ICICI Pru Guaranteed Pension Plan Flexi: Good or Bad? An Enlightening Review
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?
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?
Grace period, Discontinuance and Revival of the ICICI Pru Guaranteed Pension Plan Flexi
Free Look period of the ICICI Pru Guaranteed Pension Plan Flexi
Surrendering the ICICI Pru Guaranteed Pension Plan Flexi
What are the advantages of the ICICI Pru Guaranteed Pension Plan Flexi?
What are the disadvantages of the ICICI Pru Guaranteed Pension Plan Flexi?
Research Methodology of ICICI Pru Guaranteed Pension Plan Flexi
Benefit illustration – IRR Analysis of ICICI Pru Guaranteed Pension Plan Flexi
ICICI Pru Guaranteed Pension Plan Flexi Vs. Other Investments
ICICI Pru Guaranteed Pension Plan Flexi Vs. Pure-term + PPF/ELSS
Final Verdict on 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.
| 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 |
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
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.
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.
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.
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,
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
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.
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.
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.
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.
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.
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