Having checked several unit linked schemes, I came to the following basic conclusions:
It is always cheaper to keep insurance and investment separate, as many posts here will tell you. If investment is your goal, stay away from these plans. instead, buy Term insurance, and put your money in a Tax Saving Mutual Fund (avg annual returns have been over 70% for the last 3 years)
Equity linked insurance plans can be used to max gain if and only if your primary goal is insurance, not investment. Here’s how:
Opt for max possible life cover (say 15 lakhs) and any riders that you like for the max possible term (30 years). Personally, I found the Critical Illness rider very useful
Pay Rs 20, 000-25, 000 premium for the min required period of 3 years only, and stop paying after that.
Choose the max growth plan, that is 100% equity option
As long as the market performs well and your fund gives at least 20% returns, you would have insurance for 30 years for a payment of Rs 20, 000 or so for 3 years ONLY and would be left with a nice sum (a few lakh Rs) at the end of the 30 year term if you’re still alive. If you don’t survive during this period, your family gets at least Rs. 15 lakhs. If you choose the critical illness rider and (God forbid) are diagnosed with one of the 9 illnesses covered , you get the rider benefits, AND the remaining policy stays in effect for the reminder of the term.
Now the reason I chose to write this review under the ICICI Prudential head is - it is possible to do the above only under the ICICI Lifetime plan (NOT Lifetime II). All other companies have a max limit of 20 times (or so) of the annual premium for sum assured, whereas Lifetime provides no such upper limit. LIC allows only 5 times the annual premium (talk about risk aversion!). Which means to get 15 lakh insurance cover, you have to shell out atleast Rs. 75, 000 for 3 years with other companies.
However, I must say that keeping all the charges and fees in mind, ICICI is more expensive than most other players. The cheapest is HDFC, but their underwriting is very strict. The other issue I have with ICICI is - the agents are aggressive and will not disclose terms not in your favour, until you specifically ask. Most importantly, while filling up the form, they will ask you to not write about any existing illnesses etc. or will give you strange reasons to fill the form in a certain way. Basically they are trying to make sure that the underwriters don’t reject the policy for high risk. This may not be good for you in the long term, since if there is a claim, the company may deny payment on the grounds that you lied in the form. So, (1) fill the form truthfully whether they issue or reject the policy. If they reject the policy, better do it now, than later when you have paid premiums, but your family’s claim is denied. (2) For every strange reason or justification given by the agent, ask for the same in writing on company letterhead, before writing the cheque. Just say you want it for your records.
In the end, I just hope that ICICI Prudential provides as good a service in claims processing, as they do while collecting the cheques.