Consumer: Experience with ICICI Prudential agent

This is a post about my experience with a few of the agents of ICICI Prudential (and you should be able to extend this experience with other companies as well). This all started a few weeks back when my dad (a Government pensioner and a well-read man) got a phone call from an ICICI agent about a great pension plan with a guaranteed return. My dad has seen the past 1 year fury of the stock market bringing down the value of most companies, as well as having read enough of the over-promising by insurance Direct Sales Agents. So when anybody from a finance / insurance / investment company call, he asks them to speak to me (not that I am much better, but I am better informed about being able to get details).
So, the guy came once to meet at home, promised us a spiel about investing Rs. 30,000 every year as premium, and in December 2013, ICICI will offer us units with a NAV of Rs. 15 as part of a scheme called ICICI Life Stage Pension Plan (with investments in the Return Guaranteed Fund). Overall, it seems like a great return, and this is a pension plan. So I did some research over the next weekend when the guy was to come back again for trying to get us to sign up for this pension plan. The scheme looks good, and after all, who does not want a guaranteed rate of return for their investments, but it seemed too good to be true. And then I found a few articles that criticized the scheme for the charges that they were levying, refer this article in the Hindu.com (link):

The recently launched ICICI Prudential Return Guaranteed Fund or ‘RGF’ is a good example of how charges diminish ‘guaranteed returns’. One unit of the RGF is available for Rs. 10 NAV with a guaranteed return of Rs. 15 NAV (50 per cent) after five years. This wonderful scheme (I am kidding) can be availed if you enrol in their annual premium ULIPs: Life Stage Pension or Life Stage Gold. All right you may say! At least I am getting 50 per cent minimum guaranteed returns for my first premium. The answer is ‘no’, because only a portion of your first premium is used towards purchase of units. About 20 per cent of the premium is deducted towards premium allocation charge! That means although you expect a total return of 50 per cent (Rs. 10 NAV to Rs. 15 NAV after five years), your effective guaranteed return after charges would be much lesser — close to 20 per cent after five years. That’s a pathetic guarantee! You would earn more in a Bank FD.

This was not something that was clear in the documents that I got from the agent, but this article seemed convincing. And when I showed this review to the agent, he was speechless. He did not deny anything or try to make some more promises to me, but instead told me that I was free to make whatever decision I wanted, and then left. This overall forces me to be more careful the next time.

2 comments to Consumer: Experience with ICICI Prudential agent

  • aa

    hey hi i gone through this review… but the 20 % is only in life time gold… life stage pension does not have any up front charges so all ur money gets the exact guarantee as mentioned… if u choose ur plan wisely.. u can end up wit a good return.. anyway no company is doin charity.. so whether u want to invest or no is ur option… and u have to be sure of wat u doin

  • Ashu

    Hey aa that is not true…..Life stage pension plan has also got up front charges in the form of POLICY ADMIN CHARGES and FUND MANAGEMENT CHARGES which is 0.35% per month and 1.5% per annum of total fund value respectively. And these charges are there continuously for 10 years. So that will cost a policy holder a lot.

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>