How good is the newly launched Smart Xpress Ulip from Max New York Life? What are the features of its new money market fund? What are the charges in this plan?
— Ragini Ojha
Max New York Life’s Smart Xpress is a flexible unit-linked insurance plan (Ulip) with net asset value (NAV) guarantee and a systematic transfer plan, claiming to offer secure returns even during periods of market volatility. The product offers eight fund options, including the new money market fund, which aims to preserve capital. It works on the fundamentals of low risk, along with moderate returns generated primarily through a portfolio of treasury bills of short duration. The money market fund’s key feature is that it guarantees protection of NAV, regardless of the date of entry.
The investor can bank on getting steady and safe returns in this fund during volatile markets as it guarantees daily increase in its NAV and thus, a lock-in at the highest NAV. This ensures that the NAV of the fund will never see a decline. The policyholder can shift his investments from this money market fund to any other fund, depending on his risk appetite.
Smart Xpress offers four premium payment options— single payment, and payment terms of three years, five years and 10 years. The administrative charges are 20% of the sum invested in the first year and 3% in the remaining years. If you opt for the single premium option, the administrative charges will be 7%.
If insurance premium is not paid on the due date and the grace period ends on a public holiday, how is the last day of payment decided?
— M.S. Bhagat
The last day for paying the premium is decided after taking the grace days into account. Every policy has a provision of grace days for payment of the premium. The grace period varies from company to company, but it is usually 30 days for yearly, half-yearly and quarterly premiums, and 15 days for monthly premiums. If the last day of the grace period is a Sunday or a public holiday, the premium may be paid on the next working day to keep the policy in force. For instance, if the grace period for payment of the premium expires on 2 October, which is a public holiday, the last day for paying the premium shall automatically be extended to 3 October. The policy will lapse if the premium is not paid by 3 October.
An insurance adviser told me life coverage should be 7-10 times one’s annual income. My annual income is Rs3 lakh. My life coverage is Rs8 lakh at present, consisting of three Ulips and two non-Ulips. How can I enhance my coverage without buying another plan?
— Sanjeev Garg
Insurance companies usually fix the upper limit of life insurance as a multiple (say, 5-10 times) of the proposer’s annual income to avoid over-insurance. Life coverage requirement varies from person to person and no standard measure can be taken as a base. One must decide one’s life coverage value according to one’s needs.
The main factors that a person should consider while deciding the value of insurance he needs are his age, his earning life, his existing income, the number of dependants he has, the family’s fixed monthly expenses, the funds required for children’s education and marriage, his standard of living, his existing assets and inflation.
Usually, insurers do not allow an increase in the sum insured of an existing policy. Therefore, you will have to take an additional life insurance policy to enhance your life cover limit. Since most of your present policies are insurance-cum-investment plans, you may add a pure term policy to increase your life coverage. Term plans have the lowest premium among all policies.
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