ICICI Pru Life clarifies to myinvestmentideas.com views on ICICI Pru Guaranteed Wealth Protector Plan
When I have written the article about ICICI Pru Guaranteed Wealth Protector plan and indicated the limitations and negative points, some of the readers wrote back to me indicating to re-review my points. Today, ICICI Pru Life officials have clarified about my pointers on our blog. Please see the responses here. There is no change in my view, however these pointers indicate that due to limitations from IRDA or ULIP, these products are going to be like this.
Please see this link where they provided this response on my blog (myinvestmentideas.com). I am reproducing this for every one's benefit
With respect to this analysis on ICICI Pru Guaranteed Wealth Protector, we would like to draw your attention to a few aspects about the product:
1. One of the apparent negatives pointed out by this analysis is that ‘Like any other ULIP, this product has several deductions like mortality charge, allocation charges, fund management fees etc, which are high and makes this plan unattractive’.
Ø Since this is an insurance plan, this product offers a life insurance cover to the customer. For example, suppose a 35 year old customer has a five-pay policy. If his annual premium is Rs. 1 lakh, his family will get Rs. 10 lakh on his death, anytime during the policy term. The mortality charge is deducted on account of this benefit.
Ø The product offers a capital guarantee on maturity. The guarantee charge in the product is deducted because of this.
Ø The other charges (Premium allocation charge, Policy administration charge and Fund Management Charge) are well within the RIY limits stipulated by the Regulator.
o IRDA regulations mandate that the ‘Reduction in Yield’ (RIY) after 10 years cannot be more than 3%. In this product, the RIY after 10 years is below 2%.
2. The analysis mentions that the policy cannot be surrendered within the first five years.
Ø All Unit Linked Insurance plans are designed as long term investment and insurance solutions. Hence, as mandated by IRDA Regulations, surrender is not allowed in the first five years.
3. The analysis concludes that a combination of a term insurance plan and a fixed deposit will be a better alternative than this product.
Ø Please note that this product is meant for customers who want growth in their investments while enjoying a safety net from market volatility.
o This plan will offer customers a chance to grow their money by investing in equity. Over a long term, investment in equity provides high returns that can beat inflation.
o This plan will safeguard customers’ investments through its capital guarantee feature. No matter how the markets perform, your capital will be protected.
o Moreover, as mentioned above, this product will also provide a life insurance cover to the customer.
o And finally, the premiums paid and the benefits received under this plan will be eligible for tax benefits.
This is a unique solution which combines all of these benefits under one product. That is what makes this plan a ‘Win-Win’ proposition.
ICICI Prudential Life Insurance
I want to post this clarification seperately so that investors who wish you invest in such products knows about the risks and details before they take any decision.
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