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Will investing in Canara HSBC Life Insurance Alpha Wealth enhance your quality of life?
Will this plan provide an ideal blend of savings and investment opportunities to help you secure your financial status?
Any financial opportunity should enhance your quality of life. And such financial opportunities are the ones that will help you fulfill your dreams with ease.
You should also look to shield yourself and your family from any uncertainties that you might face in the future. to make sure all your plans stay on track.
In this detailed research, we will analyse in depth, the Canara HSBC Life Insurance Alpha Wealth Plan’s Advantages (Pros) and Disadvantages (Cons). We will also calculate the Internal Rate of Return of the policy
From this, you would come to whether investing in Canara HSBC Life Insurance Alpha Wealth will be a good suit for your investment portfolio or not.
Table of Contents
1.What is the Canara HSBC Life Insurance Alpha Wealth Plan?
2. What are the Features of Canara HSBC Life Insurance Alpha Wealth Plan
3. What are the Various Plan Options under the Canara HSBC Life Insurance Alpha Wealth Plan?
4. What are the Benefits of Canara HSBC Life Insurance Alpha Wealth Plan?
- i) Canara HSBC Life Insurance Alpha Wealth Plan Death Benefit
- ii) Canara HSBC Life Insurance Alpha Wealth Plan Maturity Benefit
- iii) Canara HSBC Life Insurance Alpha Wealth Plan Loyalty Additions and Wealth Boosters
- iv) Canara HSBC Life Insurance Alpha Wealth Plan Return of Mortality Charges
5. Canara HSBC Life Insurance Alpha Wealth Plan Investment Strategies and Fund Options
6. Various charges under Canara HSBC Life Insurance Alpha Wealth Plan
7. Canara HSBC Life Insurance Alpha Wealth Plan Grace Period, Discontinuance and Revival
8. Advantages of Canara HSBC Life Insurance Alpha Wealth Plan
9. Disadvantages of Canara HSBC Life Insurance Alpha Wealth Plan
10. Canara HSBC Life Insurance Alpha Wealth Plan Research Methodology
- Canara HSBC Life Insurance Alpha Wealth Plan Benefit Illustration – IRR Analysis
11. Canara HSBC Life Insurance Alpha Wealth Plan VS Other Investment Return
- i) Canara HSBC Life Insurance Alpha Wealth Plan VS Pure Term + PPF / ELSS
- ii) Canara HSBC Life Insurance Alpha Wealth Plan VS Canara HSBC Guaranteed Assured Income (GAIN)
- iii) Canara HSBC Life Insurance Alpha Wealth Plan VS Canara HSBC iSelect Guaranteed Future
12. Final Verdict on Canara HSBC Life Insurance Alpha Wealth Plan
1. What is the Canara HSBC Life Insurance Alpha Wealth Plan?
Canara HSBC Life Insurance Alpha Wealth Plan is an Individual, Unit-linked Life Insurance Savings Plan. It is a tailor-made investment product for investors.
This plan helps you achieve ambitious life goals with life insurance cover to protect you and your family in case of any unfortunate circumstances.
2. What are the Features of the Canara HSBC Life Insurance Alpha Wealth Plan?
- Pay premiums one time for a limited period or the entire Policy Term.
- Life cover throughout the policy term.
- Choose from 3 plan options based on your life stages – Alpha Invest Plus, Alpha Premium Plus, and Alpha Life Plus
- Loyalty Additions and Wealth Booster enhances your corpus.
- 100% of the Mortality Charges deducted during the policy term are returned at Maturity.
- Choose Systematic Withdrawal of Funds based on your financial need.
- Select from a range of 8 diverse fund options.
3. What are the various Plan Options under the Canara HSBC Life Insurance Alpha Wealth Plan?
Alpha Plus Invest
Enjoy life insurance for the entire duration of the policy and get the accumulated fund value at maturity.
Alpha Premium Plus
The Lump Sum Death Benefit will be paid to your family in case of death and all future premiums will be waived and will get funded by the company.
The family will receive the Fund Value at policy maturity, ensuring the family’s financial security and assisting them in wealth accumulation.
Alpha Life Plus
This plan option aids you in building a corpus for your retirement years with protection against uncertainties in the form of life insurance for your whole life (i.e., till 100 years of age).
4. What are the Benefits of the Canara HSBC Life Insurance Alpha Wealth Plan?
i) Canara HSBC Life Insurance Alpha Wealth Plan Death Benefit
Alpha Invest plus
Higher of:
Sum Assured fewer partial withdrawals (under MWO / under SWO), done in the preceding two years, or
- Fund Value as on date of information of death claim, or
- 105% of all Premiums paid up to the date of death.
The Policy shall cease on payment of the Death Benefit.
Alpha Premium Plus
Higher of the following will be payable as a lump sum:
- Sum Assured, or
- 105% of total premiums paid up to the date of death.
Premium Funding Benefit will also become payable. All the charges, except Mortality charges and Premium Funding Benefit charges, shall continue to be deducted from the unit account until maturity of the Policy.
Alpha Life Plus
Higher of:
- Sum Assured less partial withdrawals(under MWO/ under SWO), if any, in the preceding two years, or
- Fund Value as on date of information of death claim, or
105% of all Premiums paid up to the date of death.
The Policy shall cease on payment of the Death Benefit.
ii) Canara HSBC Life Insurance Alpha Wealth Plan Maturity Benefit
Alpha Invest Plus and Alpha Life Plus:
In case the Life Assured survives till the maturity of the Policy, Fund Value as on the date of maturity is payable and the Policy will terminate upon payment of such benefit.
Alpha Premium Plus:
Fund Value as of the date of maturity is payable to the Life Assured, if the Life Assured is alive or to the Nominee(s), in case the Life Assured is not alive.
iii) Canara HSBC Life Insurance Alpha Wealth Plan Loyalty Addition and Wealth Boosters
Loyalty Addition: 0.5% of the average Fund Value of the previous 12 monthly policy anniversaries, will be added to the fund at the end of each policy year starting from the 6th policy year and continuing until the end of the policy term.
Wealth Boosters: 2.90% of the fund value at the end of the 10th policy year and1.50% of the fund value at the end of the 15th policy year and thereafter at the end of every 5 Policy Years.
iv) Canara HSBC Life Insurance Alpha Wealth Plan Return of Mortality Charges
An amount deducted for Mortality Charges during the Policy Term will be added to the Fund Value at maturity.
5. Canara HSBC Life Insurance Alpha Wealth Plan Investment Strategies and Fund Options
There are 5 investment strategies and 8 fund options under Canara HSBC Life Insurance Alpha Wealth. So make an investment decision based on your financial objectives and needs
Systematic Transfer Option (STO): It enables you to invest systematically in the equity market which potentially lowers your risk. Premium (after deduction of applicable charges) will be first allocated to the Liquid Fund (‘Source STO Fund’) and then shall be systematically transferred every month into any one of the chosen Unit Linked Funds (‘Target STO Fund’).
Return Protector Option (RPO): It enables you to protect your returns against market volatility with the RPO investment strategy.
Gains made from RPO Fund (equity fund as chosen by you) are automatically transferred to a lower-risk Debt Fund to create a more stable sequencing of investment returns during the Policy Term.
Auto Funds Rebalancing Option (AFR): It enables you to maintain your desired fund allocation and book the potential gains from the market. Every 3 months, it automatically rebalances the allocation of your investments in various Unit Linked Funds in desired proportions.
Safety Switch Option (SSO): It facilitates an automatic asset allocation based on your needs to achieve your goal. Your funds will be systematically transferred to the relatively low-risk Liquid Fund at the start of every year for the last 4 years of the Policy in a structured manner.
Loss Protector Strategy (LPS): It enables you to safeguard your investments against losses in case of a market downturn. Risk-averse customers can minimize the losses in case of market downfall by transferring the units from high-risk to low-risk funds.
Canara HSBC Life Insurance Alpha Wealth Plan Fund options
| Asset Allocation | ||||
| Fund Name | Equity | Debt Securities | Money Market Securities | Risk profile |
| Emerging Leaders Equity Fund | 60-100% | — | 0-40% | High |
| India Multi-Cap Equity Fund | 60-100% | — | 0-40% | High |
| Equity II Fund | 60-100% | — | 0-40% | High |
| Growth Plus Fund | 50-90% | 10-50% | 0-40% | Medium to High |
| Balanced Plus Fund | 30-70% | 30-70% | 0-40% | Medium |
| Large Cap Advantage Fund | 90-100% | — | 0-10% | High |
| Debt Fund | — | 60-100% | 0-40% | Low to Medium |
| Liquid Fund | — | 0-60% | 40-100% | Low |
The asset allocation under each fund varies. The asset allocation determines the risk profile of the fund. Make sure, you choose a fund that aligns with your risk profile.
6. Various charges under Canara HSBC Life Insurance Alpha Wealth Plan
Premium Allocation Charge
This charge will be deducted upfront by reducing the Premium Allocation to the fund. It varies according to the premium payment mode and the policy year. No premium allocation charge from the 11th policy year.
Policy Administration Charge
Policy Administration Charges will be redeemed every month by unit cancellation. It depends on the premium payment mode and the policy year.
Mortality Charge
This amount is deducted in the form of cancellation of units at the beginning of each policy month. The premium levied each month depends on the age of the Life Insured and the Sum at Risk.
| Age | 20 | 30 | 40 | 50 |
| Male | 0.647 | 0.684 | 0.841 | 3.105 |
| Female | 0.58 | 0.654 | 0.729 | 2.218 |
Premium Funding Benefit (PFB) Charges
This will be charged in starting of every policy month by the reduction of units. This charge is only applicable for Alpha Premium Plus. The Premium Funding Benefit Charge will apply on the current Value of Future Premiums payable by the Life Assured provided the policy is in force.
Fund management charge
| Fund Name | Fund Management Charge Per annum |
| Emerging Leaders Equity Fund | 1.35% |
| India Multi-Cap Equity Fund | 1.35% |
| Equity II Fund | 1.35% |
| Growth Plus Fund | 1.35% |
| Balanced Plus Fund | 1.35% |
| Large Cap Advantage Fund | 1.00% |
| Debt Fund | 1.00% |
| Liquid Fund | 0.80% |
Surrender/Discontinuance Charge
It is based on the year of discontinuance and the premium amount. There is no Discontinuance Charge from the 5th policy year.
Switching Charge
-Switches are free of charge.
Partial Withdrawals Charge
Partial Withdrawals are free of cost.
Miscellaneous Charge –Nil
Inference from these charges – Although the plan doesn’t levy charges for switching and partial withdrawal, there are some other costs involved in this investment.
Premium Funding Benefit Charges, Premium Allocation Charges, Policy Administration Charges, and Surrender and discontinuance Charges are overhead costs for investors.
These charges are a burden to an investor, as they reduce their investment value. As a result, only the net premium after the deduction of charges is invested in the chosen fund. Over a long period, these charges will pull down the overall returns of this policy.
7. Canara HSBC Life Insurance Alpha Wealth Plan Grace Period, Discontinuance and Revival
Grace period
You have a period of 30 days for Annual, Half Yearly, and Quarterly Mode of Premium payment from the due date to pay your Premiums.
Discontinuance
Discontinuance of Policy during Lock-in Period (during first five years): the Fund Value less applicable Discontinuance Charge will be transferred to the Discontinued Policy Fund (DPF) and the risk cover, if any, under the Policy will cease.
Discontinuance of Policy after the Lock-in Period (after the first five years): The Policy shall continue to be in Reduced Paid-up status.
Revival
In case of Discontinuance of the Policy due to non-payment of due premium(s), the policy can be revived within the Revival Period of 3 years from the date of the first unpaid premium.
To understand the dynamics of Canara HSBC Life Insurance Alpha Wealth Plan even better. You can refer to Canara HSBC Life Insurance Alpha Wealth Plan Policy Brochure
8. Advantages of Canara HSBC Life Insurance Alpha Wealth
-
- Milestone Withdrawal Option (MWO) allows to withdraw 20% of the available funds after the completion of the 10th policy year and every 5th year thereafter.
- A fixed percentage of the fund value will be withdrawn and paid to the Policyholder at a chosen frequency starting from the 11th policy year under the Systematic Withdrawal Option (SWO).
- Partial withdrawals are allowed on completion of 5 policy years.
- The Settlement Option allows the investor to receive the maturity benefit in installments.
- The Premium reduction is allowed after 5 policy year premiums are being paid.
- Premium redirection and switching of funds are allowed.
- Change in Premium paying term and Premium payment mode is allowed.
- Option to increase the policy term.
- You can alter (increase or decrease) the sum assured.
9. Disadvantages of Canara HSBC Life Insurance Alpha Wealth
- The plan option once chosen, can’t be changed after inception.
- The mortality charges are returned at maturity without considering the time value of the money concept.
- The Lock-in period is 5 years for surrendering or partial withdrawal.
10. Canara HSBC Life Insurance Alpha Wealth Plan Research Methodology
In this segment, let us analyse the Canara HSBC Life Insurance Alpha Wealth Plan in terms of returns. As an investor, you should look for the potential return on investment.
The idea behind this calculation is to figure out whether the return on investment is higher than the inflation rate. Let us take the figures given in the policy brochure and work out the Internal Rate of Return (IRR).
Canara HSBC Life Insurance Alpha Wealth Plan Benefit Illustration – IRR analysis
A 40-year-old male chooses Canara HSBC Alpha Wealth – Alpha Premium Plus. The sum assured is ₹ 50 Lakhs and the annualised premium is ₹ 5 Lakhs. The Policy term and the Premium paying term are 15 years. The fund value will be available at maturity.
| Male | 40 years |
| Sum Assured | ₹ 50 Lakhs |
| Policy Term | 15 years |
| Premium Paying Term | 15 years |
| Annualised Premium | ₹ 5 Lakhs |
| Plan Option | Alpha Premium Plus |
The table below shows maturity values with two scenarios assuming annual gross investment returns of 4% and 8%. They are not guaranteed nor it denote any upper or lower limit.
| Age | Year | At 4% p.a. | At 8% p.a. | ||
| Annualised premium / Maturity Benefit | Death benefit | Annualised premium / Maturity Benefit | Death Benefit | ||
| 40 | 1 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 41 | 2 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 42 | 3 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 43 | 4 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 44 | 5 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 45 | 6 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 46 | 7 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 47 | 8 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 48 | 9 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 49 | 10 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 50 | 11 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 51 | 12 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 52 | 13 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 53 | 14 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 54 | 15 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 55 | 90,35,665 | 50,00,000 | 1,25,13,952 | 50,00,000 | |
| IRR | 2.29% | 6.17% | |||
The fund value at 4% scenarios is ₹ 90.35 Lakhs. The net IRR under the 4% Scenario is 2.29%. The fund value under the 8% scenario is ₹ 125.13 Lakhs. The net IRR under the 8% scenario is 6.17%.
One important point to be noted here is that the Unit Linked Insurance Policy (ULIP), issued on or after 01.02.2021, shall not be exempt under Sec 10(10D) If the premium payable surpasses Rs 2,50,000 during the policy period for any policy year.
The maturity fund value given in the illustration are pre-tax value. If you consider tax, then the returns will be even lower than the calculated figures.
The calculated return is not on par with other market-linked products. Investing in Canara HSBC Life Insurance Alpha Wealth will not aid you in wealth accumulation in the long run.
11. Canara HSBC Life Insurance Alpha Wealth Plan VS Other Investment Return
Gaining an inflation-beating return should be the main agenda for a long-term investment. In this segment, let us aim to yield better returns by alternately investing the same premium.
The premium should be utilised for life and wealth accumulation. Let us assume the same metric as seen in the above illustration and work out IRR.
i) Canara HSBC Life Insurance Alpha Wealth VS Pure Term Life Insurance + PPF / ELSS
For life cover, a pure term life insurance for a sum of ₹ 50 Lakhs would cost ₹ 10,600. The policy Term and the Premium paying Term is 15 years.
In the earlier illustration, the annual cash outflow is ₹ 5 lakhs. So, you will be left with ₹ 4,89,400 for investment. You can choose either debt or equity asset class.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 50 Lakhs |
| Policy Term | 15 years |
| Premium Paying Term | 15 years |
| Annualised Premium | ₹ 10,600 |
| Investment | ₹ 4,89,400 |
Here, we have chosen PPF for the debt investment strategy and ELSS for the equity investment strategy. The maximum annual investment amount in a PPF account is ₹ 1.5 Lakhs.
The given figures surpass the limit. This is negligible, as this is for illustrative purposes.
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance Premium + PPF | Death Benefit | Term Insurance Premium + ELSS | Death Benefit |
| 40 | 1 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 41 | 2 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 42 | 3 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 43 | 4 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 44 | 5 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 45 | 6 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 46 | 7 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 47 | 8 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 48 | 9 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 49 | 10 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 50 | 11 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 51 | 12 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 52 | 13 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 53 | 14 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 54 | 15 | -5,00,000 | 50,00,000 | -5,00,000 | 50,00,000 |
| 55 | 1,32,73,211 | 50,00,000 | 1,91,34,750 | 50,00,000 | |
| IRR | 6.85% | 11.02% | |||
The final maturity value in the PPF account is 1.32 crores and the IRR for Pure Term + PPF investment yields 6.85%.
The ELSS fund value at the end of 15 years is ₹ 2.04 crores (pre-tax value). Capital gains tax arises while exiting the fund.
So, let us aside the tax liability from the proceeds. This leaves you with a post-tax value of ₹ 1.91 crores. The tax calculation is given below.
| ELSS Tax Calculation | |
| Maturity value after 15 years | 2,04,34,055 |
| Purchase price | 73,41,000 |
| Long-Term Capital Gains | 1,30,93,055 |
| Exemption limit | 1,00,000 |
| Taxable LTCG | 1,29,93,055 |
| Tax paid on LTCG | 12,99,306 |
| Maturity value after tax | 1,91,34,750 |
Investing in these alternate options definitely yields you higher returns than inflation. As a result, this results in wealth accumulation in the long run.
The IRR analysis clearly depicts that investing in Canara HSBC Life Insurance Alpha Wealth may leave you in a deficit in acquiring the required corpus.
ii) Canara HSBC Life Insurance Alpha Wealth Plan VS Canara HSBC Guaranteed Assured Income (GAIN)
You can have a glimpse at some of the key features to see what this has to offer for its investors.
- Life Cover throughout the Policy Term even during the income pay-out period.
- It offers a Guaranteed Regular Stream of Income.
- The option of Increasing Yearly Income is available.
For further analysis and decision-making. We emphasise you to read our article on: Canara HSBC Guaranteed Assured INcome (GAIN) Review – Should You Invest?
iii) Canara HSBC Life Insurance Alpha Wealth Plan VS Canara HSBC iSelect Guaranteed Future
Let’s look into some specific features to understand the nature of the policy.
- It provides Life cover throughout the Policy Term.
- Guaranteed Maturity Benefit to accomplish financial milestones.
- Accrued Guaranteed additions will enhance your policy’s benefit
To know more about the features, benefits, and the Internal Rate of Return. You can click below on our blog post on: Canara HSBC iSelect Guaranteed Future: A Complete l Comprehensive Review
12. Final Verdict on Canara HSBC Life Insurance Alpha Wealth
Canara HSBC Life Insurance Alpha Wealth has various plan options that offer premium waiver benefits and life-long cover. Also, it consists of 5 investment strategies and 8 fund options to serve different risk appetite investors.
This plan seems like a good tool to invest in the market in a disciplined manner.
However, the returns analysis shows that the potential returns are not in favour of a long-term investor. The corpus accumulated through investment in Canara HSBC Life Insurance Alpha Wealth will eventually affect your financial plan.
Various Charges, High Agent Commissions, and lack of transparency are the main drawbacks of this plan.
To keep your financial plan on track, it is advisable to opt for a pure-term life insurance policy. Also, invest in a diversified asset class to accomplish all your financial goals.
Choosing a good Investment Product takes time. Don’t get carried away by false propaganda especially made on Social Media Platforms like Facebook, Quora, Twitter, etc, and make an investment that you might regret later.
Staying ahead of the financial plan has always been everyone’s wish. If you need any assistance in selecting the investment or insurance product, then consult a Certified Financial Planner.
He will be able to guide you through those market turbulences. Along with it, he will also assist you in creating a good core investment portfolio based on your Financial Needs and Risk Appetite.
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