ICICI Prudential Pinnacle Guaranteed NAV- Review
-
41 Comments
Guaranteed return products are undoubtedly very popular among us Indians. We use at least one of these products, say, bank fixed deposits, NSC, KVP, PPF, REC Bonds, etc., to pick up a decent fixed return. For long, the market was dominated by the government-backed guaranteed return products, but now private players have entered the fray to give them a stiff competition. Sensing the money-making opportunity, private players have experimented with capital protection plans and market-linked guaranteed return plans. The latest offering is by ICICI Prudential which has introduced ICICI Pru Pinnacle, a guaranteed return unit-linked insurance plan (ULIP). But the question remains as whether this plan will succeed in attracting investors by offering something new or fall flat.Highlights - On maturity, the plan offers the highest NAV recorded on daily basis in its first 7 years
- There is an additional 3 per cent maturity bonus on the completion of term
- Low charges make it a cost-effective guaranteed return plan
Background
ICICI Prudential, a joint venture between ICICI Bank and the UK-based Prudential Plc., was established in Dec. 2000. Over past nine years, it has built a strong distribution network of 2,074 branches (inclusive of 1,116 offices), over 2,25,000 advisors and 7 bancassurance partners. ICICI Prudential is the first life insurer in India to receive a National Insurer Financial Strength rating of AAA (Ind) from the credit rating agency, Fitch ratings. As of now, the company has a paid-up capital of Rs. 4,780 cr and the total Assets under Management (AUM) over $10 bn (Rs. 47,000 cr).
Looking for Life Insurance Products – Click here
Product highlights
- ‘ICICI Prudential Pinnacle’ is an open-ended, unit-linked insurance policy with an advantage of varying exposure to equity with downside risk protected.
- Limited premium-paying term (3 years) providing extended insurance protection (10 years)
- An option to increase or decrease the sum assured anytime during the policy term
- The minimum and maximum age for entry is 8 years and 65 years, respectively.
- The policy is available for 10 years.
- The minimum single premium is Rs. 50,000 per annum, with no cap on maximum limit.
- Minimum sum assured is five times the annual premium.
- The policy can be surrendered after the 3rd year, and there are no surrender charges after the 5th year.
Benefits of ICICI Pru Pinnacle
- ‘Guaranteed highest NAV’ as recorded on daily basis in the first seven years of the fund (from Oct. 24, 2009 to Oct. 24, 2016)
- An additional 3 per cent of fund value (prevailing NAV) received upon maturity
- Liquidity in terms of partial withdrawals allowed from the 6th policy year
- In case of the unfortunate event of death of the insured, the nominee gets the higher of the fund value and sum assured (reduced by partial withdrawals, if any)
- 100 per cent surrender value after the 5th policy year
- Tax benefits on the premium paid and benefits received under the policy as per the prevailing Income Tax laws.
Analysis
There are already a considerable number of guaranteed return products in the market such as SBI Life’s Smart ULIP, Tata AIG’s Invest Assure and Birla Sunlife’s Platinum Plus. All these plans have more or less the same features. However, they differ in charges like premium allocation charges, fund management charges, policy administration charges and others.
So where does ICICI Pru Pinnacle stand? This plan, too, is similar to the above-mentioned plans, but what sets it apart from them is its lower policy charges, recording of daily NAV and an additional maturity bonus of 3 per cent. The ICICI Pru Pinnacle fund guarantees the highest net asset value (NAV) recorded in its first seven years, subject to a minimum of Rs. 10. But there is a catch. This guaranteed highest NAV is applicable only at maturity. At maturity, the higher of Fund Value (units X NAV) and Guaranteed Value (units X guaranteed NAV) as on the maturity date shall be payable (refer Table 1).
As per the company’s benefit illustration, an annual premium of Rs. 3 lakh for three years for a 35-year-old healthy male with a sum assured of Rs. 15 lakh will grow to Rs. 11.63 lakh and Rs. 16.34 lakh at an interest rate of 6 per cent and 10 per cent, respectively.
Equating with other products
Here is the refrain, ‘Do not mix insurance with investment unless investment costs are very less and investment horizon is more than 20 years’. We are not comparing ICICI Pru Pinnacle with similar products like SBI Life’s Smart ULIP, Tata AIG’s Invest Assure and Birla Sunlife’s Platinum Plus, for they differ majorly in charges. Rather, we weigh it against a customised product – a combination of a mutual fund and a term insurance. Let us consider that the combo-product grows at the same 6 per cent and 10 per cent interest rate (refer Table 2).
In any circumstances, the combo-product of ELSS + term plan will outperform ICICI Pru Pinnacle by Rs. 1.11 lakh and Rs 1.45 lakh at a growth rate of 6 per cent and 10 per cent, respectively. Moreover, the death benefit in the MF investment will always be more than Rs. 15 lakh (Rs. 32.79 lakh at the 10th policy year). In terms of net returns also, the combo-product will yield 8.86 per cent and 4.43 per cent in comparison to 7.72 per cent and 3.25 per cent by ICICI Pru Pinnacle at a growth rate of 10 per cent and 6 per cent, respectively. Nevertheless, in ICICI Pru Pinnacle Fund maturity amount is guaranteed by its highest NAV recorded in the first seven years, but in ELSS maturity amount is applicable at the recorded NAV at the maturity date. So, in case the market tanks at the time of maturity, ELSS proceeds will go down, failing to provide the guaranteed return while ICICI Pru Pinnacle maturity proceeds are guaranteed at their highest NAV recorded.
Tax benefits
ICICI Prudential Pinnacle Fund provides tax benefits under Sec 80C of the Income Tax Act, where the premium paid is eligible for tax deductions up to Rs. 1 lakh. The maturity proceed is also exempt from tax under Section 10(10D).
Things to look into
• Top-up premiums are not allowed.
• Surrender benefit is limited to 30 per cent of the fund value within 3 years of policy term.
Recommendations
In India, products like ULIPs have become a push product rather than a pull product. By presenting delusive return charts to buyers and hiding the hefty charges applicable on ULIPs, insurance agents try to create a positive image for the product. ICICI Pru Pinnacle fund is no comparison to the combo-product of ELSS and term plan when it comes to tax saving and wealth creation, for the latter offers higher return. However, when compared with its peers like SBI Life’s Smart ULIP, Tata AIG’s Invest Assure and Birla Sunlife’s Platinum Plus, ICICI Pru Pinnacle Fund has an edge over the rest because of its lower policy charges and the unique feature of daily NAV, not applicable in Smart ULIP.
How to invest in the plan?
Investors can buy the plan directly from 2,074 branches (inclusive of 1,116 offices), over 225,000 advisors and 7 bancassurance partners of ICICI Prudential.
Summing it up
Innovation is the key to financial products. It is a known fact that most ULIPs face difficulty in offering guaranteed return as promised. Though fund managers try to invest as per the mood of investors based upon the economic scenario, they may not always succeed in generating desired return. ULIPs carry high risks as returns are linked directly to market performance, and thus insurers may not be able to honour their commitment of guaranteed NAV. However, the guaranteed maturity amount in ICICI Pru Pinnacle by its highest recorded NAV helps it score over a mutual fund whose returns are not guaranteed. So, it can be safely said that ICICI Pru Pinnacle is a good bet for the investors who have a low risk appetite.
To get a quote for this product please visit our Life Insurance Page
Related posts:
- Birla SunLife Dream Plan – Review
- LIC Jeevan Anand – Review
- ICICI Bank Advantage Deposit: A two-in-one investment solution
- LIC Jeevan Saral – Review
- MetLife’s Monthly Income Plan – Review
Published on November 18, 2009 · Filed under: Banking, ELSS, Insurance, Life insurance, Mutual Fund, Personal Finance, Rupeetalk; Tagged as: Fixed Deposit, Guaranteed NAV, Guaranteed Return, ICICI Pru Pinnacle, ICICI Pru Pinnacle Review, ICICI Prudential Pinnacle Fund, ICICI Prudential Pinnacle Review, Invest Assure, NAV, Pinnacle Fund, Platinum Plus, Smart ULIP, ULIP
41 Responses to “ICICI Prudential Pinnacle Guaranteed NAV- Review”
-
Bhavik said on November 20th, 2009 at 12:08 pm
Superb article! Very simple and crisp. A much needed one
-
Murali Krishna said on November 21st, 2009 at 4:26 pm
Really a very good article. This article brought the pros and cons and also compares it with similar types of schemes. However, tax benefits I feel should be dealt in consonance with the proposed Direct tax code since, when the plan matures, direct tax code will be in.
Any how thanks for an excellent article.
-
Mackeran said on November 22nd, 2009 at 12:13 am
I really like your blog and i respect your work. I’ll be a frequent visitor.
-
good article……………what will be best bet for me .
having invested in MF ELSS na d ULIP of reliance………..should i go for it……reliance ULIP…not coming good for me. -
Manish said on November 22nd, 2009 at 11:41 pm
Good Article. Totally focused and to the point. Thanks
-
john said on November 23rd, 2009 at 11:45 am
good informative article. i like it.
-
Raj said on November 25th, 2009 at 2:35 pm
Hi
I have paid my money for this ULIP (Pinnacle)but even after 20 days, the unitss are not being allotted. The amount was encashed on 5th Nov. Is it allowed? Which NAV will they take to allot the units? (5th Nov or the current date of allotment?)
Please clarifyThanks
Raj -
admin said on November 26th, 2009 at 2:04 pm
@Raj You have not provided your complete details to help us advise you completely. The units would be allotted on Nov 5th if the policy has been issued to you however there may be circumstances when the company can give a later date of allotment especially if there were some problems with issuing of policy. We would advise all of you to redirect all queries to our ask the expert section
-
Anand said on November 30th, 2009 at 1:26 pm
Nice Article. Since this is a insurance product, it will be great to see how it compares with a term plan in terms of coverage provided.
-
MAYANK KHANDUJA said on December 9th, 2009 at 8:26 pm
PLAN YOUR INVESTMENTS before 31st. of Dec. 2009
I came to know there will be certain big changes in Unit Link Insurance Plans from 1st. Jan 2010 to have the better benefits
-
Rame said on December 10th, 2009 at 4:06 pm
About ICIC Pru Pinncle
1. Will the NAV grow at the rate by which the sensex grow, but not fall when sensex falls.? Analysing the recent growth from 15800 to 17000, ie raise of 1200 ponts the NAV just grown a little.
Pls compare the charts of SENSEX and PinnclFund
2. How to know the NAV reported by the company is what it actual, I mean it can get more profit but show less in NAV -
admin said on December 10th, 2009 at 7:48 pm
@Rame Please redirect all your queries to our ask the expert section.
NAV will not grow at the rate of sensex growth but will grow depending upon how the fund manager of ICICI Pru’s pinnacle fund will deploy that money. NAV reported by company has to be actual since it is bound by regulations and is a large brand company so you have to trust it to follow regulations -
admin said on December 10th, 2009 at 7:51 pm
@MAYANK KHANDUJA we have covered the changes that are going to be held in ULIPS from january 2010 in our ULIP vs MF article earlier please refer it
-
leslie said on December 19th, 2009 at 6:51 am
sir,
how much rebate in the first premium will be given by the agent. -
YP said on December 23rd, 2009 at 6:37 am
Well, I doubt if this will be linked to the equity market at all. No one can afford to pay huge amounts, just because the market went high on some day. And frankly, is that not everyone in the world wishes? Get the highest benefit from the market, even if the market goes up and down! No way!
-
Hima said on December 28th, 2009 at 2:15 pm
Stupid thing to invest is in ULIPs. We may not know what will happen after 10 – 15 years. It may raise or down based on stock market.
But we need to pay highest charges when invest in ULIPs.
As per my experience LIC and Mutual fund (SIP) are the best ways to invest in long term. -
Rajesh Jayswal said on December 28th, 2009 at 2:25 pm
Very nice Article describe in lay man language! Thanks for sharing most important factor of the policy.
-
Narayanan said on December 28th, 2009 at 3:54 pm
It was a nice article on ICICI pinnacle fund. I would like to know about the safety of my investment. Also what is the likely expected return, in case i do not continue for the full period (as only then the max NAV will be applicable). Thanks.
-
Narayanan said on December 28th, 2009 at 3:56 pm
@Hima
Can you please enlighten me about the various options available in LIC products. Thanks. -
V.B.Bhosale said on December 28th, 2009 at 5:16 pm
if at the time of maturity market goes down just like 2008, then how it is possible for company to make payments of guaranteed NAV. and how they are going to secure the fund at highest level, as on one can time the market.
-
Jaspreet said on December 28th, 2009 at 9:08 pm
Hi. I am very much impressed with this plan and i m surely going to take this plan and will tell to my friends also. The Article i found is very impressive and straight forward. Means everything is shown crystal clear. Thanks to ICICI for serving the best.
-
@ Narayanan
In case you don’t continue to full term, you would be deprived of all benefits such as Highest NAV paid and other benefits. At the time of surrendering the policy before the maturity period, the maturity benefit would be in terms of applicable NAV at that time only. -
Padmakar said on December 29th, 2009 at 2:44 pm
Its a good artical, but not showing all aspects of plans in the sence what are the policy admin, allocation,mortality & other charges. What happen if i wish to withdraw befor maturity,that should be given ………………..
-
Bobby said on January 6th, 2010 at 4:51 pm
>> Minimum investment amount is 50000/- a year. For first 3 yrs, you have to invest.
>> About charges, for the first year, it is 14%, second year 4% and third year it is 2%. -
vikas said on January 12th, 2010 at 12:53 am
secure your hard earned money in public insurance company which gives u fair returns and full security and peace of mind, and dont risk them in share market where everything is uncertain.. be smart and dont get lured with these types of conceptless plans.. always choose conventional plans only.. if u have excess money to experiment then do that with ULIPs.. but first secure yourself with adequate insurance coverage which will help your family in your absence..
-
Mahaveer said on January 12th, 2010 at 7:17 am
Very good scheme. If you are interested then please contact me. 9342629036
Iam from Bangalore. -
Anupama said on January 20th, 2010 at 1:58 pm
Looking to invest in this product in Mumbai please call 9769748436
-
meera said on January 30th, 2010 at 5:37 pm
@Padmakar
Then you will not get guranteed nav, that day’s nav is applicable.meera
-
Mahesh said on February 4th, 2010 at 2:48 pm
I have taken aICICI prudential policy for 3 years where I was supposed to pay 25000 Rs every year. I paid my First installment & then I went to japan on job assignment & unable to pay the remaining installments.After three years I called them to enquire about my policy & surprisingly they told I have been eligible for a refund of Rs.5000+. The reason given was If we do not pay all three payments our policy will be foreclosed & only 25% of the toal amount will be refunded, which nobody explained to me when I was taking a policy & they only explained how policy will grow & how my investment may, may, may be increased.
If you are thinking of buying a ICICI Prudential policy please read all conditions & ask them about all risks (Whiuch they will never try to tell you).
Better thing never buy any policy from ICICI which will ceat basic amount also to the customers(That is their policy.ICICI Prudential policieas are most ridiculous things established to cheat the people.
-
Sunita Nair said on February 13th, 2010 at 5:36 pm
@Jaspreet
D/Mr. Jaspreet,
I am associated with ICICIPru so pl do let me know if and when you require this product.
Thanks
Ms.nair -
Atul Mishra said on February 14th, 2010 at 5:06 pm
The guaranteed NAV works like this: Consider this for Equity option in the scheme.
Lets say that NAV is 10 initially. During the first seven years, the fund manager tracks and freezes the funds at the highest point of market he thinks.Say the NAV here is 15. He may transfer the funds in money market for the balance period of 3 years.Now the funds will earn only that returns that money market gives (@ 3%). You cannot expect any more upside now even if the market shoots from this point after the first 7 years.
The policy holder will only track the NAV that will only increase very marginally after the shift.The increase in the market will not allow your funds to grow after the shift. Thus the cap of NAV is in the hands of fund manager.
-
NEHA said on February 15th, 2010 at 9:49 pm
@Mahesh
IT IS NOT ICICI..DONT BLAME THE COMPANY…BLAME URSELF FOR NOT READING IT..WHEN YOU GO TO ANY SHOP TO BUY THE LAPTOP EVER BODY SAYS U THE FEATURE N BENIFIT AND NOT THE DISADVANTAGES..COZ THEY OUR HERE TO SELL… -
Kuldeep said on March 2nd, 2010 at 7:33 pm
good article but i want some help on one matter : What i understand is there would be a mix of Debt and Equity in this product. there is no fix limit which they need to maintain for either equity or debt. what if their portfolio mix has more of debt and less (in comparison to debt part) of equity. that way may be they guarantee highest nav but returns may be less due to their portfolio allocation. can somebody throw light on this matter.
-
M Sahay said on March 13th, 2010 at 12:26 pm
Quite informative. Thanks
-
S R MISHRA said on March 13th, 2010 at 6:12 pm
what will happen when person fails to pay 3 consecutive years? whether bonus will be given after maturity even company is at loss?
-
BHASKAR said on March 18th, 2010 at 4:34 pm
iNSURANCE POLICIES ARTICLES
-
rahul gautam said on March 20th, 2010 at 6:34 pm
This is a good article, in fact if max. part in pinaccle plan is invested in debt instrument, so the NAV will never go down.
-
Kumar said on March 23rd, 2010 at 9:04 am
This blog gives the advantages and disadvantages of highest Nav plan.
Good one.
Think before invest. -
pankaj said on March 24th, 2010 at 2:03 pm
Guys, Article was always good by companies because they have to sale their product but thing is could you please give me just single detail if i invest annual 80000 and pay continue 3 year how much i could get after 3 year or 5year. as the market is shivering daily no body can predict what will happen next. then how could you say guarantee .. please revert me pankajchdry@gmail.com i am waiting
-
Nagabhushan said on March 26th, 2010 at 1:52 pm
Thank you very much. Such articles are really eye opener for a common man and helps in getting trapped by the words of the marketing guys.
Keep it up and going.Regards,
-
TEJAS SHAH said on March 30th, 2010 at 11:54 am
@Atul Mishra
SIR YOU ARE ABSOLUTELY RIGHT PEOPLE ARE NOT UNDERSTAND TECHNICAL THINGS THEY ONLY CONSIDER WORD GUARANTEED INSTED OF IF PERSON HOLD ANY AMOUNT FOR 7 YEARS WITH GOOD DIVERSIFIED MUTUAL FUND HE /SHE WILL GET MINIMUM 12 % RETURN AS PER TRACK RECORD.
Leave a Reply
|
||