Investment Plans September 26, 2020

ICICI Pru Lakshya Wealth Policy

Life is all about growth, and as it progresses, your goals keep on changing. Your priorities would be to buy a house, getting married, and after that, the education of your children becomes your primary concern. But how to make all this possible and protect your loved ones from financial issues at the same time. For this, we have the right plan for you, ICICI Pru Lakshya, a specially designed plan to grow your money without any risk. It will offer guaranteed benefits in the form of a Sum Assured when the policy matures along with guaranteed value benefits and bonuses in the form of regular additions every anniversary year throughout the policy term with a terminal bonus (if declared) on maturity. ICICI Prudential Life Insurance Co. Ltd. offers you this life insurance plan. And today, we will discuss the benefits of the ICICI Pru Lakshya Wealth plan in this post. So, read on to know more.

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What is the ICICI Pru Lakshya Wealth plan?

It is a life protection cover that runs throughout the policy term. There are two types of plans that you can choose as per your financial goals. Take a look at them below and know which one is suitable for you.

ICICI Pru Lakshya Wealth (Wealth Plan)

Under this plan, you can get two benefits – death benefit and maturity benefit. Let’s have a look at each of the policy benefits carefully.

Death Benefit:-

The insured family or nominee will get this benefit on the death of the insured during the policy term when all the due premiums are paid. The following amount will be payable by the insurer, whichever is higher.

  1. Sum Assured on Death + Net Accrued Regular Additions Payment in cash (if any) + Interim Regular Addition (if declared) + Terminal Bonus (if declared)
  2. 105% of Total Paid Premiums (till the date of death) that is higher of 10 X Annualised Premium or Premium Payment Term X Annualised Premium
  3. Bonuses will be provided in the form of a Regular Additions (if declared annually from the first year). If Terminal Bonus is declared, it will be payable on the death of the insured.

Note:- Once the Death Benefits are paid, all the policy benefits will cease after that.

Maturity Benefit:-

If you complete the policy term, you will get a Maturity Benefit at the end of the policy term that comprises guaranteed benefits and bonuses such as.

  1. Sum Assured on Maturity + Applicable Guaranteed Value Benefits + Accrued Regular Additions (in cash payment) if any + Terminal bonus (if declared).
  2. Bonuses are declared in the form of Regular Additions annually from the first year of the policy and will be payable on maturity
  3. If Terminal Bonus is declared by the company, it will be payable at policy maturity
  4. The Sum Assured on Maturity is calculated using the formula

Sum Assured on Maturity = Annualised Premium X Premium Payment Term

Payout Option for ICICI Pru Lakshya Wealth (Wealth Plan)

The insurer will pay the Maturity Benefit under these two mentioned options. You can choose the one which fits you the best.

  1. Lump-sum Payout: This option is for those individuals who are looking to build a wealth corpus. Under this option, your maturity benefit will be payable in a lump sum in a single pay-out when the policy term ends.
  2. Income Payout: This option is for those individuals who are looking to receive regular income for a fixed period. Under this option, you can receive the maturity benefit in installments throughout 5, 10, or 15 years. One can choose to receive the entire maturity benefit or a part of it via regular installments. The interest rate on the installment is fixed by the company every month for the chosen period.

ICICI Pru Lakshya Wealth (Lifelong Income Plan)

Under this plan, the insured will receive a regular income until 99 years of age. And following is the list of benefits that he/she can claim.

Death Benefit

If the life assured dies during the policy term and all due premiums have been paid, the beneficiary or nominee will get the following Death Benefit, whichever comes higher.

  1. Sum Assured on Death + Bonuses
  2. 105% of Total Paid Premiums till the death of the insured

Sum Assured on Death = 10 X Annualised Premium or Premium Payment Term X Annualised Policy Premium

The policy bonuses consist of the accrued Regular Additions (if any paid in cash), Interim Regular Addition, and Terminal Bonus, if declared, before ISD (Income Start Date). Your policy bonuses will consist of Interim Cash Bonus and Terminal Bonus, if declared, after ISD. On payment of the Death Benefit by the insurer, all policy benefits will be ceased.

Maturity Benefit

If you survive till maturity, you will receive a Maturity Benefit that consists of the following:-

Maturity Benefit = Sum Assured on Maturity + Terminal bonus (if declared by the insurer)

The premiums which you have paid during the policy term are protected with a benefit. And this Sum Assured on Maturity is equal to your total contribution during the policy term which is calculated as follows:-

Sum Assured on Maturity = Annualised Premium X Premium Payment Term

If a Terminal Bonus is declared by the company, you will get it on the policy maturity or death.

Survival Benefit

If you have survived till the ISD that is the policy 5th anniversary year after the Premium Payment Term, the accrued Regular Additions (if any will be paid in cash), till that date it will be payable as a lump sum.

After the ISD, on every policy year till the end of the policy term or death of the life assured, whichever is earlier, you are eligible for the following:-

  1. Guaranteed Income (it will be set at policy inception)
  2. Cash Bonus (if declared)

Note: Higher policy premiums will make you eligible for higher Guaranteed Income.

Example: Madhur is a 40-year-old male and paid a PPT for 10 years. Check out the table below to know how his policy premium payments change the guaranteed income for him.

Annualized Premium (in INR)Monthly Income (On Policy Survival in INR)
50,00011,515
1,00,00025,230
2,00,00052,660

What Will Happen If You Discontinue the Policy Premium Payment?

If the life assured discontinues the premium payment before the Premium Payment Term (PPT), the following consequences will be in force as per the ICICI Pru Lakshya Wealth Plan. Take a look at them below.

  1. If the policy has acquired a surrender value before the PPT discontinuation, the policy can be continued as a paid-up policy with reduced benefits.
  2. A paid-up policy is not entitled to any future regular additions, cash bonuses, or terminal bonuses.
  3. A paid-up policy is not entitled to accrue regular additions cash payout

Benefits On ICICI Pru Lakshya Wealth (Wealth Plan) Post PPT Discontinuation

Death Benefit

  1. A paid-up Sum Assured on Death + accrued Regular Additions (Paid in cash, if any)
  2. And Contingent Reversionary Bonus will be payable if declared

Paid-up Sum Assured on Death = Sum Assured on Death X {Paid Premium (in Months)/(12 X Premium Payment Term)}

Maturity Benefit

  1. A paid-up Sum Assured on Maturity and paid-up GVBs + accrued Regular Additions (paid in cash, if any)
  2. And Contingent Reversionary Bonus will be payable if declared

Paid-up Sum Assured on Maturity = Sum Assured on Maturity X { paid premiums (in months) /(12 X Premium Payment Term)}

Paid-up GVBs = GVBs X {paid premiums (in months)/(12 X Premium Payment Term)}

Note: The policy will terminate and all rights, benefits and interests under the policy will stand extinguished once the maturity benefits & death benefits are paid.

Benefits of ICICI Pru Lakshya Wealth (Lifelong Income Plan) Post PPT Discontinuation

Death Benefit

On Death before ISD

  1. A paid-up Sum Assured on Death + accrued Regular Additions (paid in cash, if any)
  2. And Contingent Reversionary Bonus will be payable if declared

Paid-up Sum Assured on Death = Sum Assured on Death X {paid premiums (in months)/(12 X Premium Payment Term)}

On Death after ISD

A paid-up Sum Assured on Death will be payable

Survival Benefit

On survival till ISD, you will get an accrued Regular Additions (paid in cash, if any) and a Contingent Reversionary Bonus, if declared, in a lump sum on ISD. Further, on every policy year after ISD, a paid-up GI will be payable till the end of the policy term or death of the life assured, whichever is earlier.

A Paid-up GI is calculated using the below formula

Paid-up GI = GI X {paid premiums (in months) / (12 X Premium Payment Term)}

Maturity Benefit

On survival till the end of Policy Term, the life assured will get

A paid-up Sum Assured on Maturity

Which is calculated as follows

Paid-up Sum Assured on Maturity = Sum Assured on Maturity X {paid premiums (in months)/ (12 X Premium Payment Term)}

Note: On the payment of the death benefit or maturity benefit, this policy will terminate and all rights, benefits and interests under the policy will stand extinguished.

ICICI Pru Lakshya Wealth Policy Revival

A life assured can revive his/her policy which is discontinued due to premium payment under the following conditions:-

  1. You should submit the revival application within 5 years from the first unpaid premium due date and before the policy termination date. The decision for policy revival will be based on the prevailing board approval.
  2. You need to furnish all the satisfactory evidence of health at your own expense, as required by the insurer
  3. A late premium payment will be charged in the revival interest rates that are set monthly and are equal to 150 basis points in addition to the prevailing yield on 10 year Government Securities. The policy revival interest rate is 7.97% per annum as per the data in December 2019 by ICICI Prudential Life Insurance Co. Ltd. and this will be compounded half-yearly.
  4. The revival of the policy may differ from the terms and conditions which apply to the policy before the policy premiums were discontinued. For example, extra mortality premiums or charges may be applicable in the previous policy terms and conditions. It will take effect only if there is a specific communication between the company and the policyholder. The company reserves the right to reject the policy revival. Any change in the policy revival conditions is subject to prior approval from the IRDAI and will be disclosed to policyholders whenever it is updated.

Effect of ICICI Pru Lakshya Wealth Policy Revival

Wealth Plan:- 

  1. Paid-up Sum Assured on Death, paid-up Sum Assured on Maturity and paid-up GVBs will be restored to the original Sum Assured on Death, Sum Assured on Maturity and GVBs, respectively.
  2. All applicable regular Additions which are declared by the insurer since the premium discontinuation up to the date of policy revival will accrue to the policy and the Contingent Reversionary Bonus attached to the policy will be reversed.

Lifelong Income Plan:-

  1. Paid-up Sum Assured on Death, paid-up Sum Assured on Maturity and paid-up GIs will be restored to the original Sum Assured on Death, Sum Assured on Maturity and GIs, respectively.
  2. All applicable Regular Additions which are declared by the insurer since the premium discontinuation up to the date of policy revival will accrue to the policy and the Contingent Reversionary Bonus attached to the policy will be reversed.

Additional Benefits of ICICI Pru Lakshya Wealth Policy

Apart from the above-mentioned benefits, take a look at below what more ICICI Pru Lakshya Wealth has to offer:-

Surrender Benefit:- When your policy completes 2 PPT years and all premiums are paid until your policy acquires a Guaranteed Surrender Value, you will get a Surrender Value that will be equal to or higher from the following:-

  1. Guaranteed Surrender Value (GSV) that includes guaranteed surrender value of accrued Bonuses (which are declared in the form of Regular Additions and paid in cash, if any)
  2. Special Surrender Value (SSV)

After the Surrender Value payment, the policy will terminate and all rights, benefits and interests under the policy will stand extinguished.

Guaranteed Surrender Value:- 

Know the GSV for your chosen ICICI Pru Lakshya Wealth policy.

Wealth Plan:- GSV = GSV Factor for premiums X total paid premiums paid + GSV Factor for Bonus X accrued Regular Additions (paid in cash, if any) X Surrender timing factor.

Lifelong Income Plan:-  GSV = GSV Factor for premiums X total paid premiums – Guaranteed Income paid (if any) GSV Factor for Bonus X accrued Regular Additions (paid in cash, if any) X Surrender timing factor.

All the factors that apply to your Guaranteed Surrender Value are guaranteed throughout the policy term.

Note:- If you discontinue the premium payment before your policy has acquired a surrender value, there will be no benefits payable under the policy.

Loans:- 

If any financial emergency occurs during the policy term, you can avail loan under this policy if your policy acquires a surrender value. Your policy loan amount will be a maximum of 80% of the Surrender Value. The company is entitled to call the life assured for repayment of the loan by giving a notice, if the loan outstanding amount is greater than the policy surrender value and if the policy is in a paid-up state.

If you are unable to repay the loan before the due date, the policy will be foreclosed and all rights, benefits and interests under the policy will stand Extinguished.

The lender applies an interest rate on your policy loan that will be equal to 150 basis points in addition to the prevailing yield on 10 year Government Securities and will be set monthly. ICICI Pru Lakshya Wealth Policy loan interest rate is 7.97% per annum as per the data in December 2019 by the company. The loan interest rate is compounded half-yearly and the basis will be reviewed from time to time and revised when it gets the approval of the IRDAI.

Death Benefit in Installment:-

An option of death benefit installment is available for the life assured in both the ICICI Pru Lakshya Wealth policy Wealth Plan and Lifelong Income Plan. You can get the installment for the death benefit for a chosen period in a paid-up policy as well. This option is exercised by the nominee at the time of policy claim; for full or part of death benefits under this policy.

Your nominee will receive the installment for a minimum period of 5, 10, or 15 years from time to time. And it will be calculated at annuity certain, the prevailing interest rate at the time of life assured death. Yields of the respective Government Securities – spread of 25 basis points will be used by the insurer to declare the interest rate to the annuity certain. The basis for computing the interest rates is reviewed from time to time and may get revised by the company post the approval from the IRDAI.

The policy installments are paid in advance at monthly, yearly, half-yearly, or quarterly intervals, as opted by the nominee. Check out the table to know the minimum installment amount:

Mode of Installment PaymentsMinimum Installment Amount (in INR)
Monthly
1,000
Quarterly
3,000
Half-Yearly
6,000
Yearly
12,000

Note: If the installment payment is less than the minimum installment amount as mentioned above, the claim amount will be paid in a lump sum. However, the nominee has the option to take the remaining installments in one lump sum which is equal to the discounted value of the remaining installments at a discount rate as they are declared by the company from time to time. This interest rate applicable for discounting the future installment payments will be fixed by the company every month based on yields of the respective Government Securities + spread of 25 basis points. The basis for computing the discounting interest rates will be reviewed from time to time and may get revised by the insurer subject to the prior approval of the IRDAI.

Guaranteed Value Benefits (GVBs)

This benefit is designed to enhance the total guaranteed benefits at maturity. The GVBs will be set at the time of policy inception based on the 4S components which are as follows:-

Start Early – Start saving money to become eligible for a higher GVB at policy maturity. If you save money from an early age, the benefit will be more on GVB. Check out the below example to understand it better.

Suppose you have an

  1. Annual Premium: INR 50,000
  2. Premium Payment Term: 10 years
  3. Sum Assured on Maturity: INR 5,00,000
  4. Policy Term: 30 years
    Age (in YearsGVBs (in INR)
    4048,000
    35 50,500
    2052,750
    2554,000

Note:- The younger the age, the higher the GVB

Stay More:- Invest for a longer period to let your money grow with the power of compounding

Suppose you have an

  1. Annual Premium: INR 50,000
  2. Premium Payment Term: 10 years
  3. Sum Assured on Maturity: INR 5,00,000
  4. Age: 30 years
    Stay (in Years)GVBs (in INR)
    2019,750
    2574,750
    301,32,250

Note: The longer you stay, the higher the GVB you get.

Save More:- If you invest more, you will get more at the time of policy maturity

Suppose you have an

  1. Annual Premium: INR 50,000
  2. Premium Payment Term: 10 years
  3. Sum Assured on Maturity: INR 500,000
  4. Policy Term: 30 years
  5. Age: 30 years
    Annualized Premium (in INR)GVBs (in INR)
    50,00070,000
    1,00,0001,70,000
    2,00,0004,00,000

The GVBs for a 30-year old male, who is saving INR 50,000 per annum for10 years in a policy term of 30 years, the add up will be as follows:-

GVBAmount (in INR)
Start Early52,750
Stay More1,32,250
Save More70,000
Total2,55,000

SHE:– ICICI Pru Lakshya Wealth policy offers an additional GVB to support and encourage women in creating a financially independent life. For all women customers, the GVB is equal to 5% of their Annualised Premium.

Example

  1. Annual Premium: INR 50,000
  2. Premium Payment Term: 10 years
  3. Sum Assured on Maturity: INR 500,000
  4. Policy Term: 30 years
  5. Age: 30 years
    GVBsAmount (in INR)
    Start Early52,750
    Stay More1,32,250
    Save More70,000
    SHE2,500
    Total2,57,500

Your total Guaranteed Benefits at maturity will be INR 7,57,500 as per the above data calculation.

ICICI Pru Lakshya Wealth Policy Terms & Conditions

Suicide Clause:-

In case the life assured dies due to suicide within 12 months from the date of policy commencement or the date of policy revival, the nominee or beneficiary will be entitled to get 80% of the total paid premium amount till the date of death of the insured or the policy surrender value as on the date of death of the life assured as applicable in the policy. You will get any one of the suicidal benefits, among whichever is higher as a policy is in force at the time of life assured death.

Free Look Period

When you buy this policy, the insurer will give you an option to review the policy terms & conditions within 15 days from the date you receive it or 30 days in case the policy is sourced through distance marketing or electronic policies. And, if you are not satisfied with the policy terms & conditions, you can return the policy with the reason for cancellation during this free look period.

The company will refund the premium paid by the life assured after deducting the Stamp duty charges, the proportionate risk premium for the period of cover and any pre-medical tests expenses borne by the insurer, if any. ICICI Pru Lakshya Wealth Policy will terminate on payment of this amount and all rights, benefits and interests under this Policy will stand extinguished.

Tax benefits

You can also get tax benefits under the policy as per the prevailing Income Tax law under section 80C and Section 10D(10D) of the Income Tax Act (ITA) on your policy premium payments.

Grace Period

If you are unable to pay the premium installment by the due date, the insurer will offer you a grace period of 15 days to pay the due installment premium (monthly) and 30 days for the due installment premium (for other premium frequencies). The good thing is that the life cover will continue during the grace period. In case the life assured dies during the grace period, the company will pay the Death Benefit as per the policy terms and conditions.

GVBs or GI Percentage for Different Premium Payment Frequency

Premium Payment FrequencyGVBs (ICICI Pru Lakshya Wealth Plan)GI (ICICI Pru Lakshya Wealth Lifelong Income plan)
Monthly90%98%
Half-yearly 95%99%
annual100%100%

Encashment of Regular Additions

After the policy premium payment for 2 full years, the insurer will give you an option to encash the accrued Regular Additions. The cash payouts are based on the applicable cash value factors. This feature is not available for reduced paid-up policies. It applies to both the ICICI Pru Lakshya Wealth Policy plans.

Nomination

Under Section 39 of the Insurance Act, 1938, the life assured needs to add a nominee to the policy. So in case of his/her death, the sum assured will be given to his/her legal nominee.

Section 41

Under Section 41 of the Insurance Act, 1938, other than the life assured no person is allowed to take, renew, or continue insurance in respect of any kind of risk relating to lives or property in India. Any rebate of the whole, part of the commission of the premium that is shown on the policy is payable to any person who is taking out, renewing, or continuing a policy, except such rebates as may be allowed by the published prospectuses or tables of the insurer.

This is subject to the acceptance by an insurance agent of commission in connection with a policy of life insurance taken out by himself on his own life shall not be deemed to be acceptance of a rebate of premium within the meaning of this subsection if, at the time of such acceptance, the insurance agent meets the prescribed conditions and establishes he/she is a bona fide insurance agent hired by the insurer.

Any person who makes default in complying with the provisions of this section is punishable with a fine up to INR 10 lakh.

Section 45

Under Section 45 of the Insurance Act, 1938, if any fraud or misrepresentation is established by the insurer, the policy will be canceled immediately and the company will pay the surrender value to the life assured.

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