The Hindu Business Line : `Life Maker' plan — Max NY Life to invest up to 75 pc of first year premium

DO you know that Max New York Life (MNYL) will invest not more than 75 per cent of the first-year premium paid by a person who has purchased its recent unit-linked plan?

The plan, named Life Maker, will allocate the full premium only from the third year — the second year's allocation being a shade higher at 80 per cent of the annual payment.

As MNYL points out, there will be `nominal' fund management expenses, varying from 0.9 per cent to 1.25 per cent of the net assets of the fund. The reason? This is required for professionally managing the fund.

There will further be a monthly fee of Rs 50, to be reviewed from time to time, to cover inflation and various administrative costs. However, this will not be more than 15 per cent of the charge over the previous year.

Third, there will be an `initial set up monthly expense' in the first year. This may vary from 0.15 per cent to 0.25 per cent of the sum assured, depending on the tenure of the plan.

According to a section of investment advisors, expenses such as these may not make life any easier for investors in a unit-linked plan.

They, however, point to `industry practices' that do not make a particular unit-linked plan stand out as unique in terms of expenses.

Sources also feel that the market may still view these plans differently, especially so in the context of the convenience the insurance companies provide - flexibility, choice of investment options, possibility of customisation etc.

"The unitised product also accommodates top-ups, both planned and unplanned," said an agent associated with the company. An insured person may decide to put in extra money through this route. In fact, all top-up premiums are to be allocated at the rate of 101 per cent of the amount that is paid.

In other words, if a top-up premium is Rs 10,000, MNYL will actually invest Rs 10,100 in the fund chosen by the person concerned.

Incidentally, the fact that Franklin Templeton MF, one of India's leading asset management companies in the private sector, has been chosen as the investment advisor is also being considered as one of the product's strengths.