Max Life Smart Capital Guarantee Solution: In-depth & Insightful Review (2024)

Do you find it difficult to select an insurance policy from a pool of plans available in the market?
Do you want to be cautious in selecting a policy?

Life insurance can be broadly classified as Pure Term plan, Endowment plan, Money back plan & Unit Linked Insurance Plan (ULIP). Though some investors want to get the upside of market-linked return through ULIP plans, they want to ensure that their capital is protected.

Max Life Insurance has come up with a combination of Endowment & ULIP plans. The benefits of the two plans are combined under Max Life Smart Capital Guarantee Solution.

The two products are Max Life Smart Wealth Plan (endowment) and Max Life Flexi Wealth Advantage Plan (ULIP). Let us understand the working of the plan.

Table of Contents

1.) An overview of Max Life Smart Capital Guarantee Solution

2.) Features of Max life Smart capital Guarantee Solution

3.) Eligibility Criteria of Max LifeSmart Capital Guarantee Solution

4.) Advantages of Max LifeSmart Capital Guarantee Solution

5.) Disadvantages of Max LifeSmart Capital Guarantee Solution

6.) Research Methodology on Max LifeSmart Capital Guarantee Solution

8.) Analysis of Benefit Illustration of Max LifeSmart Capital Guarantee Solution

7.) Max LifeSmart Capital Guarantee Solution vs. Other Investments

9.) Max Life Smart Capital Guarantee Solutions VS. ELSS

10.) Final Verdict on Max LifeSmart Capital Guarantee Solution

An overview of Max Life Smart Capital Guarantee Solution:

The Smart Capital Guarantee Solution is a combination of ULIP (Unit Linked Insurance Plan) and a Non-Participating Traditional Savings plan. The premium paid under the Capital Guarantee Solution is split & invested under two plans Viz, Smart Wealth Plan and Flexi Wealth Advantage Plan.

Max Life Smart Wealth Plan (Endowment Plan):

It is a non-linked life insurance savings plan that helps secure the financial future through guaranteed returns. It provides comprehensive death benefits & provides guaranteed returns. There is flexibility to choose from 4 options as per your needs.

Max Life Flexi Wealth Advantage Plan (ULIP):

It allows investors to create wealth by putting their money in market-linked funds. Flexibility to choose from 11 different funds to invest as per your risk appetite, maturity benefit, death benefit, tax benefits, and guaranteed loyalty additions.

Features of Max life Smart capital Guarantee Solution:

There are 5 different combinations available to fulfil the various requirements of investors. 

Milestone (10 years): Lumpsum

Premium Payment Term (PPT): 5 years

Policy Term (PT): 10 years.

Maturity benefit of Max Life Smart Wealth Plan: 100% capital return 

Maturity benefits of Max Life Flexi Wealth Advantage Plan: Market-linked returns at the end of the policy term.

1. Milestone (12 years): Lumpsum

Premium Payment Term (PPT): 5 years

Policy Term (PT): 12 years.

Maturity benefit of Max Life Smart Wealth Plan: 100% capital return 

Maturity benefits of Max Life Flexi Wealth Advantage Plan: Market-linked returns at the end of the policy term.

1. Milestone (15 years): Lumpsum

Premium Payment Term (PPT): 5 years

Policy Term (PT): 15 years.

Maturity benefit of Max Life Smart Wealth Plan: 100% capital return 

Maturity benefits of Max Life Flexi Wealth Advantage Plan: Market-linked returns at the end of the policy term.

1. Whole life:

Premium Payment Term (PPT): 8 years

Policy Term (PT): Smart Wealth Plan – 9 Years, Flexi Wealth Advantage plan – Whole Life.

Maturity benefit of Max Life Smart Wealth Plan: 100% capital guarantee through guaranteed income for 8 years.

Maturity benefits of Max Life Flexi Wealth Advantage Plan: Option to do partial withdrawals from fund value till 100 years of age.

1. Regular Income:

Premium Payment Term (PPT): 6 years

Policy Term (PT): Smart Wealth Plan –7 Years, Flexi Wealth Advantage plan – 16 Years.

Maturity benefit of Max Life Smart Wealth Plan: Guaranteed income for 30 years & at the end of the income period receive a return of premium allocated for this particular plan alone.

Maturity benefits of Max Life Flexi Wealth Advantage Plan: Market-linked returns at the end of the policy term (16 years).

Eligibility Criteria of Max LifeSmart Capital Guarantee Solution:

Plan	Minimum Age	Maximum Age
Milestone Solution (10 years)	18	55
Milestone Solution (12 years)		60
Milestone Solution (15 years)		60
Whole Life Solution		50
Regular Income Solution		50

Advantages of Max LifeSmart Capital Guarantee Solution:

• The premium paid is apportioned & invested in two plans.

• It aims to provide a dual benefit of a safety net to its investors with the promise of guaranteed

• return along with the opportunity to participate in market-linked incentives.

• Flexibility in choosing a combination of two policies.

• The Premium paying term is limited but the benefits are for the long term.

• The plan takes into consideration the 3 Parameters – Safety, Liquidity & Returns.

• Tax benefit under Sec 80C & Sec 10 (10D) of Income Tax Act, 1961.

Disadvantages of Max Life Smart Capital Guarantee Solution:

• The premium is split in a predefined ratio & invested under two plans. The policyholder does not have a hold to decide the allocation of premiums to be invested under the two plans.

• The combinations & the working of the plans are a hassle for the investor.

• The life cover under this plan is just 10 times the annualised premium. It is limited to policy terms; it does not cover the income benefit period.

Research Methodology on Max LifeSmart Capital Guarantee Solution:

Now, we have seen all the factors that we need to know about Max Life Smart Capital Guarantee Solution..

So, now, we are going to do detailed research on the IRR of the Max Life Smart Capital Guarantee Solution.

Simply knowing about the plan cannot help you to decide whether you should buy this plan or not.

That’s why we are going to do the research methodology to see how much return we can get from Max Life Smart Capital Guarantee Solution and whether it could benefit us or not.

To do this research methodology, first, we are going to calculate the IRR of the Max Life Smart Capital Guarantee Solution by using the Max Life Online Calculator.

Then we are going to use the same value to calculate the IRR of other investments.

Later, we can compare both of these results to see which gives us a better result.

This can help us to decide whether we should purchase this plan or not.

Analysis of Benefit Illustration of Max LifeSmart Capital Guarantee Solution:

		Milestone (10 years)	Whole Life	Regular Income
	Age	35	45	35
	Premium Paying Term	5	8	6
	Policy Term	10	SWP – 9 years, FWAP – Whole life	SWP – 7 years, FWAP – 16 years
	Annualised Premium	3,00,000	3,00,000	3,00,000
	Sum Assured	30,00,000	30,00,000	30,00,000
Benefits	Smart Wealth Plan (SWP)	At the end of the policy term (10 years) – 15,00,000	Annual guaranteed income – 3 lakhs per annum for 8 years	Annual guaranteed income – 41,683 per annum for 30 years + ROP At the end of 30 years – 5,49,540
	Flexi Wealth Advantage plan (FWAP)	At the end of 10 years 4% – 5,57,085	At the age of 100 years 4% – 47,13,654	At the end of 16 years 4% – 16,94,830
		At the end of 10 years 8% – 7,56,840	At the age of 100 years 8% – 3,30,13,881	At the end of 16 years 8% – 28,28,338
	IRR	At the rate of 4% – 4.01%	At the rate of 4% – 2.44%	At the rate of 4% – 3.89%
		At the rate of 8% – 5.21%	At the rate of 8% – 4.08%	At the rate of 8% – 6.10%

Milestone (10 Years):

Pay for 5 years & get the benefit of SWP & FWAP at the end of the 10th year.

Whole life:

Pay for 8 years &

Get the benefit of SWP in the form of regular income for 8 years &

Get the benefit of FWAP at the age of 100 years (Partial withdrawal is allowed)

Regular income:

Pay for 6 years &

Get the benefit of SWP in the form of regular income for 30 years + return of premium at the end of 30 years &

Get the benefit of FWAP at the end of 16 years.

On analysing all the combinations, it is evident that all the IRR works out in the range of 2.50% – 6%. These returns won’t be sufficient to create wealth in the long run. Also, there is no guaranteed return for the Flexi wealth Advantage Plan (FWAP).

The assumed rates of returns, 4% and 8%, are not guaranteed and 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 several factors including future investment performance.

The Max life Smart Capital Guarantee Solution does not help investors in protecting their investments from inflation. The IRR under various combinations is far below the inflation rate. If the inflation rate exceeds the return on investment, then the investor is losing money.

Max LifeSmart Capital Guarantee Solution vs. Other Investments:

The Max life Smart Capital Guarantee Solution is not suitable for wealth accumulation. So, let us investigate other options where life cover & investment are done separately.

A pure term policy for a sum assured of Rs. 30 lakhs (Similar to the benefit illustration explained above) can be taken for a tenure of 10 years & the premium paying term is 5 years. For comparison purpose, the sum assured, policy term & premium paying term is assumed like the Milestone (10 years).

Max Life Smart Capital Guarantee Solutions VS. ELSS:

Sum Assured	30 lakhs
Tenure	10 years
Premium paying term	5 years
Annual premium	18,000
Balance amount invested in ELSS	2,82,000
Total cash outflow	3,00,000

After paying a premium for the pure term, the balance amount can be invested depending on suitability. Here it is assumed that the balance amount is invested in ELSS for 5 years. The fund grows & matures at the end of 10 years.

	Milestone (10 years)		Sum Assured	ELSS	Sum Assured
	At the rate of 4%	At the rate of 8%
1	-3,00,000	-3,00,000	30,00,000	-3,00,000	30,00,000
2	-3,00,000	-3,00,000	30,00,000	-3,00,000	30,00,000
3	-3,00,000	-3,00,000	30,00,000	-3,00,000	30,00,000
4	-3,00,000	-3,00,000	30,00,000	-3,00,000	30,00,000
5	-3,00,000	-3,00,000	30,00,000	-3,00,000	30,00,000
6	0	0	30,00,000	0	30,00,000
7	0	0	30,00,000	0	30,00,000
8	0	0	30,00,000	0	30,00,000
9	0	0	30,00,000	0	30,00,000
10	0	0	30,00,000	0	30,00,000
11	20,57,085.00	22,56,845.00		33,33,498.26	30,00,000
IRR	4.01%	5.21%		10.36%

In the Milestone option, the aggregation of both guaranteed & non-guaranteed benefits at the end of 10 years is Rs.20 – 22 lakhs. On the other hand, the final maturity value of ELSS at the end of 10 years after paying the tax is Rs. 33.33 lakhs.

The IRR of ELSS (post-tax) is 10.36%. This is an inflation-beating return which is missing in the Max life smart guarantee solution.

Choosing an appropriate investment to build the required corpus for future goals. Choose either an equity-related investment like ELSS or Debt related instrument like PPF (7.1% rate of interest) based on the risk appetite and time horizon.

Final Verdict on Max LifeSmart Capital Guarantee Solution:

Max Life Smart Capital Guarantee Solution attracts you by showcasing comprehensive benefits such as life cover, guaranteed return & market-linked return and great customization.

This plan is a blend of two existing plans: Smart Wealth Plan and Flexi Wealth Advantage Plan. Each plan has its norms regarding the paid-up, surrender & lock-in period.

There is no clarity on what if the policy is discontinued or what if the policyholder wants to make it paid up or what is the minimum period for surrendering.

Moreover, there is neither an upper hand in investing in terms of return nor it is hassle-free investing. It is futile to invest in the Smart Capital Guarantee Solution as the return is also not in proportion to the risk taken. Overall, choose an investment product to fulfil your short- & long-term goals & take adequate life cover separately through pure term insurance to protect your loved ones.

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