Often claimed to be a reformed ULIP, HDFC Life Click2Invest ULIP does seem different.
But is it a “reformed” ULIP?
The biggest reason is that, unlike other conventional ULIPs, Click2Invest has cut down few policy charges.
Does it make any difference to a common investor?
Is the HDFC Life Click2Invest ULIP effective in wealth creation?
You could be looking to buy this HDFC Life Click2Invest and looking for that final reassurance from industry experts.
Or you probably are already an HDFC Life Click2Invest Customer seeking a review.
If you are either of this, your search ends here.
Get the clarity you need in this HDFC Life Click2Invest ULIP Review.
Table of Contents:
1. HDFC Life Click2Invest: An Overview
2. HDFC Life Click2Invest ULIP: Key Features
3. How Does HDFC Life Click2Invest Work?
4. HDFC Life Click2Invest ULIP Review: Benefits
5. HDFC Life Click2Invest ULIP: Flexibility Factor
6. HDFC Life Click2Invest ULIP Review: with Illustration
7. HDFC Life Click2Invest ULIP: Funds & Returns Review
8. HDFC Life Click2Invest ULIP: Review and Comparison
9. HDFC Life Click2Invest Vs. PPF Vs. ELSS Mutual Fund
HDFC Life Click2Invest: An Overview
It is a Unit Linked Insurance Plan that invests in equity units while also giving the policyholder a life cover.
In terms of benefit, the policyholder will receive the Fund Value at maturity of the policy.
Or in case of policyholder’s untimely demise, their nominee will receive the death benefit.
Before we go into a detailed review of the benefits of this plan, let’s take a look at its eligibility and key features.
HDFC Life Click2Invest ULIP: Key Features
HDFC Life Click2Invest offers policy terms as low as 5 years and up to 20 long years.
Along with 5 different premium payment frequency to flexible premium payment terms, its features are many.
See the table below for all the features, eligibility and other parameters straight from HDFC Life.
How Does HDFC Life Click2Invest Work?
HDFC Life Click2Invest ULIP can be bought online with no agent in the middle.
The procedure to buy a Click2Invest policy goes like…
Based on your choices in Premium, Premium Payment Term, and Policy Term, your Sum Assured will be decided.
Investment funds will be chosen based on your answers to two questions to assess your risk tolerance.
After that, you will have your investments going on, while your life is insured with the Sum Assured Benefit.
HDFC Life Click2Invest ULIP Review: Benefits
Like any other investment insurance, HDFC Life Click2Invest ULIP offers two different benefit options.
i) Death Benefit
It will be paid on the untimely demise of the policyholder.
The Death benefit will be the highest of,
- Sum Assured
- Total Fund Value
- 105% of the premiums paid
ii) Maturity Benefit
The total Fund Value will be paid as the Maturity benefit on the successful completion of the policy term.
HDFC Life Click2Invest ULIP: Flexibility Factor
- HDFC Life Click2Invest ULIP offers flexible premium paying term options for investors to choose from.
- As Single Pay, 5 Pay, 7 Pay, 10 Pay, and Regular Pay.
- Investors can buy this policy by answering just a Short Medical Questionnaire (SMQ) instead of a comprehensive medical exam.
- 11 different fund options for investors to choose to invest their policy premiums.
Can I buy HDFC Life Click2Invest only by answering SMQ?
It is possible but strictly not recommended.
Answering a questionnaire may be enough to buy. But HDFC Life may challenge your claim eligibility in case of a death claim since no comprehensive medical exam is done.
The probability of death benefit claim rejection is always higher with buying policies through SMQ than with a medical check-up.
You may download the official HDFC Life Click2Invest PDF of SMQ here.
How good is HDFC Life Click2Invest Risk Assessment?
It is not good enough. The policy tries to assess an investor’s risk tolerance only by asking two simple multiple-choice questions.
Leaving the fact that every investor is different, it ignores the vital part of educating to understand their risk tolerance better. It provides zero guidance to an investor.
Is HDFC Life Click2Invest ULIP Tax-Free?
Yes. The policy premiums are exempted under section 80C of the IT Act, 1961.
On the other hand, the Death benefits or the Maturity benefits are exempted from Income Tax under section 10(10D) of the IT Act, 1961.
However, there is an investment restraint that will affect investors who seek to create long-term wealth.
HDFC Life Click2Invest ULIP Review: with Illustration
To give you a better understanding of this HDFC Life Click2Invest ULIP, I am going to buy this policy and see what it offers.
Let’s say a 30-year-old man is an HDFC Life Click2Invest Customer—wanting a review of his policy.
See the table below for his policy details.
HDFC Life suggests an illustration for the above policy as,
You can see the model official HDFC Life Click2Invest PDF of Policy document here.
The illustration suggests a Gross return of 8% per annum.
Even though this HDFC Life Click2Invest plan is regarded as a reformed, next-gen ULIP, it still has 3 different charges.
If we count in these charges year after year, the net return comes down to only 6.55% per annum.
It includes the GST @ 18% on these charges.
Could the net return get any lower?
Of course, it can!
You may have noticed that the risk charge for life cover is stopped in the 8th year.
But it is not a standard procedure. It is stopped only because the Fund Value is higher than the Sum Assured of ₹10 Lakhs.
But we know that the equity market is volatile and that the fund value is not guaranteed.
If the funds perform poorly, your fund value will go below the Sum Assured—₹10 Lakhs in this case. And the policy will resume charging the mortality charges again.
Since the HDFC Life Click2Invest ULIP has a 5 Year lock-in, the competitiveness is out of the equation.
This lack of competitiveness eliminates the compulsion of the fund managers to deliver the best returns consistently. This is in contrast with the Mutual Funds and its fund managers.
So technically, if your funds perform poorly, risk charge will be taken from your fund value bringing the fund value even lower.
Speaking of which, have a look at the funds offered in HDFC Life Click2Invest ULIP and their performance.
HDFC Life Click2Invest ULIP: Funds & Returns Review
HDFC Life Click2Invest ULIP offers 11 different funds for the investors to choose from.
As seen before, the HDFC Life Click2Invest plan asks two questions to “assess” the risk tolerance of the investor. And based on the answers, it automatically chooses the investment funds.
See the table for different funds of HDFC Life Click2Invest ULIP.
11 different funds is a wide range for an investor.
The return potential of these funds is one thing to start with. But their performance and consistency over the years matter a lot.
Refer to the table below for HDFC Life Click2Invest ULIP Returns Review.
Note: See the official January 2020 Funds Performance by opening this HDFC Life Click2Invest PDF.
I do not want to point fingers at the 6% gross return from the majority of the funds.
Before we come to any conclusion, let’s assume the best-case scenario.
Let’s take the returns from 4 of the best performing funds.
They are Diversified Equity Fund, Opportunities Fund, Secure Managed Fund, and Bluechip Fund.
See the table below for the maximum returns from HDFC Life Click2Invest ULIP followed by its review and comparison.
And again, these are just gross returns from the funds.
Throughout your policy term, year after year, charges will be levied on your Fund Value. Post charges, you can expect a net-return in the range of 7%-8% p.a. at best.
Imagine investing in a high-risk instrument for years only to receive 8% p.a. and less. It is reasonable if there are no better investments.
But is it so?
Let’s compare HDFC Life Click2Invest ULIP with different investment instruments.
HDFC Life Click2Invest ULIP: Review and Comparison
Of course, we have to make things fair before we can start comparing them.
Two of the things every HDFC Life Click2Invest customer will look for in a review are the tax benefit and Life cover.
HDFC Life Click2Invest ULIP gives tax benefit under section 80C and under section 10(10D).
There are a few investment instruments that provide tax benefits to the same level. For example PPF, ELSS Funds, Tax Saving FDs, POTD, etc.
However, no investment instruments provide combined life cover other than Endowment plans and ULIPs.
A Separate Life Cover First:
Let’s first buy a term insurance plan for ₹10 Lakhs Sum Assured—as with the illustration.
Then with the remaining of the premium, we shall invest in different investment instruments.
See the table below for term plan details including one-time premium payment.
Note: ₹10 Lakhs is not a good enough life cover in any way. We’re doing this only for illustration comparison.
Professional Advice: Investment Insurances can never give you enough life cover. Before you submit your policy surrender request, get your life insured with a term plan.
Back to Comparison and Review: let’s see how the HDFC Life Click2Invest ULIP stands against other instruments.
HDFC Life Click2Invest Vs. PPF Vs. ELSS Mutual Fund
PPF and ELSS are the prime candidates for comparison. It is because,
- PPF offers the EEE status for investments and maturity benefits.
- PPF returns are assured.
- ELSS funds invest in equity units, just like HDFC Life Click2Invest ULIP.
- ELSS investments are IT exempt under section 80C.
- Yet, they are subject to LTCG tax @ 10% for redemption above ₹1Lakh.
In the following comparisons, we’ll take the same parameters as seen in the HDFC Life Click2Invest ULIP Review illustration above.
- Same Investment Term
- Same Investment Amount
- Same Life Cover
- Same Taxation/Exemption
See how the HDFC Life Click2Invest ULIP compares against PPF and ELSS in the table below.
i) HDFC life Click2Invest ULIP Review: Comparison with PPF
At present, PPF is offering a return rate of 7.9% per annum.
The maturity benefit in the table comes up to ₹31 Lakhs. It is ₹6 Lakhs higher than HDFC Life Click2Invest ULIP return.
Remember, we have the same life cover through a term plan—₹10 Lakhs.
Now the question is,
Do you want to face high investment risk for a benefit even a low-risk investment can offer?
If you are risk-averse you should definitely consider investing in PPF instead of HDFC Life Click2Invest ULIP.
Note: You may also invest in EPF by increasing your contribution—this voluntary contribution is accounted as VPF. The interest rate of EPF is at 8.65%—higher than PPF.
But, if you can handle the risks in ULIP, you can handle the risks with Mutual Funds.
Highest returns for investors for the same risk levels. Check it out!
ii) HDFC life Click2Invest ULIP Review Comparison with ELSS
Mutual Funds give an average return in the long-term in the range of 12%-15%.
For a safe take, we have assumed a minimum of 12% in this comparison.
Even then, ELSS Mutual Funds is giving a return of ₹55.5 Lakhs in the same 20 Years. In other words, the ELSS Mutual Fund offers to return more than twice than that of HDFC Life Click2Invest ULIP.
Even though ELSS Mutual Fund investments are exempt under section 80C, their returns are not.
Investors are liable to pay an LTCG tax at 10% for redemptions over ₹1 Lakh. Hence, one can expect the post-tax return to be lesser than ₹55.5 Lakhs.
See the table below for appropriate LTCG tax deductions and post-tax returns.
The post-tax ELSS return is still 2X higher than the return from HDFC Life Click2Invest ULIP.
With a planned withdrawal strategy, you can minimize what you pay as LTCG tax.
If you are an existing HDFC Life Click to Invest customer, this review must tell you that it is not worth investing.
You may either keep this High Risk-Low Return investment or surrender this HDFC Life Click2Invest ULIP.
I’m pretty sure you do not want a High Risk-Low Return investment. So, here’s…
HDFC Life Click2Invest Plan: Cancellation & Surrender
If you are a new HDFC Life Click-to-Invest customer reading this review, good chance you’re in free-look period.
HDFC life Surrendering Click2Invest during Free-look Period:
As per IRDA, policyholders have the right to cancel their policy within the first 15 days of purchase.
You will get the refund of premium—minus underwriting charges and medical exam charges if any.
30 days Free-look period is allowed if the policy is bought online.
HDFC life Surrendering Click2Invest after Free-Look Period:
HDFC Life Click2Invest ULIP comes with a 5-year lock-in period like all other ULIPs.
i) During Lock-in Period: Till 5th Year
Once you surrender or discontinue your HDFC Life Click2Invest policy during this lock-in, your life cover will stop.
Your fund value will be transferred to the ‘Discontinued Policy Fund’.
HDFC Life will pay you the ‘Discontinued Policy Fund’ value after the completion of 5 Years lock-in period.
ii) After Lock-in Period: After 5 Years
If you have already completed the 5 Years lock-in period, you can surrender your policy at any time.
HDFC Life will pay you the entire Fund Value immediately.
Steps to Surrender HDFC Life Click2Invest
Step 1: Fill the Mandate Deactivation Request form.
Download the HDFC Life Click2Invest PDF of the Mandate Deactivation Request form here.
Step 2: Walk into the nearest HDFC Life Branch to submit the form.
You may also just go straight to the nearest HDFC Life branch, get the form there and fill and submit.
Step 3: Get the deactivation request receipt for future reference.
Alternate Way to Surrender HDFC Life Click2Invest:
Send a Mandate Cancellation Request email to email@example.com.
Mention your Name, Phone Number and your Policy Number in the email.
Your policy should be cancelled within the next few working days.
Note: Submit your policy Mandate Deactivation Request at least 15 days before the premium due date.
Now, do you remember the question I asked in the beginning?
“Is the HDFC Life Click2Invest ULIP effective in wealth creation?”
You already know the answer. But I shall reiterate.
Do Not Invest in HDFC Life Click2Invest ULIP. It is not for the wealth creators or disciplined Investors, to begin with.
Instead, explore the Mutual Fund investments. They can give more than 2X returns on average.
Hence, a better chance of achieving one’s financial goals.
You too can achieve all your financial goals and retire with peace with a customized financial plan.
All it takes is your decision to achieve and an expert’s expertise.
We have 20 years of expertise. Have you made your decision?
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