HDFC Life Click 2 Wealth Plan from HDFC Life Insurance is a ULIP (United Linked Insurance Plan) product. It offers market-linked returns to the policyholder and acts as an insurance cover for the policyholder and their family.
It is a non-participating insurance plan, which means the policyholder does not get any bonuses, dividends, or such add-ons. This is because, in this plan, the insurer does not simply ‘participate’ in the business of the insurance company.
Table of Contents:
i. Death Benefit of HDFC Life Click 2 Wealth-Review
ii. Maturity Benefit of HDFC Life Click 2 Wealth-Review
4. Comparison of HDFC Click 2 Wealth Vs PPF
5. Comparison of HDFC Click 2 Wealth vs Mutual Fund
6. Charges Under HDFC Life Click 2 Wealth Plan
7. HDFC Life Click 2 Wealth Policy Discontinuation
8. How to Surrender HDFC Life Click 2 Wealth?
i. Surrender HDFC Click 2 Wealth before Free-Look Period
ii. Surrender HDFC Click 2 Wealth after Free-Look Period
Is HDFC Click 2 Wealth, an attractive product for investment and insurance?
Are the features and benefits as attractive as they seem?
Let us review HDFC Click 2 Wealth in greater detail.
HDFC Life Click 2 Wealth Plan Review– Features, Benefits, and Returns
HDFC Life Click 2 Wealth comes with 3 plan options as under
Invest Plus Option: This is the most basic plan; you get a life cover and the accumulated fund that is realized on maturity, becomes your wealth creation. Upon the death of the life assured, he or she gets the highest of,
i) Total Sum Assured – Any Partial Withdrawals
ii) Fund value
iii) 105% of the Total Premiums Paid.
Premium Waiver Option: In this plan, there is a clear distinction between the policyholder and the Life Assured.
A proposer or the policyholder will be liable to pay the premiums under the premium waiver option. In case of the unfortunate death of the proposer/policyholder during the tenure of the plan, all the future payments are waived off.
In such a case, HDFC Click 2 Wealth makes all future payments towards the fund. Meanwhile, the risk cover for the life assured will continue, and the life assured will be made as the policyholder.
Since it is designed to protect your child’s future, it can be called as HDFC Click 2 Wealth Child Plan.
In the event of the death of the Life Assured, the death benefit is payable under the policy as a lump sum.
Golden Years Benefit Option: In addition to the basic Invest Plus Option, you are covered for the whole life (99 years) and on maturity, you receive the accumulated Fund Value, and mortality charges are added to the fund value at the end of the policy year, which matches or follows the 70th birthday of the Life Assured.
Unlike the other two plans of ‘HDFC Click 2 Wealth, ‘Invest Plus’ and ‘Premium Waiver’, wherein the “age at maturity” was 75 years, it is 99 years for Golden Years Benefit Option. You can also call this HDFC Click 2 Wealth Retirement Plan because it is designed for your golden years when you need independent cash flow.
To cite an example, let us say Manoj is a 52-year-old journalist and wants to save for his retirement. He buys the HDFC Click 2 Wealth Plan with the Golden Years Benefit Option wherein the policy term is ‘Whole Life’ (99 years). So, he can choose a premium payment term from 10 years to the time he attains the age of 70. Once Mr. Manoj turns 70, the life cover continues, and he does not need to make any premium payments. At the end of the maturity of the plan, he receives the fund value as a lump sum benefit.
To produce a regular retirement income, Mr. Manoj can opt up a Systematic Withdrawal Plan under the Golden Years Benefit Option. Wherein he receives money at regular incomes from his accumulated fund.
A policyholder can request systematic or recurring withdrawals under the ‘Settlement’ option. The fund value is paid based on periodical investments over a period.
Besides, HDFC Life Click 2 Wealth also facilitates Partial Withdrawal option under certain circumstances on all the options.
The policyholder can make a partial withdrawal under the following conditions-
- a. He or she is an adult, at least 18 years of age.
b. No partial withdrawals are allowed with the first five years of the policy period.
HDFC Click 2 Wealth – Sum Assured and Minimum Premium
Minimum Single Premium → ₹24,000.
- Monthly → ₹1000
- Quarterly → ₹3000
- Half Yearly → ₹6000
- Yearly → ₹12000
There is no limit to maximum premium, subject to Board Approved Underwriting.
The Sum Assured is as follows:
- Single-Premium → 125% of Single Premium
- Regular and Limited Premium → 10x Annualized Premium
- Top-ups – 125% of Top-up Premium
Now, let us see the fund options available for an investor under HDFC Life Click 2 Wealth. And how they differ in their asset allocation and risk levels.
HDFC Life Click 2 Wealth Fund Options
HDFC Life Click 2 Wealth offers 10 different fund options to invest your money. The returns will depend on the choice of funds you take. So, if you take a low-risk debt fund, your returns may not be high. But if you are going to stay invested for 5 years or more, yo6u should go for a moderate to high-risk equity fund for better returns. You can invest in a combination of funds by diversifying your fund among different fund options.
The fund options range from the very low-risk liquid fund to the very high-risk Bluechip fund.
Based on the risk level, the returns from these funds also vary. An investor can choose to invest in any of these 10 different funds based on their risk appetite.
Let us analyse and review the return and benefits with an example in the HDFC Life Click 2 Wealth Review of Benefits below.
HDFC Life Click 2 Wealth gives benefits to the policyholder or the nominee under two different scenarios. It is either the Maturity benefit or the Death benefit.
We shall analyse each of these scenarios to check whether HDFC Life Click 2 Wealth is beneficial or not.
HDFC Click 2 Wealth Review of Benefits
1. Death Benefit of HDFC Life Click 2 Wealth-Review
In case of the death of the policyholder, the nominee gets the highest of the following –
- Total Sum Assured minus any partial withdrawals made during the 2 years immediately before the date of death.
- Fund Value
- 105 percent of the premiums paid.
To cite an example, under the basic “Invest Plus” Option, if Akash dies anytime in these 40 years, he gets the death benefit, as cited above. Once the death benefit is paid, the policy is said to be terminated.
For the ‘Premium Waiver’ Option, in the scenario, wherein the ‘proposer’ is different from ‘life assured; upon the death of the proposer, future premiums are waived. The policy goes on till maturity, and the maturity benefits are paid to the life assured.
To cite an example, let us say, when his daughter was 10 years old, Mohit Saxena bought the HDFC Click 2 Wealth Plan with the Premium Waiver Option for 30 years. In this case, he is the policyholder or the Proposer, and the daughter is the Life Assured. Every year he makes an annualized premium of ₹50,000 and the company adds 1 percent of the annualized premium to the fund value for the first five years.
In case Mohit dies after 20 years, the plan continues, the company or the insurer pays all future premiums on Mohit’s behalf, and at maturity, Mohit’s family gets the fund value as a lump sum benefit. The life cover of the daughter continues until maturity.
For the ‘Golden Years’ option also, the death cover continues for the entire policy term.
2. Maturity Benefit of HDFC Life Click 2 Wealth-Review
On survival until the maturity of the plan, you will get the accumulated fund value. TheFund value is calculated by multiplying balance units in your fund by the prevailing unit price (NAV). The policy matures at the end of the policy tenure and the risk cover is deemed complete.
Let us say Mr. Akash is a 35-year-old software developer. He buys HDFC Click 2 Wealth Plan’s Invest-Plus Option with a policy term period of 15 years and a premium paying term of 15 years.
Every year, he pays an annual premium of ₹1.2 lakhs and the company adds 1 percent of the annualized premium to the fund value for the first five years.
The life cover continues for 15 years and when the policy matures at the end of the 15th year, he gets the accumulated fund value.
The maturity benefit is applicable for all three plans – Invest-Plus Option, Premium Waiver Option, and Golden Years.
Let us see what Mr. Akash could get from HDFC Life Click 2 Wealth at the end of his policy term.
Analysis of HDFC Click 2 Wealth Maturity Benefits
Here is a model illustration of HDFC Life Click 2 Wealth maturity benefits.
The maturity value shown in the illustration below is calculated using the actual 10year CAGR of the funds of HDFC Life Click 2 Wealth.
And for the illustration, I have chosen the Invest-Plus benefit option since it is more direct in calculating the maturity value.
Note: These assumed rates of returns are not guaranteed, but depends on the fund performance.
Comparison of HDFC Click 2 Wealth Vs PPF + Term Insurance
PPF (Public Provident Fund) is a government-backed scheme known for its stability, assured returns and EEE tax exemption status.
The current interest rate (2021) at 7.1% is still strong enough to beat inflation during an investment period. The lock-in period is 15 years but partial withdrawals are allowed post the 7th policy year. The maximum amount is 50 percent of the balance amount at the end of the fourth year.
PPF enables you to claim income tax benefits up to ₹ 1.5 Lakh under Section 80C. The returns as well as the corpus post maturity are exempt from taxation.
To get the best value of compounding in a PPF, one must start early as possible. So let’s say at age 35, Akash chooses a PPF and invests ₹ 10000 per month for 15 years. At the end of 15 years, he stands to accumulate a corpus of ₹31.5 lakhs with ₹13 lakhs as interest earnings. The following table shows the PPF balance and interest income earned at maturity.
Besides, you can take a loan on your PPF money, which is not the case with a ULIP product like HDFC Click 2 Wealth.
Since PPF is backed by the government of India, the ‘risk factor’ is virtually zero. For a ULIP product like HDFC Click 2 Wealth, the returns are market-linked and unstable.
Even when looking from an insurance perspective, ULIPsdo not stand as adequate insurance cover. Term insurance policy is the cheapest and the most straight-forward of all life insurance policies; there is no investment component involved.
For instance, you need to pay just ₹ 600 per month (or ₹7200 per year) for a life cover of ₹50 lakh, for a 20-year term period, assuming you are 36 years of age. There is no investment involved in term insurance policies, it a pure insurance product that gives income to the family in case of the breadwinner’s demise.
Even term insurance is eligible for tax deduction under Section 80 C, and the claim benefit for the nominee is tax-free under Section 10D (10 D).
Thus, we see as against HDFC Click 2 Wealth, you are getting a much better cover through a term insurance policy and building a good corpus through investing in a PPF.
Comparison of HDFC Click 2 Wealth Vs ELSS Mutual Fund + Term Insurance
If you are interested in wealth creation and have a high-risk appetite, it is much better to stay invested in an equity mutual fund for the long term and take a pure term cover along with it, instead of a ULIP product. Remember the rate of return from ULIP varies depending on the investment portfolio of equity, debt, or hybrid funds.
HDFC Click 2 Wealth Return &Tax Benefits Vs ELSS Mutual Fund
Let’s assume that Akash uses the same ₹ 10000 and puts in a well-performing ELSS mutual fund.
Since an equity mutual fund cannot give assured returns, let us assume an estimated rate of return at 12 percent per annum. At the end of 15 years, he will have earned a corpus or maturity value of ₹47.5 lakhs with interest earnings at ₹ 29.5 lakhs.
The following table shows the compounded growth of investing ₹ 10,000 per month through SIP in an ELSS mutual fund scheme for 15 years while assuming a very conservative 12% rate of return.
In the case of ELSS, the returns are exempted from tax up to ₹1 lakh p.a. Gains above this limit are taxed at 10% LTCG (Long Term Capital Gain).
You should note that the 12% CAGR for an ELSS mutual fund is a conservative assumption. A good number of well-performing ELSS Mutual Fund can deliver returns at a rate of15% or even higher in the long term.
But for now, let’s assume a conservative return and compute the post-tax return in the hands of an investor.
Tax Computation for an ELSS Mutual Fund
Like any other ULIP, investments in HDFC Life Click 2 Wealth is eligible for tax deduction up to ₹1.5 lakh per annum under Section 80C of the Income Tax 1961. ELSS Mutual Fund investments are also eligible for the same tax benefits under section 80C of the Income Tax Act, 1961.
But in HDFC Life Click 2 Wealth, the accumulated money that you get at the end of the maturity period or the sum assured at death, is also tax-free under Section 10 (10d).
An ELSS Mutual Fund on the other hand has no such tax exemption on withdrawals. However, mutual fund generate return very high that even with taxation, an investor ends up with a higher return in his hand compared to the HDFC Life Click 2 Wealth plan.
See the tax computation and post-tax return from ELSS fund in the table below:
Analysis of Return From HDFC Life Click 2 Wealth Vs. ELSS Mutual Fund:
The post-tax return of ₹44.7 lakhs by ELSS Mutual Fund is still higher than the returns delivered by the HDFC Life Click 2 Wealth plan.
The return calculated in the HDFC Life Click 2 Wealth illustration table is the return before the deduction of Fund Management Charges. If we include the charges from HDFC Life Click 2 Wealth, it further reduces the return.
Even with a conservative comparison, an average ELSS Mutual Funds Can deliver ₹4 lakhs higher return than one of the best performing HDFC Life Click 2 Wealth Fund.
Hence, choosing to invest in HDFC Life Click 2 Wealth plan from the investment perspective is not a sound choice for an investor.
Analysis of HDFC Life Click 2 Wealth Tax Benefit:
HDFC Life Click 2 Wealth also has another hook.
The annual premium should be less than 10 percent of the sum assured offered by HDFC Click 2 Wealth.
So, let’s say the sum assured is ₹15 lakh, and the annual premium is less than ₹1.5 lakh, then the entire amount qualifies for a tax deduction. But if the premium is more than ₹2.5 lakh for the same sum assured of ₹15 lakh, the available deduction is again ₹1.5 lakh.
Let’s say you invested in HDFC Click 2 Wealth ULIP plan and saved some tax. But what happens at maturity when you want to liquidate the investment? Do you pay tax on the entire maturity proceeds or just the profits you made? The answer is that if all premiums were duly paid, you do not pay any tax at the time of maturity for ULIP policies that were issued before 1st February 2021, because you get tax -free maturity amount as per Section 10 (10D) of the Income Tax 1961, as per conditions stated therein.
For new ULIPs and for policies issued after 1st February 2021, if the total premium in a financial year is more than ₹2.5 lakh, the maturity proceeds from such a policy are treated as a capital asset, and the returns will no longer be tax-exempt.
Thus, with the new tax amendments for ULIP for a premium above ₹2.5 lakhs, HDFC life Click 2 Wealth and all other ULIPs are at a severe disadvantage.
So, sticking to HDFC Click 2 Wealth Plan from a tax perspective is not a sound choice either to an investor.
Additional Reasons to choose Equity Mutual Funds over HDFC Click 2 Wealth:
Here are some of the key points why you must choose an equity mutual fund as an investment vehicle over HDFC Click 2 Wealth.
- Equity Mutual Funds have superior liquidity over HDFC Life Click 2 Wealth & other ULIPs.
- The long tenure, lock-in period, compulsory contributions for 5 years make ULIPs unattractive.
- The lock-in period of 3 years for ELSS Funds is the lowest among all investment instruments considered under section 80C of Income Tax Act, 1961.
- HDFC Click 2 Wealth has a narrow fund choice of only 10 funds.
- ELSS mutual fund category alone will have 10+ funds outperforming the best funds in HDFC Life Click 2 Wealth.
- Also, if you check the returns, a good number of mutual fund schemes have consistently beaten ULIP Funds on a medium to long-term horizon.
- One may argue that, in case of the death of the policy holder or the insured, the nominee will get life insurance cover or the fund value, with the death benefit being
- But, in case of term insurance + ELSS combination, the nominee will get the sum assured (a very high sum assured) from the term insurance which is also tax exempt under section 10(10D). It doesn’t stop there, the nominee will also get the fund value from the ELSS mutual fund.
- So, in case of death of the insured person, there is a double financial protection with the term insurance + ELSS option. Meanwhile, with the HDFC Life Click 2 Wealth or any other ULIP, the beneficiary or the nominee will get only one benefit.
- Finally, any ULIP investment, including HDFC Life Click 2 Wealth is a long term commitment. You have a 5 year lock-in period and a policy term of minimum 10 years. There is no systematic compulsion on the ULIP fund manager to be at their best consistently.
- In case of ELSS mutual funds, you can stop investing in a scheme and invest in a different scheme to get the 80C tax benefit at any time you want. This flexibility makes the fund managers to perform at their best day in and day out. And inevitably they deliver the best return to their investors.
Though a product like HDFC Click 2 Wealth may seem like a good product, it is better to keep your investments & insurance separate. You can put the same money in equity mutual funds through the SIP route and earn much higher returns; get better and adequate protection through a term insurance plan.
Charges Under HDFC Life Click 2 Wealth Plan
HDFC Click 2 Wealth has no premium allocation charges, fund switching charges (unlimited switching allowed within their 10 funds), no partial withdrawal charge, no premium redirection charges, no discontinuation charges, or other miscellaneous charges.
There is a ‘mortality charge’ to provide the life cover to the life insured. This mortality charge depends on the age of the proper and life assured and the extent of the cover.
However, the policy has a fund management charge that will be deducted from the fund value annually.
The fund management charges are given as follows –
These charges, by themselves, may not be a concern for an investor. But in context with the risk-return involved and the availability of a better alternative, it makes a noticeable difference.
Should you keep investing in this policy?
HDFC Life Click 2 Wealth may look like a better investment option in comparison with other ULIPs in the market. But, it is still a below-par investment in comparison with the alternative Term insurance with PPF or ELSS mutual fund.
What happens in case you do not pay the premiums before 5 years?
In this case, the plan is deemed as withdrawn and will be discontinued. The risk cover will stop, the fund will only earn a minimum guaranteed interest rate, which is presently 4 percent, and a fund management charge of 0.5% will be levied. There will not be any other deductions. The fund value is paid at the end of 5 years and the policy is said to be terminated. You can however revive the policy by making the remaining premium payments; there are no interest charges on the delayed payments.
The 4% minimum return may tempt the investors to keep investing and get the returns generated by the fund. Who would want the minimum 4% return anyway?
It is a deliberate risk. Yes. But it is a calculated risk, and also the optimal way out.
The wise option would be to stop any further investment in this policy and invest in better alternatives. By the time the policy completes the 5year lock-in, you will have already recovered and generated more returns in the alternate options.
Unless your policy is maturing very soon, it is always better to surrender your HDFC Life Click 2 Wealth.
How to Surrender HDFC Life Click 2 Wealth?
i. Surrender HDFC Click 2 Wealth before Free-Look Period
The ‘Free-Look’ period for HDFC Click 2 Wealth Plan is 30 days from the receipt of the policy since this is an online policy. For policy cancellation with this period, you have to send them a letter along with the original policy documents and include the reason for cancellation in your request.
ii. Surrender HDFC Click 2 Wealth after Free-Look Period
You can surrender HDFC Click 2 Wealth any time after the free-look period.
In case, you surrender before the 5th year, the fund is treated as a ‘discontinued fund’ and you can withdraw your money after 5 years.
You can also surrender the policy any time after the lock-in period and get back the fund value. The risk cover ceases, and the policy will be terminated on submission of the surrender request.
Although, when should one surrender their HDFC Life Click 2 Wealth depends on the individual. Your goal is to get the optimal return from your investment, whether you surrender your policy or not.
Ideally, surrendering your HDFC Life Click 2 Wealth in the early years and investing in the alternate options will be beneficial. On the other hand, if you are near the policy maturity, it would be better to wait till the maturity. Of course, it is very subjective.
If it is already been a few years, However, to take a calculated decision, you can always consult a Certified Financial Planner.
A Certified Financial Planner or an Investment Advisor can give you a detailed analysis on what will the financially sound decision for you.
Procedure to Surrender HDFC Life Click 2 Wealth:
To surrender, simply drop an email from your registered email address to firstname.lastname@example.org with the subject line ‘Request to deactivate or Surrender HDFC Click 2 Wealth, Policy number (Policy No.). If you are making regular auto-debit payments, then include the request for Auto-Debit Deactivation too. You can also go to the closest HDFC Life Branch and fill up the Mandate Deactivation Form, 15 days before the premium due date.
More information on HDFC Click 2 Wealth Plan
You can also download the HDFC Click 2 Wealth Brochure from their official website – https://www.hdfclife.com/ulip-plans/click-2-wealth-ulip-plan The official website also has an HDFC Click 2 Wealth Calculator to calculate your actual premium as per your age, you can also make your HDFC Click 2 Wealth Online Premium Payment without any hassle.
For more information, you can also reach out to the HDFC Click 2 Wealth Customer Care for chat and email support, at their official website. To buy their policy, contact 1800-266-9777 (9AM to 9PM IST), with a provision for instant call back.
To sum up this HDFC Click 2 Wealth review, it is essential to know that an investment product should be used for investment and a pure term insurance product is the best for life cover. Smart investors distinguish between their insurance and investment objectives.
Combining the two of them in the form of a ULIP cannot give you the optimal returns or the adequate life cover.
Avoid HDFC Click 2 Wealth at all costs. Instead, go for a term plan, and choose PPF or an ELSS fund, depending on your risk appetite.
In a nutshell, if you are a conservative investor, you are better off going with a Term Insurance Plan + PPF.
For risk-tolerant investors with an eye for wealth creation, you can go for a top-performing ELSS Mutual Fund + Term Insurance.
If you have any questions or doubts regarding this HDFC Life Click 2 Wealth review ask them in the comments.
But if you are even more serious about wealth creation with a customised financial plan, register for our FREE 30 Minute consultation below.