Max New York’s Fast Track Plan is offering customers the opportunity to catch up on lost time and faster accumulation of wealth. The sales pitch is nothing short of mis-selling. Don’t touch it

Max New York Life is offering customers "the opportunity to catch up on lost time" for those life needs they may have overlooked. All they need to do is buy a 'Fast Track Plan', a unit-linked insurance plan (ULIP) and it will help plan their savings in a "faster and more efficient manner" to fulfill their goals.

It is also a plan for providing faster accumulation through choices of shorter policy tenure, faster and safer growth through fund options and an added feature of 'Systematic Transfer Plan' to benefit from market volatility.

On a closer look, this sales pitch is nothing short of mis-selling. The concept of catching up on lost time may sound fantastic, but it is not realistic. It does not work that way in the financial world. The brochure talks about dreams to fulfil which needs planned wealth accumulation including foreign education for children, a child's dream wedding, a family vacation to exotic locations and luxurious lifestyle needs. These rosy scenarios depicted in the brochure are just that—too rosy. It will call for extraordinary returns, but this will be impossible to achieve as the concept of a 'Fast Track Plan' itself is flawed. This is just a ULIP with the flexibility to choose a policy term, insurance cover, riders, and 12 free switches.

If the company is offering faster accumulation by virtue of high premium every year (minimum Rs1 lakh), it is hardly an innovative approach. Moreover, higher money going to investment due to insurance of 1.25 times (minimum) of the annual premium is not worth it due to negligible insurance and no tax benefit.

The maximum insurance cover is 20 times annual premium (minimum 5 times needed for tax benefit). There is just no way to accumulate wealth faster with a short policy tenure (it is contradictory) and there is no safer way to benefit from market volatility by a systematic transfer plan from debt to equity.

Is there something unique about Max New York's fund management that can do the trick of an accumulation much faster than the market by buying the same blue-chip stocks and high-quality debt? Maybe Max fund managers are ace market timers! Are the charges lower to help faster accumulation? This is not true either. For the regular option, the premium allocation charge is 4% of annual premium and policy administration charge is Rs1,500 per annum inflating @5% per annum compounded annually from the 2nd policy year. The single pay option is 2% premium allocation charge and Rs900 per annum with the same inflating factor as above. The fund management charge is 0.90% (Secure Fund) to 1.25% (Growth Super Fund) of the fund value.

The 'Systematic Transfer Plan' from debt (Secure Plus Fund) to equity (Growth Super Fund) every month for 1/12 of yearly premium paid is not something that can assure safe returns. It is hardly any innovative investment strategy. The customers themselves can create Systematic Investment Plans (SIPs) by monthly premium payment from their own savings account to the Growth Super Fund.

Market volatility can still work against the 'Systematic Transfer Plan' depending on the market circumstances and neither does the market remain volatile all the years. SIP does not work in all market conditions.

The Annual Target Premium (ATP) is the level premium payable in a policy year by regular installments in the amounts and on the due dates.

The product offers single premium & '5-pay' for a 10-year term and '10-pay' for 20-year terms. In case of the '5-pay' or '10-pay' variants, one can opt from either of 10 or 20 times ATP as insurance cover, depending on age.

The death benefit is sum assured plus fund value which also means higher mortality charges to be paid by the policyholder. There are no charges for 12 switches in a year and no charges for 12 redirections in a year. The minimum and maximum entry age is 30 and 60 years respectively. The maximum age at maturity is 70 years. The product offers riders of personal accident and dread disease. Don't be quick to buy this fast-track product.