An overview about what I understood was that I was to invest a certain lumpsum amount of money annually for 7 year period and then I would be getting the maturity amount at the end of 15 years… The point that Karthik Sr has mentioned is they are giving half the interest rate rather than full on the amount invested by me . i.e. instead of 8.8% they are giving 4.4% which is obviously unwelcomed…

Please correct if I am wrong as I have come across this thing for the first time and would also appreciate some information about G-Secs.

As per my understanding, the half of G-sec interest that is payble is ON THE SUM ASSURED amount. So for 15 year maturity term and 7 yr premium paying term here is calculation what my agent sent me (I am considering to take this plan).

every year premium – 1 Lac
Premium paying term – 7 years
Sum assured – 10 lac (10 times premium)

So Regular addition = 4% (50% of G-sec) x 10 lac (Sum assured) = 40,000/ Rs per year
Total regular addition = 15 years x 40,000 = 6 Lac

Maturity addition is anywhere from 80% to 180% of Sum assured (as per the agent). So if it is 80%, it will be around 8 lac (80% x 10 lac).

Total amount at maturity = 7 lac + 6 lac + 8 lac ~= 21 lac.

Where is the value of Maturity Addition given as 80-180%? The brochures available online only say depends on future performance and not any specific value.

And when the company cannot disclose the maturity addition value, then how come mr agent can tell that. Also, long term G-sec cannot remain at 8% in all the 15 years. That may come down too, so the values given above are not realistic. These appear to be paper returns, and combining with inflation risk and opportunity risk, your purchasing power of this money is going down only.

Yes, you are right about maturity addition. I have asked the agent to show some recently matured policies to see how much MA they have given to customers on those policies. He said icici prulife is only 10-11 yr old, so they may not have that many policies that are matured. But I insisted on seeing matured policies, he will try to get those.

About G-sec rates, well if it decreases in future…even FD rates will decrease. It’s not in our hands.

If we take 20% tax benefit of 1 Lac premium for 7 years, and put in FD for 15 years….this will result in additional 3.5 lac.

The liquidity factor also encourages me to consider this policy. If I can easily liquidate an investment (like FD), its not good for me as I tend to liquidate and use it for some purpose. Then the whole point of investing for long period is not achieved.

How many times do you intend to take the benefit of 80C? For your life insurance policies, for PPF, and home loan.

Calculating this way will give you wrong impression.

Practically speaking, the best of the best endowment plan can give you PPF rates minus 1-2% over next 10-15 years. Which means a max of 6-7% CAGR. Not more than that.

Putting money in such plans IS NOT INVESTMENT, it is just savings. I hope you can differentiate between the meanings of the two words.
Also, Ulips/endowments products are SOLD and not bought.

Take an informed decision, and not something which you will regret after 3-4-5 years.

Every year they will give 50% Interest rate of Govt bonds – ~ 4% per annum
Why don’t someone directly invest in those bonds and get the 100% interest – i.e ~ 8% annum

Also it has been discussed here in detail http://localhost/jagoforum2/icici-pru-guaranteed-savings-insurance-plan/2368/

Dear Natesh, from your own understanding what’s good in this plan? Please share. A direct Yes – No type answer is already given by dear Karthik.

Thanks

Ashal

An overview about what I understood was that I was to invest a certain lumpsum amount of money annually for 7 year period and then I would be getting the maturity amount at the end of 15 years… The point that Karthik Sr has mentioned is they are giving half the interest rate rather than full on the amount invested by me . i.e. instead of 8.8% they are giving 4.4% which is obviously unwelcomed…

Please correct if I am wrong as I have come across this thing for the first time and would also appreciate some information about G-Secs.

Dear Natesh, your understanding is correct. Regarding, if you so want to invest in G-Sec. you may do so by investing in Gilt MFs.

Thanks

Ashal

As per my understanding, the half of G-sec interest that is payble is ON THE SUM ASSURED amount. So for 15 year maturity term and 7 yr premium paying term here is calculation what my agent sent me (I am considering to take this plan).

every year premium – 1 Lac

Premium paying term – 7 years

Sum assured – 10 lac (10 times premium)

So Regular addition = 4% (50% of G-sec) x 10 lac (Sum assured) = 40,000/ Rs per year

Total regular addition = 15 years x 40,000 = 6 Lac

Maturity addition is anywhere from 80% to 180% of Sum assured (as per the agent). So if it is 80%, it will be around 8 lac (80% x 10 lac).

Total amount at maturity = 7 lac + 6 lac + 8 lac ~= 21 lac.

Is it too optimistic or realistic?

Let me know.

Kash

Where is the value of Maturity Addition given as 80-180%? The brochures available online only say depends on future performance and not any specific value.

And when the company cannot disclose the maturity addition value, then how come mr agent can tell that. Also, long term G-sec cannot remain at 8% in all the 15 years. That may come down too, so the values given above are not realistic. These appear to be paper returns, and combining with inflation risk and opportunity risk, your purchasing power of this money is going down only.

Yes, you are right about maturity addition. I have asked the agent to show some recently matured policies to see how much MA they have given to customers on those policies. He said icici prulife is only 10-11 yr old, so they may not have that many policies that are matured. But I insisted on seeing matured policies, he will try to get those.

About G-sec rates, well if it decreases in future…even FD rates will decrease. It’s not in our hands.

If we take 20% tax benefit of 1 Lac premium for 7 years, and put in FD for 15 years….this will result in additional 3.5 lac.

The liquidity factor also encourages me to consider this policy. If I can easily liquidate an investment (like FD), its not good for me as I tend to liquidate and use it for some purpose. Then the whole point of investing for long period is not achieved.

How many times do you intend to take the benefit of 80C? For your life insurance policies, for PPF, and home loan.

Calculating this way will give you wrong impression.

Practically speaking, the best of the best endowment plan can give you PPF rates minus 1-2% over next 10-15 years. Which means a max of 6-7% CAGR. Not more than that.

Putting money in such plans IS NOT INVESTMENT, it is just savings. I hope you can differentiate between the meanings of the two words.

Also, Ulips/endowments products are SOLD and not bought.

Take an informed decision, and not something which you will regret after 3-4-5 years.

Direct answer: NOT GOOD.

Read the complete Brochure here, and you know why.

http://www.iciciprulife.com/public/Brochures/GSIP_brochure_FINAL.pdf

Every year they will give 50% Interest rate of Govt bonds – ~ 4% per annum

Why don’t someone directly invest in those bonds and get the 100% interest – i.e ~ 8% annum