ICICI Prudential InvestShield Life new is a premium guarantee plan.
What does it mean by premium guarantee?
In ULIP plans a part of the premium is invested in either equity or debt market or both. This part of the premium along with the return it generates is called the fund value. Mortality charges and policy administration charges are deducted from the fund value on a regular interval. In case of a premium guarantee plan the insurance company promises to pay back the premium paid, on death or at the time of maturity, even if the fund value of your policy is less than the total premium paid.
What are the exceptions to premium guarantee?
If you decide to surrender the policy before maturity then the premium guarantee will not apply and only the fund value after deducting the surrender charges will be paid. Premium guarantee is also lost, if you decide to discontinue paying the premium after the first three years. To summarize, the premium guarantee applies only on maturity or on death, and only if all the due premiums have been paid.
How much insurance can I get?
Sum assured for this plan depends on the annual premium and term of the plan. Sum assured = Annual Premium * Term / 2. For a plan with term of 10 years the sum assured is 5 times the annual premium and for 30 years term is it 15 times the annual premium.
What are the death benefits?
Death benefit for the plan is sum assured plus fund value or premium guarantee which ever is more. That is, in an event of death the nominee will receive greater of sum assured plus the fund value or premium guarantee.
What are the fund options available?
Your money gets invested in New InvestShield Balanced Fund. There is no other fund option. New InvestShield Balance Fund has a mandate to invest upto 40% in equity market. The fund has been in existence for about three years and as of 2nd June, 2009, it has given average 10% per year return. Present NAV for InvestShield Balanced Fund can be found here.
How does the return of this policy is different as compared to Fixed Deposit?
Instead of putting the money in this policy, lets assume that you had put the premium equivalent money, every year in FDs and the FDs were fetching a interest rate of 10%. In this case, your post tax return from FD would be about 6.5-7%. This return will be the same as that of this policy if the policy fund continues to perform the way it is performing right now.
What are the charges in this scheme?
Premium allocation charges in the policy are 35% for the first year, 15% for the second year and 3% from there on. These charges are high as compared to other schemes available. Policy administration charges are Rs 40 per month which comes to around 480 per year. Fund management charges are 1.25% per year. Surrender charges for this scheme are also high as much is 50% if the policy is surrendered in the fourth year.
Verdict
- Premium allocation charges are quite high. Also these charges are application through out the life of the policy.
- Premium guarantee makes sure that the money you have invested in this scheme is not lost as long as you are loyal to the scheme. But personally I think that if you keep invested in a ULIP for the full term, your fund value should never go below the amount you have invested in it.
- Flexibility of deciding the sum assured is not available. This is a negative point.
- Option of switching between types of fund is not available.
- Return given by the scheme so far is good. The scheme needs to give such return consistently to make itself worthwhile for the investor.
Overall the scheme does not look bad. It is suited to those investors who want to get tax free returns with a small risk of not getting any return. Go for this scheme if you do not see any liquidity requirement till the policy matures to make use of the premium guarantee. Otherwise there are other scheme that give you more options with less charges.
More information about the policy can be found here.
Meta: June 3rd, 2009 by
Tags: ICICI · insurance · premium guarantee · ULIP · unit linked insurance plan5 Comments
If i am paying premium amount of 1.5 lake for the period your mentioned years(3years) on maturity what is the amount ican get
Hi Gnanasekaran,
As mentioned in the article this policy is worth only if you pay all the premiums and stay invested till maturity. Otherwise the premium guarantee is not applicable.
While predicting the amount on maturity one needs to know a lot of details. I am assuming a few here.
Assuming the fund gives 10% return through the policy period. As fund management charges is 1.25% the effective rate for return would be 8.75%. Your policy will be maturing in 10 years. I am also assuming you would be paying 1.5 lakhs every year.
You would be paying 1.5L in the first year. 35% from that amount would be premium allocation charges. Therefore the amount that gets invested in the first year would be 0.65 * 1.5L = 97500. At the end year one assuming effective rate of return as 8.75, your fund value becomes 97500 * 1.0875 = 106031.25
At the start of second year you would be paying 1.5L again. Your fund value now becomes
106031.25 + (1.5L * 0.85 ) = 233531.25
At the end of year two it would become 233531.25 * 1.0875 = 253965
After 10 years your 1.5L invested annually (1500000 in all) will become 2226151. In this calculation we have not considered Mortality charges for the insurance and policy administration charges.
Putting 1.5L yearly in FD fetching 7% post-tax return will become 2217539.
I hope this answers your question.
Thanks and regards,
Ripul
plz i want to current nav investshield fund
The nav of all ICICI Pudential funds can be found at https://www.iciciprulife.com/ipru/Current_UnitValue.jsp
Hi Monica,
We are independent bloggers and are not related to any of the banks. Please contact your bank customer care for the details that you want.
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Regards
Pankaj