Saturday, March 21, 2009


There is a new plan "ICICI Pru Health Saver" in market. This is being called as ULIP and which boast of availing tax benefits u/s 80D for the entire amount invested.
Being a ULIP, Because of benefits u/s 80D It looks attractive.

Here is the analysis of the same for your Benefit.

Earlier the combo of Health Plan & ULIP was available from LIC as well as Reliance but in both these policies, the 80D benefit was not available on investment part. So ICICI Prudential Life Ins. cos. has moved with this cleverly drafted policy. Here the investment part of ur prem. or in other words fund value can only be redeemed against medical treatment/expenses. This policy is a combo of usual mediclaim policy & ULIP. Just dig deep into the skin of this policy & you will come to know the real truth.

First understand what this policy offers?
Apart from a normal mediclaim benefit, due to investment component from 3rd policy years onwards u can claim more than ur standard Sum assured with a ceiling set by company. Say ur original SA is 3L Rs, after completing 3 policy years u can claim a normal claim of 3L rs. under mediclaim benefit & another 20% of ur accumulated fund value. In other words u can redeem ur fund upto 20% value of fund. This fund value ceiling `ll increase with the years pass & after 10 policy years u can claim 100% of fund value.

As per the product brochure of this plan, This policy can be taken as individual plan as well as family floater plan.

Here r the negative aspects of this plan.

1. High Prem. allocation charges - 20% for 1st year, 2 & 3 year 9%, 4-10 years 2% & Nil from 11 year onwards.
2. In case of family floater option, in case of death of primary insured (the eldest member of family), the policy `ll be terminated immediately.
3. Regular prem. pmt. is compulsory for first 5 years for cover continuance option i.e if u don`t want to pay prem. in future to keep policy in force u `ll have to pay prem. for first 5 years.
4. No surrender of policy is allowed except the first 15 day free look period window.
5. Ins. charges for general mediclaim policy as well as policy admin charges `ll be recovered by cancellation of UNITs which `ll impact u severely in prolong bearish phases like the current one.
6. For individual plan option the mly. policy admin charge is 60 Rs. where as for family floater option the same is 90 Rs.
7. A long list of exclusion, which i can`t post here in this limited space of MMB.
8. Actually the health saving option of this policy is similar to our general practice of dipping into our savings to sat off the medical bills.
9. Plz. note the prem. for general mediclaim benefit (known as Hospital insurance benefit in this policy) `ll be charged on ur actual age every month by cancellation of ur UNITs. this is not the case in normal mediclaim policies of Gen. ins. cos. where u pay prem. as per age band of say 31-35, 36-40...... Again this monthly cancellation of UNITs `l impact more in case of bear phases as more UNITs `ll be cancelled to pay insurance prem. per month.

For individual Plan - Min. entry age is 25 years completed & max. age is 55 years.

For family floater Plan - Min. entry age is 90 days & max. age is 55 years.

In each of the above policy the maturity age is common i.e. 75 years.

The same effect of mediclaim & saving can be achieved by purchasing a cheaper mediclaim policy as well as investing the surplus amount as per our comfort level in Eq. or Debt funds or anywhere else. So this policy should be avoided.

Thanks to Ashal for valuable inputs


Astha Sharma says:
6 weeks ago

How would you then get a tax benefit on the surplus amount? Here you can claim upto 15k under section 80D. One can save upto 4.5k tax by investing 15 k.... Won't that take care of the extra cost assigned to it... taking that into consideration, how expensive is this?

goodfundadvisor profile image

goodfundadvisor says:
6 weeks ago

I can understand what the main question & relative doubts there on in your mind.

Here is the answer - For normal mediclaim policy, to claim 80D benefit upto max. limit of 15K, for a normal family of 2Adult & 2 minor child, the prem. 'll be around 2K to 3K per lakh & higher there after as per the age band. So in case of normal mediclaim, to exhaust full 15K limit, the cover amount can be anywhere from 5L to 7L depending upon age again. In case of IPru health saver, Ur total prem money is eligible for 80D even for a lower cover of say 1.5L or 2L. Bcoz, in this policy the extra prem. apart from normal mediclaim cover is invested ion funds & later on it can be used only in case of claim more than policy cover amount. Effectively u can't withdraw money from this plan for ur general needs like any other ordinary ULIP. That's why the total prem. is eligible for 80D. Plz. note in case of LIC & Rel. similar health ULIPs, the investment part can be withdrew at ur will & for any reason, hence no 80D benefit for full prem. amount for these policies. i hope the matter is clear to u now.

goodfundadvisor profile image

goodfundadvisor says:
6 weeks ago

One Sandeep wrote :



Dear Sandeep, Here is my take.1. Free health check up every 2 year. - Just calculate the money deducted by Ins. co. for Prem. allocation charges in initial years, the same free health check up we can arrange from this money. Even now a days Some plain vanila mediclaim policies offers free health check ups. every 2 years.2. My dear friend by not investing money after 5 years, u r again playing in the hands of Ins. co. being ULIP, u r already aware that it's advisable to pay prem. By stopping prem. pmt. u r inviting trouble. As every year the basic mediclaim prem. 'll be recovered by cancellation of units. & in between if there is claim above SA limit, ur fund value 'll be worst hit.thanks

prashant agrawal says:
5 weeks ago

i would like to know the premium of myself(41yrs),wife(38),daughter(15).as max limits in 80 D is 10000,please clear my doubts

K.A.Murali Sundar says:
3 weeks ago

Quite an interesting analysis, can you suggest which is the best mediclaim policy in the market to

1. Get a good cover (most common ailments, accidents and emergenices)for the family

2. 80D benefit

drrobingeorge says:
3 weeks ago

i was planing to take a health plan for me and my family ,and almost fixed up with medi claim when an agent told me about icici pru health saver which iliked untill i read you review i could not understand exactally whats wrong with it, and about it hidden clause.could u clarify it for me with less abbrrivations. mediclaim tells me to pay 7895 premium every year , icici 15000 family flotter.mediclaim i willreq to pay for the rest o f my life buy icici only 5 years .more ove any one member can use up to 5lac unlike mediclaim 2lac for me and wife and children 1lac

Also visit for an indepth Equity Analysis


  1. After 5 years, does the SA always remain (let us say I opted for 3lacs) at 3 lacs in spite of me not paying the premium or will it come down?

  2. Sum Assured will Not come down.
    The only thing he will have to take care of is his fund value which should not come down up to 110% 0f his annual premium. In this case the policy will be closed nd the amount will be given back to customer.


Have you read the best seller DON'T RETIRE RICH ?

The MOST Loved book on How NOT TO RETIRE RICH! 4.8 out of 5 stars Order your copy NOW !