HDFC Life Classic One Plan
HDFC Life Classic One Plan Summary
This is a single premium investment plan in which you can cover upto 2 lives. Given the nature of this product, it is important to really understand this plan before purchasing it. The amount invested by you will be used to purchase funds of your choice. The performance of the funds will determine how much money you make out of this investment.
Note: There were 2 earlier versions of this plan with UIN 101L132V01 & 101L132V01.
Steps to proceed:
- Select the Life Cover Variant
- Decided on the amount of investment – single premium
- Select policy term
- Choose the amount of Life Cover needed
- Choose your fund options
Important – In this plan, you have to stay invested for at least 5 years. You cannot withdraw your investment before 5 years.
- It is a single premium market linked plan
- Option to protect Single Life or Joint Lives
- In case of no partial withdrawals, Loyalty Additions will be added as extra units
- 11 investment fund options with free switching between them
- Tax exemptions under Sec 80C and Sec 10(10D). However, this will not be applicable to all scenarios in this plan. Please check this before purchasing this plan, particularly the Premium Amount to Sum Assured ratio which determines the tax eligibility as per income tax rules.
We will understand each of the above mentioned points and more in the sections below.
- Single Life Coverage Variant - The Fund Value will be paid.
- Joint Life Coverage Variant - In case any of the 2 lives assured survive the policy term, the Fund Value will be paid out.
You can use the Settlement Option to withdraw your money. In the Settlement Option you can take your money in equal installments, for upto a maximum of 5 years. The investment risk during this period would be borne by the policyholder - so be very sure in case you want to use the Settlement Option. Fund Management Charge would also be applicable. Understand scenarios where this feature could be useful to you - just don’t opt for it because someone advised you without giving reasons.
- Single Life Coverage Variant - The “Sum Assured on Death” is paid out.
- Joint Life Coverage Variant - The “Sum Assured on Death” is paid out to the nominee on death of the 2nd life. On death of the 1st life, the Fund Value will be set to higher of:
- 105% of Single Premium
- Balance in the unit fund
The surviving member can use any of the 2 ways mentioned:
- Fully withdraw Fund Value and continue with the life coverage
- Not withdraw any amount and continue the plan with life coverage
In case the surviving life decides to withdraw the fund value, then a lumpsum value towards mortality charge for the remainder of the policy term will be deducted to provide the life cover.
Sum Assured on Death - Highest of:
- Total Fund Value
- Total Sum Assured less any partial withdrawals made during the 2 year period immediately preceding the date of death
- 105% of the premiums paid
At the end of the 10th policy year, if you have not made any partial withdrawals, you will get higher of the following:
- Total Premium allocation charge and Policy Administration charge deducted on your policy till date
- 5% of Single Premium
If you are greater than 18 years old and have completed 5 policy years, you can make partial withdrawals from your funds. However, in case you make partial withdrawals before the end of the 10th policy year, the Loyalty Additions will not be added to your account.
You can add more premiums at anytime except during the last 5 policy years.
- Top-up premiums shouldn not exceed the single premium paid initially
- Minimum top-up premium is Rs. 10,000
you can move your existing investments between funds at any point of time. You can do this as many times as you want.
You can opt for the Income Benefit of Accidental Disability Rider by extra premiums
No loans are available in this plan.
Surrender - You can surrender your plan anytime after 5 policy years and receive the Fund Value. In case surrender before 5 years, the funds will move to the Discontinued Fund and you can withdraw after 5 years. You will have to pay discontinuation charges which are as mentioned below in the Charges section.
Grace period - You have a grace period of 15 days for the monthly payment mode and 30 days for other modes of premium payment.
Tax Benefits - The premiums paid are exempted from tax under Sec 80C. Please bear in mind that the annual premium should not be greater than 10% of the cover amount for tax benefits on premiums and maturity to be applicable completely.
You have 2 options:
- Single Life Coverage - Only 1 life is covered
- Joint Life Coverage - 2 lives are covered
In case of Joint Life Coverage, the relationship between the two policyholders can be the spouse / child / parent / grand-parent / co-borrower. Other relationships such as that under partnership firms may also be considered as long as there is an insurable interest between the two individuals.
Charges in HDFC Life Classic One Plan
The list of charges applicable in this plan are as mentioned below.
Premium Allocation Charge - 2% for the Single Premiums and 1% for the Top-Up premiums. This amount is deducted from the amount you pay before they are invested.
Policy Administration Charge - 0.04% per month subject to a maximum of Rs. 500. This charge is deducted every month by cancelling appropriate number of units.
Fund Management Charge - 0.8% per annum for Bond Plus Fund & Secure Managed Fund and 1.35% per annum for the rest of the 7 Funds which are available. This is charged daily adjusting the NAV of the funds.
Mortality Charge - This will depend on your age and the amount of cover. This charge is deducted every month. This charge is deducted every month by cancelling appropriate number of units.
Partial Withdrawal Charge - Nil
Switching Charge - Nil
Premium Redirection Charge - Nil
Discontinuation Charge - This is charges by cancelling units you hold.
|Year of Discontinuance||Single Premium upto Rs. 3 lakhs||Single Premium greater than Rs. 3 lakhs|
|1||Lower of 2% x (SP or FV) subject to a max of Rs. 3,000||Lower of 1% x (SP or FV) subject to a max of Rs. 6,000|
|2||Lower of 1.5% x (SP or FV) subject to a max of Rs. 2,000||Lower of 0.5% x (SP or FV) subject to a max of Rs. 5,000|
|3||Lower of 1% x (SP or FV) subject to a max of Rs. 1,500||Lower of 0.25% x (SP or FV) subject to a max of Rs. 4,000|
|4||Lower of 0.5% x (SP or FV) subject to a max of Rs. 1,000||Lower of 0.1% x (SP or FV) subject to a max of Rs. 2,000|
SP - Single Premium
FV - Fund Value of Date of Discontinuance
Fund Options in HDFC Life Classic One Plan
Important - The returns in your plan will depend on your choice of funds. So it is very important to choose them wisely. If you choose a Low Risk fund, the chances of returns will not be very high but will be stable. These funds are managed by experienced fund managers of HDFC Life.
|Fund Name||Fund Composition||Risk & Return Rating|
|Money Market Instruments, Cash, Deposits, Liquid Mutual Funds||Government Securities, Fixed Income Instruments, Bonds||Equity|
|Discovery||0% to 10%||0% to 10%||90% to 100%||Very High|
|Equity Plus||0% to 20%||0% to 20%||80% to 100%||Very High|
|Diversified Equity||0% to 40%||0% to 40%||60% to 80%||Very High|
|Blue Chip||0% to 20%||-||80% to 100%||Very High|
|Opportunities||0% to 20%||-||80% to 100%||Very High|
|Balanced||0% to 20%||0% to 60%||40% to 80%||Moderate to High|
|Income||0% to 20%||80% to 100%||-||Moderate|
|Bond||0% to 60%||40% to 100%||-||Moderate|
|Conservative||0% to 60%||40% to 100%||-||Low to Moderate|
|Secure Managed||0% to 25%||75% to 100%||-||Low to Moderate|
|Bond Plus||0% to 20%||30% to 100%||0% to 50%||Moderate to High|
The asset allocation of the Discontinued Policy Fund will be as follows:
- Money Market Instruments - 0% to 40%
- Government Securities - 60% to 100%
Apart from investing your money in any of the funds mentioned above, you can also avail the Systematic Transfer Plan (STP) - You can invest money in the Income Fund, Bond Fund, Conservarive Fund or Secure Managed Fund and then transfer a fixed amount every month into any of the more aggressive funds in regular monthly instalments over a period of 12 months. This is most useful for those who are paying through the Annual mode of payment. There will be no additional charges for using the STP option.
You can decide on the amount of premium which you want to pay and also select from one of the three plan options given in this chart.
|Age at Entry||Single Life||Any age||40 years|
|Joint Life||18 years||80 years|
|Age at Maturity||Single Life||18 years||50 years|
|Joint Life||28 years||90 years|
|Premium Amount||Both||Rs. 25,000||No Limit|
|Policy Term||Single Life||10 years||50-Entry age|
|Joint Life||90-Entry age|
|Sum Assured||Single Life||1.25 x Premium||10 x Premium|
|Joint Life||10 x Premium|
In case of Single Life cover is opted for a minor, the maturity benefits will be paid when the minor is 18 years of age, no matter what policy term is selected.
If the premiums are not paid by the end of the grace period, the plan will be withdrawn and discontinued. This is what will happen:
- There will be no more risk coverage offered.
- The Fund Value on the date of discontinuance will be moved to the “Discontinued Policy Fund”.
- This fund will now earn a minimum guaranteed interest rate of 4% (as per current regulations).
- A Fund Management Charge of 0.5% per annum would be applicable.
- No other charges would be deducted.
- The Fund Value will be paid out at the end of 5 years and the policy terminates
- At any point, you can revive the policy by paying the pending premiums. You do not have to pay any interest charges on the delayed payments.
That pretty much explains how HDFC Life Classic One Plan works and the benefits you get out of it. If you have any questions on this plan, drop in a line in the comments and we will be happy to help out.