A few months back HDFC Life launched an online cheapest ULIP product called HDFC Click2Invest. This product claims itself as the game changer due to its offer of very low charges. However, can we still consider mixing Insurance with Investment?
Few of the features highlighted with this product are as below.
- You can buy this ULIP Plan online.
- This product offers “No Policy Allocation Charges”.
- In addition, there will be “No Policy Admin Charges”.
- Premium paying options like single pay, limited payment options like 5 yrs, 7 yrs, 10 yrs or regular payment.
- You have options to choose 8 types of funds.
Below is an eligibility criterion of this investment.
Please note the highlighted area of above image. Considering the current tax rules, if you invest in single premium or your age is above 55 years of age then there will be no tax benefit on maturity, which is usually available for Life Insurance Products.
Maturity or Death Benefits–
At maturity, you will receive the value of the fund as on maturity date. However, in case of death, the nominee will receive the highest of below three options.
- Sum Assured,
- Fund Value,
- 105% of premiums paid.
Charges–
This plan claims to be charges only two types of charges.
- Fund Management Charges-This will be 1.35% of fund value per year.
- Mortality Charges-It depends on age and the sum assured opted by buyer.
Surrender of this policy–
If you surrender within 5 years of policy term, then it is considered as discontinued policy. So, accordingly benefits will be payable. If you surrender after 5 years, then you will receive the fund value as on date.
Loan Facility–
This plan offers no loan facility during the policy period.
Whether can we consider this plan for buying?
Advantages-
- This plan offers lowest charges among existing ULIPs. As buying, this plan is online and no intermediaries involved. Therefore, this is a cost efficient way of investing than the typical insurance buying. When we consider the cost of fund management charges, it is very much at competitive rate compared to mutual fund expenses.
- You have 4 free switching options in a year within available fund types.
- You can withdraw partially 4 times a year once the policy completes 5 years.
- A few reviews mentioned that lock in about 5 years is negative point. However, I feel it as an advantage. Reason is equity investment is for the long term. Hence, I consider this as a positive point rather than negative.
Disadvantages–
- There will be no tax benefit on maturity to those who opt for a single premium or the aged above 55 years. Reason is, in both the cases the eligibility for Sec.10 (10D) fails. Hence attract tax on maturity (But death claim is tax-free).
- In case of death claim, you will receive only the highest of sum assured, fund value or 105% of premiums paid. Whereas if you opt for term insurance along with other investments, you get the term insurance sum assured along with investing amount value. Because this is Type I ULIP, where in on death nominee will receive either sum assured or fund value (whichever is higher). In such type of insurance policies mortality charges usually go down as the fund value increases. Another type of ULIPs is called Type II. In such type of ULIPs, on death nominee will receive both sum assured along with fund values. However, mortality charges under such type of plans will be higher than Type I.
- Higher the age means higher mortality charges. This charge is deducted from your fund value. So, lesser investable amount for investors. Hence younger the age more benefit.
- Leading negative point towards ULIPs is tracking the fund performance. We hardly have data on that. If data available also it is hard for one to come out. Because even though this plan offers free surrender after 5 years, but what about the insurance cost if one want to buy after paying 5 years? It cost more to buy insurance after 5 years than having it now. This is a reason why you should avoid clubbing insurance with investment.
- If you try to protect the required life insurance by buying this plan, then one must be ready to pay higher premium. So hard for few to manage required life cover than simply buying term insurance.
- Few reviews suggested to invest in the name of spouse or kids to avoid the higher mortality charges. However, if your spouse is not earning then is she really need life insurance? This question applies to kids too.
View Comments
dEAR sIR
Pls advise on HDFC LIFE CLICK 2 WEALTH, is it worth to opt or not.
Dear Rajik,
Better to stay away.
Hii i buy HDFC click to investment in 2018 it's now More than 2years I feel like canceling my plans.. suggestion pls
Dear Mani,
May I know why?
i Basu,
Appreciate your work!!!!!!
I became daily visitor of your site. Thank god that i have got this ?
My Friend has got some LIC Policy where she paid 20,000(Monthly 3000+ ;paid for 5 months already) which is endowment policy. After reading so many articles i felt this should not be continued. I have requested him to close this and take Term policy.
Whether this decision is correct?
Dear Lucyfer,
Yes.
Hi Basavaraj!! I am Rupa 24 age, I earn 30k per month and On Jan 2019, I purchased the click2invest plan for 3k per month. I have paid three premiums until now. Now I realized that this is not good for investment.
1. Shall I cancel this now? If I cancel it now, will I get my 9k what I have paid now? Are there any charges applicable?
2. I am looking only for investment? What is a good plan for this? ELSS/MF/Any other?
3. Any term plan required for me now? Or just the medical insurance provided by my employer is enough?
4. Any retirement plan for my Mother (Age 44) Unemployed.
Thanks in advance for your help.
Dear Rupavathi,
You have an option to cancel within 15 days from the date of policy period without loss. I think that period has already lapsed. Hence, you have either pay it for 5 more years and then surrender or you have to forget of what you paid already. Regarding term life insurance, it is required (in fact a Life Insurance) for those who have financial dependents. Hence, take a call based on your dependents. Medical Insurance is different from the Life Insurance (Term Life Insurance) and hence don't compare both. Sadly there are no such retirement plans under my purview.
Thanks for your reply.
But I don't understand why you say to forget the premium paid. If I surrender it now, I think the corpus will move the govt returns and I can withdraw after the lock-in period. Is it not the case?
Regarding term insurance, any suggestions for me since I already said my income(30k) per month.
Dear Rupavathi,
To be eligible for surrender, in case of ULIPs you have to pay the premium at least for 5 years. Whether you paid for those many years? Refer my recent post regarding term insurance "Top 5 Best Term Insurance Plans in India 2019".
Hi Basavraj,
We can now see that the HDFC Click2Invest fund performance is good since last 4 years.
Earlier you had cited one reason of not investing in this because it lacked performance history.
Is your advice still same?
Are ULIPs always bad ?
If not then in which case ULIP is good ?
Thanks,
Santosh
Dear Santosh,
May I know as per you how the performance is good? What benchmark they are using for the same?
Hi Basavraj,
I was looking at the performance at http://www.moneycontrol.com/insurance/ulip/hdfc-standard-life-insurance-HD/hdfc-life-click-2-invest-equity-plus-fund-IHD453.html
Thanks,
Santosh
Dear Santosh,
Check the benchmark and rolling returns then let me know the returns.
Could you tell me how to check that ? If handy, could you share the benchmark and rolling returns for this fund ?
Dear Santosh,
Contact the HDFC Life. They have to disclose to you.
Hi Basavraj. I have been paying Rs 15K per month in HDFC Click2Invest Opportunity Fund ULIP since last 1.5 years. However, I also have term insurance purchased which fulfills my required insurance needs. Is it advisable to surrender HDFC Click2Invest policy right away and use the premium to invest in equity based mutual funds to gain better returns?
Dear Tushar,
It is always best to not to combine insurance with investment. However, to discontinue the policy and surrender the same you have to pay for at least 5 years. Otherwise, you have to forget the amount of what you paid.
but if you surrender the policy befor 5 yr so your all funds will be shifted to discontinuance fund in which you will get a return of atlest 5% fixed by company and your all money will be return back after 5 years.
Hi Basavraj,
I am planning to start investment 10 lakhs/year for 5 years. And looking for the best returns. Kindly help me in suggesting best plans? Someone suggested me to go with HDFC Click2Invest where I can get good rate of return + Protection. Do you recommend this?
Dear Anjanna,
Either use Bank FDs or Ultra Short Term Debt Funds. Never be in the trap of these products.
Thanks a lot for your valuable advise. I was checking Ultra Terms and most of them are giving around 7% -8.5% returns which is almost equivalent to FD. What is the best life protection plan?
Dear Anjanna,
You are looking for INVESTMENT then why PROTECTION PLAN?
okay but mam if you invest in fd or rd so you will get only 8% of return maximum and also at maturity you have to pay tax to the government if your growth is more than one lakh and after 5 or 10 year when you will take your money out so you are not even able to satisfy your need because the inflation rate will increase and the growth which you have generated dont fulfill your dreams
Hi Basavaraj,
Actually I was looking for Investment cum Protection. Could you please what are disadvantages of ULIPs?
My income is 37k per month.
I want to invest 17k in short term period for tax benefit. Yes I know
Now section 80C give you 1,50,000 tax saving. So, I want to take full advantage of it.
So, I found that : Aditya birla sun life tax relief 96 can give upto 45,000 rs of tax benefit (Cleartax.in).
Now, where do I invest 1,05,000 for tax saving in short period of time for high return ?
Option :
HDFC click 2 invest ?
Or any other ?
Please advice.
Nish-What do you mean by short term and high returns?
Hi,
I'm 26yrs male, unmarried and my income is around 30K, I want to save money in the form of Mutual funds.
Suggest me is there any way to save money for future use instead of mutual funds?
If mutual funds is ur ans, can I go with HDFC Click2invest plan by paying 1k/mnth of tenurity 5yrs?
Suggest me if there were any other plans?
Raja-Hard to say anything without knowing much about your financial life.
not that mutual funds will attract 10 % ltcg and ulip are tax free if premiums are paid yearly.what are your calculations is it wise to go for ulip like hdfc click to invest
Rajeev-But what about the liquidity issue? What if the fund manager not performing well? You have to stick with same product forever. This is not the case with MF.