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
Guaranteed Tax Savings
Under sec 80C & 10(10D)₹ 1 Crore
Invest 10k Per Month*Zero LTCG Tax
Unlike 10% in Mutual Funds*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
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Product Specification:
|
Minimum |
Maximum |
Entry Age (Last Birthday) |
14 years |
65 years |
Maturity Age (Last Birthday) |
- |
75 years |
Policy Term (PT) in years |
10 |
30 |
Premium Paying Term (PPT) in years |
Equal to policy term |
|
Premium Paying Frequency |
Yearly, half-yearly, monthly |
|
Yearly Premium |
24,000 |
100,000 |
Sum Assured |
Higher of 10*annual premium or 0.5*term*annual premium for ages<45 yrs. Or Higher of 7*annual premium or 0.25*term*annual premium |
40*annual premium subject to a maximum of 40 lakhs |
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 plan, 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.
Policyholder has to fill up an ‘Application form/ proposal form’ for HDFC Life Progrowth Plus plan with accurate medical history and submit KYC documents. The documentation procedure is fairly simple and one requires to submit the following self-attested documents:
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 individual’s 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 one’s 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.
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:
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.
It is charged daily and the daily unit price under HDFC Progrowth Plus is calculated after deducting the fund management 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.
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.
In case the premium of HDFC Life ProGrowth Plus plan has not been paid even till the expiry of the grace period, then the following options are available to you:
In case you do not select one amongst the above mentioned options and do not communicate the same to the insurer, then the following will happen:
You also have an option to renew a terminated policy within a period of 2 years from the discontinuation date of the policy, provided all the premiums have been duly paid subject to the underwriting policy.
In case you surrender the HDFC Life ProGrowth Plus Plan before the fifth policy year is complete, your total Fund Value excluding the relevant charges will be added to the (DPF) Discontinued Policy Fund and the takings from the same shall be payable post the lock-in period of the policy is completed.
In case you surrender the policy post the completion of 5 years of the policy term, your total Fund Value shall be paid to you. Once this benefit is paid to the policyholder, the policy comes to an end and no further benefit shall be payable. For further details on surrender, it is advisable to refer to the formal policy brochure.
In the Settlement Option of the HDFC Life ProGrowth Plus Policy, the total Fund Value is payable in the form of regular payments over a period of up to five years. The amount of such installments paid on the specified dates is subject to the investment risk; meaning, the NAV might increase of fall down as per the performance of the fund options that you choose. Your capital will stay invested in the funds of your choice and investment risk, as during the term of the policy, shall be applicable to it. While the Settlement period is on, risk cover will terminate and the Fund Management Charges will continuously be deducted. However, there will no further applicable charges. No withdrawals or switches shall be allowed while the settlement period is going on. However, during this period, the policyholder might be allowed to make a complete withdrawal without any charge being levied. At the closing of the five-year term, the balance units shall be redeemable at the unit price that would be prevailing at that time and the total fund value shall be payable to you.
The HDFC Life ProGrowth Plus Policy offers 4 different fund options with varying risk and return profiles. The options are as follows:
Read Also: What is ULIP