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Could Max Life Smart Fixed Return Digital Plan help you reach your financial objectives?
Is Max Life Smart Fixed Return Digital Plan a good choice for growing your savings?
Could Max Life Smart Fixed Return Digital Plan be an integral part of your portfolio?
In this article, we will review Max Life Smart Fixed Return Digital plan’s features, costs involved, advantages, disadvantages, and potential returns through IRR analysis. This will help you determine if it is the right investment product for your needs.
Table of Contents:
What is Max Life Smart Fixed Return Digital Plan?
What are the Features of Max Life Smart Fixed Return Digital Plan?
Who is Eligible for Max Life Smart Fixed Return Digital Plan?
What are the Plan Variants and the Benefits of Max Life Smart Fixed Return Digital Plan?
Grace Period, Reduced paid-up and Revival of Max Life Smart Fixed Return Digital Plan
Free Look Period of Max Life Smart Fixed Return Digital Plan
Surrendering Max Life Smart Fixed Return Digital Plan
What are the Advantages of Max Life Smart Fixed Return Digital Plan?
What are the Disadvantages of Max Life Smart Fixed Return Digital Plan?
Research Methodology of Max Life Smart Fixed Return Digital Plan
Benefit Illustration – IRR Analysis of Max Life Smart Fixed Return Digital Plan
Max Life Smart Fixed Return Digital Plan Vs. other investment product
Max Life Smart Fixed Return Digital Plan Vs. Pure Term + ELSS
Final Verdict on Max Life Smart Return Digital Plan
What is Max Life Smart Fixed Return Digital Plan?
Max Life Smart Fixed Return Digital Plan is a Non-Linked Non-Participating Individual Life Insurance Savings Plan. Max Life Smart Fixed Return Digital Plan combines protection along with giving you lump sum benefits that are assured right at the outset.
What are the Features of Max Life Smart Fixed Return Digital Plan?
- Guaranteed Returns payable as a lump sum at maturity
- Flexibility to choose the level of Death Benefit cover you need for the financial security of your family
- Option of taking a loan against policy to help you in case of financial emergencies
- You can enjoy higher benefits for higher premiums paid, as per your chosen goals
- Special benefits for women customers
- Tax benefits are available as per prevailing tax laws
Who is Eligible for Max Life Smart Fixed Return Digital Plan?
What are the Plan Variants and the Benefits of Max Life Smart Fixed Return Digital Plan?
A. Gold:
Premium paying term: Single Pay.
Maturity benefit: A Guaranteed lump sum on survival at the end of the chosen period (Policy Term) of 5 or 10 years.
Death benefit: A Death Benefit of either 1.25 times or 10 times the Single Premium as chosen by the policyholder. You can also opt for joint life coverage under this variant.
B. Platinum:
Premium paying term: 5 years.
Maturity benefit: A Guaranteed lump sum on survival at the end of the chosen period (Policy Term) of 5 or 10 years.
Death benefit: A Death Benefit of at least 11 times the Annualized Premium.
C. Titanium:
Premium paying term: 5 years.
Maturity benefit: A Guaranteed lump sum on survival at the end of the chosen period (Policy Term) of 5 or 10 years. This lump sum includes additional benefits in the form of Guaranteed Additions which accrue once you have completed paying all due premiums.
Death benefit: A Death Benefit of at least 11 times the Annualized Premium.
Grace Period, Reduced paid-up, and Revival of Max Life Smart Fixed Return Digital Plan
Grace period
A grace period of 30 days for annual, semi-annual, and quarterly modes and 15 days in case of monthly premium payment mode from the due date for payment of each premium will be allowed.
Reduced Paid-up Benefit
If you stop paying premiums after paying for 2 or more years, your Max Life Smart Fixed Return Digital Plan policy will continue with reduced benefits. RPU benefits are not applicable in the case of the Gold variant.
If you stop paying premiums before paying premiums for 2 years, you will not be eligible for any benefit.
Revival
A lapse/RPU policy can be revived within a revival period of five consecutive years from the due date of the first unpaid premium. Revival is not applicable for the Gold variant.
Free Look Period of Max Life Smart Fixed Return Digital Plan
If you disagree with any of those terms and conditions, you have the option to return the Max Life Smart Fixed Return Digital Plan policy within a period of 15 days (30 days in case of electronic policies and policies obtained through Distance Marketing modes) from the date of receipt of the policy document.
Surrendering Max Life Smart Fixed Return Digital Plan
The policyholder can surrender the Max Life Smart Fixed Return Digital Plan policy anytime during the policy term after it has acquired a surrender value. The Max Life Smart Fixed Return Digital Plan policy acquires a Surrender Value as follows:
5 Pay: On payment of the first two full years’ premium.
Single Pay: Immediately on payment of single premium.
The surrender value will be equal to the higher Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).
What are the Advantages of Max Life Smart Fixed Return Digital Plan?
- Riders can be added to the base policy
- Policy loans will be available under this product subject to a maximum limit of 75% of the Surrender Value
- Joint life cover is available under the gold variant.
What are the Disadvantages of Max Life Smart Fixed Return Digital Plan?
- Some of the features are not available for the Gold variant.
- Though the benefits are guaranteed, the returns are not favourable.
- The policy term and Premium paying term are rigid.
Research Methodology of Max Life Smart Fixed Return Digital Plan
The Max Life Smart Fixed Return Digital Plan offers a guaranteed maturity benefit. However, this guaranteed benefit shouldn’t be the sole criterion for choosing the Max Life Smart Fixed Return Digital Plan. It’s essential to evaluate the Max Life Smart Fixed Return Digital Plan in terms of its percentage returns.
Let’s calculate the Internal Rate of Return (IRR) using a quote from the portal and the Max Life Smart Fixed Return Digital Plan maturity calculator.
Benefit Illustration – IRR Analysis of Max Life Smart Fixed Return Digital Plan
A 40-year-old male purchases the Max Life Smart Fixed Return Digital Plan with a sum assured of ₹ 22 lakhs. The Max Life Smart Fixed Return Digital Plan policy term is 10 years, and the premium payment term is 5 years, with an annual premium of ₹ 2 lakhs. He opts for the platinum variant.
| Male | 40 years |
| Sum Assured | ₹ 22,00,000 |
| Policy Term | 10 years |
| Premium Paying Term | 5 years |
| Annualised Premium | ₹ 2,00,000 |
If he pays the premium for 5 years, he will receive the maturity benefit along with the accrued guaranteed addition at the end of 10 years.
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 40 | 1 | -2,00,000 | 22,00,000 |
| 41 | 2 | -2,00,000 | 22,00,000 |
| 42 | 3 | -2,00,000 | 22,00,000 |
| 43 | 4 | -2,00,000 | 22,00,000 |
| 44 | 5 | -2,00,000 | 22,00,000 |
| 45 | 6 | 0 | 22,00,000 |
| 46 | 7 | 0 | 22,00,000 |
| 47 | 8 | 0 | 22,00,000 |
| 48 | 9 | 0 | 22,00,000 |
| 49 | 10 | 0 | 22,00,000 |
| 50 | 17,25,550 | 22,00,000 | |
| IRR | 7.00% |
The final maturity benefit is ₹17.25 lakhs. The IRR for this cash flow is 7%. This IRR matches the inflation rate, making it seem like an attractive investment option. However, it’s important to note that your investment is locked until the end of the policy term.
The lack of liquidity makes the Max Life Smart Fixed Return Digital Plan less appealing. Additionally, the sum assured is relatively low.
Max Life Smart Fixed Return Digital Plan Vs. other investment product
To gain better insights into the proper utilization of your savings, let’s compare the returns of other investment products. Instead of opting for an endowment plan, you could consider a pure term life insurance policy for life coverage with an adequate sum assured.
Since pure-term policies are non-profit policies, the premiums are more affordable. For investment purposes, allocate your savings across various asset classes based on your life goals. This approach can provide a more balanced and potentially higher return on investment.
Max Life Smart Fixed Return Digital Plan Vs. Pure Term + ELSS
A pure term life insurance policy with a sum assured of ₹22 lakhs would cost ₹21,500. The Max Life Smart Fixed Return Digital Plan policy term is 10 years, with a premium payment term of 5 years.
By opting for the Max Life Smart Fixed Return Digital Plan policy, you can save ₹ 1.78 lakhs out of the annual ₹ 2 lakh premium, which can then be invested based on your risk tolerance.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 22,00,000 |
| Policy Term | 10 years |
| Premium Paying Term | 5 years |
| Annualised Premium | ₹ 21,500 |
| Investment | ₹ 1,78,500 |
| Term insurance + ELSS | |||
| Age | Year | Term Insurance premium + ELSS | Death benefit |
| 40 | 1 | -2,00,000 | 22,00,000 |
| 41 | 2 | -2,00,000 | 22,00,000 |
| 42 | 3 | -2,00,000 | 22,00,000 |
| 43 | 4 | -2,00,000 | 22,00,000 |
| 44 | 5 | -2,00,000 | 22,00,000 |
| 45 | 6 | 0 | 22,00,000 |
| 46 | 7 | 0 | 22,00,000 |
| 47 | 8 | 0 | 22,00,000 |
| 48 | 9 | 0 | 22,00,000 |
| 49 | 10 | 0 | 22,00,000 |
| 50 | 22,38,282 | 22,00,000 | |
| IRR | 10.46% | ||
For this example, we’ve chosen an Equity Linked Savings Scheme (ELSS) as the investment vehicle. When redeeming units from the ELSS fund at the end of 10 years, capital gains tax will apply.
The pre-tax maturity value is ₹22.38 lakhs, and after paying the tax, the final post-tax maturity value is ₹21.13 lakhs.
The IRR for the combined strategy of a pure term life insurance premium and ELSS investment results in an IRR of 10.46% (post-tax return).
| ELSS Tax Calculation | |
| Maturity value after 10 years | 22,38,282 |
| Purchase price | 8,92,500 |
| Long-Term Capital Gains | 13,45,782 |
| Exemption limit | 1,00,000 |
| Taxable LTCG | 12,45,782 |
| Tax paid on LTCG | 1,24,578 |
| Maturity value after tax | 21,13,704 |
This calculation highlights the benefits of investing separately without bundling insurance. The returns exceed the inflation rate, and you also benefit from greater liquidity. These advantages are not matched by the Max Life Smart Fixed Return Digital Plan.
Final Verdict on Max Life Smart Return Digital Plan
The Max Life Smart Fixed Return Digital Plan is an endowment plan that offers single pay and limited pay options. However, the Max Life Smart Fixed Return Digital Plan policy term and premium payment term cannot be adjusted based on personal requirements, leading to a potential mismatch between actual needs and policy maturity.
While the return percentage appears attractive for a fixed instrument product, the investment is locked in for the long term. This lack of liquidity is an important consideration in investment decisions.
Additionally, the life insurance coverage provided by this plan is inadequate to meet a family’s future needs. These factors make the Max Life Smart Fixed Return Digital Plan less suitable for a recommended investment portfolio. If you already hold this Max Life Smart Fixed Return Digital Plan policy, it is advisable to maintain it until maturity rather than surrendering it prematurely.
Although social networking sites like Facebook, Twitter, and Quora can be excellent starting points for financial education, you shouldn’t end up there. Although you may find some intriguing anecdotes and advice, they are devoid of the essential components required to make wise financial decisions.
Creating a robust financial plan is crucial for your financial journey. Consult a certified Financial Planner for a personalized financial plan that aligns with your life goals.
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