All about HDFC LifeClick2Invest- ULIP Investment Plan

Written by Vidya Kumar

November 28, 2014

Returns since inception
8.32%
7.47%
9.41%
9.58%
12.46%
9.84%
9.91%
9.07%

HDFCLifeClick2Invest ULIP

Executive Summary – HDFC LifeClick2Invest is a Unit Linked Plan that offers insurance and acts as an investment product. It is unique, as it has no allocation, distribution and administration charges. It is one of the cheapest options among ULIPs. It has other attractive features like switching and discontinuance. Experts feel that insurance and investment should be kept separate and when investing in such a product, one has to understand it completely and track its performance to make sure the investor gets the promised returns.

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HDFC Life Click2Invest – ULIP is an online Unit Linked Insurance Plan. It offers market-linked returns. It is a little different from other plans as it charges only for mortality risk and fund management. Other Unit Linked plans have allocation charges; administration charges and discontinuation charges. HDFC Life Click2Invest – ULIP does not have any of these charges. It does not charge or distribution as it can be purchased online. It also does not have any discontinuation charges.


Key Features

HDFC Life Click2Invest is an online unit linked Insurance policy with only 1.35 % p.a. charge structure.  The rest of the premium amount is invested.

There is an option of partial withdrawal after the first 5 years of the policy are complete. The first 4 withdrawals are free in a year.

The investor has 8 fund options.

The Investor can discontinue the policy without any discontinuation charges. But if you 
discontinuation of premium payment happens before the minimum tenure of 5 years, risk cover will not be there and fund value as on date of discontinuance will be moved to discontinued fund. The Investor will get minimum interest rate @ 4 % p.a. The funds can be withdrawn only after 5 years. 

Switching the premium payment to a different fund is possible.

Surrender of policy is possible.

Entry Age

Minimum – 30 days and Maximum – 65 years.

Maturity Age

Minimum –  18 years and Maximum – 75 years

Policy Term

It can be from 5 years to 20 years.

Premium Payment

There are 3 options for premium payment –
Single Premium
Limited Premium – For tenure of 5,7 and 10 years.
Regular Premium – For tenure of 5 to 20 years.

Sum Assured

At maturity or at death, the sum assured will be the highest of the following:
– Sum Assured
– Fund Value or 
– 105% of the  premium paid

Benefits

The investor gets tax benefits under Sec 80 C and Sec 10(10 D) of Income Tax Act.

The plan has very low expenses, as there are no allocation charges or administrative charges.

The plan gives the option to switch between funds
4 times in a year free of cost.

It is possible to discontinue the plan without any discontinuance charges.

There are different premium payment terms and the investor can choose the one that is suitable for him/her

Disadvantages

The policy can be surrendered only after 5 years though there is an option to discontinue the fund before that.

Tax benefits are not available for people above the age of 55 years

The premium to be paid is higher than a normal life insurance policy. If the investor is looking at it solely from an insurance perspective, he/she needs to research other life insurance products.
 
Many of the funds that this plan invests in are new and so there is not much of a track record. The performance of the plan is not as good as other ULIPs in the market.

Comments

A Unit Linked Plan tries to mix insurance and investment. Many experts agree that this may not be such a good thing. Investment products like Mutual funds. PPF give equitable or better returns with lesser expenses. Insurance should only be treated as protection agaist unforeseen exigencies. Buying a life insurance policy or term insurance policy will work out cheaper.

But it still gives the dual advantage of insurance and investment. If that is your goal, you can buy a ULIP, HDFC Life Click2Invest is one of the cheapest options available and has good features like fees switching between funds and provision of discontinuing. You need to study it very well, understand investment policy, track expenses, the funds that it is investing in and actively make changes (like switching funds) as required.


Here is a snapshot of the Plan Performance versus the Benchmark as of October 31st, 2014 –

Fund & Benchmark

Income Wealth Builder Fund

HDFCSL Returns

CRISIL Composite Bond Fund Index

BlueChip Wealth Builder Fund 

HDFCSL Returns

BSE 100

Opportunities Wealth Builder Fund

HDFCSL Returns

CNX MID CAP INDEX

Balance Fund Life Super-II

HDFCSL Returns

60% BSE-100 40% Crisil Composite Index



Source-HDFCLife (http://www.hdfclife.com/iwov-resources/pdf/fund/benchmark/Click%20to%20Invest%20P.pdf)

Have you invested in this product? What is your view on it?

The author can be reached at [email protected]

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