Plan Aims To Fetch You Maximum Returns Even Amidst Fluctuations If You're Ready To Hang In There
ICICI Prudential Life Insurance has launched a ULIP plan called ICICI Pru LifeTime Maxima, which follows two different portfolio strategies — fixed and trigger portfolio. The first strategy provides an option for you to choose from any of the seven funds — Opportunities Fund, Blue-chip Fund, Multi-Cap Growth Fund, Multi-Cap Balanced Fund, Income Fund, Money Market Fund and Return Guarantee Fund. But the company bets on the trigger portfolio strategy to generate good returns in volatile market conditions.
HOW DOES THE TRIGGER PORTFOLIO STRATEGY WORK?
Initially, your investments will be distributed between two funds: Multi-Cap Growth Fund and Income Fund — in a 75:25 ratio. The company will rebalance the portfolio when the fund allocation gets altered due to market movements based on a trigger event. The insurer defines a trigger event as a 15% upward or downward movement in NAV of Multi-Cap Growth Fund, since the previous rebalancing. On the occurrence of the trigger event, any fund value in Multi-Cap Growth Fund, which is in excess of three times the Income Fund fund value is considered a gain and transferred to the money market fund by cancellation. The idea is to make investors realise their notional gains and protect them from future equity market fluctuations. At the same time, the fund manager maintains the asset allocation between the Multi-Cap Growth Fund and Income Fund at 75:25.
COST STRUCTURE
The premium allocation charge is 7.5% for the first year, 3% for the second and third years and 0% from the fourth year onwards. The fund management charge is in the range of 0.75-1.35%, depending upon the choice of funds. The policy administration charge is 0.8-0.9%, which is charged for the first five years. It allows four free switches every year and the subsequent switches would cost Rs 100 each. The mortality charges vary from Re 0.72 to Rs 40.51 (per Rs 1,000), depending upon the age and gender of the investor.
FEATURES
You can change your portfolio strategy once a year free of cost. There is a top-up option and the minimum amount is Rs 2,000. The policy allows partial withdrawals from the sixth year up to a maximum of 20% of the fund value. The minimum withdrawal amount is Rs 2,000. On maturity, you can choose to take the fund value as a systematic withdrawal plan on a yearly, half yearly, quarterly or a monthly basis. At any time during the settlement period, you can withdraw the entire fund value.
WHY GO FOR IT:
The trigger portfolio strategy works in a volatile market. Equity markets tend to be volatile if one looks at a time horizon of 10-15 years. Also, a professional fund manager has the expertise to understand the vagaries of the stock market.
WHAT IS THE CATCH:
You have to stay invested for more than 10 years to earn optimal returns in this strategy. This strategy caps returns in a secular bull run.
