Recently HDFC Life contacted me through a third party to write a review (mainly positive) on their newly launched “HDFC Life Click 2 Retire online ULIP Plan”. When I highlighted too many negatives, they just stopped replying further. Let us discuss more about this product.
I also found many more reviews on HDFC Life Click 2 Retire online ULIP Plan. Some are very genuine (by mentioning both positive and negative sides of this product) and some just highlighted the positive points of this product. Even not bothered why they are recommending this product. Simply copy pasted the plan features from HDFC Life portal.
I tried to highlight the negative points of this product, which many reviews or portals missed (don’t know the reasons).
1) ONLINE-There is nothing special about this plan except HDFC Life’s famous tagline used with this plan too i.e. CLICK. It is an online retirement plan. However, wait…it does not mean that there are no intermediaries involved in selling. Check about HDFC Life’s online term plan. Many leading insurance comparison portals recommend this single product. I found few planners insist you to buy HDFC Life online term insurance ONLY.
If there is no commission to these online portals or to planners, then why they are promoting only HDFC Life online term insurance? I still say that ONLINE insurance products have not purely avoided agent’s cost. Indirectly they include the selling cost, which we never come to know. Therefore, do not be in a hurry that you will be investing in a product with is CHEAPEST form of retirement product.
2) Charges are less-Currently charges may look minimal. However, check the condition “We reserve the right to review our charging structure (except premium allocation and mortality charges) at any time. Proper notification of any changes would be made to theIRDAI and prior approval will be sought before any change is made“. This means that on charges, they have every right to review.
Along with that, this product launched the new type of expenses to ULIPs. This expense is called as “Investment Guarantee Charge”. This charge is 0.5% to equity and income funds and 0.1% for conservative fund. Overall, the product will come with around 1.8% to 2% of charges. This I think competitive expense when it comes to mutual funds. However, what if they change the charges at a later stage?
3) Fund Types-This plan offers three types of funds where only fund you have equity exposure. The rest of the two fund types offer only debt category of investments. In such a scenario, whether investors earn a positive real return (return adjusted to inflation) in the long run? I do not know what prompted them to offer these two fund types, where equity exposure is ZERO. A retirement plan, which is in many cases a long term plan. Avoiding equity investment in such an important goal may totally harm your retirement planning.
4) Lock-in-This product will come with lock-in feature of at least 5 years from the start of the policy. In case you plan to surrender within 5 years, then “Your fund value (as on date of surrender) less discontinued charges will be moved to the ‘Discontinued Policy Fund. The fund value corresponding to the ‘Discontinued Policy Fund’ will be paid out on the completion of the lock-in period.” Currently, such discontinued charges showing as NIL.
However, they clearly mention, “This charge may be increased to a maximum cap as allowed byIRDAI, subject to prior approval fromIRDAI.” If you surrender after 5 years, then the fund value of that day will be payable to you. So any plan to come out of this plan before 5 years will actually harm you. You have to continue with this product at least up to 5 years irrespective of fund performance.
5) Assured Vesting Benefits?On maturity of the product, you are eligible to receive the HIGHER of “Fund Value” or “Assured Vesting Benefit”. Assured means guaranteed. However, how much? This is the percentage of total premiums paid. This assured vesting benefit starts from 103% for 10-year policy term to 128% for a 35-year policy. So do not be so much attached to this ASSURED. Instead, if the fund performs well then only you can live your retirement at ease.
6) Taxation-During investment you may get some tax benefits. However, at maturity only 1/3 of the commuted amount of whole retirement corpus is tax-free. Remaining 2/3 will be converted into a pension. This is taxable income for you. Therefore, you have to think of the taxation part post maturity.
7) Buying Annuity-At maturity, you have to buy an annuity only with HDFC. This I feel a big hindrance. Because even if the annuity product of HDFC not suitable to us or not well in the market, we have to go with HDFC annuity product with no other options.
8) Indicative Returns-As per IRDA rules, this product shows you the INDICATIVE returns of 8% and 4%. Remember that these are indicative returns, but not guaranteed returns. Many insurance companies or agents sell product showing these indicative returns as assured returns. But these indicative returns are meant to give you an example like how the product performs. Returns may be purely different.
9) Switching-Switching among the three fund category is not in your control. But it is purely with HDFC Life. Therefore, no control over your investment. You have to just invest and look at how fund performs.
Finally, it is left with you to decide. Few positives and many more negatives lead to bad product. Now you may came to know why I put the heading of this post as “Don’t Invest” in a straight way 🙂
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Uday
My current age is 33 and retire age is 50. I am thinking to invest 50000 per annual for 15 years in HDFC click 2 retire pension policy. based on this information please explain policy. Also please suggest me if and else of this policy.
Basavaraj Tonagatti
Uday-Do you think this is the BEST pension product or who suggested you this?
Prashaanth
I follow your blog with lot of interest and it is very unbiased. I want to take a policy for my father who is 63 and felt this HDFC Life Click2Retire would be suitable purely as it provides minimum guarantee as well as some sort of death benefit/insurance. I already have a term plan, ppf and SIP investments for personal accumulation and security but am unsure what to take for my father. We also have a family health insurance with Oriental.Kindly suggest the best plan for my father.
Basavaraj Tonagatti
Prashanth-Do anyone financially dependent on your father. If the answer is YES, then only go for LIfe Insurance. Otherwise, he doesn’t need insurance.
Prashaanth
Thanks for the simple and clear response.Makes sense. Appreciate it
Basavaraj Tonagatti
Prashaanth-Pleasure 🙂
saida zainab
hi iam looking for retirement plans or ways I can save money for my old age what are the best options for me I am salaried person aged 30 years female, kindly help as I jhav etwo daughters I have to do some good savings for my old age & for them as well please guide with any plans or tips wher ei can save money.
Basavaraj Tonagatti
Saida-Accumulating on your own through Equity Mutual Funds and debt portfolio is the best way than relying on any so-called retirement or pension product.
Saida Zainab
Hi thanks for your suggestions could you give me more information on reliance smart pensions plan is it good for and kids savings plan
Basavaraj Tonagatti
Saida-I am against a product which combines Insurance with Investment. Buy insurance only to protect your life.
Raja
Your details about HDFC life insurance is good. I need to know details about HDFC life super income plan. Whether it is beneficial or not? I have paid first premium of 28800 last month. They told me that it’s tax savings plan and they deducted nearly 1200 as tax for account opening. Had I read your blog about this before I would have asked you before investing.
Basavaraj Tonagatti
Raja-It is typical endowment plan. A trap to sell as if tax saving product. If the the policy is still in free-look-in period, then cancel it immediately.
BABURAJ PRABHU
Dear Basavaraj,
Regarding your pension suggestion, how come an individual like us create our own corpus. That too without any plans. If you suggest by Recurring Deposit in Bank then how much Corpus for how many years ?
Click to protect or any other product provides you with Death cover also amount accrued is tax free. Not too much love with new generation Insurance firms. But confused how we can ?
Basavaraj Tonagatti
Baburaj-When you are INVESTING, death cover matters? Is this product only offers TAX FREE on this earth?
Prageeth
Sir,
Instead of this plan, which private/government plans you are suggesting as Retirement plan..
Basavaraj Tonagatti
Prageeth-No readymade pension or retirement plan from my end.
Dr Jagadish Kothari
How do you rate &suggest about investment in the New National Pension scheme which has added tax benefit.
Basavaraj Tonagatti
Jagadish-I strongly suggest to stay away. Your investment must not be solely based on tax benefit.
Ashraf Khan
HI Sir,
My Self Ashraf Khan and i am searching a health insurance policy for my family. i am 33 years old and my wife is 32 year old having on doughter 2 years. Fater -67 & mother 60 year old.
i am receiving phone calles from HDFC Life Insurance for their Plan “HDFC Life Health Asssure Plan” for my family.
Kindly suggest about above policy is good nor not for me.
Thanks
Warm regards,
Ashraf Khan
Basavaraj Tonagatti
Ashraf-Stay away from that plant of HDFC. Buy separate health insurance for your parents. Include you, wife and kid in your plan. You can check with Star, Apollo, MaxBupa or Religare.
Gaurang Bhavsar
Sir,
1) What is your view to invest in ELSS schemes for short tenure or upto 10 years compare to ULIPs products?
2) Should igo with PPF or post offfice pension schemes for guaranteed returns?
I am intested to invest upto 20 years for better retirement.
Kindly guide
Basavaraj Tonagatti
Gaurang-1) Don’t compare ELSS with ULIP, even though both are meant for long term. You can enter into ELSS only if you have patience of waiting for more than 5 years or so.
2) Never run behind GUARANTEED. But think both PPF as a debt product. If it matches with your goal tenure, then you can consider it.
Harry
Great One. Thank you 🙂 It is very beneficial article for me
Shruthi
The title of your article (Don’t Invest in HDFC’s ULIP) sparked my interest, but the article itself doesn’t provide any solid evidence to back the title!
Basavaraj Tonagatti
Shruthi-What more is there to drag my head into this product? I discussed major points and reasons. Is your expectation is more than that?
Shruthi
Hey Basu, the reason I follow your blog is to have stuff explained that I may not understand without your inputs, but I am totally lost in this one, your title says one thing and then your article doesn’t address the product properly.
Basavaraj Tonagatti
Shruti-Pleasure for your blog following. I pointed all negative points of what this product offers. What more you expect? That is the reason I mentioned as “Don’t invest”.
Tejaswi
Hi Basavaraj
Thanks a lot for your post . its simply awesome. please keep going on .
Basavaraj Tonagatti
Tejaswi-Pleasure 🙂
Ramesh
Assuming they don’t increase the Investment Guarantee charge, do you think this ULIP will continue to be less expensive than other ULIPs when it comes to fees like this?
Your thoughts?
Basavaraj Tonagatti
Ramesh-This ULIP is cheapest now also. But my concern is it’s performance and the basic idea of mixing insurance with ivnestment.
Ramesh
But why not go for cheapest current option? We can only live in present certainly!
Basavaraj Tonagatti
Ramesh-Certainly we live in present, but when it comes to investment, whether we not think of future? If we not thinking of future, then we may not investing but spending. Forget about expenses, how can I risk my money in a product which don’t have track record and comes with lock-in. I need something reliable which had a good track record and also free from lock-in. There are many options available, why stick to this ONLY?
Shinoj Surendran
Hi Basavaraj,
Thanks alot for putting some light on all the grey areas of HDFC click to retire. Actually I brought this plan today morning, now after reading your post I have decided to quit this (Hopefully they will let me do it with out any loss).
I request you suggest some best retirement plans for me please.. I am 32 yrs old now.
Basavaraj Tonagatti
Shinoj-Sadly there is nothing called BEST RETIREMENT plan as of now. The better way is to create your own retirement corpus than investing in any pension or retirement product.
Shinoj Surendran
Thanks for the reply Basavaraj..!!!
I have a below avg knowledge on finance sector.. Could you please help me by suggesting some tips like how and where to invest money..I am a salaried person and currently can invest up to 15K per month.
nagaruru rajakumar
Sir please tellme wich is the best pention plan
My db is 7/2/1976
I want 30000/- pention
Basavaraj Tonagatti
Nagaruru-Sadly NONE. Better you have to create on your own.
nagaruru rajakumar
Sir already a had click 2 invest policy now what can i do
Basavaraj Tonagatti
Nagarruru-If it is still in free look in period, then cancel it immediately. Otherwise you have two options, one is to forget now itself or come out after the surrender charges are NIL.
Karthik
You are straight forward sir. People like me depends on your knowledge to invest our hard earned money. I followed your pages and did some investment. This kind of straight forward review will save from being a victim. Keep going.
Basavaraj Tonagatti
Karthik-Pleasure 🙂
Rajesh
you nailed it Basu, you have highlighted the right points which should be the REAL concern for people who are looking forward to buy a retirement plan.
Basavaraj Tonagatti
Rajesh-Pleasure, but don’t spam using different names in different blog posts but using same IP Address.