Do you agree that the world around us is changing rapidly and it is of paramount importance to plan well for achieving your financial needs?

What are the two most important aspects of having a secure life?

I think all of you would agree that a life cover to protect the family and savings for life goals are the important factors that give a family a sense of safety and peace of mind.

Will a protection and savings-oriented conventional participating life insurance product fulfill these needs?

This article analyses the advantages(pros) and disadvantages(cons) of the ICICI Pru Lakshya Plan in detail. The return analysis part will assist you in deciding whether buying this plan will be a Good or Bad solution to your financial needs.

Let’s get started!

Table Of Contents

1. What is the ICIC Pru Lakshya Plan?
2. What are the features of the ICICI Pru Lakshya Plan?
3. Who is Eligible for the ICICI Pru Lakshya Plan?
4. ICICI Pru Lakshya Plan – Review of Benefits in detail
5. The Grace Period, Discontinuance and Revival of ICICI Pru Lakshya Plan
6. Free Look Period of ICICI Pru Lakshya Plan
7. What happens if I Surrender the ICICI Pru Lakshya Plan?
8. What are the Advantages of the ICICI Pru Lakshya Plan?
9. What are the Disadvantages of the ICICI Pru Lakshya Plan?
10. Research Methodology of ICICI Pru Lakshya Plan – Analysis

• Benefit Illustration – IRR Analysis of ICICI Pru Lakshya Plan

11. ICICI Pru Lakshya Plan vs Other Investment Options – Review

• ICICI Pru Lakshya Plan Vs. Term Insurance + ELSS
• ICICI Pru Lakshya Plan vs ICICI Pru Assured Savings Plan
• ICICI Pru Lakshya Plan vs ICICI Pru Gold Plan

12. ICICI Pru Lakshya Plan vs Other Investment Options – Review Conclusion
13. Final Verdict on ICICI Pru Lakshya Plan – Good or Bad Investment Option?

1.What is the ICIC Pru Lakshya Plan?

ICICI Pru Lakshya is a Non-Linked Participating Life Insurance Plan. It is designed to grow your wealth with the promise of protecting your money. This is done through guaranteed benefits in the form of Sum assured on maturity and Guaranteed value benefits and Bonuses.

Refer to the official brochure of ICIC Pru Lakshya Plan for more policy details.

2.What are the features of the ICICI Pru Lakshya Plan?

• Protection of life cover throughout the policy term.
• Convenient options to pay your premiums in annual, half-yearly, or monthly frequency.
• A flexible plan to help you meet various financial needs with an option to take the payout as a lump sum limited period income or Life-long income.
• Two Plan Options: Wealth Plan and Life-long Income Plan.

3.Who is Eligible for the ICICI Pru Lakshya Plan?

4.ICICI Pru Lakshya Plan – Review of Benefits in detail

i.Wealth Plan

Death benefit

Death Benefit is Higher of,

• Sum Assured on death + Accrued Additions (if any) + Interim regular addition (if declared) + Terminal Bonus (if declared)
• 105% of Total Premiums paid as of the date of death

Maturity benefit

Maturity Benefit = Sum Assured on Maturity + Guaranteed Value Benefits + accrued Regular Additions net of encashment, if any + Terminal bonus, if declared

Sum Assured on Maturity = Annualised Premium X Premium Payment Term

Guaranteed Value Benefits (GVBs) will be set at ICICI Pru Lakshya policy inception based on the 4S components: Start Early, Stay More, Save More, and SHE.

ii.Life-long income plan

Death benefit

Death Benefit is Higher of

• Sum Assured on Death + Bonuses
• 105% of Total Premiums paid as of the date of death

Maturity Benefit

Maturity Benefit = Sum Assured on Maturity + Terminal bonus, if declared.

Sum Assured on Maturity= Annualised Premium X Premium Payment Term

Survival benefit

On survival of the life assured till the Income Start Date (ISD) which is the fifth ICICI Pru Lakshya policy anniversary after the Premium Payment Term, the accrued Regular Additions net of encashment if any, till that date shall be payable as a lump sum.

After the Income Start Date, on every ICICI Pru Lakshya policy anniversary, till the end of the ICICI Pru Lakshya policy term or death whichever is earlier, the following is payable. Guaranteed Income (GI) + Cash Bonus (if declared)

5.The Grace Period, Discontinuance and Revival of ICICI Pru Lakshya Plan

Grace period

In ICICI Pru Lakshya policy, a grace period of 15 days will be given for payment of the due installment premium for monthly frequency, and 30 days will be given for payment of the due installment premium for any other frequency, commencing from the premium due date.

Discontinuance

If premium payment is discontinued, before the end of the PPT but after the ICICI Pru Lakshya policy has acquired a surrender value, the ICICI Pru Lakshya policy can continue as a paid-up policy with reduced benefits. A paid-up ICICI Pru Lakshya policy will not be entitled to future regular additions, cash bonuses, or terminal bonuses. A paid-up ICICI Pru Lakshya policy shall not be entitled to cash out the accrued regular additions.

Revival

You can revive the ICICI Pru Lakshya policy within five years from the due date of the first unpaid premium.

6.Free Look Period of ICICI Pru Lakshya Plan

If you are not satisfied with the terms and conditions of the ICICI Pru Lakshya policy, you have the option to return the ICICI Pru Lakshya policy within 15 days from the date you receive it, 30 days in case of ICICI Pru Lakshya electronic policies or policies sourced through distance marketing.

7.What happens if I Surrender the ICICI Pru Lakshya Plan?

Your ICICI Pru Lakshya policy will acquire a surrender value after payment of two full years’ premium. On ICICI Pru Lakshya policy surrender, you will get higher of the following:

• Guaranteed Surrender Value (GSV) plus surrender value of accrued Gas
• Special Surrender Value (SSV)

8.What are the Advantages of the ICICI Pru Lakshya Plan?

• Under the wealth plan option, maturity benefit could be received in lumpsum or as income payout.
• You can avail of a loan of up to 80% of the surrender value.
• Option to take Death Benefit in installments.

9.What are the Disadvantages of the ICICI Pru Lakshya Plan?

• The product is available for sale through online mode.
• The Sum assured is too low to meet the family’s basic needs.

10.Research Methodology of ICICI Pru Lakshya Plan – Analysis

Investment decisions based on detailed research are always the best approach. Detailed research on features and working of the plan is essential. At the same time, analyzing the returns is also equally important. Now, let us estimate the returns of the ICICI Pru Lakshya plan.

Benefit Illustration – IRR Analysis of ICICI Pru Lakshya Plan

A 30-year-old male buys the ICICI Pru Lakshya Plan for a Sum Assured of ₹ 6 Lakhs. The policy term is 15 years and the premium paying term is 10 years. The annualised premium is ₹ 60,000. Since this is the wealth plan option, the maturity benefit is available at the end of the policy term.

Male	30 years
Sum Assured	₹ 6 Lakhs
Policy Term	15 years
Premium Paying Term	10 years
Annualised premium	60,000

The given illustration shows two different rates of assumed future investment returns – 4% p.a. and 8% p.a. The returns shown here are not guaranteed and they are not the upper or lower limits of what you might get back.

Age	Year	At 4% p.a.		At 8% p.a.
		Annualised premium / Maturity benefit	Death benefit	Annualised premium / Maturity benefit	Death benefit
30	1	-60,000	6,00,000	-60,000	6,00,000
31	2	-60,000	6,00,000	-60,000	6,00,000
32	3	-60,000	6,00,000	-60,000	6,00,000
33	4	-60,000	6,00,000	-60,000	6,00,000
34	5	-60,000	6,00,000	-60,000	6,00,000
35	6	-60,000	6,00,000	-60,000	6,00,000
36	7	-60,000	6,00,000	-60,000	6,00,000
37	8	-60,000	6,00,000	-60,000	6,00,000
38	9	-60,000	6,00,000	-60,000	6,00,000
39	10	-60,000	6,00,000	-60,000	6,00,000
40	11	0	6,00,000	0	6,00,000
41	12	0	6,00,000	0	6,00,000
42	13	0	6,00,000	0	6,00,000
43	14	0	6,00,000	0	6,00,000
44	15	0	6,00,000	0	6,00,000
45	16	0	6,00,000	0	6,00,000
		7,83,522	6,00,000	10,75,625	6,00,000
	IRR	2.33%		5.11%

Under 4% scenario, the final maturity value is ₹ 7.83 Lakhs. The IRR(Internal Rate of Return i.e. Interest Rate) calculation under the 4% scenario results in 2.33%. This rate of return is less than a Savings bank account interest rate. Under 8% scenario, the final maturity value is ₹ 10.75 Lakhs. The IRR calculation under the 8% scenario results in 5.11%. This rate of return is less than a bank’s fixed deposit interest rate.

The Sum assured is too low and the returns are not convincing for an investor. IRR calculation reveals that investing in the ICICI Pru Lakshya Plan will not be beneficial.

11. ICICI Pru Lakshya Plan vs Other Investment Options – Review

Both the investment component and Insurance component are not favorable under the ICICI Pru Lakshya Plan. Let us do a comparison analysis. For this, let us assume the same premium is invested in other instruments. This will help you to compare the returns percentage and decide on your investments.

i. ICICI Pru Lakshya Plan Vs. Term Insurance + ELSS

Since the ICICI Pru Lakshya plan offers life cover and insurance under the same roof, we need to utilise the premium for life cover and wealth accumulation. For life cover, a pure term life insurance policy for a sum assured of ₹ 6 Lakhs would cost ₹ 3,200. Here the ICICI Pru Lakshya policy term is 15 years and the premium paying term is 10 years. This leaves you with ₹ 56,800 for investment.

Pure Term Life Insurance
Sum Assured	₹ 6 Lakhs
Policy Term	15 years
Premium Paying Term	10 years
Annualised premium	₹ 3,200
Investment	₹ 56,800

For investment, either debt instruments (low-risk) or equity instruments (high-risk) can be chosen. For illustrative purposes, we have chosen ELSS funds. Every year after paying pure term life insurance premium, the balance is invested in the ELSS fund.

Age	Year	Term insurance + ELSS
		Term Insurance premium + ELSS	Death benefit
30	1	-60,000	6,00,000
31	2	-60,000	6,00,000
32	3	-60,000	6,00,000
33	4	-60,000	6,00,000
34	5	-60,000	6,00,000
35	6	-60,000	6,00,000
36	7	-60,000	6,00,000
37	8	-60,000	6,00,000
38	9	-60,000	6,00,000
39	10	-60,000	6,00,000
40	11	0	6,00,000
41	12	0	6,00,000
42	13	0	6,00,000
43	14	0	6,00,000
44	15	0	6,00,000
45	16	0	6,00,000
		18,37,499	6,00,000
	IRR	9.87%

The final maturity value under the ELSS fund is ₹ 19.67 Lakhs which is a pre-tax value. Capital gains tax arises at the time of redemption. Tax calculation is given below. The final post-tax value is ₹18.37 Lakhs. The IRR calculation for this cash flow results in 9.87%.

ELSS Tax Calculation
Maturity value after 15 years	19,67,444
Purchase price	5,68,000
Long-Term Capital Gains	13,99,444
Exemption limit	1,00,000
Taxable LTCG	12,99,444
Tax paid on LTCG	1,29,944
Maturity value after tax	18,37,499

In this alternate arrangement, you get better returns when compared to the ICICI Pru Lakshya Plan. To yield inflation-beating returns, it is always wise to invest separately for life goals. The main disadvantage of clubbing insurance and investment is poor returns.

ii.ICICI Pru Lakshya Plan vs ICICI Pru Assured Savings Plan

Let’s see some of the features of the ICICI Pru Assured Savings Plan,

• Option to select the coverage terms and premium payment arrangements that best suit your needs.
• Get life insurance for the duration of the policy.
• Your coverage will get Guaranteed Additions each year that equals either 9% or 10% of the entire amount of premiums paid.

Read the complete review of the ICICI Pru Assured Savings Plan.

iii.ICICI Pru Lakshya Plan vs ICICI Pru Gold Plan

Let’s see some of the features of the ICICI Pru Gold Plan

• Protection through a life insurance policy that lasts up to age 99.
• You can choose to begin getting paid right away or after a few years, depending on what you require.
• A combination of guaranteed income and money related to bonus declaration will make up a regular income.

Read the complete review of the ICICI Pru Gold Plan.

12. ICICI Pru Lakshya Plan vs Other Investment Options – Review Conclusion

It is impossible to classify the earnings you received from the ICICI Pru Lakshya Plan as a long-term investment vehicle because they are not inflation-adjusted.

In contrast, it appears that the other alternate investment option Pure Term Insurance + ELSS provides stronger inflation-beating returns that are both risk-adjusted and beneficial to your financial objectives.

13. Final Verdict on ICICI Pru Lakshya Plan – Good or Bad Investment Option?

ICICI Pru Lakshya Plan is a conventional life insurance policy that offers protection and savings advantages. It allows individuals to save regularly. You can reap the benefits either through lumpsum payouts or regular income payouts.

As all conventional plans club both the insurance aspect and investment aspect, they are prone to low returns. There are many reasons for low returns and one among them is high agent commission. The same concept applies here in the ICICI Pru Lakshya plan. The returns analysis depicted how they are falling behind. Investing in the ICICI Pru Lakshya Plan will not earn you the required corpus to meet your future goals.

In addition, the provided money will be insufficient to cover the necessities of your family. To meet your requirements, a pure-term life insurance policy will be the best choice. Under a pure-term policy, you get high coverage at an affordable premium.

Investing in life goals should be done based on your personal risk tolerance and the time horizon of the goals. If you need any assistance in choosing the new-age investment vehicles, instead of taking amateur advice on social media sites like Quora, Facebook, Twitter, etc, consult a Certified Financial Planner.