The Hindu Business Line : ICICI Pru's ForeverLife

THE importance of a having sufficient funds at one's disposal to meet an exigency after retirement cannot be emphasised enough. It is to address this need that insurance companies have launched pension plans. This week we will look at one from ICICI Prudential's portfolio, ForeverLife.

Plan features

The life insured is required to pay a fixed premium over the chosen duration. It is better to enter such plans at a young age and pay premiums over an extended period.

This results in the twin advantages of a lower premium payout as well as a higher corpus at maturity because of the compounding effect of the bonuses declared.

Bonuses under this plan are declared on the sum assured are compounded, and non-guaranteed. However, additions for the first four policy years are guaranteed at 3.5 per cent of the sum assured (compounded).

On the policy's maturity, the insuree can withdraw up to 25 per cent of the accumulated corpus (basic sum assured plus guaranteed additions plus declared bonuses) and take an annuity for the remaining amount. The company will determine the annuity rate. The annuity can also be purchased from any other insurer (open market option).

In the event of the policyholder's death, the beneficiary will stand to receive the basic sum assured, the guaranteed additions and the bonuses declared till that date.

The beneficiary can either opt to receive a lumpsum or commute a portion of the corpus and buy an annuity with the remaining amount.

Annuity options

The amount that one receives as an annuity is a function of the prevailing rates as well as the mode of annuity taken.

The modes offered are:

Annuity for the life of the insured.

Annuity with return of purchase price

Annuity guaranteed for 5/10/15 years.

Annuity payouts for the policyholder's life, and on his death the annuities will continue for his spouse. On the death of the spouse the nominee receives the purchase price

Riders

Four riders can be attached — Critical Illness, Major Surgical Benefit, Accident and Disability, and Accident Benefit.

Another feature of the plan is one can defer the vesting age from the original date chosen. During the period, the corpus will earn interest at a company-determined rate. However, no life cover is applicable during the deferred phase.

Suitability

With access to health-care facilities having improved rapidly, the threat of an extended lifespan is real. A plan such as this will provide the much-needed financial relief after a steady revenue stream dries up on retirement.

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