ULIP Review: Max Online Savings Plan - Wealth Solution, a pure digital ULIPThe Max Online Savings Plan – Wealth Solution is an ‘online only’ ULIP. This in itself is good for you because insurers tend to pass on the lower costs of online sales to customers. This ULIP is no exception.

The policy term goes from 5 to 30 years. On maturity, you get the ULIP value (Net Asset Value per unit * Number of units).

Minimum Entry Age: 18 years

Maximum Entry Age: 60 years

The minimum annual premium is Rs 36,000 and there is no maximum annual limit.

Death Benefit

The higher of sum assured (10 times annual premium) or fund value (which can go higher if the investment performs well). Here the policy has an interesting variant which pays out 10 times the annual premium on death and an income equal to 1% of the sum assured over a period of 3 – 10 years.

Investment Strategies

The ULIP offers only two investment strategies – one in which you manually select the ULIP fund you want to invest in and another in which this is set based on the number of years remaining in the policy. It has no counterparts for the Systematic Transfer Plan variant offered by Bajaj Allianz Goal Assure and Kotak Single Invest Advantage ULIP.

Charges

Type Amount
Premium Allocation Charge None
Policy Administration Charge None
Fund Management Charge 0.9% to 1.25%
Mortality Charge Levied on ‘Sum at Risk’ as per a complex formula

Sum at Risk = Sum Assured – Total Fund Value

Number of free fund switches Unlimited
Discontinuance Charge 1st year – Lower of 6% of fund value or 6000

2nd year – Lower of 4% of fund value or 5000

3rd year – Lower of 3% of fund value or 4000

4th year – Lower of 2% of fund value or 2000

5th year onwards – None

You can make up to two partial withdrawals, up to 50% of the fund value, per year. These would be free of charge.

ULIP Funds

The ULIP funds offered by Max have delivered reasonable performance. We have benchmark data for three out of the five funds in the ULIPs. Two of these funds have outperformed their respective benchmarks over the past five years.

Fund Type 5 year % Benchmark % Outperform?
High Growth Focus on midcap stocks,

70-100% in equity, rest debt

16.85 14.92

(BSE 100)

Yes
Growth Super 70-100% equity, rest debt 13.65 14.92 (BSE 100) No
Growth 20-70% equity, rest debt 10.61 N/A N/A
Balanced 10-40% equity, rest debt 9.79 9.58(Crisil 85:15) Yes
Secure Debt, Money market securities 8.44 N/A N/A

Source: Morningstar, As on 22nd March 2018

Conclusion

Max Online Savings Plan – Wealth Solution does the job it was created for – to offer a low-cost, relatively simple online ULIP. The lack of investment strategies like STP which move money from a ULIP debt fund to a ULIP equity fund is a disappointment. On the other hand, the lack of complicated loyalty bonuses and top-ups makes it simple and easy-to-understand. The ULIP funds have also performed well.

Author
Neil Borate

Neil Borate is Deputy Editor, RupeeIQ. He can be contacted at neil@rupeeiq.com.