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. Do remember that I have excluded the GST which you have to pay on the premium. If we consider this, then the returns will be less than 5.7%.

# 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

Do remember that I have excluded the GST which you have to pay on the premium. If we consider this, then the returns will be less than 6%.

# HDFC Life Sanchay Plus – Long Term 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. On 36th year, you will also receive the premium you paid along with 36th-year benefit.

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 6.5%. No big differentiator. Do remember that I have excluded the GST which you have to pay on the premium. If we consider this, then the returns will be less than 6%.

# 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.

Image may look small. However, the end result is not more than 6.9%. When I wrote at first, I have not considered the return of premium which life assured will receive at 99 years of age. Few readers pointed out this error. But want to say one thing, if one assumes the 6% simple inflation and his age is 50 years, the amount of Rs.3,30,900 he receives at his 99 years of age in today’s value isΒ  Rs.19,041. It means almost half of what he is able to pay now. Do remember that I have considered 6% inflation. However, in reality, inflation is beyond 6%.

One more BIGGEST point which the DEFENDERS of this plan forgot that we have to pay GST on the premium (which I have excluded for illustration purpose). If we consider the GST, then the returns will be again at around 6%.

HDFC Life Sanchay Plus - Life Long Income Returns

Do remember that I have excluded the GST which you have to pay on the premium. If we consider this, then the returns will be less 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%. Do remember that we have to pay GST on the premium also. Hence, if we consider this expense, then the returns from all the above options will be around 5%.Β 

# 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!!

206 Comments

  1. Hi Basu
    I fell in this trap, one hdfc RM give me hdfclife sanchey policy in 2015, i payed 50,000/- lateron i invested in sbi and stop paying premium, after 5years now june 2020i visited hdfclife office so that i can get the premium refunded , assuming they will deduct some panaliy whatsoever .Now i came to knw that i will not get any penny because i have to pay 3 premium minimum. But policy does not say anything like that they use a term GIR grunteed invetmnt return ,policy will get GiR after 3premiums, but it does not say whatever you payed will become zero if you dont achieve GIR, i feel cheated now, pls advice what to do, where to aproach, is there any hope to get my money back

    Reply
  2. Dear Basavaraj

    Thank you for a detailed analysis. I request your review on the following points:

    Assumptions:
    – I am actually considering Aditya Birla ABSLI Secure Plus Plan (same product as Sanchay Plus)
    – 2L + GST Premium for 12 years (comes to 2.09L for 1st year, and 2.045L for 2nd through 12th year)
    – Payout at 2x = 4L starts from 14th year to 25th year
    – IRR comes to about 5.28% (using excel IRR formula)
    – Comparing this product only to other debt products and not Equity MFs or ELSS etc. I have already maxed out PPF etc.

    Results:
    – Since the maturity amount is tax free, to compare with other taxable products I have multiplied the return by 1.45. (At 31.2% tax bracket including cess). Assuming a 5.28% IRR this comes to around 7.65%. (5.28 x 1.45)

    – Since this is an insurance product, the premium can be paid by credit card, which earns you an extra 1% or more – tax free. Again this is worth 1.45%.

    – There are some added minor benefits such as accidental insurance etc., which I am not putting a value on since I am looking at it is only a debt investment.

    Simply adding the two yields around 9.1% taxable, which is a decent return. If a long term FD of 9.1% were to be offered today from a safe bank such as SBI, HDFC etc. I am sure most people would jump on it.

    Thoughts? What am I missing.

    Thanks in advance – and great work!

    Reply
    • Another update to the above.

      HDFC Sanchay Plus when bought from the website of HDFC Life gives a higher return vs. logging into your HDFC Netbanking or through your RM. Details below:

      Premium (assumption of 2L – same as above):
      – 2L + GST for 12 years (2.09L for 1st year and 2.045L for 2nd to 12th year)
      – 12 years PPT (Premium Paying Term)

      Payout (via RM)
      – 2x = 4L from 14th to 25th year
      – IRR = 5.28% (using excel IRR formula)
      – Taxed return = 5.28*1.45 = 7.65%

      Payout (via HDFCLife)
      – 2.15x = Rs 430,540 to be precise from 14th to 25th year
      – IRR = 5.87% (using excel IRR formula)
      – Taxed return = 5.87*1.45 = 8.51%

      Reply
      • Dear K,
        So the returns from this plan is more than 7%? May I know how you calculated the IRR?

        Reply
    • Dear K,
      If your goal is long term, then why debt ONLY? Why not mix debt and equity and accumulate well?

      Reply
      • Hello Basavaraj,

        Thank you for your responses.

        I am looking at the Sanchay Plus only from the debt part of my portfolio. Equity part is separate. With the recent fear around debt funds, RBI withdrawing the 7.75 bonds and FDs/Liquid Funds yielding no more than 6% I dont see a lot of choices. Yes Bank and some banks like IDFC First offer 7 to 7.5% but I am worried about the banks viability and NPAs once this pandemic is over.

        For the IRR I got 5.87% (pre-tax) from IRR formula in excel (see below). Since I fall in 31.2% tax bracket, to compare with other taxable products I multiplied by 1.45. So if I make 8.51%, after tax deduction at the rate of 31.2%, the number would be 5.87%.

        Here is how I got IRR – since I cannot attach it here.

        Excel Row 1 = -209,000 (-ive 2.09L)
        Excel Row 2 to 12 = -204,500 (-ive 2.04L)
        Excel Row 13 = Blank
        Excel Row 14 to 25 = 430,540 (+ive 4.3L)

        Excel row 26 = IRR (1:25) = 5.87% [I also used XIRR formula with dates, same result]
        Excel row 27 = Tax rate = 31.2%
        Excel row 28 = 5.87% divided by (100%-31.2%) = 8.51%

        So comparing with taxable products (e.g.: FD) the yield is 8.51%, which is not bad. Now since this is HDFC Life, I feel they are a fairly safe company and comparable to FD in HDFC or SBI.

        Please let me know if I have missed something or a made an error. Since I am a novice, there is probably something obvious that I have missed :)!

        Thank you again for the wonderful work you are doing!

        Reply
  3. Sir, in the income-plans, the money is taxable or non-taxable? I heard that it is either 80C or 10D. I don’t have hope of 80C. it will go away. But what about 10D?

    All these plans come under 10D and no need to pay tax ?

    Reply
    • and I saw that 10D is applicable only if the following condition is met.

      “The insurance premium for any year during the policy tenure should not exceed 15% of the sum assured. Besides, it also should not have been purchased on or after 1st April 2013. Also, the insurance policy must be for the life of any individual who meets the following criteria:

      Disabled or severely disability individual, as specified under Section 80U of the Income Tax Act, 1961
      Suffering from a disease as specified under Section 80DDB of the Income Tax Act, 1961”

      Does this mean, that actually the income is taxable for normal people. ?

      Reply
      • Dear Raju,
        Life Insurance companies are smart. They made it eligible by following those norms.

        Reply
    • Dear Raju,
      It is not like EITHER 80C or 10D. Please read the conditions properly.

      Reply
  4. Sir, I have one question.

    Is that 5% or 6% fixed? I mean, is the return linked to RBI repo rate and keeps changing every year? or is it always 5-6% and nothing linked to market?

    Reply
  5. Nice information, how is sbi life smart money back gold as per them, if we pay 1L premium per year for next 12/15 years we will get close to 27 Lakhs at the end of the term i.e 12/15 years, if not what are the other best options we have in similar products to invest?

    Reply
  6. The income received every year on this sheme, is it taxable under my tax slab?

    Reply
  7. Can you suggest any investment opportunity for a 47 year old person who is conservative in investment, but can take a calculated risk

    Reply
    • Dear Anand,
      Let me know what is the meaning of CONVERVATIE and CALCULATED RISK as per YOU.

      Reply
  8. Dear Sir,

    Very interesting article. What is your view on HDFC Life Guarnateed income plan and Aditya Birla Sun Life Insurance guarnateed income plan?

    Reply
  9. Sir more than insurance i take it as an investment product. I agree return is hardly 6%. But that alone is misleading. U hv to take other factors into consideration, like how fd rates hv been declining over the years n how they will continue to fall in coming years. Each of us does invest in fds although return is meagre compared to mfs. Moreover u r getting benefit of 80c and maturity is tax free as well which isnt the case in fds.. saving 30000 pa isnt a big deal for most of us. Although returns r not much but still it encourages u to save atleast something. Do reply

    Reply
    • Dear Kunal,
      If you feel 6% is the BEST RETURN FOR LONG TERM, TAX BENEFIT and if you feel it ENCOURAGES you to save, then PLESE go ahead and buy it TODAY. Bank RMs are eagerly awaiting for you.

      Reply
  10. If we are comparing plans like LIC Jeevan Umang and HDFC Life Sanchay then which one is more better. One may ready to take 6% IRR as life long tax free income. As india is developing country where future interest rate is to be going down by time gap. Today PPF interest rate may be near 8% which may get reduced to 5% in span of 15 year and more in coming years. If we get IRR of 6% with long life income then is it good to invest my debt portion?

    Reply
    • Inflation gap is always there but i just compared my debt investment part only which i can kept only in terms of FD, PPF or liquid fund. So inflation rate is to be ignored as per my understanding. Clarify me if i am wrong.

      Reply
    • Dear Priyank,
      If 6% is best for you, then please go ahead and BUY.

      Reply
  11. Hello Sir,

    I’ve invested in the ULIP & paid 2 premiums (HDFC Click 2 Invest – 3000/month for 5 years and policy term as 15 years). Your suggestions regarding what should I do after 5 years (lock-in period ends here). Secondly, after reading your views on Guaranteed income plans, I’m confused whether to go ahead or not. Is it advisable from your end to rather invest in Postal Life Insurance’s Endowment Plan (SANTOSH) as I’m eligible to invest in it. It gives us bonus based returns and more importantly comes with a security that it is the product of Central Government. I’m planning to invest 3550/month for next 23 years and chosen 10 Lac as my Sum Assured in the SANTOSH Plan. If the bonus remains constant at Rs. 58000/10 Lac, then I might end up receiving Rs. 23,92000/- lumpsum when I turn 60 (after 23 years from now.

    Reply
    • Dear Abhijit,
      Simple answer-NEVER COMBINE INSURANCE WITH INVESTMENT.

      Reply
  12. Sir, If we take illustration of 10L per year in HDFC sanchay plus 25 years they pay 9.6L per year tax free that amounts to be 2.4cr in total after 25 years and 1cr initial investment is paid back so total of 3.4cr is earned in 25 years if stayed invested.
    So looking at these figures what is your thought? All these will be confirmed returns.

    Reply
    • Dear Sagar,
      By taking higher or lower premium rates, does your return on investment change?

      Reply
  13. Sir, if you are suggesting PPF instead of HDFC sanchay how this can replace PPF if amount limit is 1.5L per year in PPF.
    Say i have to Invest 5L per annum in this product then i cannot substitute to PPF.

    Reply
    • Dear Sagar,
      You mean debt part of your investment per year is Rs.5 lakh? Then how much will be your equity part per year?

      Reply
  14. Dear basa sir,
    Happy to hear from advices..
    I am investing 150K/Year in PPF, Beyond that could you help me to choose good product where i could invest 1lakh/ year and provides good returns after 20 Years as pension fund. It may be taxable also, that doesnt matters

    Reply
    • Dear Chezhian,
      It is hard to do the whole planning on such public platform without clear understanding of your financial life.

      Reply
  15. Dear Basavraj,
    Thanks for your views, but I still feel that the primary aim of buying Life Insurance endowment policies,( be it LIC, HDFC,) is life cover & death benefits, and not returns. Any endowment policy doesn’t provide more than 6% IRR, but it is usually purchased for the life cover & death benefits, While PPF, mutual funds, etc provide better IRR, still none of them provide life cover, hence the purpose of buying a product should be clear in every investor’s mind.
    Thanks,
    Shantanu.

    Reply
    • Dear Shantanu,
      If your main purpose of BUYING LIFE INSURANCE is “life cover & death benefits, and not returns”, then why not buy HDFC Life’s Term Plan rather than this product?

      Reply
  16. “I never lose, either I gain or I learn”.
    I have now bought shares in HDFC life and HDFC Bank & the returns are fantastic.
    How did I learn – my HDFC RM palmed me off an HDFC savings assurance plan for which I continued paying premium for 10 years. The lump-sum I rec’d in the 11th year amounted to an IRR of 5.1%. I honestly felt cheated with this product and found so many like me crib about the product. But as HDFC BANK & HDFC LIFE continued to make handsome gains I realized, I need to move from the customer (victim you might say) to the owner side and enjoy the benefits.
    Kindly keep morality out of investment as evidenced time & again by big corporations across the world.

    Reply
    • Dear Financial Consultant,
      Having HDFC Bank, HDFC AMC and HDFC Life stocks is far far better than investing in such dumb products.

      Reply
      • Please advise if one fell in the trap and has taken this policy, what is the way out, as returns are certainly discouraging and like you mentioned if one is looking for life insurance better to go for term policies.

        Reply
        • Dear Roopesh,
          Below are the options:-
          1) If the policy is in free-look in the period, then close it immediately.
          2) If you paid 1-2 years policy premium, then either you have to FORGET what you paid or surrender after 3 years of completion.
          3) If the policy is paid for more than three years, then better to surrender.

          Reply
  17. Hello Mr.Basavaraj. Thanks for the nice article and interesting comments too. I am unable to understand the IRR calculations clearly though.
    But could you advise how this compares to GCAP from Edelweiss Tokio? Certainly the returns are higher, but from IRR perspective, does it tick better against the inflation in your view? Can they be looked as a diversification?

    Also, are these guaranteed maturity (from any company) really guaranteed!?! Can IRDAI have a say when these guys refuse to pay out during maturity? Thanks.

    Reply
    • Dear Prabhu,
      Whether it is this HDFC Plan or Edelweiss, the returns will not be more than 7%. In such a situation, how you can fight the inflation? Stay away from such junk products.

      Reply
  18. Hello Sir..
    Want to know about Hdfc 3 D protect plus term insurance plan.. i m 40 yrs non tobaco user

    Reply
  19. Hi I have opted for sanchay plus.but the benefits suggested by them are not as per the description mentioned and they also promised , free medical policy, but they haven’t provided one. Sow wanted to know, following two points.

    How do I cancel the policy, as I am not interested in continuing the policy and block my money for years.
    Also how to I complaint about their false promises, as I forwarded the complaint to HDFC as well , but they are not willing to listen and have a pre defined answer.

    Reply
    • Dear Parth,
      You can cancel the policy within 15 days of free-look in period. NONE can stop you from exercising the rights of cancelling the policy.

      Reply
  20. Hi Sir,

    How about the TATA AIA Diamond plus plan. Is it really good to invest as they are guaranteeing for 20% for 8 year policy term?

    Reply
  21. Hello Sir,
    Which are competitors plans for HDFC Life Sanchay?
    Which one is best among all? (For the people happy to receive IRR 5.5% – 6.0%, guaranteed tax free returns)

    Reply
    • Dear Chanpreet,
      Why you are desperately searching for such DUMMY PRODUCTS?

      Reply
  22. Hello sir, superb artical. How do I connect with you?

    Reply
  23. Hi, How do I connect with you? I have a few questions regarding HDFC Life Click to Wealth Plan and Bharti AXA elite .
    7738145225

    Reply
  24. Hi Basavaraj,
    I have been contacted with the same plan. I need one clarification. In HDFC Life Sanchay Plus – Life-Long Income Benefit and Returns , suppose I invest 1lakh every year for 10 yrs, the person is saying that if you want to take the maturity amount after the completion of 11 years (10 yrs premium + 1 year cooling period ) you can do so and that will be equal to maturity at the end on 30 yrs minus 9%pa i.e 25 lakh(25 years ~1lakh per year) minus 9%pa i.e nearly equal to 22 lakh by end on 11 th year . Is this correct . They also are showing the proof in the policy by referring to page 7 where its written as following –

    “At the end of the Payout Period, the policy terminates by returning Total Premiums paid. On the maturity date, you shall have an option to receive the Guaranteed Sum Assured on Maturity, which under this option, shall be the present value of future payouts, discounted at a rate of 9% p.a. This interest rate is not guaranteed. However, any change in the interest rate will be subject to prior approval of the Authority and will be applicable only to the policies sold after the date of change. At any point of time during the Payout Period, you shall have an option to receive the future income as a lump sum, which shall be the present value of future payouts, discounted at a rate which is computed using the prevailing interest rates”

    Can you pl enlighten me on this . Is it again a trap or they are saying correct thing

    Awaiting for your response

    Reply
    • Dear Vishal,
      Let them add few more dozen of features, the returns will not go beyond 6% πŸ™‚

      Reply
  25. Should I invest in PPF 15+5 years? Please suggest.

    Reply
  26. Thanks Basavraj, Saved from trap.

    Reply
  27. Hello

    Thanks for your efforts to log this all down in nice fashion.

    Just got written reply from HDFC life on “Will nominee also get back all premiums paid at the end of payout period ?

    Ans:Yes,”On death of the Life Assured during the Payout Period, the nominee shall continue receiving Guaranteed Income as per Income Payout Frequency & benefit option chosen till the end of Payout Period.At the end of payout period, nominee get back total premiums paid (excluding the underwriting extra premiums, taxes and other statutory levies, rider premium, if any)

    There is provision “At any point of time during the Payout Period, you shall have an option to receive the future income as a lump sum, which shall be the present value of future payouts, discounted at a rate which is computed using the prevailing interest rates.” However I could not get any details on it how it will be calculated.

    Your analysis is quite right that returns are not that great except for higher tax bracket customers who may get benefited from total tax free payouts/returns. You said right that investment in PPF / MIS etc are better than such type of investments but both has limitation of max investment amount allowed.
    So customers who are looking for lump sum investment of considerable amount in safe instrument, don’t have much choices than to choose this plan (for tax free income) or Jeevan shanti.

    Whats your views ?

    Reply
    • Dear Janu,
      Why these LIFE INSURANCE plans only? Why not Tax-Free bonds kind of products?

      Reply
      • Dear Basavraj
        Yes..Tax free bonds would be great option but when those are available in primary market..I dont see any bond would be available in near future for fresh purchase. Also I dont know if it would make any sense to buy them in secondary market or above insurance product would give more IRR than secondary market bond purchase.. Pl guide.

        Reply
        • Dear Janu,
          Currently, there are no such bonds in the primary market. However, you can easily buy them in the secondary market. Who told you that LIFE INSURANCE PRODUCTS GIVE YOU MORE IRR? Cross-check your IRR of Life Insurance with the Bond Yield of these tax-free bonds as of TODAY.

          Reply
  28. Hi .. loved the analysis – have one query – for long term income scheme – under the 5 years option, are the repayments eligible for exemption under sec 10 10 d? Hope you would throw light on this

    Reply
    • Dear Narayanan,
      Any survival benefit you receive from life insurance is subject to the rules of Sec.10(10D).

      Reply
  29. Superb Article recently getting more calls from HDFC stating guaranteed returns even Preferred customer care person also forcing to take these plans…..thanks for giving headsup.

    Reply
  30. Hi, thanks for a detailed analytical review. As I understand the returns are very low in HDFC guaranteed return life insurance product. I want to invest in guaranteed life insurance plan. I have heard LIC plans give 7%+ return. However I have not understood their “bonus” concept and how certain is that. Can you please tell me the best guaranteed return life insurance plan giving best XIRR. Thanks

    Reply
    • Dear Gupta,
      Why you need a GUARANTEED product and also why you need LIFE INSURANCE?

      Reply
      • I have some unique requirement due to which I need to start a life insurance policy. I want to invest some money in fixed income products but those are taxable and tax free bonds are highly priced. Personally I feel tax free guaranteed returns of around 7% in a life insurance provides me a good combination of life insurance and investment. Thats why my query, can you please tell me a guaranteed return life insurance plan giving best XIRR.

        Reply
        • Good that you have choose LIC as your trusted insurance and saving partner.

          Reply
  31. I disagree,
    These all points intact is the need of customer.
    Also on Guaranteed Income, you, consciously, did not discussed about 12-1-12 option.
    Sorry to say, bit shrewd of you.

    Reply
  32. To all those saying pre tax returns are high and the person wjo calculated 33% tax rateβ€” why would someone like that need guaranteed income? The people looking for guaranteed income are people who are making under 10 lakh probably which means they are probably not going to have to pay tax anyway.

    Reply
    • Dear Test,
      But sadly those who are crying are too much caring for those who are in 33% tax bracket πŸ™‚

      Reply
  33. Dear Basu Sir, thank you for the excellent analysis. Appreciate the time and effort from you to enlighten investors. Request your opinion on invits as an option to get passive income instead of such insurance plans. I heard irb and indigrid offer 17 % and 13% pre tax yields

    Reply
    • Dear Daya,
      Thanks for your suggestion. Sadly I do not follow such products which you referred.

      Reply
  34. Superb Article..I was about to take this plan and also my friend was thinking to buy that ,but fortunately I tried to find pros and cons of this plan and luckily,I got this article.I already have term plan of 1 crore..So,why should I waste my money in buying this plan just for cover ? instead it is very good if I can diversify that amount into PPF/MF/NPS/Stocks/FD..It can overall will make me earn some handsome return in total after I retire if my investment purpose is for long term..BUt sir,one thing I do not understand is TAX FREE.If I have invested my other money in PPF/MF/NPS/Stocks/FD (after saving in 80c),if I withdraw that amount then will I have to pay tax for all of them ? Please explain in detail sir.Thanks in advance.

    Reply
    • Dear Raj,
      Each product comes with it’s own positive and negative. It is you who has to decide. Regarding taxation, it is hard for me to explain about all product in comment section.

      Reply
  35. Basavaraj,
    I don’t understand the reason why are you hell-bent to malign this product. With due respect to your knowledge I would like to make the following points:
    1. I am not an Insurance agent but have little bit of understanding about financial products
    2. Each & every financial product has its PROs & CONs
    3. IRR, Inflation, taxation etc. these fancy words are good for discussion but the typical Indian mentality is that Insurance is for investment, tax saving or may be for layering black money. Till few years back nobody, nobody use to talk about Term insurance. Now atleast few people are talking and buying it, but may be not in its pure term.
    4. Any one buying insurance asks the 1st question- what is the return?(Maybe I will also ask) So all Insurance companies design products as per the market demand to survive. And these products are approved by IRDA.
    5. There are always better alternatives available against any product but that depends on the buyer’s risk appetite, knowledge & awareness, time he can invest etc.E.g. Why only PPF? If someone invests in a Bluechip Share and remains invested for say 15-20 years, maybe he will get 20%+ return.
    As an advisor it is expected that one should tell the PROS & CONS and let the audience to judge on their own.

    Sorry, but your review is giving a sense of bais.

    Regards,
    Rajiv

    Reply
    • Dear Rajiv,
      I am not here to malign any product and also whether you are an adviser or not that also does not matter to me. I am just putting the facts, rest is up to the readers to decide. However, if one investing without understanding the IRR, Inflation and taxation, then everything will be bad shape. I hope you being knowledgeable understand the importance of IRR, Inflation, and Taxation when one try to invest. As an adviser, it is my duty to highlight the things which matter the most. This is what I did by highlighting the INFLATION, IRR and TAXATION, which are utmost important before investing. If you feel they are not relevant, then god bless you πŸ™‚ Please invest πŸ™‚

      Reply
      • Seems that you want to prove your point at any cost. You probably missed what I wished to highlight – “Each & every financial product has its PROs & CONs”. Just highlighting the CONs is partial sharing of fact.
        Anyway its your blog….Can write anything you wish

        Reply
        • Dear Rajiv,
          What if there are more CONs rather than PROs? In what sense it protect the investors?

          Reply
      • Great response

        Reply
  36. Namaskara Basu,
    I have tried calculation for the Guaranteed Income Option and I see that You haven’t taken into consideration of the Compounding ..

    Reply
    • Dear Shivaram,
      Please understand the meaning of IRR, Compounding, XIRR, Absolute Return and Simple Interest, then we discuss. At least let me know how one has calculate the returns? What is IRR?

      Reply
      • Thank You Basu , I think I need to do my Homework

        Reply
  37. Hi – One of my friend just retired; he is actively looking into this plan for a long term income option like pension for himself and his spouse (100% like him) after 5 years of deferment. He is in 30% Tax bracket and likely to be for many years. Please let me know what can be better low risk plan/invest option. Understand overall Tax Free return from this plan is around 6% which hardly beats inflation. You will appreciate PPF investment is limited (1.5 Lacs) and no VPF investment opportunity.

    Reply
    • Dear Halder,
      What is his age? How well he planned for emergencies? What about his family dependents? How long he need this income? By mere sharing few lines, I can’t guide you properly. It is dangerous to your friend than me.

      Reply
      • Thanks. He is 60 now; his emergencies and family dependents are well covered; he wants this secured income lifelong for himself and his spouse. Please let me know if you need further details

        Reply
        • Dear Halder,
          Yes, with this mere sharing, I can’t judge. Better you drop an email to [email protected]. Just one thing I can say, if there are no financial dependents, then why he is looking for a LIFE INSURANCE+INVESTMENT product rather than the INVESTMENT PRODUCT?

          Reply
  38. I have read your whole thing above. Even the paytm bank FB is giving 7.60% interest on GB. You are correct this policy yeald low returns as compared to PPF. Thank-you for your reply. I will figure out myself on how to cancel this policy or to continue with it.

    Reply
    • Dear Jatin,
      Thanks for understanding the concerns I aired against this policy.

      Reply
  39. Purchased HDFC Life Sanchay Plus on 21st June 2019. Premium Rs 5225 per month.I want to know do I get the full amount invested + interest or I should quit this plan and invest in PPF. I have just paid one premium. My only concern is will I get the amount I have Invested back including interest. I want my money to be save. I should not feel that after few years this plan is bad debt for the HDFC bank and I loose whole my money.

    Reply
    • Dear Jatin,
      Refer the above post properly. If you still feel it is a good policy, then go ahead. If you close the policy now, then you will not get anything.

      Reply
  40. I HAVE GOT THIS POLICY DETAIL THAT I HAVE PAY 104500/- PA FOR 12 YRS AND FROM 13TH YEAR IWILL GET 231750/- FOR THE NEXT 12 YRS WHICH IS TOTATALLING TO RS.2781000/- PLZ EXPLAIN THE IRR WHICH IS COMING AROUND 7%

    Reply
    • Dear Akash,
      Don’t believe either on me or the person who claimed 7% returns. Calculate the IRR on your own the way I did it in the above post.

      Reply
  41. I am 44 years old. Does the Critical Illness cover option with Guaranteed Income (13 years) plan help? I do not have any health insurance or term insurance apart from the Corporate Health Insurance.
    Secondly, I am having NPS (Tier II) and some MFs and PPF as investments. Is the plan help me for post retirement tenure ? I am more interested to get a fixed income on retirement and life insurance.

    Reply
    • Dear Abhijit,
      GUARANTEED income at what cost? Whether you considered the INFLATION to arrive at judging about this product? Buy the insurance separately for INSURANCE sake. I am repeating again, you have to consider the INFLATION before judging which one to buy.

      Reply
  42. Thanks for the clarity. My banker was behind me and was proposing this on top of their voice. Thanks that I didnt fall for it

    Reply
  43. Sanchay plus is offering the highest return amongst all guaranteed income products available in the market. The IRR is 6.4.to 6.9 which is tax free hence the pre tax returns are around 9-9.5%. It is a shame that the so called SEBI approved advisor is publishing highly biased and non factual malignant blogs.

    Reply
    • Dear Amit,
      Thanks for your kind words πŸ™‚ Coming back to returns, as per you pre-tax returns are 9% to 9.5%. Can share how you arrived? Your plan adding 3% to the 6% is so funny. HIGHEST GUARANTEED RETURN at what cost?

      Reply
      • Assuming a person is in 30% tax bracket with surcharge and eduction cess etc. pre tax return will be 6/(1-.33) roughly 9%. Assuming roughly 6% tax free return from this scheme and pension is available to spouse. Please let me know if this understanding is correct.

        Reply
        • Dear S,
          I am again stressing on INFLATION, but few are JUST concentrating on GUARANTEE and TAX FREE πŸ™‚ Only God can protect.

          Reply
    • Are you from HDFC??? He has rightly given his view and clearly illustrated that it’s foolish to buy this HDFC plan.

      Reply
      • Dear Naresh,
        Whether he is representative of HDFC or LIC, it does not matter to me πŸ™‚

        Reply
  44. Hi Basu,
    Thanks for explaining this plan.
    I am married and considering family planning now. Few days ago, I was considering this plan for getting some fix amount every year which I will utilise for my child school fees after 10 years. My goal is to have good amount from some plan every year to pay school fees annually and then for higher education.Please suggest some plan. This type of plan will work for this purpose or not?
    Thanks,
    Kumar Divyaprakash

    Reply
    • Dear Kumar,
      Your kid’s school inflation is more than 8% and this plan generates around 6%. Then how can you beat inflation? Either you have to satisfy with lower returns and sacrifice your kid’s goal or be ready to invest more IF YOU LOVE THIS PRODUCT. The choice is in your hand.

      Reply
      • Thanks Basu.
        Which type of investment will be suitable for child education planning?
        Thanks,
        Kumar Divyaprakash

        Reply
        • Dear Divyaprakash,
          If your goal is more than 10 years or so, then definitely you have to include equity and debt in the right proportion to achieve the goal. For equity, you can use the Equity Funds and for debt, you can use PPF or Debt Funds.

          Reply
  45. I really appreciate Basveraju to give clarity on this. Specially keeping in mind inflation..

    Reply
  46. People who are still confused about investing in Sanchay Plus…..should once sit with any authorized person of HDFC Life (Fc) to get the true picture before going in to judgement.

    Reply
    • Dear Amritendu,
      Why confusion? Why not refer HDFC Life online content to decide? Is it necessary for one to meet HDFC LIFE? I definitely know that they brainwash buyers with certain FANCY numbers.

      Reply
  47. Life insurance products should not be compared with other fin instruments,

    Reply
    • Dear Amritendu,
      EXACTLY…We have to consider Life Insurance product as a pure life insurance products only not as an investment tool πŸ™‚

      Reply
  48. Over all , in this product segment, People want to save their Money with Guranteed Words. And I think and Mostly observed all investor donot want to take Risk!!!

    In this Plan also capturing the Life protection. Which will be not cover by term plan to all….bcs for term plan always need the U/w profile. We Can’t offer Term plan to any one. So, for Saving, it is not bad option.

    Reply
      • I think Term plan does not come under investment. It is for life secure your dependents. But, here we can get some guaranteed money.

        Reply
        • Dear Abhijit,
          Who said Term Insurance is an INVESTMENT? I always say that we have to separate Insurance with Investment. Here, you get GUARANTEE money, but at what cost??

          Reply
  49. Hi Basavaraj,
    This is one great post. Thanks for sharing such useful info. I have a query, I want to invest for my kid(long term) and i ma getting a gurranted plan for Kotak where i have to pay 1lakh every yr for 10 yrs and after 5 yrs i will get approx 15.6 lakhs.
    Can you please suggest whether its a good plan or i can invest somewhere else where i will get good returns.

    Thanks

    Reply
    • Dear Sagar,
      Features look the same as the above plan. Refer to the above images, where I have calculated the IRR. The same way you can come up with IRR returns. But as per me, stay away from such dangerous products.

      Reply
  50. Besides you have wrongly or deliberately missed up factoring in Lump Sum returns that customer gets in the Long Term and Life Long Options. Best part is that he even acknowledges that Sanchay Plus is offering an IRR of 6.9% guaranteed ,plus tax benefits and Life Cover and besides saying that only PPF is slightly better than this *means that it is best in Insurance Space*.

    HDFC Group Products are always The best in Financial Industry, be it in banking, AMC, GI or LI Space.

    Net IRR of 6.23% to 6.80% and after adding Lump Sum returns this adds to 7.10% to 7.93% Tax Free means that this product offers 8.91% -9.23% Guaranteed Gross returns, *means this is a wonderful product*.
    No current insurance product offers such good and gauranteed return that too with life cover.

    It has deleibrately calculated it on 30K, when we know that higher the ticket size higher is the return in this plan.

    Sanchay plus, super product, competition ko pagal kardiyaa eis product nay*.. !!

    Reply
    • This is the first time I have ever seen a geek increasing the calculated returns of a product because its tax free.
      The way I have always seen is the return once known can reduce if there is tax to be paid. And it remains the same when there is no tax paid.
      Such is the literacy in this country.

      Reply
      • Dear Pradeep,
        For them TAX-FREE and GUARANTEE only matters. How much and what is the REAL RETURN? Neither they know nor they try to understand.

        Reply
    • Dear Manik,
      Please check the above post properly. I have included the premium return at the policy maturity. I am not sure what DELIBERATE action is pinching you. 6.9% tax-free guaranteed for the long term means the BEST for you, then let God protect you in your journey of wealth creation πŸ™‚ PPF slightly better than this plan?? Come on…. πŸ™‚
      Ha ha, as Pradeep pointed, you the only rarest of rare who is increasing the returns by adding your taxation part to return. God bless the people like you and your financial literacy level.
      You show me with an example that if the premium is Rs.30,000, then returns will be less and if the premium is Rs.3,00,000 or Rs.30,00,000, then the returns will be higher. Can you please share your validation with IRR calculations?? Just throwing in the air without valid reasons πŸ™‚

      Reply
  51. Sir with the economy growth rate and with past experiences we can assume that interest rates will definitely comedown secondly what the future govts will do regarding the ppf rates. It may change no guarantee. This product definitely gives guaranteed returns for next 25/50 years why ppl should risk their money in other instruments. Why you calling it a trap? Because the invest ment period is 10 years with life cover and tax free returns and it is a contract which cannot be changed also you mentioned about 6.9% retun..

    Reply
    • Dear Lakshmanan,
      Definitely, PPF interest is not FIXED. Definitely with the economy (If inflation stays at low), then interest rates will fall. However, do we have only such products in long run to create wealth? You are explaining as if we don’t have any other option on this earth than this HDFC product. Come on..open your eyes. Getting around 7% with the proper asset allocation for long term like 10+ years is not a big thing. This product is a TRAP because it failed to address the basic concept of INFLATION in the name of so-called GUARANTEED. I can understand your frustration πŸ™‚

      Reply
    • HDFC Life is making 25% profit every quarter but the people who pay premiums to them are making 6% return.
      The fact that they go with ‘Guaranteed returns’ to sell this plan indicates they will not pay a single penny more even if their profits increase to 30%. Surely if more people buy this plan, their profits will go to 30%.
      Oh here is a question to you. Would you work for a company that will pay you the same salary for 25 years?
      Is it okay if you dont get any hike at all? I am sure you will accept it if they pay 1 crore every month but not 25,000 Rs.

      Reply
      • Dear Pradeep,
        Well said and I hope these guys understand the concept of how HDFC Life making profit at the cost of these guys who are defending.

        Reply
        • well said

          Reply
  52. Well i would like to ask a question… Which traditional plan in market gives the return of IRR that is higher than this plan? There is no other traditional. Plans in market as such… After analyising all the plans in market for traditional i am. 100 percent sure about this. So kindly get the celredentials cleat… I have invested in other traditional. Plans in market, ehich has not given me returns as higher as this one. Ehen u say negative about something please speak positive about something too.

    Reply
    • Dear Niks,
      Do we need TRADITIONAL plans for our long term goals? If YES, then WHY? It is your mindset that you need it. There is nothing to say positive about this as the basic principle of investing of beating the inflation itself failed here. Also, do remember one thing, I will not get anything by saying EITHER POSITIVE or NEGATIVE.

      Reply
  53. It seems you are an agent of Aditya Birla Capital Life Insurance , I can understand the level of frustration you are passing through now a days, there is no better insurance plan then sanchay plus among all the insurance companies accros the country, let you buy one for yourself, plz confirm the appointment date and time so that I can arrange a financial advisor for you, who will explain this plan to you and will provide you this policy, last I request to go with higher premium I mean more than 1 Lakh so that the IRR will be around 8-9%, don’t go with 30 thousand, advice is for you don’t make people fool from your rubbish blogs,

    Reply
    • Dear so-called XXX πŸ™‚
      I feel pity for your knowledge. Please check my profile. I am a SEBI Registered Investment Adviser. I am not authorized to represent, sell or earn the commission DIRECT or INDIRECTLY from any Mutual Fund Companies or Life Insurance Companies. Hence, hope you first update your basics at right.
      One more great GYAAN by you πŸ™‚ Go for higher premium so that I will expect 8-9% IRR. Can you validate the same? Please update your knowledge on how IRR works at first. IRR does not depend on how much you invest. But based on your investment (Rs.30,000 or Rs.3,00,000), how long you wait and how much you receive.
      You are unable to understand the concept of SEBI RIA and how IRR works but blaming me upfront. I can understand your frustration of being a representative of HDFC Life. But I need valid calculations rather than just throwing your frustration in the air πŸ™‚

      Reply
      • You have received maximum critism for this, how many people’s you will justify, this product is gona be long long lasting in the insurance industry, I can’t understand why you choose HDFC Sanchay Plus for your popularity rather than all other products out of 57 other insurance companies, u are caught in your own trap, just finish this drama Now, you are exposed

        Reply
        • Dear So-Called XXX,
          You are exposing yourself that why you are commenting πŸ™‚ You are not commenting to discuss the valid points but to CRITICIZE. Cooldown!! You are unable to point the valid issues or where I was wrong with respect to this plan. Rather acting with criticism is the only motive rather than quality discussion. The more you comment the more you exposure and readers will definitely come to know who is right and who is wrong.

          Reply
          • Basu,
            Perhaps HDFC Life is paying bonuses to these XXXs for abusing revealing articles like yours.
            66 comments in 2 days is great advertisement for this πŸ™‚
            But then the bonuses should be paid only if they defend it with some substance. I hope they read these comments before paying out.

            Reply
            • Dear Pradeep,
              The problem with few of them is that they don’t have valid points and unable to discuss quality sharing. They just throw their points in the air without valid substance.

              Reply
        • Dear XXX,

          I will happily agree with you, if you can provide IRR calculations which Basavaraj is asking for. I, as a reader, am more inclined to believe that Basavaraj is right because none of the Sanchay plus supporters have provided any detailed calculations yet.
          I agree that Basavaraj is a bit aggressive here in criticizing the scheme, however, the ones who favors the scheme have not provided any solid points yet to counter him and, hence, making his point more strong.
          I am still awaiting a strong point, from anyone, in favor of this scheme in this thread.

          Reply
          • Dear Ankit,
            Thanks for your views and sorry if you felt I am bit aggressive πŸ™‚

            Reply
  54. Basu,
    Fools buy such products and we need them because smart people then can invest in HDFC Life stock for excellent returns.
    I suggest you don’t discourage those who are hellbent on buying it.

    Reply
    • Dear Pradeep,
      Sadly they are not true buyers. They are in one way or other way connected to HDFC Life. Hence, I can understand their frustration on me πŸ™‚ Readers or the actual buyers will look at what I have written and what few claiming without validation. It is natural for me whenever I write something against Traditional Plans or ULIPs of companies like LIC or HDFC.

      Reply
      • No Basu, you are overestimating our people in the streets. They will buy this no matter what you write or illustrate.
        That is why they deserve 6% returns.
        Do you know HDFC Life Insurance stock has given 25% returns in the 18 months since it listed?
        I find it so funny here that people are confronting you since you put 6.5% instead of 6.9% returns on this invaluable plan for the HDFC Life stock investors.
        I encourage all the HDFC agents to work even more harder selling this plan.

        Reply
  55. Hi Basavaraj, good post. But if you consider the tax benefits from returns (considering you are in higher tax bracket after retirement), irr will be mych better. Isnt it?

    Reply
    • Dear Magesh,
      Never invest just for the sake of tax saving. There are products like PPF, which gives you better returns, same tax treatment and more flexibility.

      Reply
      • * PPF has Maximum investment cap and its only for 15Yrs
        * Guaranteed And Tax free Return of 6.9 % IRR for the lower premium size is a brilliant product
        * Product Provides Guaranteed Return for 25 yrs to 50 yrs term ..

        Reply
        • Dear Lakshmanan,
          * Yes, maximum limit of Rs.1,50,000 a year. But not the maximum tenure. You can extend after 15 years for as many years as you wish.
          * For lower size TAX-FREE and GUARANTEED!! But what about inflation??
          * At what cost? Do you invest if some other day a product offers you 4%, 5% or 6% GUARANTEED by throwing the inflation concept in dust??

          Reply
  56. Hi Basu there are couple of mistakes you did while explaining this plan.
    1- There is no GST in (in this plan) Traditional plan. Only service tax which is 1st year 4.5% and from second year 2.25%
    2-you mentioned ppf/epf rate of this is decided every quarter. It will not be fixed for 25/30 or 40 year.
    3- From day 1 person will be having life cover of at least 10 times of his annual premium. it means if he take this plan so from day 1 he will be insured for at least 10 lakh even next day any thing happens to him. Which ppf or epf or fd will not give.
    4- No fd is there where you can get guaranteed regular income for 25/30/40 year.
    5- In this I agree with you this is not investment plan. But this is saving plan for some goals.
    6- You are financial planner so you will be knowing that in financial planning we always suggest asset allocation. So this will be one part of your investment.

    Reply
    • Dear Rahul,
      1) There is GST but not service tax now. It is currently @ 4.5% for first year and from second year onwards it is 2.25%.
      2) Yes, but still the returns of PPF or EPF are far far better than this plan.
      3) Do you discuss LIFE COVER? Check HDFC Life cover itself. How much cheap they are currently in India. Hence, it is not wise to bring life insurance part here.
      4) I never said so.
      5) Saving with low or negative real return is not worthy.
      6) Asset allocation a must. But not in such ILLIQUID PRODUCT.

      Reply
  57. Dear basu,

    Gst in this plan is 4.5% only. Please don’t compare apple with orange

    Reply
    • Dear Mydeen,
      If we consider 4.5% at first year and 2.25% for the subsequent year, then returns will be less than what I calculated. GST is tax and you have to pay it along with premium. Hence, where comes the question of comparing APPLE with ORANGE?

      Reply
  58. Sir
    Can u also expert comment on HDFC crest policy. Thanks

    Reply
  59. Hi i invested in hdfc life sanchay plus i calculated I’m getting IRR at 8 percent .
    My policy term 13 years
    Premium paying term 12 years
    Invested amount: 200000 p.a
    Now say me how much irr will i get as per your calculation.

    Reply
      • Nope
        Please let me know Mr basu as a investor wanted to know weather it’s a right product .
        I pay 2lacs pa
        For next 12 years totally 24lacs. From 14th year onwards I will get 4.7 lacs annually totally I’m getting 57lacs
        Which is guaranteed.
        So I think it’s a good plan for me ?

        Reply
        • Dear Balaji,
          Whether you invest Rs.30,000 or Rs.2,00,000 the return benefits are same. Hence, by increasing your investment, you are thinking I will get more. The reality of return will remain same

          Reply
  60. Kindly review DIAMOND SAVINGS PLAN from tata aia this is i believe inflation beating plan for all

    Reply
  61. Dear Basu sir according to me being a good investor we should invest in each plan accordingly our life goal….for insurance we should take term plan for pension we should start investing in sip and for 80c benefits defenetly invest in life insurance so that present life is stable and in future life also stable

    Reply
    • Dear Sagar,
      Filling Sec.80C benefit is easy nowadays if we use the products like EPF, VPF or PPF for long term goals and buying a pure term life insurance.

      Reply
  62. Dear sir ,
    Any traditional plan, matter of fact offered by any insurance company in India is offering less than 6 %.
    People who invest are mainly the risk averse people.they buy these policies basically for protection.many don’t calculate roi but ppl are not ready to invest in policy which are risky and provide high returns

    Reply
    • Dear Steve,
      I suggest POLICIES (Life Insurance) only for mitigating the risk but not as a tool of investment.

      Reply
  63. excellent basavaraju, today only HDFC BM approached me the same plan , i am convinced and ready to take the plan on monday . but now you opened my eyes. thanks a lot . its really a trap. hats of you.

    Reply
    • Dear Praveen,
      Great to know and thanks for your kind words πŸ™‚

      Reply
    • Dear Parveen u should consult Bm of branch..a

      Reply
  64. Dear sir in HDFC Life Sanchay Plus – Guaranteed Income Benefit and Returns, you have not add the total receiving of paid primium after 36 year to your return calculation.please do consider and said how much was the return.

    Reply
    • Dear Manoranjan,
      Thanks for the updates and I corrected it. Even after adding that features also, returns are not healthy.

      Reply
  65. Sir, good analysis and eye opener. There is another product called Kotak Smart Life – could you explain the advantages and disadvantages of this “investment” vehicle? Thank you in advance

    Reply
    • Dear Aravind,
      Let me check the Kotak product and come up with my review.

      Reply
      • Thank You

        Reply
  66. Sir , can u pls suggest any product in the market which gives guaranteed return of more than 6%. Eagerly waiting for your reply.

    Reply
    • Dear Vipul,
      Sir in search of GUARANTEED, you are forgetting the evil called INFLATION. If you are ready to beat the inflation, then go ahead where you are OK with inflation, then why to take this plan itself? Why not to keep the money in a savings account at 4%? When we invest somewhere, the first thing we have to consider is INFLATION. If you are unable to understand, then please go ahead with this GUARANTEED plan. I don’t have any issues if you don’t have any issues with your money πŸ™‚

      Reply
  67. Friends… Always Remember. We should never mix INSURANCE and INVESTMENT in a single product. The problem is such products (Endowment plans are one such example) will not do justice to your investment and insurance needs because:
    – The returns they give will never beat the INFLATION which is the need of the hour. They will almost invariably will be below 7% for sure
    – The INSURANCE coverage they give also will be inadequate as it will be very less than you actually need.

    So its always a good advice to not mix them into a single product.
    – Have a dedicated TERM INSURANCE plan to cover your life insurance needs. They will give significant coverage for you with minimum premium requirements
    – Have a dedicated INVESTMENT/RETURNS product like PF/PPF/NPS/Mutual-funds etc that beat the inflation in long term.

    Note: Endowment policies r the ones that were preferred to be mis-selled to all the customers by the insurance agents as they have high commissions in them but not because they want to do good to you..

    Hope this helps.

    Cheerz….
    SArath.

    Reply
    • Dear Sarath,
      Sadly our Indian MENTALITY always searches for GUARANTEED rather than learning on how to beat the evil called inflation and how to manage and maximize the returns.

      Reply
  68. Fraud company HDFC Life policy death claim Nahin pass kiya jata HDFC life ke investigation officer death claim pass karne ke10% commission mangte hai

    Reply
    • Dear Ashoka,
      I am neither defending the HDFC Life nor against it. However, if you find any such employee asking bribe, then, to be frank, there is no point in pointing HDFC Life. Instead, better you approach the higher authority by complaining against the employee. With mere a single person experience, we can’t BLINDLY blame the HDFC Life. Many have a good experience with HDFC Life too.

      Reply
  69. Mr Basu Please discuss here any Endowment Insurance schemes which is giving more than HDFC sanchay plus from Any company
    We will then know actual insurance schemes how much return they are giving to Us
    Or please suggest if we want to take the insurance schemes only then where to go and which is the plan

    Reply
    • Dear Sailen,
      Do we really need ENDOWMENT PLANS for your long term investment goals?? A simple product like PPF will beat all these Endowment Plans with the same tax benefits.

      Reply
      • Dear Mr. Basu,
        In case you are 60 you cannot invest in PPF..So what is the other option
        Regards
        Madhu

        Reply
        • Dear Madhu,
          Many and many ways to generate income (like using a bucket strategy for retirement income generation). As I pointed, again and again, guiding need full information.

          Reply
          • Can you please explain bucket startegy in more detail sir ? I want to know about it.My father is retired so I want his money to be planned accordingly

            Reply
            • Dear Raj,
              1st Bucket-10-15 years requirement-No Equity
              2nd Bucket next 10 years requirement-Partly Equity
              3rd Bucket next 10 years requirement-Bit higher equity.

              Reply
  70. As I can see ,Your life long illustration didnt added Lumpsum payment of all premium at the end of payout period.
    Pls check.If considered then Yield comes around 6.9%

    Reply
    • Dear Kapil,
      Oh YES!! Sorry for the mistake. I have updated. But it hardly adds any value to make it as a valid reason to go for this plan. Because 50 years of aged buying now with yearly premium of Rs.30,000 will have to wait for 49 years to receive this. If we consider a marginal 6% inflation, then today’s value of what he receives at his 99 years of age (Rs.3,30,900) will be Rs.19,041. While designing this plan, they completely forgot the concept of INFLATION.

      Reply
  71. Sir although you are experienced one . But here I would like to say please do proper research on product before giving review . This plan is giving IRR of 6.9% that too tax free income, even ppf is not giving this much returns.
    Beauty of this plan is tax free income and giving guarantee of even 6.9 % for the longer term say 40 years. While no other products giving guarantee for more than 5 years.

    Reply
    • Dear Prashant,
      Yes, I corrected and definitely, returns are at 6.9%. But how about one utilize the premium payment period and maximize his accumulation and go for decent debt products where one can get returns more than 6.9%? Never highlight the taglines of TAX-FREE and GUARANTEE by NEGLECTING WISELY THE DISASTEROUS ENEMY CALLED INFLATION.

      Reply
  72. For Its Long term Income plan, they are paying all the premium at the end of payout term.
    Like if you pay 1 lac per annum.HDFC Will pay 1.08 lac per annum for 25 years after 12th year. And at the end of of payout term 11.38 lac.
    You paid 10 lax, u got around 37 lac.
    Yield coming around 6.9%, it’s not 6%, as ur illustration didnt include lumpsum amount at end of payout term.
    Guaranteed and tax free 6.9%return In my opinion ,its good enough.
    Pls advise

    Reply
  73. Hi Basu sir, thanks for the article. Such articles helps us to understand usually how policies work as a whole. Thanks for educating people like us

    Reply
  74. Though lots of home work done but the analysis given above is not lacking practical exposure. As far as knowledge is concern, its good but in a country where people are generally victim of political polarization, this kind of analysis and implications to influnce investors may not give any impact. Because people generally influnced by brand value, not by productsbfeatures.
    In any civilized community people should always be encouraged to keep investment, where it is safe in even/odd time of life. Only mere calculation game is of least use. In a span of 20vyears and above,if any damn product is offering even 6% IRR, its exceptioal. Except few stong financial institution, even our Govt cant give us that percentage gurantee. Because Govt is not the prime economic power to ensure us best return. Giving us guranteed return is not the job of Govt.
    So any organization incl HDFC Life if giving us such an opportunity to invest in so scientific and wise way in such volatile maket, its commendable. Appreciate every such products of any organization, which is primarily targeted to people like Indian citizen to clearly benifit in short as well as in long run.

    Reply
    • Dear Amribhatta,
      Sadly money matters can’t be taken just because of brand. Above, that whether it is HDFC Life or any other insurer (including LIC), they are not here to do social service. Hence, don’t be emotional so much with BRAND or FAME. Be realistic. The biggest drawback of this plan is that it fails to give use the answer towards an EVIL called INFLATION.

      Reply
      • Agreed to your valued advice only when one could get any damn product available where he/she can beat INFLATION over a period of time without taking market risk . Its imaginary and baseless till date.

        Sanchay Plus is best available product in market in its category. And others are desperately trying to copy it as market demand is very high of this kind of product.

        Better should all not to loose self confidence and not to get influenced by expert comments only. Because mostly experts are influnced by some brands/Industry. People should better focus on having basic knowledge of economy/ market.

        Reply
        • Dear Amritendu,
          In what SENSE IT IS BEST???? This product fail to understand the evil called INFLATION, then what is the use of investing in such a product for long term goals?

          Reply
          • Are u sure the GST is 18 % for traditional plans

            Reply
          • Because it is Best available product in its class for the said segment of client who are buying it. Inflation evil not only challenging this product, but affecting net return of all products. And people areloosing faith in fin system when ever facing adverse,affecting their long term benifits and goal. In this situation this plan giving those distressed people some reason to invest. In chasing higher return in our country people are taking scientific or inscientific ways. In Sanchay plus ppl need not take any undue risk on their hard earned money.

            For other people,gate is open to invest in HDFC Life stock to get the chance to be rewarded with 25% pa profit for sharing risk, as said by some Gentlemen.
            No point to criticize some moderate yield ,just to promote some
            lesser one.
            Finally Investing in Life Insurance products should be compared with any other financial instruments. Because its always 10 steps ahead of other in term of over all benifit.

            Reply
            • Dear Amritendu,
              It is the best available products for representatives of HDFC Life. Sadly people need the validated data to prove your BEST or WORST. I too never suggest CHASING RETURNS. But taking a calculated risk to get the real return is a must. You are pointing someone who is chasing HDFC Life stock but you are comfortable with their product πŸ™‚ If you don’t have confidence in HDFC Life, then how can you at one side promote their product and no confidence in their stock itself only?
              No product can replace LIFE INSURANCE. But sadly for many middlemen and representative of companies (in direct or indirect way), LIFE INSURANCE is an INVESTMENT not a INSURANCE product.

              Reply

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