Life Insurance presentation

Needs

… and many more

Short Term Long Term

Classifying needs

1 to 5 years

More than 10 years

Needs

Buying a bike or carHousehold assetsGoing on vacationGifting your loved

onesUpgrading lifestyle

Short Term Planning for kids

education & Marriage

Protection for dependent Parent

Protection for family (to start in future)

Wealth creation for long term

Retirement planning

Buying a house

Long Term

Everything has a price tag attached to it…..

Car

Rs.8,00,000

House

Rs.35,00,000

Family vacation

Rs.2,00,000

Own office

Rs.20,00,000

If, you’re unable to accumulate enough for your short term goals, like…

What would you do?Maybe,

Go for a cheaper variant or drop for a

while…

Go to a domestic location, rather

than going international…

Postpone or go for lesser

options…

Settle for a lower standard of living

than today…

Send your child to a cheaper

College…

If the same thing happens with your long term goals, like…

Would you do the same thing?

Compromise on your daughter’s wedding …

Long term goals(>10 years)

Non Negotiable Cannot be postponed Cannot be modified Can never be dropped No alternate available

You need a solution that provides: Protection to family Money to fulfill your goals

Revisiting basic financial needs

Any two attributes makes an instrument attractive for investment

Safe

ty +

Liq

uidi

tyLiquidity + Returns

Safety + Returns

Traditional product basics

The Premium has 3 portions :

The Investible portion of Premiums are required to be invested in Debt Instruments of various kinds

The regulations require insurers to invest in Govt. Securities, Social & Infrastructure sector, other approved securities

Insurers are required to maintain solvency margins The account of investments are audited by both an internal

& external auditor appointed by IRDA every month

Where does an insurance company invest the premium from traditional products ?

PREMIUM

EXPENSES MORTALITY INVESTMENT

Regulation of investments

Sec 49 of Insurance Act

Provided further that the share of any such surplus allocated to or reserved for the shareholders (including any amount for the payment of dividends guaranteed to them, whether by way of first charge or otherwise) shall not exceed such sums as may be specified by the Authority and such share shall in no case exceed ten percent of such surplus in case of participating policies and in other cases the whole thereof.

Bonus is declared in various ways. The most common method is Simple reversionary bonus. Amount of bonus declared is added to the SA, this addition is

called vesting

Example: If SA in the policy is Rs 50000. Bonus declared is Rs. 60 per thousand SA or 6% of SA.

SA in the policy will then become 53000 straightaway

If similar bonus is declared in subsequent year, then SA would become RS 56000

Difference between Simple & Compound reversionary bonus

In Compound reversionary bonus – the bonus will be added to the existing SA including vested bonus.

Example: If SA in the policy is Rs 50000. Bonus declared is Rs. 60 per thousand SA or 6% of SA.SA in the policy will then become 53000 straightawayIf similar bonus is declared in subsequent year, then SA would become RS 56000In the example cited above, after the 2nd declaration, the SA will become Rs.56180

Difference between Simple & Compound reversionary bonus

Method of calculating the compound reversionary bonus and simple reversionary bonus

Please find below the cumulative accumulated bonus amount over a 15 year term for a sum assured of Rs 1 lakh and a reversionary bonus of 4%.

Year Sum Assured (Rs)

Cumulative Sum Assured incl. bonus accumulation (Rs)

Compounded Bonus Computation per

year (Rs)

Simple Bonus Computation per year (Rs)

Year 1 100000 100000 4000 4000Year 2 100000 104000 4160 4000Year 3 100000 108160 4326 4000Year 4 100000 112486 4499 4000Year 5 100000 116986 4679 4000Year 10 100000 142331 5693 4000Year 15 100000 173168 6927 4000

Total 180095 160000

Product

Code / Year

2006-07 2007-08 2008-09 2009-10 One-time bonus

(2009-10)

2010-11

E01 3.25% 3.00% 2.25% 2.50% 1.50% 2.50%

E00 3.25% 3.00% 2.25% 2.50% 1.50% 2.50%

A01 3.25% 3.00% 2.25% 2.50% 1.50% 2.50%

A02 3.25% 3.00% 2.25% 2.50% 1.50% 2.50%

A03 3.25% 3.00% 2.25% 2.50% 1.50% 2.50%

Bonus rates in our traditional plan

Performance of ICICI Pru conventional plans

ProductAnnual

premiumMaturity benefit

Customer IRR

ICICI Pru Save’n’Protect

Rs. 10,185Rs. 158,677

7.9%

Issue date Maturity date Sum AssuredFebruary 10,

2002February 10, 2012 Rs. 1 lakh

Best in Class returns!!

Guaranteed benefits • Guaranteed Maturity

Benefit• Guaranteed Regular

Additions (RAs)

GSIP: The complete solution

Safe

ty +

Liq

uidi

tyLiquidity + Returns

Safety + Returns

Expected returns?

Liquidity?

Protection?

So what’s new in GSIP ?

Liquidity through loans

No need to liquidate assetsEasy liquidity available through GSIP policy

No collateral required for loan

No processing charges

Low interest rates10 yr GSec+1% compounding hly– current rate

9.3%Loan repayment: Payable when able!!Repay principal / interest as per convenienceAdjust principal / interest against maturity

benefit

How are the benefits guaranteed?

• Benchmarked against GOVERNMENT SECURITIES

• Independent of how invested fund performs

• Declared as a percentage of Sum Assured

• Guaranteed to be 50% of annualised gross redemption yield (GRY) of the 10-year G-Sec*

• RA announced on 7th of the first month of every quarter

Guaranteed Regular Additions (RA)

Most trusted? Government

RA for AMJ 12 =

4.4%

*rounded down to the lower 0.2%

ICICI Pru GSIP – Regular Additions

Date Regular Addition %October 2010 - December 2010 4.0%

January 2011 – March 2011 4.1%

April 2011 – June 2011 4.0%

July 2011 – September 2011 4.2%

October 2011 – December 2011 4.4%

January 2012 – March 2012 4.1 %

Regular Addition rate for this Quarter 4.4%Regular Addition for premium of Rs. 1

lakh & PPT-7 Rs. 30,800

Asset allocation in GSIP

Focused on providing steady returns with downside protection

Funds invested in a combination of Government securities, corporate bonds, debentures, other

fixed income instruments & equities

Allocation to equity depends on outstanding term Can be up to ~ 25%; this will be reflected in the maturity

addition under the plan

Protection with GSIP

Death Benefit

Guaranteed Death benefit (GDB): Higher of 10 times annual premium and sum of all premiums paid till date compounded @5% p.a.

Higher protection makes GSIP a complete package

Richer death benefit

Free of cost cover

Richer death benefit

Higher Guaranteed Death Benefit in ICICI Pru GSIP

Product ICICI Pru GSIPTerm 15

Guaranteed death benefit (GDB) 10Annual premium (Rs.) 1 lakh

Total premium (Rs. lakh) 7Ratio of GDB to Total premium 1.43

*Age- 40 years, GSIP 7-15*The purpose of this illustration is to show the impact of richer death benefit

Starts at 10X and increases from Year 10 onwards

Maturity addition

As in normal traditional plan profit is shared in the form of bonuses similarly in GSIP over a term profit earned in plan is shared in form of Maturity Addition

Thank you!!!!