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Why is ICICI Prudential Smart Kid Solution with ICICI Pru Smart Life special?

You can enjoy the opportunity to get potentially better returns and grow your money by investing it in equity and debt funds for the long term. This combination helps you beat inflation while protecting your investments.

How do equity and debt funds beat inflation?

Inflation is the rate at which the price of goods and services increases over a period of time. For example, the average price of petrol has increased from `40 in 2005 to `62 in 2015 as a result of inflation over the same period*.

On the other hand, savings rate is the rate at which your savings grow. To gain from your investments, your savings rate should be higher than the inflation rate.

In order to get better returns in the long run, it is advisable to have exposure to equity. Although equity markets are subjected to short term market volatility, the impact of this short term volatility on long term investments made to equity funds in ULIPs is negligible.

Below is an example of how investing in a mix of equity and debt can help in building your savings, while protecting your investment over the long run.

If 60% your money was invested in the equity market and 40% in debt market## in the last 10 years, your investment would have grown by around 12% on an annualized basis. This growth would have helped you stay ahead of the inflation rate of about 6%# in the same period.

*As per the IOCL Petrol Prices in Delhi
#Source: Bloomberg - WPI inflation average of 10 years (from March 2005 to March 2015)
##
Equity market: BSE 100; Debt market: CRISIL Composite Bond Index (from March 2005 to March 2015)

You may want to manage your investments yourself, or want an expert to do it for you. This plan brings you the best of both worlds. With the Fixed Portfolio Strategy, you can manage your money by investing it as per your risk appetite in equity and debt funds. Whereas with the Lifecycle-based portfolio strategy, we carefully manage your money to create an ideal balance of equity and debt funds, depending on your age.

Which portfolio strategy suits me the best?

Fixed Portfolio Strategy:With this option, you can invest your money in the equity and debt funds of your choice. You can also move your money from one fund to another to suit your investment needs.

Lifecycle-based Portfolio Strategy: With this option, your money is automatically allocated to equity and debt funds based on your age. As you grow older, your money is systematically transferred from equity to debt to secure it when the policy matures.

This plan provides your child an all-round protection. In case of an unfortunate event during the policy term, your child receives a lump sum amount. This amount will help cover the cost of regular expenses and help fund your child’s education.

How much lump sum amount will my family receive in my absence?

In case of an unfortunate event, the company pays in two ways:

a) Lump Sum Benefit - A lump sum amount is paid out, to take care of any immediate liabilities of the family. The Lump Sum benefit is higher of the two amounts:

  • A fixed minimum amount called the Sum Assured including top-up** Sum Assured if any

  • Minimum Life Cover amount that is equal to 105% of the total premiums paid including top-up** premiums, if any.

**Top-up is any extra amount that you can invest and add to your existing Life Cover amount.

b) Smart Benefit -This benefit ensures that your money continues to grow for your children’s higher education. In case of an unfortunate event, the company pays all future premiums on your behalf and the policy continues uninterrupted. In addition, a Maturity benefit is paid at the end of the policy to make sure that your long term goals are fulfilled.

To reward you for being a loyal customer, the company adds to your savings further with Loyalty Additions, which helps your wealth grow.

How much Loyalty Additions do I get and when?

Loyalty Additions will be added as extra units at the end of each policy year, starting from the sixth policy year. Each Loyalty Addition will be equal to 0.25% of the average Fund Value*. It includes Top-up Fund Value**, if any, if all premiums until that year have been paid.

An extra Loyalty Addition of 0.25% will be paid every year after the 6th year if all premiums due until that year have been paid. These Loyalty Additions will be allocated to your fund in the form of units.

*Fund Value is total value of your money that is invested in a fund of your choice.
**Top-up Fund Value is any extra amount that you can invest and add to your Fund Value.

The company also adds Wealth Boosters to your savings. This helps you grow your money without making any additional investments.

What is the value of Wealth Boosters that I will get?

Each Wealth Booster addition will be equal to 3.25% of the average Fund Value* in the Regular Pay option and 1.5% in the One Pay option. This will also include additional Fund Value from Top-up Fund Value, if any. The additions are made once in 5 years starting from the end of the 10th policy year, which means for a policy term of 25 years, you will receive Wealth Boosters four times.

Loyalty Additions and Wealth Boosters will be equal to the above percentage of the average Fund Values on the last business day of the last eight policy quarters.

Is this a guaranteed feature of the product?

Yes, the allocation of Wealth Booster units is guaranteed subject to regular premium payment to be made by you.

*Fund Value is total value of your money that is invested in equity and debt fund of your choice.
**Top-up Fund Value is any extra amount that you can invest and add to your Fund Value.

Starting from the sixth policy year, you can withdraw a part of your money as per your need. This ensures that you have easy access to your money while at the same time allowing the rest of your invested money to grow.

How much can I withdraw?

You can withdraw up to 20% of your Fund Value at any time+ after the fifth policy year.

Am I charged for making partial withdrawals?

No, partial withdrawals are completely free of cost.

Will partial withdrawals reduce the lump sum amount my nominee receives in my absence?

No, partial withdrawals will not reduce the lump sum amount that your nominee receives in your absence.

+Provided monies are not in DP Fund. You can make unlimited number of partial withdrawals as long as the total amount of partial withdrawals in a year does not exceed 20% of the Fund Value in a policy year. DP Funds refer to Discontinued Policy Funds and consist of money from lapsed policy.

With this plan, you can reduce your taxable income by investing up to ` 1.5 lakh under Section 80C. This will help you save tax. What’s more, even shifting your money from equity to debt or debt to equity is completely tax-free*. The money you get on maturity/death is also completely tax-free*.

*Tax benefits under the policy are subject to conditions under Section 80C, 10(10D) and other provisions of the Income Tax Act, 1961. Service tax and applicable cesses will be charged extra by the redemption of units, as per prevailing rates. Tax laws are subject to amendments from time to time.

Product Snapshot

As a parent, you want to make sure your children get the best possible education to pursue the career of their choice even if you are not around. Presenting ICICI Prudential Smart Kid Solution with ICICI Pru Smart Life – a Unit Linked Insurance Plan, which grows your investments and helps you secure the educational milestones of your children.

For this solution, you have to purchase ICICI Pru Smart Life (UIN: 105L145V01), keeping yourself as the Life Assured* and your child as the nominee.

*Life Assured is the person for whom the life/health insurance policy has been issued.

Product at a glance - ICICI Prudential Smart Kid Solution with ICICI Pru Smart Life

This solution allows you to choose the number of years for which you wish to pay premiums. You can opt for either the One Pay option (payment of premium once), or the Regular Pay option (regular payment of premiums throughout the policy term).

How much premium can I pay?

Your minimum premium amount will depend on your age at entry as shown below.

There is no upper limit on the premium amount.

Age at Entry Minimum Premium per year
20 – 49 years `45,000
50 – 52 years `1,20,000
53 – 54 years `5,00,000

Can I pay the premiums yearly, half-yearly or monthly?

Yes, you can choose to pay your premiums yearly, half-yearly or monthly.

At what age can I start this plan?

You can start this plan from the age of 20 years. The maximum age of entry is 54 years.

 What age must I be at the time of maturity?

The minimum age you must be at the time of maturity of the plan is 30 years and the maximum age is 64 years.

How long does the policy last?

You can choose this policy to continue for 10 to 25 years.

How much premium can I pay?

There is no upper limit on the premium amount that you can pay. The minimum premium amount to be paid and the Sum Assured^ will depend on your age at entry as shown below:

Age at Entry Sum Assured Minimum Premium per year
20 – 54 years 1.25 X Single Premium `48,000
20 – 28 years 10 X Single Premium `48,000
29 – 35 years 10 X Single Premium `1,25,000

Can I pay the premiums yearly, half-yearly or monthly?

No, you only need to pay your premium once at the beginning of the policy in the One Pay option.

At what age can I start this plan?

You can start this plan from the age of 20 years. The maximum age of entry is 54 years.

What age must I be at the time of maturity?

The minimum age you must be at the time of maturity of the plan is 30 years and the maximum age is 64 years.

How long does the policy last?

The policy lasts for 10 years.

Raj is employed at an MNC as a manager and is the sole earning member of the family. He is a proud father and wants to provide the best education to his 6 year old daughter, Rita. He realizes that his responsibilities are not merely ensuring basic education, but an all-round development that include nurturing hobbies, extra-curricular activities, sports, and exposure to the world, new technologies, etc. He wants to accumulate `30 lakh in the next 15 years for Rita’s higher education with easy access to money for funding important educational milestones.

He invests in ICICI Prudential Smart Kid solution. By regularly investing in this policy, he will be able to accumulate an education corpus for Rita by the time she turns 21 years old.

Unfortunately, five years later a road accident claims Raj’s life. On Raj’s death, the company pays a lump sum amount which takes care of Rita’s immediate educational needs. Under this plan, the company also pays all 10 (pending policy years) future premium instalments towards his policy. At the end of the policy term, Rita gets the corpus she needs for her higher education. Thus, even in Raj’s absence, the dream for his daughter becomes a reality!

 

ICICI Prudential Smart Kid Solution benefit illustration

 

The maturity value at 4% growth scenario will be `21,79,502*

*The returns shown in the benefit illustration are not guaranteed and they are not the upper or lower limits of what you might get back, as the value of your policy depends on a number of factors including future investment performance.

Food for Thought

Open letter from a father to his son

Food for Thought

How to Invest to secure your child’s future ?

 

 

^Sum Assured is the fixed minimum amount you receive either at maturity or your family receives in your absence.
Unlike traditional products, Unit linked insurance products are subject to market risk, which affect the Net Asset Values & the customer shall be responsible for his/her decision. The names of the company, product names or fund options do not indicate their quality or future guidance on returns. Funds do not offer guaranteed or assured returns.

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