Max Life Smart Wealth Income Plan Review: Is It Worth Investing?

Do you have a dream to earn a regular second income?

This second income will aid you in fulfilling all your future Milestones.

Max Life Smart Wealth Income Plan claims to offer you additional income so that you can fulfil your financial dreams.

But, will this plan provide you with adequate Life protection & Financial Support to fulfil your family’s financial needs?

Let us delve into an in-depth analysis to answer your question on whether this policy could benefit you or not.

Table of Contents:

1.)What is Max Life Smart Wealth Income Plan?
2.)Features of the Max Life Smart Wealth Income Plan
3.)Eligibility Criteria for the Max Life Smart Wealth Income Plan
4.)Benefits Under the Max Life Smart Wealth Income Plan

• Survival Benefit
• Maturity Benefit
• Death Benefit
• Bonuses

5.)A Grace Period, Premium Discontinuance & Revival of the Max Life Smart Wealth Income Plan
6.)Free Look-Up Period of the Max Life Smart Wealth Income Plan
7.)Surrendering Max Life Smart Wealth Income Plan
8.)Advantages of the Max Life Smart Wealth Income Plan
9.)Disadvantages of the Max Life Smart Wealth Income Plan
10.)Research Methodology
11.) IRR analysis of the Max Life Smart Wealth Income Plan
12.)Max Life Smart Wealth Income Plan Vs Other Investments Options
13.)Post-Tax Calculation of the ELSS Mutual Fund Option
14.)Alternative Investment Strategy to the Max Life Smart Wealth Income Plan
15.) Final Verdict on the Max Life Smart Wealth Income Plan

What is Max Life Smart Wealth Income Plan?

It is a Non-Linked, Participating, Individual, Life Insurance Savings Plan. Depending on whether you want your income early, or a few years down the line, you have 3 plan options to choose from.

All these 3 options come with inbuilt guaranteed income, cash bonuses (if declared), and a life cover for the entire policy term.

Features of the Max Life Smart Wealth Income Plan

• 3 plan Variants:

 ✓On the whole, the benefits uEarly Income

✓ Early income with Guaranteed Money Back

✓ Deferred Income plan

• You can accrue your survival benefit pay-outs and withdraw as much as you like & whenever you like.
• Flexibility to receive income and avail of life cover till age 100/85/75/70/65/60 years.
• You can Customize your policy by opting for riders by paying a small amount of extra premium.

Eligibility Criteria for the Max Life Smart Wealth Income Plan

Let us look at the criteria for eligibility for this plan at a glance below;

Minimum Entry Age	Policy Continuance Benefit opted	Minimum Entry Age
	Yes	18 years
	No	91 days
Maturity Age	Policy Continuance Benefit opted	Maturity Age Option
	Yes	60,65,70,75,80,85 years
	No	60,65,70,75,80,85,100 years
Policy Term	Maturity Age	Policy Term
	60 years	60 – the age at entry
	65 years	65 – the age at entry
	70 years	70 – the age at entry
	75 years	75 – the age at entry
	80 years	80 – the age at entry
	85 years	85 – the age at entry
	100 years	100 – the age at entry
Premium Payment Term	Early Income	6, 8, 10, and 12 years
	Early Income with Guaranteed Money Back	6, 8, 10, and 12 years
	Deferred Income	8, 10, 12, and 15 years
Premium Payment Mode and Modal Factors	Premium Payment Mode	Modal Factors
	Annual	1
	Semi-annual	0.52
	Quarterly	0.265
	Monthly	0.09
Minimum Sum assured on Maturity (SAM)	Rs. 500,000
Maximum Sum assured on Maturity (SAM)	No Limit
Annualized Premium	Based on Sum Assured

Benefits Under the Max Life Smart Wealth Income Plan

Survival Benefit

Survival Benefit Under all plan options, the Survival benefit is payable in the form of a Cash Bonus (if declared) and Guaranteed Income / Guaranteed Money Back. The survival benefits under each of the three key Plan Options are,

Early Income

• Cash Bonus (% of Sum Assured on Maturity), if declared, from 2^nd Policy Year till the end of the Policy Term; and
• Guaranteed Income (% of Sum Assured on Maturity) from 2^nd Policy Year and payable for a period of 25 years or till the end of the Policy Term, whichever is earlier.

Early Income with Guaranteed Money Back

• Cash Bonus (% of Sum Assured on Maturity), if declared, from 2nd Policy Year till the end of the Policy Term; and
• Guaranteed Money Back (% of Sum Assured on Maturity) at the end of the Policy Years (PPT+1), (PPT+6), and (PPT+11).

Deferred Income

• Cash Bonus (% of Sum Assured on Maturity), if declared, starting policy year PPT +2till end of Policy Term; and
• Guaranteed Income (% of Sum Assured on Maturity) starting policy year PPT+2 and payable for 25 years or till the end of Policy Term, whichever is earlier.

Maturity Benefit

Upon maturity of the Policy, the sum of the following benefits will be paid:

• Sum Assured on Maturity, plus
• Terminal Bonus (if any)

The accrued survival benefit shall be paid in addition, if not already paid.

Death Benefit

The death benefit under this plan varies with your choice of Policy Continuance Benefit.

Without Policy Continuance Benefit: In the case of an unfortunate demise of the policyholder during the policy term, the Death Benefit shall be equal to:

• Sum Assured on Death, plus
• Terminal Bonus (if any)

Any accrued survival benefit, if not already paid, shall also be paid.

With Policy Continuance Benefit: In case of an unfortunate demise of the Life Insured during the policy term, the benefit payable is the sum of a. Death benefit & b. Policy Continuance benefit.

1. Death Benefit:

• The Death Benefit is equal to Sum Assured on Death, where “Sum Assured on Death” is higher of:
• 11 times the (Annualized Premium4 plus underwriting extra premium, if any)
• 105% of (Total Premiums Paid plus Underwriting Extra Premiums paid plus loadings for modal premiums received as on the date of death of Life Insured)

Any accrued survival benefit, if not already paid shall be paid in addition to the death benefit.

1. Policy Continuance Benefit:

All future Cash Bonus (if declared), Guaranteed Income, Guaranteed Money Back, and Maturity Benefits (Sum Assured at Maturity plus Terminal Bonus) shall be payable as and when due in the future without any need for the premium payment.

Bonuses

Annual Cash Bonus

Cash Bonus, if declared is a bonus rate (as a percentage rate applied on policy Sum Assured on Maturity) that may be declared and is payable starting from:

The second policy year in the case of “Early Income” and “Early Income with Guaranteed Money Back” Plan Options

The policy year PPT+2 in case of the “Deferred Income” Plan Option

You can choose to take your cash bonuses (if declared), in either annual or monthly mode.

Terminal Bonus

Terminal Bonus If declared, all eligible policies (in force for at least 4 years) shall receive the terminal bonus on maturity or exit due to death or surrender based on the terminal bonus rates declared by the company.

A Grace Period, Premium Discontinuance & Revival of the Max Life Smart Wealth Income Plan

Grace period

A grace period of 30 days for policyholders who have opted for the annual, semi-annual, and quarterly modes. The policyholder gets 15 days in case he has chosen the monthly premium payment mode from the due date for payment of the contractual premium.

Premium Discontinuance

If you miss paying your first two years’ full premiums, your policy would lapse and no benefits would be payable.

If you discontinue paying your premiums after payment of the first two years’ full premiums, your policy acquires a surrender value, and it will by default become a Reduced Paid-Up (RPU) policy.

The Sum Assured on Maturity and Sum Assured on Death will be reduced as mentioned below.

RPU Sum Assured on Maturity = RPU Factor8 * Sum Assured on Maturity

RPU Sum Assured on Death = RPU Factor8 * Sum Assured on Death

Revival

You have the option to revive your lapsed/RPU policy within a revival period of five consecutive years from the due date of the first unpaid premium.

Free Look-Up Period of the Max Life Smart Wealth Income Plan

If you disagree with any of those terms and conditions of the Max Life Smart Wealth Income Plan, you have the option to return the policy within a period of 15 days.

Your Free Look-Up Period will be extended up to 30 days in case of electronic policies and policies obtained online from the date of receipt of the policy.

Surrendering Max Life Smart Wealth Income Plan

Once your policy has acquired the surrender value, you can surrender it at any time. The policy acquires a Surrender Value on payment of the first two full years’ premium.

The Surrender Value will be equal to higher than the Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).

Advantages of the Max Life Smart Wealth Income Plan

• You have the flexibility to accrue your Survival Benefits anytime during the Policy Term.
• You may choose to receive future payouts at a monthly or annual frequency.
• Riders will enhance the protection.
• If the policy continuance option is chosen, then the policy continues as would have in case the life insured was alive. Your survival Benefits and Maturity Benefits shall be payable in the future as and when it is due, without you having to pay any of the future premiums.
• Discounts for the Existing customer (first year only), and High Sum Assured on Maturity rebates are available under the policy.
• Once your Policy has acquired a surrender value, a loan facility is available subject to a maximum of 50% of the Surrender Value.

Disadvantages of the Max Life Smart Wealth Income Plan

• Under the survival benefit, only guaranteed income is a confirmed pay-out & the cash bonus is a non-guaranteed part.
• If the lifelong cover is chosen, you get survival benefits throughout life but it can’t be relied on to meet all your financial needs.
• The sum assured is insufficient.

You can read the Max Life Smart Wealth Income Policy Brochure for more details.

Research Methodology

The features & other details will not help you to understand the cash flow of the policy. Max Life Smart Wealth Income Plan has 3 variants where the survival benefit varies under each variant.

The cash flow of survival benefits both guaranteed & non-guaranteed could be understood better through illustration. We have taken all the 3 variants for this analysis so that they will be easy to compare with each other.

IRR analysis of the Max Life Smart Wealth Income Plan

Let us assume a 35-year-old male opts for this plan for an annualized premium of Rs. 1 Lakh & the Premium paying Term is for 10 years.

The chosen maturity age under the deferred income option is 85 years whereas, in the other 2 options, it is 100 years. So, we have assumed a life expectancy of 85 years under the Early income & Early income with Guaranteed Money back options.

	Age	Chosen Maturity Age	Policy term	Premium paying term	Annualized Premium	Policy Continuance benefit
Early Income	35 years	100 years	65	10 years	Rs. 1 Lakh	Not opted
Early Income with Guaranteed Money Back	35 years	100 years	65	10 years	Rs. 1 Lakh	Not opted
Deferred Income	35 years	85 years	50	10 years	Rs. 1 Lakh	Not opted

The illustration above shows two different rates of assumed future investment returns – 4% & 8%. These assumed rates of return are not guaranteed. They also do not represent the upper or lower limits of what you might get back as your final maturity value. Because the value of your policy is dependent on several factors including the policy’s future investment performance.

		Early Income		Early Income with Guaranteed Money Back		Deferred Income
		At 4% p.a.	At 8% p.a.	At 4% p.a.	At 8% p.a.	At 4% p.a.	At 8% p.a.
Age	Year	Annualized premium / Maturity benefit	Annualized premium / Maturity benefit	Annualized premium / Maturity benefit	Annualized premium / Maturity benefit	Annualized premium / Maturity benefit	Annualized premium / Maturity benefit	Death benefit
35	1	-1,00,000	-1,00,000	-1,00,000	-1,00,000	-1,00,000	-1,00,000	11,00,000
36	2	-1,00,000	-1,00,000	-1,00,000	-1,00,000	-1,00,000	-1,00,000	11,00,000
37	3	-80,145	-63,240	-91,071	-73,329	-1,00,000	-1,00,000	11,00,000
38	4	-80,145	-63,240	-91,071	-73,329	-1,00,000	-1,00,000	11,00,000
39	5	-80,145	-63,240	-91,071	-73,329	-1,00,000	-1,00,000	11,00,000
40	6	-80,145	-63,240	-91,071	-73,329	-1,00,000	-1,00,000	11,00,000
41	7	-80,145	-63,240	-91,071	-73,329	-1,00,000	-1,00,000	11,00,000
42	8	-80,145	-63,240	-91,071	-73,329	-1,00,000	-1,00,000	11,00,000
43	9	-80,145	-63,240	-91,071	-73,329	-1,00,000	-1,00,000	11,00,000
44	10	-80,145	-63,240	-91,071	-73,329	-1,00,000	-1,00,000	11,00,000
45	11	19,855	36,760	8,929	26,671	0	0	11,00,000
46	12	19,855	36,760	1,23,398	1,41,140	0	0	11,00,000
47	13	19,855	36,760	8,929	26,671	42,886	1,02,989	11,00,000
48	14	19,855	36,760	8,929	26,671	42,886	1,02,989	11,00,000
49	15	19,855	36,760	8,929	26,671	42,886	1,02,989	11,00,000
50	16	19,855	36,760	8,929	26,671	42,886	1,02,989	11,00,000
51	17	19,855	36,760	1,23,398	1,41,140	42,886	1,02,989	11,00,000
52	18	19,855	36,760	8,929	26,671	42,886	1,02,989	11,00,000
53	19	19,855	36,760	8,929	26,671	42,886	1,02,989	11,00,000
54	20	19,855	36,760	8,929	26,671	42,886	1,02,989	11,00,000
55	21	19,855	36,760	8,929	26,671	42,886	1,02,989	11,00,000
56	22	19,855	36,760	1,23,398	1,41,140	42,886	1,02,989	11,00,000
57	23	19,855	36,760	8,929	26,671	42,886	1,02,989	11,00,000
58	24	19,855	36,760	8,929	26,671	42,886	1,02,989	11,00,000
59	25	19,855	36,760	8,929	26,671	42,886	1,02,989	11,00,000
60	26	19,855	36,760	8,929	26,671	42,886	1,02,989	11,00,000
61	27	19,855	36,760	8,929	26,671	42,886	1,02,989	11,00,000
62	28	12,707	36,760	8,929	26,671	42,886	1,02,989	11,00,000
63	29	12,707	36,760	8,929	26,671	42,886	1,02,989	11,00,000
64	30	12,707	36,760	8,929	26,671	42,886	1,02,989	11,00,000
65	31	12,707	36,760	8,929	26,671	42,886	1,02,989	11,00,000
66	32	12,707	36,760	8,929	26,671	42,886	1,02,989	11,00,000
67	33	12,707	36,760	8,929	26,671	42,886	1,02,989	11,00,000
68	34	12,707	36,760	8,929	26,671	42,886	1,02,989	11,00,000
69	35	12,707	36,760	8,929	26,671	42,886	1,02,989	11,00,000
70	36	12,707	36,760	8,929	26,671	42,886	1,02,989	11,00,000
71	37	12,707	36,760	8,929	26,671	42,886	1,02,989	11,00,000
72	38	12,707	36,760	8,929	26,671	2,746	1,02,989	11,00,000
73	39	12,707	36,760	8,929	26,671	2,746	1,02,989	11,00,000
74	40	12,707	36,760	8,929	26,671	2,746	1,02,989	11,00,000
75	41	12,707	36,760	8,929	26,671	2,746	1,02,989	11,00,000
76	42	12,707	36,760	8,929	26,671	2,746	1,02,989	11,00,000
77	43	12,707	36,760	8,929	26,671	2,746	1,02,989	11,00,000
78	44	12,707	36,760	8,929	26,671	2,746	1,02,989	11,00,000
79	45	12,707	36,760	8,929	26,671	2,746	1,02,989	11,00,000
80	46	12,707	36,760	8,929	26,671	2,746	1,02,989	11,00,000
81	47	12,707	36,760	8,929	26,671	2,746	1,02,989	11,00,000
82	48	12,707	36,760	8,929	26,671	2,746	1,02,989	11,00,000
83	49	12,707	36,760	8,929	26,671	2,746	1,02,989	11,00,000
84	50	12,707	36,760	8,929	26,671	2,746	1,02,989	11,00,000
85		11,00,000	11,00,000	11,00,000	11,00,000	20,31,689	21,00,243
	IRR	2.04%	4.38%	2.05%	4.26%	3.48%	6.77%

Early Income Option

Survival benefit – Guaranteed income from the end of the 2^nd Policy Year and payable for a period of 25 years. Cash Bonus if declared, from the end of the 2^nd Policy Year & payable till the end of Policy Term.

The IRR in this option ranges between 2% & 4.3% which is not viable to beat inflation. Also, the lock-in period is till 100 years of age or death whichever is earlier. Locking funds at this rate, in the long run, will not be beneficial.

Early Income with Guaranteed Money Back

Survival benefit – Guaranteed Money Back at the end of the Policy Years (PPT – 10+1), (PPT – 10+6), and (PPT – 10+11) years. Cash Bonus if declared, from the end of the 2^nd Policy Year till the end of the Policy Term.

The IRR under this option also ranges between 2% & 4.3% which is again lower than the Bank FD interest rates.

Deferred Income

Survival Benefit – Guaranteed Income starting from the end of policy year PPT (10) +2 and payable for 25 years. Cash Bonus, if declared, starting from the end of policy year PPT (10) +2 till the end of Policy Term.

In the above two cases, the whole life option is chosen, so we assumed the life expectancy as 85 years. It is assumed that at the age of 85 death benefit is received by Nominee. But here the policy matures at the age of 85. So, here the final amount is Sum Assured on maturity along with Terminal Bonus.

The IRR under this option also ranges between 3.4 % & 6.7%. It is slightly higher than the above two cases, because of the addition of a Terminal bonus in the final value. In the other two scenarios, Sum Assured on Death alone is considered for the death benefit.

On the whole, the benefits under the Max Life Smart Wealth Income Plan in any form are not an optimized solution to cater to your financial needs for the long term. A proper Financial Plan that suits your personal risk appetite could be the best option for you to choose proper Investment Products.

Max Life Smart Wealth Income Plan Vs Other Investments Options

Under the Max Life Smart Wealth Income Plan, survival benefits start at the end of 2^nd year itself in most cases.

Only under the deferred income option, the income benefit starts after the Premium Paying Term. For our comparison, let us consider the deferred income option along with other Investment Options.

Max Life Smart Wealth Income Plan Vs. Pure Term Insurance Plan + ELSS

The annual premium & sum assured is Rs. 1 lakh & Rs. 11 lakhs respectively in the above illustration. Pure Term Insurance could serve the purpose.

This would cost Rs. 5000, the balance amount could be invested for corpus accumulation. This accumulated corpus could be utilized for the withdrawal of the survival benefits.

		Deferred Income			Term Insurance + ELSS
		At 4% p.a.	At 8% p.a.
Age	Year	Annualized premium / Maturity benefit	Annualized premium / Maturity benefit	Death benefit	Annualized premium / Maturity benefit	Death benefit
35	1	-1,00,000	-1,00,000	11,00,000	-1,00,000	1100000
36	2	-1,00,000	-1,00,000	11,00,000	-1,00,000	1100000
37	3	-1,00,000	-1,00,000	11,00,000	-1,00,000	1100000
38	4	-1,00,000	-1,00,000	11,00,000	-1,00,000	1100000
39	5	-1,00,000	-1,00,000	11,00,000	-1,00,000	1100000
40	6	-1,00,000	-1,00,000	11,00,000	-1,00,000	1100000
41	7	-1,00,000	-1,00,000	11,00,000	-1,00,000	1100000
42	8	-1,00,000	-1,00,000	11,00,000	-1,00,000	1100000
43	9	-1,00,000	-1,00,000	11,00,000	-1,00,000	1100000
44	10	-1,00,000	-1,00,000	11,00,000	-1,00,000	1100000
45	11	0	0	11,00,000	0
46	12	0	0	11,00,000	0
47	13	42,886	1,02,989	11,00,000	1,02,989
48	14	42,886	1,02,989	11,00,000	1,02,989
49	15	42,886	1,02,989	11,00,000	1,02,989
50	16	42,886	1,02,989	11,00,000	1,02,989
51	17	42,886	1,02,989	11,00,000	1,02,989
52	18	42,886	1,02,989	11,00,000	1,02,989
53	19	42,886	1,02,989	11,00,000	1,02,989
54	20	42,886	1,02,989	11,00,000	1,02,989
55	21	42,886	1,02,989	11,00,000	1,02,989
56	22	42,886	1,02,989	11,00,000	1,02,989
57	23	42,886	1,02,989	11,00,000	1,02,989
58	24	42,886	1,02,989	11,00,000	1,02,989
59	25	42,886	1,02,989	11,00,000	1,02,989
60	26	42,886	1,02,989	11,00,000	1,02,989
61	27	42,886	1,02,989	11,00,000	1,02,989
62	28	42,886	1,02,989	11,00,000	1,02,989
63	29	42,886	1,02,989	11,00,000	1,02,989
64	30	42,886	1,02,989	11,00,000	1,02,989
65	31	42,886	1,02,989	11,00,000	1,02,989
66	32	42,886	1,02,989	11,00,000	1,02,989
67	33	42,886	1,02,989	11,00,000	1,02,989
68	34	42,886	1,02,989	11,00,000	1,02,989
69	35	42,886	1,02,989	11,00,000	1,02,989
70	36	42,886	1,02,989	11,00,000	1,02,989
71	37	42,886	1,02,989	11,00,000	1,02,989
72	38	2,746	1,02,989	11,00,000	1,02,989
73	39	2,746	1,02,989	11,00,000	1,02,989
74	40	2,746	1,02,989	11,00,000	1,02,989
75	41	2,746	1,02,989	11,00,000	1,02,989
76	42	2,746	1,02,989	11,00,000	1,02,989
77	43	2,746	1,02,989	11,00,000	1,02,989
78	44	2,746	1,02,989	11,00,000	1,02,989
79	45	2,746	1,02,989	11,00,000	1,02,989
80	46	2,746	1,02,989	11,00,000	1,02,989
81	47	2,746	1,02,989	11,00,000	1,02,989
82	48	2,746	1,02,989	11,00,000	1,02,989
83	49	2,746	1,02,989	11,00,000	1,02,989
84	50	2,746	1,02,989	11,00,000	1,02,989
85		20,31,689	21,00,243		99,28,216
	IRR	3.48%	6.77%		8.05%

Post-Tax Calculation of the ELSS Mutual Fund Option

In the first 10 years, the corpus is accumulated through investing in the ELSS Mutual Fund. After that, the Fund Value which is the post-tax estimate of the ELSS Mutual Fund is invested in a 7% Return Instrument.

Similar to the illustration (8% scenario) – Rs. 1,02,989 is withdrawn every year from the 7% instrument. After withdrawing, at the age of 85 years Rs. 99.28 lakh is left. And the final IRR is at 8.05%.

Alternative Investment Strategy to the Max Life Smart Wealth Income Plan

For comparison purposes, we have assumed that the same amount is withdrawn every year. But if you split the fund & invest in equity & debt, you can comfortably withdraw an inflation-adjusted amount every year (i.e., year on year, your withdrawal amount increases).

You can withdraw the inflation-adjusted amount from the debt portion, meanwhile, the fund grows in the equity portion. Periodically replenish the debt portion by withdrawing from equity. By doing this way you get inflation-beating returns & better liquidity which is missing in the Max Life Smart Wealth Income Plan.

Final Verdict on the Max Life Smart Wealth Income Plan

Max Life Smart Wealth Income Plan is a money-back policy where you receive the money back in the form of a survival benefit. In the initial stage, you get a Guaranteed Income Benefit. But at a later stage, the policy pays only cash bonuses depending on the rate declared every year.

Even the initial year’s survival benefit couldn’t fund your big-ticket expenses. In the later years also the survival benefit can’t be relied upon as a post-retirement source of income.

Although they provide whole life cover, the investment return is far too low for a Long-Term horizon of your Financial Goals. Any Long-Term Investment should beat inflation.

For Life Cover, Pure Term Insurance offers a high amount of life coverage at an affordable premium. A Pure Term Plan is a must for an investor before starting their Investment Journey. A Well-Diversified Portfolio should be built to fulfil your Life’s Financial Goals.

A Certified Financial Planner can draft a customized Financial Plan that includes

• Investment Planning
• Tax Planning
• Retirement Planning
• Estate Planning
• Risk Management
• Insurance Planning.

To save you from the hassle, consult with your Financial Advisor to reach your Financial Goals faster and smarter.