ICICI Pru Guaranteed Wealth Protector (ULIP)-Is it really win win plan?

ICICI Pru Guaranteed Wealth Protector planICICI Pru Guaranteed Wealth Protector (ULIP)-Is it really win win plan?

Are you seeing ICICI Pru Life Guaranteed Wealth Protector – Win win plan on advertisement hoardings on the road side? FM Radio keeps buzzing about this plan several times in a day. Are you wondering what is this win-win plan advertisement appearing major financial websites? This ULIP plan is offered by ICICI Pru life named Guaranteed Wealth Protector indicates that it is win win to have equity linked returns and also capital protection. ULIP schemes issued earlier have been cheating investors by charging high allocation and agent commissions. Does this ICICI Pru life guaranteed wealth protector is different from earlier ULIP Plans? Is it really win win plan ?

About ICICI Pru Guaranteed Wealth Protector ULIP

This is a Unit Linked Insurance Plan (ULIP) indicates that it would protect capital and would provide your assured benefit of 101% of premiums paid. Generally, all ULIP’s fund value would get reduced to the extent of commissions paid to agents + premium allocation charges, etc., Hence ULIP holders fund value shows very less compared to what they invested for a moment ignore the returns. This plan indicates that it provides 101% of assured benefit and investors are getting tempted to invest in this.

Also Read: Top Term Insurance Plans in India

Important Highlights of ICICI Pru Guaranteed Wealth Protector plan

  • It offers assured benefits
  • Option to pay for a single premium or premiums for 5 years
  • Loyalty additions and wealth booster features where a sum is added to your fund value
  • Like any other regular insurance plan, you would get tax benefits.

Features of this ICICI Guaranteed Wealthy Protector plan

ICICI Pru Guaranteed Wealth Protector plan-Features

*Snapshot from Brochure

What are the objectives or strategy of this insurance plan?

Your money would be invested in life growth fund or life secure fund, which depends on your age

ICICI Pru Guaranteed Wealth Protector plan-Objectives

*Snapshot from Brochure

Benefits under this insurance plan

1) Maturity benefit: This would be maximum of

        Fund value, including loyalty additions and wealth booster or

        101% of single premium (one pay) or 101% of the sum of all premiums paid (5 pay)

2) Loyalty additions: Loyalty addition, units are added at the end of the policy year from the 6th year onwards. This would be 0.25% of average fund in last 8 quarters.

3) Wealth booster: Extra units would be added at the end of the 10th policy year which would be 1.50% in the case of one pay and 3.25% in case of 5 pay.

4) Dealth Benefit: On dealth of the insured, nominee would get Sum Assured as indicated in above table.

Coming to various deductions and allocation charges in this insurance plan

  • Policy admin charges = 2.52% per annum during premium payment term and 1.20% after that. For One pay it is Rs 720 per annum for 5 years.
  • Fund management charge of 1.35% per annum + 0.50% is adjusted in NAV for investment guarantee
  • Mortality charges = Rs 1.52 to Rs 14 per every Rs 1,000 sum assured

Illustration with an example

  • 35 years – Rs 100,000 single premium – One pay
  • Sum Assured = 1.25 x premium = Rs 1.25 x 100,000 = Rs 125,000
  • Assured benefit would be = 101% of premium = Rs 101,000
  • Maturity amount @ 4% returns – Rs 113,853 and 8% = Rs 167,243
  • Loyalty addition = 0.25% from 6th year to 10th year = 1.25% in total. This would depend on fund value
  • Wealth booster – 1.50% at the end of the 10th year.
  • Total additions would be 2.75% (approx)

Positive factors of ICICI Guaranteed Wealthy Protector plan

  • Provides assured benefit of 101% of premiums paid.
  • Loyalty additions of 0.25% of average fund value every year from 6th year onwards
  • Wealth booster package which adds 1.50% (single pay) or 3.5% (5 pay) of fund value at the end of the policy term

Also Read: Best Mediclaim Plan to buy in India

Some of the Negative factors of ICICI Guaranteed Wealthy Protector plan

  • You cannot surrender the policy within 5 year policy term. If you want to surrender the policy within 5 years, the fund value would go to discontinued fund account and you would get amount after 5 years completion. During such discontinuance period you would get 4% annualized interest.
  • Additions from loyalty additions and wealth booster would get offset to some extent of deductions. Net summary is deductions are higher than additions.
  • Like any other ULIP, even this has several deductions like mortality charges, allocation charges, fund management fees etc., which are high and makes this plan unattractive.

Download Brochure of ICICI Pru life guaranteed wealth protector plan

Conclusion: ICICI Pru life guaranteed Capital Protector ULIP win win plan is not a win win in reality. Though it offers several benefits all such benefits are adjusted with the charges which this plan deducts. However, considering earlier ULIP plans where your investment amount is being reduced, this plan at least protects to that extent where it offers 101% assured benefit. But I do not see any reason why I need to invest my money and think of protection of the money. Rather, I consider the term insurance plan and invest balance money in bank FD and sit and relax rather investing in this and worrying about it.

Readers, have you got tempted and invested in this plan ? What do you say about this plan. I would love to hear your views on this.

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Suresh
ICICI Pru Guaranteed Wealth Protector (ULIP)

Suresh KP

98 comments

  1. Hi Suresh,

    Brilliant Article .. I also read in the finance websites that now ULIPS are comapritive to Mutual Funds , the argument given was that now the charges are reduced and if one stays till the end the loyality additions added will make up for the charges . What is your view ?

    Also I would like to suggest an article on comparing Top ten ULIPS , like the one you wrote on TOP ten funds for 2014 

    Thanks & Regards

     

  2. Hi Suresh,

    I just invested 50K per annum in this policy as they said there would be 101% guaranteed on amount I invested. I have asked them clearly that if this guaranteed is on my premium or on the money invested after deduction and they said it would be on your premium.

    That time this plan was new so I did not get much review on this, and now after reading your analysis I thing I will be in loss. My question is I took this policy is on 16 may 2014 and its free look period is over. Is there any other option to withdraw it with minimum cost?

    1. Hi Pawan, You could have visited this blog little ahead of time. I don’t think there is any choice as you can surrender the policy with min charges only during free look up period. Pls consult customer care and close this.

  3. Hi Suresh,

    Thank you for such detailed post about ULIP and specifically writing about ICICI Prudential Life Insurance Policy. Recently I was fooled by the ICICI Prulife people and lured me into signing up Wealth Builder Policy. I agree it was my mistake of signing the contract without getting myself completely informed, but I remember correctly asking them about the applicable charges, which the adviser at the bank continously denied. Now I have received my policy document with Policy Allocation charges of 6%. With a yearly premium of 1.5Lacs, that turns out to be 9000 for the first year. In total they will deduct ~35K(6%, 5%, 4%,4%, 4%) in 5 years as premium allocation charges. Apart from Premium Allocation charges a sum of 315/- and 227/- is also deducted in the name of Policy Administration Charges and Morality Charges. What a foolish way to make money. Currently I’am fighting with them to get this policy cancelled. If I had visited your site early, I would have saved myself and my family lot of trouble.

    I was also browsing ICICI Prulife website and its very difficult to find all the information regarding premium allocation charges and so forth. Shame on ICICI Prulife to go down to such a level, where middle and lower class investors are duped into such schemes to make profits.

    Cheers to you for bringing this in open.

    Sunny.

    1. Very bad to hear your story Sunny. But you would have surrendered the policy within cancellation charges so that only document charges deducted. Have you missed to surrender within 15 days from the receipt of such policy ?

    2. Hi Sunny,

      Did you get the policy cancelled. I have called the customer service and they said even if we cancel the policy the 1st premium that I have paid shall be locked with them for 5 years.. Is that true? Is there anyway to cancel and get a refund with some cancellation charges?

       

       

  4. I will just say that ICICI GWP  is a long term good return plan…if thouth logically.

    If money put in in FD for five years and U die in between what will u get? Compare…..

    No Tax benefit for FD – Interest above Rs 10000 is eligible for TDS….

    Assure that market performs good which gives your fund value which will be helpful to beat inflation.

    Can you proov the statement that the return on fund will be only 5 to 6 percent only after 10 years and Fund value will not raise….

    1. Niraj, You can ask ICICI Pru life people to show proofs that returns are more than 6% in any of their wealth schemes ? The returns what they have been paying is only within this range.

  5. hi Suresh,

     

    How would u rate Bharati Axa wonder years retirement plan? Given a choice between this and icici dream retirement plan which would u choose? I know  one is a traditional retirement plan and the other is an fd , but still?

     

    Thank you

    1. Hmmmm. I am yet to analyse this Sumesh. If you want me to do that, pls do me favor of putting this request on suggest a topic, i would do that in coming weeks.

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