HDFC Click2Invest new ULIP-Should you invest?

HDFC Click2Invest-UlipHDFC Click2Invest new ULIP-Should you invest?


Few days back, HDFC life has floated a new Unit Link Insurance Plan (ULIP) which indicates zero policy allocation charges and zero policy administration charges. Apart from this, HDFC Click2Invest plan can be discontinued without any charges. Investors lost interest in ULIP plans as they have been charging high allocation charges and premiums are invested after deducting them. Should you invest in HDFC Life Click2Invest ULIP plan? Is this different from other ULIP Plans? What are the positive and negative factors about HDFC Life Click2Invest Plan?

Features of HDFC Life Click2Invest ULIP Plan


  • This is an online ULIP plan.
  • Zero policy allocation charges
  • Zero policy administration charges
  • There are 8 fund options to choose in equity and debt segment.
  • Premiums paid would be reinvested in the funds you would be choosing
  • Single, limited and regular premium options available
  • Maximum tenure is 20 years
  • Premiums can be payable monthly or per annum

Also Read: Should you invest in ICICI Pru Wealth protector ULIP Plan?

Other features of HDFC Life Click2Invest Plan


HDFC Click2Invest ULIP-Other Features

What are the various fund options available to invest?


HDFC Click2Invest ULIP-Fund options

What are the benefits?


1) Death Benefit: In case of unfortunate death of insured, highest of the following would be paid

  • Sum assured
  • Fund value
  • 105% of premiums paid

2) Maturity Benefit: An investor who is alive till the end of the policy period would get the fund value as maturity amount.

4) Income tax benefits: Life Insurance premiums paid up to Rs. 1,00,000 are allowed as a deduction from the taxable income each year under section 80C of income tax act and the maturity amounts are tax free under section 10 (10) D subject to fulfillment of terms and conditions.

Positive factors of HDFC Click2Invest ULIP plan


1) No allocation and administrative charges: Unlike other ULIP plans, this plan comes with zero premium allocation charges and zero policy administration charges. There are fund management fees charged by this insurance policy which is 1.35% of the fund value.

2) Free Switches between funds: When you invest in a fund, you may think of switching to other funds due to market conditions. This plan offers 4 free switches in a year. Beyond this, any further switch would have separate charges

3) Zero discontinuance charges: One more negative point for many ULIP schemes is they charge high penalty for discontinuance of ULIP Plan. However, this plan comes offer zero charges in case you want to discontinue this ULIP.

4) Partial withdrawals: There are partial withdrawals allowed under policy after 5 years of the policy.

Negative points of HDFC Click2-Invest Plan


1) Surrendering policy before 5 years: Like any other ULIP plan, even this policy can be surrendered only after 5 years of taking the policy. However, if you want to surrender this policy before 5 years, you can do that and fund value would be transferred to the discontinued fund portfolio and 4% annual returns would be paid till the completion of 5 years.

2) Fund Management charges: This ULIP plan charges 1.35% fund management charges. Comparing  to mutual fund schemes which charge 1% to 2.5% as fund management charges is comparable. However, one should think that mutual fund schemes need more professionals to manage funds as they are intended to provide good returns. ULIP’s can provide returns of 4% to 6% returns, hence paying such fees could be still higher.

3) ULIP Still complex and not simple: Though the charges are reduced, still ULIP plan is still complicated and not simple to understand. Even an educated person need to spend a lot of time to understand how it works.

4) Don’t consider for risk cover: If you want to buy this plan for risk coverage, then you need to pay hefty premiums. E.g. for Rs 20L risk coverage, one can buy term insurance plan where premiums come at Rs 4,000 (approx) per annum. However, for this ULIP plan, you need to pay Rs 2 Lakhs (per annum) as this is risk cover + investment product.

5) No tax benefit for 55 years and above: This plan provides tax benefits for specific fund options. Any individual who wants to buy this ULIP plan after 55 years, would not get tax benefit as you can opt in specific fund options and not in all options.

Also Read: Should you surrender old ULIP Plans which has high allocation charges?

Should you invest in HDFC Life Click2Invest ULIP?


There are several positive factors like zero premium allocation charges, zero administration charges, investing online etc. However, I still feel that you should look Risk cover and wealth creation as separate aspect. Consider a term insurance plan for risk coverage. If you are a low risk investor, invest the balance amount in bank FD schemes or RD schemes. If you can take some risk, invest in equity mutual funds or hybrid/balanced mutual funds which can create good wealth in long run of 10 to 20 years. Personally, I would not like to invest in such ULIP schemes.

HDFC Click2Invest Plan brochure can be downloaded here

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Suresh
HDFC Click2Invest ULIP

Suresh KP

35 comments

  • disha

    Hi I have been told by the policy bazaar people that if I invest 5000 per month for 20 years I would be getting 75L as a maturity amt. How far its true..?

    • Disha, If you invest Rs 5,000 per month for 20 years at 15%, you would definitely get Rs 75 Lakhs. But who is promising 15% returns? If you invest in large cap mutual funds that too good funds, you can expect between 12% to 15% annualised returns. Investing in ULIP’s would not give such huge returns. You can expect 10% to 12%. Means between Rs 38 L to Rs 50 L. Anything comes over and above it is bonus for you. Keep your expectations in this range if you would like to invest in such products. Don’t regret later.

  • indrajit Lahiri

    Hello, I would like to invest monthly 2500/- on SIP. which fund do you suggest ? I am a 38 year old family man with one son

  • yeskay

    Just like these guys badmouth all ulips and hold brief for mfs, I think we should discard this useless bunch of people who are financila illiterates who masquerade as advisors telling all falsehood against ulips. Will they keep shut.

    • Ha Ha. What do you do? Why you are encouraging insurance agents who has been looting investors money by give false statements and asking them to subscribe ULIP’s. I agree that new ULIP’s are coming with lesser costs. It is investor call. They have become clever now with bloggers awareness articles. Shameful for people who are still encouring ULIP’s to become millionarie and crorepathis with investors money.

  • pari

    You are mis-guiding people by mentioning ulip gives returns of 4% and 6%. I had a ULIP which i bought in 2005. Young star of HDFC Life where the costing was obnoxious but today I got maturity cheque where if I calculate the IRR it is coming 16% after all the charges.

    I feel if the performance of the fund is maintained than the people will get huge benefit out of these Ulip as the costing is less.

    Also since there is no brokerage in this product so you people are not interested to promote the same.

    But public is not fool.

    • Hi Pari, If you really concerned, send me scan copy of your ULIP plan + scan copy of cheque at suresh@myinvestmentideas.com. These type of comments are passed by insurance companies or agent or brokers who want to sell their products and earn 35% of commission in 1st year and 8% in subsequent years. Public knows who is fooling here and who is being fooled. Would wait for your email.

  • anil

    Dear Sir,

    I want invest monthly Rs.1000/- for 5 year. What is best mutual fund for me. I am 27 year unmaried men. My anually income Rs.1,30,000/-
    Please best invest for me?

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