ICICI Prudential Life Insurance has recently unveiled the ‘ICICI Pru Signature Pension,’ an innovative retirement savings solution that is anchored in market-linked mechanisms, tailored to empower individuals in constructing a financially judicious and tax-efficient retirement fund. By allocating up to 100% of investments in equities, customers are granted the flexibility to shape their retirement corpus according to their preferences, with the liberty to shift allocations among equity, debt, and balanced funds.
Amid its array of offerings, the product showcases two distinctive funds: the ICICI Pru Pension India Growth Fund and the ICICI Pru Pension Balanced Fund, enabling customers to engage in India’s growth narrative while strategizing for their retirement needs.
Moreover, a notable feature of this plan is the provision for a tax-exempt withdrawal of a maximum of 60% of the accumulated fund value at the conclusion of the policy tenure. The residual amount is mandated for the procurement of an annuity, ensuring a steadfast income stream for the duration of one’s life.
The plan encompasses a waiver of premium add-on benefit, which allows policyholders to continue their coverage without making premium payments under certain circumstances.
Policyholders are also allowed to make partial withdrawals, giving them access to funds while maintaining the integrity of their overall savings strategy.
Moreover, customers can choose to make top-up contributions to bolster their retirement nest further.
The ability to adjust the income start date, either by advancing or postponing it, serves as a crucial feature for the Financial Independence Retire Early (FIRE) generation, aiding them in reaching their early retirement objectives. Those who are eager to commence receiving income upon retirement can opt to delay the income start date as needed.
Amit Palta, Chief Distribution Officer, ICICI Prudential Life Insurance, said: “Our objective has been to be a one-stop shop when it comes to Retirement Planning – this could be through the industry-first annuity offering which allows 100% moneyback or in the form of a market-linked pension plan like ICICI Pru Signature Pension. Opting for the waiver of premium add-on benefit will insulate the retirement plan from being disrupted due to a critical illness or permanent disability due to accident. The partial withdrawal feature can aid in overcoming liquidity requirements without disturbing the savings plan. Also, the top-up feature allows customers to make additional investments to boost their retirement savings.”
2. Income Protection Plan
Aditya Birla Sun Life along with Policybazaar has launched a term insurance — the Income Protection Plan, which will offer a lifelong income stream to the policyholder’s family in the event of the policyholder’s demise. The Income Protection Plan offers policyholders the benefit of lifetime income for their nominees. This income is not subject to taxes and is adjusted for inflation at a compounding rate of 5% annually, starting from the date of plan purchase. This feature ensures that the income received by the family retains its purchasing power over time. For example, a 30-year-old individual earning Rs 10 lakh per year has the option to purchase a plan that provides income until the age of 70. In the unfortunate event of the policyholder’s demise in the first year, the family would continue to receive an annual payment of Rs 10 lakh until the policy reaches maturity. This results in a total sum assured of Rs 4 crore (Rs 10 lakh multiplied by 40 years).
The plan guarantees a payout for at least 10 years, even if the policyholder passes away just before the policy matures. The minimum amount payable is based on the income plan chosen.
For example, a policy with a minimum income of Rs 10 lakh would provide a sum assured of Rs 1 crore (Rs 10 lakh x 10 years) to the family, ensuring financial security for a decade.
Payouts can be received either monthly or annually, providing flexibility to meet the family’s financial needs.
Additionally, like other term insurance plans, the sum assured is entirely tax-free.
The Income Protection Plan’s inflation-adjusted income is a structured plan where the family’s income is compounded annually at a rate of 5% up to a maximum of 1.5 times the initial minimum amount. For instance, if the initial amount is Rs 10 lakh, it has the potential to grow to Rs 15 lakh over time. This arrangement ensures that the family’s income keeps pace with inflation and provides a financial safety net for the future.