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Should I Renew My HDFC Life Youngstar Super Premium Plan?

Milind

Milind Vadjikar  |806 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Sep 19, 2024

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more
Raj Question by Raj on Nov 24, 2023Hindi
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Sir, Me & my wife got HDFC Life Youngstar super premium with Rs. 1 Lac premium each. The 5 years lock in period is over. Should I continue for another 5 years or surrender?

Ans: Surrender will cause lot of charges and since you already have market exposure through ULIP therefore I recommend you to continue it. Invest in Bluechip and opportunities fund for long term. Also since your policy is before Feb-2021, your gains out of ULIP plan will be 100% tax free(No capital gain) at maturity as per Section 10(10D).

Happy Investing!!
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |7363 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 26, 2024

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Dear Ulhasji, I have a HDFC SL youngstar super policy since 2010 and I have been paying Rs 25000 annually. Is it OK to continue or can you suggest a better option? Please suggest few names
Ans: It’s great that you’ve been consistent with your HDFC SL Youngstar Super policy since 2010. Maintaining regular investments shows financial discipline. However, it’s wise to periodically review your investments to ensure they align with your goals.

Let’s analyse the policy and explore other potential options.

Understanding Your Current Policy
HDFC SL Youngstar Super policy is a unit-linked insurance plan (ULIP). It provides a mix of insurance and investment. While you’ve been paying Rs 25,000 annually, part of this premium goes towards life cover and the rest is invested.

ULIPs come with benefits like tax savings and potential market-linked returns. However, they also have certain charges like premium allocation, fund management, and mortality charges. These can impact your overall returns.

Evaluating ULIPs
ULIPs are good for disciplined savings with insurance cover. They offer flexibility in switching between funds based on market conditions. The lock-in period encourages long-term investing.

However, ULIPs can be complex and expensive due to various charges. The returns might not always meet expectations after accounting for these costs. It’s essential to understand these aspects before deciding to continue with the policy.

Alternative Investment Options
Exploring other investment avenues might be beneficial. Here are a few options to consider:

Mutual Funds
Mutual funds are a popular investment option. They offer a variety of schemes tailored to different risk appetites and investment goals. They are managed by professional fund managers, aiming to provide good returns.

Mutual funds come with advantages like liquidity, diversification, and potential for high returns. They have different categories like equity, debt, and hybrid funds, catering to various investor needs.

Public Provident Fund (PPF)
PPF is a government-backed savings scheme, known for its safety and attractive interest rates. It is ideal for long-term investment, offering tax benefits under Section 80C. The interest earned is also tax-free.

PPF has a lock-in period of 15 years, encouraging long-term savings. It’s a risk-free investment, suitable for conservative investors seeking steady returns.

National Pension System (NPS)
NPS is designed for retirement savings. It offers the advantage of market-linked returns with professional fund management. It also provides additional tax benefits under Section 80CCD.

NPS allows for partial withdrawal after a certain period for specific purposes like education or buying a house. It is suitable for those looking to build a retirement corpus.

Equity-Linked Savings Scheme (ELSS)
ELSS is a type of mutual fund that offers tax benefits under Section 80C. It invests primarily in equities, providing the potential for high returns. ELSS has a lock-in period of three years, one of the shortest among tax-saving options.

ELSS is suitable for investors with a higher risk appetite, looking to save on taxes while investing in equities.

Pros and Cons of Your Current Policy
Pros
Combines insurance and investment.
Offers flexibility in fund switching.
Provides tax benefits under Section 80C.
Cons
High charges can reduce returns.
Complexity in understanding the product.
Returns might not always meet expectations.
Assessing Your Financial Goals
Reassess your financial goals to decide whether to continue with the policy. Consider your risk appetite, investment horizon, and financial objectives.

If you seek simpler, more cost-effective investment options, alternatives like mutual funds or PPF might be suitable.

Conclusion
It’s commendable that you have maintained your HDFC SL Youngstar Super policy. Reviewing your investment periodically ensures it aligns with your goals. Consider other options based on your risk profile and financial objectives.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Moneywize

Moneywize   |174 Answers  |Ask -

Financial Planner - Answered on Jun 19, 2024

Asked by Anonymous - Jun 08, 2024Hindi
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I have a HDFC SL Youngstar Super Policy since 2010 and I have been paying Rs 25000 annually. Is it okay to continue or can you suggest a better option? Please suggest few names.
Ans: Deciding whether to continue with your current HDFC SL Youngstar Super Policy or to switch to a different option depends on several factors, including your financial goals, the policy's performance, and the benefits it provides. Here are a few steps you can take to make an informed decision:

1. Evaluate Your Current Policy:

• Performance: Review the policy’s performance since 2010. How has it grown? Is it meeting your expectations in terms of returns?
• Benefits: What are the key benefits of the HDFC SL Youngstar Super Policy? Does it provide life insurance, investment benefits, and other features you need?
• Charges and Fees: Understand the charges associated with the policy (e.g., premium allocation charges, policy administration charges, fund management charges).

2. Compare with Other Options:

Consider comparing your current policy with other financial products that can offer similar or better benefits. Here are a few alternatives:

Term Insurance + Mutual Funds:

• Term Insurance: Provides pure risk cover without any investment component. It's usually cheaper than ULIPs (Unit Linked Insurance Plans).
• Examples: HDFC Click 2 Protect, ICICI Prudential iProtect Smart, Max Life Online Term Plan Plus.

• Mutual Funds: For investment purposes, consider investing in mutual funds for potentially higher returns.
• Examples: Axis Bluechip Fund, Mirae Asset Large Cap Fund, SBI Small Cap Fund, HDFC Hybrid Equity Fund.

Public Provident Fund (PPF):

• A long-term investment option with tax benefits and guaranteed returns. It's a good option for risk-averse investors.

National Pension System (NPS):

• A government-backed retirement savings scheme with tax benefits and market-linked returns. Suitable for long-term retirement planning.

Equity Linked Savings Scheme (ELSS):

• Mutual funds that offer tax benefits under Section 80C and have the potential for high returns.
• Examples: Axis Long Term Equity Fund, Mirae Asset Tax Saver Fund, Aditya Birla Sun Life Tax Relief 96.

3. Assess Your Risk Appetite and Goals:

• Risk Tolerance: Are you comfortable with market-linked products (mutual funds, ULIPs) or do you prefer guaranteed returns (PPF, fixed deposits)?
• Financial Goals: What are your financial goals (e.g., child’s education, retirement)? Choose products that align with these goals.

4. Consult a Financial Advisor:

It’s always a good idea to consult with a financial advisor who can provide personalised advice based on your entire financial situation.

Summary:

• If your HDFC SL Youngstar Super Policy has not performed well or if the charges are high, consider alternatives like term insurance combined with mutual funds for better returns and flexibility.
• For risk-averse investors, PPF or NPS might be suitable options.
• Always align your investments with your financial goals and risk tolerance.
• Carefully assess these factors before making a decision. If needed, get professional advice to ensure your financial plans are on the right track.

..Read more

Ramalingam

Ramalingam Kalirajan  |7363 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 18, 2024

Money
Dear Sir, My name is Raj, I am 48, I have HDFC Youngstar super premium policy which is invested in Opportunity funds, now the fund value is 10Lacs (1 Lac/M and I paid 6 yrs so far) should I surrender the policy and invest in MF?And if yes, please suggest the best MF to invest Lumpsum amount for next 5 years. Thank you.
Ans: Dear Raj,

I appreciate you reaching out with your query. As a Certified Financial Planner, let me help you evaluate your current HDFC YoungStar Super Premium policy and assess whether switching to mutual funds is a better option for your financial goals.

Evaluating Your HDFC YoungStar Super Premium Policy
You've already paid premiums for 6 years and have accumulated a fund value of Rs 10 lakhs. This policy is a Unit Linked Insurance Plan (ULIP), where part of your premium goes towards life cover, and the rest is invested in the market.

ULIPs typically have high charges for mortality, administration, and fund management, which can reduce returns compared to other investment options like mutual funds.

Opportunity funds are high-risk investments and are subject to market volatility. It is important to compare the growth of your fund over the past 6 years against other market investments, like actively managed mutual funds, to see if it is performing well.

Why Consider Surrendering the Policy?
High Costs: ULIPs often have higher charges than mutual funds, which impacts the overall returns over time.

Low Flexibility: ULIPs offer limited flexibility compared to mutual funds in terms of changing or switching funds.

Better Growth Potential in Mutual Funds: If your ULIP is underperforming or you want to reduce costs, investing in actively managed mutual funds can be a more efficient way to grow your wealth over time.

Tax Implications: Partial or full withdrawal from ULIPs after 5 years is generally tax-free, making this an opportune time to consider surrendering. However, future premiums may still incur higher costs compared to mutual funds.

Benefits of Mutual Funds Over ULIPs
Lower Costs: Actively managed mutual funds typically have lower fund management and administrative charges compared to ULIPs.

Greater Flexibility: Mutual funds allow you to choose from a wide range of investment strategies, risk profiles, and asset classes without the limitations that ULIPs often impose.

Active Management: Unlike index funds or ULIPs, actively managed funds are handled by professional fund managers who continuously analyze the market for opportunities, potentially delivering better returns.

Lumpsum Investments: If you’re looking for a 5-year investment horizon, actively managed equity mutual funds can provide growth potential, especially when you reinvest in funds with a good track record.

What Should You Do Now?
Evaluate Your Policy: Compare the growth of your ULIP’s Opportunity Fund with the performance of actively managed mutual funds. If your ULIP has not performed satisfactorily, it may be worth surrendering.

Consult with a CFP: Before surrendering your policy, ensure you are clear about any surrender charges or other fees involved. Speak to a Certified Financial Planner (CFP) to get a clear picture of the financial impact.

Invest Lumpsum in Mutual Funds: Once you surrender your ULIP, you can invest the Rs 10 lakh lump sum in mutual funds for better growth potential over the next 5 years.

Suggesting the Right Mutual Fund Strategy (Without Scheme Names)
For a 5-year investment horizon, I would recommend the following types of funds based on your risk appetite:

Aggressive Approach: Invest a significant portion of the amount in large-cap or multi-cap equity funds for capital appreciation. These funds tend to have lower volatility compared to small-cap funds but still offer strong growth prospects.

Moderate Approach: A combination of balanced advantage funds (BAFs) or flexi-cap funds could provide growth with moderate risk. These funds dynamically adjust between equity and debt based on market conditions, offering a balance between risk and return.

Conservative Approach: If you prefer to limit risk, you can look into debt-oriented hybrid funds. These funds invest in a mix of debt and equity, providing stable returns while still participating in market growth.

Tax Implications for Mutual Fund Investments
When you switch to mutual funds, it’s important to be aware of the capital gains tax rules:

Equity Mutual Funds: For investments held for more than 1 year, long-term capital gains (LTCG) above Rs 1.25 lakh are taxed at 12.5%. Short-term capital gains (STCG) for investments held for less than a year are taxed at 20%.

Debt Mutual Funds: Both long-term and short-term capital gains from debt funds are taxed as per your income tax slab.

Final Insights
To sum up, if your HDFC YoungStar Super Premium policy has underperformed or the costs are too high, surrendering the policy and switching to mutual funds can be a wise decision. Mutual funds offer lower costs, greater flexibility, and potentially better returns, especially when investing for 5 years.

Ensure you consult a Certified Financial Planner (CFP) to understand all the charges involved in surrendering the policy and get tailored advice on mutual fund selection based on your risk profile and financial goals. By doing so, you can optimize the returns on your lump-sum investment and secure your financial future.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

..Read more

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Asked by Anonymous - Oct 22, 2024Hindi
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I have lost money around 8 lakhs in gambling now i want to restart my life fresh i need to settle my debts and loan with bank and NBFCs is it possible to settle money at 70 percent waived off
Ans: Restarting your life after financial setbacks is possible with a disciplined approach. Settling your debts with banks and NBFCs requires a strategic plan, negotiation, and commitment. Here's a 360-degree approach to help you resolve your situation:

Assess Your Current Financial Position
List All Debts: Create a detailed list of all outstanding loans and debts, including principal, interest, and penalties.

Identify Income Sources: Calculate your monthly income and any other sources of funds.

Evaluate Essential Expenses: Identify non-negotiable expenses such as rent, food, utilities, and transport.

Determine Negotiable Debts: Focus on debts with higher interest rates or legal implications.

Negotiating with Lenders
Possibility of Settling at 70% Waiver
Banks and NBFCs Are Open to Negotiation: They prefer recovering some amount rather than declaring a loan as non-performing.

Settlement Terms Vary: Each lender may have unique policies. Some might agree to 70% waiver, but others may not.

Present Your Case Transparently: Show proof of your financial hardship. Explain your inability to pay in full.

Request a One-Time Settlement (OTS): Offer to pay a lump sum of the waived-off amount to close the debt.

Steps to Negotiate Effectively
Reach Out to the Right Department: Contact the collections or recovery department of your lender.

Seek Professional Help: A certified financial planner or debt resolution expert can negotiate on your behalf.

Prepare a Settlement Plan: Propose a realistic amount you can pay. Mention the sources for this payment.

Ask for Written Confirmation: Ensure the lender provides a formal agreement on the waived-off amount.

Negotiate for Reduced Interest and Penalties: Request removal of penalties and reduction of interest rates.

Managing Your Financial Obligations
Repayment Strategy
Prioritise High-Interest Loans: Focus on clearing loans with higher interest rates first.

Consolidate Debts: Consider consolidating multiple loans into one with a lower interest rate.

Use Liquid Assets Wisely: If you have savings or assets, use them to reduce your debt burden.

Building a Fresh Financial Foundation
Avoid Gambling and High-Risk Activities
Adopt Healthy Habits: Seek professional help if gambling is an addiction. Join support groups like Gamblers Anonymous.

Focus on Financial Literacy: Learn to manage your money effectively through courses or books.

Create a Budget and Emergency Fund
Track Income and Expenses: Use apps or spreadsheets to monitor your financial activity.

Save for Emergencies: Set aside 3–6 months of expenses as a safety net.

Restart Investments Gradually
Start with SIPs: Begin investing small amounts in mutual funds. Avoid direct stock trading initially.

Build a Retirement Corpus: Plan for long-term financial security systematically.

Final Insights
Rebuilding your life after a financial setback takes effort but is achievable. Focus on negotiating your debts transparently and settling them systematically. Learn from past mistakes and adopt disciplined financial habits. Restart your journey with renewed confidence and a commitment to avoid risky behaviours. Seek professional guidance when needed to make informed decisions.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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Milind

Milind Vadjikar  |806 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Dec 27, 2024

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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