ICICI pru Smart Kid Guarantee Plan
Is ICICI Pru Smart Kid Guarantee Plan the right choice to secure your child’s future?
Can the ICICI Pru Smart Kid Guarantee Plan provide peace of mind from knowing your child’s future is financially secure?
Is ICICI Pru Smart Kid Guarantee Plan the solution that aligns with your child’s milestones, from education to career aspirations?
In this article, we explore the key features, benefits, and drawbacks of this plan. We’ll also analyse its returns using the Internal Rate of Return (IRR) method to help you make an informed decision.
What is the ICICI Pru Smart Kid Guarantee Plan?
What are the features of the ICICI Pru Smart Kid Guarantee Plan?
Who is eligible for the ICICI Pru Smart Kid Guarantee Plan?
What are the benefits of the ICICI Pru Smart Kid Guarantee Plan?
Grace Period, Discontinuance and Revival of ICICI Pru Smart Kid Guarantee
Free Look period for ICICI Pru Smart Kid Guarantee Plan
Surrendering the ICICI Pru Smart Kid Guarantee Plan
What are the advantages of the ICICI Pru Smart Kid Guarantee Plan?
What are the disadvantages of the ICICI Pru Smart Kid Guarantee Plan?
Research Methodology of ICICI Pru Smart Kid Guarantee Plan
Benefit Illustration – IRR Analysis of ICICI Pru Smart Kid Guarantee Plan
ICICI Pru Smart Kid Guarantee Plan Vs. Other Investments
ICICI Pru Smart Kid Guarantee Plan Vs. Pure-term + ELSS
Final Verdict on the ICICI Pru Smart Kid Guarantee Plan
ICICI Pru Smart Kid Guarantee Plan is a guaranteed savings plan for your child’s goals that ensures security with continued benefits and future premiums waived in case of unforeseen events.
ICICI Pru Smart Kid Guarantee Plan comprises ICICI Pru GIFT Pro and ICICI Pru Non-Linked Waiver of Premium (WoP) Rider.
| Premium payment term | Policy term | Income Period | Min/Max Age at entry | Min/Max Age at maturity |
| 5 years | 8 to 10 years | 5/7/10/12/15/20/25/30 years | 18/55 years | 18/65 years |
| 6 years | 8 to 11 years | 18/66 years | ||
| 7 years | 8 to 12 years | 18/67 years | ||
| 8 years | 9 to 13 years | 18/68 years | ||
| 9 years | 9 to 14 years | 18/69 years | ||
| 10 years | 10 to 15 years | 18/70 years | ||
| 11 years | 11 to 16 years | 18/70 years | ||
| 12 years | 12 to 17 years | 18/70 years | ||
| Premium payment frequency | Annual, Half-Yearly, Monthly | |||
In the event the person whose life is covered by this policy (known as the Life Assured) passes away during the term of the ICICI Pru Smart Kid Guarantee Plan policy, the Death Benefit will be paid out as a lump sum.
Death Benefit is highest of:
Since Waiver of Premium (WoP) Rider is an in-built feature, get a waiver on all future premiums on the occurrence of unforeseen events like Death, Accidental Total Permanent Disability, Terminal Illness or Critical Illness.
This feature ensures that the ICICI Pru Smart Kid Guarantee Plan policy benefits, such as regular payouts and maturity payouts will be provided without any interruption.
In case of death of the Life Assured during the Income Period, the claimant will continue to receive the Guaranteed Income and Money Back Benefit.
At any time during the Income Period, the Claimant shall have the option to receive the discounted value of future income and Money Back Benefit
You have the option to select whether you want to receive guaranteed income that either
(payable at maturity)
You can choose to receive any percentage from 0% to 100% of the total of all annualized premiums known as a Money Back Benefit. You will need to select the percentage of Money Back at inception.
The lower the money-back benefit percentage, the higher the income benefit (annual regular income) and vice versa.
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 in the first years, no benefits will be payable.
If you stop paying premiums after you have completed payment of premiums for the first year, the ICICI Pru Smart Kid Guarantee Plan policy can continue with reduced benefits.
You can revive your ICICI Pru Smart Kid Guarantee Plan policy benefits for their full value within five years from the due date of the first unpaid premium.
You have an option to review the ICICI Pru Smart Kid Guarantee Plan policy terms and conditions.
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.
You can Surrender the ICICI Pru Smart Kid Guarantee 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)
The ICICI Pru Smart Kid Guarantee Plan allows you to customize your Income and Money-Back Benefits, with the added appeal of guaranteed returns.
These features might seem attractive, but it’s important to evaluate whether the plan truly benefits you. This requires analysing its Internal Rate of Return (IRR). Let’s consider an example:
A 35-year-old male opts for the ICICI Pru Smart Kid Guarantee Plan with a 10-year Income Benefit and 100% Money-Back Benefit at maturity.
The ICICI Pru Smart Kid Guarantee Plan policy has a sum assured of ₹10.7 lakhs, a premium-paying term of 10 years, and a policy term of 11 years, with an annual premium of ₹1.01 lakh.
| Male | 35 years |
| Sum Assured | ₹ 10,70,000 |
| Policy Term | 11 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 1,01,298 |
The initial income benefit is ₹93,190, increasing annually by 5% (simple interest). A Money-Back Benefit of ₹10 lakhs is paid along with the final income benefit.
Upon calculation, the IRR for this cash flow is 5.39% as per the ICICI Pru Smart Kid Guarantee Plan maturity calculator.
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -1,01,298 | 10,70,000 |
| 36 | 2 | -1,01,298 | 10,70,000 |
| 37 | 3 | -1,01,298 | 10,70,000 |
| 38 | 4 | -1,01,298 | 10,70,000 |
| 39 | 5 | -1,01,298 | 10,70,000 |
| 40 | 6 | -1,01,298 | 10,70,000 |
| 41 | 7 | -1,01,298 | 10,70,000 |
| 42 | 8 | -1,01,298 | 10,70,000 |
| 43 | 9 | -1,01,298 | 10,70,000 |
| 44 | 10 | -1,01,298 | 10,70,000 |
| 45 | 11 | 0 | 10,70,000 |
| 46 | 12 | 0 | |
| 47 | 13 | 93,190 | |
| 48 | 14 | 97,850 | |
| 49 | 15 | 1,02,510 | |
| 50 | 16 | 1,07,170 | |
| 51 | 17 | 1,11,830 | |
| 52 | 18 | 1,16,490 | |
| 53 | 19 | 1,21,150 | |
| 54 | 20 | 1,25,810 | |
| 55 | 21 | 1,30,470 | |
| 56 | 22 | 11,35,130 | |
| IRR | 5.39% |
Considering the overall investment period of over 20 years, this return is disappointing for a long-term investment. Ideally, such investments should at least keep pace with inflation.
An IRR of around 5% means your money’s purchasing power is eroded over time. With such low returns, the Guaranteed Income Benefit of the ICICI Pru Smart Kid Guarantee Plan offers little financial advantage.
The regular income offered by the ICICI Pru Smart Kid Guarantee Plan does not provide favourable returns for investors.
Let’s explore alternative investment options that offer life insurance and regular income. Using the same parameters as the previous example, here’s a comparative analysis:
A pure term insurance plan with a sum assured of ₹11 lakhs costs ₹9,000 annually for a policy term of 11 years and a premium-paying term of 5 years. In contrast, the ICICI plan required a 10-year premium payment.
This means that for the first 5 years, after paying the term insurance premium, the remaining amount can be invested, and from the 6th year onward, the entire allocated amount is available for investment.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 10,70,000 |
| Policy Term | 11 years |
| Premium Paying Term | 5 years |
| Annualised Premium | ₹ 9,000 |
| Investment | ₹ 92,298 |
Based on individual risk appetite, the funds can be invested in either debt (low-risk) or equity (high-risk) instruments. In this comparison, the balance is invested in ELSS funds, a tax-saving equity investment option.
| Age | Year | Term Insurance premium + ELSS | Death benefit |
| 35 | 1 | -1,01,298 | 11,00,000 |
| 36 | 2 | -1,01,298 | 11,00,000 |
| 37 | 3 | -1,01,298 | 11,00,000 |
| 38 | 4 | -1,01,298 | 11,00,000 |
| 39 | 5 | -1,01,298 | 11,00,000 |
| 40 | 6 | -1,01,298 | 11,00,000 |
| 41 | 7 | -1,01,298 | 11,00,000 |
| 42 | 8 | -1,01,298 | 11,00,000 |
| 43 | 9 | -1,01,298 | 11,00,000 |
| 44 | 10 | -1,01,298 | 11,00,000 |
| 45 | 11 | 0 | 11,00,000 |
| 46 | 12 | 0 | |
| 47 | 13 | 93,190 | |
| 48 | 14 | 97,850 | |
| 49 | 15 | 1,02,510 | |
| 50 | 16 | 1,07,170 | |
| 51 | 17 | 1,11,830 | |
| 52 | 18 | 1,16,490 | |
| 53 | 19 | 1,21,150 | |
| 54 | 20 | 1,25,810 | |
| 55 | 21 | 1,30,470 | |
| 56 | 22 | 25,18,124 | |
| IRR | 8.55% |
The corpus accumulated during the investment phase is utilized during the income period to provide regular payouts, similar to the ICICI plan’s income benefit. The final withdrawal mirrors the Money-Back Benefit offered by the ICICI plan.
| ELSS Tax Calculation | |
| Maturity value after 12 years | 23,55,908 |
| Purchase price | 4,61,490 |
| Long-Term Capital Gains | 18,94,418 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 17,69,418 |
| Tax paid on LTCG | 2,21,177 |
| Maturity value after tax | 21,34,731 |
ELSS Investment Phase: The pre-tax corpus value grows to ₹23.55 lakhs, and the post-tax value is ₹21.34 lakhs.
Income Period: This corpus is reinvested in an instrument offering a 7% annual return. Regular annual withdrawals are made, with the final withdrawal replicating the Money-Back Benefit.
Final Corpus: After annual withdrawals, the remaining corpus stands at ₹25.18 lakhs, with an IRR of 8.55%.
If withdrawals are avoided, the corpus compounds further, offering even higher returns. For regular income, it is more efficient to invest separately instead of combining insurance and investment.
This approach ensures better returns, liquidity, and flexibility, which are lacking in the ICICI Pru Smart Kid Guarantee Plan.
The ICICI Pru Smart Kid Guarantee Plan allows customization of Income Benefits and Money-Back Benefits. However, beyond these options, it operates much like a traditional Money-Back Policy, where premiums are paid in the early years, and benefits are received as regular income later.
Under this plan, the income benefit is not directly tied to the sum assured or premiums paid. Instead, it depends on the percentage of Money-Back Benefits you select. This Money-Back Benefit can be taken at maturity or during any year of the income period.
However, opting for a higher percentage of the Money-Back Benefit reduces the income benefit amount and it also has a high agent commission.
The trade-off between the final Money-Back Benefit and the income benefit limits the plan’s flexibility. Furthermore, the life cover is restricted to the premium-paying term.
Instead of relying on ready-made children’s education plans, consider investing separately for better returns and greater flexibility.
Build a diversified investment portfolio tailored to your risk appetite and life goals. Simultaneously, secure adequate life insurance by opting for a Pure Term Life Insurance Policy.
When it comes to financial advice, are Quora, Facebook, and Twitter the final word? For personalized guidance, consult a financial professional who can create a customized financial plan to help you achieve your objectives effectively.
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