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Your child’s dream could be, to become a rocket scientist or the next ‘Indian Idol’. You never know what fuels their imagination and what they plan for themselves. As a parent, what is the best you could do? You can back their dreams and provide financial support whenever needed. Right?
Will ready-made children’s education plans help to secure the funds for your child’s future? Is buying the Max Life Shiksha Plus Super a good or bad decision?
This article reviews the Max Life Shiksha Plus Super plan. This review analysis with the advantages(pros) and disadvantages(cons) helps to figure out whether the Max Life Shiksha Plus Super plan can fund your child’s dream.
Let’s get started!
Table Of Contents
1.What is Max Life Shiksha Plus Super Plan?
2.What are the Features of Max Life Shiksha Plus Super Plan?
3.Who is eligible for the Max Life Shiksha Plus Super?
4.Max Life Shiksha Plus Super Plan – Review of Benefits in Detail
5.Max Life Shiksha Plus Super Plan Illustration – Review of Fund Options and Investment Strategies
6.Review of Charges under the Max Life Siksha Plus Super Plan
7.The Grace period, Discontinuance, Paid-up, and Revival of the Max Life Siksha Plus Super Plan
8.Free Look period of the Max Life Siksha Plus Super Plan
9.Surrendering the Max Life Shiksha Plus Super Plan
10.What are the Advantages of the Max Life Shiksha Plus Super Plan?
11.What are the disadvantages of the Max Life Shiksha Plus Super Plan?
12.Research Methodology Max Life Shiksha Plus Super Plan
- Benefit illustration of Max Life Shiksha Plus Super Plan – IRR(Internal rate of return i.e. Interest Rate) Analysis
13.Max Life Shiksha Plus Super Plan Vs. Other Investment Options – Review
- Max Life Shiksha Plus Super Plan Vs. Pure Term + PPF / ELSS
- Max Life Shiksha Plus Super Plan Vs. Max Life Guaranteed Lifetime Income Plan
- Max Life Shiksha Plus Super Plan Vs. Max Life Online Savings Plan
14.Max Life Shiksha Plus Super Plan Vs. Other Investment Options – Review Conclusion
15.Final Verdict on Max Life Shiksha Plus Super Plan – Good or Bad Investment Option?
1. What is Max Life Shiksha Plus Super Plan?
Max Life Shiksha Plus Super Plan is a Unit-linked Non-Participating Individual Life Insurance Plan. The plan is designed to provide adequate funds at key educational milestones and take care of your child’s future even if you are not around.
Refer to the official brochure of Max Life Shiksha Plus Super Plan for more policy details.
2. What are the Features of Max Life Shiksha Plus Super Plan?
- Option to choose your Policy Term and Premium Payment Term as per your need.
- Guaranteed Loyalty Additions increase your fund value.
- The plan offers comprehensive Life Insurance coverage including Family Income Benefits and Funding of Future Premiums in case of Death.
- Two investment strategies and 8 Fund options
3. Who is Eligibile for the Max Life Shiksha Plus Super?
| Minimum/ Maximum Age of Life Insured at Entry | 21 years / 50 years |
| Maximum Maturity Age of the Life Insured | 5 pay variant – 60 years Regular pay – 65 years |
| Premium Payment Term | 5 pay variant – 5 years Regular pay – 15 -25 years |
| Policy term | 5 pay variant – 10 years Regular pay – 15 -25 years |
| Minimum Annualised Premium | 5 pay variants – 50,000 Regular pay -25,00/48,000 |
| Maximum Annualised premium | No Limit |
| Sum Assured Multiple | 10 times Annualised Premium |
| Minimum Sum Assured | 5 pay variants – 5,00,000 Regular pay -2,50,00/4,80,000 |
| Maximum Sum Assured | No Limit |
4. Max Life Shiksha Plus Super Plan – Review of Benefits in Detail
Death benefit – Review
In case of Death of the Life Insured, the following 3 benefits are available.
Lumpsum death benefit – Higher of
- Sum Assured or
- 105% of all premiums paid or
- 0.5 x Policy Term x Annualised Premium is payable immediately on Death.
Family Income Benefit (FIB) – An amount equal to 10% of the Sum Assured will be paid on each
Max Life Shiksha Plus Super policy anniversary following or coinciding with the Date of Death of the Life Insured till the end of the Policy Term, but not exceeding 10 such instalments.
Funding of Premium (FOP) – Under this Benefit, the Company will fund all outstanding premiums payable under the Max Life Shiksha Plus Super Policy and the Fund Value will be paid on maturity.
Maturity Benefit – Review
Fund Value as on Date of Maturity is payable, provided Settlement Option has not been exercised.
Guaranteed Loyalty Additions – Review
0.20% of Fund Value shall be added to the Fund by the creation of additional Units, at the end of every policy year starting from the 11th Max Life Shiksha Plus Super policy year.
5. Max Life Shiksha Plus Super Plan Illustration – Review of Fund Options and Investment Strategies
You may choose to invest in the following eight Funds available in this plan. Alternatively, you may opt for either a Systematic Transfer Plan or a Dynamic Fund Allocation strategy (but not both).
| Investment Mix of Funds (in %) | |||||
| Funds | Risk profile | Govt Sec | Corporate bond | Money Market | Equities |
| High Growth Fund | Very High | 0-30 | 0-30 | 0-30 | 70-100 |
| Nifty Small Cap Quality Index Fund | Very High | 0 | 0 | 0-20 | 80-100 |
| Mid-cap Momentum Index Fund | Very High | 0 | 0 | 0-20 | 80-100 |
| Growth super Fund | High | 0-20 | 0-20 | 0-30 | 70-100 |
| Growth Fund | High | 0-30 | 0-30 | 0-40 | 20-70 |
| Balanced Fund | Medium | 20-50 | 20-40 | 0-40 | 10 – 40 |
| Conservative Fund | Low | 50-80 | 0-50 | 0-40 | 0-15 |
| Secure Fund | Low | 50-100 | 0-50 | 0-40 | 0 |
| Secure Plus Fund (Only for STP) | Low | 60-100 | 0-40 | 0-40 | 0 |
Systematic Transfer Plan
It helps you replicate a rupee cost-averaging method on your Annualised Premium. Where the Annualised Premium received net of the Max Life Shiksha Plus Super Plan Premium Allocation Charge shall be allocated first to the Secure Plus Fund to purchase Units. Immediately thereafter and on each subsequent monthly anniversary, a fixed value at the beginning of the month shall be Switched to the Growth Super Fund.
Dynamic Fund Allocation
Only at the start of the Max Life Shiksha Plus Super policy may you select the Dynamic Fund Allocation option. Your money will be split between two funds (Growth and Secure) based on how many years you have until maturity.
6. Review of Charges under the Max Life Shiksha Plus Super Plan
Premium Allocation Charge:
The Premium Allocation Charge is expressed as a percent of premium received.
| Policy Year | 5 Pay | Regular Pay |
| 1 | 5% | 5% |
| 2 | 4% | 4% |
| 3 to 5 | 3% | 3% |
| 6 to 10 | NA | 3% |
| 11 and above | NA | NA |
Fund management Charges
| Funds | Charges per annum as % of Fund Value |
| High Growth | 1.25% |
| Nifty Small Cap Quality Index Fund | 1.00% |
| Mid-cap Momentum Index Fund | 1.25% |
| Growth super | 1.25% |
| Growth | 1.25% |
| Balanced | 1.10% |
| Conservative | 0.90% |
| Secure | 0.90% |
| Secure Plus Fund (Only for STP) | 0.90% |
| Discontinued Policy fund | 0.50% |
Policy Administration Charge
For annual mode – 0.32% p.m. compounding at 5% p.a. from the 6th Policy year onwards up to a maximum of ₹ 500 per month.
For non-annual mode – 0.22% p.m. compounding at 5% p.a. from 6th Policy year onwards up to a maximum of ₹ 500 per month.
Mortality Charge
The “Mortality Charge” is a fee you pay based on your age at the time you buy the policy and is the same price for men and women.
| Age | 25 | 30 | 35 | 40 | 45 | 50 |
| Mortality Charge (Per 1000 Sum at risk) | 0.98 | 1.06 | 1.28 | 1.8 | 2.87 | 4.95 |
Surrender/discontinuance charge
A discontinuance charge, calculated based on the policy’s duration and premium amount, will be deducted from the Fund Value in case of policy discontinuance or surrender.Switch Charge
A maximum of 12 Switches are allowed in a Max Life Shiksha Plus Super policy year and all are free of charge
Premium redirection Charge
A maximum of 6 Premium Redirections are allowed in a Max Life Shiksha Plus Super policy year and all are free of charge
Partial Withdrawal Charge
After the first 5 policy years, a maximum of 2 Partial Withdrawals are allowed in a Max Life Shiksha Plus Super policy year and are free of any charge.
Inference from the charges
The premium paid by you doesn’t get invested fully in the chosen fund. The aforesaid charges are deducted and the net premium goes into the fund. Over a period of time, these charges are overhead costs to investment. This will affect the investment return. Other market-linked products don’t levy these kinds of charges.
7. The Grace period, Discontinuance, Paid-up and Revival of Max Life Shiksha Plus Super Plan
Grace period:
There will be a Grace Period of 30 days starting on the due date of the first unpaid premium in the Max Life Shiksha Plus Super Plan. It will be reduced to 15 days if the policyholder uses the monthly mode.
Discontinuance and Paid-up:
Discontinuance of payment of premium during the first five policy years (Lock-in Period) – Upon the expiry of the Max Life Shiksha Plus Super policy 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 Max Life Shiksha Plus Super 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 policy years (i.e., after the expiry of the lock-in Period) – The Max Life Shiksha Plus Super policy shall be converted into a reduced paid-up policy with the paid-up sum assured.
The current Max Life Shiksha Plus Super 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 Shiksha Plus Super policy.
Revival:
You will have a Revival Period of three years from the Date of Discontinuance to revive your Max Life Shiksha Plus Super policy.
8. Free Look period of the Max Life Shiksha Plus Super Plan
If you disagree with the terms and conditions of the Max Life Shiksha Plus Super policy, you can return the Policy within a period of 15 days from the date of receipt of the Max Life Shiksha Plus Super policy. The free look period will be extended up to 30 days if the policyholder buys the plan online or through distance mode.
9. Surrendering the Max Life Shiksha Plus Super Plan
You have the right to surrender the Max Life Shiksha Plus Super policy at any time during the Policy Term. The 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 Shiksha Plus Super Policy (i.e., within the Lock-in Period) – the Fund Value will be credited to the Discontinuance Max Life Shiksha Plus Super Policy Fund after deducting applicable Surrender / Discontinuance Charges.
At the expiry of five years from the effective date of the Max Life Shiksha Plus Super Policy (i.e., at the expiry of the 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 Policy Lock-in Period) – Surrender Value which is equal to the Fund Value of the Units in the Segregated Fund(s) is receivable.
10. What are the advantages of the Max Life Shiksha Plus Super Plan?
- You have a choice of 8 funds and 2 Investment Strategies
- Apart from the lump sum Death Benefit, there is the funding of premium and Monthly Income Benefits.
- Unlimited free switches, 6 premium redirections and 2 partial withdrawals (after the lock-in period) are allowed in a Max Life Shiksha Plus Super policy year.
- A settlement option can be exercised during maturity.
- Option to decrease the premium up to 50% of the original Annualised Premium (post-lock-in period)
11. What are the Disadvantages of the Max Life Shiksha Plus Super Plan?
- No liquidity in the first 5 years of the Max Life Shiksha Plus Super policy.
- 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 Max Life Shiksha Plus Super plan.
12. Research Methodology Max Life Shiksha Plus Super Plan
The return on investment plays a major role when selecting an investment product. The product that we invest in should yield an inflation-beating return in the long run. Let us check the Internal Rate of Return of Max Life Shiksha Plus Super using the figures given in the policy brochure.
Benefit illustration of Max Life Shiksha Plus Super Plan – IRR(Internal rate of return i.e. Interest Rate) Analysis
| Male | 35 Years |
| Sum Assured | ₹ 7,50,000 |
| Policy Term | 15 years |
| Premium Paying Term | 15 years |
| Annualised premium | ₹ 75,000 |
A 35-year-old male buys Max Life Shiksha Plus Super Plan for his 5-year-old child. The sum assured is ₹ 7.5 Lakhs. The policy term and the premium paying term are 15 years. The annualised premium is ₹ 75,000. He receives the fund value at maturity.
| Age | Year | At 4% p.a. | At 8% p.a. | ||
| Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit | ||
| 35 | 1 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 36 | 2 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 37 | 3 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 38 | 4 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 39 | 5 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 40 | 6 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 41 | 7 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 42 | 8 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 43 | 9 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 44 | 10 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 45 | 11 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 46 | 12 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 47 | 13 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 48 | 14 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 49 | 15 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 12,15,250 | 17,02,136 | ||||
| IRR | 0.96% | 5.02% | |||
The mentioned rates of return (4% and 8%) are just examples of what you might earn after deducting all charges. They are not guaranteed and could be higher or lower depending on how the investments perform in the future.At the 4% scenario, the Final Maturity value is ₹ 12.15 Lakhs. IRR calculation for the 4% scenario results in 0.96%. This rate implies that the premium paid by you comes back to your pocket without any value addition.
At the 8% scenario, the Final Maturity value is ₹ 17.02 Lakhs. IRR calculation for the 8% scenario results in 5.02%. This rate is less than the bank’s fixed deposit rate.
A market-linked product fetching a return lower than a debt instrument is not favorable for investors. In the long run, this affects your wealth accumulation process.
13. Max Life Shiksha Plus Super Plan Vs. Other Investment Options – Review
Now, let us compare other instrument returns with Max Life Shiksha Plus Super. This will help you in arriving at informed decisions. For comparison purposes, let us assume the same figures as seen in the previous benefit illustration. With the same premium amount of ₹ 75,000, let us work out some alternate investment options.
i.Max Life Shiksha Plus Super Plan Vs. Pure Term + PPF / ELSS
For life cover, picking a Pure Term Life Insurance policy (without profit) is the right choice. A pure term life insurance policy for a sum assured of ₹ 7.5 Lakhs would cost ₹ 3800. This leaves you with ₹ 71,200 for investment. You can choose an investment vehicle as per your need.
| Pure Term Life Insurance | |
| Sum Assured | ₹ 7,50,000 |
| Policy Term | 15 years |
| Premium Paying Term | 15 years |
| Annualised premium | ₹ 3,800 |
| Investment | ₹ 71,200 |
To illustrate the working of different asset classes, we have chosen two scenarios. ELSS for equity asset class and PPF for debt asset class. After paying a pure-term insurance premium, the balance is invested either in the PPF or ELSS fund.
| Age | Year | Term Insurance + PPF | Term insurance + ELSS | ||
| Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit | ||
| 35 | 1 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 36 | 2 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 37 | 3 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 38 | 4 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 39 | 5 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 40 | 6 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 41 | 7 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 42 | 8 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 43 | 9 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 44 | 10 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 45 | 11 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 46 | 12 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 47 | 13 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 48 | 14 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 49 | 15 | -75,000 | 7,50,000 | -75,000 | 7,50,000 |
| 19,31,043 | 27,92,350 | ||||
| IRR | 6.50% | 10.71% | |||
The final maturity value under PPF investment is ₹ 19.31 Lakhs. This is a tax-free amount. The IRR calculation for the Pure term insurance policy and PPF combo results in 6.50%.
ELSS proceeds are subject to capital gains tax. Under ELSS fund the pre-tax value is ₹ 29.72 Lakhs. After capital gains tax payment, the final maturity value is ₹ 27.92 Lakhs. The tax calculation is given below. The IRR calculation for the Pure term insurance policy and PPF combo results in 10.71%.
| ELSS Tax Calculation | |
| Maturity value after 15 years | 29,72,834 |
| Purchase price | 10,68,000 |
| Long-Term Capital Gains | 19,04,834 |
| Exemption limit | 1,00,000 |
| Taxable LTCG | 18,04,834 |
| Tax paid on LTCG | 1,80,483 |
| Maturity value after tax | 27,92,350 |
The Rate of return from these alternate investments is higher than inflation. This ultimately helps to accumulate wealth in the long-run. Max Life Shiksha Plus Super is a market-linked product but doesn’t accelerate your wealth creation.
ii. Max Life Shiksha Plus Super Plan Vs. Max Life Guaranteed Lifetime Income Plan
Let’s look at some of the features of the Max Life Guaranteed Lifetime Income Plan:
- Freedom to select the deferment times and premium payment arrangements.
- Income for you and your loved one with the Joint Life Option.
- Option to select between a deferred annuity and an immediate annuity.
Read the complete review of the Max Life Guaranteed Lifetime Income Plan
iii Max Life Shiksha Plus Super Plan Vs. Max Life Online Savings Plan
Let’s look at some of the features of the Max Life Online Savings Plan:
- There are two versions of the Max Life Online Savings plan.
- Both the Policy Term and the Premium Payment Term are up to you to select. Pick from 11 Funds based on your tolerance for risk.
- The quantity of fund switches that might be completed within a policy year is unlimited.
Read the complete review of the Max Life Online Savings Plan.
14.Max Life Shiksha Plus Super Plan Vs. Other Investment Options –Review Conclusion
The Max Life Shiksha Plus Super Plan or other Insurance plus investment plan, doesn’t keep up with inflation, making it unsuitable for long-term goals. Instead, consider Pure Term Insurance and ELSS for better inflation protection and returns aligned with your financial needs.
15.Final Verdict on Max Life Shiksha Plus Super Plan – Good or Bad Investment Option?
Max Life Shiksha Plus Super invest net premium (after deducting applicable charges) paid by you in Funds of your choice. Fund choices may vary from Debt (low risk), Balanced (medium risk), and Equity (high risk). Based on personal risk appetite, you may choose any one or a combination of fund options.
The returns analysis reveals that the potential return is substantially low. Though it allows to invest in the market, it fetches less than a debt instrument return. High charges deplete the return in the long run. This can disrupt the dream of your child. If insurance agents pursue you to buy this plan then it is purely for the high agent commission they get for selling this Max Life Shiksha Plus Super Plan.
Education cost doubles every six years. Ready-made children’s education policies may not keep up with the rising cost of education. Therefore, investing in instruments that can sustain inflation can help parents earn better returns.
To navigate the intricate landscape of education finance, consult a finance professional instead of trying to find an answer for all your personal finance-related queries on social media sites such as Quora, Facebook, Twitter, etc.
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