Listen to this article
Each one of us has unique dreams and goals that we would like to pursue. It could be short-term, long-term, or immediate financial goals. A proper financial plan can give wings to your dreams.
HSBC Life Insurance Guaranteed Assured INcome provides you, with life insurance coverage to achieve financial stability and security for your family. Will this plan suit your long- or short-term goal?
This detailed review, helps you to understand the Advantages(pros) and Disadvantages(cons) of the Canara HSBC Guaranteed Assured INcome (GAIN)plan and also helps you in determining whether buying this Canara HSBC Guaranteed Assured INcome (GAIN) plan is a Good or Bad investment decision for your future.
Let’s get started!
Table of Contents
1.)What is the Canara HSBC Guaranteed Assured INcome (GAIN) Plan?
2.)What are the Features of Canara HSBC Guaranteed Assured INcome (GAIN)?
3.)Who is eligible for Canara HSBC Guaranteed Assured INcome (GAIN)?
4.)Let’s Analyse the different Plan options in Canara HSBC Guaranteed Assured INcome (GAIN)
5.)What are the Key benefits under Canara HSBC Guaranteed Assured INcome (GAIN)?
6.)What is the Grace period, Lapse, Paid-up and Revival of Canara HSBC Guaranteed Assured INcome (GAIN)?
7.)A Free-Look period of Canara HSBC Guaranteed Assured INcome (GAIN)
8.)Surrendering Canara HSBC Guaranteed Assured INcome (GAIN)
9.)Advantages of Canara HSBC Guaranteed Assured INcome (GAIN) – Analysis
10.)Disadvantages of Canara HSBC Guaranteed Assured INcome (GAIN) – Analysis
11.)Research Methodology of Canara HSBC Guaranteed Assured INcome (GAIN)
- Benefit Illustration – IRR(Internal Rate of Return i.e. Interest rate) Analysis of Canara HSBC Guaranteed Assured INcome (GAIN)
12.)Canara HSBC Guaranteed Assured INcome Plan vs. Other Investment Products
13.)Canara HSBC Guaranteed Assured INcome Plan Vs. Pure Term Insurance + ELSS
- Canara HSBC Guaranteed Assured INcome Plan vs. Canara HSBC iSelect Guaranteed Future
- Canara HSBC Guaranteed Assured INcome Plan vs. LIC Dhan Vriddhi Plan
- Canara HSBC Guaranteed Assured Income Plan vs. Other Investment Products – Review Conclusion
14.)Final Verdict on Canara HSBC Guaranteed Assured INcome Plan – Good or Bad?
1. What is the Canara HSBC Guaranteed Assured INcome (GAIN) Plan?
This policy is aimed at savings and protection, which is an individual life insurance that is non-linked and non-participating. It provides life insurance coverage as well as a different way for you to save money so you may meet your financial objectives. The plan offers flexible premium reimbursement after the policy term in addition to guaranteed income.
Please Click here to refer to the official brochure of Canara HSBC Guaranteed Assured INcome (GAIN) for more policy details.
2. What are the Features of Canara HSBC Guaranteed Assured INcome (GAIN)?
- It offers life cover throughout the Policy Term even during the income pay-out period.
- Guaranteed regular stream of income.
- Option of Increasing Yearly Income
- The plan returns the Total Premiums Paid at the end of the Policy Term.
- Income pay-out can be annual/ semi-annual/ quarterly/ monthly.
3. Who is eligible for Canara HSBC Guaranteed Assured INcome (GAIN)?
4. Let’s Analyse the different Plan options in Canara HSBC Guaranteed Assured INcome (GAIN)
Short-term income
Provides income for shorter terms of 5 and 7 years
Long-term income
Provides income for long term of 10/15/20/25 or 30 years
Early Income
Provides immediate income starting from the 2nd Policy year onwards.
5. What are the Key benefits under Canara HSBC Guaranteed Assured INcome (GAIN)?
Death Benefit
The sum Assured on Death is payable to the nominee. Sum Assured on Death is the amount that is higher than:
- Sum Assured
- 105% of Total Premiums Paid, as of the date of death
- Where Sum Assured is defined as 11 times or 7 times the Annualized Premium
Maturity Benefit
Sum Assured on Maturity i.e., “Final Benefit” equal to 100% of Total Premiums is Payable as Maturity Benefit.
Survival Benefit
Short-term income and long-term income
“Loyalty Income Instalment” and “Assured Income Instalment” are paid after each month, quarter, half year, or year, depending on the selected income frequency. The amount is to be paid once the Premium Payment Term + Deferment Period is over and until the Policy Term is over.
Early Income
During PPT- ‘Immediate Income Instalment’ is payable at the end of every month/quarter/half year/year as per the chosen Income Frequency. The same shall be paid from 2nd year onwards till the end of the Premium Payment Term.
After PPT- ‘Assured Income Instalment’ plus ‘Loyalty Income Instalment’ which is payable at the end of every month/quarter/half year/year as per the chosen Income Frequency. The same shall be paid post-completion of the Premium Payment Term till the end of the Policy Term.
6. What is the Grace period, Lapse, Paid-up and Revival of Canara HSBC Guaranteed Assured INcome (GAIN)?
Grace period
You are provided with a Grace Period of 30 days for annual, yearly, and quarterly modes and 15 days for monthly mode from the Canara HSBC Guaranteed Assured INcome (GAIN) Premium due date to pay a due premium.
Lapse
Canara HSBC Guaranteed Assured INcome (GAIN) Policy shall acquire Lapse status at the expiry of the Grace Period if the Policyholder fails to pay due Premiums within the Grace Period in the first 2 consecutive policy years. Once the Policy is in Lapse status, no benefit shall be payable.
Paid-up
The Canara HSBC Guaranteed Assured INcome (GAIN) policy will acquire a Paid-up status at the expiry of the Grace Period from the due date of the first unpaid premium, provided the first 2 consecutive policy years’ full premiums have been paid. There will be a corresponding reduction in all benefits.
Revival
You can Revive your Canara HSBC Guaranteed Assured INcome (GAIN) policy within the Revival Period i.e., 5 years from the due date of the first unpaid premium.
7. A Free-Look period of Canara HSBC Guaranteed Assured INcome (GAIN)
In case the Canara HSBC Guaranteed Assured INcome (GAIN) Policy Terms and conditions are not agreeable to You then You can opt for a cancellation of the Policy within 15 days (30 days in case the Policy is sourced through distance marketing mode) from the date of receipt of this Policy Document.
8. Surrendering Canara HSBC Guaranteed Assured INcome (GAIN)
The Canara HSBC Guaranteed Assured INcome (GAIN) policy acquires a GSV or SSV only after payment of at least the first 2 consecutive policy years’ premiums. On surrender of the policy, the Surrender Value payable will be higher than Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).
9. Advantages of Canara HSBC Guaranteed Assured INcome (GAIN) – Analysis
- To meet any contingent need, you may avail of the loan facility in this plan.
- Loyalty income increases your Survival Benefit.
- Booster for higher annualised premiums.
- You can customize the Canara HSBC Guaranteed Assured INcome (GAIN) policy to suit your financial goals and requirements.
- A step-up income option is available.
10. Disadvantages of Canara HSBC Guaranteed Assured INcome (GAIN) – Analysis
- Plan Option once chosen cannot be altered within the Policy Term.
- The Survival Benefit will not help to meet any big-ticket expenses.
- Return of premium at maturity doesn’t consider the time value of money.
11. Research Methodology of Canara HSBC Guaranteed Assured INcome (GAIN)
Under the Canara HSBC Guaranteed Assured INcome (GAIN) plan you receive both Survival Benefits and Maturity Benefits. Though the benefits are guaranteed, you need to check the returns before investing in the plan. Calculation of the Internal Rate of Return (IRR) helps to proceed further in our analysis. A case study given in the sale brochure is analysed below.
Benefit Illustration – IRR(Internal Rate of Return i.e. Interest rate) Analysis of Canara HSBC Guaranteed Assured INcome (GAIN)
A female aged 30 years, opts for (Internal Rate of Return i.e. Interest rate) HSBC Life Insurance Guaranteed Assured INcome plan and pays a premium of Rs. 1,00,000 annually. She opts for a Premium Payment Term of 5 years, a Deferment Period of 5 years, and an Income Pay-out Period equal to PPT which is 5 years. She chooses income payout frequency as Annual. The Policy Term is 15 years.
| Female | 30 years |
| Sum Assured | 11,00,000 |
| Annualised premium | 1,00,000 |
| Premium paying term | 5 years |
| Deferment period | 5 years |
| Income pay-out period | 5 years |
| Policy Term | 15 years |
The Survival Benefit starts from the end of the 11th year till the end of the 15th year. She receives ₹ 78,315 annually and the final maturity amount is ₹ 5 Lakhs.
| Age | Year | Annualised premium / Maturity Benefit | Death Benefit |
| 30 | 1 | -1,00,000 | 11,00,000 |
| 31 | 2 | -1,00,000 | 11,00,000 |
| 32 | 3 | -1,00,000 | 11,00,000 |
| 33 | 4 | -1,00,000 | 11,00,000 |
| 34 | 5 | -1,00,000 | 11,00,000 |
| 35 | 6 | 0 | 11,00,000 |
| 36 | 7 | 0 | 11,00,000 |
| 37 | 8 | 0 | 11,00,000 |
| 38 | 9 | 0 | 11,00,000 |
| 39 | 10 | 0 | 11,00,000 |
| 40 | 11 | 0 | 11,00,000 |
| 41 | 12 | 78,315 | 11,00,000 |
| 42 | 13 | 78,315 | 11,00,000 |
| 43 | 14 | 78,315 | 11,00,000 |
| 44 | 15 | 78,315 | 11,00,000 |
| 45 | 16 | 5,78,315 | 11,00,000 |
| IRR | 4.89% |
In the above illustration, the IRR calculation for the cash flow results in 4.89%. For a long-term investment, the return should beat inflation which is missing in the Canara HSBC Life Insurance Guaranteed Assured INcome plan. This shows that the Survival Benefit is not adjusted to inflation. So often Survival Benefit will end up with discretionary expenses. This defeats the purpose of savings.
12. Canara HSBC Guaranteed Assured Income Plan vs. Other Investment Products
Now, let us look for opportunities where you can invest the same premium as seen in the previous illustration. Canara HSBC Life Insurance Guaranteed Assured INcome plan offers Life cover, Survival Benefits, and Maturity Benefits. To match it up, first, we need to look for a Pure-Term life insurance policy. And then we can invest separately to meet the survival and Maturity Benefits.
i) Canara HSBC Guaranteed Assured INcome Plan Vs. Pure Term Insurance + ELSS
A Pure Term Policy for a sum assured of 11 Lakhs would cost ₹ 9,300. The Policy Term is 15 years and the Premium paying term is 5 years.
Out of ₹ 1 Lakh, after paying the Pure Term Insurance premium, a balance of 90,700 could be invested for wealth accumulation. The risk profile of the investment avenue should align with your risk profile.
Let us assume that 90,700 is invested in the ELSS fund for the first 5 years. During the deferment period of 5 years, the fund grows.
At the end of a deferment period, we need to exit the fund and invest it in a debt instrument in order to withdraw annually. At the time of exiting the fund, capital gains tax is payable. Tax calculations are given below.
| Pure Term Life Insurance Policy | |
| Sum Assured | 11,00,000 |
| Annualised premium | 9,300 |
| Premium paying term | 5 years |
| Policy Term | 15 years |
| Investment | 90,700 |
The pre-tax fund value is 12.73 Lakhs. After the payment of Capital Gains tax, the post-tax value is ₹ 12.01 Lakhs. This amount is invested in a debt instrument yielding a 7% return. From this debt investment, ₹ 78,315 is withdrawn annually.
In the final year, to match the Maturity Benefit, the amount left in the investment is withdrawn fully.
| Term insurance + ELSS | |||
| Age | Year | Term Insurance premium + ELSS | Death Benefit |
| 30 | 1 | -1,00,000 | 11,00,000 |
| 31 | 2 | -1,00,000 | 11,00,000 |
| 32 | 3 | -1,00,000 | 11,00,000 |
| 33 | 4 | -1,00,000 | 11,00,000 |
| 34 | 5 | -1,00,000 | 11,00,000 |
| 35 | 6 | 0 | 11,00,000 |
| 36 | 7 | 0 | 11,00,000 |
| 37 | 8 | 0 | 11,00,000 |
| 38 | 9 | 0 | 11,00,000 |
| 39 | 10 | 0 | 11,00,000 |
| 40 | 11 | 0 | 11,00,000 |
| 41 | 12 | 78,315 | 11,00,000 |
| 42 | 13 | 78,315 | 11,00,000 |
| 43 | 14 | 78,315 | 11,00,000 |
| 44 | 15 | 78,315 | 11,00,000 |
| 45 | 16 | 12,03,223 | 11,00,000 |
| IRR | 9.27% | ||
| ELSS tax Calculation | |
| Maturity value after deferment period | 12,73,802 |
| Less | |
| Purchase price | 4,53,500 |
| Long-term capital gains | 8,20,302 |
| Exemption limit | 1,00,000 |
| Taxable LTCG | 7,20,302 |
| Tax paid on LTCG | 72,030 |
| Maturity value after tax | 12,01,772 |
In the above illustration, the IRR calculated for this cash flow results in 9.27%. A long-term investment beating the inflation rate is always beneficial to investors. If you allow the fund to grow (without withdrawing annually), you will get a better return than this. Compounding benefits work at their best in the long run.
The IRR analysis of the Canara HSBC Life Insurance Guaranteed Assured INcome Plan reveals that both returns and cash flow are important factors in choosing an investment avenue.
The income pay-out will not suffice to meet any of your goals and also the returns are not satisfactory under the Canara HSBC Life Insurance Guaranteed Assured Income Plan.
ii) Canara HSBC Guaranteed Assured INcome Plan vs. Canara HSBC iSelect Guaranteed Future
Some of the features of Canara HSBC iSelect Guaranteed Future are,
- Life insurance during the duration of the policy.
- To reach your financial objective, you can decide whether to pay a single premium or premiums for five, seven, or ten years.
- A Guaranteed Maturity Benefit to meet your financial objectives.
You can read the complete review of Canara HSBC iSelect Guaranteed Future here.
iii) Canara HSBC Guaranteed Assured INcome Plan vs. LIC Dhan Vriddhi Plan
Some of the features of the LIC Dhan Vriddhi Plan are,
- Assurance of Additions during the duration of the LIC Dhan Vriddhi Policy.
- For LIC Dhan Vriddhi policies with higher Basic Sum Assured, there are higher guaranteed additions.
- The Basic Sum Assured will be in increments of 5,000.
You can read the complete review of the LIC Dhan Vriddhi Plan here.
13. Canara HSBC Guaranteed Assured INcome Plan vs. Other Investment Products – Review Conclusion
After a thorough analysis of alternative investment options for the Canara HSBC Guaranteed Assured INcome Plan. The best investment alternative seems to be taking Term Insurance for your Life Cover needs and investing separately in ELSS. This is because the investment and insurance aspect is separate in Term Insurance and ELSS whereas it is not the same in the Canara HSBC Guaranteed Assured INcome Plan.
14. Final Verdict on Canara HSBC Guaranteed Assured INcome Plan – Good or Bad?
Canara HSBC Life Insurance Guaranteed Assured INcome Plan doesn’t participate in the profit and is not linked to the market. All the policy benefits are upfront guaranteed at the start of the policy.
Survival Benefit starts post-completion of the Premium Payment Term and Deferment Period to take care of the recurring expenses. As a Maturity Benefit, 100% of the Total Premiums Payable will be paid.
The cash flow is predetermined and flexible to adjust all types of goals either short-term or long-term. And also, flexibility in receiving the annual pay-out.
The main drawback of this plan is returns. To keep up with inflation, your investment must earn more than the inflation rate. Our IRR analysis shows that the return is below par. High insurance agent commission also pulls down the overall returns.
The reason for the below-average return is the mixing-up of insurance and investment. Alternatively, you can opt for a pure-term life insurance policy and invest separately for life goals.
Instead of just dreaming about your investment goals by surfing through social media sites like Quora, Facebook, Twitter, etc, please consult a Certified Financial Planner to give wings to your dreams by drafting a custom-made financial plan.
Leave a Reply