If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades
HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan (ULIP). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund.
COST STRUCTURE:
ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age.
BENEFITS:
Investors can choose a sum assured between 10-40 times the annualised premium. The plan also offers options such as accidental death benefits and critical health benefits on payment of an additional charge. The plan's settlement option allows policyholders to take away the fund value at maturity in periodic instalments over a period that may extend over 5 years. ProGrowth Super II has a 30-day free look-in period, during which it can return the policy if found unsuitable. Other companies offer a shorter review period of 15 days.
PERFORMANCE:
ProGrowth Super II does not have a big range of funds, but offers all required categories for investors to choose from as per their risk appetite. The funds in this scheme are new and most have not been able to prove their sheen yet. The mid-cap Opportunity Fund has been one of the top performers, having generated absolute gains of around 17.5% over the past 15 months, despite a lacklustre performance by mid-cap stocks. The Blue-chip Fund is a large-cap fund, but it has not been able to outperform its benchmark BSE 100. The performances of debt oriented Income Fund and Short-Term Fund have also not been encouraging. Overall, the funds basket does not look very attractive. But going by the good track record of HDFC Life fund returns, one can invest in them.
PORTFOLIO REVIEW:
HDFC Life has always been heavily exposed to financial services and the oil and gas sectors. However, the fund manager, who had earlier reduced exposure in the banking sector, has again tilted the portfolio towards it. The fund manager has taken a contra call on the infotech sector by reducing exposure.
The portfolio has been balanced out with sufficient exposure in growing, but low beta sectors such as FMCG and healthcare. Exposure of metals, a high-beta sector, in the portfolio is considerably low while sectors like automobiles have been almost written off by the fund manager.
DEATH/MATURITY BENEFIT:
Upon maturity, the policyholder receives the amount accumulated in the fund whereas in the case of death, a sum of both fund value and sum assured will be given. For instance, say a 35-year-old healthy male invests 20,000 pa in the Blue-chip Fund for 20 years.
Assuming a sum assured equivalent to 40 times the annual premium, the total sum assured receivable, in the case of any eventuality, would be 8 lakh. By the end of 20 years, assuming a rate of return of 6% and 10%, the fund value shall be 5,11,487 and 8,26,837 respectively, receivable at maturity, along with a maturity bonus.
However, in the case of demise of the policyholder, the nominee receives the sum assured of 8 lakh, along with the value of the fund then.
OUR VIEW:
HDFC SL ProGrowth Super II is a fair deal for those looking for insuring themselves, as the death benefit that can be opted is high and that high death benefit accumulation of fund is extremely low. For high-risk return appetite investors, Opportunity Fund looks a good investment while low-risk profile investors can opt for the Income Fund.
