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Table of Content:
2.) What is HDFC Life YoungStar Udaan Policy?
3.) Features of HDFC Life YoungStar Udaan
4.) What is the eligibility of HDFC Life YoungStar Udaan?
5.) What is the policy term and premium term of HDFC Life YoungStar Udaan?
6.) Option to Choose Maturity Benefit
7.) Benefits of HDFC Life YoungStar Udaan
8.) What are the premium payment options of HDFC Life YoungStar Udaan?
9.) HDFC Life YoungStar Udaan: Example with an illustration
10.) IRR of HDFC Life YoungStar Udaan:
11.) Classic Waiver benefit with career maturity benefit plan option
12.) IRR of HDFC Life YoungStar Udaan (CAREER) vs. ELSS + Term Insurance
13.) Classic waiver death benefit with Aspiration maturity benefit plan option
14.) HDFC Life YoungStar Udaan (Aspiration) vs. PPF + Term Insurance
15.) HDFC Life YoungStar Udaan (Aspiration) vs. ELSS + Term Insurance
16.) What is the High Sum Assured Rebate in HDFC Life YoungStar Udaan?
17.) What is the Loan Facility in HDFC Life YoungStar Udaan?
18.) HDFC Life YoungStar Udann-Rider
19.) Advantages of HDFC Life YoungStar Udaan
20.) Disadvantages of HDFC Life YoungStar Udaan
21.) What is the Grace Period in HDFC Life YoungStar Udaan?
22.) Lapsation & Revival in HDFC Life Young Star Udaan
23.) Paid up in HDFC Life YoungStar Udaan
24.) How to cancel the HDFC Life YoungStar Udaan during the free look period?
25.) How to Surrender the HDFC Life YoungStar Udaan?
26.) Final Verdict of HDFC Life YoungStar Udaan
Introduction:
Children are not just carrying the hierarchy of the family. They are the hope for the next generation.
They are carrying their dreams. They are expected to fulfill our dreams.
They have their race to finish and as parents, we want to cheer them up and help them to cross the hurdles.
But how long we can do it? No one knows what will happen in the future.
But, fortunately, we can prepare everything beforehand for certain things such as investment planning, insurance planning, and so on.
HDFC Life YoungStar Udaan is a non-linked individual insurance plan which claims to help you to create a systematic plan to achieve your children’s financial goals financially.
But, how this plan works?
Will the benefit can help you to beat the inflation?
Let’s discover the answer here.
Here’s an analysis on HDFC Life YoungStar Udaan!
What is HDFC Life YoungStar Udaan Policy?
HDFC Life YoungStar Udaan is a non-linked insurance plan which claims that it will walk with you to help you plan and save for your child’s aspirations so that when they are ready to begin their spectacular careers, you will be financially prepared to assist them not only at the last defining moments but along the whole journey.
This insurance plan claims to make certain that your child’s requirements are addressed even if you are not present.
This HDFC Life YoungStar Udaan plan can help if you want to
- Take care of your ward’s academic expenses before college education
- Achieve some specific financial goals, such as your ward’s higher education, their marriage, etc.
- Take care of all the miscellaneous and other extracurricular charges.
Features of HDFC Life YoungStar Udaan:
- HDFC Life YoungStar Udaan is providing an endowment and money-back plan with multiple options.
- HDFC Life YoungStar Plan provides 3 benefits that suit your children’s aspirations.
- The policyholder does not need to pay the future premiums under Classic Waiver Option.
- During the first 5 years, you can boost your payouts with Guaranteed Additions which can be payable at maturity.
- The premium payment and the policy term give you the flexibility to plan your children’s goals financially.
- You can get insurance coverage throughout your policy term by paying a premium for a limited time.
What is the eligibility of HDFC Life YoungStar Udaan?
What is the policy term and premium term of HDFC Life YoungStar Udaan?
Option to Choose Maturity Benefit:
HDFC Life YoungStar Udaan offers 3 different maturity options to achieve your children’s goals financially.
Endowment Option: The Endowment option provide one maturity benefit called “ASPIRATION” where maturity will be paid as a lump sum.
Moneyback Option: The money-back plan provides 2 maturity benefit options called “ACADEMIA” and “CAREER” where payouts are offered in the last 5 years before maturity.
Option-1: ASPIRATION
Option-2: ACADEMIA
Option-3: CAREER
Image Source: HDFC Life
Benefits of HDFC Life YoungStar Udaan:
Death Benefit:
The Policyholder can choose the death benefit between the two options.
1.) For classic Death Benefit Option:
The death benefit will be p ayable from the highest of the following.
- Sum Assured on Death
- 105% of the total premium paid
Plus guaranteed additions + accrued reversionary bonus + interim bonus + terminal bonus (if any).m
2.) Classic Waiver Death Benefit Option:
The death benefit will be payable from the highest of the following.
- Sum Assured on Death
- 105% of the total premium paid
Plus future outstanding premiums will be waived off and the policy will continue.
For both the benefit options
The sum assured on death benefit will be paid from the highest of the following.
- Sum assured on Maturity
- 10* the annualized premium for entry age up to 50 years and 7* the annualized premium for entry age greater than 50 years.
Maturity Benefit:
The maturity benefit will be payable based on the following payouts.
Guaranteed Additions:
The HDFC Life YoungStar Udaan provides an additional booster in the name of Guaranteed Additions when the Premium Payment term is 10 years or more.
The Guaranteed Additions will be payable at the end of the maturity.
It shall be accrued at the end of every policy year.
Bonuses:
Reversionary Bonus:
At the end of each financial year, a simple Reversionary Bonus may be issued.
The same will be stated as a percentage of the Maturity Sum Assured.
Terminal Bonus:
A Terminal Bonus can be added to a policy. It allows the firm to pay a fair portion of the surplus at the end, based on real experience during the policy period, and allows for any reversionary bonuses that have previously been announced.
The Terminal Bonus is not a guaranteed benefit because it is dependent on real future experience.
What are the premium payment options of HDFC Life YoungStar Udaan?
HDFC Life YoungStar Udaan: Example with an illustration:
IRR of HDFC Life YoungStar Udaan:
Now, let’s see the IRR of HDFC Life YoungStar Udaan for both the worst-case scenario and the best-case scenario.
Since we have three maturity options in endowment and money-back options, let’s calculate the IRR on each.
Classic Waiver benefit with career maturity benefit plan option:
Now let’s take the “CAREER” option in the money-back option.
Premium payment: Rs. 78, 720
Premium term: 10 years
Policy term: 15 years
The assumed gross return in the worst-case scenario is 4%.
As you can see in the above illustration, in the worst-case scenario, we get an IRR of 1.91% at the end of the policy term.
And it gives us Rs. 5, 64, 716 as maturity benefit and Rs. 7, 87, 200 as a death benefit.
Now lets us see the policy return for the best-case scenario.
In the best-case scenario, let’s take the assumed gross return as 8%.
As you can see in the above illustration, at the end of the policy term, it gives us an IRR of 5.13% and Rs. 9, 08, 305 as maturity benefit.
IRR of HDFC Life YoungStar Udaan (CAREER) vs. ELSS + Term Insurance:
Overall contribution: Rs. 78, 720 p.a
Term Insurance:
Annual Premium: Rs. 3, 600
Sum Assured: Rs. 8, 00, 000
ELSS contribution: Rs. 75, 120 p.a
Assumed Return Rate: 12% with investment risk
As you can see in the above calculation, if we invest in ELSS for 10 years, then we will get Rs. 12, 97, 785 as investment return at the end of the 15 years. And, we will get an IRR of 7.79%.
HDFC Life YoungStar Udaan’s career option plan seems to be providing a better benefit at a low cost.
But, in reality, it gives us a low benefit compared to other risk-free investments.
For example, RBI Bonds give us a 7.15% interest rate, and if you are interested in PPF, it offers a 7.10% interest rate.
So, the benefit we gain from HDFC Life YoungStar Udaan does not promise an inflation-beating return.
And, we will get a better return in ELSS, if we invest the same for the long term.
Classic waiver death benefit with Aspiration maturity benefit plan option:
Here, let’s take the “ASPIRATION” option in the endowment option.
Premium payment: Rs. 1, 00, 000
Premium term: 15 years
Policy term: 20 years
The assumed gross return in the worst-case scenario is 4%.
As you can in the above illustration, at the end of the policy term, we will get an IRR of 2.13%, Rs. 19, 81, 262 as maturity benefit, and Rs. 15, 75, 000 as the death benefit.
Now, let’s take the assumed gross return as 8% in the best-case scenario.
As you can see, in the best-case scenario, we will get an IRR of 6% at the end of the policy term and Rs. 33, 02, 123 as maturity benefit.
HDFC Life YoungStar Udaan (Aspiration) vs. PPF + Term Insurance:
Now, let’s see what we will get if we invest in a risk-free investment.
Here, let’s take PPF as a risk-free investment.
Overall Contribution: Rs. 1, 00, 000
Tenure: 20 years
Term Insurance:
Annual Term: Rs. 7, 100
Sum Assured: Rs. 15, 00, 000
PPF Contribution: Rs. 92, 900
Investment return rate: 7.10% without taking any risk
If we invest in PPF, at the end of the maturity period, we will get an IRR of 6.55% and Rs. 35, 50, 382 as investment return.
HDFC Life YoungStar Udaan (Aspiration) vs. ELSS + Term Insurance:
Now, what will happen, if we invest in risk-oriented investments?
Let’s take ELSS for risk-oriented investment.
Overall Contribution: Rs. 1, 00, 000
Tenure: 20 years
Term Insurance:
Annual Term: Rs. 7, 100
Sum Assured: Rs. 15, 00, 000
PPF Contribution: Rs. 92, 900
Assumed Investment return rate: 12% with investment risk
After 20 years, we will get an IRR of 10.84% and Rs. 63, 01, 670 as investment return.
So, compare to HDFC Life YoungStar Udaan, ELSS gives us a better return for the long-term that can beat the inflation.
What is the High Sum Assured Rebate in HDFC Life YoungStar Udaan?
What is the Loan Facility in HDFC Life YoungStar Udaan?
HDFC Life YoungStar Udaan provides 80% of the surrender value of the policy as a loan. The interest rate is 14% p.a. (provided if the policy is in force).
HDFC Life YoungStar Udann-Rider:
HDFC Life YoungStar Udaan offers HDFC Life Critical Illness Plus Rider (UIN 101B014V02).
Advantages of HDFC Life YoungStar Udaan:
- Option to choose between 2 life protection options and 3 maturity options.
- Income tax advantage on premium paid under section 80c and claim recoverable under section 10 (10D).
- Guaranteed addition in the first five years of the policy term.
- There is a loan facility available.
- It is possible to provide a rider option.
Disadvantages of HDFC Life YoungStar Udaan:
- There is a two-year lock-in period (for surrender or paid-up)
- After ten years, the maturity benefit will not be adequate to cover the rising cost of the goals.
- It is both an insurance and an investment policy, and neither is useful.
What is the Grace Period in HDFC Life YoungStar Udaan?
The grace period is 15 days for yearly, half-yearly, and quarterly modes. And it will be 30 days for monthly mode.
Lapsation & Revival in HDFC Life Young Star Udaan:
The HDFC Life YoungStar Udaan Policy will lapse if the premium is not paid within the grace period.
During this time, risk cover ceases and no benefit is payable.
The policyholder has the option to revive the HDFC Life YoungStar Udaan policy within 5 years from the date of unpaid premium.
For the revival, the policyholder needs to pay all the outstanding premiums and interest on the outstanding premiums and applicable taxes.
The current rate of interest for revival is 9.5% p.a.
Paid-up in HDFC Life YoungStar Udaan:
If you stop paying premiums after paying a premium for 2 years, your policy will be paid up at the end of the grace period.
Paid-up Sum Assured = The Sum Assured on Death or Maturity * The total premiums paid / The premiums payable under the policy
How to cancel the HDFC Life YoungStar Udaan during the free look period?
If the policyholder is not satisfied with the terms and conditions of the HDFC Life YoungStar Udaan, then he has the option to return the policy during the free look period by stating the reason.
The free look period is 15 days from the date of purchasing the policy.
It will be 30 days if the policy is purchased in online mode.
For more details, you can read the HDFC Life YoungStar Udaan Brochure here.
How to Surrender the HDFC Life YoungStar Udaan?
The policyholder can choose to surrender the HDFC Life YoungStar Udaan any time after the lock-in period of 2 years.
However, the HDFC Life YoungStar Udaan policy will acquire a Guaranteed Surrender Value (GSV) upon payment of at least two years’ premiums.
The surrender value will be higher than the Guaranteed Surrender Value or Special surrender value.
The GSV shall be calculated as a percentage of total premiums paid.
In addition, the following will also be payable
- GSV percentage of bonuses
- GSV percentage of guaranteed additions
Final Verdict of HDFC Life YoungStar Udaan:
HDFC Life YoungStar Udaan seems to be a genuine insurance plan that can help you to secure your child’s future financially.
But, compared to other investments, it does not gives us a better return or better life protection.
The benefit also did not help to beat the inflation in the long term. As we have already known, the cost of expenses will not be the same every year.
So, the HDFC Life YoungStar Udaan is not a trustable plan to secure your children’s financial future.
You can choose better investment options and term insurance separately for a better result.
If you have any comments or questions, write them in the comment box below.
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