Max Life Insurance recently launched Smart Secure Plus Plan, a non-linked, non-participating, term life policy. While the loss of a family member is hard to cope with, a term cover can offer financial support to the surviving members. Max Life’s new plan, in addition to providing a risk cover, comes with multiple frills and riders. Should you go for this plan?
Basics
The policy is available for those from 18 to 65 years of age, with minimum sum assured (SA) of ₹20 lakh (minimum SA for joint life is ₹10 lakh). It provides cover up to 85 years of age. The policy offers different premium payment term options — 5, 10, 12, 15 years, and one where you can pay premium till 60 years. Apart from this, regular pay option (where you can pay premium till the end of the policy term) and single premium payment option, too, are available.
Unlike most policies in the market where the policyholder chooses the pay-out (death benefit) for the nominee, Smart Secure Plus allows the nominee to select from three pay-out options — lump sum payment or monthly pay-out or part lump sum and part monthly pay-out. In addition to the death benefit, the policy provides coverage against diagnosis of terminal illness (pay-out subject to maximum of ₹1 crore), post which the policy terminates.
Similar to most term plans, this policy too offers two SA options, to be chosen by the policyholder at the inception of the policy. These are level SA (where the life cover remains constant for the duration of the policy) and increasing SA, where the cover increases 5 per cent every policy year, subject to a maximum of 200 per cent of the base SA.
The policy also offers enhanced features for additional premium, such as joint life cover, return of premium, premium break option, voluntary top-up of SA, accelerated critical illness, accident cover, waiver of premium and critical illness and disability rider.
What’s new
While Smart Secure Plus Plan is, by and large, similar to other term plans with respect to coverage and riders, it has two new features — special exit value option and premium break option.
Under the special exit value feature, a policyholder may choose to exit the policy and receive the premiums paid. That is, you can receive the entire premium paid for the base policy if you are 65 years or you have reached the 25th year (applicable for policy term from 40 years to 44 years) or the 30th policy year (applicable for policy terms greater than 44 years), whichever is earlier.
Though special exit value is offered in-built in the policy (without payment of additional premium), there are certain points to keep in mind. It is not available if the policyholder has opted for return of premium rider. It is also not available if the policy term is less than 40 years. Lastly, when a policyholder opts for special exit value, then only the premium applicable on the base cover has to be paid and not the premium additionally paid on riders or optional covers.
The second feature is premium break, where the policyholder can take a break from premium payment and still stay covered. The policyholder will be allowed to take this break twice during the policy term. If the premium break option is not exercised, the insurer will waive the last two policy year premiums. But the option is available only for policies with a policy term greater than 30 years and premium payment term greater than 21 years. The feature is available only under the regular pay and premium payment term till 60 years options.
Do keep in mind that this feature is available only on the payment of additional premium. Further, the first break is available only after the completion of 10 policy years and the premium waived includes base cover premium, accelerated critical illness benefit premium and accident cover premium. The second premium break can be exercised after a minimum gap of 10 years from the first premium break.
Both features have to be opted for at the inception of the policy.
Our take
When it comes to life insurance, it is best to go for a basic term plan, which is the cheapest life cover available in the market today. You can consider adding accidental death benefit and critical illness riders to your base plan and go for the ones available at a suitable premium.
When other riders like return of premium and waiver of premium are added to the policy, including Smart Secure Plus, the premium becomes steep. So for a 30-year old for SA of ₹1 crore (40-year term), with return of premium, the premium works out to ₹18,658 per year (including tax). But, a pure term life cover for the same person will cost about ₹7,300-12,000 a year.
The premium break option may not be useful for many as the income of an individual is likely to increase as he/she ages. Further, if there is any financial strain, he/she might as well go the special exit or early exit option instead of selecting premium break (for extra cost).
While it is advisable to stay covered for maximum number of years, the policy’s special exit options come in handy, particularly if you are in need of money. But you may not be able to avail this exit if you miss the said timeline (25th or 30th year). However, if you still want to exit the policy earlier, the insurer provides an option for early exit as well, but you may not receive the entire premium paid.
To sum up, you could go for this policy for its pure vanilla cover and special exit option. But if you want to go for online term plans, there’s a wider basket of policies to choose from.
