 53 | 19 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 54 | 20 | -35,000 | 5,00,000 | -35,000 | 5,00,000 |
| 55 | 14,29,313 | 24,13,049 | |||
| IRR | 6.39% | 10.73% | |||
By inferring the final maturity value, you could see a vast difference between the Max Life Savings Advantage Plan & other Investment Options.
The IRR for the Pure Term Insurance + PPF which is a Debt Instrument combination yields 6.39%.
The Pure Term Insurance + ELSS which is an Equity Instrument combination yields 10.73% which is a Post-tax return.
Risk-averse Investors can choose Debt Instruments Combination. Generally, the yield would be matching the inflation but you get a fixed/steady return in this category.
On the other hand, those who are ready to take risks & whose Financial Goals are in the long term can choose Equity Instruments Combination. This helps to beat inflation in the long run.
Final Verdict on the Max Life Savings Advantage Plan
Max Life Savings Advantage Plan offers comprehensive protection & long-term savings. It has a Guaranteed Sum Assured on Maturity.
Since it is a participating policy the annual rate declared every year decides the final Maturity amount. You can’t utilize this maturity amount to fulfil your Financial Dreams.
A Proper Financial Plan can help you to fulfil your Financial Dreams.
Opting for an appropriate Life Cover & building an Investment Portfolio is part of a Holistic Financial Plan.
You can always consult with your Professional Financial Advisor to customise your Financial Plan according to your risk appetite and Financial Goals for better results.
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