The Hindu Business Line : ICICI Pru's SecurePlus

Premium payments made by the policyholder are invested in a portfolio that is predominantly made up of debt/money market instruments (minimum of 80 per cent), with the rest being deployed in equities. The emphasis of such an investment is equal on long-term appreciation and capital preservation.

Plan features

Policyholders can chose between three levels of cover: Basic, standard and enhanced. The extent of cover is a function of the annual premium payment as well as the plan term.

For instance, under the basic cover, the total cover is (Term-5) X annual premium. To illustrate, the cover for an annual premium payment of Rs 10,000 over a 20-year term would be Rs 1,50,000 ((20-5) X Rs 10,000). One can also switch between different levels of cover. Mortality charges, a function of the policyholder's age and the level of cover chosen, will be deducted accordingly.

Maturity/death benefit

Should the policyholder die during the policy term, the sum assured and the accumulated bonuses will be paid out to the beneficiary. Bonuses are declared on the invested portion of the premium, and are compounded. In the first year, bonus on the invested premium is guaranteed at 4 per cent.

On survival to maturity, the policyholder will receive the accumulated policy value. The policyholder also has the option to draw the maturity proceeds as a lumpsum or in equal annual instalments over three or five years.

Charges

Charges deducted from the premiums include those related to policy issuance, underwriting and servicing, apart from those pertaining to mortality. These charges are high initially and taper off subsequently. Under the plan, the deduction is 57 per cent in the first policy year, 15 per cent in the second and third policy year, and 5 per cent thereafter. For example, a yearly premium of Rs 10,000 will result in an investment of Rs 4,300 in the first year, Rs 8,500 in the second and third policy years, and Rs 9,500 thereafter. A fixed charge of Rs 300 per annum, and an investment charge of 1.25 per cent of the investment value are also levied.

Loans

After the policy becomes paid-up (after three years' premiums have been paid) a loan can be taken against the policy. The company will determine the quantum of the loan and the interest on it.

Riders/suitability

A set of six riders can be attached to the basic plan. In contrast, SecurePlus has the features of an endowment plan and incorporates the facets of a market-linked policy as well. Those looking for a combination of protection and savings can give this plan a dekko.

Pieces under this column seek to examine insurance products in detail. Readers are requested to compare products featured under this column with similar products offered by other players before arriving at an investment decision.

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