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In this article we explore Online Term Plan from Max Life Insurance. Online Term Plan is pure term (traditional non-participating) plan that pays a lumpsum amount to the family members of the life insured in the event of death of the life insured during the plan tenure. Online Term Plan comes with three Death Benefits options to choose from. These include:
| Death Benefit Option | Death Benefit Details |
| Sum Assured | On death of the life insured 100% of the policy sum assured is paid |
| Sum assured plus level monthly income | On death of the life insured 100% of the policy sum assured + 0.4% of the policy Sum Assured per month for 10 years is paid (Total payout – 148% of sum assured) |
| Sum assured plus increasing monthly income | On death of the life insured 100% of the policy Sum Assured + 0.4% of the policy sum assured per month increasing @ 10% p.a. (simple interest) for 10 years is paid (Total payout – 169.6% of sum assured) |
You have to choose one of the above options at the time of buying the plan. The plan option once chosen cannot be changed during the tenure of the plan. We will look at the details of the above three death benefits in detail later in the article. Let us first look at the basic features of the product.
Basic Features of the Plan
Max Life Online Term Plan offers a comprehensive protection solution for your loved ones at an affordable price. The lumpsum amount paid by the company in the event of death of the life insured ensures the family will be able to sustain the same lifestyle event in the absence of the bread earner.
|
Feature |
Explanation |
| Minimum age at entry | 18 years. This basically means that you should be of 18 years or above if you wish to buy this plan. |
| Maximum age at entry | 60 years. This basically means individuals who have completed 60 years or above cannot buy this plan. |
| Maximum age at maturity | 70 years. This basically means this plan will end for all individuals who complete 70 years of age. |
| Plan tenure | Individual can choose any term from 10 years to 35 years subject to maximum maturity age of 70 years. |
| Premium payment term | Equal to policy term. This basically means if the policy term is 30 years, you have to pay premium for 30 years. |
| Premium payment frequency | Annual mode only. There is NO option to pay premiums on a monthly, quarterly, half-yearly basis |
| Minimum Sum Assured | Rs. 25 Lakhs |
| Maximum Sum Assured | Rs. 100 crores |
| Tax Benefits | Section 80C: The premium paid under this policy qualifies for deduction from taxable income up to Rs. 1,50,000 in a Financial Year Section 10 (10D): The death benefit amount received under this policy by the family members of the life insured is exempt from tax, subject to conditions specified therein. |
Non-smokers are charged lower premium rates as compared to smokers.
Comprehensive Accident Benefit Rider: By opting for this rider, you can get additional cover in case of death or dismemberment due to accident. You can opt for this rider at the time of buying the plan or any time during the policy term. The maximum sum assured under the rider is lower of Base Plan Sum Assured or Rs. 1 crore.
Death Benefit options available under the plan
Now that you understand the basic features of the plan, let us now understand the death benefit options available under the plan in detail.
Option 1: Max Life Online Term Plan – Sum Assured
This is the most basic option available under this plan. Under this option, in the event of death of the life insured during the plan term, the family gets the sum assured as a lumpsum payment and the policy will terminate. In case the life insured survives the term / tenure, then on maturity of the plan, the policyholder will not get any maturity benefit and the insurance company gets to keep the premiums.
Example: Praveen Kumar is a 30 year old male. He has bought Max Life Online Term Plan with sum assured option for a tenure of 30 years for a sum assured of Rs. 1 crore. In this case in the event of Praveen’s death during the term of the plan, Praveen’s family members will get Rs. 1 crore and the policy will terminate.
Option 2: Max Life Online Term Plan – Sum Assured plus Level Monthly Income
Under this option, in the event of death of the life insured during the plan term, the family gets 100% of the sum assured as a lumpsum payment and an additional monthly income of 0.4% of sum assured for 10 years.
Example: Kamal Verma is a 30 year old male, non-smoker, marketing executive who works with a leading bank. He has bought Max Life Online Term Plan with Sum Assured plus Level Monthly Income option for a tenure of 30 years for a sum assured of Rs. 1 crore. The nominee of the policy is his wife Sulekha. In the event of Kamal Verma’s death within the policy term (30 years), Max Life Insurance will have to pay 100% of the sum assured of Rs. 1 crore to his wife Sulekha (nominee). In addition to this, Sulekha will also get a monthly income of Rs. 40,000 (0.4% of the policy Sum Assured of Rs. 1 crore) for a period of 10 years (120 months). The total monthly payout that Sulekha will receive will be Rs. 40,000 per month X 120 months (10 years) = Rs. 48 lakhs.
The total payout that Sulekha will get under this policy is Rs. 1 crore (100% of sum assured) + Rs. 48 lakhs (total monthly payout) = Rs. 1.48 crore which is 148% of the sum assured of Rs. 1 crore.
Option 3: Max Life Online Term Plan – Sum Assured plus Increasing Level Monthly Income
Under this option, in the event of death of the life insured during the plan term, the family gets 100% of the sum assured as a lumpsum payment. The family will also get an additional monthly income of 0.4% of sum assured increasing every year @ 10% (simple interest) for 10 years.
Example: Vishal Bharadwaj is a 30 year old, non-smoker, software engineer who works with a leading IT firm. He has bought Max Life Online Term Plan with Sum Assured plus Increasing Level Monthly Income option for a tenure of 30 years for a sum assured of Rs. 1 crore. The nominee of the policy is his wife Megha. In the event of Vishal’s death within the policy term (30 years), Max Life Insurance will have to pay 100% of the sum assured of Rs. 1 crore to his wife Megha (nominee). In addition to this, Megha will also get a monthly income of Rs. 40,000 (0.4% of the policy Sum Assured of Rs. 1 crore) increasing every year @ 10% (simple interest) for a period of 10 years (120 months). So, post Vishal’s death, the payout will be as follows:
|
Year |
Monthly Payout Amount |
Annual Amount |
|
1 |
40,000 |
4,80,000 |
|
2 |
44,000 |
5,28,000 |
|
3 |
48,000 |
5,76,000 |
|
4 |
52,000 |
6,24,000 |
|
5 |
56,000 |
6,72,000 |
|
6 |
60,000 |
7,20,000 |
|
7 |
64,000 |
7,68,000 |
|
8 |
68,000 |
8,16,000 |
|
9 |
72,000 |
8,64,000 |
|
10 |
76,000 |
9,12,000 |
|
Total Payout over 10 years |
69,60,000 |
|
The total monthly payout that Megha will receive will be Rs. 69,60,000.
The total payout that Megha will get under this policy is Rs. 1 crore (100% of sum assured) + Rs. 69.60 lakhs (total monthly payout) = Rs. 1.696 crore which is 169.6% of the sum assured of Rs. 1 crore.
Premiums
Let us now compare the three cover options in terms of premium.
The below mentioned premiums have been calculated for a 30 year old male, non-smoker, who has taken life cover of Rs. 1 crore for the term of 30 years.
|
Cover Option |
Annual Premium |
Death Benefit |
| Max Life Online Term Plan – Basic Life Cover | Rs. 7,400 | Rs. 1 crore will be paid on death |
| Max Life Online Term Plan – Life Cover + Monthly Income | Rs. 10,100 | Rs. 1 crore will be paid on death and Rs. 40,000 per month will be paid for 10 years |
| Max Life Online Term Plan – Life Cover + Increasing Monthly Income | Rs. 11,100 | Rs. 1 crore will be paid on death. Rs. 40,000 per month (annually increasing @ 10% simple interest p.a.) will be paid for 10 years |
Please note:
The premiums have been taken from company website.
The premiums are exclusive of service tax and education cess.
These premium amounts are as on January 2015. Interested buyers are requested to recheck these quotes with the insurance company before purchasing the plan.
The premium of Max Life Term Plan – Basic Life Cover is lowest at Rs. 7400 per annum, whereas that of Max Life Online Term Plan – Life Cover + Increasing Monthly Income is highest at Rs. 11,100. However the additional benefits offered (apart from sum insured) by the latter plan in the form of monthly income that increases @ 10% p.a. (simple interest) can provide a regular income stream to the family dependents along with help in offsetting inflation!
Comparison of Max Life Online Term Plan with other plans in the market
Let us now compare the Max Life Online Term Plan in terms of features, claim settlement ratio and premium amount with offline term plan of Max Life Insurance and other online plans available in the market. The premium calculated is for a 30 year old male, non-smoker, for a sum assured of Rs. 1 crore for a period of 30 years.
|
Policy Name |
Mode |
Policy Term |
Maximum age at maturity |
Minimum Sum Assured |
Claim Settlement Ratio (2013-14) |
Annual Premium |
| Max Life Platinum Protect II | Offline | 10-30 years | 75 years | Rs. 25 lakh |
93.86 |
Rs. 23,500 |
| Max Life Online Term Plan (Basic Cover) | Online | 10-35 years | 70 years | Rs. 25 lakhs |
93.86 |
Rs. 7,400 |
| HDFC Life Click 2 Protect Plus | Online | 10-40 years | 75 years | Rs. 25 lakhs |
94.01 |
Rs. 9,024 |
| LIC e-Term | Online | 10-35 years | 75 years | Rs. 25 lakhs |
98.14 |
Rs. 15,700 |
| SBI Life eShield | Online | 5-30 years | 70 years | Rs. 20 lakhs |
91.06 |
Rs. 11,690 |
| Kotak Preferred e-Term Plan | Online | 10-40 years | 75 years | Rs. 25 lakhs |
90.69 |
Rs. 7,375 |
Please note:
a) The claim settlement ratio data for respective year has been taken from the IRDA Annual Report for respective year. The claim settlement ratio is overall for the company for all products taken together and not just for term plans.
b) All premiums amounts have been taken from the respective company website. All the premium amounts mentioned are exclusive of service tax.
c) The premiums shown in the above table are for a 30 year old male (non-smoker) for a sum assured of Rs. 1 crore for a term of 30 years.
d) These premium amounts are as on Jan 2015. Interested buyers are requested to recheck these quotes with respective insurance companies before purchasing a term plan. These rates may not be fixed and are subject to change.
e) Last but not the least; we are not representing any particular insurance company 🙂
From the above table we can observe that the premium for Max Life Insurance Online Term Plan (Rs. 7,400) is almost one third of the premium charged for the offline term insurance plan Max Life Platinum Protect II (Rs. 23,500). When compared to LIC’s e-Term Plan (Rs. 15,700) also the premium for Max Life Insurance Online Term Plan (Rs. 7,400) is less than half. When compared to HDFC Life Click 2 Protect Plus (Rs. 9,024) also the premium for Max Life Insurance Online Term Plan (Rs. 7,400) is quite low. However the Claim Settlement Ratio for LIC (98.14) and HDFC Life (94.01) is slightly better than that of Max Life Insurance (93.86). When compared to Kotak Preferred e-Term Plan (Rs. 7,375) the annual premium for Max Life Insurance Online Term Plan (Rs. 7,400) is just marginally higher by Rs. 25.
Conclusion
Overall we believe Max Life Insurance Online Term Plan is a good plan. Someone who is looking for a pure term cover with various cover options like just basic cover or basic cover with level monthly income or basic cover with increasing monthly income can consider going this plan.
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