Date:26/03/2006 URL: http://www.thehindubusinessline.com/bline/iw/2006/03/26/stories/2006032600211300.htm

Back ICICI LifeLink Super

Sowmya Sundar

LifeLink Super, the new version, emphasises on long-term lock-in and higher life insurance component

ICICI has launched a new version of its single-premium product LifeLink II, redesigned as per the Insurance Regulatory and Development Authority's latest regulations on Unit Linked Insurance Policies (ULIP). LifeLink Super, the new version, emphasises long-term lock-in and higher life insurance component.

The changes

The new version has a higher life component. The minimum death benefit is 125 per cent of the premium compared to the earlier 105 per cent. It also imposes a three-year lock-in instead of the one year earlier. Restrictions on withdrawals from the fund have been increased to emphasise the long-term nature of the product. The top-up facility is no longer available. This is to ensure that the life component is within a certain percentage of the total premium. These changes have made the product attractive for long-term investors.

The initial charges on the premium have been reduced but have been more than compensated by an increase in fund management charges. The minimum premium payment has been reduced to Rs 25,000 from Rs 50,000. Insurance instruments are by nature long-term products and the restrictions on withdrawals plus the three-year lock-in will favour long-term investors in the product. When withdrawals are made the impact cost is borne by the existing investors. In an insurance product frequent withdrawals could have a more lasting impact on the investment value of the existing holders and affect the overall returns in the long term.

The latest regulations also try to differentiate ULIPs from mutual funds by stressing on the core purpose of taking an insurance policy — protection against odds. Enhanced life component in a ULIP takes care of this need to some extent.

LifeLink Super offers two choices of death benefit — a minimum of 125 per cent of the initial premium and 500 per cent of the premium.

Choice of four funds to invest in, according to risk profile.

Flexibility of switching between funds free of cost, four times a year.

The policy can be surrendered only after three years.

No initial premium charges for premium above Rs 5 lakh.

Top-ups not allowed

The fund management charge has been hiked to 2.25 per cent on Maximiser and Balancer options against the earlier 1.5 per cent and 1 per cent respectively.

LifeLink Super is a new fund and will commence with an NAV of Rs 10. The existing policyholders in the LifeLink II will continue with the scheme till the end of the contracted term.