HDFC Life Sanchay Plus – A GUARANTEED TRAP!!


Recently HDFC Life launched one more Non-Linked Savings Insurance Plan HDFC Life Sanchay Plus. The eye-catching part of this product is GUARANTEED.

Long back I wrote a post about one of the HDFC Life’s products “HDFC Life Sanchay – Reality check of 8% to 9% Guaranteed Addition“. After visiting this particular post, many people requested me on what will be my review about HDFC Life Sanchay Plus. Hence, thought to write a post on this.

This is the typical Endowment Plan with different features added to it. The biggest tagline that attracts many of us is GUARANTEED.

HDFC Life Sanchay Plus – Eligibility

Let me share the HDFC Life Sanchay Plus eligibility criteria.

HDFC Life Sanchay Plus - Eligibility

Benefit options in HDFC Life Sanchay Plus

This plan offers four types of Benefit Options. They are as below.

HDFC Life Sanchay Plus Benefit Options

I am taking the example of a person whose age is 30 years and the yearly premium of Rs.30,000 (which is minimum).

# HDFC Life Sanchay Plus – Guaranteed Maturity Benefit and Returns

In this plan, the policy term is 20 years and the premium paying term is 10 years (this I have taken for my calculation purpose). At maturity, you will receive the Guaranteed Sum Assured on Maturity+Guaranteed Addition. Here, the guaranteed addition available is higher for younger age group and lower for older. The GA ranges from Rs.60 at the minimum to the maximum of Rs.140. Hence, to make sure how much the maximum benefits one can receive under this plan, I will take the 30 years young proposer example and the term also the long term. This makes us to consider the Rs.140 GA for our calculation.

One more catch here is that there is no GA for a certain period. See the below chart for the same.

HDFC Life Sanchay Plus Guaranteed Addition Rates

After considering this maximum benefit, the results are as below.

HDFC Life Sanchay Plus Guaranteed Maturity Benefit Returns

You noticed that returns are around 5.7%. Hence, not a big game changer for your investment of around 20 years.

# HDFC Life Sanchay Plus – Guaranteed Income Benefit and Returns

Under this plan, the policy term is 11 years and the premium paying term is 10 years. From the 12th year onwards you will receive the GUARANTEED income for the next 10 years. As per the below illustration, one will receive the yearly benefit of Rs.61,800 for the 10 years.

HDFC Life Sanchay Plus Guaranteed Income Benefit

Looks attractive right? You are paying Rs.30,000 for 10 years and from next year onwards yearly Rs.61,800 for the next 10 years. Each of your yearly premium paid will be doubled. Wait….Let us calculate the IRR of the investment. In principle, it is nothing but your each year money will be doubled for every 10 years. Hence, in plain, you can assume that the return on investment will be just 6%.

Look at the below calculation. I have not changed any numbers. Whatever it is shown in the benefit illustration, I have included for IRR calculation. The returns are just around 6%.

HDFC Life Sanchay Plus Guaranteed Income Returns

# HDFC Life Sanchay Plus – Guaranteed Income Benefit and Returns

Under this plan, the policy term is 11 years and the premium paying term is 10 years. From the 12th year onwards you will receive the GUARANTEED income up to 36 years. As per the below illustration, one will receive the yearly benefit of Rs.32,455 for the 36 years.

HDFC Life Sanchay Plus Long Term Income Benefits

Again an eye-catching of 36 years GUARANTEED income. But let us look into the IRR of this example.

HDFC Life Sanchay Plus Long Term Income Returns

You notice that IRR is again at 6%. No big differentiator.

# HDFC Life Sanchay Plus – Life-Long Income Benefit and Returns

Here, one more surprise to us. This plan is only for those whose age is 50 years or above than that. Hence, it is nothing NEW but a LURING way of Life Long GUARANTEED income.

HDFC Life Sanchay Plus Life Long Income Benefit

In this plan, you will pay the premium for 10 years. From 12th year to 99 years of your age, you will receive the Guaranteed Benefit.

Life Long GUARANTEED is an eye-catching term. But the reality is again something different when we check the IRR.

HDFC Life Sanchay Plus Life Long Income Returns

Image may look small. However, the end result is not more than 6%.

HDFC Life Sanchay Plus – A Guaranteed TRAP!!

Yes, it is a TRAP in the name of GUARANTEED LONG TERM INCOME TRAP. You noticed that in all benefit options returns will not be more than 6%. Hence, should you buy it? My take

# This product is a typical endowment plan sold as if GUARANTEED income or GUARANTEED Addition. However, when you look at the returns, its just around 6%.

# This product even though claim to be LIFE LONG GUARANTEED income for you. But fail to give the solution to inflation. You will receive the same income throughout your life (In Life Long Option). How this is going to benefit ONLY GOD KNOWS.

# Wisely they increased the minimum age for Life Long Income Option to 50 years and make sure that their liability of paying you the GUARANTEED income should be to the maximum of 49 years (90 Yrs-50 Yrs). Hence, it is completely an eyewash to present you in a different AVATAR of the benefit option LONG TERM INCOME.

# Many of your Bank RMs may be behind you to buy this product. However, look at the pathetic returns of around 6%, which even can’t beat the inflation. Hence, it is better to say NO.

# One must not buy just because there is a tagline GUARANTEED. We have to think about how much is GUARANTEED and what will be the final returns.

# In the Guaranteed Maturity Benefit, their Guaranteed Addition looks attractive. However, the GA will not be added to you immediately you start the policy. They will add it after a certain period. Hence, this again lowers the returns to around 5.7% (in the above example).

# It is better to buy a term life insurance and by investing monthly in PPF kind of product, you have the possibility to earn more than this plan.

FINAL THOUGHT…STAY AWAY FROM SUCH PRODUCTS!!





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