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ICICI Prudential Future Perfect is a non-linked insurance plan.
This plan claims guaranteed benefits and guaranteed bonuses. How “guaranteed” are their claims, we will find out in this article.
In this article, we will demonstrate all you need to know about this plan by giving an elaborative example. You will be able to figure out whether this policy is really making your Future PERFECT, as it claims. Or, does it have the elements which make your Future “Tense” instead; regardless of their claim.
Let’s read on and figure out the rest by yourself.
Table of Content
1. Key Features
2. ICICI Prudential Future Perfect: Guaranteed Benefits
3. ICICI Prudential Future Perfect: Bonuses
4. ICICI Prudential Future Perfect: Illustrative example
5. ICICI Prudential Future Perfect: Actual Returns
6. ICICI Prudential Future Perfect: Disadvantage (Secret Exposed)
7.ICICI Pru Future Perfect Vs. Other Investments
8. Final Verdict
9. Commonly asked questions: ICICI Prudential Future Perfect
Key Features:
1. ICICI Prudential Future Perfect is an endowment plan.
2. You will get guaranteed benefits such as Guaranteed Maturity Benefit and Guaranteed Additions each year, based on your policy term.
3. You may also receive non-guaranteed bonuses such as reversionary and terminal bonuses; they are detailed in later sections in this article.
4. In case of the death of a policyholder, death benefits will be provided.
5. The below table shows the Premium Payment Term, Policy term, and basic eligibility criteria to invest in this policy. [Source: ICICI Pru Future Perfect brochure]
Let’s have a look at the video illustration showing the review of all the important aspects of ICICI Pru Future Perfect Plan.
ICICI Prudential Future Perfect: Guaranteed Benefits
This plan offers 2 guaranteed benefits, discussed below:
Guaranteed Maturity Benefits (GMB):
The Guaranteed Maturity Benefit (GMB) is a fixed amount that depends on various things like age, policy term, premium payment term & gender.
GMB gets activated as soon as you purchase the ICICI Prudential Future Perfect Policy. And, you will receive the guaranteed amount from this benefit as soon as your policy matures. For example, if your policy term is 20 years, you will receive the GMB in the 20th year.
These benefits are payable subject to payment of all the due premiums.
Guaranteed Addition Benefits
Guaranteed Additions are added to your maturity amount for every policy year that you stay invested in.
The table below shows you how much GAs that will be paid out as a percentage of your annual premium:
You can notice from the table above that the longer you are invested; you will receive higher guaranteed returns on maturity. For example, if you choose a premium payment term of more than 10 years and stay invested for more than 16 years, you will get the maximum Guaranteed Addition of 18%!
The Guaranteed Maturity Benefit & Guaranteed Additions together contribute to the total Guaranteed Returns you receive at maturity.
ICICI Prudential Future Perfect: Bonuses
Bonuses are non-guaranteed. This plan offers 2 types of bonuses, described below:
Reversionary Bonuses
Reversionary Bonus is declared every year as a percentage of Guaranteed Maturity Benefit and Earlier Revisionary Bonuses (if any). The exact calculation of the Reversionary bonus is unclear. It is calculated using the online calculator available on the website.
Reversionary bonus is payable at maturity of the policy, or it is payable along with death benefits. Reversionary bonus in Cash advantage is added every year to your maturity benefits.
Terminal bonuses
Terminal bonus is a one-time bonus declared at the time of the maturity for participating policy. Though they are a non-guaranteed bonus, still its value depends on the duration you stay invested. There is no clear cut way to find Terminal Bonuses but you can use the online calculator available on the company’s website to get the rough estimates.
Now we will have a look at an illustrative example to get a better idea of the various benefits, bonuses and overall returns you can expect from this policy.
ICICI Prudential Future Perfect Plan: Illustration
Let us say you are 30 years old and you choose to invest in ICICI Pru Future Perfect Plan with the premium amount of Rs.1,00,000 per annum.
You opted your payment duration as 10 years and you have fixed your policy term as 20 years. Now putting all these values in the Online Calculator, you will get various values shown below
Therefore, if you invest the premium of Rs.1,00,000 per annum. With taxes, you have to pay the total yearly premium of Rs.1,04,501 for the first year and Rs.1,02,251 for subsequent years.
At maturity, you will get Rs.25,70,254, which consists of Guaranteed Benefits and Estimated Bonuses of Rs.13,84,426 @ 8%.
Or,
You will get Rs.15,53,975 , which consists of Guaranteed Benefits and Estimated Bonuses of Rs.3,68,147 @ 4%.Please note, the estimated bonuses are not guaranteed.
The assured sum is Rs.10 Lakhs, it is the amount of life-insurance cover paid to the nominee, in case of policy holder’s death.
Now, let’s have a closer look at the Guaranteed Benefits and Estimated Bonuses.
Guaranteed Benefits:
As you can notice, the total Guaranteed Benefits are Rs.11,85,828. It consists of Guaranteed Maturity Benefits (GMB) and Guaranteed Additions (GA) on Maturity. They described below:
Guaranteed Maturity Benefits are set at the inception of the policy, its value depends on the policy holder’s age, policy term, premium, premium payment term, and gender.
They are guaranteed but how this sum actually fixed is unknown.
Guaranteed Additions as we have defined earlier, they are added to your maturity amount for every policy year that you stay invested according to the rate of interest (per annum) as described in the previous section.
You are paying Rs. 1 Lacs per annum for 10 years exclusive of GST and you are receiving the guaranteed benefits of Rs.11,85,828. It shows that ONLY the principal you paid is guaranteed, which does not contain ANY return!!
ICICI Prudential Future Perfect: Actual Returns
As defined earlier, your policy term is 20 years and your premium payment duration is 10 years. And, you choose to invest Rs.1,00,000 per annum.
Let’s calculate the average returns using all the data discussed earlier,
|
At 4% p.a. |
At 8% p.a. |
||||
|
Age |
Year |
Annualised premium / Maturity benefit |
Death benefit |
Annualised premium / Maturity benefit |
Death benefit |
|
30 |
1 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
31 |
2 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
32 |
3 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
33 |
4 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
34 |
5 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
35 |
6 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
36 |
7 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
37 |
8 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
38 |
9 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
39 |
10 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
40 |
11 |
0 |
10,00,000 |
0 |
10,00,000 |
|
41 |
12 |
0 |
10,00,000 |
0 |
10,00,000 |
|
42 |
13 |
0 |
10,00,000 |
0 |
10,00,000 |
|
43 |
14 |
0 |
10,00,000 |
0 |
10,00,000 |
|
44 |
15 |
0 |
10,00,000 |
0 |
10,00,000 |
|
45 |
16 |
0 |
10,00,000 |
0 |
10,00,000 |
|
46 |
17 |
0 |
10,00,000 |
0 |
10,00,000 |
|
47 |
18 |
0 |
10,00,000 |
0 |
10,00,000 |
|
48 |
19 |
0 |
10,00,000 |
0 |
10,00,000 |
|
49 |
20 |
0 |
10,00,000 |
0 |
10,00,000 |
|
50 |
15,53,975 |
25,70,254 |
|||
|
IRR |
2.86% |
6.18% |
|||
So, in the policy term of 20 long years, you are getting the average return of just 6.18%.
Please note it is the best interest rate of this policy, as we have assumed the ARR of 8%.
If we consider the Assumed Rate of Return (ARR) as 4%, the average IRR comes down to 2.86%!!
On average, you can expect your returns to be somewhere between 3% to 6.2%!!
Reversionary Bonuses: Update for 2019
This policy started in the year 2016 and though they claim their estimated bonuses to be around 4% or 8%; below table shows the rate of reversionary bonuses declared so far…
It is in the range of 2%-2.25%!!
Now, do you think it is good enough return for a 20-year long investment term?
Do you think, at this bonus rate, will they be able to achieve an IRR of 7%? I doubt.
If you are still looking for more details on this plan, then you should read the ICICI Prudential Future Perfect Product Brochure.
ICICI Prudential Future Perfect: Disadvantage (Secrets Exposed)
Though this policy uses catchy words such as “Guaranteed Benefits” or “Future Perfect”, but in reality, it is not true. Let’s have a look at its biggest disadvantage:
As you might have noticed in the illustration in the above section, that in the best case scenario you are getting the maximum returns of merely 6.18%!
Therefore, you are receiving Rs.11,85,828, plus the non-guaranteed estimated bonus of Rs.13,84,426!
Anyways, in the best-case scenario, you will receive the sum of above, that is Rs.25,70,254 on maturity, means after 20 years!!
Is it a good deal?
ICICI Pru Future Perfect Vs. Other Investments
Let’s say if you invest in PPF or Mutual Fund instead, as defined below:
|
Pure Term Life Insurance Policy |
|
|
Sum Assured |
₹ 10,00,000 |
|
Policy Term |
20 years |
|
Premium Paying Term |
10 years |
|
Annualised Premium |
₹ 6,600 |
|
Investment |
₹ 93,400 |
By separating insurance and investment, you can accumulate a higher corpus. For life coverage, a pure term life insurance policy with a sum assured of ₹10 Lakhs costs a premium of ₹6,600 annually. The policy term is 20 years with a premium payment term of 10 years. This allows you to save ₹93,400 out of the ₹1,00,000 annual budget, which can be invested for corpus accumulation.
We’ll consider two investment instruments – one for equity and one for debt – to illustrate how different asset classes perform. You can choose investments based on your risk appetite.
|
Term Insurance + PPF |
Term insurance + ELSS |
||||
|
Age |
Year |
Term Insurance premium + PPF |
Death benefit |
Term Insurance premium + ELSS |
Death benefit |
|
30 |
1 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
31 |
2 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
32 |
3 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
33 |
4 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
34 |
5 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
35 |
6 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
36 |
7 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
37 |
8 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
38 |
9 |
-1,00,000 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
39 |
10 |
-97,500 |
10,00,000 |
-1,00,000 |
10,00,000 |
|
40 |
11 |
-500 |
10,00,000 |
0 |
10,00,000 |
|
41 |
12 |
-500 |
10,00,000 |
0 |
10,00,000 |
|
42 |
13 |
-500 |
10,00,000 |
0 |
10,00,000 |
|
43 |
14 |
-500 |
10,00,000 |
0 |
10,00,000 |
|
44 |
15 |
-500 |
10,00,000 |
0 |
10,00,000 |
|
45 |
16 |
0 |
10,00,000 |
0 |
10,00,000 |
|
46 |
17 |
0 |
10,00,000 |
0 |
10,00,000 |
|
47 |
18 |
0 |
10,00,000 |
0 |
10,00,000 |
|
48 |
19 |
0 |
10,00,000 |
0 |
10,00,000 |
|
49 |
20 |
0 |
10,00,000 |
0 |
10,00,000 |
|
50 |
27,56,302 |
51,21,208 |
|||
|
IRR |
6.64% |
10.81% |
|||
Debt Instrument – PPF: The PPF account requires a minimum contribution of ₹500 per year for 15 years. Given the policy term is only 10 years, adjustments are made for the contributions in the remaining years. The final maturity value in the PPF account is ₹27.56 Lakhs, with an IRR of 6.64% when combined with the pure-term policy.
Equity Instrument – ELSS: The pre-tax final maturity value of the ELSS fund is ₹57.01 Lakhs. After accounting for capital gains tax, the post-tax maturity value is ₹51.21 Lakhs, with an IRR of 10.81% (post-tax return) when combined with the pure-term policy.
|
ELSS Tax Calculation |
|
|
Maturity value after 20 years |
57,01,524 |
|
Purchase price |
9,34,000 |
|
Long-Term Capital Gains |
47,67,524 |
|
Exemption limit |
1,25,000 |
|
Taxable LTCG |
46,42,524 |
|
Tax paid on LTCG |
5,80,315 |
|
Maturity value after tax |
51,21,208 |
The accumulated corpus from these investments can help you achieve your life goals. These investments offer better returns, making them superior to the ICICI Pru Perfect Future Plan.
Final Verdict
As you might have noticed that the claim of the company of making Future Perfect, is not so perfect. Instead, it is making your Future Tensed by providing you the returns less than the average rate of inflation of 8%!
In fact, you are losing your money through this policy!!
Our advice is you should avoid investing in this policy.
RDs can offer you the guaranteed return greater than 7%, in the much shorter term!
Or, you can invest in PPF which offers a guaranteed return of 7.1%.
If you can tolerate the risk, then we suggest you invest in equity mutual funds where you can get 12% returns on average.
ICICI Prudential Future Perfect: Commonly asked questions
1. How to cancel this policy?
You can discontinue this policy by downloading and filling up the surrender form. You can access the surrender form by visiting the official website of ICICI Prudential Life. You need to enter your Policy number and date of birth to access your surrender form.
After downloading the surrender form you can fill up the important details and submit it at your nearby branch of ICICI Prudential Life and your surrender request will be processed from there.
2. What payouts to expect after surrendering this policy?
If you have chosen to pay a premium for 10 years or more, your policy will acquire a surrender value after you have paid premium fully for 3 years.
If you have chosen to pay a premium for less than 10 years, the policy will acquire a surrender value after you paid premium fully for 2 years.
And, if you discontinue your premiums before your policy has acquired a surrender value, you will NOT receive any pay-out.
For more details on the exact surrender payout value, you can refer to the product brochure.
3. What if I stop paying my premiums?
If you stop paying the premium before your policy acquires a surrender value, your policy will lapse and no benefits will be paid.
However, if you stop paying the premiums AFTER your policy acquires a surrender value, the policy would continue as a “paid-up” policy with reduced benefits.
4. Who to contact in case any help is required during the policy term?
You can give a missed call on 18003157751 and you will get a callback.
Or, you can contact them through their official website by sending an online message or request a callback.
Still, if you have any specific queries on this plan, feel free to ask them in the comment section.
For your customized investment advice, you can take advantage of our FREE complementary consultation call, by clicking the link in the description below.
If you have any comments or questions, write them in the comment box below.
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Where is calculator link. Please
Sir
Am in this plan of paying 3 lakhs per year (4 terms paid, i.e., 12 lakhs paid } one more year to pay, 5 years paying and maturity at 10th year. Please advise on what should I do now.
Thanks.
As of today, 35.79% is equity allocation. Do you think that will be beneficial ?. I guess that will add as one time bonus at the time of maturity
Excellent review . I have decided not to opt as today post 2023 Budget all Insurence and rest agents simply suggest that the Maturity will be taxed and hence rush for investment before 3st March 2023. This isnt right way of suggestions by the people . Please double check and invest Please.
Yes. That’s why we dont recommend these kind of schemes and suggested better alternatives.
Would you recommend to me changing it to a paidup policy or I go and surrender and put it in MFs? I have paid 6 premiums (from Jan’18 to Jan’23). Its a 10 year payment term (4 more) with maturity in 15 years (2033)
Which is more beneficial route? converting to paid up or surrendering?
Consulting your financial planner is essential. They will compare the benefits of continuing with the policy versus surrendering it and investing in mutual funds. If you convert to a paid-up policy, you retain some insurance coverage and accrued benefits. If you surrender and invest in MFs, you could potentially achieve higher returns, but this carries more risk. Your planner can project both scenarios to help you make an informed decision.
Best Explanation. I wish I came across this page in 2019. simply I am losing 25k yearly in this non-sense plan 🙁
Excellent analysis. Icici pru perfect is a cruel joke. I wish I have read this article before I took the policy.
This policy is a horrible trap. Even the ICICI Prulife people are not able to explain the policy. I was dumb to have taken this policy in a hurry without much research. After paying 5 annual installment, I get only 60% of invested amount ie.. 6Lacs for 10Lacs if I wish to cancel the policy now. Had I not invested, at least would have made double thru regular MF in that much period.
thanks for a well explained article..i have been in this invest.ent for more than 3 years and my payment term is 10 years, with monthly investments of 42500/. suppose i sureender it today, what would be the final payout and do they charge anything for surrendering after 3 yrs?
Since you have already taken this insurance plan, then you have two options.
Option: 1 You can surrender and encash the policy. And reinvest the surrender value and future premium money with better investment plans like PPF or MF.
Option: 2 You can continue with the insurance plan until the policy matures.
It is advisable to work out the outcome of both options and proceed with the better option.
80% of the time, option 1 is better.
You can consult a financial planner to choose the better option.
Or
You can take advantage of our free complimentary financial plan consultation and talk to our financial planners.
Get your appointment here: https://www.holisticinvestment.in/complimentary-financial-plan-consultation/
My brother suggested me to put icici prudential future perfect plan, I don’t exactly about this plan. now I want to know about this plan. Kindly explain. I think it’s not profitable so that only I ask
Please check with your financial planner.
You can also book a slot with our financial planner for an initial complimentary consultation.
https://www.holisticinvestment.in/complimentary-financial-plan-consultation/
Lucid explaination. I wish I should’ve referred to your article before investing in this product.
1) Thanks a lot, Dr. Sravan for sharing your feedback.
2) We are happy that our article has given you a new perspective. Thanks for sharing your feedback with us.
very good explanation and concluding with suggestions for investment … Goof Job !
Thanks Sandeep.
Nicely analysed. Thanks for your valuable input
Thanks Rajan.