Life Insurance presentation

1. Life Insurance presentation

2. Needs … and many more

3. Classifying needs More than 10 years 1 to 5 years Short Term Long Term

4. Needs Long Term Short Term • Buying a bike or car • Household assets • Going on vacation • Gifting your loved ones • Upgrading lifestyle • 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

5. Everything has a price tag attached to it….. Rs.2,00,000 Rs.8,00,000 Family vacation Car Rs.35,00,000 Rs.20,00,000 Own office House

6. If, you’re unable to accumulate enough for your short term goals, like… Postpone or go for lesser options… Go to a domestic location, rather than going international… Go for a cheaper variant or drop for a while… What would you do?Maybe,

7. If the same thing happens with your long term goals, like… Send your child to a cheaper College… Settle for a lower standard of living than today… Compromise on your daughter’s wedding … Would you do the same thing?

8. 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

9. Revisiting basic financial needs Liquidity + Returns Safety + Liquidity Safety + Returns Any two attributes makes an instrument attractive for investment

10. Traditional product basics

11. Where does an insurance company invest the premium from traditional products ? PREMIUM EXPENSES MORTALITY INVESTMENT 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

12. Regulation of investments

13. 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 inno case exceed ten percent of such surplus in case of participating policies and in other cases the whole thereof.

14. Difference between Simple & Compound reversionary bonus 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

15. 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 straightaway • If similar bonus is declared in subsequent year, then SA would become RS 56000 • In the example cited above, after the 2nd declaration, the SA will become Rs.56180

16. 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%.

17. Bonus rates in our traditional plan

18. Performance of ICICI Pru conventional plans Best in Class returns!!

19. GSIP: The complete solution Liquidity + Returns Safety + Liquidity Safety + Returns Liquidity? So what’s new in GSIP ? Protection? Guaranteed benefits • Guaranteed Maturity Benefit • Guaranteed Regular Additions (RAs) Expected returns?

20. Liquidity through loans No need to liquidate assets • Easy liquidity available through GSIP policy No collateral required for loan No processing charges Low interest rates • 10 yr GSec+1% compounding hly– current rate 9.3% Loan repayment: Payable when able!! • Repay principal / interest as per convenience • Adjust principal / interest against maturity benefit

21. How are the benefits guaranteed? Most trusted? Government RA for AMJ 12 = 4.4% Guaranteed Regular Additions (RA)‏ • 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 *rounded down to the lower 0.2%

22. ICICI Pru GSIP – Regular Additions

23. 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

24. Protection with GSIP Higher protection makes GSIP a complete package Death Benefit Guaranteed Death benefit (GDB): Higher of 10 times annual premium and sum of all premiums paid till date compounded @5% p.a. Richer death benefit Free of cost cover

25. Richer death benefit Higher Guaranteed Death Benefit in ICICI Pru GSIP Starts at 10X and increases from Year 10 onwards *Age- 40 years, GSIP 7-15 *The purpose of this illustration is to show the impact of richer death benefit

26. 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

27. Thank you!!!!