The debt fund will be available with the life insurer’s unit-linked insurance plans. The fund comes with a lock-in period of five years
ICICI Prudential Life Insurance on May 15, 2023 launched a new debt fund. Called ICICI Pru Constant Maturity Fund, it is available with the insurer’s Unit-linked insurance plans (Ulips). The new fund offer (NFO) opened for subscription on Monday. The fund carries a lock-in of five years.
According to a release from the life insurer, customers have the option of investing in this fund through the insurer’s Ulip offerings, such as ICICI Pru Signature, ICICI Pru Smart Life and ICICI Pru LifeTime Classic. The product will provide customers with the flexibility to switch asset classes without any cost and tax implications, the release added.
“The prevailing interest rate regime provides customers with an excellent opportunity to invest in the debt fund - ICICI Pru Constant Maturity Fund - the first such fund in the life insurance market. With interest rates closer to their peak, any fall in interest rates makes debt instruments attractive as an investment option for customers. This is due to the inverse relationship between prices of debt instruments and interest rates – their prices increase when interest rates fall thus benefitting customers who have invested in these instruments,” ICICI Prudential Life Insurance said in a press statement.
Arun Srinivasan, head of fixed income, ICICI Prudential Life Insurance said in a statement, “We are excited to launch a unique debt fund when the interest rate cycle closer to its peak. We suggest investors apportion a share of their savings to Ulip debt funds for capital preservation and long-term wealth creation.”
He added: “By investing in this fund, customers will be able to lock-in their investments at the high current interest rates and benefit from the increasing net asset value (NAV) of the fund since bond prices are expected to rise over time.”
According to the life insurer, the product offers several benefits as well. Debt funds offered by life insurance companies offer tax benefits. Besides, investments in Ulips also provide tax benefits.
Srinivas Balasubramanian, head of products, ICICI Prudential Life Insurance said: “Ulips also offer customers a tax-efficient mode of building long-term savings as they can invest up to Rs. 2.5 lakh annually for the duration of the policy and take home a tax-free maturity amount.”
He added: “Besides steady and stable returns, it offers customers a life cover which financially secures their loved ones.”