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ICICI Prudential Life Insurance, a leading private insurer in India, has launched a new unit-linked insurance plan (ULIP) called ICICI Pru Platinum which aims to bridge the gap between the interests of distributors and policyholders by aligning distributor commissions with the customer's fund value.
The plan incentivises distributors to encourage their customers to stay invested for the entire policy tenure.
Let's delve deeper into the key features and benefits of ICICI Pru Platinum:
Aligning incentives for long-term investment
Traditionally, distributor commissions in ULIPs are often front-loaded, meaning a significant portion of the premium paid in the first year goes towards distributor fees. This structure can incentivize short-term sales over long-term investment strategies. ICICI Pru Platinum takes a different approach by linking distributor commissions to the customer's fund value. This unique feature encourages distributors to recommend the product to customers seeking long-term wealth creation and to guide them towards staying invested throughout the policy term.
Flexibility and choice
ICICI Pru Platinum offers a high degree of flexibility to policyholders. Customers can choose from a wide range of 21 funds, including 13 equity funds, four debt funds, and four balanced funds, allowing them to tailor their investment strategy to their risk appetite and financial goals. Additionally, the plan provides four portfolio strategies for those who prefer a pre-defined asset allocation.
ICICI Pru Platinum allows for unlimited free switches between asset classes.
This flexibility empowers policyholders to adjust their investment mix based on market conditions and their evolving financial needs. Importantly, these switches happen without any additional cost or tax implications, maximizing the potential returns.
This flexibility empowers policyholders to adjust their investment mix based on market conditions and their evolving financial needs. Importantly, these switches happen without any additional cost or tax implications, maximizing the potential returns.
Life cover options
ICICI Pru Platinum provides a choice between two life cover variants: Growth Plus and Protect Plus. These options cater to different needs, offering flexibility in terms of the death benefit payout.The Growth Plus variant entitles the nominee to receive either the sum assured or the fund value, whichever is higher. Whereas the Protect Plus variant offers the nominee both the sum assured and the fund value.
Claim Settlement:
ICICI Prudential boasts a remarkable claim settlement ratio of 99.2% for FY2024, with an average turnaround time of just 1.3 days.
But, should you invest in an ULIP?
ICICI Prudential boasts a remarkable claim settlement ratio of 99.2% for FY2024, with an average turnaround time of just 1.3 days.
But, should you invest in an ULIP?
As a general rule, any earning person should be insured for at least ten years' income. ULIP is a market-linked insurance scheme where the scheme invests in equity or debt oriented schemes, whereas endowment plans offer a guaranteed benefit called the sum assured. But experts say neither do such plans provide adequate insurance, nor a good investment solution.
"The biggest factor that goes against them are the exorbitant charges. A significant percentage of the premium you pay, particularly in the initial years, are deducted in the form of various fees and charges, the biggest component being distributor commissions. This reduces the amount of your premium that is actually invested to generate returns. Over a long period, that makes a huge impact on the total wealth you are able to accumulate," according to Value Research.
So what are the alternatives?
It is always better to keep insurance and investment separate. "If you have financial dependents, the first thing that you should do is to buy a term insurance with an adequate cover. Put the rest of the money in one or two good diversified equity funds. But, what if you are risk averse? In that case, we would suggest you to stick to a term plan & good old PPF," Value Research said in a note.
