HDFC Unit Linked Plans

HDFC UNIT LINKED PENSION

Today, you are busy climbing the ladder of success and realizing your dreams. Today, time is with you. Just take a moment and think. Will you be able to continue at the same pace? Will your income be the same forever? Will you be able to live life on your own terms even after you retire?
The HDFC Unit Linked Pension is an insurance policy that is designed to provide a retirement income for life with the freedom to maximize your investment returns. Stride into your golden years of retirement with dignity and pride.

The HDFC Unit Linked Pension gives you:-
An outstanding investment opportunity by providing a choice of thoroughly researched and selected investments.
A post retirement income for life.
Flexibility to plan your retirement date.
Freedom to invest premiums as per your preference.
You can choose your premium and the investment fund or funds. We will then invest your premium, net of premium allocation charges in your chosen funds in the proportion you specify. At the end of the policy term, you will receive the accumulated value of your funds, which will be used to provide your pension income.
In the event of your unfortunate demise during the policy term, your spouse will receive a cash lump sum to help him or her manage the retirement years.
Use HDFC Standard Life's excellent investment options to maximize your savings & secure your golden years. Don't compromise on self-respect, ever. Go ahead, hold your head high and enjoy life with the HDFC Unit-Linked Pension

3 EASY STEPS TO YOUR OWN PLAN
1. Choose your retirement age.
2. Choose the premium you wish to invest, based on your retirement needs.
3. Choose the investment fund or funds you desire.

You will be eligible for Tax Benefit under section 80CCC of the income tax act 1961
“Lead a life of respect and dignity. Even after retirement.”

HDFC UNIT LINKED ENDOWMENT

You have given your family the very best and there is no reason why they should not get the very best in the future too. With HDFC Unit Linked Endowment, you can ensure that your family remains financially independent, even if you are not around. You can ensure that they live a life of respect and dignity always.

The HDFC Unit Linked Endowment Plan gives you:-
· An outstanding investment opportunity by providing a choice of thoroughly researched and selected investments.
· Valuable protection to your family in case you are not around.
· Flexible benefit combinations and payment options.
· Flexible additional benefit options such as critical illness cover.
· Access to your accumulated fund before maturity.
In case of your unfortunate demise during the policy term, we will pay the greater of your Sum Assured (less any withdrawals you have made in the two years before your claim) and your total fund value to your family.

Use HDFC Standard Life's excellent investment options to maximize your savings & secure your and your family's future. We will provide financial security for your family in your absence.
You can choose your premium and the investment fund or funds. We will then invest your premium, net of premium allocation charges in your chosen funds in the proportion you specify. At the end of the policy term, you will receive the accumulated value of your funds.

4 EASY STEPS TO YOUR OWN PLAN
1. Choose the premium you wish to invest.
2. Choose the amount of protection (Sum Assured) you desire.
3. Choose the additional plan benefits you desire
4. Choose the investment fund or funds you desire.

You will be eligible for Tax Benefit under section 80C & Section 10. (10D) Of the income tax act 1961
“Invest in financial security and self-respect for you and your family”

HDFC UNIT LINKED YOUNG STAR

As a parent, your priority is your children's future and being able to meet their dreams and aspirations. Today, providing a good education, establishing a professional career or even a modest wedding is expensive. Costs are rising fast. Just imagine how much you will need when your children take these important steps in life.
Plan today to ensure a bright future for your children. Start saving today with our HDFC Unit Linked Young Star so that your child is able to lead a life of respect and dignity with a secured financial future.
The HDFC Unit Linked Young Star gives you: -
· An outstanding investment opportunity by providing a choice of thoroughly researched and selected investments.
· Valuable protection to your child in case you are not around.
· Flexible benefit combinations and payment options.
· Flexible additional benefit options such as critical illness cover.
· Access to your accumulated fund before maturity.
In case of your unfortunate demise during the policy term, we will: -
· Pay the Sum Assured you had chosen to your child
· Continue your policy AND continue to pay the original regular premiums you had chosen
This means we will continue to make your savings on your behalf, in your absence. The fund will be available for your family's use until the original Maturity Date. Use HDFC Standard Life's excellent investment options to maximize your savings & maximize your child's achievements.
“We will provide financial security for your child.”
4 EASY STEPS TO YOUR OWN PLAN
1. Choose the premium you wish to invest
2. Choose the amount of protection (Sum Assured) you desire
3. Choose the additional plan benefits you desire
4. Choose the investment fund or funds you desire

You will be eligible for Tax Benefit under section 80C & Section 10. (10D) Of the income tax act 1961
“Invest in your child’s dreams, and secure your self-respect”

Courtesy : www.hdfcinsurance.com

How long will you munch it?

A Ulip or a combo meal of an ELSS and a term cover? That depends on the duration of the meal, the investment horizon Should you go for unit-linked insurance plans (Ulips) or a combination of a term life cover and an equity-linked savings scheme (ELSS)? It makes sense to choose ELSS from the hemisphere of mutual funds for a comparison with Ulips because the tax breaks on ELSS and Ulips are similar. There are two types of Ulips. The first (Type I) pays the higher of fund value or sum assured as death benefit. The second (Type II) pays both sum assured and fund value. Till Type II Ulips hit the market, the ELSS and term plan combo was better. But Type II Ulips have created confusion (see When You Choose a Term Plan & an ELSS, When You Choose a Type II Ulip and The Real 2-in-1 Ulip, 15 July 2007). Financial planners are of the view that one product should meet one financial objective and that investment and insurance should not be mixed. Says Gaurav Mashruwala, a Mumbai-based financial planner, “I try to keep the insurance and investment elements separate while preparing financial plans for clients.” We ran the numbers to settle the contest between Type II Ulips (referred to as Ulips from now on) and the combo of ELSS and term plans. Cost. The visible cost in an ELSS, which is a type of mutual fund, is the entry cost, around 2.25 per cent in most cases. A term plan is the cheapest life cover. The entry costs of Ulips are higher than those of ELSS. The premium allocation charge is 5-60 per cent of the premium in Year I, falling later to 2-4 per cent of the premium every year. Among other charges are mortality charge for the life cover and policy administration fees. Both are deducted every month. Holding period. Like other life covers, Ulips should be bought for the long term, 10 or 15 years. The Insurance Regulatory and Development Authority has emphasised this long-term nature by stipulating that insurers levy a charge if an investor surrenders a Ulip within 5 years of buying it. In the following example, mutual funds are ahead in cost-adjusted returns in the medium term. Ulips win in the longer term. Here's how. Assumptions. We assume that a 30-year-old male deploys Rs 1 lakh every year for 20 years in both a Ulip and in the combo of a term cover and an ELSS to compare the results of the two options. In the combo, the annual premium for the life cover with a sum assured of Rs 20 lakh is taken to be Rs 6,000. The remaining Rs 94,000 is invested every year in an ELSS which has an entry load of 2.25 per cent and a recurring charge of 2.20 per cent of the fund value. In the Ulip, the sum assured is Rs 20 lakh, the tenure 20 years, the premium Rs 1 lakh per year, the option 100 per cent growth and the fund management charge 1.5 per cent. Figures for fund value and death benefit take into account all the other charges—those related to premium allocation, mortality, fund management and policy administration. The annual growth rate is 10 per cent. Comparison Returns. If you survive the policy term of 20 years, the fund value in ELSS is Rs 43,18,519 (the other part of the combo, the term life cover, won’t yield anything), lower than Rs 46,22,490 from the Ulip (see Maturity Benefits). But it is only in the 10th year that the Ulip fund value overtakes the ELSS value. This flip is observed in case of claims occurring after the death of the policyholder too (see Death Benefits). So, if you are looking at a horizon of 10 years or less, the combo is likely to give you more. For horizons beyond a decade, Ulips are a better deal. Exits. The lock-in period of ELSS is three years. After that, you can withdraw your fund value without any leakages. However, most Ulips have substantial surrender charges if you exit within 10 years. Disclosures. Despite the numbers, since disclosures remain tacky and costs hidden in Ulips, a term plan plus ELSS combination will work. Bear these factors in mind along with the crucial aspect of time horizon while choosing between a Ulip and a combination of a term plan and an ELSS.

Sunil Dhawan-24/10/2007,http://www.outlookmoney.com/

ULIPS This Year Cover Story

Courtesy :-DNA, Mumbai, 04/08/2006

Comparision Of Different Pension Plans

Here, I am comparing 3 Pension Plans of 3 different companies.
1) HDFC Standard life Insurance Co – Unit Linked Pension Plus
2) ICICI Prudential-Life Time Super Pension
3) Bajaj Allianz- UG Easy Pension Plus

Let’s take an example of a person of 40 years of Age, who is interested to invest Rs. 50,000 annually as premium.
As per IRDA’s guidelines an Agent or a company can show the return of 10%( Higher) & 6%(Lower).
So, Following are the returns that the person will get if the market gives a return of 10%.

· HDFC Standard life Insurance - Unit Linked Pension Plus for Growth Fund
After 10 years-Rs. 7,66,606
After 15 years –Rs. 15,14,492,
After 20 years- Rs. 26,76,775

· ICICI Prudential-Life Time Super Pension for Maximiser II fund.
After 10 years-Rs. 7,59,608
After 15 years –Rs. 14,51,292
After 20 years- Rs. 24,84,178

· Bajaj Allianz- UG Easy Pension Plus for Equity Index Pension Fund II
After 10 years-Rs. 7.71,869
After 15 years –Rs. 14,77,377
After 20 years- Rs. 25,42,923

So, we can see clearly that the best plan for those people who are interested to take a pension plan is of HDFC Standard life Insurance - Unit Linked Pension Plus.

The reason why HDFC’s Unit Linked Pension Plan is able of give more returns that other companies are because of the Lower Fund Management Charges (FMC).
· In Case of HDFC the FMC charge is just 0.08 % of your fund value, which is minimum in the industry.
· FMC is the charge, which play a major role in the long term.
· Beside this HDFC is also giving addition units of 0.10%, which is called Loyalty Benefit. This additional benefit of Loyalty Units, which is being given, increases the total Fund Value.

So, my suggestion to all those people who want to take a pension plan is see the FMC charges of the plan before investing.

The Best Investment Options

Choosing the best investment for you depends on your personal circumstances as well as general market conditions. For example, a good investment for a long-term retirement plan may not essentially be a good investment for higher education expenses. In each case, the right investment is a balance of three things: Liquidity, Safety and Return.

Liquidity - how accessible is your money?
How easily an investment can be converted to cash, since part of your invested money must be available to cover any financial emergencies.

Safety - what is the risk involved?
The biggest risk is the risk of losing the money you have invested. Another equally important risk is that your investments will not provide enough growth or income to offset the impact of inflation, which could lead to a gradual increase in the cost of living. There are additional risks as well (like decline in economic growth). But the biggest risk of all is not investing at all.

Return - what can you expect to get back on your investment?
Investments are made for the purpose of generating returns. Safe investments often promise a specific, though limited return. Those that involve more risk offer the opportunity to make - or lose - a lot of money.

Courtesy:- bajaj capital

The 'Crorepati' Syndrome

For centuries, the Indian people could not even think about the very existence - the mere possibility - of an Indian Dream. But ironically, it was upto a former US President to define it.

As Bill Clinton put it in a speech - the dream of every Indian is to become a Crorepati. That is the difference between India at Independence and the new India, at the turn of the millennium. What was once not even a possibility has now been given a shape - a magic figure - Rs.1 Crore.
How does one go about achieving this figure? Surprisingly, the road to Rs.1 crore is not as difficult as it may seem. The answer lies in a planned and disciplined approach towards savings and investment. An amount as low as Rs.1,540, if invested monthly, can get you there in 25 years. The secret lies in the power of compounding where interest on re-invested interest ensures that your savings grow at a geometric rate rather than at an arithmetic rate. The other thing at work for you is the magic of systematic investments. Rs.100 invested monthly would grow to an amount larger than a one-time Rs.1,200 investment at the end of the year simply because of the interest earned on Rs.100 every month. Here, Rs.100 would grow to Rs.1,267 at year-end at an interest rate of 10%.

The lower the age when you start investing, the lower the amount that is needed for investment. For example, an individual starting at age 25, having 35 years till retirement, would need to save only Rs.6,985 per month (at an interest rate of 6%) as compared to an individual who starts saving at age 35, having only 25 years to retirement. In our example, the 35 year old would have to invest Rs.14,359 per month to reach a crore.

As your appetite for risk increases, so does the return. As a result, you would have to save less each month. For example, a 25-year old individual A, with a conservative risk profile, investing in RBI 6.50% tax-free bonds, would have to save Rs.6,216 per month for 35 years. Individual B, also 25 years old, with a higher risk appetite i.e. not averse to investing in equity funds, would earn a return of perhaps 12%. Individual B would need to save only Rs.1,540 per month for the same number of years.

The individual amounts that an individual would need to save would depend upon the tax-bracket that the person is in since except for the RBI Bonds, all the other instruments are taxable and the effect of tax has not been included in the calculations since it would vary for different individuals. But then should one invest only in a single asset such as the RBI bonds which provide tax-free income? This is not recommended since this would not only lock in your investments at a low rate of return, it would also expose the investor to interest rate risk i.e. progressively lower rates of interest on the bonds, which has been the trend in the past. Further, the investor would not be able to take advantage of returns from equity funds, should the equity markets turnaround this year.

Using insurance to plan for your child’s future

For parents who are convinced about the need to plan finances for their children’s future but don’t know how to do it, help is at hand. You have already read about the various child-related investment avenues available at the parent’s disposal. One avenue that many parents are partial to is life insurance, i.e. child insurance plans. The reasons are not far to seek.

Why you must plan for your child’s future

Child insurance is popular with parents for the following reasons:

1. It is a dependable route for parents to plan their children’s future. Money back endowment plans for instance, tell the parent roughly how much he/she can expect and at what age (of the child) the money will be due.

2. Child insurance offers a lot of flexibility. There is something in it for all parents regardless of their risk appetites. Unit-linked child insurance plans (child ULIPs) have several options with varying equity components. Parents can select the one that suits their needs the most.

Let us bring each of these avenues under the scanner to see what they can do for parents anxious for their child’s future.

Money back child insurance plans
Money back plans are ideal for parents planning for life stage events like child’s education, marriage or seed capital for a business opportunity. Ideally, parents would have to set aside money separately for each event and plan their finances accordingly. A money back insurance plan allows them to combine their planning for all these events in a single avenue. We can understand this better with an illustration.

A father wants to set aside some money for his 5-year old daughter’s higher education. He also wants to have enough money for her marriage a few years after that. This is the ideal scenario for a money back plan.

The father can select a money back endowment plan with a 20-Yr tenure for a sum assured of Rs 10 lakhs (Rs 1 million). The annual premium that he will have to pay is Rs 67,175 (refer Table 1). The premium amount will vary across life insurers.

Age (Yrs) 30
Sum Assured (Rs) 1,000,000
Tenure (Yrs) 20
Premium (Rs) 67,175


(The figures used in the illustration are based on that of an existing life insurance company. The returns could vary across life insurance companies.)
In case of an eventuality to the parent, his nominee will receive the sum assured of Rs 10 lakhs plus bonuses accumulated till that period. In case of survival, the parent will receive disbursements over four regular intervals according to a pre-determined schedule (refer Table 2).

Year Guaranteed Amount (Rs) Bonus (Rs) Total Amount
5 200,000 - 200,000
10 200,000 - 200,000
15 200,000 - 200,000
20 400,000 300,000 700,000


(The figures used in the illustration are based on that of an existing life insurance company. The returns could vary across life insurance companies.)
Money back insurance plans are essentially variants of endowment plans, which give you a lumpsum payment at maturity. While endowment plans also serve the purpose of helping parents save for the child’s future, they aren’t as flexible as money back plans. For instance, in our illustration where the father has multiple objectives (daughter’s education and marriage), an endowment plan with a single disbursement may not be as helpful as a money back plan with multiple disbursements.

ULIPs
If parents are pleased with money back plans, then ULIPs should thrill them. As far as flexibility goes, it does not get any more flexible than a ULIP. ULIPs differ from conventional insurance in the way they invest your premiums. Unlike endowment plans that invest primarily in government securities and corporate bonds (as specified by the regulator), ULIPs can also invest in equities. Below, we have outlined some of the key features in a ULIP.

1. As an investor, you can decide how much your ULIPs must invest in equities and debt. For this ULIPs offer a range of options with varying equity and debt components. As an investor you can choose the option based on your risk appetite.

2. However, unlike conventional endowment plans, ULIPs do not guarantee a return, although your sum assured is guaranteed provided you have paid the minimum premiums (even conventional plans no longer assure a return). This is because ULIPs invest in equity and debt markets and offer market-linked returns. Your returns will fluctuate in line with the ULIP’s performance.

3. We mentioned that ULIPs are flexible. Their flexibility is evident in two features. One, they allow individuals to switch across options. For instance, as a parent you can afford to have more equity at an early stage of your investment plan for your child’s education. As your plan nears the end of its tenure, you can shift your monies to a debt option. Most insurers allow for a predetermined number of free switches across ULIP options every year.

4. The second feature that makes ULIPs flexible is that they allow for a larger number of withdrawals. In the money back illustration, there were four disbursements with a bonus disbursement at the end of the tenure. In a ULIP you can make many more withdrawals over the tenure of the plan; in fact some ULIPs permit multiple withdrawals every year.

5. ULIP expenses are usually lower than those of conventional endowment plans. Over the long-term, this reflects in the returns of the ULIP.

Our view on ULIPs

1. There is little doubt that if selected prudently, ULIPs can add considerable value to the portfolio you wish to build for your child’s future. Equities are well-placed to give a boost to your child portfolio’s over 15-20 years. They can also help you go one up on inflation. These are facts established by several studies.

2. However, the ULIP frenzy has made investors including parents ignore the prudent principles of financial planning. We are certain that parents with unduly high investments in Aggressive ULIPs (which can invest upto 100% in equities) would be concerned with the sharp drop in their child’s portfolio every time the market crashes. So going overboard in Aggressive ULIPs could make your child’s portfolio swing like a pendulum during stock market volatility, which is something you do not want.

3. The answer is in striking a balance between equities and debt, because during stock market volatility, debt can be a major ally. It is best for parents to go for a ULIP with moderate equity investments (balanced option), as opposed to a ULIP with a heavy equity allocation (aggressive option).

Courtesy:- http://www.personalfn.com/