Advice Needed on Max Life Insurance

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rahul asked 8 years ago

I have two Max Life Insurances Max Life Whole Life Super 15 pay 7 &&Max Life Life Perfect Partner Super - 20 Pay. I have paid three years premium which is around 2 Lakhs in total. Now I want to close both or atleast one of them. When i contacted max life I was said I would get Rs.32,867.60 & Rs.53,703.04 respectively. Could you please suggest, whats the best thing to be done to reduce losses. Regards Rahul

5 Answers

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Sreekanth Staff answered 8 years ago

Dear Rahul, Max Life Whole Life Super is a traditional whole-life insurance plan. Max Life Life Perfect Partner is a traditional Money-back savings plan. We can expect returns of around 4 to 6% (max) from these kind of insurance plans. These kindly of plans are high cost and low yielding plans. May I know if you have dependents and/or have any financial liabilities? Do you have adequate life cover? Related articles : https://www.relakhs.com/traditional-life-insurance-plan/ https://www.relakhs.com/insurance-importance-life-health-accident-covers/

rahul replied 8 years ago

Hi Sreekanth
My dependents are my parents and I am the only working member, and I have home loan as well.
Yes I have adequate Life cover tho.

I am trying to get out of Max Life as I am unable to pay for it anymore.

rahul replied 8 years ago

dependents

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Sreekanth Staff answered 8 years ago

Dear Rahul, You may just go ahead and surrender these high cost plans. Kindly do not mix insurance and investment. You can divert these premiums and surrender value amount to better investment alternatives for your long term financial goals. Kindly get adequate Personal accident and health insurance covers as well. Related articles : https://www.relakhs.com/how-to-get-rid-off-bad-life-insurance/ https://www.relakhs.com/best-personal-accident-insurance-policies-in-india-details-comparison/ https://www.relakhs.com/list-of-best-investment-options-schemes-in-india/

rahul replied 8 years ago

Thank you so much for you help, I really appreciate it, I did contact Max life and they said it would be converted to Paid Up Policy once I stop making the payment.

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Sreekanth Staff answered 8 years ago

Dear Rahul, I am assuming that you understand the difference between 'surrendering' the policies and making them as PAID-UP. If I am in your situation, I would prefer surrendering the policies (as only 3 premiums have been paid), re-invest the surrender value in better alternatives for my long-term goals than making them as PAID-UP ones. How Paid-up works? For example: If you have an endowment policy with a cover of Rs 10 Lakh for 20 years and convert it into a paid up policy after 5 years then the reduced sum assured will be Rs 2.5 Lakh. So, you will have a life cover for Rs 2.5 Lakh for the next 15 years. There is no need to pay any premiums during this tenure. The future bonuses will not be accrued. The reduced sum assured along with the accrued bonuses (if any for 5 years) will be paid only on maturity or on death of the insured.

rahul replied 8 years ago

Ah, ok im confused now.. What other better alternative can u suggest?

So my Base Sum Assured is 5,34,006.00 and Death Benefit is 5,58,143 which means I would get Rs 2.5 Lakh at the maturity time?

Also I have some Cash bonus, so I am planning to withdraw it, before it becomes PAID-UP

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Sreekanth Staff answered 8 years ago

Hi, What other better alternative can u suggest? May I know your investment objectives, goals and time-frame?? Regarding Paid-up value and Surrender value, kindly contact your Insurer.

rahul replied 8 years ago

I am looking for short term investments and Can u tel me if Surrender Value or Paid Up Value is higher? I am trying to minimize my loses

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Sreekanth Staff answered 8 years ago

Dear Rahul, Kindly note that if you surrender, you get the amount now, which can be re-invested. However, if they are made as PAID-UP, you get the amount at the end of policy term (on maturity). So, you need to give more importance to 'Time value of money'. Kindly read : https://www.relakhs.com/what-is-time-value-of-money-tvm/