IDBI Federal Termsurance Sampoorn Suraksha Micro insurance Plan
HDFC Progrowth Plus is a Unit Linked Insurance plan where the premium is invested in capital market yielding great returns and also providing the benefits of insurance coverage
This plan is a HDFC ULIP plan with Regular Pay option
This Plan provides 2 coverage options called Life Options and Extra Life Option
The following 4 funds are available for investment in HDFC Progrowth Plus:
Blue Chip Fund: The prospect of risk and returns is very high because the fund composition is skewed towards equity asset allocation to the extent of 80% to 100%. This means that just 0% to 20% can be allocated between money market instruments, cash, deposits and liquid mutual funds. The highlight of this HDFC Progrowth Plus fund is investment in large cap equities and equity related instruments.
Opportunities Fund: The HDFC Progrowth Plus fund composition is primarily in favour of mid-cap equities and equity related instruments, so much so that only 0% to 20% is allocated in money market instruments, cash, deposits and liquid mutual funds, the balance i.e. 80% to 100% is kept in equity. Consequently, the probability of risk and returns is very high.
Balanced Fund: As the name suggests, the HDFC Progrowth Plus fund allocation is balanced across different asset classes resulting in a moderate to high risk and return rating. Exposure to equity to the extent of 40% to 80% enhances returns while debt allocation reduces volatility of returns. Between 0% to 60% funds are allocated in government securities, fixed income instruments and bonds, and between 0% to 20% in money market instruments, cash, deposits and liquid mutual funds.
Income Fund: This HDFC Progrowth Plus fund has a moderate risk and return rating as the fund composition is between 80% to 100% in government securities, fixed income instruments and bonds. Of the remaining 0% to 20% are invested in money market instruments, cash, deposits and liquid mutual funds.
Policy Details of HDFC Life ProGrowth Plus
Grace Period: 15 days grace period is allowed for monthly mode and 30 days for other modes in HDFC Progrowth Plus
Policy Termination or Surrender Benefit: Policyholder of HDFC Progrowth Plus is allowed to surrender the policy after 5 completed years. If surrendered before 5 years, the fund value net of discontinuation charge will be credited to the Discontinued Policy Fund where it will earn a minimum of 4% p.a. growth. After completion of 5 years, the fund value in the Discontinued Policy fund as on that date will be paid to the policyholder. If surrendered after 5 completed policy years, the entire Fund value on the date of surrender is paid without any charges
Free Look Period: If you are not pleased with the coverage, and terms and conditions of the HDFC Life Progrowth Plus, you have the option of cancelling HDFC Progrowth Plus policy within 15 days of receipt of the policy documents, provided there has been no claim.
Partial withdrawals are allowed every year with a minimum value of Rs.10,000 in HDFC Progrowth Plus
Switches are allowed every year for switching between funds under HDFC Progrowth Plus
Future premiums can be redirected to a new fund via the Premium Redirection option in the HDFC Progrowth Plus plans
Additional Features or Riders
Premium paying frequency can be changed as per requirement under HDFC Progrowth Plus
There is an inbuilt Accidental Death Benefit Rider under the Extra Life Option of these HDFC Progrowth Plus plans
In HDFC Life Progrowth Plus, the benefit paid in case of suicide within 12 months of policy inception or revival is the fund value as on that date.
In case of rider benefit under HDFC Life Progrowth Plus, death 3 months after the accident or accidental death due to intentional self-inflicted injury, alcohol abuse, war, aviation, and acts of criminal nature or due to participating in hazardous activities is excluded.
Myths Surrounding Investment in ULIPs
Unit linked insurance plans (ULIP) such as HDFC Life Progrowth Plus enable one to enjoy a life cover and also benefit from investing in different types of funds as per an individuals risk appetite. In other words, products such as HDFC Progrowth Plus combine insurance and investment in one instrument. It allows one to effectively channelize savings and counter the effects of inflation by making the most of equities and other asset classes.
In spite of this, there exist many myths and misconceptions with respect to the objectives, liquidity, returns, functioning, pricing etc. of ULIPs. Common ones are discussed and debunked below:
Myth 1: ULIPs are costly due to higher costs
Fact: It is commonly believed that ULIPs such as HDFC Life Progrowth Plus are a costly investment product due to high inherent charges, particularly due to premium allocation and fund management charges. The reality is that ULIPs have undergone several changes in recent years and IRDAI (Insurance Regulatory and Development Authority of India) has brought down the annual charges to 3% for the first 10 years of holding and 2.25% if the ULIP is held for more than 10 years. Overall charges cannot exceed the prescribed limit set by the regulator. ULIPs are affordable and cost much less than before.
Myth 2: ULIPs are risky financial instruments
Fact: Another myth about investing in ULIPs is that they are risky and unsafe investment products because they only invest in equities. ULIPs like HDFC Life Progrowth Plus do not only invest in equities but in other asset classes too, ranging from money market instruments, cash and deposits to liquid mutual funds to government securities, fixed income instruments and bonds. Insurance companies provide different funds, each with different fund composition in terms of exposure to various asset classes. Depending on ones risk appetite, one may choose an aggressive growth fund with high exposure to equities having a high risk and return rating or a relatively conservative debt fund with high exposure to debt instruments offering stability from among the ones offered under HDFC Life Progrowth Plus. One may even opt for a balanced fund which comprises of a mixture of equity and debt, balancing risk with stability. ULIPs also allow switching i.e. the option to switch between available funds as per changing risk appetite, change in market conditions etc.
Myth 3: Addition funds cannot be invested in ULIPs
Fact: The reality is that ULIPs such as HDFC Life Progrowth Plus allow investment of additional / surplus funds as and when they are available by way of top-up premiums. One may start with a lower premium ULIP and top it up anytime during the tenure of the policy.
Myth 4: Once taken, a ULIP cannot be discontinued
Fact: This is a myth because the fact is that ULIPs like HDFC Life Progrowth Plus can be discontinued after a minimum lock-in period of 5 years without paying any surrender charges.
Myth 5: The life cover in ULIPs is linked to market performance and it decreases when market dips
Fact: This is another common misconception that the life cover in a ULIP such as HDFC Life Progrowth Plus is linked to capital markets and that it increases or decreases with market volatility. The reality is that the life cover is not linked to market performance at all. It stays the same in bear or bull market conditions. In the event of death of the insured, an ULIP like HDFC Progrowth Plus pays the higher of the life cover or fund value to the dependent family members/nominees of the policyholder.
Myth 6: ULIPs do not provide health or accident cover
Fact: Additional optional riders like Accidental Death Benefit, Waiver of Premium, Family Income Benefit and Hospital Cash Benefit enhance the scope of HDFC Life Progrowth Plus and other unit linked insurance plans. Also, partial withdrawal is available helping take care of unforeseen emergencies.
Myth 7: ULIPs offer low returns
Fact: It is a myth that ULIPs give low returns. The reality is that they give much higher returns as compared to many other investment options like a savings accounts, endowment policies, etc. If say the funds offered under HDFC Life Progrowth Plus are chosen judiciously and one takes the advantage of switching and redirection of funds / premiums, one can be sure that the fund growth will be healthy with high returns.
Charges levied under HDFC Progrowth Plus
Certain charges help the company provide better returns and value to customers. Charges under HDFC Progrowth Plus policy are levied to cover the cost of administration and other costs. Different charges are explained in detail below:
Premium Allocation Charge
This charge under HDFC Progrowth Plus is based on premiums and depends on the year of allocation. The premium allocation charge percentage is highest in the first year and decreases over time. The remainder money after deducting this charge from annualised premiums is invested to buy units. The remaining percentage of annualised premium is called premium allocation rate. Both, premium allocation rate and premium allocation charge are guaranteed for the full policy term.
Fund Management Charge
It is charged daily and the daily unit price under HDFC Progrowth Plus is calculated after deducting the fund management charge.
Policy Administration Charge
Policy administration charge is a percentage of annualised premium and guaranteed for full policy term of HDFC Progrowth Plus. It is deducted monthly to provide administration for the HDFC Progrowth Plus policy. The charge is taken by cancelling proportionate units from every fund chosen available in HDFC Life Progrowth Plus.
This is a monthly charge towards the cost of life insurance cover under HDFC Progrowth Plus. The charge is guaranteed for the full policy term of HDFC Progrowth Plus. It is exclusive of any expense loadings levied either by cancellation of units proportionately from each of the fund(s) chosen in HDFC Progrowth Plus or by debiting the premium but not both.
Risk Benefit Charge
This is towards the cost of morbidity benefit offered like Extra Life Benefit under HDFC Life Progrowth Plus. It is exclusive of any expense loadings levied either by cancellation of units or by debiting the premium but not both. This charge may be levied at the beginning of each policy month from the fund. This charge will be taken in addition to the mortality charge only in case one is covered for the benefit under HDFC Life Progrowth Plus.