Unit Linked Insurance Plans (ULIPs) have always been popular among people. They have some attention-grabbing features such as:

• They combine the advantages of investment and insurance in a single plan.
• The benefit of Life Cover.

Table of Content:

1. Key advantages and disadvantages of ULIP: ICICI Prudential Signature Plan
2. Key Highlights of ICICI Prudential Signature plan
3. ICICI Prudential Signature: Special Features and Benefits
4. Charges under ICICI Prudential Signature Plan
• Premium allocation charge
• Fund management charge
• Policy administration charge
• Mortality charges
• Discontinuance charges

5. Analysis and Review of ICICI Prudential Signature Plan
6. Analysis and Review of Premium Allocation Charge of ICICI Prudential Signature Plan
7. Updated: ICICI Pru Signature Plan Performance till 31st December 2019
8. Final Review: Should you invest in ICICI Prudential Signature plan?

Key Advantages and Disadvantages of ULIP: ICICI Prudential Signature Plan

ADVANTAGES of: ICICI Pru Signature Plan:

1. Control over your Investment:

You will have control of your invested money in the ways given below

• Fund Switch: With this option, it is possible to move your money between equity, balanced, and debt funds. In the ICICI Prudential Signature plan, you will have this benefit to suit your investment needs.
• Premium Redirection: With this option, it is possible to invest your future premium in a different fund of your choice.
• Partial Withdrawal: It is an option where you can withdraw a part of your money but it comes with certain restrictions with different ULIPs.

2. Significant Tax Benefits:

Let us review what are the tax benefits offered by ICICI Prudential Signature Plan.

• Investments in ULIPs are Tax-Free for the income up to Rs. 1.5 Lacs per annum.
• All the maturity proceeds of the ULIPs are also exempt from tax, under the conditions mentioned under Section 10(10D) of the income tax act.
• In case of the death of ULIP investor, the amount received on death will be exempt from tax, through the death benefits of the ULIP policy.
• Also, if you want to switch your ULIP fund with another, it does not attract any tax.

ICICI Prudential Signature Plan consists of all the tax benefits, listed above.

3. More benefits in long term investments:

Depends on the policy you choose, it will have it’s specific rewards and bonuses, such as; wealth boosters, loyalty additions, etc. this way your money will grow further.

Disadvantages of ICICI Pru Signature Plan

1. The biggest disadvantage of ULIP is that the returns are not guaranteed. For eg, if you have chosen a ULIP that invest a large portion of money in equity stocks, and if the shares are not doing well, then the chances of losing money are inevitable.

2. Returns are poor because there are multiple charges associated with this scheme, such as mortality charges, annual maintenance charges, administration charges and so on.
These charges bring down the returns significantly. In the first year itself, as high as 5% of the money is lost in paying these charges.

3. Lock-in period of 5 years, it makes the investor difficult to come out of the policy and discontinuance charge is high for many ULIPs.

Key Highlights of ICICI Prudential Signature plan

ICICI Prudential Signature scheme comes with 3 plans for investment. Let’s review what are all the benefits you will receive with the plan of your choice:

1. ICICI Prudential Signature scheme: Advantage Plan

• Annualized Premium: Min: Rs. 2,00,000 and Max: Rs. 4,99,999
• Benefits: Return of all Premium Allocation Charges + Wealth Boosters (described in the next section)

2. ICICI Prudential Signature scheme: Premier Plan

• Annualized Premium: Min: Rs. 5,00,000 and Max: Rs. 9,99,999
• Benefits: Return of all Premium Allocation Charges + Wealth Boosters + Value Benefit in year 2.

Now, let’s know more about these benefits:

➢ The purpose of Wealth Boosters is wealth creation by allocating extra units to your policy at the end of every 5th policy year starting from the end of the 10th policy year till the end of your policy term. As given in the description below, based on your term of Premium Payment:

Small fraction percentage of your average fund value gets added as the number of years increases after 5 years.

➢ Return on Premium Allocation Charges: The total of Premium Allocation Charges (as described in the subsequent section) deducted in the policy will be added back to the Fund Value at the end of the 10th policy year.

The same amount will be added again at the end of every 5th policy year thereafter. So, the longer you stay in the policy, the more value will be added to your corpus!

➢ Value benefit is useful in creating more benefits and value in your investment. For example, 5% of your annual premium will be added to your fund value as the extra units on the receipt of 2nd-year premium, if you choose Premier Plan. It is further explained in the example below:

For example:

Mr. Shroff is 35 years old and invested in ICICI Pru Signature Premium Plan, with below details:

• Policy term: 30 years
• Premium to be invested: Rs. 5 Lacs per annum
• Premium payment term: 7 years

Now, soon after 2nd year, Mr. Shroff will get the ‘value benefit’ of Rs. 25,000, that will be added to his policy fund value.

At the end of 10 years, Mr. Shroff will get the Total Premium Allocation Charge of Rs. 1,75,000, that will further get added to his policy fund value.

3. ICICI Prudential Signature scheme: Exclusive Plan

• Annualized Premium: Amount: Rs. 10,00,000 and more.
• Benefits: Return of all premium allocation charges + Wealth Boosters + Value Benefit in year 2 + Value Benefit in year 6

The Exclusive Plan has all the benefits of the Premium Plan, as described above. In addition, it provides the value benefit in 6th year. Let’s take an example:

For example:

If Mr. Shroff in the previous example chooses to invest the premium of Rs. 10 Lacs per annum in an exclusive plan, with the policy term of 30 years and premium payment term of 7 years.

Then after the payment of the 2nd and 6th-year premium, Mr. Shroff will get Rs. 50,000 added to his fund value.

At the end of 10 years, he will get back the Total Premium Allocation Charge of Rs. 3,50,000 added to his policy fund value.

The same amount gets added every 5 years until the end of the policy term.

ICICI Prudential Signature Plan: Special Features and Benefits

1. Premium Payment Term

Premium Payment Option	remium Payment Term	Policy Term (in Years)
Single Pay	Single-Premium	10-30
Limited Pay	5,7 and 10 years	10-30
Regular Pay	Same as the Policy term	10-30

For the whole life plan, the premium payment option is through Limited pay at 7th, 10th and 15th year.

Minimum Premium Amount: Rs. 2,00,000 p.a.

Maximum Premium Amount: Unlimited

Premium Payment Modes: Single, yearly, half-yearly and monthly

2. Life Cover

It is applicable for the entire policy term, to provide security to your family even in your absence.

In case of the unfortunate death of any policy-holder during the term of the policy, the nominee will receive the Death Benefits. Death Benefit would be the highest among:

• Sum Assured
• Fund Value, or
• Minimum Death Benefit 105% of the total premiums paid

3. Systematic Withdrawal Plan and Partial Withdrawal Benefits

This facility allows you to withdraw a pre-determined percentage of your fund value regularly, under the conditions, given below:

• Systematic Withdrawal Plan is allowed only after the first five policy years.
• The payouts may be taken monthly, quarterly, half-yearly or yearly, on the 1st or 15th date of a month.
• This facility can be opted at policy inception or anytime during the policy term. You may modify or opt-out of the facility by notifying your branch manager.
• The maximum amount of withdrawals in a year should not exceed 20% of the Fund Value.

Systematic Withdrawal Plan can be used simultaneously with Partial Withdrawal benefits, which is designed to help you provide liquidity so that any immediate financial need can be met.

Partial Withdrawal can be availed after the completion of 5 policy years, provided that the money is not in the Discontinued Policy(DP) Fund.

With partial withdrawal benefits, you can make an unlimited number of Partial Withdrawals and they are free of cost.

4. Whole Life Policy Term

For the Whole Life policy term option, policy term will be equal to 99 minus Age at entry.
For example, if you take this policy when you are 64 years old, then the policy term will be 99-64=35 years.

The maximum age of entry in this policy is 65 years under Limited and Regular Pay. And, 70 years under Single Pay.

The maturity age of the whole life policy term is 99 Years.

An assured sum of whole life policy is defined in the next section.

5. Assured Sum by ICICI Prudential Signature Plan:

Source: ICICI Pru Signature Leaflet

Charges under the ICICI Prudential Signature Plan

1. Premium Allocation Charges

This charge is expressed as a percentage of the premium and it is deducted from the premium amount at the time of premium payment.

They are initial expenses at the time of policy issuance, such as underwriting, agent’s commission, medical expenses, etc.

It depends on:

• Premium Payment Option: Such as – ‘Single Pay’ and ‘Limited and Regular pay’.
  For Single pay, the charges are fixed at 3%.
  Limited and Regular Pay option varies with the mode of payment.
• The chosen mode of payment towards premium: Annual or non-annual.

If the payment mode is Annual, charges are levied as given below:

1st Year to 7th Year	8th and 9th Year	10th Year	More than 10 Years
5%	2%	1%	Nil

If the payment mode is other than annual, then charges are levied as shown below:

1st Year	2nd Year	3rd-7th Year	8th and 9th Yr.	10th Year	10+ Years
5%	3.75%	3.5%	2%	1%	Nil

Allocation charges of 2% are applicable for top-ups.

The total of Premium Allocation Charges (excluding Top-up premium allocation charges) deducted in the policy net of taxes will be added back to the Fund Value at the end of the 10th policy year.

The same amount will be added again to the Fund Value at the end of every 5th policy year thereafter. Percentage addition of annualized premium is given below with the premium payment term:

Premium Payment Term	5 Years	7 Years	10+ Years
Addition as a % of one annualized Premium	25%	35%	40%

2. Fund Management Charge

They are typically charged as 1.35% of the fund value on a per annum basis. However, if the monies are in the Discontinued Policy Fund, a Fund Management Charge of 0.50% p.a. will apply.

3. Public administration Charge

• For Single Pay option: Cost is Rs. 60 per month for the first 5 policy years.
• For Limited and regular pay option: Cost is 0.183% of the annual premium to be payable per month, subject to the maximum of Rs. 500/-.

This charge will be charged throughout the policy term!

4. Mortality Charge

Let’s figure out, how mortality charges can be made?

Mortality charges will be levied every month by the redemption of units based on the Sum at Risk. And, the sum at risk equal to the highest of Sum Assured, minimum death benefits, and Fund Value.

Indicative annual charges per thousand life cover for a healthy male and female life are as shown below:

Age	30	40	50	60
Male (Rs)	1.06	1.81	4.95	11.54
Female (Rs)	1.02	1.55	3.99	9.95

That is, if a 30-year-old male has taken the life cover of Rs. 10 Lacs, then he will be paying Rs. 1060. It increases with age.

5. Discontinuance Charge: Coming out of the policy

These charges are described below:

Source: ICICI Pru Signature Leaflet

If you surrender the policy during the first five policy years, your money will be transferred to Discontinued Policy (DP) Fund after deduction of applicable Discontinuance Charge.

How to cancel the ICICI Prudential Signature Plan during the free lookin Period?

You have got 15 days time to review the ICICI Prudential Signature Plan original policy document from the date of its receipt. If you find the policy terms and conditions are not satisfying, you can return the policy for cancellation. Then you will be eligible to get a refund.

You can cancel your policy within the free lock-in period, by filling up this form and submit it to any of the ICICI Prudential Insurance branches.

Analysis & Review of ICICI Prudential Signature Plan

ICICI Pru Signature contains all top-notched benefits, that any ULIP holder is desired to have. If you choose to invest in ULIPs, ICICI Pru Signature Plan is recommended.

BUT,

There are better alternative investment options available…

Instead of investing in this plan, you can consider choosing the combination of Mutual Fund and Term Policy for much better returns and more flexibility and control over your investments.

The combination of Mutual Fund and Term Policy contains all the benefits of ULIPs such as Fund Switching, Partial Withdrawal, All tax benefits, and more benefits in Long-Term Investments.

Apart from having all these benefits, the combination of Mutual Fund and Term Insurance also overcomes the limitations of ULIPs.

1. Returns of ULIP as compared to Mutual Funds: Who is better?

Whether the returns of ULIP are lower than the returns of the Mutual Fund or higher? Let’s find out by taking the below example:

If someone chooses to invest in ICICI Prudential Signature Plan with the details given in the description below:
The assumed returns will lie between 4% and 8%, with an assured sum of Rs. 20,00,000 as displayed above.

However, the same amount of investment in Mutual Funds will reap the returns between 12%-15%. And, the fund value at maturity may reach much beyond Rs. 38,00,000!!

As you can notice from the above example, the returns of Mutual Funds are way higher than ULIPs.

2. Who is more Goal focused? Mutual Funds or ULIPs!

The Financial goals are the basic building block of any Financial Plan. Through any ULIP it is practically impossible to achieve any financial goal, due to their fixed lock-in periods and lesser returns in investments.

But, with Mutual Funds, you can list your short term (2-5 years) and long term (7+ years) goals and invest accordingly in the right scheme, where you will be benefitted by Higher Returns as compared to ULIPs.

This way, the investments in Mutual Funds provides a more focused and goal-oriented approach. For more details, read the 5-Steps Financial Planning Guide for beginners.

3. Fixed Lock-in Period

In ICICI Prudential Signature Plan there is a fixed lock-in period of 5 years and cancellation charges are significantly high as mentioned in the previous section.

But, If you want to cancel and come out from any Mutual Fund Scheme at any time, you can do so at the much lower cost as compared to ULIPs in the first year.

There are no cancellation charges in Mutual Funds from 1 year onwards.

4. Competitiveness of Fund managers: Mutual Fund Vs. ULIP!

Fund managers who are involved in managing Mutual Funds have a strong pressure to perform the best among their various competitors. Otherwise, investors may withhold their SIPs and invest in other mutual fund schemes, withdrawal of SIP may lead to the bad reputation of any scheme!

This competitive nature of work tends to maximize the profitability of the Mutual Funds significantly.

But with ULIPs there is no such pressure among their Fund Managers, as the returns are lower, plus there is 5 years of the lock-in period.

Therefore, the fund managers handling Mutual Funds are highly competitive as compared to their ULIP counterparts.

5. Regulatory Authority: Mutual Funds Vs. ULIPs:

Mutual Funds are regulated by a reputed agency called SEBI. Whereas, ULIPs are regulated by IRDA, which basically regulate insurance policies.

SEBI ensures greater security and safeguards against all frauds in the Mutual Fund or Stock investments. Whereas, SEBI has no such role to play in ULIPs.

IRDA’s regulations is predominantly focused on Insurance regulation and not on investment regulation. SEBI’s regulation is well evolved in regulating the investments, protecting investor’s interest and proactively taking measures to stop misselling.

If your purpose is investing and getting returns, then SEBI’s regulation is better for you.

6. Transparency in Investment: Mutual Fund Vs. ULIP:

Mutual funds are more transparent than ULIPs about the fees charged and the portfolio holdings. Also, there is a transparency in the level playing field in the Mutual Fund investment, as the categorization of the mutual funds is defined by SEBI. For example, if you choose to invest in the Large Cap Mutual Fund, your investment will be 100% in large-cap. And, you can easily compare various other Large-cap funds, and select the best choice.

Whereas the investment in the ULIP is rather complex, for example if you choose to invest in Large Cap funds through ULIP, it is NOT 100% in Large Cap; they may be exposed to Mid Cap or other category by 20%. Therefore, it becomes hard to compare one ULIP from another. The nature of ULIP investment is not transparent as compared to Mutual Fund investment.

7. Affordability of Insurance: Term Insurance Vs. ULIPs

Your investment in ULIP is divided among Insurance and Investment, you can choose to pay as a single payment or on a monthly basis. And the minimum premium amount is Rs. 2 Lacs per annum!

Existing Term Insurance plans come with much affordable price as compared to the ULIPs and provides the same amount of benefits. For more details about the Best Life Insurance policy, you can read this Cheat Sheet to select the best term insurance plan for you.

Though you are investing in 2 different schemes to get the benefits provided by a single ULIP. But you will experience way better returns in the combination of Mutual Fund and Term Insurance as compared to ULIPs and you will have more control over your investments.

Review and Analysis of Premium Allocation Charges of ICICI Pru Signature Plan

As you have noticed that that premium allocation charges of this ULIP are 5% of the premium amount. And, the minimum amount of your premium is Rs. 2 Lacs p.a. and goes up to 10 Lacs p.a. based on the scheme you choose. And, there is a fixed lock-in period of 10 years, for you to get your premium allocation charges back! Now, let’s do some calculation:

5% of Rs. 2Lacs (minimum premium amount) equals to Rs. 10,000 ; and
5% of Rs. 10Lacs (maximum premium amount) equals to Rs. 50,000.

So, your premium allocation charge is somewhere between Rs.10,000 to Rs.50,000, depending on the plan you choose. After 10 years you will get this amount back without ANY interest!!
Can you imagine!!

In 10 year duration, if you invest this amount (Rs.10,000 – Rs.50,000) in a good Mutual Fund, then the returns of your investment might be close to triple!

There are other ULIPs today, who charges 1% – 3% premium allocation charges. Though they do not refund the premium allocation charge, still their premium allocation charges are less by 2%-4% as compared to ICICI Pru Signature Plan. Even if you invest this small fraction of percentage in a good Mutual Fund, your returns will be much more than the premium allocation charge you may get after 10 years.

For example, let’s say you invest 3% of Rs. 2 Lacs, that is, Rs. 6000. After 10 years you will receive almost triple of this amount, that is, approximately Rs.18,000!!

Which is much higher than the original refundable Premium Allocation Charge of Rs. 10,000, that you receive after 10 years, through ICICI Pru Signature Plan!

Also, there are some ULIPs available today, who do not charge ANY Premium Allocation Charge.

Hence, refunding the Premium Allocation Charge is a way to lure the customer to stay invested for 10 long years. It is just to make you feel that you are not losing anything!!

But, based on the above analysis of Premium Allocation Charges, you got the catch, right?

Updated: ICICI Pru Signature Plan Performance till 31st December 2019

Since ICICI Pru Signature Plan is an insurance-cum-investment plan; it invests in various funds across Equity, Debt and Balanced funds. The table below shows the performance of these funds until 31st December 2019.

Data Source: ICICI Pru website
As you can notice from the above data, the performance of equity funds had been below average. A decent equity fund is expected to give an average return in the range of 12% -15%; but in this case, the returns are in the range of only 5%, 8% or maximum 11%!!

2 equity funds are new, which generated around 3% returns so far. And, value enhancer fund generated a negative return of -4%!!

Balanced funds are expected to give returns around 10%. But they have delivered less than the expectation. Debt funds have delivered reasobaly. Therefore, the overall performance of ICICI Pru Signature Plan funds had been mediocre till 2019!

For more details on each fund, you can visit the official website of ICICI Pru Signature Plan performance details.

Final Review: Should you invest in ICICI Pru Signature Plan?

So, what is our verdict on ICICI Prudential Signature Plan?

As you have noticed in the previous section that based on Premium Allocation Charges, this particular ULIP is NOT up to the mark based on its performance until December 2019!

Our recommendation for you is to invest in Mutual Fund and Term policies separately. Not only they will provide you the higher returns and security benefits, also the Investment in the combination of Mutual Funds and Term Insurance policies can take away the limitations of any ULIP, including ICICI Pru Signature Plan.

Therefore, based on the overall analysis as described in this review, this ULIP (ICICI Prudential Signature Plan) is NOT recommended.

And, also beware of the mis-selling of this ULIP by your bank. They may lure you to invest in this ULIP by showing its various benefits. But, after reading the complete analysis, we hope that you get a clear idea about this ULIP.

If you have any further questions, feel free to ask them in the comment section below.

For more details on your best-personalized investment plan, you can book your FREE Consultation call with us, by clicking the link below: