Max Life: Term insurance plan that returns premium, provides cover for critical illness; Should you buy?

Max Life Insurance has recently announced the launch of ‘Max Life Smart Term Plan’, with a term of up to 50 years and a coverage ceasing age of 85 years.

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Term insurance plans are the simplest and purest form of life insurance. If you have financial dependents and do not have adequate life cover, a term plan is a right tool to ensure their income replacement. The minimum life cover, according to thumb rule, suggests an amount equal to at least seven times of one’s annual take-home pay.

As term insurance plans do not offer any maturity benefit, they come at a lower cost and provides high life coverage. The premium for these low-cost, high cover plans is considerably lower compared to the endowment and money-back kind of traditional insurance plans.

In a plain vanilla term insurance plan, the death benefit payable to the nominee of the life insured if the death occurs within the term of the policy is the sum assured in the policy. However, most insurance companies offer improvised versions of a term plan in addition to a regular term plan to the potential buyers.

Max Life Insurance has recently announced the launch of one such plan called ‘Max Life Smart Term Plan’, with life insurance term of up to 50 years and a coverage ceasing age of 85 years. The plan is not the regular run-of-the-mill term insurance plan but have options to add-on and make it customised depending on one’s requirements. This term insurance plan also offers a ‘Premium Back Option’ on a term product till the age of 85 for those who are looking for some return upon survival of the life insured throughout the policy term.

In a Return of Premium term plan, the premium is higher than a pure term plan because in the former if the death doesn’t occur within the term of the policy, the premium paid is returned to the policyholder on surviving the term.

In addition to life cover, Max Life Smart Term Plan provides coverage against 40 critical illnesses, including kidney failure, heart attack, and cancer etc. and provides coverage for Disability as well. Note that the premium returned on surviving the policy term will only be that of Base Plan and not paid towards Critical Illness and Disability cover.

The Max Life Smart Term Plan comes with a host of premium payment options – Single payment, payment for a limited term of 5, 10, 12, 15 years,  Pay till 60 and the standard regular mode of premium payment. Ideally, opt for regular annual payment option in term insurance plans.

Generally, the option to increase the sum assured is non-existent in most term plans. But, as life moves on, one finds the need to enhance life cover when liabilities start piling up. This plan allows ‘Life Stage Add-on Sum Assured Benefit’ for major life’s milestones like marriage, childbirth or home loan etc.

The Max Life Smart Term Plan offers seven types of death benefits to choose from, which will be a combination of lump sum and family income monthly income. The idea is to customize the plan as per the need, the premium, however, will vary accordingly. The seven varied death benefit options provide the customers with the option to choose what suits their protection needs like:

i. Life cover with lumpsum death benefit
ii. Income protector with fixed level monthly income
iii. Income inflation protector with increasing monthly income
iv. Life cover plus monthly income with Lumpsum Life Cover with a fixed level monthly income
v. Life cover plus increasing monthly income with an increasing monthly income
vi. Life Cover with increasing sum assured; and
vii. Life cover with decreasing sum assured.

Max Life Smart Term Plan comes with several options and combinations to choose from. It suits those who wish to keep all risks covered under one plan. However, there are certain conditions and restrictions with most of these customizable options. Buyers need to fully understand the working of the plan and also how each of the features will work, to make an informed buying decision. For those who wish to keep death cover, coverage against Critical Illness and Disability separate may go for each of them individually as a standalone policy.

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