HDFC has launched a new scheme, SL Crest which is an invest cum insurance plan but for the first time a plan guarantees Highest NAV with a minimum NAV assured. Here are few basic facts :
- Offer price is Rs 10 on date of launch.
- Highest NAV Guarantee option is Rs 15 or the Highest NAV during the first seven years of the plan.
- The plan matures in 10 years.
- Minimum Premium paying term is 5 years which is paid annually.
- Minimum premium amount is 50 thousand INR.
- You can withdraw your investment minimum after five years but you get it at current NAV and not the highest. That means if current rate is 13 which is less than 15, you get 13 and not 15. However this also means that if the rate is 18 you get 18 not 15.
- To get the Maximum NAV benefit, you should withdraw only at the end of seventh year,.
- Sum Assured is 10 times the annual premium. This means if your premium is 10K your insurance is 1 lakh.
Below I have taken some sample conditions to understand how CREST will perform and what percentage of profit you will get. Also I am comparing it with NSC which gives me 8% interest yearly.
Assumptions to make calculation simpler :
- I have taken sample NAV values to calculate for first five years.
- I am considering a period of Five Years for profit calculation.
- 10 thousand as minimum premium.
Profit Percentage after Five Years ( but you withdraw money at the end of Seven Years )
HDFC SL Crest Calculations.
Assuming that maximum NAV went to Rs 17 in Five years which is more than guaranteed NAV of 15, one can make a profit of 25%.
NSC Calculations :
Investing same amount of premium to buy NSC every year gives you a guaranteed income of 17200 on same investment amount. Here you have a profit of 34.4%.
Now for HDFC SL Crest to beat the NSC income in this scenario, the NAV should reach 67200/3691 = 18.2
What if you withdraw at the end of Seven Years :
According to the the scheme, if you keep the investments till 7 complete years, you will get the benefit of Maximum NAV which means if NAV at the end of 7th year is 12 but during this period it was 23 you get the money according to 23 NAV.
What if you withdraw after Five Years :
In this case you do not get the benefit of maximum NAV so if the NAV at the end of Fifth year is 15 you get 3691 * 15 = 55365 where income is 5365 i.e. 10% but way less than NSC.
However if the NAV is more then 15 say for example 18 or 19 you make almost the same what NSC gives you in profit.
This is a lucky scenario where if you see that you get good profit you can make a quit without keeping the investment for another two years. Lets say if you get NAV of 25 you make 3691*25 = 92275 where you get 42K which is like 90% profit. Good Deal.
What if you withdraw before Five years :
In case for some reason you have to withdraw before five years, you will get interest of 3.5% PA which is same as Bank Interest for savings account and there will be some charges applicable for discontinuing the policy.
HDFC SL Crest looks like a good plan if opted for seven straight years or if you have NAV greater than 18.2 so that you get much more benefit than what you would have got from NSC itself. Another great feature of this plan is 30 days trial period before which you can opt out if you don’t find it useful.