Home » Personal Finance » Insurance » HDFC Life Click 2 Invest ULIP Policy Is Useless, Unless… | #OneTip | EP. #204
HDFC Life Click2Invest ULIP is one THE most popular ULIP plans out there. The best thing about this ULIP policy is its charges. Because unlike a typical ULIP policy, this policy doesn’t have Premium Allocation Charges and Policy Administration Charges. The only charges applicable are the Fund Management Charge (which comes to around 1.35% p.a.) and the Mortality Charge (for the insurance coverage offered).

Now I said this policy is useless for two reasons. First, the insurance coverage provided won’t be adequate for you because the maximum insurance coverage is just 10 times your annual premium. And that’s not all, the maximum policy term is 20 years. So you have to invest Rs. 5 lacs per year to get a life cover of Rs. 50 lacs. So it’s never a good idea to invest Rs. 5 lacs per year to get a life coverage of just Rs. 50 lacs.

Now the second reason is, based on the illustration provided by the company, if you invest Rs. 50,000 per year for 20 years, then you get a life coverage of Rs. 5 lacs. And your investment will be worth Rs. 20 lacs after 20 years assuming a return of 8% p.a.. Optically it looks huge. But the actual CAGR is just 6.50% after deducting the charges. Because if you invest Rs. 50,000 per year for 20 years, your investment should be worth almost Rs. 25 lacs and not Rs. 20 lacs.

Now I mentioned ‘Unless’ in the title. Because despite being a horrible investment and insurance product, I personally bought THIS ULIP TWICE and it actually worked better than a Mutual Fund for me. Because I didn’t buy it for its insurance coverage. Instead, I bought it to speculate the market peaks and bottoms. So the tax benefits were just the icing on the cake. And no, it doesn’t really mean in any way that I am recommending this ULIP Plan, because I guess this ULIP will work only for 1 in 100 or maybe 1,000. Are you one of them? Well, that’s another #OneShot for you.

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ULIP Plans In Less Than 60 Seconds : https://www.youtube.com/watch?v=3RgCJC9N1Yc

Life Insurance Malayalam: അറിയേണ്ടതെല്ലാം… : https://www.youtube.com/watch?v=P1AZTh–3Tw

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Happy Investing/Trading! 🙂

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Mahesh Mohan

Agnostic, Apolitical, Bluephile, Brutally honest, Curious, Digital Creator, Finance geek, Marketing ninja, Microsoft fanatic, Multi-passionate nerd, Overthinker, Perfectionist, Workaholic.

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