ICICI Pru IProtect Smart Life Cover :- Term insurance is that the simplest and cheapest form of life insurance. However, financial institutions aren’t always pleased with simplicity. And there’s always this race to outsmart competition.

Hence, the insurance companies have began to provide packaged term life insurance plans, which provide a host of ancillary coverage. One such plan is ICICI Pru IProtect smart Life cover plan. ICICI prudential is aggressively marketing this plan. Nothing wrong with that. apart from plain vanilla life cover, the plan offers coverage for terminal illness, accidental death, critical illness and permanent disability.

In this post, i’ll review ICICI Pru IProtect smart Life cover plan and discuss all the riders and coverage in detail.

Review: ICICI Pru IProtect Smart Plan

ICICI prudential IProtect smart Term plan is a term life insurance plan. there’s no investment benefit. additionally to a regular life cover, it additionally offers a host of additional edges. some of the advantages are inbuilt into the plan while the others can be purchased for an additional premium.

Apart from death benefit, Terminal illness and waiver of premium on Permanent disability are inbuilt options. you’ll opt for Accidental death benefit and critical illness riders if you thus need. These riders come at a cost.

ICICI Pru IProtect Smart Life Cover Plan Product Brochure

Inbuilt Riders

  1. Terminal illness Benefit: If you’re diagnosed with a terminal illness (likely to lead to death), the insurance firm can pay out the sum Assured to you. you’ll use the money as you want. The policy can lapse when payment of such benefit.
  2. Waiver of Premium on Permanent Disability: just in case you get permanently Disabled due to an Accident, all future premiums are waived off by the insurance firm. Please note there’s no payout from the insurance firm. only permanent disability due to an accident is covered. disability due to natural causes like paralysis isn’t covered.

Do go through the product brochure or policy wordings for better understanding.

Optional Riders

  1. Accidental death benefit Rider: just in case death is due to an accident, the nominee gets double the sum Insured. So, if your basic sum Assured (Death benefit) is Rs 1 crore, your nominee can Rs 2 crores (Rs 1 crore basic death benefit + Rs 1 crore Accidental Death Benefit).
  2. Critical illness benefit Rider: If you choose for this benefit and get diagnosed with a vital illness, the insurance firm can pay your critical illness sum Assured. Do note critical illness sum Assured must be chosen separately and it needn’t be equal to base sum Assured. the maximum critical illness cover below the plan is Rs 1 crore.

The rider covers 34 critical illnesses.

Critical Illness rider is an accelerated rider i.e. your Death Benefit goes down by the amount of Critical Illness benefit paid. Supposed the Sum Assured under your plan is Rs 1 crore and you have added critical illness benefit of Rs 10 lacs.

In case you get diagnosed with a critical illness, insurance company pays out Rs 10 lacs and Sum Assured (death benefit) goes down to Rs 90 lacs. Critical Illness also cover gets over. From the next year, you will be charged only for term cover of Rs 90 lacs (there won’t be any further charge for Critical Illness Rider).

There is a good illustration about such a case in the product brochure. You can go through it.

Death Benefit Payout Options

After death of the policyholder, the nominee will get the payout in 3 different ways. Let’s consider sum Assured of Rs 1 crore.

  1. Lump sum: Entire Rs 1 crore are paid as lump sum.
  2. Income option: 100% of the death benefit is paid each year i.e. the nominee can get Rs 83,300 per month for 10 years i.e. Rs 10 lacs each year for 10 years. Total payout of Rs 1 crore over 10 years.
  3. Increasing income: 100% of the death benefit is paid in the 1st year. Payout will increase every year by 100% each year. So, the nominee gets Rs 83,300 per month in the 1st year, Rs 91,667 per month in the second year (Rs 11 lacs in the second year), Rs 1 lac per month in the third year (Rs 12 lacs in the third year) and then on. Total payout of Rs 1.45 crores over 10 years.

Additionally, at any time, the beneficiary has the option to convert all or part of the monthly income into lump sum. The lump sum value, in such cases, are arrived at by discounting the monthly payouts at 4wd p.a.

Life Stage Protection

Life insurance requirements keep fluctuating during your life. certain life events like marriage or birth of a child will increase your life insurance requirement. ICICI Pru IProtect smart plan allows you to increase your sum Assured by up to 500th at the time of wedding (maximum Rs 50 lacs). in addition, you’ll further enhance your life cover by 25th each (maximum Rs 25 lacs) at the time of birth of each of your 2 kids.

So, if you begin with a cover of Rs 1 crore before wedding, you’ll enhance it to Rs 1.5 crores once wedding, to Rs 1.75 crore when the birth of 1st kid and Rs 2 crore when the birth of second kid.

Additional sum Assured comes at a cost. you’ve got to pay additional premium for increase in sum Assured.

Premium Comparison with Other Life Insurance Plans

ICICI Pru Iprotect Smart Premium Table

You can see the premium of income plan is that the lowest and also the increasing income plan is the highest. With some calculations, you (30 year old non-smoker male) are paying Rs 5,668 for accidental death benefit rider and Rs 4,168 for vital illness rider.

As far as base plan (Life) is concerned, you’ll find quite a few plans in the range of Rs 8,000-10,000 each year. Therefore, premium for the base plan (Life) is on the higher side but you need to understand there are 2 in-built riders within the base plan.

I have expressed reservations against Accidental death benefit rider earlier during this post. I don’t see much value during this rider. If you’re fine with the cost, you’ll go for it.

Coming to critical illness benefit, you wish to compare the plan against standalone critical illness plans. you’ll compare critical illness plans based on 3 parameters viz. cost, no. of illnesses covered and survival period.

This rider covers 34 illnesses, that is on the higher side. Typically, critical illness plans have survival period. So, you need to survive for a fixed number of days before the insurance firm makes the payment. If you don’t survive the period, the insurance firm doesn’t pay. i’m still at loss why you’d have such a rule. The good part regarding the rider is that there’s no survival period (I couldn’t find in the policy wordings), that is a major positive.

About the cost, standalone critical illness are cheaper in the initial years however can get more expensive within the later years. With this rider, you’ll always pay the same cost (as long as you don’t exhaust the cover). that is cheaper?

Points to Note :- 

Death benefit is quite objective. The insurance firm pays up once the policy holder passes away. However, with other features, you need to establish that the insured event has happened. to establish terminal illness, the policyholder should be, in opinion of 2 specialist doctors, is unlikely to survive for more than 6 months.

Permanent disability is defined as inability to perform 3 of the 6 mentioned activities in daily life. Mentioned activities are mobility, bending, climbing, lifting, writing and blindness. there’s severity attached. for example, mobility is defined as the ability to walk a distance of 200 meters on flat ground. disability should be verified by a company empanelled medical practitioner. you know what which means.

Coming to vital illnesses, there’s severity attached to each critical illness. So, you may think you had a heart attack in real life however it won’t be heart attack as per insurance policy. Such things leave a lot of subjectivity within the matter.

Do note this happens with all critical illness plans or personal accident covers. Insurance firms need to put things down in writing to avoid undue litigation. Hence, this issue isn’t specific to ICICI Pru IProtect smart Term plan.

I suggest you read the policy wordings for better understanding of the plan.

Tax Benefits

Premium paid for life insurance (base sum Insured and Accidental death benefit is eligible for tax deduction under Section 80C. Premium paid for critical illness benefit Rider is eligible for tax benefit under Section 80D.

What i prefer about ICICI Pru IProtect Smart?

  1. It provides you various payout options (lump sun, income or increasing income). i might have preferred an additional explicit option wherever you’ll take part amount as lump sum and remaining as monthly payout.
  2. It provides you an option to increase life cover at various life stages like wedding and birth of a child. though you’ll always purchase an extra cover, however it’s good to have an option to enhance cover within the same plan. this option is available only under Life

What I don’t like/care regarding in ICICI Pru IProtect Smart?

  1. Waiver of premium on permanent disability: though waiver of premium on permanent disability is a good feature, what you wish is a personal accident cover and not just the waiver of premium. just in case of permanent disability, you wouldn’t just face problems in paying life insurance premium. you need cash to make up for the loss of income too.
  2. Critical illness benefit Rider is an accelerated rider.
  3. The insurance firm has named one of the options “Life & Health” which might be a bit misleading. there’s no health cover but just a critical illness cover. Do note critical illness benefit rider isn’t an alternate to a comprehensive health plan.
  4. Accidental death benefit Rider: you must always have adequate life cover. The cause of death is immaterial. simply because someone dies due to an accident doesn’t mean that the person has a higher life insurance requirement. I agree accidental death is sudden however thus is death due to a heart attack.

It is difficult to seek out flaws after you are talking about a pure term plan. it’s good to have options. ICICI Pru IProtect smart plan will exactly that. some of the features don’t add much value however it’s still acceptable.

In my opinion, terminal illness benefit and waiver of premium on permanent disability don’t really add much value. unfortunately, these are part of the base plan and can’t be done away with.

I would not suggest Accidental death benefit rider. so rules out Life plus and All-in-One options.

ICICI Pru IProtect smart plan is as good (or as bad) as any other term plan. there’s nothing special regarding it. So, if you are planning to purchase a term plan and are comfortable with ICICI prudential life insurance, you’ll consider Life plan. it’s slightly expensive than other plans however I personally am fine with that. you’ll additionally enhance your cover under this plan at the time of wedding and birth of children.

Critical illness benefit Rider looks good and reasonably priced. If you’re planning to purchase a critical illness cover and a term life plan, you’ll consider Life & Health plan.

Please understand i’m not saying you need a critical illness cover. All i’m saying is if you think that you need one; ICICI Pru IProtect smart plan offers a good option.

Just keep one thing in mind. If you’re opting for critical illness benefit, i might suggest you choose for a higher sum Assured. as an example, if your life insurance requirement is Rs 75 lacs and you choose for critical illness cover of Rs 10 lacs, go for sum Assured of Rs 85 lacs. this may make sure that you’re adequately covered even if the critical illness benefit is exhausted.

Disability rider, in above table, is different from waiver of premium on Permanent Disability.