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There is a plethora of Insurance Plans available in the market that offers you both – Wealth-Building and Financial Protection for your family.
Max Life offers one such plan called Max Life Smart Wealth Advantage Guarantee (SWAG) which offers a comprehensive solution.
In this review, we shall find out how beneficial is this plan to the investor for the long term through a detailed IRR and Comparative Analysis.
Table of Contents:
1.)What is Max Life Smart Wealth Advantage Guarantee (SWAG) Plan?
2.)Features of the Max Life Smart Wealth Advantage Guarantee (SWAG)Plan
3.)Eligibility Criteria of the Max Life Smart Wealth Advantage Guarantee(SWAG) Plan
4.) Benefits of the Max Life Smart Wealth Advantage Guarantee (SWAG)Plan
- Survival Benefit
- Maturity Benefit
- Death Benefit
5.)Advantages of the Max Life Smart Wealth Advantage Guarantee (SWAG)Plan
6.)Disadvantages of Max Life Smart Wealth Advantage Guarantee (SWAG)Plan
7.) Research Methodology
8.)IRR of the Max Life Smart Wealth Advantage Guarantee (SWAG) Plan
9.) Max Life Smart Wealth Advantage Guarantee (SWAG) Plan Vs. OtherInvestment Avenues
10.) Max Life Smart Wealth Advantage Guarantee (SWAG) Plan Vs. Pure Term Insurance + PPF / ELSS
11.) Final Verdict on the Max Life Smart Wealth Advantage Guarantee(SWAG) Plan
What is Max Life Smart Wealth Advantage Guarantee (SWAG) Plan?
It is a Non-Linked, Non-Participating, Individual, Life Insurance, Savings Plan.
It gives enhanced protection with guaranteed return on your savings and offers a highly customizable solution to fulfill the certain as well as uncertain needs of your family. It allows you the flexibility to customize your plan to suit your convenience.
Features of the Max Life Smart Wealth Advantage Guarantee (SWAG) Plan
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- You can choose your Premium Payment Term, Income Period & Policy Term at your convenience.
- You have the option to get income as early as the first year through their “Early Wealth” variant.
- Save the Date option can be used to receive income on any of your special occasions.
- There is an option to accrue your income and withdraw it anytime during your policy term after your premium payment term is over.
- In-built accidental death benefit of 50% of the sum assured is provided to the policyholder.
- Policy Continuance Benefit (PCB) – On the occurrence of a specified event, your survival and maturity benefits are payable as and when due without any need for premium payment to the policyholder.
- It allows the policyholder to break their maturity and death benefits and receive them in installments.
Eligibility Criteria of the Max Life Smart Wealth Advantage Guarantee (SWAG) Plan
Let us look at some of the basic information we need to know about the Max Life SWAG Plan to be eligible to enter this plan at a glance below;
Minimum age at entry Maximum age at entry Maximum Maturity Age Variant Premium Paying term PCB opted PCB not opted PCB opted PCB not opted PCB opted PCB not opted Wealth For Milestones Single Pay 8 years NA 1.25 X DB Multiple 65 years NA 1.25 X DB Multiple 75 years 10 X DB Multiple 45 years 10 X DB Multiple 55 years NA 5,6,8,10,12 91 days 18 years 65 years less PPT 60 years 90 85 Regular Wealth 5,6,8,10,12 91 days 18 years 65 years less PPT 60 years 85 80 Long Term Wealth 5,6,8,10,12 91 days 18 years 65 years less PPT 60 years 100 95 Early Wealth 10,12,15,20 91 days / 3 years if PPT 15 years is chosen 18 years 65 years less PPT 58 years 95 88 Lifelong Wealth 5,6,8,10,12 40 days NA 65 years less PPT NA 100 NA PCB – Policy Continuance Benefit.
Benefits of the Max Life Smart Wealth Advantage Guarantee (SWAG) Plan
Survival Benefit
It is payable if the Life Insured is alive on the due date of the benefit, provided the Policy is in force
Variant Survival benefit Wealth For Milestones NA Regular Wealth Income benefit + Loyalty Income Booster (10% of Income benefit) Early Wealth Income benefit Long Term Wealth Income benefit + Loyalty Income Booster (20% of Income benefit) Lifelong Wealth Income benefit + Loyalty Income Booster (20% of Income benefit) + Money back benefit payable at the age of 85 years Maturity Benefit
It is payable on survival of the Life Insured on the maturity date, provided the Policy is in force.
Variant Maturity Benefit Wealth For Milestones Sum Assured on Maturity + Accrued guaranteed additions Regular Wealth NA Early Wealth Sum Assured on Maturity + Accrued guaranteed additions Long Term Wealth Sum Assured on Maturity Lifelong Wealth Sum Assured on Maturity + Last guaranteed income payment
Death BenefitThe below information covers the death benefit of all the Variants available in the Max Life Smart Wealth Advantage Guarantee (SWAG) Plan.
Considering PCB is not opted – Payable if the Life Insured dies during the Policy Term
Single Pay: Death Benefit shall be higher of:
- Sum Assured on Death
- 125% of Surrender Value applicable as of the date of death
Other than single pay: Death benefit shall be higher of:
- Sum Assured on Death
- 105% of (Total Premiums Paid plus underwriting extra premiums plus loadings for modal premiums) as on the date of death of the life insured
- 125% of Surrender Value applicable as on the date of death Any accrued income benefit and loyalty income boosters, if not already paid shall be paid in addition to the death benefit.
Considering PCB opts
If the Life Insured dies during the Policy Term provided the Policy is in force, the Death Benefit is the sum of the Death Benefit and Policy Continuance Benefit
Death Benefit equal to higher of:
- Sum Assured on Death
- 105% of (Total premiums paid plus underwriting extra premiums plus loadings for modal premiums) as on the date of death of the life insured
Policy Continuance Benefit: All future Survival Benefits and Maturity Benefits shall be paid to your beneficiary, as and when due in the future without any need for the premium payment. Plus, any accrued income benefit and loyalty income boosters, if not already paid shall be paid.
The plan also comes with an in-built accidental death benefit that pays an additional amount that equals 50% of the sum assured if the premium payment term is completed by the policyholder if the life insured dies due to an unfortunate accident.
Advantages of the Max Life Smart Wealth Advantage Guarantee (SWAG) Plan
- You have the flexibility to choose the mode of pay-out to receive your Income benefit. Either you can accrue it or get it on every policy anniversary.
- Income pay-out frequency – annually, semi-annually, quarterly, and monthly.
- Loan option is available to meet your urgent financial requirements.
- There are special rates for women & discounts for transgender.
- Riders will allow you to extend your range of benefits by paying a small premium.
- A settlement option is available for both death & maturity benefit.
Disadvantages of Max Life Smart Wealth Advantage Guarantee (SWAG) Plan
- The Insurance Plan mainly focuses on Income benefits rather than building wealth.
- Though the returns are guaranteed, they will not aid you in fulfilling your financial goals.
- The sum Assured is too low.
For more details on surrendering the policy, free-look period, etc…; please refer to the Max Life Smart Wealth Advantage Guarantee (SWAG) Policy Brochure.
Research Methodology
The above details may not help you to decide whether this plan should be in your Investment Portfolio or not.
We need some numerical validation to make the RIGHT Investment decision. So, let us find out the Internal Rate of Return of this policy.
Also, let us compare the IRR with other investment avenues to support our investment decision.
IRR of the Max Life Smart Wealth Advantage Guarantee (SWAG) Plan
The Assumptions for Comparison
Male 35 Years Policy Term 15 Years Premium Paying Term 15 Years Annual Premium Rs. 1 Lakh Sum Assured Rs. 11 Lakhs Variant Early Wealth Annual Income benefit 1,35,000 Income Benefit starts from the year At the end of the 10th year The illustration below is taken from the Max Life portal.
Under the Early wealth variant, there is income benefit & Maturity benefit.
For the Sum Assured of Rs. 11 lakhs, Policy Term & Premium Paying Term is 15 Years, and the Annual premium is Rs. 1 Lakh.
The following table will decipher the cash flow & IRR workings of the Max Life Smart Wealth Advantage Guarantee (SWAG) Plan.
Max Life SWAG Age Year Annualized premium / Maturity benefit Death benefit 35 1 -1,00,000 11,00,000 36 2 -1,00,000 11,00,000 37 3 -1,00,000 11,00,000 38 4 -1,00,000 11,00,000 39 5 -1,00,000 11,00,000 40 6 -1,00,000 11,00,000 41 7 -1,00,000 11,00,000 42 8 -1,00,000 11,00,000 43 9 -1,00,000 11,00,000 44 10 -1,00,000 11,00,000 45 11 35,000 11,00,000 46 12 35,000 11,00,000 47 13 35,000 11,00,000 48 14 35,000 11,00,000 49 15 35,000 11,00,000 50 14,11,443 IRR 4.57% The IRR for Max Life SWAG – Early Wealth Variant works out to be 4.57%.
The Income benefit that you receive every year is adjusted to the annual premium. All the benefits are guaranteed.
Still, the IRR doesn’t hold well to investment as the rate is far below any fixed income securities rate of return. Even if you invest in a Bank FD, the returns will be much better. Moreover, the income benefit may not help you to meet any of your big-ticket expenses like your children’s higher education or their marriage.
Max Life Smart Wealth Advantage Guarantee (SWAG) Plan Vs. Other Investment Avenues
The Sum assured is too low & the IRR is also too low for the Max Life SWAG Plan.
So, let us look for other options to fulfil both our requirements i.e., Life cover & investment. We can assume a similar cash flow as in the above illustration.
The annual premium of Rs. 1 lakh can be invested in a Pure Term Insurance Policy & also for Wealth Creation Purposes. The premium for a Pure Term Insurance Policy with a Sum assured of Rs. 11 lakh is Rs 5,500. The balance amount of Rs 94,500 can be invested either in equity or debt instrument as per your choice.Max Life Smart Wealth Advantage Guarantee (SWAG) Plan Vs. Pure Term Insurance + PPF / ELSS
For Wealth Accumulation Purposes, we have taken PPF (debt) & ELSS (equity) as Investment Instrument. There is an income benefit in the Max Life Early wealth variant.
The same is assumed here. For that purpose, 50% of the accumulated corpus is withdrawn from PPF / ELSS & invested in a 7% return investment instrument. From this investment, Rs. 1,35,000 is withdrawn annually.
Term Insurance + PPF Term insurance + ELSS Age Year Term Insurance premium + PPF Death benefit Term Insurance premium + ELSS Death benefit 35 1 -1,00,000 11,00,000 -1,00,000 11,00,000 36 2 -1,00,000 11,00,000 -1,00,000 11,00,000 37 3 -1,00,000 11,00,000 -1,00,000 11,00,000 38 4 -1,00,000 11,00,000 -1,00,000 11,00,000 39 5 -1,00,000 11,00,000 -1,00,000 11,00,000 40 6 -1,00,000 11,00,000 -1,00,000 11,00,000 41 7 -1,00,000 11,00,000 -1,00,000 11,00,000 42 8 -1,00,000 11,00,000 -1,00,000 11,00,000 43 9 -1,00,000 11,00,000 -1,00,000 11,00,000 44 10 -1,00,000 11,00,000 -1,00,000 11,00,000 45 11 35,000 11,00,000 35,000 11,00,000 46 12 35,000 11,00,000 35,000 11,00,000 47 13 35,000 11,00,000 35,000 11,00,000 48 14 35,000 11,00,000 35,000 11,00,000 49 15 35,000 11,00,000 35,000 11,00,000 50 17,27,665 26,04,502 IRR 6.35% 10.06% The IRR for Term Insurance & PPF is 6.35% & for Term Insurance + ELSS (Post tax) is 10.06%. This return is comparatively better than Max Life SWAG Plan.
For comparison purposes, we have assumed annual withdrawal & low sum assured as in the illustration. But in reality, instead of withdrawing the income benefit, it is always advisable to accrue. The more you allow the investment to grow, the better you enjoy the benefit of compounding.
Take adequate life cover considering all your liabilities.
Final Verdict on the Max Life Smart Wealth Advantage Guarantee (SWAG) Plan
The Max Life Smart Wealth Advantage Guarantee (SWAG) Plan is a traditional life insurance policy where you get the benefits either every year or at the end of the policy term. All the benefits (Maturity & Survival) are guaranteed under this plan.
Besides the guaranteed benefit, the plan may not be suitable for wealth accumulation. Max Life Smart Wealth Advantage Guarantee (SWAG) Plan neither serves you in terms of life cover nor in terms of Investment.
Alternatively, build an Investment Portfolio based on your life goals & risk appetite. Also, take a Pure Term Insurance Policy with an adequate life cover at a low-cost premium. It is always a wise choice to keep your Insurance and Investment separate.
You should consult with your Financial Advisor if you need help deciding which Insurance and Investment choice would be the RIGHT fit for your Investment Portfolio. As a professional, he would be able to provide immense guidance in customizing your Financial Plan.
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