ICICI Pru Elite Life Super – Review, Returns & How ULIPs Work?

There’s this one thing that I know about ICICI Prudential Life Insurance. They make use of aggressive sales tactics to sell their insurance plans.

The same strategies have been followed for Elite Life I to Elite Life II, now known as Elite Life Super. Nonetheless, there is nothing super about the plan.

So, here is the detailed ICICI Pru Elite Life Super Review, return analysis and the reason why you shouldn’t buy it. Now before getting started with the article, let’s understand the basic features of ICICI Pru Elite Life Super.

ICICI Pru Elite Life Super – Details and Features

ICICI Pru Elite Life Super is a Unit Linked Insurance Plan (ULIP). I hope you understand what a ULIP plan is, if not, let me explain.

ULIP is a plan where you pay a monthly/Quarterly/Half Yearly/Yearly premium to an insurance company. The insurance company invests the same in the stock/money market instruments as per the regulations of IRDAI. Moreover, you can decide where you want to park your hard-earned funds. It can be a 100% equity investment or 100% debt investment. Moreover, you can also invest in the ratio of 50:50 or any other ratio in equity and debt simultaneously.

Now let us proceed and come to the prime features of ICICI Pru Elite Life Super.

ICICI Pru Elite Life Super – Details & Features

Entry Age 

A person between the age group of 0-75 years can invest in the plan.

Maturity Age 

For a single premium plan, the maturity age is 80 years. Whereas for a limited and regular pay it is 75 years.

Premium Payment Options

Single Pay/ Limited Premium Payment term of 5 or 10 years and Regular Pay.

Premium Payment Mode

Single/Monthly/ Half Yearly/Yearly.

Minimum/Maximum Premium 

2 Lakhs/Unlimited.

Maximum Sum Assured Option

For a single premium between 0-41 Years – 10 Times of the total premium.

For a single premium between 42 Years and above – 1.25 Times of the total premium.

Note – You won’t get any tax benefit upon maturity if your sum assured is less than 10 times of the premium.

Also Read – Should In surrender my Jeevan Anand Policy?

ICICI Pru Elite Life Super Review

Now that we have discussed the basic features, it’s time to move further. Let’s come to ICICI Pru Elite Life Super review and returns and why it’s a bad product to invest in.

There are 3 major charges in a ICICI Prudential Elite Life Super . We will study all of them one by one.

Premium Allocation Charges

Single Pay – 3%

Regular pay for an annual mode of Premium

Year 1-5 – 5%

Year 6-7 – 3%

Thereafter – 2%

Premium allocation charges refer to the amount which is deducted by the company to allocate your investment across different funds. Why? What extra effort is being put in by the company to justify this deduction?

Okay, the company is not putting in any special efforts for the same. But the agents are undoubtedly making efforts by calling you, coming to your house to make you understand the product. Do you remember that 1 cup of tea with biscuits in the manager’s cabin of your bank’s branch? This is exactly the price of the tea and biscuits you enjoyed on that very day. In simple terms, this is the amount which is paid to agents as commission.

So, suppose you are paying a yearly premium of Rs. 2,00,000 for 10 years. The company will deduct the following premium allocation charges for the same:

Years 1-5 – 10,000 per annum i.e. 50,000 in 5 years.

Year 6-7 – 6,000 per annum i.e. 12,000 for another 2 years.

Year 8-10 – 4,000 per annum i.e. 12,000 for another 3 years.

So, in total, you are paying 74,000 on a premium of 20 Lakhs in 10 years. Hence, 3.7% of your premium is straightway going into the agent’s pocket as commission.

And wait, this is just the beginning!

Policy Administration Charges

Policy Administration Charges will be levied on the redemption of units every month.

Single Pay: 60 per month (720 per annum) for the first five policy years.

Other than Single Pay: 350 per month (4200 per annum) for the entire policy term.

For a 10-year period on regular pay policy, you will pay Rs. 42,000 for policy admin charges.

What is the total amount now? – Rs.74,000+Rs, 42,000 = Rs. 1,16,000

5.8% charges on a total premium of 20 Lakhs in a 10-year period.

Is it the end of all the charges? Well, the answer is no as there are mortality charges too.

Mortality Charges

For a male aged 40, the mortality charges are 1.81 per thousand sum assured. So if you have taken a sum assured of 20 Lakhs, the annual mortality charges would be Rs. 3,620. The charges will reduce as the fund value increases.

Fund Management Charges

All the equity investment funds come with charges of 1.35%. The charges are around .35-.6% higher if you invest in the direct plan of mutual funds. Whereas the charges are around 1% higher if you make an investment in index funds.

Now tell me, would you really invest in a product which charges 6% of your premium every year? You may say yes only if the fund performance is evidently better.

Fund Performance

How does fund performance work in ULIPs? It isn’t like MF where you see the returns on value research or morning star and be content with it. The fund performance in ULIPs works in the same way as mutual funds. But there is a big difference.

In mutual funds, the entire amount is invested and fund management charges are deducted. In ULIPs, the amount is invested after the appropriate deduction of premium allocation charges, policy administration charges and mortality charges.

Don’t think that just because NAV is offering 10% returns, your investment will also give returns of 10%. It may only give up to 7% returns as the entire amount is not being invested.

Trust me, I have not seen many portfolios where the returns were more than 7%.

Let us proceed and analyse the actual performance of ICICI Pru Elite Life Super.

ICICI Pru Elite Life Super – Returns

Now, This is the fund performance for ICICI Pru Elite Life Super. If the fund performance has been 7.6%/10.95% since 2009/2011, and that too NAV performance. I am pretty sure that your portfolio would not give anything more than 6%-8%.

* Returns as on 10th September 2019

Source – ICICI pru Life Fund Performance

Tax Savings

What about tax-free maturity in ULIP which is not present in mutual funds? I will not explain in depth about the same. However, I’ll give you the necessary calculations. Suppose you invest considering the charges which are there in this ULIP (around 1.2 Lakhs which have been explained above) in debt mutual funds and assume 7% returns. In this case, you will get an additional amount of 1.7 lakhs.

Do you think, you are going to pay that much of tax? Anyways, do let me know.

No Way Out

There is another major problem with ULIPs. You cannot come out of a ULIP if the fund performance is bad or not up to the mark. You have to maintain your investment in the plan for at least a minimum 5-year period. If you choose to discontinue, you’d have to pay surrender charges and the money will move into the discontinuance fund. Hence, your investment would only give returns up to 4-5% and sometimes even lesser than that.

So, this was my personal view on ICICI Pru Elite Life Super – Review and Returns. If you have purchased this policy, do let me know about the performance of the product so far.  If you are planning to purchase one, please do not.

Till Then, Happy Investing!