HDFC Life Sanchay claims 8% to 9% Guaranteed Addition and also the guaranteed maturity benefit of 220% to 325% of the Sum Assured depending upon the policy term. One of my blog readers noticed this and shared with me for review. Let us see the what is the truth.

It is one of the traditional plans which is not related to stock market. In such a situation how can a product generate 8% to 9% GUARANTEED ADDITION?

Let us see the key plan features. They are listed as below.

- Guaranteed benefits payable on maturity provided all due premiums have been paid.
- Guaranteed benefits will vary by policy term in a range of 220% to 325% of the Sum Assured on Maturity.
- Premium payment for a limited period of 5, 8 and 10 years.
- Flexibility to choose policy terms ranging from 15 years to 25 years.

## Eligibility to buy HDFC Life Sanchay

Below are the eligibility conditions to buy this product.

## HDFC Life Sanchay Benefits

### # Guaranteed Additions (GA)

The plan offers guaranteed additions as a percentage of Sum Assured on Maturity accrued at a simple rate for each completed policy year, throughout the policy term.

These Guaranteed Additions are payable at Maturity or Death whichever is earlier, subject to all due premiums being paid. In case of surrender, the surrender value of Guaranteed Additions will be payable.

Policy Term-15 Yrs to 19 Yrs-GA 8%.

Policy Term-20 Yrs to 25 Yrs-GA-9%.

### # Maturity Benefit

If policyholder survives till the end of the policy period, then he will receive the below benefits.

Sum Assured on Maturity (which is equal to Basic Sum Assured)+ Accrued Guaranteed Additions. This according to HDFC Life varies from 220% for 15 Years policy to 325% for 25 years policies of Sum Assured.

### # Death Benefit

If the death of the policyholder occurs during the policy period, then his nominee will receive below benefits.

Sum Assured on death is higher of the below.

a) Sum Assured on Maturity

b) an absolute amount assured to be paid on death, which in this case is equal to the Sum Assured on Maturity

c) 105% of premiums paid

d) 10 times Annualised Premium

## HDFC Life Sanchay – Reality check of 8% to 9% Guaranteed Addition

As I said earlier, two things are highlighted by HDFC Life to sell this product. The first one is 8% to 9% Guaranteed Addition and second is Guaranteed maturity benefit of 220% to 325% of the Sum Assured depending upon the policy term.

Let us check the reality now. For this purpose, I took the same example of what they showed in their product brochure.

Ramesh, a 35-year-old individual, invests Rs. 1,14,877 annually for 5 years in the HDFC Life Sanchay. He chooses a policy term of 15 years. His Sum Assured on Maturity in the plan is Rs.5,00,000. He will receive a guaranteed maturity benefit of Rs.11,00,000 at the end of the policy term. Below table illustrates his benefits in the plan.

Now as per HDFC Life ‘s claim, Ramesh will definitely receive 8% GA per year without fail till maturity. Also, the maturity benefit is obviously 220% of Sum Assured.

So is it a GREAT product? Let us cross-check the reality by using the IRR formula and find out the actual returns from this plan.

You noticed that the actual returns are just 5.11% but not the 8% to 9%. Then why returns showing less?

# The premium in this plan is hefty but sum assured is less. Hence, the returns are less. Because your returns are linked to the sum assured you opted.

# The GA what HDFC Life will declare yearly will not earn any interest further. They just keep that money with them and will pay you back either at maturity or death.

# Even though 8% or 9% GA and 220% to 325% of Sum Assured at maturity will look fancy, but the reality is that this plan not gives you more than 6% returns.

**Conclusion:**–

The 8% and 9% GUARANTEED ADDITION may look you fancy to jump into investment. But when you check the return on investment, then you will see that returns are not more than 6%.

Also, one more fancy thing what HDFC Life did is that to claim 220% to 325% of Sum Assured as a maturity benefit. This at first glance looks so attractive. But the reality is something different.

Refer our other posts related to HDFC Life-

- HDFC Life Pension Guaranteed Plan – Should you invest?
- HDFC Life Click 2 Protect 3D Plus Review and Benefits
- ULIPs Vs Mutual Funds – How HDFC Life is misguiding !

your research is commendable. Kindly help me HDFC commit ed 6.55 IRR for Sanchay Plus . Please suggest

Dear Aparna,

COMMITTED in the sense anything in writing? If so, then let me know. If they just claiming it, then DON’T BUY THEIR CLAIM.

Thank you Sir ….you have calculated 5.1 as IRR for sanchay can I get what would be IRR for Sanchay Plus from HDFC Life . Is this better option than FD of 8.5 % from IndusInd bank

Dear Aparna,

It may be around same 5% but not more than 7%.

Sir . One of representative from hdfc life says if i invest 1 lakh each for 5 years. I will get back 17 lakh after 15 years under sanchay plan. 11 lakh maturity of policy + 6 lakh as interrst. He says it will be written in policy. Kindly tell is it true

Dear Upendra,

These are selling tactics and let him show one policy bond issued by HDFC where it is mentioned. Above that, first calculate the IRR.

Hello from Scotland. I have a young family and was looking at some safe investment options with assured returns and for a call from hdfc about this. I was quite sold until I came across your blog and the simple maths of it. Disappointed that I didn’t pick this up. Relieved that you did. Thank you.

I may be exploring your blog further now to find something that may meet my requirements..

Dear Arjun,

Great to know this 🙂

I am 51 now and wife 45. Want to get 6-7 lakh per year from my age 60 till life and after me my wife should get the same till her life and the deposit amount should be returned to nominee with some interest. I prefer to avoid IT after age of 60

Dear Sanjib,

Sadly your wish list can’t be feasible 🙂

Hello Basavaraj,

What is a decent investment now? I want to invest 1 lakh yearly…

Dear VB,

It depends on many criteria. Merely by few lines of your sharing, I can’t suggest a product BLINDLY.

Sir, i want to invest 50k yearly in HDFC Life Sanchay Plus for investment purpose. Sir please guide

Deepak,

Calculate the returns based on the past performance of the product. If you feel 4% to 6% is the BEST return for your long term investment, then GO AHEAD!!

Dear Basavaraj, could you please share your review for “HDFC Life Sanchay Plus” which was launched 15days back?

Dear Kavi,

I strictly say NEVER COMBINE BOTH INVESTMENT AND INSURANCE.

why sir?

Deepak,

Calculate the returns based on the past performance of the product. If you feel 4% to 6% is the BEST return for your long term investment, then GO AHEAD!!

Dear sir I purchase HDFC life sanchay policy in 2017 .as a yearly mode for 15 years , I pay 48058 Rs. Annual . So after 15 years how much I get total amount please rply .

Thank you

Dear Mohammad,

Please refer above post once again.

Dear sir I purchase HDFC life sanchay policy in 2017 .as a yearly mode for 15 years , I pay 48058 Rs. Annual . So after 15 years how much I get total amount please rply .

Thank you

Dear Mohammad,

Refer the above post properly.

Thanks a lot sir for clarifying on the returns at maturity. HDFC folks blalanty lie about the return stating that maturity amount is 220% of SA + Guaranteed Additions (GA) and hence their CAGR is in excess of 9%.

After reading your blog and then going back to the plan brochure, I realized that the fact is maturity amount is only 220% of SA (inclusive of GA).

Dear Mukesh,

Pleasure 🙂

thanks for the Blog. I was informed that HDFC life Sanchay gives a return of 8.75 % which is more than PPF.. after reading this, when i calculated the maturity amount vs investment in HDFC Life Sanchay – it comes out to be @ 5.7 % compounded interest rate.

1 L invested in HDFC life Sanchat for 5 years would fetch @ 10-10.5 L at maturity in 15 years.

Same amount in PPF would be 14 L+.

Please do not believe the sales executives and do the calculations yourself before investing.

Dear AB,

Pleasure 🙂

Dear sir,

Can you please suggest me which investment is best either Lic endowment policy or SIP mutual fund. I am 52 years old & am planning to invest RS 5000/ pm. So kindly advise me which investment is best sir.

Thank you

Ramamurthy

Ramamurthy-Hard to say anything BLINDLY without knowing much of your financial details.

Hi Basu sir, thanks a lot great detailed analysis and understandable to common people like us thanks a lot

Sat-Pleasure.

Thank you Basu very detailed analysis for the product

Rahul-Pleasure 🙂

Hi

Can you please tell the value of Guess in the IRR formula you have used.I left the guess blank and am getting 6.49 %

Gautham-Why to put the value of guess? Without that, you can calculate.

HOW U CALCULATE IRR. SHARE THE FORMULA

Dear Praveen,

You can calculate the same using excel.

Great article on Sanchay ! Thx Basu . You are doing such a great service to all of us

Rajini-Pleasure 🙂

Thanks for the great post as i was about to buy this policy..how can i contact you to get your proper advise/service in helping me to invest right.

Dear Sayeed,

You can mail me at [email protected]