The Hindu Business Line : ICICI Pru Golden Years retirement plan

AS THE medical world strives to extend human longevity through its many advances and innovations, having to secure oneself financially for a lengthy post-retirement innings becomes even more important.

Retirement plans offered by insurance companies may be one option through which to secure one's monetary needs after having hung up one's boots. Golden Years from ICICI Prudential is one such plan. Let's take a look at some of its features.

Plan details

A key feature is that the policy permits an investment of up to Rs 1,00,000 which can be claimed as a benefit under Section 80C; this allows build up of a healthier corpus for retired life, compared to the investment limit of Rs 10,000 under a pension plan.

The plan has two phases. During the accumulation phase the premium contributions are made. The payout phase commences at the vesting age of the policyholder.

Premium payments can be made over a three, five, seven, or 10-year term. The minimum age at vesting is 45 and the maximum 75. In case the premium-paying term ends before the plan vests, the plan will continue to be active and participate in the gains/losses of the chosen investment options till the payout phase commences. During this intervening period, the policyholder is free to bring in top-ups into the plan.

Investments can be made in a combination of four fund options, ranging from one that invests predominantly in equities (high risk, high return), to one that deploys funds in call money markets (low risk, low return).

The two other funds attempt to moderate the risk by fusing the equity and debt options. The policyholder can also switch between funds; up to four free switches are permitted in a year.

The sum assured can be a minimum of five times and a maximum of 15 times the annual premium payment. In the event of the policyholder's death during the accumulation phase, the beneficiary will receive the higher of the sum assured or the value of the units. Additional units also get credited to the policyholder's account, the extent of which depends on the premium-paying term chosen.

The payout phase: On vesting, the policyholder has five options to choose from

Withdraw the accumulated amount as a lump sum and close the contract.

Take out the accumulated value as a structured payout, over a one to 20-year time-frame, with payments made each quarter.

Take an annuity with the entire accumulated amount.

Withdraw 50 per cent as a lump sum and opt for a structured payout option for the remaining amount

Split the accumulated value equally, by taking a lump sum and buying an annuity with the remaining amount.

Under the annuity option, the policyholder can again choose from among five options. If the policyholder dies after during the structured payout, the beneficiary will receive the remaining value of the units in his account, apart from a fixed death benefit of Rs 1 lakh.

Riders

The plan has a couple of riders — accident and disability benefit and critical illness. These riders envisage a payment of an additional rider sum assured, should the policyholder meet with death due to an accident or be diagnosed with a critical illness.

Charges

As with unit-linked plans, there are quite a few charges associated with the plan, such as administrative, fund-related, premium allocations, top-up and mortality.

Barring the premium allocation charge, the others are imposed by means of cancellation of units.

(Readers are requested to compare products featured under this column with similar ones offered by other players)

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