Personal Finance

Don’t Buy HDFC Crest – It is Not a Fixed Deposit

I have now had a few people complaining to me – including my own mother – that relationship managers in HDFC Bank have been strongly selling HDFC Crest, a life insurance product, while they were looking for a fixed deposit. Latest in the list is someone who is above 60, and who has had some post retirement income that needed to be safely placed.

This is very very disconcerting, because this product is not at all meant for a person of that profile, including my mother. I have a detailed video (published in 2011!) of why this product is unsuitable for anyone looking for an investment avenue for their money.

Let me now elaborate about why I think it is a bad idea to buy HDFC SL Crest. (First, note: all details taken from their brochure or online calculators)

Salient points

• You pay 50K or more premium for five years
• You wait the remaining 5 years for a total of 10 years
• You can either get a “guaranteed” Highest NAV in the first 7 years or
• Choose one of the regular non-guaranteed plans
• Insurance 10x to 20x Sum assured
• Direct Costs of 4% of premium (years 1 and 2), 3% (year 3) and then 2% (years 4 and 5)
• Extras: 0.31% per month (of premium) as Admin charges
• Management fee of 1.35% (plus 0.5% if you take the guaranteed plan)

Lower Returns with Comparable More Flexible Options

Let’s look at illustrations for three cases:

• HDFC Crest with the “Guarantee”
• HDFC Crest without a guarantee
• A mutual fund with 2% management fee, with a term plan of 10 lakhs (35 year old – I even took HDFC’s own online term plan that offers 10.65 lakh cover for Rs. 2,002 per year)

Assumptions: 10% return on whatever’s in the fund.

(Click on any of the images to get a larger view)

First, with the guarantee, the returns are substandard: (what is below is the output of their own calculator – so while my formulas show even lower returns, I presume theirs is correct and have displayed that instead)

As you can see, the guarantee costs clips the return; the yield on this investment is about 5.31%. Not what you would consider very good, really.

(Technical note: the “yield” is an internal rate of return. That is, what interest rate would take the same investment numbers and return the exact end value we have in the illustration. This is done in Excel using XIRR)

Without the guarantee, things get slightly better:

The return goes up to 5.88%. Note that I don’t include tax benefits in this case, and I will elaborate later about them. The taxes one saves are elusive, and one might be able to get tax advantages in alternative investments (ELSS mutual funds or long term fixed deposits).

Now let’s take the online term plan for Rs. 2002 per year, and put the remaining money into a mutual fund instead. We’ll have to pay out the term plan for the full tenure. But the returns are much better:

This is substantially better (even better than the one in the video) in terms of returns. It is more than Rs. 30,000 higher than HDFC Crest’s returns in a similar setting.

Also look at the Total Death Benefit column. If you die your family will get the full term plan sum (Rs. 10 lakhs) plus whatever is accumulated in the mutual fund. This column is substantially greater than the corresponding numbers in the HDFC Crest cases. This also gives you flexibility – if you aren’t in for the insurance (like those above the age of 60 with no dependants) you should ignore the insurance completely. (The return magnifies)

The other huge advantage of an MF + Term plan is liquidity. The maximum lock in for mutual funds is 3 years after each investment (ELSS) with no restrictions on money redeemed afterwards. In HDFC Crest, you’re locked in for five years, but even after that you can’t withdraw, in total, more than 3x your original premium. (In the above example, you would be limited to total withdrawals of Rs. 150,000).

Also, if you consider that this is being sold to retired people, their alternative is to buy a simple fixed deposit for 10 years. Current rates at private banks are 8.25%, and one public bank offers 9% (PNB). Let me take 8.25% and assume we can get it for five more years, and assume a tax rate of 20% (most people seem to come in that tax bracket anyhow)

There is reinvestment risk in this option, i.e. the interest rate in subsequent years may not be as high. Also, liquidity is a problem, since you can’t exit a fixed deposit without a penalty.

I just wanted to illustrate these options – while you might think these are not directly comparable for one reason or the other, the point remains that to most people that are investing, these are usable options. In fact, to two people I know who are beyond the age of 60, suggesting HDFC Crest is ridiculous as they can lock in nearly 10% on a Fixed Deposit for 10 years, plus they have no use for the insurance piece.

Also, these comparisons are tax neutral since equity gains and insurance returns are tax free, and all options above get the 80(C) deductions as well.

Limited Insurance

While this is not really being sold as an insurance plan, insurance is touted as one of the benefits. But let’s look at primarily the insurance part and see what’s wrong.

1. You get only 10x to 20x the annual premium as insurance (“Sum Assured”).

2. You get the GREATER of the fund value or the Sum Assured.

If you pay Rs. 50,000 per year, your insurance cover ranges from Rs. 5 lakh to Rs. 10 lakh. Every premium you pay actually reduces the real insured amount. After two years, you would have paid Rs. 1 lakh in premium, so the insurance company is on the hock for Rs. 1 lakh less, and so on.

In the images above I demonstrate how, by taking a mutual fund plus term plan, you would actually have a much higher sum assured. In fact, if you die in year 9, your family would only get Rs. 10,00,000 (1 million, or 10 lakhs) with HDFC Crest. But with the MF plus term plan option, they would get more than 14,00,000 (1.4 million or 14 lakhs). That’s a 40% better alternative.

(Apart from the fact that if you didn’t die, you’d have made more money as well)

For people above the age of 60 with kids well settled, there is hardly a need for insurance (especially if their spouse is no longer alive).

Useless Guarantee

The guarantee is, for the most part, useless.

They say they’ll give you a minimum of Rs. 15 per unit (current rates are around Rs. 10 per unit) or the highest NAV in the first seven years. The seven years is important: you get your guaranteed money only after ten years, but the highest NAV is only for the first seven.

First, let’s see how anyone can guarantee this kind of return. It’s not coming from someone else’s pocket. No one’s that benevolent. Every guarantee has a cost and a structure to achieve it.

Manish from Jagoinvestor explains how it’s done. The concepts are of Constant Proportion Portfolio Insurance (CPPI) and Dynamic Hedging, but what happens in India is mostly a shift of money between debt and equity. As the “guaranteed” NAV gets higher and higher, more money gets locked into debt in order to make the guarantee.

Next, let’s look at the Rs. 15 guarantee. We all assume we buy at Rs. 10 per unit. That’s a 50% return!

Stop. 50% return over ten years is chicken-droppings.

If you gave me Rs. 50,000 every year for five years, you’ve given me Rs. 250,000. Can I give you back a 50% return, i.e. 375,000 back in 10 years?

The return I need to give you is a mere 5.2% per year, compounded. (Remember, 10 year government bonds are currently yielding 8.2%) Of course, because you will actually buy more units at a higher NAV (say Rs. 11 in year 2, Rs. 12 in year 3 etc.) the actually guaranteed return comes down some more.

The second option – the “highest” NAV sounds very pleasing but it’s fleeting. Managers will move money into debt as the equity portion rises, in order for them to be able to make the guarantee. You are in effect moving money out of the “winners” and locking the return for the future. That also means if the stock market rises over time, you are likely to miss most of the bus, as the manager try to lock in the existing NAV returns for the rest of the time. We’ll see this play out when we actually analyze performance.

The guarantee is an overstated piece in this pie, and should not get much attention. Plus, there is needless confusion by weasel-clauses like pay for five years, get money after ten years, but guarantee applies only on seven years etc.

High Costs

The cost of every instalment is quite high, it turns out.

Comparable costs for a mutual fund are 0% today.

Mutual funds tend to have a higher asset management fee. I’ve assumed it will be around 2% (versus Crest’s 1.35%). However, HDFC Taxsaver, which is run by HDFC Mutual Fund (a fund house I respect very much) charges just 1.85% according to Value Research Online.

[wpob id=”4″]

Elusive Tax Benefits

There are two tax benefits to insurance:

a) That the total sum returned is tax free, including all gains and partial withdrawals and early surrenders.

b) That the amount invested is exempt from tax under section 80(C).

For a) the concept applies in many other cases as well. Equity returns are also tax free if held for over a year. Investing even in bond funds or mutual funds can give you a tax value of zero; because of indexation benefits. (Read this article for how that works) You could invest even in Public Provident Funds to get tax free returns.

For b), I throw you the assertion that for the most part, 80(C) tends to be covered by something else. 80(C) is a cumulative tax deduction, so you can spend or invest in various heads and the total deduction per year is Rs. 100,000. The other heads that apply are:

• Children’s education fees
• Employee PF deducted by your company
• Public Provident Fund
• National Savings Certificates
• Repayment of the principal part of a home loan
• Equity Linked Mutual Funds (ELSS)

Just my child’s education costs and the PPF that I invest in add up to the 100K per year deduction. Even if people had none of the others, better than insurance would be to invest in a PPF account (Rs. 100K per year) which is an 8.5% return, tax free, and backed by the government.

Finally, these tax gains are current. We’ve seen amendments that make tax saving methods vanish, and it might well be the case that later, tax structures change and make these investments irrelevant. All else being equal, taxes should not tip the scales in any direction.

Substandard Actual Returns

Lastly, let’s come to how the funds have actually performed in the last two years or so. (since their inception).

Let’s compare the plan’s NAV with that of compable mutual funds. For a mutual fund investor, the NAV is the real return over time, since the number of units bought changes only at repurchases or withdrawals. For an insurance buyer, the NAV is only one part of the story; even when there is no purchase or sale transaction, the insurers keep deducting units as some charge or the other (mortality, policy admin, etc.) So, an NAV comparison will still overstate the return of an insurance buyer, but it’ll be close to what the mutual fund investor sees.

Comparable funds like the Franklin Bluechip (a mutual fund) with HDFC Crest’s Bluechip (a non-guaranteed fund) provides one perspective: the Crest’s funds are still struggling to come on par with mutual fund returns.

What about the guaranteed fund? It still is at the NAV of 10.17, with the “highest” NAV in the last two years being 10
.34, achieved in Jan 2011. (A fixed deposit would be more than 15% up in this time, making it a comparable NAV of 11.5)

Of course, we’ll only know about the guarantee when seven years have passed and the CPPI has had time to play out the full cycle; but it’s evident that it doesn’t really track the returns of the Nifty.

Conclusion

I don’t like to diss funds of any sort. They’re doing their job. But most ULIPs are confusing to people, almost by design. HDFC Crest is no different and it takes a while, even for an experienced hand, to understand the fact that there are far better alternatives. When such ULIPs are sold to widows and retired people, without apparent care about whether it is useful, it’s important that we bring the reality to everyone’s notice.

I understand that the HDFC folks are not going to be happy about this – not the bank, and not the insurance company. However, I hope they strengthen their practices and curb attempts by representatives to hard-sell this product, and stand for the cause of the small depositor.

And remember: HDFC Crest is NOT a fixed deposit.

It is sold by a bank representative who’s only an agent. The real company behind it is HDFC Insurance. This is a different company that shares four letters with the bank. The parent shareholder of HDFC Bank and HDFC Insurance are the same, but the bank is the one you want to deposit your money with, not the insurance company. (They are not the same. Banks are safer for depositors.)

Would deeply appreciate your comments. This is a long post, and it was supposed to be one.

• Ram says:

Thank you for the detailed analysis on this plan.
I generally read through all analysis that you put in but I must apologize that I did not have the patience to read this fully. Not because it was long, but because it was moot (at least to me).
ULIP is a scam. It is the industry’s response to get around selling mutual fund like products without mutual fund like regulations.
Investing and Personal Insurance can never go together as they serve totally different purposes. The result will be sub optimal except under extreme circumstances which by their nature occur so rarely to benefit the holder.
I am yet to see a ULIP that can beat a fund investment and term insurance combo.

• Thanks Ram! Much appreciate it. Yes, a ULIP, even in a new avatar struggles to beat a simple combination.

• Kuldhir says:

Dear Deepak,
You are correct .. HDFC people have been trying hard to sell this product to anyone. I don’t know they have some targets to achieve! I have also brought HDFC life product and i regret my decision now. Anyway, i liked your article on gold. Looking forward for lot more in future.

• Shiva says:

Thanks Deepak for the analysis. It sure helps!

• meenakshipai says:

Very educative,but now am bit anxious as my daughter got convinced and has invested?
Do not have the heart to tell her the analysis you have done.Thanks a lot Deepak!

• Shankar says:

Great work Deepak. It is sad to see people pushing ULIPs to old people under the bank’s banner. This is happening in several banks.

• Akash Parmar says:

Hi Deepak,
Thanks for the post 1-2 years ago on HDFC crest. This seems like a recap of that. It saved me from this product.
Regards
Akash

• Namdev says:

Good post Deepak. Well analyzed one.Guess ICICI Pru Life also has a similar product in their basket of offerings : http://www.iciciprulife.com/public/Life-plans/pinnacle/Pinnacle_Super.htm

• Zorbish says:

Just last week I was being sold a Endowment plan form ICICI. The sales person pitched it like a PPF and compared it with other debt deposits. 😀

• Nirav Shah says:

Dear Deepak.
HDFC branch arm-twisted us and were offering us a locker only if we invested in this product. I have paid one premium and my next premium of 50K is due in December. Please suggest what should I do? If i discontinue the fund value will be locked for 5 years and yield 4% p.a. for the remaining of the tenure.
PS: I had opted for a non-guaranteed fund (balanced fund option).

• Krish says:

Nice review. HDFC bank opened near my home couple of years ago and I wanted a locker due to proximity. They immediately sensed an opportunity and started forcing to buy ULIP. I am fully aware of dud nature of ULIPs. As a highest type of the customer (Imperia), they could not refuse the locker in anyway. When no tricks work and they were cornered, comes the heavy pleading making you feel lot guilty. Coincidentally I was looking for tax saving FD and under extreme pleading, I had to buckle for SL Crest. I have paid 2 premiums (100K/yr) so far and third one is pending shortly.
I had opted for Blue Chip growth and did not churn so far. Although it is close to 3 years, it never came into +ve returns. Agree that it is short term assessment to take a call but given the upfront charges deduction, I wonder whether it would ever turn to +ve terriotory.
I understand it is a value addition for the bank for earning commissions through ULIP rather than simple FD. I am uncomfortable of RBI allowing bank premises/employees being used to source insurance business. When you visit any branch with all of the employees pitching for insurance, you would wonder whether you came to bank or insurance branch.
Over a period of time I have stopped visiting any branch for fear of poaching. For any requirement, I courier the docs or talk over phone or correspond over e-mail. I never thought that beyond their friendly smiles lies the other face of devicing strategies to loot the customer wealth.
I ask myself this question whether the designer of the such ULIP product would invest themselves in to such a product or their CEO Mr. Puri or venerable Mr. Parekh would also buy such product. Hope I would get an answer one day. ULIP should be renamed as Ur Loss Investment Policy.

• Whoa. That’s a lot of money. You could of course exit but you’re probably still taking a loss on. However, it is surprising that their bluechip fund hasn’t given you positive returns – it is their best performing fund! That means they must have deducted units to the extent that you are still underwater. This sucks, I agree.
I love the Ur Loss Investment Policy 🙂

• Krish says:

Lot of people ask me whether I would complain if ULIP returns would have been more than +10%. The answer is always ‘Yes’. I can not surrender my ULIP currently because I have availed tax benefits ( 30% bracket). If I surrender now, the benefits would be withdrawn. Seems I have to retain it for 6 years to get the full surrender value without any deduction from insurance company, tax free corpus and to retain the tax saving benefits used each year. I am willing to experiment till 6 years or perhaps 10 years to generate real time data.
Among the ULIPs, we don’t need any complicated maths to see the reality. Just tweek the market returns negative in the first or second year or both, the whole illustration turn to negative at the end of policy irrespective of continuous +ve performance in rest of the 8 years . For ULIPs, +ve market returns in the initial years play a key role at the end of maturity. Ofcourse no one can ensure these and stagnant market and lower market performance in the initial years would be a deadly blow to the buyers.

• Sachin says:

This is very common. If you go to bank and ask for locker facility, you will be pitched for ULIP policy (and as new name given Ur Loss Investment policy).

• Abhijit Joshi says:

Hi Deepak,
Fantastic & very detailed.
Only a week ago, My Father-in-law called my wife (from HDFC bank branch of course) and told her that he was putting Rs 25K in the name pf my son as a ‘Fixed Deposit’.
When my wifey called me and shared ‘Good News’, i smelt rat and asked her to call up Pa-in-Law and ask him to make stop payment of cheque. It was the same story like the one narrated by you with your mother (in not so big town called Miraj in Maharashtra). Branch Manager trying to sell CREST. Branch Manager even called up my wife and tried convincing her, but were able to move away from mis-selling.
Thanks for educating scores of people through your site :).
Abhijit

• Bondgirl says:

Very nice of you to have published this . Very informative and cautionary

• Neerav says:

Even BOB is offering 9 and 9.15(in a special case) on FD.
http://www.bankofbaroda.co.in/interest.asp

• Sivakumar says:

Can we take this up with the banking ombudsman and the RBI. I have experienced the same mis-selling in my hometown and had to be very resolute to shy away from signing the form documents. IRDA/RBI must step in to save the innocent, un-suspecting customers. I have just received an account statement for another ULIP investment which my father had done. This was a Reliance ULIP and ‘boy o boy’ the 15,000 investment was turned into 8,200 with myriad number of fees and commissions. I felt like scanning the account statement and sharing it on the web as a sign of things to come for potential ULIP investors.

• Sachin says:

Heading is very apt — Don’t Buy HDFC Crest – It is Not a Fixed Deposit.
I would rather say “DO NOT BUY ANY ULIP”. It’s that simple.

• Nice and detailed article.Hope your post saves many of the gullible investors who, even as we discuss this are being sold ULIPs as “investment” products.And this is done even by the professional staff in banks and other wealth management outlets who know fully well that this is not what the client is looking for,but given the steep sales targets they are loaded with,they try and force sell insurance policies to every person who is looking at investments.

• abhinandan says:

Hi Deepak,
Im entirely new to this market equity stock and stuff………regarding investment Fd is the only thing i know……had been to bank today and almost purchased crestnplan…..reading ur analysis i could pick up that ulip is not the right option…..but it is still not clear why……could u pls send a mail to me comparing crest with regular fd.and mutual fund……that would be really helpfull to me……sorry if im troubling u but as i mentioned im unaware of any financial concepts……..awaitiing response…..

• Praneeth says:

investing in SL crest is the worst ever decision i ever made…junk policy

• Snehal Masne says:

Thanks a lot for this analysis. I was about to purchase this ULIP but after reading comments I have to have second thought. Thanks a lot.
Regards,
Snehal Masne
http://www.TechProceed.com

• Kiran says:

The ULIP v/s MF + Term policy the Mutual funds have always won in my last 8 Yrs of investment actual return. I had surrendered the ULIP and moved the same to Nifty BEES (ETF) which has given me 12% annualized return ( Have added some Technical analysis to buy them during down trend only).
I think smart buying of ETF and some good SIP in MF will always give a better returns . Do not go by how big the fund maintained but simple funds like Quantum Mutual funds gave a better returns then highly advertised funds!. The Ad + Party for agents eats our returns !

• Ubaid says:

Thanks a ton for reviewing this product. I got a HDFC credit card recently and these people call me 10 times a day now trying to sell CREST. I even agreed thinking of the guaranteed returns. I am glad i read this blog post before I agreed to buy it. I’m saved! Thanks a ton deepak bhai!!

• Raja says:

Thanks a lot for this review. I took(forced to take while taking a locker) this policy in 2010. and not able to pay continous. its 1lac per year. last year I got a letter stating that policy is discontinued and I can get 83K + 3.5% interest for the 1lac I paid. But I am continously getting calls from the bank that I should continue the policy. I just asked whats the current NAV. they told me its 11.6. I casually checked in net and came to know its just 10.43. even after 2.5 years its not even crossing 11. I am definite at the end of 7 years it will not go beyond 15. Now I am decided I will not continue the policy after reading this detailed review. after 5 years whatever I get will be more than the return of SL crest if I would have continued with 5 lacs.

• Sandeep UN says:

Dear Deepak
Thanks for ur detail write up.
I bought this policy two years back in 2011 , till now paid two installments of 50K each. I am 28 years working professional.
Last year I was searching through net, magzines and my friends @ the credibility of Crest plan, but i din get a single convincing explanation @ it.
Now wen i went thru ur analysis, i convinced @ their mis representation and misleading. Now my question is should i stop it (am due for the 3rd installment in April 2013) or should i continue as my 100k is at stake?
ur valuable advice will be of great help deepak.

• Amrata says:

Hi Deepak,
Last year to have tax benefits, i invested in HDFC CREST Policy. My premium is 50k per Year. I am not much aware of these banking things.. Could you advise, what return is expected post 5 Yrs , post 7 Yrs and post 10 yrs. I invested when NAV was around 9. And Bank people told me that locking period is 5 Yrs, and I can claim my money back after 5 yrs.

• Amrata: There’s no guarantee of how much you will get. What return is “expected” has a lot to do with what kind of fund option you invested in, how that particular fund has done, what the costs are (read through teh notes and the video). I feel bad when you say you aren’t aware of these banking things – in that case, you should never invest in such a product, which is both too complex, and too heavily missold to be valuable.
After five years there is no charge for surrender, but your returns will depend on how well the product has performed. Given the last two or three years underperformance, I wouldn’t put my hopes too high.

• Raghu T N S says:

If what is written above is true, then it is really unfortunate that a new generation bank is in volved in such a thing. If it is not true and if the scheme manager feels that they are actually helping the people, why not he come out with rejoinder with solid figures to substantiate and nullify the above comments. If a person is going to get a return of 5.5% after waiting for 10 years, it is peanut, considering the inflation. They should remember one thing. The future of any fund manager depends on the cumulative result of all the schemes and even if one scheme fails, it will drastically affect the name.

• pritam says:

hi…
my father is one of them who were trapped by HDFC agent. Is there any way to get rid of it…it is just three years old.Please suggest me any suitable way.plz ..

• Sadly, no easy answer. It will depend on what you’ve done and how long you’ve paid, what’s the current NAV etc.

• Nagasayana says:

Dont buy HDFC SL Crest..its a wrong selling from HDFC with 5years locking period. There is an additional charges everymonth. Its a complete loss to constomers.I am one of the victim..
GV.NAGASAYANA RAO
9490000399

• rajivahuja says:

This a absolutley dud investment. I am too one of the victim.

• Ajay says:

Deepak,
Thanks Deepak. I was about to invest in the Crest on the insistence of my banker. Luckily I went thru your article in time and changed my decision.
Thanks again.

• Diwakar says:

Dear Deepak Shenoy,
Thanks for such an informative video. I did not understand about the admin charges. You say it is 3.1% but its shows at .31%. Please can you clear my doubt?

• VIVEK GUPTA says:

Hello Deepak,
Thanks for detailed review. Last year i invested in SL Crest 30,000 Rs. Now after reading your detailed analysis i am confused. Please tell me what is better option: to keep invested or leave after 1 year? Waiting for your reply.
Regards,
Vivek

• satish says:

Thanks for the post. I was about to invest in crest now i will stop thinking about this plan.

• Priti says:

Thanks for the post…today i was supposed to invest my hard earned money into HDFC Crest. I called the person today to collect the documents but somehow i wanted to have a review of the product. So i searched in Google and here i see t he analysis of the product…Thanks to this blog..now i am stepping back and not investing in this product.

• Jyo says:

I have around 3 lac to invest and additional 10-15 per month in some plan.I was opting for HDFC crest but ypur review on same saved my money. Pl let me know where/what wud be the best way to invest the monthly / on monthly basis.
Thanks.
Jyo

• Shiva says:

At the risk of incurring Deepak’s wrath, let me attempt to answer your query. Assuming you want to invest from a long term point of view, a mutual fund would serve your purpose. Go for an SIP based approach to invest in a good equity or balanced fund. Since nowadays we get so many good reviews of the schemes from the net,do your research online and go for a direct investment with the fundhouses. You will save a lot on expenses by doing that and also avoid mis-selling from the agents/brokers. To reduce the risk somewhat, you can choose 2-3 funds and distribute your investment among the same.

• Neil Bhatnagar says:

Hello. I am 29 yr old marine engineer looking for a good short term investment plan which offers tax benefits and good returns. I was presented with the crest plan. Is it advisable? If not what other plan do u suggest for me. Please do keep in mind being at sea it is impossible for me to track the markets..

• noshir says:

Hello Deepak,
Thanks a TON for the wonderfully explained and detailed view about the product. You have saved one more victim to fall for the well known brand.
It would be my humble request if you have any other relevant facts that you have shared or you could share about such other products.
Regards,
Noshir

• Thanks 🙂
Will post if I do have any. Wish you the very best! Have written on a number of products, though not recently.

• Swaroopkumar says:

I am really not happy with HDFC Crest policy. They never give clear information about deduction. They just say about premium allocation charge nothing else. I made a wrong decision by investing in it. Don’t know what to do. Should I continue or stop? Its been 3 years now.
If you call HDFC service desk you will get hear to different statements. They are not very sure what they are saying. Everytime I call I get different statement and moreover you wont get e-mail reply also in timely manner. Its just BAD..BAD…BAD…

• Gokul says:

I am highly indebted to you for writing such a frank and detailed article in such simple words so that even non-finance persons like us can understand the true nature of ULIPs.
I was being repeatedly pressured by the people at the bank to buy the Crest policy and decided to do a google search before taking the plunge. What a downfall it would have been!
Such veiled promises and not a mention of the high costs and the wide scope of manipulation. Just think, people trying to convert your hard earned FDs to something almost fraudulent.
You have done a very noble deed. God bless you, Deepak.

• DR NAYAK says:

HI DEEPAKJI,
Thank u for giving good review…great help for investing people.

• Vikash says:

Hi, I invested 50000 in this policy last year by paying the amount at one shot. It’s current value is approx. 47000. I am disheartened when I see that my units are being eaten up because of the different charges on the product. So, the highest NAV * number of units or minimum guaranteed NAV * Units available sounds like I too became a victim of this mis-selling and I have myself to blame for this as I did not research well before purchasing this. However I would like to know about what does the minimum guarantee of 62500 on my product means or does it also have any conditions applied. Thanks.

• Biju says:

Great article -I am discontinuing from the plan right away,, I paid 2 premiums

• arvind says:

Dear Sir, I have read your article regarding HDFC Crest, in my opinion it is not bed policy comparison than any LIC policy because LIC policy gives only 4 to 5% max. Return with low death benefit, while this policy getting 5.31%with the guarantee return, with 10lakhs death benefit amount. Can you suggest me any other policy. Thanking you
A.K.MITTAL

• Sachin says:

Today only i invested for this plan HDFC Crest plan. I don’t know what to do now. I could not read this article on time 🙁 After reading this article i regret my decision now. Is there any way to cancel this plan and back my money ? As i started today only.

• You have a 15 day free look period, if you return the policy within this time, you can get your money back…

• Sachin says:

Thank you Deepak 🙂 I will check out tomorrow ! Thanks for your feedback

• Sachin says:

And one more thing is i submitted all my doc(Salary slips, address proof etc) Do they give it back if i close ? and one more thing is I want to escape from their HDFC crest plan(Definitely they will force me to continue this plan). Please suggest me what can i say to cancel that plan ? I want to get rid of their force. Please help in that.
Waiting for your positive response.
Regards
Sachin

• sachin says:

Yes i has given only xerox copues.thanks will check it tomorrow

• hiren says:

• I’m not sure what you’re getting at, but are you this person: http://in.linkedin.com/pub/hiren-anarkat/3a/176/564? If so you are an HDFC bank manager in Ahmedabad and I’ll let readers understand where you’re coming from.
I honestly want to spread the message that ULIPs are, for the most part, evil. HDFC Crest is one of those examples.
If you disagree with my calculations, please specify why. If you ask me to read some random article (without even giving the link!) that is not justification – I have made my point very clearly.
If you believe that 59 comments means something negative, you have no idea of how social media works! Apart from this, I’ve received thousands of thank-you messages that tell me how useful they found the article, and in some cases, that I have helped them avoid this product.
If you’re an HDFC bank manager, you might want to reconsider selling such products based on these calculations. But I’ve heard the sales pitch for this product is enormous.

• Shiva says:

If you think that “only 59 comments” are there to the post and no one cares, why are you so rattled. Just get the hell out of here since no one is noticing the post!!! BTW, I assume you would have heard of a search engine called ‘Google’ which btw is used by more than 59 people. Just type your policy name there and see where this particular,”no one cares” post comes up!!! You ask Deepak to apply his mind while losing your own by coming up with whatever crap you wrote. If you have facts to refute what Deepak wrote, you are welcome to share with the readers else ‘ u know what’.

• rajivahuja says:

I totally agree with Shiva’s observations on this policy. I think you are speaking from HDFC Bank’s point of view,that is to increase the policies sales and not as an investor. Mr Deepak is doing a great service by telling us the relevant facts aboutt this’ policy’

• milind says:

Dear Deepak
I am very late to view this article. HDFC bank forced me to buy this crest product as I wanted locker very badly and I bought this with 1 lakh per year plan, now the returns are 3 to 4 %. only. I expected at least 8-10% returns as the money was to be invested in blue chip fund. I have given 3 installments. If I stop paying now then I hope I can get some money after 5 years. I am retired now and feel that this is mis selling from the bank.
I am amused at the nerve of this person hiren to confuse and give some rubish bla bla to people who are actually suffering because of this investment.We are loosing money and he is not.
I am going to stop paying now onwards.
Regards
milind

• pratish says:

Thanks for the article. I know everything written is true here, thanks to my own experience with other similar funds from Metlife(metsmart) and birla Sunlife(dream). I can say now, that all ULIPs are designed only to pass money from investor to insurance company and the fund managers. After completing 10Yrs policy term, my investment of 1.44 Lacs became 1.55lacs. 10k return in 10years. less than 1% per year. When I called up the company to explain this return, they told I have not utilized my fund-switching options judiciously.
Today one guy called me for HDFC life Crest, thats when I got this article. Thanks a lot for saving me from this.

• raina says:

Dear Sir,
I have taken HDFC SL Crest life insurance policy in March 13 ..My premium is 50k per Year…Now want to surrender it.my lock in period is 5 year. but i want my money back. my question : Shall surrender it or not?

• Chintan says:

thanks deepak…. perfect presentation and explanation to how these people are bluffing the people and sweeping them into this not at all profitable investment option. I am young man looking for some investment options when these people started pitching this product to me when i went to the bank. moreover they also harassed calling me a couple of times.
being new to the financial world, had to check experts views on this plan on internet.
thanks for saving me from falling in to this pit and also time since your was the first review i read and was completely convinced.
also, i would appreciate if you may help me with good investment plan.

• Khalid says:

Dear Deepak,I mistaken too. I have paid two premiums and thinking to leave HDFC crest once I reach India. I am working in abroad and I always look to invest in beneficial way. But I always been deceived by these agents. The first loss was from Bajaz ULIP. Please suggest if any suggestion. thanks

• Yes, it’s truly a pain. I would suggest a pure term plan (only if you need one!) and then do NOT put money into insurance.

• Khalid says:

Thanks a lot Deepak. I am really happy to see your article on this site.Now, I am keeping eye on every comment in response to your article.Once again thanks a lot.

• pankaj says:

Dear Sir,
I have taken HDFC SL Crest life insurance policy in sept 11. I have paid 2 premiums of 50k per Year. Now 3rd premium is due(they are asking me to pay) but After reading ur article I want to to surrender/discontinue it.
I also spoke to customer care they told me that my lock in period is 5 year. please tell me if i discontinue my policy today, then HDFC will be giving total amount based on the today’s NAV price or NAV that will be on the day of surrendering after 5 years? How much will be discontinuing charges? pls pls advice what should i do?

• Technically they should take current NAV minus surrender charge (max of 6%) and put the rest in an acocunt that pays 3.5% per year until five years. Then they will pay you that balance after 5 years.

• xyz says:

thanks for the suggestion, one should put a criminal case against the major HDFC Life as they make fool of people and run the industry . with comman man left with nothing at the end of the day

• Sourab says:

Really The above informations are really helpfull for me and the others.
I bought one policy “HDFC SL YOUNGSTAR SUPER PREMIUM” one year back with 30,000 per year premium. I was totally a new joiner as wel as I don’t have so much of inforamtion like you, now i am in a loss of 9000/- as per the fund value.
HDFC agent didn’t inform me that nearly 1900/- will be deducted from your total value ever year(i.e 30000-1900=28100).
I am not getting interest other than i am getting loss of -30% every year. Really this is not acceptable.
So really this is not a great idea to continue. So I am discontinue this policy.
Kindly help me iin this regard.

• Balakrishna says:

Mr. Deepak, It is really a very good piece of information. One thing is not clear when they have committed Guaranteed return at NAV Rs.15. How they can deny at maturity. Now I am due for 4th installment of 50K is due on Dec 2013. Now HDFC life representative informed me that this HDFC SL crest is not doing fine and came with a proposal to switch over to other plan like Sampoorna Samriddhi assuring 6 % assured interest. Its very confusing. I am not sure whether it is better to continue with Crest or switch over to other scheme where they transfer this fund. Pls advice

• Do not switch! it’s just a scheme to take more commissions from you.
Pay up and hold on, and evaluate if you should get out. But do not switch, please.

• Mija says:

Hi Deepak,
This is,by far, one of the best analysis I’ve read on any policy. Its just unfortunate that I read it only now when am due for my fourth instalment of 50K this month.
The current value, after paying 150K in three years, is 142K (which is incidentally just the same amount early this year as well)
My really in a dilemma right now- should I discontinue or go on for two more installment and then stop. Would appreciate your advice. Thanks.

• I’d have to look at your policy in particular to see what getting out means. I mean now that you’re in, you’re in. The charges have largely been paid, and if you get out now, you might have a surrender charge of Rs. 6,000 and then the money’s locked for two more years. But the exact details will depend on your policy – I’m a little strapped for time, but mail me?

• Nair says:

Hi,
I went through the articles and all the reply. Excellent information. But really very late. I have invested 2 lakhs(single premium) on crust blue chip non guaranteed fund last December and next due on this December2013.my fund value has come down to 172000. Shall I go ahead with the second installment or surrender. Please advise. How these people can cheat us like this???

• You will need to meet with a financial advisor who can help. On the face of it surrender looks like a better option – because you said “single premium” and then you have said “second installment” which probably means they told you something very different. If you surrender, you might lose another 6K in surrender charges (depends on your policy!) and you’ll have to wait another four years for your money, but that may still be a better option than investing for four more years.

• Mac says:

HI Deepak,
I have paid two premiums (50K each) under HDFC SL Crest Highest Nav Guaranteed but seeing the lack of growth and uncertainty, I aint sure whether I should continue or surrender it now.
Can you please guide me if surrendering now would decrease my losses or should I continue with its closure till 5years.
Thanking in anticipation!
Cheers!
Mayank

• milind says:

Dear Deepak
I have made blunder of buying this crest( 1 lakh pa) even though I have good background of mutual funds. I bought as I wanted locker even I told them I am going to retire in 2-3 years. They told me only pay for 3 yrs and no need to pay further. Now I know after 3 yrs that it is not so simple. Value of my fund is 2.71 lakhs on my base 3 lakhs paid so far. Good loss of capital itself!!!!. I will get only savings rate interest on this 2.71 god knows when I will get my money. I am not paying now and waiting. Has any body gone through the procedure to make the policy dormant or whatever they call it?

• Ramesh says:

Thanks for the great analysis! I’ve invested 1lac and this is second year. Went with this for a locker..I’m an NRI. How do I widthdraw from this plan and what are my other options if I can flip the investment into a FD or something?? Please advise.

• Devesh says:

I have HDFC crest plan it three year I have given 1.5 Lacs but return is only 1.49 lacs . what should I do , should I withdraw money from this policy. Please suggest

• Ashwin says:

Hi deepak,Thanks for the information.
I have made one installment of 50k and the next is due in 15 days. The status is as follows
Highest NAV Guaranteed Fund
Unit price – 10.76420
Unit Balance – 4269.71434
Fund value – 45,960/-
Please help me to estimate the amount after five years if i discontinue this policy right now.
Is investing in LIC ok and please tell me whether the maturity amount of LIC is taxfree,I feel it to be best option for a common middle class person like me.
Correct me if i am wrong.
Thanks

• If you discontinue, your money gets stored in a special account, and gets 4% per year for the next four years, and you’ll get that much back after four years.
All insurance policies, at maturity are tax free at this time.

• Ashish Singh says:

Thnaks for the long n detailed article. I just wish I had read it before I invested 1 lakh in this damn Crest !!