Endowment Policy of Max New York Life.

POSTED BY Dilip ON November 18, 2011 7:14 pm COMMENTS (5)

I have purchased ‘Endowment to Age 60’ insurance policy of Max New York Life for my doughter when she was of 22 yrs. on18-8-2009. This was purchased through my son’s one of the friends, who was bent upon to give at least one policy in our family. I have purchased this policy thinking that the premium of the policy would be less and she will not feel any burden when she takes a job after her study. Now the premiums are paid by me. The sum insured is Rs. 4,54,025/- with personal Accident Benfit and Dread Disease riders of Rs. 1,00,000/- each. The half yearly premium is Rs. 6344.60. So far I have paid Rs. 6344 x 5 = 31720. Now after reading and listening the views on the Insurance, I feel that I am landed in wrong policy. Becuase most of the advisors recommend Term Insurance Policies and guide to avoid Unit Linked Policies. I think this policy is also a Unit Linked Policy, becuase the company has provided projection chart of earnings under three heads. 1. Guaranted 2. Non Guaranted Lower Rate( 6% p.a.) 3. Non Guaranted Higher Rate(10% p.a.). Can any body tell me whether I have done right thing? If not is there any way to correct it? or should I continue the policy? Thanks.

5 replies on this article “Endowment Policy of Max New York Life.”

  1. Dear Dilip, If you are ready to bite the bullet, dumping this policy at this stage is the best solution. Else pay one more prem. & check for paid up value.

    I’m agree with dear Manish that directing the future prem. till maturity into Eq. MFs is a better option.

    Thanks

    Ashal

  2. Dilip & Ashal

    Check the link of Max New york I gave , its clearly written that the Policy acquires the CASH VALUE (means some worth) only after 3 yrs , which will happen only once Dilip pays 6th premium .

    Dilip , I can understand your situation at the moment , loosing a large sum is really going to be a tough thing , but believe me (and also do calculate yourself) , that stopping it now and redirecting your further premiums for next remaining years (till maturity) will be able to generate more money for you compared to this policy .

    Do the maths a bit , assume that you will invest the amount equal to premiums in mutual funds at 12% for remaining years and then see if its coming more than the Policy amount or not … Any ways everything else remains same for you , pretty much ..

    Do you really want to earn paltry 4-5% over the next many years on this policy ?

    Manish

  3. Dear Dilip, please check with the ins. co. what ‘ll be the surrender value if you opt to surrender after 5Y or 7Y or 10Y. accordingly, decide. In a sense, dumping it right now & forgetting the prem. is a better solution. But do check that is it possible to make this policy paid up at this stage.

    Thanks

    Ashal

  4. Dilip says:

    Dear Manish, you are right. I told the situation in which this policy was taken. After three years the cash value will be Rs. 7192/-. i.e after paying Rs.6344/- ( for the 6th instalment). If I want to opt for discontinuation, then why should I pay the 6th instalment and get back little more than that ? It is very hard dicision to go for this option as I will have to loose all the money I paid so far. Are you for taking this decision ? Will it be beneficial in the long run ? or should I continue with this ? What best options would you suggest, if I am to go for discontinuation? Thank you.

  5. Its not a ULIP , its a traditional kind of Endowment plan , even worse than ULIP

    You have got into low return , highly ILLIQUID Instrument , just have a look at the rules of the policy and see what will happen if you want to CLOSE and GET OUT at 3rd yr , 5th year and 10th year and how much you will get compared to what you have paid. you will come to know what i am trying to say

    http://www.maxnewyorklife.com/Plans/insurance-plans/savings/endowment-60.aspx

    Surely this is a NO RISK Kind of plan , but there is HUGE RISK in this plan and that is getting not less than inflation (NO REAL RETURN) over a long period .

    For your daughter , you should have invested in a equity related product which over a long term would be ALMOST NOT RISKY and have given a superior Inflation linked return .

    Right now you have paid 2.5 yrs premium , if you close it right now, you will get ZERO .

    If you pay one more premium and then surrender , it would be a better choice .

    Manish

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