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.
Now 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.
Shekhar Bandaru says
Still, I will not consider it as a change of policy.
Either you have to forefeit/loose all the money paid as premiums till now on the first policy, or continue paying for both the policy.
If anyone are already trapped into it, then 2nd option is better.
Lesson Learnt: Change of policy is not possible under any circumstances in any company 🙂
Uma shanker achanta says
Thank you sekhar for the information. In fact I visited the ICICI office and spoke to their agents and was astonished to hear a different story from the horse mouth
When you change the policy there is another lock in period of 5 years which comes into effect
The policy would be considered as new and not taken as transfer from policy to another policy
You can withdraw funds for the next 5 years
The premieum what you pay for the new policy would be considered as a fresh one
Hence guys take care. Visit the offices and do not listen to the Franchisee agents and end up in trouble
Uma shanker achanta
Uma shanker achanta says
Today I got a call from the agent asking me to switch my existing policy to the new policy with a return gurantee. I asked her what is the returns in % and she gave me as 15% with a premieum amount to be paid is Rs 15000 for one year which comes to Rs 1000 + monthly.
I have asked them to call me back after a day or so
Any comments on this
Uma shanker achanta
Shekhar Bandaru says
As far as I know, no company allows change from one policy to another policy. What they allow is, change of fund (like from growth to balanced/protector, etc) within same policy.
If you listen to the agents, you’ll end up paying/maintaining 2 policies simultaneously. I have read about such cases regarding ICICI.
Please refer to the terms in your policy document you received for exact details.
please tell some policies that gives maximum at maturity time(5 to8)years
Shubha Mukherjee says
I am absolutely novice in these financial matters. However, I invested in the Return Guarantee Fund (Life Stage Pension Fund VII), on December, 2009, with annual premium of INR 70K. Well I don’t know I have done a mistake or not. I have not been promised of any 50% return or so.
I would appreciate if you please enlighten me about the following.
(1) What will be the approx net return at the end of 3, 5 and 7th year, taking into consideration all applicable charges and taxes (assuming that I stop paying premium after the 3rd year)?
(2) What is the minimum time period I must wait for a good return (by “good” I mean greater return than FD’s)?
Shubha, thanks for sharing the details. The calculations part is well described in comment # 14 on this article. Please go through and let us know if you still find any difficulty in understanding it.
thats quite useful information. when my brother told me about this i smelled something wrong and this article explained it.
Thanks for your comment Giridhar. I am glad this article was useful to you 🙂
Excellent information on the post as well as comments of various people. I only want to highlight the need of professionals in the field of financial industry. People also should understand the commissions received by the agents and why they are selling a particular product to you.
I will visit the blog more often from today.. Let us build the educated community in the field of Financial investments.
Thank you. Welcome to my blog!
Hi! if anyone require any detail about icici prudential plans you may let me know. i’ll try to gather as much information as i can.
Hi Krishna, thanks for volunteering to provide information on ICICI prudential plans. Your help will be certainly appreciate.
thanks a lot sir for given imformation about RGF . i saved my money after reading ur view.
Your comment makes me review more products 🙂
I have subscribed to InvestShield Life – New last year for 30k half yearly. Now, I get calls from ICICI Pru customer care that my investment is under loss so switch to Return Guarantee Fund – Life Paid Assured where units would be allocated for 30k (equal to the amount invested last year) and the premium payments would be payed for this new scheme from now on.
Please suggest what to do as I am not good with finance matters. I greatly appreciate your suggestions. Thanks a lot.
thanks for your inputs and your support volunteered to help out on ICICI prudential plans.
Hi! if anyone require any detail about icici prudential plans you may let me know. i’ll try to gather as much information as i can.
go on website- iciciprulife.com
Hi! I am also one of the ICICI prudential customer from last 5 years. During last five years i came in contact of various sales/ service staff of the company. i have found them very supportive and helpful. Even my funds are growing well. the only pain which i taken all these years is a visit to branch once in 2 months. be it any service request or financial transaction i always got what i need. even the staff sitting at service desk always tried to help me out in case of any issue. similarly is the case with most of my colleagues/ friends. i think just before making any investment we just have to do some surfing aboout the pdt. Today i am a proud ICICI Pru cst.
Hi , I am new in this investment area, Could anybody tell me what are the important points to be stressed before investing?
first to collect the procedures and areas where u can do investment
than collect all the merits and demerit for each plan,(as it consume tax on return, it give tax benefit on paying, it is single premium or paying contineous for theree years or any lock in period, or what charge a company cut on plans etc) than find ur purpose as u want to tex saaving or for pure financial grow, or is it fix or flowing return like this , than find for how much time u want to give to ur investment. than put only 5% of the amount (u want to invest) on the investment area u choosed (try to find the brochure of company or check the right or wrong on web site of respective company)than carefully read the bond or paper u found after invested the amount. after that u will found ur investment is right or wrong.
frm – ankur agrawal, Haridwar
i have recieved a call from markiting person for RGF, i have no experience about ULIP, person told me that invest Rs. 20000/- annualy and after 5 years i will get Rs. 90000+amount as per share markit, please tell me is it right or not. can i invest this time in this policy and also tell me that what are other charges which are extra payable.
@Natasha, @Nayan Patel
I think Deepak made a good attempt at answering your queries. I don’t have anything much to add.
Thanks for your inputs.
I dont’ agree with your comparison either Nayan. How can you compare a finance product with a telecom product? Well, even I have bought this ICICI rgf 2months back and i don’t see the kind of growth that monty showcased above. Infact I have been fluctuating between very very thin marginal positive and a large swing towards negative value.
If all the agents were to give the right picture about the policies, none of them would stay in their policy selling jobs. You might not agree, but that is the reality.
What I understand about insurance is basically for protection for my family. If I only buy it as an investment then it beats the purpose. My agent showed me an illustration depicting various charges on my policy. I grilled my agent before investing money coz ultimately the onus lies with me. Though I have not invested in the guaranteed fund of any company as yet. However I look forward to invest with them basis my previous experience.
Nayan Patel says
I do not agree to your point in reponse to Ved, Mohan. We are acapable of running business for the organizations we work for, earn salaries in the range that we do – then how can we escape with making a statement that the terms & conditions are too confusing. I am not a telecom person or a software person – but each time I change my pda – I browse the net, check options right from Irla to Croma and then pick the phone I think best suits me. Cost of phone – around 25-30K. When I invest my savings – why no due diligence there? Nokia also mentions stuff on its brouchures which is sometimes difficult to comprehend – but we still make an attempt!
I agree with your thoughts completely.
That is a very suggestion. But the bigger question is how many of us can really read and understand those confusing terms and conditions?
I don’t deny that either. Like is said before due diligence is what an individual can rely on in these turbulent market scenarios.
@monty, @Nayan Patel
I am glad you both have a positive opinion about ICICI prudential. Looks like it is equally distributed among various people based on the time at which one enters in to the market. Hope everyone gets into profit side 🙂
Nayan Patel says
I don’t get this. I am in investment field for past 15 years and have been monitoring the NAV for my policy with ICICI pru since the day they have issued me a policy.
To share with you – the NAV has not gone below Rs.10 in the past 2 months of the policy been issued to me.
I think the fund managers at ICICI do a fair job yaar… We are paying them various charges though… I have invested with them once and rest everything is taken care by them.
After reading your article I got panicked and went back just to check the value of units of my policy as on date.I invested in a policy in Dec.The NAV was Rs. 10 with no allocation charges and today the NAV is gone up to Rs. 10.51 giving me a substantial return. The value of my policy is increased by Rs.5000 in just three months. Infact I feel it was a wise investment… Who offers you this kinda return in the volatile market? Newayz at the end 5 years I m gonna get an assured NAV of 15.03 or more whichever is higher for the first premium paid by me. In today’s time, is it possible to ask for more!
I think we all have one thing in common and that is basic education and common sense.. so before making any investment atleast for once you should have a quality discussion with your advisor, and the same shouldn’t be done on any relationship. Fortunatly now a days we have all the information available on our finger tips, so spend time on this aswell, for better understaning of the products. Any kind of an investment has an objective (Short term, Long term etc)., so point is how well you know what you want from your investment..
Spend some time and then decide…
Iam having plans from icici prudential from the last 5 yrs, my experiance is good, I have seen profits in my account when market is doing good even now my funds are not in neg, my advice before commiting take the sales broucher read it understand then go a head
Ved Prakash says
Hi All – one more point wrt ICICI return guarantee fund… please understand every investment, mutual fund and insurance company is in market to make profits…why scare people with the charges..we need to find a plan which has low charges but has the potential for higher returns..I think we don’t mind paying 2 % if the returns are more than 12 % ..u still get 10%… Every plan which is giving returns will have chagres..we have to find a plan which has low charge and provide good returns.
sahil sharma says
*personal info deleted*
call me now ask me how
Please don’t leave any personal contact numbers here. Such comments will be deleted without any notice going forward.
Thanks and I am glad that my blog helped you 🙂
Excellent source Mohan keep it up.
I was being trapped, now i will not, glad i read this blog.
I wrote this article soon after getting a call from the ICICI folks. I could only wish I got a call from them much more earlier! I am not sure about the second year charges. May be some of the readers of this article might throw light on that. Feel free to share that info as and when you get to know.
Thanks for your support. I welcome your comments.
I wish you had made this information available before January. I got mis-led by ICICI, though I got my first years fund allocation charges back after threatening to cancel the policy during the free look period. My document says for the second year on the charges are 4%. Is this also variable ?
You are doing good work on educating people
I am glad my article helped you 🙂
Thanks for your inputs.
I seriously could find any related information on this fund on their site while writing this article, I have mentioned that as well.
hmmm as always, there would be one or the other form of hidden charges. I am glad you were able to dig out that piece of information.
Thanks for your inputs.
Your dad is obviously better experienced than you 😉 When will you scale up to his level?
I don’t think this is a good investment. I was offered the same. Immediately, I told to my dad, who usually takes care of such things for me. According to his opinion, this is not a good investment.
It is not a good investment
Thanks for your information. I nearly ended up taking a policy under the ICICI Return Guarantee Fund with a premium of 100K per year. I told the agent I want some time . He was not very happy. With your inputs I decided against investing in the Fund. He could not give me any document from ICICI Pru Life which guaranteed 50% returns on the first premium.
Well done. Continue to keep educating investors
I too was contacted by an ICICI Pru representative.
The same story of buying units @ 10 and a guaranteed returns where each unit at the end of a 5yr term would be 14.xx which he said will be given on bond paper. After refusing to go in for it, he even said he’ll be waving off the first year’s premium allocation charges which is as high as 20%. He said he is ready to give me 20% of my investment cash upfront as cash back. I am surprised. How does this even work? What is the catch?
Initially he told me that he’ll give me a 10% cash back if I agree to purchase the first year’s premium through my ICICI credit card and now he says, even without that he’ll give me a 20% cash back on the whole. I suspect fraud here. These guys are hiding something which is not glaringly visible to small time investors like me.
Be aware of the 14% administrataive charges on Y1 and 3% each for subsequent years
hi… this return guaranteed fund does provide you 50
% return on your 1 st year premium… if you chose your plan properly… u wont be having any problem of charges as such.. for example.. life stage pension. where all ur money is invested and hence you get guarantee for the whole amount as its actually projected. all of us are educated yaar. so just read through clear and ask as many doubts as possible… to get all the info.. and anyway every thing is provided on website. just the matter of us acquiring all the info wit out pointing out some 1 else .
Sunil saran says
I started a policy with Return guarnteed fund.It is LIFE STAGE PENSION.I started with 1 lac INR per annum .I gone through an extensive study.There was 0.25% policy administrative charges per month. So the net amount invested was 1 lac-0.25% of 1 lac =99750 rs. I got 10000 units .ICICI will deduct 0.25% per month.
SO the total first year amount which go toward investment is 97000 Rs.
The total unit I have for first year are 9700.
Minimum guarnteed NAV they are offering 15.03,It means
=9700*15.03 =145791 Rs.
So my minimum guarnteed profit is 45791 for first year premium.
equal to 9.15 % per year compounded.
Its good yaar,,,at least my first year capital and 9.15 % return are safe even in this volatility.
The best part I like about ICICI Pru is online servivce ..I can see my fund value daily .
I had another policy started in jan 2004 with 20 k with ICICI Pru. I keep on shifting fund online in that .Its convenient and fun also. I recently shifted a profit of 48000 from equity to debt.
I am happy ,….
I dont care what other says……I don mind long term investment..
I am aggresive and I like agressive people also
I like ICICI ….they are aggresive ,,,what’s wrong in that …
How can agent missell untill and unless we dont understand.
We all people always write negative things…losses..misselling…
Have we been writings profits ?
I paid 100000 in my earlier policy…I have now 180000..
I can withdraw any time because 3 year are completed…
why ? because I care about my money ..I did 16 switchesfree of costs.
I am getting a good life cover on that also..
I can take joint life pension also.
I have ICICI Prudential’s Dynamic mutual fund too….
Its VERY good….
Sunil, that is interesting and thanks for posting the detailed info on the way the deductions and mortality charges are applied. I am glad to see such positive notes on some of the policies.
yeah it is a really nice note. of course i need more positive comments. i want 2 spend 20k p a up to 10years n i want it 2 b matured around tats period. can u suggest me which icici plan should i go for? n i need max returns…..
I got a similar call from a lady talking about this return guarantee fund by ICICI. She mentioned just the way you have written. Looks like they all are trained to mislead people by one source. Thanks for the detailed information Mohan.
Narendra kumar says
What i would suggest that you can go for SBI Magnum tax saver the new or old, or HDFC mutual fund as these are not taking much allocation charges.
mutual funds have no allocation charges, only insurance company have allocation charges up to 60% of first premium, mutual fund have only entry load of around 2%
Thank you both for bringing up an issue and a solution! Hope that is useful to many more people who are looking for more info on ICICI return guarantee fund.
Sujeet, thanks for that additional information on mortality charges and NAVs.
Sujeet Kumar says
It seems that you have been traped in mis selling by your agent.You can log/report mis selling at firstname.lastname@example.org or call the customer care mentioning proper details.Further you can do changes in your existing policy or take your money back during free look period which is 15 days from you received your policy documents.you have to pay the stamp duty and mortality charges for the days since policy has been in force and policy admin chares for the same duration.Mortality charges depends upon the age of life assured.For age of 31 it is around 40 paise a day per lac.If someone’s policy is inforce for 10 days,then he/she has to pay RS 4 per lac.
It seems that you not reached the proper authority regarding this.You should contact nearest brnch customer care department of any ICICI Prudential Branch.However mailing the complain to the above mentioned email id is good option.Allways keep in mind the free look period.
In RGF( Return gurantee fund) two funds has been launched.One with maturity date of dec 2013 will have maturity value of Rs 15.03 and other with maturity date of jan 2014 will have maturity value of Rs 14.69.One can get units with Rs 10 value during some specific period only.After that, unit will be available at market rate.Nav as of today for 1st RGF is around Rs 10.35 and that for other is around Rs 10.03.If some opts for RGF today, then he will get units at the market rate.Allocation of units will be done after deducting all initial charges for the policy.So if someone is investing Rs 50000 then he will not get units worth 50000.So 50% guranteed return is mis selling.
In your case agent has given the half yealy mode and assured you 50% guranteed return.Both is the case of mis selling.you should report this to customer care with all details.
I had applied for ICICI prudential Life Return Guarantee Fund (RGF) at 30k annually. The represenatative had explained me the same things as what you have mentioned including the 50% returns on first year premium. In 2 days I received a sms confirmation saying that the frequency as half yearly(60k annually). So I called up the represenatative as well as the customer service asked about the change in frequency. Then they told me to wait until I receive the policy document and then apply for a change. I received a confirmation call from them, then also I had specified it as annual 30k and they said ok. Two days back I got the policy document with 30k half yearly. I called up the customer care, they told me to goto nearby branch and drop a request letter and that it will be done without any extra cost if done within the freelook period. Today I visited their branch and now they are saying that if I need to change the frequency I will have to bear all the stamp duty, mortality charges, other service tax and the change in fund value (if any). When I asked them why they are charging this much even when I am in the freelook period, he started explaining that change will be considered as cancellation of the current one and applying for a fresh one. So its like they will sell the existing fund and buy new one. He showed me the benefit illustration of the policy and no where it is mentioned that there is a 50% returns on first premium or anything. According to it if the gross interest rate is 6% then the yeild will be 3.47%. Now what should I do? Cancel this and go for some other mode of investment? The funniest part is even now when I call the custromer care they are saying I will get the entire amount if done within the freelook period…
many thanks – I just received a call from sales person from ICICI and information you have shared was immensely helpful !
I am not an investments advisor. I just write my observations based on the market dynamics. You decide the best if my post helps you.
No comments, I hardly do any transactions with ICICI 😉
Thanks, appreciate your encouragement.
Like I said, there is no written document that the ICICI policy sellers point to. It is tough to believe as each one perceives in their own way and explain the way they want. I still hunting for a proper material about this plan on ICICI’s site. I will post it here as soon as I find one.
Vikas Jain says
The same policy was offered to my father. He was told that he has to pay 30K in per year (in a maximum of 2 installments/year), and after 3 years, the investor will get in tune of 1.5-1.9 L.
I was looking for this information, although I found this article also useful.
Please provide me if you find any more info, links etc.
Chinmay Lal says
What you have said is right. ULIPs require one to have a continuous monitoring which includes Fund switches at correct time and premium redirection. Also, you need to re-balance your portfolio time to time considering the market scenario as well as as per your risk taking capacities.
There are charges and mortality NAV’s everytime you switch funds. Well thought and written Mohan. Keep it up.
icici is known for very poor after sales services,they never deliver what they promise! Their promises are most of the times nothing but a set of false words. Don’t believe in salesmen until they show something in written form.
I need to invest around Rs 40000 for Tax saving purpose in mutual fund for the current financial year. Can you please suggest me a good return mutual fund with no hidden charges?