How ICICI Pru Advisers Found a Chink in This Pension Plan

Customers surrendered most of the policies even as the firm's advisers ended up making handsome gains

- Aprajita Sharma

Much hyped pension product that ICICI Prudential Life Insurance Co. Ltd launched last year has unravelled with customers surrendering most of the policies even as the company's advisers ended up making handsome gains on commissions and rewards.

The firm launched a product called 'ICICI Pru Guaranteed Pension Plan (GPP) Flexi with Benefit Enhancer' in January 2024, offering customers the option to surrender the policy any time and claim a 100% refund on premiums paid until then. The insurer claimed it was the "industry's first annuity product offering 0% surrender charges and 100% refund of premiums".

The company is looking to claw back commissions and rewards for advisers—intermediaries between an insurance firm and its customers—who exploited a loophole in the product's marketing and sales pitch. Mint couldn't ascertain the amount ICICI Prudential is looking to recover. Surrendering or closing an insurance policy before its maturity date typically results in a payout lower than the total premiums paid until then. ICICI Prudential structured its GPP Flexi Benefit Enhancer product to offer an exit route to customers facing financial constraints.

However, a few ICICI Pru employees and advisers found a loophole in the product's 100% refund guarantee, two ICICI Prudential executives told Mint on condition of anonymity.

Advisers selling insurance are paid a percentage of a policy's annual premium as commission. But if a customer surrenders the policy within a so-called free-look period, usually 30 days, the adviser has to return the commission.