ICICI Pru Guaranteed Pension Plan Flexi: Good or Bad? An Enlightening Review

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Is ICICI Pru Guaranteed Pension Plan Flexi the right choice for securing a peaceful retirement?

Can the ICICI Pru Guaranteed Pension Plan Flexi provide peace of mind during your golden years?

Is ICICI Pru Guaranteed Pension Plan Flexi the plan that grows with you by offering flexibility and assurance?

This article delves into the plan’s annuity options, their benefits, and the overall returns it offers to help you make an informed decision.

What is the ICICI Pru Guaranteed Pension Plan Flexi?

ICICI Pru Guaranteed Pension Plan Flexi is a Non-participating, Non-linked Individual Savings Deferred Annuity Product. ICICI Pru Guaranteed Pension Plan Flexi ensures peace of mind in your golden years with a guaranteed Annuity that will continue for your entire lifetime.

What are the features of the ICICI Pru Guaranteed Pension Plan Flexi?

Enjoy a guaranteed annuity with the flexibility to opt for a return of premiums paid.
Choose your preferred frequency for annuity payouts—monthly, quarterly, half-yearly, or annually.
Select from a variety of options tailored to meet your unique financial needs.
Benefit from the “Save the Date” feature to align your annuity payouts with a specific date of your choice.
Opt for a premium payment term that suits your convenience.
Enhance your savings with the option to “top-up” the plan whenever you have surplus funds.

Who is eligible for the ICICI Pru Guaranteed Pension Plan Flexi?

Minimum age at entry	40 years (Primary Annuitant), 30 years (Secondary Annuitant)
Maximum age at entry	70 years
Premium Payment Term (PPT)	5 to 15 years
Deferment period	Premium payment term chosen to 15 years (in multiples of 1 year)
Premium payment frequency	Annual, Half Yearly, Monthly
Minimum annuity	₹ 12,000 per annum (₹ 1,000 per month) for policies other than Government sponsored insurance schemes and National Pension
Maximum annuity	Subject to the board-approved underwriting policy
Minimum premium	Subject to minimum annuity amount as mentioned above
Maximum premium	Subject to the board-approved underwriting policy
Modes of annuity payouts	Annual, Half-yearly, Quarterly, Monthly

What are the annuity options and the benefits of the ICICI Pru Guaranteed Pension Plan Flexi?

The plan offers seven options to choose from as per your retirement needs.

Options	Plan	Death benefit (death during deferment period)	Death benefit (death after deferment period)	Annuity
Option1	Single Life without Return of Premium	The death benefit will be higher of a. Total Premiums Paid by you + Accrued Guaranteed Additions b. 105% of Total Premiums Paid	Nothing is payable	Starts at the end of the deferment period and is payable as long as the annuitant is alive
Option2	Joint Life without Return of Premium	On the death of the last survivor, the death benefit will be higher of a. Total Premiums Paid by you + Accrued Guaranteed Additions b. 105% of Total Premiums Paid by you	On the death of the Primary Annuitant, the annuity amount continues to be paid to the Joint Life (known as the Secondary Annuitant) chosen by you	Starts at the end of the deferment period and is payable till the last survivor
Option3	Single Life with Return of Premium	The death benefit will be higher of a. Total Premiums Paid by you + Accrued Guaranteed Additions b. 105% of Total Premiums Paid	The death benefit will be higher of a. Total Premiums Paid by you + Accrued Guaranteed Additions – Total annuity paid out till date of intimation of death b. 105% of Total Premiums Paid	Starts at the end of the deferment period and is payable as long as the annuitant is alive
Option4	Joint Life with Return of Premium	On the death of the last survivor, the death benefit will be higher of a. Total Premiums Paid by you + Accrued Guaranteed Additions b. 105% of Total Premiums Paid by you	On the death of the last survivor, the death benefit will be higher of a. Total Premiums Paid by you + Accrued Guaranteed Additions – Total annuity paid out till date of intimation of death b. 105% of Total Premiums Paid	Starts at the end of the deferment period and is payable till the last survivor
Option5	Single Life with Return of Premium (ROP) on Critical Illness (CI) or Permanent Disability due to Accident (PD) or Death:	Refer to the below image	Refer to the below image	Starts at the end of the deferment period and will continue for life till the first diagnosis of any of the 7 specified CI or PD, before the age of 80 years, or death whichever occurs earlier
Option6	Increasing Annuity for Single Life with Return of Premium:	The death benefit will be higher of a. Total Premiums Paid by you + Accrued Guaranteed Additions b. 105% of Total Premiums Paid	The death benefit will be higher of Total Premiums Paid by you + Accrued Guaranteed Additions – a. Total annuity paid out till date of intimation of death b. 105% of Total Premiums Paid	Starts at the end of the deferment period and is payable as long as the annuitant is alive. The annuity amount increases every year at a rate of 5% p.a.
Option7	Increasing Annuity for Joint Life with Return of Premium	On the death of the last survivor, the death benefit will be higher of a. Total Premiums Paid by you + Accrued Guaranteed Additions b. 105% of Total Premiums Paid by you	On the death of the last survivor, the death benefit will be higher of a. Total Premiums Paid by you + Accrued Guaranteed Additions – Total annuity paid out till date of intimation of death b. 105% of Total Premiums Paid	Starts at the end of the deferment period and is payable till the last survivor. The annuity amount increases every year at a rate of 5% p.a.

Death benefit for Option 5 Single Life with Return of Premium (ROP) on Critical Illness (CI) or Permanent Disability due to Accident (PD) or Death

Grace period, Discontinuance and Revival of the ICICI Pru Guaranteed Pension Plan Flexi

Grace period

A grace period of 15 days will be given for payment of the due instalment premium for monthly frequency, and 30 days will be given for any other frequency.

Discontinuance

If you stop paying premiums before at least one full year’s premium is paid, the ICICI Pru Guaranteed Pension Plan Flexi policy will lapse on the expiry of the grace period.

If you do not revive the lapsed policy by the end of the revival period, it will terminate.

If you stop paying premiums after you have paid premiums for at least one full year, your ICICI Pru Guaranteed Pension Plan Flexi policy is said to have become “paid-up”.

A paid-up policy is one where you are entitled to get benefits, but the benefits will be lower than full benefits.

Revival

You can revive your ICICI Pru Guaranteed Pension Plan Flexi policy benefits for their full value within five years from the due date of the first unpaid premium by paying all due premiums together with interest.

Free Look period of the ICICI Pru Guaranteed Pension Plan Flexi

You have the option to review the policy terms and conditions and if you are not satisfied or have any disagreement with the terms and conditions of the policy, then you can cancel the policy within 30 days from the date of receipt of the policy document whether received electronically or otherwise,

Surrendering the ICICI Pru Guaranteed Pension Plan Flexi

The ICICI Pru Guaranteed Pension Plan Flexi policyholder can surrender the policy at any time after payment of at least one full policy year’s premium(s). Prior to receipt of one full year’s premium, no surrender value is payable.

For all options, in case of surrender during the deferment period, the Surrender value would be higher than the Guaranteed Surrender Value (GSV) and Special Surrender Value (SSV).

For the following options, no surrender value will be payable after the Deferment Period:

Single life without return of premium

Joint life without return of premium

What are the advantages of the ICICI Pru Guaranteed Pension Plan Flexi?

Higher premiums unlock additional annuity benefits as a percentage of the annuity rates.
Joint Life options come with the added advantage of a premium waiver benefit.
Boost your annuity at any time by making a top-up premium payment.
The “Save the Date” feature lets you schedule annuity payouts to align with a meaningful date of your choice.
Choose how the death benefit is received—either as a lump sum or as income for a specified period.
Enjoy the flexibility to withdraw up to 60% of the total premiums paid (less prior withdrawals) under select options known as Special Withdrawals.
Avail of a loan facility for all plans, except Single Life and Joint Life options without the Return of Premium feature.

What are the disadvantages of the ICICI Pru Guaranteed Pension Plan Flexi?

Once chosen, the annuity option, premium payment term, and deferment period cannot be altered after the free-look period.
Annuity payouts are fully taxable as per applicable laws.
Surrendering the plan and availing of loans are permitted only under specific options.

Research Methodology of ICICI Pru Guaranteed Pension Plan Flexi

The ICICI Pru Guaranteed Pension Flexi provides various options with unique benefits, such as Single and Joint Life plans, with or without a return of purchase price.

However, to evaluate its effectiveness, we calculate the Internal Rate of Return (IRR) and compare it with alternative investment returns.

Benefit illustration – IRR Analysis of ICICI Pru Guaranteed Pension Plan Flexi

Consider a scenario: A 45-year-old man pays a premium of ₹1 lakh annually, opting for Plan Option 3—Single Life with Return of Premium. The premium payment term and deferment period are set at 15 years.

Male	45 years
Sum Assured	₹ 15,00,000
Premium paying term	15 years
Annualised Premium	₹ 1,00,000
Deferment period	15 years
Annuity (per annum)	₹ 1,45,282
Life Expectancy (Assumption)	85 years

He receives a lifetime annuity of ₹1,45,282 annually. Upon his death at the assumed life expectancy of 85 years, the purchase price of ₹15 lakh is returned to his nominee.

The IRR for this cash flow is calculated at 5.37% as per the ICICI Pru Guaranteed Pension Plan Flexi maturity calculator.

Age	Single Life with Return of Premium
45	-1,00,000
46	-1,00,000
47	-1,00,000
48	-1,00,000
49	-1,00,000
50	-1,00,000
51	-1,00,000
52	-1,00,000
53	-1,00,000
54	-1,00,000
55	-1,00,000
56	-1,00,000
57	-1,00,000
58	-1,00,000
59	-1,00,000
60	0
61	1,45,282
62	1,45,282
63	1,45,282
64	1,45,282
65	1,45,282
66	1,45,282
67	1,45,282
68	1,45,282
69	1,45,282
70	1,45,282
71	1,45,282
72	1,45,282
73	1,45,282
74	1,45,282
75	1,45,282
76	1,45,282
77	1,45,282
78	1,45,282
79	1,45,282
80	1,45,282
81	1,45,282
82	1,45,282
83	1,45,282
84	1,45,282
85	15,00,000

IRR	5.37%

By comparison, a bank Fixed Deposit (FD) offers a higher rate of return. Furthermore, the premiums paid remain locked, limiting liquidity.

Thus, the ICICI Pru Guaranteed Pension Plan Flexi falls short in terms of both yield and flexibility. There are better investment alternatives available, providing higher returns and superior liquidity, which will be discussed in the next section.

ICICI Pru Guaranteed Pension Plan Flexi Vs. Other Investments

The ICICI Pru Guaranteed Pension Plan consists of two phases: an accumulation phase and a distribution phase. However, the plan’s returns are not compelling, and it lacks liquidity.

A more effective approach to building a retirement corpus and ensuring regular income can provide better flexibility and higher yields.

ICICI Pru Guaranteed Pension Plan Flexi Vs. Pure-term + PPF/ELSS

Consider an alternative strategy using the same metrics as the previous example. For life coverage, a pure-term life insurance policy with a sum assured of ₹15 lakhs costs ₹14,700 annually for a policy term of 15 years.

This leaves ₹85,300 from the ₹1 lakh annual premium, which can be invested based on individual risk tolerance. In this scenario, the savings are invested in a PPF (low-risk scenario) and ELSS (high-risk scenario) to accumulate a robust retirement corpus.

Pure Term Life Insurance Policy
Sum Assured	₹ 15,00,000
Policy Term	15 years
Premium Paying Term	15 years
Annualised Premium	₹ 14,700
Investment	₹ 85,300

		Term Insurance + PPF		Term insurance + ELSS
Age	Year	Term Insurance premium + PPF	Death benefit	Term Insurance premium + ELSS	Death benefit
45	1	-1,00,000	15,00,000	-1,00,000	15,00,000
46	2	-1,00,000	15,00,000	-1,00,000	15,00,000
47	3	-1,00,000	15,00,000	-1,00,000	15,00,000
48	4	-1,00,000	15,00,000	-1,00,000	15,00,000
49	5	-1,00,000	15,00,000	-1,00,000	15,00,000
50	6	-1,00,000	15,00,000	-1,00,000	15,00,000
51	7	-1,00,000	15,00,000	-1,00,000	15,00,000
52	8	-1,00,000	15,00,000	-1,00,000	15,00,000
53	9	-1,00,000	15,00,000	-1,00,000	15,00,000
54	10	-1,00,000	15,00,000	-1,00,000	15,00,000
55	11	-1,00,000	15,00,000	-1,00,000	15,00,000
56	12	-1,00,000	15,00,000	-1,00,000	15,00,000
57	13	-1,00,000	15,00,000	-1,00,000	15,00,000
58	14	-1,00,000	15,00,000	-1,00,000	15,00,000
59	15	-1,00,000	15,00,000	-1,00,000	15,00,000
60	16	0		0
61	17	1,45,282		1,45,282
62	18	1,45,282		1,45,282
63	19	1,45,282		1,45,282
64	20	1,45,282		1,45,282
65	21	1,45,282		1,45,282
66	22	1,45,282		1,45,282
67	23	1,45,282		1,45,282
68	24	1,45,282		1,45,282
69	25	1,45,282		1,45,282
70	26	1,45,282		1,45,282
71	27	1,45,282		1,45,282
72	28	1,45,282		1,45,282
73	29	1,45,282		1,45,282
74	30	1,45,282		1,45,282
75	31	1,45,282		1,45,282
76	32	1,45,282		1,45,282
77	33	1,45,282		1,45,282
78	34	1,45,282		1,45,282
79	35	1,45,282		1,45,282
80	36	1,45,282		1,45,282
81	37	1,45,282		1,45,282
82	38	1,45,282		1,45,282
83	39	1,45,282		1,45,282
84	40	1,45,282		1,45,282
85		35,12,456		88,23,025

	IRR	6.31%		7.83%

If the ₹85,300 is invested in a PPF account annually, it grows to ₹23.13 lakhs at the end of 15 years. This amount can then be transferred to an instrument yielding a 7% annual return, enabling annual withdrawals of ₹1.45 lakhs.

By the age of 85, the remaining corpus reaches ₹35.12 lakhs, providing an Internal Rate of Return (IRR) of 6.31%.

Alternatively, if the savings are invested in an ELSS fund, the pre-tax corpus grows to ₹35.61 lakhs over the same period. After accounting for capital gains tax, the post-tax maturity value is ₹32.91 lakhs.

When this amount is transferred to an instrument yielding 7% per annum, it supports annual withdrawals of ₹1.45 lakhs while the final corpus at age 85 grows to ₹88.23 lakhs, achieving an IRR of 7.83%.

ELSS Tax Calculation
Maturity value after 15 years	35,61,555
Purchase price	12,79,500
Long-Term Capital Gains	22,82,055
Exemption limit	1,25,000
Taxable LTCG	21,57,055
Tax paid on LTCG	2,69,632
Maturity value after tax	32,91,923

This approach offers significant flexibility compared to the ICICI Pru Guaranteed Pension Plan. The accumulated corpus can be used not only for regular income but also for other financial goals at the retiree’s discretion.

Furthermore, investing in a diversified asset portfolio and rebalancing periodically can ensure inflation-adjusted income during retirement, safeguarding purchasing power over time.

In contrast, the ICICI Pru Guaranteed Pension Plan Flexi fails to offer such flexibility. Its returns are lower, and it locks policyholders into a rigid structure with fewer options for fund utilization.

This makes alternative strategies more suitable for achieving financial independence and maximizing retirement benefits.

Final Verdict on the ICICI Pru Guaranteed Pension Plan Flexi

The ICICI Pru Guaranteed Pension Plan Flexi aims to help individuals save for retirement, offering regular income during the post-retirement years. While the plan includes both accumulation and distribution phases, its returns are not competitive for long-term retirement needs.

One significant drawback of the ICICI Pru Guaranteed Pension Flexi is the lack of liquidity, as funds remain locked.

The guaranteed annuity might not justify this limitation, especially when the returns are moderate. These factors make the plan a less attractive option for retirees seeking flexibility and higher returns and it also has a high agent commission.

To build a robust retirement corpus, it is advisable to invest regularly in a diversified portfolio that includes equities, fixed-income instruments, and other asset classes aligned with your risk tolerance.

Regularly reviewing and adjusting your investment strategy can ensure you stay on track with your retirement goals.

Once the desired corpus is achieved, allocate a portion to debt instruments for stable income and another to equity for growth. This balanced approach helps the corpus sustain your lifetime while addressing inflation.

When it comes to financial advice, are Quora, Facebook, and Twitter the final word?

For personalized guidance, consider consulting a Certified Financial Planner who can design a tailored retirement strategy to meet your unique financial needs.

ICICI Pru Guaranteed Pension Plan Flexi: Good or Bad? An Enlightening Review

Table of Contents:

What is the ICICI Pru Guaranteed Pension Plan Flexi?

What are the features of the ICICI Pru Guaranteed Pension Plan Flexi?

Who is eligible for the ICICI Pru Guaranteed Pension Plan Flexi?

What are the annuity options and the benefits of the ICICI Pru Guaranteed Pension Plan Flexi?