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Keep Insurance & Investment Separate

ICICI Prudential SP Maximiser fund is a ULIP that comes with high charges. We don't recommend this policy

I have recently seen the sales pitch for ICICI Pru Life SP Maximiser Fund for investment. Is this fund advisable for someone who wants to save for Child educational needs after 15 years? Are the returns good? The purpose is to achieve a target of ₹30 lakh over a time horizon of 15 yrs for child's education. Is this the right fund or can you suggest a better option?
- Dr. T. V. Ananthanarayanan

We have always stressed on keeping your insurance and investment separate. ICICI Pru Elite II is a unit linked policy which is no different from its peers. It will charge over 6 percent as total expenses during first policy year. The charges will reduce gradually overtime but that is not a reason to support this plan. Unlike mutual funds, you cannot judge a ULIP only by looking at the NAV of underlying funds. You need to consider its expenses which are large and reduce the returns generated. Instead go for an adequate term life insurance plan and invest the balance in mutual funds. 15 years is a long time to accumulate a sufficient surplus. Invest 50 percent of your surplus into large-cap or multicap funds through monthly Systematic Investment Plan and the remaining into mid-cap funds. For large caps we recommend Quantum Long term Equity, Birla Sun Life Equity and ICICI Pru Top 100 as suitable funds. In the mid-cap space, Axis Midcap, HDFC Mid-Cap Opportunities Fund and Franklin India Prima are recommended. Start switching to debt in a gradual manner as you near your goal.

You mentioned a ₹30 lakh corpus in 15 years for your child's education. We hope you have factored inflation while calculating this corpus. Look at the following table to have an idea on how much is to be invested on a monthly basis at given rate of returns.

Required CorpusMonthly Investment (in ₹)
at 12 %at 15 %
Rs 30 Lakh60004400

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