Many of us might still be seeing the best investment options or ULIPs in particular to be a type of oxymoron. It’s almost all the investors who might have come across stories where investors have been cheated by agents with the option of ULIPs as an investment proposition. This might be haunting and preventing them from actually planning to invest in some ULIP plans. Another drawback which restricts people from investing in ULIPs is that many of the options that are available do not have returns equal to the total investment they have made after the end of the locking period.
However, with times and several concerns that have crept up things seem to have changed, and for the better of course. Today IRDA, India’s insurance regulator has modified several rules in order to cut down the expenses of ULIPs. Today most of the companies are out with several ULIP options that are giving way much higher return that it was offering before. In the race to give the best services and higher returns ICICI Prudential has also made efforts and come up with several ULIP options for its investors.
What are the key features of the Policy?
The Objective of the plan says “Financial Protection of Family and Good Return on Investment.” While we list down some of the key features covering the policy it would be as follows:
- One has the option to choose any of the three NAV Funds and have an assured minimum NAV as per the option the policy holder chooses.
- The policy provides the option of payment of premium in two ways:
- One Pay: As per this the policy the death benefit is equal to the sum Assured or Fund Vale (whichever is higher).
- Five Pay: As per this premium payment option the death benefit is equal to the sum of Fund Value and the Sum Assured as per the policy.
What are the benefits/advantages of ICICI PRU Pinnacle Super?
At the time of inception of the policy the policyholder is entitled to choose from the 3 NAV funds and allocate the premium from 8 funds available. The 3 NAV Funds are as follows:
- NAV Fund A: This NAV fund provides the higher of the highest NAV achieved during the first 7 years or the NAV on maturity which is subject to Rs.10 (minimum).
- NAV Fund B: This NAV fund provides higher of 110% on the highest NAV achieved during the first 7 years or the NAV on maturity which is subject to a minimum of Rs.11.
- NAV Fund C: This NAV fund provides the higher of the highest NAV that is achieved in the first 7 years or the NAV on maturity which is subject to a minimum or Rs.15.
Depending on the policy one chooses the final maturity amount is different. Also the funds are clubbed with that a loyalty addition of 2% of the fund value is added at the time of maturity.
Additional benefits on all the funds are the flexibility of the Sum Assured. This means that at the time of policy anniversary, the policyholder has the option to increase or decrease the life cover.
What are the basic eligibility criteria to apply for the policy?
As similar to all the ULIP options available there are a few eligibility criteria in order to apply for the funds. They are as follows:
- Minimum Entry Age is set at 8 years
- Maximum Entry Age for the policy is 70 years
- The total policy tenure is 10 years
- The policy has two paying options: one year or 5 years
- The mode of premium payment is annual
What are the returns that could be expected out of ICICI PRU Pinnacle Super?
As known to all the performance of any ULIP is directly related on performance of a fund. Moreover the fund is in turn dependent on the equity as well as the debt markets. In case the market rises it is evidently reflected in the returns of the fund.
For the purpose of free asset allocation ICICI Pinnacle Super consists of 8 funds that have different types of risks associated with them. It ranges from high risk i.e. aggressive to the low risk funds. One can choose any depending on the appetite of the risk they have. Under ICICI PRU Pinnacle Super there are 3 NAV funds. All these funds invest in a mix of debt and equity in various proportions as per the set dynamics. As per a typical scenario one can at least expect a return of 10% as the return on their investment. However the investment risk as always is to be borne by the holder of the policy.
What are the charges associated with ICICI Pinnacle Super? How much is it?
The premium that is paid by the policyholder does not get directly invested, but few charges are deducted initially after which the units of fund is bought. There are other charges which are deducted with the cancelling of units.
Some of the charges are:
Premium Allocation Charges: This charge is deducted as a percentage of the entire premium. It is deducted by the insurer under the heads of medical examination, underwriting bills, and policy issuance. All these charges get deducted till the 5th year of the policy tenure which ranges between 3 to 6% of the premium value.
Cost of Guarantee: The Fund is also levied by an additional charge of 0.5% for the NAV fund.
Policy Administration Charge: These charges get deducted on a monthly basis that starts from the first month of the policy. The monthly charges have been fixed at 0.12% of annual premium amount. For the one time pay option for the premium it is deducted at once for the period of 5 years. For the 5 pay option the charge is fixed at 0.25% for the first 5 years and 0.10% for the next 5 years.
Does the policy provide tax benefits?
Yes as per under Section 80C one can get the tax benefit for the yearly premium that they pay subject to a maximum of one lac. It would be deducted from the taxable income. Also as per section 10(10D) a death claim is treated to be completely free.
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