Recently HDFC Life contacted me through a third party to write a review (mainly positive) on their newly launched "HDFC Life Click 2 Retire online ULIP Plan". When I highlighted too many negatives, they just stopped replying further. Let us discuss more about this product.

I also found many more reviews on HDFC Life Click 2 Retire online ULIP Plan. Some are very genuine (by mentioning both positive and negative sides of this product) and some just highlighted the positive points of this product. Even not bothered why they are recommending this product. Simply copy pasted the plan features from HDFC Life portal.

I tried to highlight the negative points of this product, which many reviews or portals missed (don't know the reasons).

1) ONLINE-There is nothing special about this plan except HDFC Life's famous tagline used with this plan too i.e. CLICK. It is an online retirement plan. However, wait…it does not mean that there are no intermediaries involved in selling. Check about HDFC Life's online term plan. Many leading insurance comparison portals recommend this single product. I found few planners insist you to buy HDFC Life online term insurance ONLY.

If there is no commission to these online portals or to planners, then why they are promoting only HDFC Life online term insurance? I still say that ONLINE insurance products have not purely avoided agent's cost. Indirectly they include the selling cost, which we never come to know. Therefore, do not be in a hurry that you will be investing in a product with is CHEAPEST form of retirement product.

2) Charges are less-Currently charges may look minimal. However, check the condition "We reserve the right to review our charging structure (except premium allocation and mortality charges) at any time. Proper notification of any changes would be made to the IRDAI and prior approval will be sought before any change is made". This means that on charges, they have every right to review.

Along with that, this product launched the new type of expenses to ULIPs. This expense is called as "Investment Guarantee Charge". This charge is 0.5% to equity and income funds and 0.1% for conservative fund. Overall, the product will come with around 1.8% to 2% of charges. This I think competitive expense when it comes to mutual funds. However, what if they change the charges at a later stage?

3) Fund Types-This plan offers three types of funds where only fund you have equity exposure. The rest of the two fund types offer only debt category of investments. In such a scenario, whether investors earn a positive real return (return adjusted to inflation) in the long run? I do not know what prompted them to offer these two fund types, where equity exposure is ZERO. A retirement plan, which is in many cases a long term plan. Avoiding equity investment in such an important goal may totally harm your retirement planning.

4) Lock-in-This product will come with lock-in feature of at least 5 years from the start of the policy. In case you plan to surrender within 5 years, then "Your fund value (as on date of surrender) less discontinued charges will be moved to the 'Discontinued Policy Fund. The fund value corresponding to the 'Discontinued Policy Fund' will be paid out on the completion of the lock-in period." Currently, such discontinued charges showing as NIL.

However, they clearly mention, "This charge may be increased to a maximum cap as allowed by IRDAI, subject to prior approval from IRDAI." If you surrender after 5 years, then the fund value of that day will be payable to you. So any plan to come out of this plan before 5 years will actually harm you. You have to continue with this product at least up to 5 years irrespective of fund performance.

5) Assured Vesting Benefits?On maturity of the product, you are eligible to receive the HIGHER of "Fund Value" or "Assured Vesting Benefit". Assured means guaranteed. However, how much? This is the percentage of total premiums paid. This assured vesting benefit starts from 103% for 10-year policy term to 128% for a 35-year policy. So do not be so much attached to this ASSURED. Instead, if the fund performs well then only you can live your retirement at ease.

6) Taxation-During investment you may get some tax benefits. However, at maturity only 1/3 of the commuted amount of whole retirement corpus is tax-free. Remaining 2/3 will be converted into a pension. This is taxable income for you. Therefore, you have to think of the taxation part post maturity.

7) Buying Annuity-At maturity, you have to buy an annuity only with HDFC. This I feel a big hindrance. Because even if the annuity product of HDFC not suitable to us or not well in the market, we have to go with HDFC annuity product with no other options.

8) Indicative Returns-As per IRDA rules, this product shows you the INDICATIVE returns of 8% and 4%. Remember that these are indicative returns, but not guaranteed returns. Many insurance companies or agents sell product showing these indicative returns as assured returns. But these indicative returns are meant to give you an example like how the product performs. Returns may be purely different.

9) Switching-Switching among the three fund category is not in your control. But it is purely with HDFC Life. Therefore, no control over your investment. You have to just invest and look at how fund performs.

Finally, it is left with you to decide. Few positives and many more negatives lead to bad product. Now you may came to know why I put the heading of this post as "Don't Invest" in a straight way