Investment Plans October 5, 2020

You basically want these things – certainty in life, have a regular flow of income and ensure financial immunity for your family in your absence. Keeping these in mind, Max Life has introduced the Max Life Guaranteed Income Plan, which is a savings plan that provides life cover to the insured with guaranteed payouts in the form of monthly income for 10 years. Further, the income would double, during the latter half of your Payout Period. In the case of an immediate need for lump-sum benefits, you can choose to get a lump-sum in place of a monthly income. To plan children’s education, retirement, etc, customers need surety that their dreams are fulfilled even in their absence. The Max Life Guaranteed Income Plan has got the features that can enable the same. Read this page to know the details of this plan and what it offers to you.

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Key Features of the Max Life Guaranteed Income Plan

Option to Choose Your Policy Term

Customers will have the full freedom to decide their policy term as per their financial goals. You can choose either a 6 year or 12-year policy term. And the premium payment term for the chosen period would be the same as the policy term. The policyholder can choose from the following two variants.

Policy TermPayout Period
6 years10 years
12 years10 years

The payout Period is 10 years, which starts after the completion of the policy term. Whereas, the Terminal Benefit is paid once at the end of a 10-year payout period after completion of the Policy Term. This life insurance plan also offers protection for the entire policy term by providing a guaranteed Death Benefit to the life insured.

Guaranteed Income

This insurance plan lets you choose the guaranteed monthly income as per your desire. The annualized premium of the policy is linked to your chosen income. The income will be paid to you for 10 years, starting immediately after the end of the policy term. The income which is payable monthly in the last 5 years of your payout period will be twice the payable monthly income in the first 5 years of the payout period. Apart from this, you will also get a guaranteed terminal benefit at the end of the payout period. Lets’ see in the below example how the Max Life Guaranteed Income Plan works.

Mrs. Chatterjee is a 35-year-old salaried woman, who is recently blessed with a baby girl. And for her child’s plan, she wishes to buy an insurance plan to support the school and college education. She decided to buy Max Life Guaranteed Income Plan and choose a policy term of 12 years and an Annualized Premium of INR 1 lakh. Mrs. Chatterjee makes Mr. Chatterjee her nominee for the policy. So, as per the policy details mentioned above, the following are the scenarios where Mrs. Chatterjee can claim this policy.

Scenario 1:- Mrs. Chatterjee pays all the policy premiums and survives until the end of the policy term. So, she receives the following benefits from the insurer as per the policy terms and conditions.

Policy Term (in Years)Payout Period (in Years)Annualized Paid Premium (in INR)Income Benefit per annum (in INR)Terminal Benefit (in INR)
11,00,000
21,00,000
31,00,000
41,00,000
51,00,000
61,00,000
71,00,000
81,00,000
91,00,000
101,00,000
111,00,000
121,00,000
11,31,370
21,31,370
31,31,370
41,31,370
51,31,370
62,62,740
72,62,740
82,62,740
92,62,740
102,62,7402,00,000

As per the above scenario, Mrs. Chatterje’s age would be 46 years at the end of the policy term and her daughter would be 11 years old.

Scenario 2:- If Mrs. Chatterje dies after paying 2 Annualized Premium payment, Mr. Chatterjee her nominee will get a Death Benefit of INR 18,50,000. However, Mr. Chatterjee has an option either to avail the Death Benefit in monthly installments for 10 years or in lump sum post the date of Mrs. Chatterjee’s death. On exercising the monthly installment option, the Death Benefit is payable as mentioned below:-

Policy Term (in Years)Payout Period (in Years)Annualized Paid Premium (in INR)Death Benefit per annum (in INR)
11,00,000
21,00,000
312,36,000
422,36,000
532,36,000
642,36,000
752,36,000
862,36,000
972,36,000
1082,36,000
1192,36,000
12102,36,000

Note:-  The policy risk cover will be payable only during the policy term that means till the end of the 12th policy year. In case the policyholder dies during the payout period, the insurer will continue to pay the guaranteed monthly income and terminal benefit to the nominee as & when due, and no death benefit shall be payable.

Max Life Guaranteed Income Plan Benefits

The insurer will provide various benefits to the insured as per the contours of the policy. Let’s take a detailed look at the benefits below:-

Survival Benefit

The Life Insured who has survived the Policy Term is eligible for the Survival Benefit which is payable over 10 years. This comprises both Income Benefit and Terminal Benefit.

If you have already paid all the premiums as and when due and survived till the policy term, you are entitled to the following benefits mentioned below:

Survival Benefit = Income Benefit + Terminal Benefit

The Income Benefit will accrue on the policy anniversary year after the end of the policy term. In practice to all the monthly payout transactions which would be effective from a payout date, once per month, as specified by the company.

The Terminal Benefit is a one-time payout payable at the end of the Payout Period, which equates to the following.

  1. 125% of Annualised Premium (for 6 years Policy Term variant)
  2. 200% of Annualised Premium (for 12 years Policy Term variant)

Instead of taking the Survival Benefit as a monthly payment, you can also have the option to get the survival benefit in a lump sum at the end of the policy term, before the commencement of the payout period.

Upon exercising this option, the GSAM (Guaranteed Sum Assured on Maturity) is paid to the insured. The policy will terminate on the payment of the GSAM. Anytime during this payout period, you have an option available to receive the present value of the outstanding Survival Benefit as a lump sum.

Policy TermInsured Age (as on last birthday)Minimum Guaranteed Sum
Assured on Maturity (in INR)
Maximum Guaranteed Sum
Assured on Maturity
6-years 60 years4,62,960The maximum Guaranteed Sum Assured on Maturity is subject to the policy limits that are determined according to the board-approved underwriting policy of the company.
12-years55 years2,80,887

Death Benefits

This benefit will be payable on the death of the life insured during the policy term provided that the policy is in force. In such cases, the beneficiary receives the policy Death Benefit. Check out below how much benefit you will get.

Lump-sum Death Benefit Payable = Death Sum Assured, which is defined as the higher of:

  1. 10X Annualised Premium
  2. 105% of total paid premiums paid + underwriting extra premiums as on the date of death
  3. Guaranteed Sum Assured on Maturity (GSAM);
  4. Any absolute amount that is assured to be paid on death
  5. Guaranteed Sum Assured on Death (GSAD) is 12.75X Annualized Premium for 6 years Policy Term variant and 18.50X Annualised Premium for 12 years Policy Term variant.

GSAD in this policy will be payable only during the policy term. In case of death of the insured during the Payout Period, the insurer shall continue to pay the guaranteed monthly income and terminal benefit to the nominee as & when due, and GSAD will not be payable to them.

The Death Benefit is payable in a lump sum. However, instead of taking the Death Benefit as a lump sum, the beneficiary has the option to avail the Death Benefit in monthly installments for 10 years post the date of death of the life insured. Upon exercising this option, the Death Benefit will be paid as follows:

Payment PeriodPayment VariantDeath Benefit (as % of the Annualized Premium, which is payable monthly)
10 years following the
date of death of the
life insured
6 years
Policy Term
162%/12
10 years following the
date of death of the
life insured
12 years
Policy Term
236%/12

While receiving the Death Benefit in monthly installments, the beneficiary can choose a date to commute all outstanding payouts in a lump sum as provided under the commutation option.

Lump-sum Payment on Commutation = Death Benefit – Paid Monthly Installments 

Your MAX life insurance policy shall terminate on the payment of the commuted death benefit.

Surrender Benefits

The surrender value, if it has been the case in your policy, will be payable immediately on surrender and the company has received the policyholder’s written request. A policy can be surrendered only once. The policy acquires a surrender value such as:

  1. 6/12 years Policy Term – After payment of 2 full annualized premiums (from the 13th month)

There are Guaranteed Surrender Value (GSV) and Special Surrender Value (SSV), with the latter being non-guaranteed.

A Surrender Value is higher than GSV or SSV. And the policy is terminated after the payment of surrender benefits.

GSV of base = GSV Factor  (Total Paid Premiums)

Here, the GSV and SSV will be the percentage of your total paid premiums. The SSV can be changed by the company that may be subject to IRDAI’s approval (but this will never be below GSV). The GSV or SSV factor will depend on the surrender year of the policy and not the date of premium discontinuance.

GSV & SSV Scales:

Surrender
Factors
Guaranteed Surrender Value Factor
(Percentage of Total Paid Premiums)
Year of
surrender
6 year Policy
Term
12 year Policy
Term
10.00% 0.00%
230.00% 30.00%
335.00% 35.00%
450.00% 50.00%
590.00% 52.00%
690.00% 54.00%
7NA56.00%
8NA64.00%
9NA73.00%
10NA81.50%
11NA90.00%
12NA90.00%

Reduced Paid-up (RPU) Benefits

If your policy has a surrender value – In the case of non-payment of due premiums before the expiry of the Grace Period, your policy will not lapse but will become Reduced Paid-up (RPU) It will continue with reduced benefits like.

Death Benefits

RPU Death Benefit = (Total Premiums Paid/Total Premiums Payable)

Survival Benefit

RPU Survival Benefit = (Total Premiums Paid/Total Premiums Payable)

Note:- For the avoidance of doubt, both the Income Benefit and Terminal Benefit are pro-rated.

Max Life Guaranteed Income Plan Terms & Conditions

Tax Benefits

You are entitled to tax benefits under Section 80C and 10D(10D) on your premium payments. The insured should know that the tax benefits are subject to tax laws prevailing at the time of premium payment or receipt of policy benefits, it may be subject to change by the tax laws.

Free Look Period

You have a period of 15 days or 30 days from the date of policy receipt to review the terms and conditions. If you disagree with any of those terms and conditions, you have an option to return the policy.

The insured will be entitled to a refund if he/she exercises this facility. The paid premiums are subject to a deduction of the proportionate risk premium for the period of cover and the expenses incurred by the company on medical examinations plus the stamp duty charges.

If your policy is sourced from the following distance marketing modes:

  1. Telephone-calling
  2. Short Messaging Service (SMS)
  3. E-mail
  4. Interactive television (DTH
  5. Postal mail
  6. Newspaper
  7. Magazine

The free look period will be for a maximum of 30 days.

Grace Period

30 days from the due date of your first unpaid premium, the payment will be allowed where you can pay the premium without any late fee. The insurance coverage also continues during the Grace Period. If the insured dies during the Grace Period, the company will be entitled to deduct the unpaid premium (if any) till the date of the insured death from the benefits which are payable to the nominee under the policy.

Lapse: If you haven’t paid the policy premium within the Grace Period and your policy has not acquired a surrender value, the policy will lapse and so do the policy benefits.

Revival: If your policy lapses, you can revive it within 5-years, which starts from the due date of your first unpaid premium. The policyholder needs to pay all overdue premiums together with the late fees, which are determined by the company depending upon the number of days between the date of lapse and revival. The current late fee structure for Max Life Guaranteed Income Plan is mentioned below:

Number of Days Between Policy Lapse & RevivalLate Fee (in INR)
0-61NIL
61-180RBI Bank Rate + 1% per annum compounded annually on the due premiums
>180RBI Bank Rate + 3% per annum compounded annually on the due premiums

Acceptable evidence of the insurability of the life insured should be produced at his/her own cost. The policy revival will take effect only if it is approved by Max Life Insurance basis the board approved underwriting policy which is communicated to the policyholder in writing.

Once the policy revives, all the benefits will be reinstated to their original levels if you have paid the premium throughout. If a lapsed policy is not revived within 5 years, the policy terminates and no value is payable to the policyholder.

If the policy has acquired a Surrender Value, it will become Reduced Paid-Up. And the revival of a Reduced Paid-Up Policy can be done within 5 years from the due date of the first unpaid premium.

Once the policy revives, all the benefits will be reinstated to their original levels if you have paid the premium throughout. If a Reduced Paid-up policy is not revived within 5 years of it becoming Reduced Paid-up, the policy cannot be revived and will remain Reduced Paid-up for the rest of the policy term.

Note:- For the avoidance of doubt, the policy cannot be revived beyond the Policy Term

Termination of Policy

Your Max Life Guaranteed Income Plan will terminate on the occurrence of the following events:-

  1. Freelook cancellation
  2. Repudiation of the death claim
  3. Expiry of the Revival Period
  4. Policy Maturity Date

Suicide Exclusion

As per the insurance policy terms, if the insured dies by suicide within

12 months from the policy date of inception or revival, the policy shall terminate immediately. In such cases, the company will pay either of the following, whichever is higher:

Surrender Value or ( Paid Total Premiums Paid + underwriting extra premium – taxes, cesses & levies (if the policy has acquired a surrender value)

Sum of Total Paid Premiums + underwriting extra premium – taxes, cesses & levies (if the policy hasn’t acquired a surrender value)

Section 45 of the Insurance Act

  1. No life insurance policy will be called in question on any grounds after the expiry of 3 years from the date of the policy (the date of policy issuance, the date of commencement of risk, the date of policy revival, or the date of the rider to the policy, whichever is later).
  2.  A life insurance policy can be called into question at any time within 3 years from the date of policy issuance, the date of commencement of risk, the date of policy revival, or the date of the rider to the policy, whichever is later, on the grounds of fraud.

Provided: that the insurer will communicate in writing to the insured or the legal representatives/nominees, the grounds and materials on which such decisions are based.

The explanation I – Here “fraud” means any of the following acts committed by the insured or by his agent, with the intent to deceive the insurer or to induce the insurer to issue a life insurance policy.

  1. The suggestion, as a fact which is not true and which the insured does not believe to be true
  2. The active concealment of a fact by the insured knowing the belief of the fact
  3. Any other act fitted to deceive
  4. Any such act or omission which declares to be fraudulent by the law

Explanation II – Silence to the facts are likely to affect the assessment of the risk by the insurer is not fraud, unless the circumstances prove them, it is the duty of the insured or his agent, keeping silence to speak, or unless his silence is, in itself, equivalent to speaking.

  1. As per the sub-section, no insurer shall repudiate a life insurance policy on the grounds of fraud if the insured prove the misstatement of or suppression of a material fact at his/her best knowledge and belief or if such misstatement of or suppression of a material fact is within the knowledge of the insurer:

Provided In the case of fraud, the onus of disproving lies on beneficiaries, if the insured is not alive.

Explanation – A person who solicits and negotiates a contract of insurance is deemed for the formation of the contract, to be the agent of the insurer.

  1. A policy will be called in question within 3 years from the date of policy issuance, the commencement of risk, revival, or rider to the policy, whichever is later, on the grounds that any statement of or suppression of a fact material to the expectancy of the life of the insured is incorrect in the proposal or other document based on which the policy was issued, revived, or rider issued.

Provided the Insurer will communicate in writing to the insured or the legal representatives/ nominees of the insured on the grounds and material as per which policy repudiation is based.

Provided: Further, in repudiation of the policy on the ground of misstatement or suppression of a material fact, and not on the ground of fraud, the collected premiums on the policy till the date of repudiation is paid to the insured or the legal representatives/nominees within 90 days from the date of such repudiation.

Explanation – The misstatement of or suppression of fact will not be considered material unless it has a direct bearing on the risk by the insurer, the onus is on the insurer to show that the insurer was aware of the said fact and no life insurance policy would have been issued to the insured.

  1. In this subsection, nothing shall prevent the insurer from calling for proof of age at any time if he/she is entitled to do so, and no policy will be deemed to be called in question on subsequent proof that the age of the insured was incorrectly in the proposal form.

Prohibition of Rebates (Under Section 41 of the Insurance Act, 1938)

  1. No person is allowed or shall offer to allow, either directly or indirectly, as an inducement to any person to take, renew, or continue insurance concerning any kind of risk relating to the lives or property in India. The rebate of the whole or part of the commission payable, or any rebate of the premium as shown on the policy, nor any person taking out, renewing, or continuing a policy can accept, except it is allowed by the published prospectuses or tables of the insurer.

Provided:-  The acceptance by an insurance agent of commission in connection with a policy of life insurance taken out by himself or on his own life is deemed from acceptance of a rebate of premium if at the time of such acceptance the insurance agent satisfies the prescribed policy conditions establishing that he is a bona fide insurance agent employed by the insurer.

  1. Any person who fails to comply with the provisions of this section is liable for a penalty of INR 10 lakh rupees.

Nomination

A nomination facility applies to the Max Life Guaranteed Income Plan by provisions of Section 39 of the Insurance Act, 1938 respectively.

Assignment

An assignment will apply to your Max Life Guaranteed Income Plan by provisions of Section 38 of the Insurance Act, 1938.

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