Max New York Life SMART Invest Pension Super

Any smart investor would be strongly advised to stay away from this SMART Invest Pension Super Plan brought out by Max New York. It is yet another ULIP, suffering from the same problems that other ULIPs face (extremely high charges, lack of transparency and extreme complexity of the product). Despite coming from an insurance company, the basic policy has no life cover. If you take the riders (obviously at extra cost), only then does it have a Disease and Accident cover. Given the high charges, the rate of return is not going to be attractive for you either.

It advertises a 0% Premium Allocation Charge, but just calls it by another name – ‘Policy Administration Charge’. This charge is as high as 30% of your premium in the first year. Even in the second and third years, it refuses to fall – 18% and 15% respectively. This will make sure that you are unlikely to benefit from any rise in the market, since so much less of your premium is going into the investment fund anyway.

Illustration:

Let us assume a simple case:

  • Your age: 40 years
  • Planned retirement: 60 years
  • Policy term: 20 years
  • Level premium option: Rs.30,000 per year
  • No riders chosen 

Let’s see what you get:

  • Absolutely no life cover
  • Of your first year premium of Rs.30,000, 27% (Rs. 8,100) is removed. Most of this goes to your agent’s pocket. Only the remaining gets invested in the fund.
  • Of your second year premium of Rs.30,000, 18% (Rs. 5,400) gets removed again. Most of this again goes to your agent, and only the remaining gets invested
  • Of your third year premium, 15% (Rs. 4,500) is chopped off again.
  • Of all future years, about Rs.1,000 is removed every year from the premium
  • Thus, on a Rs.30,000 annual premium, you have lost almost Rs.19,000 as charges. Worse, most of these have happened in the first three years itself, so redeeming yourself thereafter is impossible!
  • In addition to this, of your total fund, the fund management charge of ~1% is cut every year
  • Instead, if this Rs.30, 000 per year had gone into a Systematic Investment in a Mutual Fund, not a single Rupee would have been deducted as policy charges. It would not take a mathematician to deduce that the returns here will be much better.

In summary, investments can deliver returns only if the costs are not so high. Even there, there is no evidence that these funds of Max New York can deliver superior returns to other excellent funds available in the market. So you would rather give this product a miss.

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