ICICI Pru has recently launched a new plan known as Guaranteed Income for Tomorrow. This is basically a non-linked, non-participating and limited/single premium payment plan. Simply put, the plan gives you 2 options to choose from. You can either opt for receiving lump sum amount at maturity or fixed income every year after maturity. Before getting into details, returns and review of ICICI Pru Guaranteed Income for Tomorrow.
But first let us see what is non-participating, non-linked and limited/single premium payment.
ICICI Pru Guaranteed Income For Tomorrow – Details
Non-Linked – It is traditional life insurance plan i.e. your premium is not invested in the stock market.
Non-Participating – The maturity/income amount will not depend on the bonuses declared by ICICI Pru every year. You will know the maturity value/yearly income of the plan in the beginning itself.
Limited/Single Premium Payment Term – You will not have to pay the premium for the entire term of policy. You can either pay single premium or pay premium for limited number of years.
10/12(10) – You will pay the premium for 5 years and the policy will mature after 10/12 years.
12(6) – You will pay the premium for 6 years and the policy will mature after 12 years.
15/20(10) – You will pay the premium for 10 years and the policy will mature after 15/20 years.
5/10/15 (1) – You will pay the premium for 1 year and the policy will mature after 5/10/15 years.
Minimum/Maximum age of entry – 18 years – Policy Term/60 years
Minimum/Maximum age at maturity – 18 years/80 years
Please note that the policy term (5/10/12/20 year) has to be chosen by you.
ICICI Pru Guaranteed Income For Tomorrow – Plan Options
There are 4 options in the ICICI Pru Guaranteed Income for Tomorrow plan.
- Lump Sum Option – You will receive a guaranteed lumpsum maturity amount at the end of policy term.
- Income Option – You will receive a Guaranteed Income for a certain period after the end of the policy term
- Early Income Option – You will receive a Guaranteed Income starting from 2nd year onwards. This will be in addition to the Guaranteed Income for a certain period after the end of policy the term.
- Single Pay Income Option– You will pay premium only once and receive guaranteed regular income (known as the Guaranteed Early Income). You will get the income for a fixed period. The period will start from the end of the 2nd year till the end of policy term.
Death Benefits
For Single Pay:
Highest of:
- Sum Assured on Death
- Sum Assured on Maturity X Death Benefit factor for Lump sum plan, where
Sum Assured on Death is 10 X Single Premium or 1.25 X Single Premium as chosen by you.
For other than Single Pay:
Highest of:
- Sum Assured on Death
- 105% of Total Premiums Paid up to the date of death
- Sum Assured on Maturity X Death Benefit factor for Lump sum plan, where
Sum Assured on Death is 10 X Annualised Premium
ICICI Pru Guaranteed Income For Tomorrow Returns
ICICI Pru Guaranteed Income Returns will depend on the premium payment term, policy term and plan option chosen by you. (Lump sum/Income/Early Income)
Let us analyse the returns for different premium payment term and tenure of the policy. The images below (under different options) will show you the corresponding returns against each option.
The image has been Copied from ICICI Pru Guaranteed Income for Tomorrow Brochure. It shows the premium of different premium payment and policy terms.
Lump Sum Option Returns
The returns in Lump Sum option vary between 4.40% – 5.20% depending upon the premium payment and policy term. You can check the image below for returns in each option.
Also Read – LIC Bima Returns and Review
Income Option Returns
The returns in Income option vary between 4.40% – 5.40% depending upon the premium payment term and income term. 5.40% are the highest returns you can get in case of 10-year premium payment term and 20-year policy term. Also, you can check the returns in the 2 images below for the respective premium payment and policy term.
Please note that the income stream starts after 2 years of the premium payment term. For example if you have paid the premium for 10 years, the income will start in the 13th year. It will not start immediately after 10 years. There is a big gap of 2 years, which drastically reduces your returns.
Also Read – Tax Deductions under Section 80D
Early Income Option Returns
The returns in the early income option vary between 4.30% – 4.80%.
Single Pay Income Returns
The returns in Single Pay Income option are 3.60%. Yes, you heard it right, it is 3.60% only. However, the income will not start immediately. You will start receiving the income after 2 years of paying the premium. For example, if you pay the premium in 2021, your income will start from 2023 onwards.
Now, you know all about the returns. Let us check if the maturity amount would be taxable or not.
Guaranteed Income For Tomorrow – Is Maturity Taxable?
The maturity proceeds of life insurance policy are taxable if sum assured is less than 10 times of annual premium. Suppose the annual premium is 1 Lakh and sum assured is 9 Lakhs. In this case, the maturity proceeds would be taxable. Whereas if sum assured is 10 Lakhs for an annual premium of 1 Lakh, the maturity proceeds would be tax-free.
In the above scenarios, if you choose sum assured as 1.25 X Single Premium (for single premium option). The maturity would be taxable.
ICICI Pru Guaranteed Income for Tomorrow Review
So, here is the review of ICICI Pru Guaranteed Income for Tomorrow.
Should you purchase this policy – The answer is NO even if you are a very conservative investor.
Would you really be comfortable locking your hard-earned money for meagre returns of 4%-5%?
So, What is the best option?
There are plenty of good options in the market. There is PPF, debt mutual funds, RBI Bonds etc. Why do you want to purchase an insurance policy that is giving returns as low as 3.60%?
If you are a very conservative investor – Open a PPF account and start investing. You can also contribute some additional amount in PF account through VPF.
If you are a moderate investor – Invest in equity and debt instruments in the ratio of 50:50.
For Aggressive investors – You can invest in equity mutual funds.
Having gone through this review, feel free to comment and let me know if you need any further clarification.
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