Canara HSBC Guaranteed Fortune Plan
Can the Canara HSBC Guaranteed Fortune Plan provide the financial benefits required to fulfil them?
Is the Canara HSBC Guaranteed Fortune Plan the reliable financial cushion you’ve been searching for?
Can the Canara HSBC Guaranteed Fortune Plan strike the perfect balance between security and returns?
In this review, we will analyse the Canara HSBC Guaranteed Fortune Plan’s features, advantages, and drawbacks, including an Internal Rate of Return (IRR) calculation to assess its effectiveness.
What is the Canara HSBC Guaranteed Fortune Plan?
What are the features of the Canara HSBC Guaranteed Fortune Plan?
Who is eligible for the Canara HSBC Guaranteed Fortune Plan?
What are the benefits of the Canara HSBC Guaranteed Fortune Plan?
Grace Period, Lapse and Paid-up Policy and Revival of Canara HSBC Guaranteed Fortune Plan
Free Look Period of Canara HSBC Guaranteed Fortune Plan
Surrendering Canara HSBC Guaranteed Fortune Plan
What are the advantages of the Canara HSBC Guaranteed Fortune Plan?
What are the disadvantages of the Canara HSBC Guaranteed Fortune Plan?
Research Methodology of Canara HSBC Guaranteed Fortune Plan
Benefit Illustration – IRR Analysis of Canara HSBC Guaranteed Fortune Plan
Canara HSBC Guaranteed Fortune Plan Vs. Other Investments
Canara HSBC Guaranteed Fortune Plan Vs. Pure-term + PPF/ELSS
Final Verdict on Canara HSBC Guaranteed Fortune Plan
Canara HSBC Guaranteed Fortune Plan is a Non-Linked Non-Participating Individual Savings Life Insurance Plan. It helps you achieve your goals with its guaranteed benefits. It provides the dual benefit of life cover together with a guaranteed payout ensuring policyholders fulfil their goals.
| Parameters | Minimum | Maximum |
| Entry age | 0 years | Guaranteed Savings Option: 55 years Guaranteed Cash Back Option: 50 years |
| Maturity age | 18 years | 65 years |
| Premium payment term & Policy term | Premium payment term | Policy term |
| 5 years | 5, 10, 15 & 20 years | |
| 7 years | 7, 12, 15 & 20 years | |
| 10 years | 10,15 & 20 years | |
| 12 years | 12, 15 & 20 years | |
| Annualised premium | ₹ 6,000 | ₹ 2,25,000 |
| Sum assured | ₹ 66,000 | ₹ 25,00,000 |
| Premium paying mode | Annual, Half-Yearly, Quarterly & Monthly modes | |
Guaranteed Savings Option & Guaranteed Cash Back Option
Sum Assured on Death less CARE Pay Benefit already paid, if any, plus accrued Guaranteed Yearly Additions, if any is paid to the nominee. Sum Assured on Death is defined as the higher of:
Guaranteed Savings Option
Nil
Guaranteed Cash Back Option
15% of Guaranteed Sum Assured on Maturity payable at the end of every 5th Policy Year (falling before the end of the Policy Term)
Guaranteed Savings Option
Guaranteed Sum Assured on Maturity plus accrued Guaranteed Yearly Additions
Guaranteed Cash Back Option
Guaranteed Sum Assured on Maturity less Survival Benefits already paid, if any, plus Deferred Survival Benefits, if any plus accrued Guaranteed Yearly Additions
Guaranteed Sum Assured on Maturity = the sum of the Annualized Premiums payable under the Policy during the Premium Payment Term (i.e. Annualized Premium x Premium Payment Term).
You are provided with a Grace Period of 30 days for annual, half-yearly and quarterly modes and 15 days for monthly mode from the Premium due date to pay the due premium.
A 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 policy year.
Once the Canara HSBC Guaranteed Fortune Plan Policy is in Lapse status, no benefit shall be payable upon death or request for termination/surrender of the Policy.
After payment of at least the first year’s Premium, if any subsequent due Premium is not paid within the grace period, the Policy shall acquire a Paid-up status. The benefits will be reduced proportionately.
A Policy can be revived anytime during the Canara HSBC Guaranteed Fortune Plan Policy Term within five years (Revival Period) from the date of the first unpaid Premium.
If the Policyholder does not agree with the terms and conditions of the Policy or otherwise & has not made any claim, they shall have the option to request for cancellation of the Policy by returning the Policy Document (if issued physically upon request) within 30 days from the date of receipt of the Policy Document, whether received electronically or otherwise (whichever is earlier).
The Canara HSBC Guaranteed Fortune Plan Policy acquires a Guaranteed Surrender Value (GSV) after payment of at least the first 2 consecutive years’ Premiums.
Surrender Value is defined as the higher of Guaranteed Surrender Value (GSV) and Special Surrender Value (SSV)
The Canara HSBC Guaranteed Fortune Plan provides a guaranteed maturity benefit or survival benefit at regular intervals. However, relying solely on these guarantees is not advisable.
It is crucial to assess the plan based on its percentage returns. Let’s calculate the Internal Rate of Return (IRR) using the figures from the policy brochure.
A 30-year-old male purchases the Canara HSBC Guaranteed Fortune Plan with a sum assured of ₹11 lakhs (death benefit – ₹12.7 lakhs). The policy term is 25 years, and the premium payment term is 10 years, with an annual premium of ₹1 lakh. He opts for the Guaranteed Savings Option.
| Male | 30 years |
| Sum Assured | ₹ 12,70,000 |
| Policy Term | 25 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 1,00,000 |
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 30 | 1 | -1,00,000 | 12,70,000 |
| 31 | 2 | -1,00,000 | 12,70,000 |
| 32 | 3 | -1,00,000 | 12,70,000 |
| 33 | 4 | -1,00,000 | 12,70,000 |
| 34 | 5 | -1,00,000 | 12,70,000 |
| 35 | 6 | -1,00,000 | 12,70,000 |
| 36 | 7 | -1,00,000 | 12,70,000 |
| 37 | 8 | -1,00,000 | 12,70,000 |
| 38 | 9 | -1,00,000 | 12,70,000 |
| 39 | 10 | -1,00,000 | 12,70,000 |
| 40 | 11 | 0 | 12,70,000 |
| 41 | 12 | 0 | 12,70,000 |
| 42 | 13 | 0 | 12,70,000 |
| 43 | 14 | 0 | 12,70,000 |
| 44 | 15 | 0 | 12,70,000 |
| 45 | 16 | 0 | 12,70,000 |
| 46 | 17 | 0 | 12,70,000 |
| 47 | 18 | 0 | 12,70,000 |
| 48 | 19 | 0 | 12,70,000 |
| 49 | 20 | 0 | 12,70,000 |
| 50 | 21 | 0 | 12,70,000 |
| 51 | 22 | 0 | 12,70,000 |
| 52 | 23 | 0 | 12,70,000 |
| 53 | 24 | 0 | 12,70,000 |
| 54 | 25 | 0 | 12,70,000 |
| 30,50,500 | |||
| IRR | 5.53% |
Under this option, after paying premiums for 10 years, he will receive the maturity benefit along with accrued guaranteed additions at the end of 25 years.
The total maturity benefit amounts to ₹30.50 lakhs. The IRR for this cash flow is 5.53% as per the Canara HSBC Guaranteed Fortune Plan maturity calculator, which is lower than the inflation rate, making it an unattractive investment.
Additionally, the investment remains locked until the policy term ends, requiring a 15-year wait after completing the 10-year premium payment. The maximum sum assured is limited to ₹25 lakhs, which may be inadequate for comprehensive financial security.
The combination of poor liquidity, insufficient life coverage, and suboptimal returns makes the Canara HSBC Guaranteed Fortune Plan a less appealing choice for both insurance and investment.
Instead of opting for an endowment plan, consider a pure-term life insurance policy that provides adequate life coverage at an affordable premium. Since term plans are non-profit policies, the premiums are significantly lower.
For investments, you can allocate your savings across various asset classes based on your financial goals, offering a more balanced and potentially higher return. Let’s illustrate this strategy with a comparative scenario.
Using the same parameters as the previous example, a pure-term life insurance policy with a ₹13 lakh sum assured (similar to the illustrated death benefit) costs ₹10,500 annually for a 25-year term with a 10-year premium payment period.
This allows you to save ₹89,500 per year from the ₹1 lakh premium, which can be invested based on your risk appetite.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 13,00,000 |
| Policy Term | 25 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 10,500 |
| Investment | ₹ 89,500 |
High-risk investors can opt for equity instruments, while low-risk investors can choose debt instruments. In this comparison, we consider PPF (a debt instrument) and ELSS (an equity instrument).
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 30 | 1 | -1,00,000 | 13,00,000 | -1,00,000 | 13,00,000 |
| 31 | 2 | -1,00,000 | 13,00,000 | -1,00,000 | 13,00,000 |
| 32 | 3 | -1,00,000 | 13,00,000 | -1,00,000 | 13,00,000 |
| 33 | 4 | -1,00,000 | 13,00,000 | -1,00,000 | 13,00,000 |
| 34 | 5 | -1,00,000 | 13,00,000 | -1,00,000 | 13,00,000 |
| 35 | 6 | -1,00,000 | 13,00,000 | -1,00,000 | 13,00,000 |
| 36 | 7 | -1,00,000 | 13,00,000 | -1,00,000 | 13,00,000 |
| 37 | 8 | -1,00,000 | 13,00,000 | -1,00,000 | 13,00,000 |
| 38 | 9 | -1,00,000 | 13,00,000 | -1,00,000 | 13,00,000 |
| 39 | 10 | -97,500 | 13,00,000 | -1,00,000 | 13,00,000 |
| 40 | 11 | -500 | 13,00,000 | 0 | 13,00,000 |
| 41 | 12 | -500 | 13,00,000 | 0 | 13,00,000 |
| 42 | 13 | -500 | 13,00,000 | 0 | 13,00,000 |
| 43 | 14 | -500 | 13,00,000 | 0 | 13,00,000 |
| 44 | 15 | -500 | 13,00,000 | 0 | 13,00,000 |
| 45 | 16 | 0 | 13,00,000 | 0 | 13,00,000 |
| 46 | 17 | 0 | 13,00,000 | 0 | 13,00,000 |
| 47 | 18 | 0 | 13,00,000 | 0 | 13,00,000 |
| 48 | 19 | 0 | 13,00,000 | 0 | 13,00,000 |
| 49 | 20 | 0 | 13,00,000 | 0 | 13,00,000 |
| 50 | 21 | 0 | 13,00,000 | 0 | 13,00,000 |
| 51 | 22 | 0 | 13,00,000 | 0 | 13,00,000 |
| 52 | 23 | 0 | 13,00,000 | 0 | 13,00,000 |
| 53 | 24 | 0 | 13,00,000 | 0 | 13,00,000 |
| 54 | 25 | 0 | 13,00,000 | 0 | 13,00,000 |
| 37,21,719 | 85,52,410 | ||||
| IRR | 6.54% | 10.80% | |||
PPF requires a minimum contribution of ₹500 annually for 15 years. Since the premium payment term is 10 years, adjustments are made to meet PPF regulations. The final maturity value in PPF is ₹37.21 lakhs, with an IRR of 6.54%.
ELSS investments, after accounting for capital gains tax at redemption, result in a post-tax maturity value of ₹85.52 lakhs (pre-tax value: ₹96.28 lakhs). The overall IRR for the combined term insurance and ELSS investment strategy is 10.80% (post-tax).
| ELSS Tax Calculation | |
| Maturity value after 25 years | 96,28,469 |
| Purchase price | 8,95,000 |
| Long-Term Capital Gains | 87,33,469 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 86,08,469 |
| Tax paid on LTCG | 10,76,059 |
| Maturity value after tax | 85,52,410 |
These returns surpass the inflation rate while also offering superior liquidity. This analysis clearly demonstrates the benefits of separating insurance and investment—providing better liquidity and higher returns, advantages that the Canara HSBC Guaranteed Fortune Plan does not offer.
The Canara HSBC Guaranteed Fortune Plan is a traditional life insurance policy that provides survival or maturity benefits with guaranteed payouts. You pay premiums for a limited period in exchange for these benefits.
However, the policy term and premium payment duration are fixed, which may not align with individual financial needs, leading to a potential mismatch between actual goals and policy maturity.
An analysis of returns indicates that the plan delivers suboptimal returns for a long-term investment. Additionally, funds remain locked until the end of the policy term, and the sum assured may be insufficient for comprehensive financial protection.
These limitations make the Canara HSBC Guaranteed Fortune Plan less suitable for both insurance and investment purposes and it also has a high agent commission.
A more effective approach is to separate insurance and investment. A pure-term policy provides adequate life coverage as a financial safety net, while investments can be tailored to individual risk tolerance, investment horizon, and life goals.
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Building a strong financial plan is essential for long-term financial success. For a strategy tailored to your needs, consider consulting a certified financial planner who can help align your investments with your life goals.
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