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ICICI prudential Life introduced Return Guarantee  Fund (RGF) recently and I got a call from its tele-caller today. This is yet another option if you like to invest in ULIP plans. I was told by the representative that this plan was launched to public on 22nd Dec’08. I would like to list out the information provided by him about this plan in this post.

After LIC’s Jeevan Aastha and IDBI’s Bondsurance – a fixed return products, ICICI Prudential has launched a fund called RGF(Return Guarantee Fund) on the similar lines. However, the former two are single premium policies while RGF is an ULIP fund with multi premium options spread over a minimum of 5 years. The common factor among all three is the insurance coverage as top up for investment schemes. Advantage of all these schemes is that they offer tax benefit on investment amount as well as the returns upon maturity.

icici_logNow let me take you folks through the illustration of the RGF plan as told by the representative. I doubt if this information is proper or not as I could not find all that he said anywhere on ICICI’s website. As per him, if an individual invests a sum of INR 30,000 in this plan,  you are assured of getting 50% returns on FIRST year’s premium. However, you will continue to pay annual premiums for 5 years. For the remaining 4 years, ICICI will pay an *estimated* 12% compounded interest on your money.  So, your contributions would account to 1.5 lakhs by 5th year and you would get an estimated return of 2.4 to 2.5 lakhs towards the policy maturity. I fail to understand how he is projecting so much! More over he himself acknowledged the fact that on the agreement it is mentioned as 10% compounded interest would be added to the premiums.

I see a lot of catches in these kind of plans. One such catch is that you may switch out to other options anytime on the NAV value, but you will miss out guaranteed return if switched before 20th Dec 2013. To get to the facts, am I getting 50% minimum guaranteed returns for my first premium atleast? Well, it is not truth either. This is due to the fact that only a portion of your first premium is used towards purchase of units. Also, you may want to note that about 20% of the premium is deducted towards premium allocation charge, which they don’t mention while selling the plan to you. Though you expect a total return of fifty percent(Rs 10 NAV to Rs 15 NAV after 5 years), your effective guaranteed return after charges would be way lesser than that, which close to 20% after 5 years. To add to all these, there are more charges that you should be aware of. Prominent ones include the policy administration charges which is about 6% per annum. Also, brace up to shell out some of your NAV’s over a period of time in the form of mortality rate whenever you opt for cancellation of units.

Does that sound good to you? I feel it is a way to fool people. You would earn more in a fixed deposits, ofcourse without the insurance cover though! These are the lucrative times to trap the investors in the name of tax savings. If you are looking for Insurance cover, go for dedicated insurance policies than opting for ULIPs with a very marginal insurance cover.

Disclaimer:This article is based on my personal opinion and observations derived upon my conversation with a tele-caller. For more information, please check with ICICI Prudential Life Insurance directly. Image extracted from ICICI web site.

{ 73 comments… add one }
  • Sunil raj Bannary July 19, 2016, 7:12 pm

    ICICI Prulife Pension scheme 50k annually from year 2010. Total investment till 2016 = 3,50,000rs

    My total value = 5,00,000rs same in ICICI smart kid investment 3.5lakhs total amount till date rs 482,000/-

    Also ICICI Weath scheme total investment
    3.5 lakh = total amount till date is 4.92 lakhs.

    Guys ICICI ULIPS are best plans first 3 yrs hugh deductions and after five years only 1% deductions. Even you can make TOPUP with 1% deductions.

    Don’t break the policy in the middle complete the full tenure.. Annually 13% minimum. Best equity experts allocating your investment in highly safe pattern.

  • saurabh December 7, 2012, 6:56 pm

    Hi All,

    Can some one tell me is this is a good policy if no why and suggest an alternative one.

  • Vinod April 6, 2012, 11:10 am

    Hi My self Vinod,
    As My father suggested to take the plan i invest 1lakh pa for 5yrs ICICI Pension Dynamic P E Fund Now the fund value is 181938.34 as on 02/04/2012 i paid 3lakhs now, can any one help me to understand this policy is good or bad should i discontinue or pay for 5 yrs and leave it or with draw after 5 yrs will i get 5lakhs back with fund value as on the date, what i loose and what i gain. How about the SBI Pension & LIC Pension plan with out ULIP. Please advice

  • rai October 29, 2011, 3:30 pm

    ICICI Prudential Pension Return Gaurantee Fund is a bogus scheme and do not invest in this scheme at all for god’s sake. You will be stripped off.

  • Vichu October 22, 2011, 2:47 pm

    I believe to get the benefit out of this policy, the policy holder has to survive till the maturity term 7 or 10 years. If he passed away before that nominee will get only 5% of his total paid amount. I believe it not like (2o or 15 years * Premium amount). It is death insurance = Toatl amount paid so for * .05. Expert can correct me if I am wrong. It is not the insurance plan. I don’t know why they kept the name insurance for it. Now day banks are offering the interest rate at 10.5% and above. This policy will be suitable for the long term saving and not for the insurance. If the policy holder passed way in the middle of the premium period, the nominee cannot continue the policy for the remaining years (10/7 – X premium paid years). I believe it is big risk to take up this policy.

  • pankhuri April 7, 2011, 10:46 pm

    hey please let me knw abt the data of cost of capital analysis of bajaj allianz for last 5 years.. please let me knw the answer as soon as possible

  • Manish Agrawal December 25, 2010, 6:01 pm

    Dear friends,
    I am low salieried person hience my friends come on march 2009 and invest my 20000 per annum in rgf . they tell lie that i got 14.35 nav after maturaty. now i asked them but they refused. bcoz 25% allocation my rgf units are only 1500 and now after 2year the unit value is only 11.00 .
    they sold me the policy talking lie commitment. what can i do . can irda help me . please tell me . i will be very thankful to you.
    manish aggrawal

  • Suneel November 22, 2010, 12:44 pm

    Dear frnds,
    I got a policy of Rs 5000 per month in ICICI Pension Dynamic P/E Fund, and 3 months gone i had fund value of Rs 13599 today. In this policy Rs 600 is deducting for admin charges every month so can anyone help me out what the hell it is..??If its a wrong decision from my side as i was promised from the ICICI agent to get a good return of 15+% and for investment of Rs 1.8 lakhs in 3 years i will get back Rs 3 lacs as 3 years locking period.I dnt know anything regarding fund managing so if how to manage the funds can anyone help me out with the information.I will be thankful to him.If this policy is gud or not???

  • Lavneet Aggarwal October 13, 2010, 9:47 pm

    when all we know mostly these sales rep. are mis leading us.
    can’t we do any thing ?
    can’t IRDA do any thing ?
    can’t even govt. do any thing ? (in real meaning)
    shame on all.

  • Shweta June 30, 2010, 4:17 pm

    I had invested 50k in the RGF in January 2009, with ICICI Pru. In fact, after speaking to another friend of mine who works for Infosys and is also an agent, I soon realised that with the huge charges that ICICI has, getting a return of 50% over the first premium is a stupid maistake, since they already cut over 20-25% as allocation charges. So I will only be left 37000. In five years after mortality charges this will only be like 35000. If it grows by 50%, it will only be 51000. So a profit of 1k is bad in 5 years time. I immediately switched to Growth and RICH funds, and luckily my money is now over 72000. Also, I saw that the RGF value has only increased by 10%.

    So, it is important that we dont trust whatever the selling person says. Try to find on your own , or get a good agent. I for instance have an agent, who is an engineer and works for MNC, and reluctantly sells policies helped me a lot in making right switches. So Icici is not bad, but u have either to get complete knowledge, or get in touch with someone who has experience and knowledge.

    Note that a good agent/seller will always:-

    1. Ask you for monthly/quartely premium frequency. Because it helps reduce the loss and maximise your profit. But bad agents will force you to deposit one time because they get more commission on one time payment.

    2. Ask you to invest for more than 10 years or long period. A bad agent will tell u to do it for a minimum period, and ask u to buy new policy after 3/5 years.

    3. Will make you a complete plan for your financial needs, like children education and buying house and car. He will also recommend u invest in MFs. But a bad agent will tell u that MF is risky and do only ULIPs

    4. Will give u complete brochure and details. A bad agent will only explain to you on paper and try to extract huge premium.

    Also, remember that if you are saving for your child’s education, a certain amount needs to be calculated and invested. This will not be the same as ur pension policy premium or simple life insurance premium. So do some calculation of find a good agent. Try to find in your office if they know someone who is good and educated, not some one who is desperate to earn money and knows nothing.

    And Mohan, thank you for your article, but I have had 3-4 long and short term policies with ICICI since early days after I started working, and I got really good return. I put in every month 5000 in around 2004, i.e 3lac+ till now and my money has grown to more than 7 lac + . I was also lucky that I invested in the right fund which grew heavily. Also, it is important that you switch if u are not doing on monthly basis, but it is not so much required if you do SIP ,i.e monthly.

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