Retirement is a phase that comes in everyone’s life when your expenses are far higher than your income. We normally save during our working years for these days and spend as per our need after retirement. However, it depends on the amount of savings which determines if we can still afford the lifestyle or standard of living even without working. Another fear that comes to all of our minds is the bad events in our lives like death of the living earner in the family. I have come across a plan that cover of both of such situation i.e. HDFC Click to Retire which I would like to discuss about today.
HDFC Life Click 2 Retire is a Unit Linked Insurance plan available online on website of HDFC Life. A Unit Linked Insurance Plan (ULIP) is just a product which is offered by insurance companies that not only insures a person but also provide market linked investment avenue. In this product also, the Insurance company not only provides the life cover but also provides the market linked returns to the people who are looking forward and are undertaking retirement planning. Let us discuss some of key features and other details of the same.
- It is an online Unit Linked Plan and offers Non-Traditional Insurance Plan without Bonus facility. The returns are linked to market performance subject to certain minimal charges.
- Age of entry is between 18 – 65 years and Age of vesting is 45 – 75 years. So you may opt for this even after your retirement.
- Minimum premium is Rs. 2000 on monthly basis and Rs. 5000 on single pay however there is no limit to maximum premium.
- A policyholder may choose between single pay or premium paying terms of 8, 10 or 15 years with policy terms of 10 & 15 to 35 years.
- The Maturity benefit is higher of Fund value or Assured Vesting (Maturity) benefit. The Maximum capital guarantee is offered upto the maximum of 135% of the total premium paid.
- There is no liquidity option in this plan and hence it supports the very purpose of retirement planning. However you may discontinue the same without any discontinuation charges.
- The Death benefit ( in case applicable) is higher of Fund value or 105% of the total premium paid. The nominee has the option to take that amount as annuity or withdraw the proceeds as lumpsum.
- It offers a unique feature where deferment of vesting age (date of retirement) is possible. As such policyholder may defer the vesting age maximum to 75 years, till he/she attains the age of 55 years.
Income Tax benefit
It offers an Income Tax Benefit under section 80C where premium paid upto Rs. 1.5 lacs every year may be deducted from taxable income. Also One third of the Maturity proceeds are tax free under section 10(10)A subject to certain terms.
It offers the option to investment in different type of funds namely Pension Equity fund, Pension Income fund and Pension Conservative fund. Pension Equity fund has more exposure on Equity and less of Debt or Money market instruments. Pension Conservative fund, as compared to Equity, has lesser exposure to Equity and more investment in Debt or Govt Securities. However, Pension Income fund invests more into Income and money market instruments and lesser to debt instruments. As such, the three offers a choice of investment with your Risk / Return appetite.
Normally the ULIPs are known for their charges however I felt some difference here. Let us explore what that is:
Premium allocation charge – Nil. 100% of your premiums are invested.
Policy administration charge – Nil.
Mortality Charge –Nil.
Discontinuance charge – Nil.
So what all charges are there….here it comes.
Fund Management Charge – 1.35% p.a. of the fund value charged on daily basis.
Investment Guarantee charge ( as per your investing style)
|Pension Equity Plus Fund||0.50% p.a.|
|Pension Income Fund||0.50% p.a.|
|Pension Conservative Fund||0.10% p.a.|
In a Nutshell
It is an insurance plan which not only offers life cover but also Assured maturity benefit. Also it offers different option of investing along with tax benefit both on premium paid in current year and on maturity. It does not liquidity however gives an option to discontinue without any charges.