Why is ICICI Pru Easy Retirement special?
You can enjoy the opportunity to get potentially better returns and grow your money by investing in a mix of equity and debt. This combination helps you beat inflation while protecting your investments.
How does a mix of equity and debt beat inflation?
Inflation is the rate at which the price of goods and services increases over a period of time. For example, the price of a particular item has increased from `100 in 2005 to `243 in 2017.
To gain from your investments, your savings should grow at a rate higher than the inflation rate.
In order to get better returns in the long run, it is advisable to have equity exposure. Equity markets are subject to short-term market volatility. However, the effect of market volatility is negligible in the long term.
Below is an example of how investing in a mix of equity and debt can help in building your savings,
If 60% of your money was invested in the equity market and 40% in debt market## in the last 12 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 7.7%# in the same period.
*Source: CEIC, CSO, CPI inflation average of 12 years (from March 2006 to March 2017)
##Equity market: BSE 100; Debt market: CRISIL Composite Bond Index (from March 2005 to March 2017)
Along with the potential to give you higher returns, this plan also protects your money. It does this by offering capital guarantee on the money that you invest. On vesting, i.e. maturity, you will be entitled to the Assured Benefit^ or Fund Value, whichever is higher.
How much Assured Benefit will I get?
In case your Fund Value* at maturity is less than the sum of premiums paid by you, the Assured Benefit ensures that you receive 101% of all the sum of premiums paid by you and top ups, if any.
You can utilise this benefit amount only as per the available options. Alternatively, you can choose to postpone your vesting date. As a result, your money is protected as the company returns your invested money regardless of market ups and downs.
For example, if you invest `1,00,000 every year for 5 years, the company guarantees to return a minimum sum of `5,05,000.
^The Assured Benefit amount shown assumes all due premiums as per the premium payment term shown above are paid. On maturity, you will receive higher of Assured Benefit or fund value. Assured Benefit will be 101% of total premium paid which is applicable only on maturity of the policy and does not apply on death or surrender.
*Fund Value is the total value of the money that is invested in a fund of your choice.
You can choose to invest your money in equity or debt funds of your choice. You also have the option to transfer your money from one fund to another using the Switch option*.
Which funds can I invest in with ICICI Pru Easy Retirement?
Easy Retirement Balanced Fund (SFIN: ULIF 132 02/11/12 ERBF 105) – Here, your money is invested in a mix of equity and debt to ensure balanced returns.
Easy Retirement Secure Fund (SFIN: ULIF 133 02/11/12 ERSF 105) – Your money is invested in a mix of debt, money market and cash investments to achieve a balance between protection and returns, to guard it from any unforeseen market falls, thereby adding to your savings.^
*Four free switches are allowed every policy year. Subsequent switches would be charged `100 per switch.
^For more information on these funds, please refer the product brochure.
The company adds Pension Boosters to your retirement savings. Thus, your savings continue to grow smoothly without the need for you to invest more money.
How much Pension Booster will I receive?
On completion of the tenth policy year, the Pension Boosters will be added every fifth policy year provided at least five years’ premiums have been paid. It will be equal to 5% of the average daily total Fund Value of the previous 12 months.
Choose from the following multiple options to receive your money:
Regular Income option – Portions of your Fund Value* are given to you as regular income either monthly, quarterly or yearly
Lump sum + Regular Income – Flexibility to withdraw up to 60% of your Fund Value as a lump sum and use the remaining to receive regular income
Postpone your retirement date – Convenience to postpone your pay-outs and schedule them after a few years
Single Premium Deferred Pension Product – Choice to invest your Fund Value in a new pension plan to get regular pay-outs at a later stage
*Fund Value is the total value of the money that is invested in a fund of your choice
Which of the above payment options will suit me the best?
Regular Income: This option lets you receive your money regularly. You can choose from five annuity options to receive your regular income.
Lump sum + Regular Income: You receive up to 60% commutation of your fund Value as a lump sum completely tax-free subject to conditions as per section 10(10A). The remaining amount can be used to purchase an annuity plan to get regular income. Also, you can avail tax benefit on your retirement income as the amount received at the policy maturity is completely tax-free. You can choose from five annuity options to receive your regular income.
Postpone your retirement date: Change the date on which you want to start receiving regular income, i.e. your vesting date, provided you are below an age of 60 years, subject to the maximum vesting age of 80 years
Invest in a Single Premium deferred pension plan: A Single Premium deferred pension plan invests your money further to give you an opportunity to get potentially higher returns. This option is ideal in case you don’t the need the money immediately.
What is meant by annuity and what are the annuity options available to me?
Through a lump sum investment, you start getting a regular income, also called the annuity. The actual amount of annuity chosen by you will depend upon the annuity rate applicable at the time of purchase and pay-out option. These rates are guaranteed throughout your life.
You can choose from the following annuity options of the Immediate Annuity plan: (For more annuity option refer our ICICI Pru Immediate Annuity Plan)
Life Annuity: You will receive pay-outs for life under this option.
Life Annuity with Return of Purchase Price: You will receive pay-outs for life in this option. In your absence, the purchase price of this plan will be returned to your nominee*.
Joint Life, Last Survivor without Return of Purchase Price: Similar to the Life Annuity option, the company gives you the pay-outs for life first. In your absence, your spouse will continue to receive the same pay-out amount as pension.
Joint Life, Last Survivor with Return of Purchase Price: In this option, you will receive the pay-out amount. In case of an unfortunate event, your spouse will continue to receive the same amount as pension. In the absence of both you and your spouse, the purchase price of this plan will be returned to the nominee chosen by you.
Life Annuity guaranteed for 5/10/15 years and thereafter: In this pay-out option, you will receive a pay-out for a term of your choice, that is, either for 5, 10 or 15 years. After this term, your pay-outs will continue for the rest of your life.
*Nominee is the person you appoint at the time of purchase for receiving the benefits of your insurance policy in your absence.
In case of an unfortunate event during the policy term, your nominee receives a Guaranteed Death Benefit or the Fund Value, whichever is higher.
What is the Guaranteed Death Benefit?
Your family will receive the Guaranteed Death Benefit or the Fund Value, whichever is higher, in your absence. The Guaranteed Death Benefit is equal to 105% of the total premiums paid and Top-ups**, if any.
**Top-up is any extra amount over and above your premium that you can add to your Fund Value.
With this plan, you can reduce your taxable income by investing up to ` 1.5 lakh under Section 80CCC. 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 commutation is also tax-free**.
*Tax benefits under the policy are subject to conditions under Section 80CCC, 10(10A) and other provisions of the Income Tax Act, 1961. Applicable taxes will be charged extra as per prevailing rates. Tax laws are subject to amendments from time to time. **Receive a lump sum of up to one-third of the accumulated value, tax-free. The remaining amount must be used to purchase an immediate annuity, providing you with regular income.