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Can the ICICI Pru Savings Suraksha Plan offer protection and savings in one package?
Can the ICICI Pru Savings Suraksha Plan simultaneously provide guaranteed returns and peace of mind?
Is ICICI Pru Savings Suraksha Plan the savings plan that ensures financial stability?
This article delves into the plan’s features, benefits, and limitations. An Internal Rate of Return (IRR) analysis will guide you in making an informed decision.
Table of Contents:
What is the ICICI Pru Savings Suraksha Plan?
What are the features of the ICICI Pru Savings Suraksha Plan?
Who is eligible for the ICICI Pru Savings Suraksha Plan?
What are the benefits of the ICICI Pru Savings Suraksha Plan?
Grace Period, Discontinuance and Revival of ICICI Pru Savings Suraksha Plan
Free Look period for the ICICI Pru Savings Suraksha Plan
Surrendering the ICICI Pru Savings Suraksha Plan
What are the advantages of the ICICI Pru Savings Suraksha Plan?
What are the disadvantages of the ICICI Pru Savings Suraksha Plan?
Research Methodology of ICICI Pru Savings Suraksha Plan
Benefit Illustration – IRR Analysis of ICICI Pru Savings Suraksha Plan
ICICI Pru Savings Suraksha Plan Vs. Other Investments
ICICI Pru Savings Suraksha Plan Vs. Pure-term + PPF/ELSS
Final Verdict on the ICICI Pru Savings Suraksha Plan
What is the ICICI Pru Savings Suraksha Plan?
ICICI Pru Savings Suraksha is a Participating Non-linked Life Individual Savings Product. It is a savings and protection-oriented plan. ICICI Pru Savings Suraksha Plan preserves your wealth and helps you secure the dreams of your loved ones with guaranteed benefits.
What are the features of the ICICI Pru Savings Suraksha Plan?
- Enjoy life insurance coverage throughout the ICICI Pru Savings Suraksha Plan policy term.
- Receive the Guaranteed Maturity Benefit (GMB), Accrued Guaranteed Additions (GAs), and bonuses upon policy maturity.
- Customize your plan by selecting the premium payment term, mode, and policy term to suit your needs.
- Benefit from tax advantages on premiums paid and payouts received, subject to prevailing tax laws.
Who is eligible for the ICICI Pru Savings Suraksha Plan?
| Premium payment option | Limited pay | |||
| Premium paying term | 5 years | 7 years | 10 years | 12 years |
| Policy term | 10 to 30 years | 12 to 30 years | 15 to 30 years | 17 to 30 years |
| Minimum Annual Premium | ₹ 30,000 | |||
| Min/Max Age at entry | 0/50 years | |||
| Min/Max Age at maturity | 18/70 years | |||
| Sum Assured on death | 10* Annualised premium | |||
| Premium paying mode | Annual / Half-yearly / Monthly | |||
What are the benefits of the ICICI Pru Savings Suraksha Plan?
1. Death benefit
On the death of the life assured during the ICICI Pru Savings Suraksha Plan policy term, the highest of the following will be payable
- Sum Assured on death plus accrued Guaranteed Additions and Bonuses
- GMB plus accrued Guaranteed Additions and Bonuses
- Minimum Death Benefit
2. Maturity benefit
On survival of the life assured till the date of maturity, the sum of the following will be payable
- Guaranteed Maturity Benefit (GMB) Plus
- Accrued Guaranteed Additions Plus
- Vested reversionary bonuses, if declared
Grace Period, Discontinuance and Revival of ICICI Pru Savings Suraksha Plan
Grace period
For premium payment, a grace period of 15 days will be given for monthly frequency, and 30 days will be given for any other frequency
Discontinuance
If you discontinue premium payment before you have paid one full year’s premium then your ICICI Pru Savings Suraksha Plan policy will lapse and no benefits will be paid.
If premium payment is discontinued after paying one full year’s premium the policy would continue as a ‘paid-up’ policy with reduced benefits.
Revival
You can revive the policy within five consecutive years from the due date of the first unpaid premium or before the end of the ICICI Pru Savings Suraksha Plan policy term, whichever is earlier.
Free Look period for the ICICI Pru Savings Suraksha Plan
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 return the policy within 30 days from the date of receipt of the Policy Document, whether received electronically or otherwise.
Surrendering the ICICI Pru Savings Suraksha Plan
You can Surrender the ICICI Pru Savings Suraksha Plan policy at any time after payment of at least one full year’s premiums. Prior to receipt of one full year’s premium, no surrender value is payable. On policy surrender, you will get higher of the following:
Guaranteed Surrender Value (GSV)
Special Surrender Value (SSV)
What are the advantages of the ICICI Pru Savings Suraksha Plan?
- Avail a loan of up to 80% of the policy’s Surrender Value.
- Enjoy the flexibility to select a premium payment option tailored to your requirements.
What are the disadvantages of the ICICI Pru Savings Suraksha Plan?
- The returns offered are relatively low.
- A portion of the benefits is non-guaranteed, as it depends on bonuses.
- The sum assured may be insufficient to meet the basic financial needs of your family.
Research Methodology of ICICI Pru Savings Suraksha Plan
The ICICI Pru Savings Suraksha Plan combines savings and insurance by allocating premiums to both components.
To assess its investment potential, calculating the Internal Rate of Return (IRR) offers deeper insight than simply reviewing cash flows. Let’s examine the benefit illustration provided in the ICICI Pru Savings Suraksha Plan policy brochure.
Benefit Illustration – IRR Analysis of ICICI Pru Savings Suraksha Plan
A 35-year-old male opts for the plan with a sum assured of ₹3 Lakhs, a policy term of 20 years, and a premium payment term of 10 years, paying an annual premium of ₹30,000.
| Male | 35 years |
| Sum Assured | ₹ 3,00,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 30,000 |
At maturity, he receives a benefit comprising guaranteed additions and bonuses. The illustrations below assume future investment return rates of 8% p.a. and 4% p.a., which are not guaranteed as they depend on various factors, including future performance.
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -30,000 | 3,00,000 | -30,000 | 3,00,000 |
| 36 | 2 | -30,000 | 3,00,000 | -30,000 | 3,00,000 |
| 37 | 3 | -30,000 | 3,00,000 | -30,000 | 3,00,000 |
| 38 | 4 | -30,000 | 3,00,000 | -30,000 | 3,00,000 |
| 39 | 5 | -30,000 | 3,00,000 | -30,000 | 3,00,000 |
| 40 | 6 | -30,000 | 3,00,000 | -30,000 | 3,00,000 |
| 41 | 7 | -30,000 | 3,00,000 | -30,000 | 3,00,000 |
| 42 | 8 | -30,000 | 3,00,000 | -30,000 | 3,00,000 |
| 43 | 9 | -30,000 | 3,00,000 | -30,000 | 3,00,000 |
| 44 | 10 | -30,000 | 3,00,000 | -30,000 | 3,00,000 |
| 45 | 11 | 0 | 3,00,000 | 0 | 3,00,000 |
| 46 | 12 | 0 | 3,00,000 | 0 | 3,00,000 |
| 47 | 13 | 0 | 3,00,000 | 0 | 3,00,000 |
| 48 | 14 | 0 | 3,00,000 | 0 | 3,00,000 |
| 49 | 15 | 0 | 3,00,000 | 0 | 3,00,000 |
| 50 | 16 | 0 | 3,00,000 | 0 | 3,00,000 |
| 51 | 17 | 0 | 3,00,000 | 0 | 3,00,000 |
| 52 | 18 | 0 | 3,00,000 | 0 | 3,00,000 |
| 53 | 19 | 0 | 3,00,000 | 0 | 3,00,000 |
| 54 | 20 | 0 | 3,00,000 | 0 | 3,00,000 |
| 55 | 4,18,605 | 6,88,514 | |||
| IRR | 2.16% | 5.43% | |||
4% Scenario: The maturity value is ₹4.18 Lakhs, resulting in an IRR of 2.16% as per the ICICI Pru Savings Suraksha Plan maturity calculator, which is even lower than the interest rate offered by savings bank accounts.
8% Scenario: The maturity value is ₹6.88 Lakhs, yielding an IRR of 5.43% as per the ICICI Pru Savings Suraksha Plan maturity calculator, still below the returns from bank fixed deposits.
These returns are suboptimal, making the ICICI Pru Savings Suraksha Plan a less effective tool for achieving financial goals.
Moreover, the life insurance coverage provided under the plan is inadequate to secure the family’s future needs. Therefore, both the investment and insurance aspects of the ICICI Pru Savings Suraksha Plan fall short of expectations for a prudent investor.
ICICI Pru Savings Suraksha Plan Vs. Other Investments
As per IRDAI guidelines, the minimum sum assured for a standard pure-term policy like Saral Jeevan Bima is ₹5 Lakhs.
Any sum assured below this benchmark, such as the ₹3 Lakhs illustrated earlier, fails to provide sufficient financial support for a family. Let’s re-evaluate by considering a minimum life insurance coverage of ₹5 Lakhs.
ICICI Pru Savings Suraksha Plan Vs. Pure-term + PPF/ELSS
The premium for a pure-term policy for a sum assured of ₹ 5 Lakhs with a 20-year term and a 10-year premium payment period is ₹4,400 annually. This leaves ₹25,600 available for annual investment, which can be allocated based on your risk appetite.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 3,00,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 4,400 |
| Investment | ₹ 25,600 |
Risk-averse investors can opt for PPF (Public Provident Fund), while Risk-tolerant investors may prefer ELSS (Equity Linked Savings Scheme).
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 35 | 1 | -30,000 | 5,00,000 | -30,000 | 5,00,000 |
| 36 | 2 | -30,000 | 5,00,000 | -30,000 | 5,00,000 |
| 37 | 3 | -30,000 | 5,00,000 | -30,000 | 5,00,000 |
| 38 | 4 | -30,000 | 5,00,000 | -30,000 | 5,00,000 |
| 39 | 5 | -30,000 | 5,00,000 | -30,000 | 5,00,000 |
| 40 | 6 | -30,000 | 5,00,000 | -30,000 | 5,00,000 |
| 41 | 7 | -30,000 | 5,00,000 | -30,000 | 5,00,000 |
| 42 | 8 | -30,000 | 5,00,000 | -30,000 | 5,00,000 |
| 43 | 9 | -30,000 | 5,00,000 | -30,000 | 5,00,000 |
| 44 | 10 | -27,500 | 5,00,000 | -30,000 | 5,00,000 |
| 45 | 11 | -500 | 5,00,000 | 0 | 5,00,000 |
| 46 | 12 | -500 | 5,00,000 | 0 | 5,00,000 |
| 47 | 13 | -500 | 5,00,000 | 0 | 5,00,000 |
| 48 | 14 | -500 | 5,00,000 | 0 | 5,00,000 |
| 49 | 15 | -500 | 5,00,000 | 0 | 5,00,000 |
| 50 | 16 | 0 | 5,00,000 | 0 | 5,00,000 |
| 51 | 17 | 0 | 5,00,000 | 0 | 5,00,000 |
| 52 | 18 | 0 | 5,00,000 | 0 | 5,00,000 |
| 53 | 19 | 0 | 5,00,000 | 0 | 5,00,000 |
| 54 | 20 | 0 | 5,00,000 | 0 | 5,00,000 |
| 55 | 7,54,772 | 14,15,014 | |||
| IRR | 6.04% | 10.25% | |||
PPF Investment: With annual contributions adjusted to meet the minimum requirements (₹ 500 per annum) in the final years, the PPF matures to ₹7.54 Lakhs, delivering an IRR of 6.04%.
ELSS Investment: Assuming historical equity returns, the pre-tax maturity value is ₹15.62 Lakhs. After accounting for capital gains tax, the post-tax maturity value stands at ₹14.15 Lakhs, with an IRR of 10.25%.
| ELSS Tax Calculation | |
| Maturity value after 20 years | 15,62,730 |
| Purchase price | 2,56,000 |
| Long-Term Capital Gains | 13,06,730 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 11,81,730 |
| Tax paid on LTCG | 1,47,716 |
| Maturity value after tax | 14,15,014 |
This analysis highlights that separating insurance and investment is a superior strategy. Traditional insurance plans typically offer limited coverage and modest returns, whereas combining a pure-term policy with tailored investments like PPF or ELSS provides better financial outcomes.
Final Verdict on the ICICI Pru Savings Suraksha Plan
The ICICI Pru Savings Suraksha Plan promotes regular saving habits but falls short of utilizing these savings effectively for higher returns.
Its sum assured is insufficient to meet the basic financial needs of a family, and the savings component delivers below-average returns. Consequently, the plan’s insurance and investment aspects provide little value to investors.
Investing in the ICICI Pru Savings Suraksha Plan may lead to significant opportunity costs, as it limits the potential benefits and returns your money could achieve elsewhere.
Traditional policies like this can disrupt your financial plans and leave you unprepared for future challenges. Hence, the ICICI Pru Savings Suraksha Plan is not an ideal choice for your insurance and investment needs and also it has a high agent commission.
A better strategy is to safeguard your family’s future with a Pure-Term Life Insurance Policy while investing separately to achieve your financial goals.
This approach ensures you stay financially resilient, even during tough times. Diversifying your investments across asset classes is key to achieving your aspirations.
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