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.
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
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.
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.
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.
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.
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.
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.
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.
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).
| 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 |
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.
| 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% |
Pay for 5 years & get the benefit of SWP & FWAP at the end of the 10th year.
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)
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.
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).
| 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.
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.
If you have any comments or questions, write them in the comment box below.
Or are you interested in creating a Comprehensive Financial Plan for your financial goals?
Skip the queue by registering for your 30 Minute FREE Financial Plan Consultation. Click the ‘‘BOOK YOUR SLOT NOW!’’ button below.
Listen to this article Power looks dominant—until it fails. History is rarely decided by who…
Listen to this article Is building a retirement corpus of ₹1–2 crore really only possible…
Listen to this article Markets feel predictable—until they suddenly aren’t. At market peaks, confidence is…
Listen to this article Your salary will likely grow with time. Promotions, job switches, and…
Listen to this article Markets are falling, headlines are screaming, and uncertainty feels louder than…
Listen to this article What if the biggest mistake in your investing journey isn’t choosing…