HDFC life Click 2 invest – different but no different

by Manikaran Singal on June 26, 2014 Total Views: (18067)

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HDFC life has come up with one of its kind unit linked insurance plan with name HDFC life Click 2 invests. Why it is unique is because it is devoid of many charges that generally ULIP insurance plans have. It doesn’t have any allocation charge, administration charge and even the discontinuation charge. HDFC life click 2 invest can be bought online only and thus does not have any distribution cost attached too. But even after its no charge structure, does it make sense to invest in HDFC click 2 invest insurance plan. Let’s find out.

hdfc life click 2 invest

HDFC life click 2 invest – Key features

 

HDFC Life click 2 invest is an online unit linked insurance policy. Like any other ULIP you have to decide on the premium you want to pay, depending on which you will be covered with insurance. As in ULIP insurance cover will be the multiples of premium you pay.

Premium you pay after deduction of allocation charges (which is NIL in this product) will get invested in the fund option you chose. There are 8 fund options available for investors in this plan.

With a single, limited and regular premium pay option the maximum policy term available is of 20 years.  You keep on paying the premiums and at maturity you will get the fund value accumulated or at death your nominees will get highest of the following:

  • Sum Assured
  • Fund value
  • 105% of the premium paid

HDFC life click 2 invest – eligibility and other conditions

 

hdfc life click 2 invest

HDFC life click 2 invest – Other Features

 

  1. Charges: There is no Allocation, administration charges in this policy. There’s a fund management charge of 1.35% and being an insurance plan there’s mortality charges too. ULIP charges are also subjected to service tax.
  2. Discontinuation: There are no discontinuance fund charges. But if you discontinue the premium payment before the minimum tenure of 5 years, then the risk cover will cease and the fund value as on date of discontinuance will be moved to discontinue fund portfolio where you will get minimum guaranteed interest rate @ 4% p.a. You will be able to withdraw the funds only after completion of minimum of 5 years tenure.
  3. Partial Withdrawal: You can also make partial withdrawal after completion of 5 policy years. First 4 withdrawals in single policy year is free, subsequent withdrawals will be charged.
  4. Switch and Re direction:  You may also switch the invested amount to some other funds of your choice or even redirect the premium payments.
  5. Surrender: You can surrender the policy in between, but if you do it with in first 5 years, your fund value will be shifted to discontinued fund and can be withdrawn only after 5 years.
  6. Settlement: There’s one settlement option too, where you can claim the maturity proceeds in monthly installments for 5 years. But as in accumulation phase, even in settlement phase investment risk will be borne by you.

HDFC life Click 2 Invest – Should you invest?

 

The reason this plan is different but no different for me is the charge and investment structure. Where ULIPs are generally full of charges, this plan has no charges at all. Mortality charges are meant to be there being an insurance plan and fund management charges are due to investment structure attached to it.

The main point of contention to me is the ULIP investment structure. I mean i have never been able to answer the question of why should someone invest in ULIP or even endowment, for investments or insurance or for both?

If this is for insurance, then will the investor be able to pay enough premium and that too regularly to buy adequate insurance cover? Say for e.g. If a healthy nonsmoker male needs an insurance cover of Rs 20 lakh, then in case of HDFC life click 2 protect (term insurance) he will pay Rs 3798/- p.a. of premium, where as in case of HDFC life click 2 invest or any insurance ULIP plan he needs to shell out Rs 2 lakh p.a.

Even if one has enough money to pay for premium, how one can be sure that he’ll be able to answer this commitment every year (at least from next 5 years)

If this is for investments looking at low fund management charges, then how would you track the funds performance, compare it among peers and  above all by any chance you find that funds are not performing as expected, what options you are left with. You have to continue with this structure and keep on paying the premium for at least 5 years and if you don’t you will get returns of discontinuance fund account.

On the other side investments products like mutual funds, PPF, bank FDs, Post office schemes etc. all are so flexible and one can invest as per his requirement and manage comfortably.

Conclusion:

Even though hdfc life click 2 invest is devoid of all unnecessary charges, I am still not convinced to advise on investing in this. My advice is still the same keep insurance and investments separate.  Buy adequate insurance cover through term insurance plans and do investments in pure investment products as per your short and long term goals and risk profile. Keep your investments simple and flexible.

How do you find hdfc life click 2 invest? Do you agree with my views?

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{ 25 comments… read them below or add one }

Rajiv Ahuja June 26, 2014 at 11:42 am

I fully agree with your observations.

Reply

Manikaran Singal June 27, 2014 at 5:43 am

Thanks Rajiv.

Reply

Parthiban T June 28, 2014 at 3:51 am

Dear Mr.Singal,

“My advice is still the same keep insurance and investments separate”… is not just a simple sentence for this article.. It have real life meaning & implication. I learned this after loosing.

After separating insurance and investment, at present I feel more secure & flexible, than before.

Thanks for Quoting.

- Partho

Reply

Manikaran Singal July 7, 2014 at 9:25 am

Dear Mr Partho

What i can understand from your comment is you have bitter experience with the package of insurance and investments. Can i request you to share your experience for the benefit of other readers.

I am sure you can make other people’s financial life better by not letting repeat the same mistakes again.

regds

Reply

manoj July 2, 2014 at 9:13 am

HI,

Can you suggest any pure invest plans?

Reply

Manikaran Singal July 7, 2014 at 10:02 am

Bank FD, PPF, Post office schemes, Mutual funds, Tax free bonds etc. all are pure investments plan

Reply

sumedh September 22, 2014 at 5:00 pm

Come on…it’s a pretty good option considering it’s tax exempt…debt funds aren’t…and you can switch between asset classes easily…that’s pretty cool…

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parul September 24, 2014 at 5:37 pm

Ur idea of keeping investment n insurance separate looks like old tag line… They are offering 9 funds and hdfc has a past records of giving competitive return as mutual fund.. I have a ulips which is giving me average of 25% since 2006. I have played the game of timely switching once in 2 years . IF I continue doing so with this I can earn much more tax free under sec 10(10) d… This is a awesome product in the market.. n what more u can expect from a company… just 1.35% pa with full transperancy.. is better than 2.5% in mutual funds where many cost are hidden…

Reply

Manikaran Singal September 30, 2014 at 11:21 am

Your ULIPs are generating 25% ( i assume this is per annum though you have not mentioned it) since 2006, that’s a pretty nice return. And if you as an investor is getting this much return after allocation, administration, FMC and Mortality charges…that’s a gain commendable. because generally investments generate returns but investors don’t enjoy the same.
I also appreciate your game of “timely” switching once in 2 years, as i have never been able to time the market. Parul, you are really a Smart Investor.

Though i have already mentioned my points of contention, but just to reply your comment, i would like to reiterate the same….

” The main point of contention to me is the ULIP investment structure. I mean i have never been able to answer the question of why should someone invest in ULIP or even endowment, for investments or insurance or for both?

If this is for insurance, then will the investor be able to pay enough premium and that too regularly to buy adequate insurance cover? Say for e.g. If a healthy nonsmoker male needs an insurance cover of Rs 20 lakh, then in case of HDFC life click 2 protect (term insurance) he will pay Rs 3798/- p.a. of premium, where as in case of HDFC life click 2 invest or any insurance ULIP plan he needs to shell out Rs 2 lakh p.a.

Even if one has enough money to pay for premium, how one can be sure that he’ll be able to answer this commitment every year (at least from next 5 years)

If this is for investments looking at low fund management charges, then how would you track the funds performance, compare it among peers and above all by any chance you find that funds are not performing as expected, what options you are left with. You have to continue with this structure and keep on paying the premium for at least 5 years and if you don’t you will get returns of discontinuance fund account.”

I still find Bank FDs, Mutual funds etc. are much more easily manageable, and pls note that no charges are hidden in those products.

Reply

avinash October 24, 2014 at 3:47 am

Dear manikaran singal,

I am Avinash had started a policy in click to invest with monthly invested of 2000/.i selected equity plus bond 20%. and the other 80% i kept in bond fund. so i kept in 15 year time period. hence guide me whether i placed the money in correct investment or not. if this policy i selected is risk means i am ready to withdraw it.

Hence please guide me

Reply

Manikaran Singal October 31, 2014 at 10:59 am

Avinash, the fund selection is totally dependent on your risk profile and risk tolerance level. generally when investment is for 15 years time frame then investment allocation should be more into equity and not debt.

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sandani December 15, 2014 at 8:00 am

Hi ,

I am planning to take this policy considering the tax savings and investments where i can save my tax in 80c and at the time of maturity with 10 d tax rules, but reading your comments i am again stuck how about if i go with mutual funds as you said … will i get the good returns and tax exemptions

Reply

Manikaran Singal December 15, 2014 at 12:02 pm

Sandani, you will definitely get good returns and tax exemptions in ELSS. See this HDFC policy and ELSS Mutual funds both are market linked products, so if you want to generate returns from equity exposure then i believe ELSS could be a better option which like ULIP will keep the taxation to NIL on maturity proceeds.

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GOWRI SHANKAR December 25, 2014 at 11:45 am

Hi Sir,

Myself Gowrishankar, 30yrs old and i want to invest for my child (6 months) old. Some one has suggested to invest in hdfc click to invest and i want to go for long term period between 15 to 20yrs which will be useful or benefit to my child education or marriage. Help to go for investment plan or insurance plan(kindly suggest me if any better scheme available)

Reply

Manikaran Singal December 27, 2014 at 10:14 am

Gowrishankar, its a question of your child’s future. Plan properly. Rather than buying a single product you should chalk out a suitable plan for your kid. Make estimate of the expenditure on education and marriage and start saving through open ended mutual funds, PPF and other debt instruments as suitable to your risk tolerance. Get yourself adequately insured so in case of your absence his future should not be at risk.
And the most important point…don’t ignore your retirement planning while saving for your child. Always remember, you can get loan for children education but not for your retirement.

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Anil December 29, 2014 at 4:05 pm

I am 27 year unmaried men. Looking for my first investment. My yearly saving is Rs.12000/-. What is good policy for me? I want good maturity fund after 15 year.. which is best for me “Hdfc click 2 invest or SBI PPF??????

Reply

Manikaran Singal January 2, 2015 at 8:35 am

Anil , first of all congratulations for starting with your investment life. I would advise you to divide the money into PPF and balanced equity oriented mutual funds. Though i can understand you want to stay invested for 15 years, but still this is your start of investments. Learn more about the various options, understand the pros and cons and slowly and gradually build your portfolio with proper planning.

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Santanu January 20, 2015 at 12:08 pm

ULIP plans will become more unpopular in coming days as people are analyzing them gradually. Even with so many attracting features HDFC click 2 invest is able offer very bad life cover and return. Complete disappointment.

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Mahesh Mohan March 4, 2015 at 7:02 pm

I have a reason to invest in this HDFC ULIP. So, can I ask here to get your feedback or you are no longer monitoring the comments on this post?

Thanks!

Reply

Manikaran Singal March 5, 2015 at 7:46 am

Mahesh, regarding HDFC Click to invest i have already shared my feedback in the post itself. If there’s any specific question related to this product, feel free to ask.

Reply

Mahesh Mohan March 5, 2015 at 8:55 am

Hi Manikaran,

Yes, my question is about ULIP itself (specific to this HDFC Plan). I can see that no one actually recommends an ULIP plan — whether it’s for investment or for insurance. And I also agree that it makes sense to buy a term insurance cover (for insurance) + an ELSS (for investment & 80c benefits).

When I read about this hdfc plan I felt that its a better choice for me (correct me if am wrong or missing something here).
I do not have a term insurance cover so.. I was considering this ULIP plan as they are offering upto 40 times coverage (on ther website its written as 10x but they told me that they are offering upto 40x -–will confirm that before buying). I am actually not interested in their Equity fund as I prefer to invest in stocks myself. But still…. I can switch from debt to equity when there is, say a 20-30% stock market correction.

Do you think that this strategy is better than ELSS + Term Insurance?

My goal is to save tax and at the same time to get insurance benefits as I do not have a term insurance plan. Also, I want to make sure that the ROI is positive after 5 years. I might have preferred ELSS over ULIP if it had the ability to switch between debt/equity. But I was unable to find an ELSS fund that gives us the flexibility to switch between debt and equity. All of them were equity only fund (let me know if there is a hybrid fund available).

They say those ELSS offered say 20% or 30% returns over the past two years. But I do not want to trust that. Because the market can crash anytime and if I invest in ELSS today the fund value could be negative after 3 years if a 20 to 30% correction happend before that.

Thanks a lot!

Reply

Manikaran Singal March 10, 2015 at 10:03 am

Switching from debt to equity when market is down is a strategy which looks good on papers but i have not seen anyone practically applying it. We all are suffering from some investment biases which restrain us from taking rational decisions.
Investor switch to equity at 15% fall, but market does not stop there and fell another 20%. Now the investors portfolio is 20% down. Market doesn’t recover for next 6 months. Losing patience, investor switch back the negative portfolio again to debt just to make sure that it should not fall further and one can enjoy the safe returns. And after few months, mkt bounced back and gave 50% return. This is something which is a real life example of one of my friend who wants to follow buy on dip strategy.
See the key is not in timely switching but following a process. Follow Asset Allocation, with a proper allocation into debt, equity, gold. You don’t know which side , which asset class will move. So balance it out and take the benefit of both worlds. Rebalance your portfolio timely to book profit or get into down market.
Go for term plan, as the premium would be small which you can continue paying without bothering about the expenses or economy.

Reply

Mahesh Mohan March 11, 2015 at 7:25 pm

Hi Manikaran,

Thanks a ton for that. Btw, the HDFC guy gave the wrong information about its insurance part. The premium for insurance (when the coverage is high) is actually higher than traditional term plans.

But without insurance benefits (that is with single premium plan)… this ULIP plan still looks good as I checked the historical NAV of its debt funds.

So, now considering this ulip debt fund (to save tax) and an online term insurance.

Thanks! :)

tashi March 29, 2015 at 6:09 am

Sir
I want to invest rs 5000 per month in hdfc click to invest for 15-20 years. Kindly suggest me to divide my amount so that I can get good returns. And also tell me how much life insurance cover will I get since I do not have any life insurance cover. And is it safe to do online cuz I m frequently getting calls from policy bazar. Please suggests

Reply

rajen March 29, 2015 at 6:14 am

Sir
I want to invest rs 5000 per month in hdfc click to invest for 15-20 years. Kindly suggest me to divide my amount so that I can get good returns. And also tell me how much life insurance cover will I get since I do not have any life insurance cover. And is it safe to do online cuz I m frequently getting calls from policy bazar. Please suggests

Reply

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