ICICI Pru's '100% refund' pension plan was gamed: 90% surrendered, commissions clawed back

In January 2024 ICICI Prudential Life launched the ICICI Pru Guaranteed Pension Plan (GPP) Flexi with Benefit Enhancer. It billed it as the industry's first annuity with 0% surrender charges and a 100% refund of premiums, so buyers in financial difficulty could exit freely. A Mint report in July 2025, citing two ICICI Pru executives who asked not to be named, said some employees and advisers found a loophole in the guarantee.

Advisers earn commission upfront and normally return it only if a customer surrenders within the 30-day free-look period. With a full refund available afterwards, advisers could buy the plan through relatives or wealthy clients, collect commission and rewards, then surrender after the window. In the executives' example, a ₹10 lakh premium paid an 8% commission (₹80,000) plus a ₹80,000 reward, and the buyer got the premium back apart from 4.5% tax. Some regions saw two to three times average monthly business.

By June 2025 about 90% of the plan's policies had been surrendered, some after the free-look period and others when the first renewal premium fell due. ICICI Pru did not reply to Mint's queries.

The 100% refund guarantee removed the buyer's economic risk, so surrendering cost the buyer almost nothing.

Commission was paid upfront and a separate sales reward was offered, so advisers gained money before the surrender.

Zonal and regional heads reportedly pushed advisers to sell the plan as a one-time payment product, boosting sales numbers.

A guarantee plus upfront commission and bonus rewards is an arbitrage for anyone paid to sell. Pay incentives only after the free-look period and the surrender window have passed.

According to Mint, earlier in 2025 ICICI Pru told advisers that surrender before the third premium payment would trigger a clawback of commissions and rewards, and in January it raised the free-look period for the product to 15 months. It could not establish how much the insurer was seeking to recover. ICICI Pru's savings-including-annuity line fell 4.8% year on year in Q4 FY25, with annuity payouts down 57.8%. The report relies on anonymous executives and the insurer did not comment.