Skip to main content

ULIP Review: ICICI Prudential Lifelink Pension Plan

ICICI Pru Lifelink Pension Plan is a cost-effective scheme with guaranteed returns

 

ICICI Pru Lifelink Pension plan is the first unit-linked pension plan launched by any private insurer after the rollout of new Ulip guidelines. This is a single premium plan that comes with pension guarantee funds which provides a minimum guaranteed net asset value (NAV) of 19.1 at maturity. This guarantee is quite captivating, since it is much higher than that proposed by the regulators under the guidelines.

COST STRUCTURE

Lifelink Pension has a reasonable cost structure. Though the premium allocation charges are pretty high, low policy administration charges and no mortality charge (since death cover is not attached) compensate this, keeping the overall cost structure fairly balanced. The policy does not have surrender charges, however, one has to compulsorily remain invested for five policy years.

BENEFITS

The key distinctive benefit of Lifelink Pension is a guarantee attached to the product. The guarantee generates at least 6.7% interest per annum. So, one doesn't have to bother much about the cost structure of the product. Further, the policy award loyalty additions on maturity, however these additions vary on the single premium (SP) invested. So, for instance on SP of 40,000 no loyalty addition is given, while on SP of 2.5 lakh almost 2% of the fund value is rewarded as loyalty additions.


CAVEAT

The guaranteed NAV does not apply on surrender or death benefit payout. In both cases, the existing fund value is returned to the policyholder. Also, on early withdrawal or at maturity, two-third of the accumulated corpus has to compulsorily be utilised for purchasing annuity. Hence even on surrender, after the lock-in period of five years, an investor has to purchase annuity. Besides, the policy tenure is limited to 10 years, leaving the policy an undesired investment avenue for those interested in long-term pension options.

PERFORMANCE & PORTFOLIO REVIEW

ICICI Pru Lifelink Pension offers just one fund namely Pension Return Guarantee Fund, which is predominately debt-oriented due to the requirement of guarantee returns. The fund provides a minimum guaranteed NAV of 19.1 at maturity. As far as the portfolio of this fund is a concerned, corporate bond and government bond are the securities in which the asset under management is predominately invested. Government bonds of long tenure form the core of the portfolio.

DEATH/MATURITY BENEFIT

ICICI Pru Lifelink Pension does not offer death benefits. So in the case of demise of the policyholder, the nominee receives only the accumulated fund, whereas upon maturity, one third of the fund is given to the investor as lumpsum, which is fully tax-free. The balance two-third is invested in annuity plan from either the same company or any other insurer (see the table for the annuity plans). The amount invested in annuity grows with a certain fixed percentage and investors receive a series of payment on a periodic basis. For instance, say a 35-year-old healthy male invest 2 lakh in Pension Return Guarantee Fund for 10 year. Assuming that the fund do not perform well. It will surely grow to nearly 3,64,748 receivable at maturity.

OUR VIEW

ICICI Pru Lifelink Pension is a cost-effective plan with guaranteed returns, but it may not suit investors with high-risk appetite. Those who wish to invest money for their retirement and are ready to buy annuity on maturity or withdrawal may opt for this plan. However, young people should try to have relatively more exposure in equity market or equity funds, and use debt funds barely to hedge returns.

 

Popular posts from this blog

What is Electronic Clearing Service (ECS)?

  As the name suggests, it's an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs , investments in mutual funds , payment of insurance premium etc. There are two types of ECS , like most other banking transactions, ECS credit and ECS debit. An ECS credit is used by a bank account holder , usually a large company or an institution for services like payment of dividend, in terest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. For example if you are investing in a mutual fund sc...

WEALTH TAX

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 WEALTH TAX   WHAT CONSTITUTES WEALTH? For wealth tax purposes, "wealth" means property , urban land, car, jewellery , yacht, boat, aircraft and cash in hand in excess of Rs 50,000. CAUTION POINT | Do not think you will have an easy escape from wealth tax by transferring your `wealth' without consideration to your spouse or minor child. Such assets will also be considered as your wealth. HOW TO DETERMINE YOUR TAXABLE WEALTH Add the taxable value of the above assets (computed as per the detailed rules for valuation) owned by you as on March 31 (for FY 2014-15, it will be March 31, 2015). In case you sold your car during the year, it will not be taxable wealth. Deduct loans if any obtained by you to acquire any of the taxable assets from the value of gross tax out for at least 300 days in a...

Equity Savings Fund

Invest Equity Savings Fund Online   The best part about these funds is that they are subject to equity fund taxation and at the same time are structured like MIP like funds . This new category, equity savings funds , offer a little of everything. They allocate money to equities & equity related instruments, and fixed income. They aim to generate returns by diversification. Such funds invest in fixed income and arbitrage to protect the investors from short term volatility and equity for capital gains. The best part of these funds is that they are subject to equity fund taxation and at the same time are structured like MIP funds.   MIP funds however are subject to debt fund taxation. Investors Equity savings funds are suitable for the following: First time investors who seek partial exposure to equity with less volatility and greater stability Investors seeking moderate capital appreciation with relatively lower risk Those wh...

How to Pick Top Performing Mutual Fund Schemes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   How to Pick Performing Schemes  Funds that continue to stay in the top grade of performance over longer periods are the ones to bet on, advise investment experts   The mutual fund performance charts of the past few months make for an impressive reading. Funds across all categories boast of stellar returns. Sample this: The mid and small cap category has averaged 77 percent return over the past 12 months, with the best fund delivering a staggering 120 percent. The tax-saving funds also average an impressive 51 percent, including a fund which has soared 92 percent. Many of the table-toppers are funds of proven quality and track record. However, there are also schemes that are not that well-known. Some of these have rarely made it to the performance charts in the past, yet, of late, they bo...

8% Government of India Bonds quick guide

For those seeking comfort in safety of returns, the Government of India issued 8% savings bond once again comes to the fore. First launched in 2003, these bonds are issued by the government with a maturity of 6 years. The bonds are available at all times with specified distributors through whom you can apply to invest in them. Here is a quick guide to what the bond offers and its features to ascertain to check for suitability. What are Government of India bonds Government of India bonds are like any other government bonds with specified rate of interest. The rate is fixed at 8% per annum paid half yearly, or you can opt for cumulative payment of interest at the end of the tenure. You can buy these bonds from State Bank of India and its associates, other nationalized banks and some private sector banks such as HDFC Bank Ltd and ICICI Bank Ltd, among others. The bonds can be bought from the offices of Stock Holding Corporation of India as well. They are available in physical form onl...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now