Canara HSBC Promise4 Future Plan: Good or Bad? An Enlightening Review
Can the Canara HSBC Promise4 Future plan be a more reliable way to secure your child’s future as they grow?
Can the Canara HSBC Promise4 Future plan truly offer both financial security and wealth-building potential for your family?
Can the Canara HSBC Promise4 Future Plan turn your aspirations into a financial safety net for your family?
In this review, we’ll explore the plan’s features, benefits, and potential drawbacks, along with an Internal Rate of Return analysis to help you make an informed choice.
What is the Canara HSBC Promise4 Future?
What are the features of the Canara HSBC Promise4 Future?
Who is eligible for the Canara HSBC Promise4 Future?
What are the benefits of the Canara HSBC Promise4 Future?
Grace period, Lapse & Paid-up, Revival of Canara HSBC Promise4 Future
Surrendering Canara HSBC Promise4 Future
What are the advantages of Canara HSBC Promise4 Future?
What are the disadvantages of Canara HSBC Promise4 Future?
Research Methodology of Canara HSBC Promise4 Future
Benefit illustration – IRR Analysis of the Canara HSBC Promise4 Future
Canara HSBC Promise4 Future Vs. Other Investments
Canara HSBC Promise4 Future Vs. Pure-term + PPF/ELSS
Final Verdict on the Canara HSBC Promise4 Future
Canara HSBC Life Insurance Promise4 Future Plan is a Non-Linked Par Individual Life Insurance Savings cum Protection Plan.
Canara HSBC Life Insurance Promise4 Future Plan provides financial protection to your family in case of an eventuality. The Plan offers two distinct plan options: Savings4Future for targeted savings and Income4Future which creates a parallel income stream for you.
| Parameter | Minimum | Maximum |
| Age at Entry | 0 | 45/55, 50/60 years |
| Maturity Age | 18 years | 70 / 75 years |
| Premium paying term & Policy term | Premium paying term | Policy term |
| 7 years | 12/15/20/ 25/ 30/ 35/ 40 years | |
| 10 years | 15/20/25/30/ 35/ 40 years | |
| 12 years | 20/25/ 30/ 35/ 40 years | |
| Premium amount | Yearly – ₹ 24,000 Half-Yearly – ₹ 18360 Quarterly – ₹ 9360 Monthly – ₹ 3240 | No Limit |
(under both the plans)
Higher of:
Sum Assured on Death is the amount that is higher of Guaranteed Sum Assured on Maturity or 11 times the Annualized Premium
Savings4 Future
Guaranteed Sum Assured on Maturity PLUS Guaranteed Loyalty Addition PLUS accrued Annual Bonuses, if any PLUS Final Bonus, if any
Guaranteed Loyalty Addition is an amount equal to 25% of the Guaranteed Sum Assured on Maturity
Income4 Future
A Grace period of 15 days for monthly mode and 30 days for all other modes will be allowed from the Premium due date to pay the due premium.
If you fail to pay the full premium for the first policy year within the Grace Period, then your Canara HSBC Life Insurance Promise4 Future Plan policy will lapse at the expiry of the Grace Period and the insurance cover will cease immediately,
If you fail to pay the due premium within the Grace Period after paying the premium for the first policy year’, your Canara HSBC Life Insurance Promise4 Future Plan policy will become a Paid-up policy and will continue with reduced benefits till death/ maturity.
You can revive your Canara HSBC Life Insurance Promise4 Future Plan Policy within the revival period i.e. 5 years from the due date of the first unpaid premium.
In case the Canara HSBC Life Insurance Promise4 Future Plan Policy terms and conditions are not agreeable, you can opt for a cancellation of the Policy. You can cancel it within 30 days from the date of receipt of the Policy Document, whether received electronically or otherwise.
The Canara HSBC Life Insurance Promise4 Future Plan Policy shall acquire a surrender value if the premiums have been paid in full for at least the first two consecutive Policy years.
The Surrender Value payable is higher of: Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).
The Canara HSBC Life Insurance Promise4 Future Plan provides both maturity and survival benefits, with partial guarantees while the remainder depends on bonus declarations.
To evaluate the returns, we can use an Internal Rate of Return (IRR) calculation, which enables comparison with other investment returns. Here, we’ll calculate the IRR based on the benefit illustration provided in the policy brochure.
Consider a 40-year-old male who selects the Canara HSBC Promise4 Future Plan with a sum assured of ₹11 lakhs.
The policy term spans 20 years, with a premium payment term of 10 years and an annual premium of ₹1 lakh under the Saving4 Future option. He receives the maturity benefit, including any bonuses, at the end of the term.
| Male | 40 years |
| Sum Assured | ₹ 11,00,000 |
| Policy Term | 40 years |
| Premium Paying Term | 20 years |
| Annualised Premium | ₹ 1,00,000 |
For illustration, assumed investment returns are at 4% and 8%. These are neither guaranteed nor represent the upper or lower returns.
With a 4% return assumption, the maturity benefit would be ₹15.02 lakhs, resulting in an IRR of 2.64% as per the Canara HSBC Life Insurance Promise4 Future Plan’s Maturity calculator.
At an 8% return, the maturity benefit rises to ₹24.80 lakhs, yielding an IRR of 5.94% as per the Canara HSBC Life Insurance Promise4 Future Plan’s Maturity calculator.
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 40 | 1 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 41 | 2 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 42 | 3 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 43 | 4 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 44 | 5 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 45 | 6 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 46 | 7 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 47 | 8 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 48 | 9 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 49 | 10 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 50 | 11 | 0 | 11,00,000 | 0 | 11,00,000 |
| 51 | 12 | 0 | 11,00,000 | 0 | 11,00,000 |
| 52 | 13 | 0 | 11,00,000 | 0 | 11,00,000 |
| 53 | 14 | 0 | 11,00,000 | 0 | 11,00,000 |
| 54 | 15 | 0 | 11,00,000 | 0 | 11,00,000 |
| 55 | 16 | 0 | 11,00,000 | 0 | 11,00,000 |
| 56 | 17 | 0 | 11,00,000 | 0 | 11,00,000 |
| 57 | 18 | 0 | 11,00,000 | 0 | 11,00,000 |
| 58 | 19 | 0 | 11,00,000 | 0 | 11,00,000 |
| 59 | 20 | 0 | 11,00,000 | 0 | 11,00,000 |
| 60 | 15,02,457 | 24,80,075 | |||
| IRR | 2.64% | 5.94% | |||
These rates fall below typical debt instrument returns, and as a long-term investment, the Canara HSBC Life Insurance Promise4 Future Plan may not outpace inflation, leading to a potential shortfall in the funds needed to achieve future goals.
Additionally, the sum assured may be insufficient to fully support the family’s financial needs in the future.
All these aspects make the Canara HSBC Promise4 Future plan an unfavourable option for investors.
A focused analysis of the Canara HSBC Promise4 Future Plan highlights it as a low-yield product. To help make an informed decision, we’ll compare its returns against other investment options by separating the insurance and investment components, using the same metrics as before.
In the previous scenario, the plan included a life cover of ₹11 lakhs. A comparable pure-term life insurance policy offering the same cover would cost ₹13,600 for a 20-year term with a 10-year premium payment period.
This approach frees up ₹86,400 annually, which can be invested according to individual risk tolerance.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 11,00,000 |
| Policy Term | 40 years |
| Premium Paying Term | 20 years |
| Annualised Premium | ₹ 13,600 |
| Investment | ₹ 86,400 |
Low-risk investors might consider debt instruments like the Public Provident Fund (PPF), while high-risk investors could explore equity-based options such as Equity-Linked Savings Schemes (ELSS). For comparison, we’ll look at both options.
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 40 | 1 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 41 | 2 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 42 | 3 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 43 | 4 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 44 | 5 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 45 | 6 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 46 | 7 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 47 | 8 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 48 | 9 | -1,00,000 | 11,00,000 | -1,00,000 | 11,00,000 |
| 49 | 10 | -97,500 | 11,00,000 | -1,00,000 | 11,00,000 |
| 50 | 11 | -500 | 11,00,000 | 0 | 11,00,000 |
| 51 | 12 | -500 | 11,00,000 | 0 | 11,00,000 |
| 52 | 13 | -500 | 11,00,000 | 0 | 11,00,000 |
| 53 | 14 | -500 | 11,00,000 | 0 | 11,00,000 |
| 54 | 15 | -500 | 11,00,000 | 0 | 11,00,000 |
| 55 | 16 | 0 | 11,00,000 | 0 | 11,00,000 |
| 56 | 17 | 0 | 11,00,000 | 0 | 11,00,000 |
| 57 | 18 | 0 | 11,00,000 | 0 | 11,00,000 |
| 58 | 19 | 0 | 11,00,000 | 0 | 11,00,000 |
| 59 | 20 | 0 | 11,00,000 | 0 | 11,00,000 |
| 60 | 25,49,654 | 47,38,563 | |||
| IRR | 6.13% | 10.28% | |||
PPF requires a minimum annual investment of ₹500 over 15 years. In this case, the 10-year premium payment term requires adjustments in the remaining years. The final maturity value in PPF is estimated at ₹25.49 lakhs, with an IRR of 6.13%.
| ELSS Tax Calculation | |
| Maturity value after 20 years | 52,74,215 |
| Purchase price | 8,64,000 |
| Long-Term Capital Gains | 44,10,215 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 42,85,215 |
| Tax paid on LTCG | 5,35,652 |
| Maturity value after tax | 47,38,563 |
With ELSS, the accumulated fund at the end of the term would be approximately ₹11.95 lakhs (pre-tax). After capital gains tax, the post-tax value would be ₹11.29 lakhs, resulting in an IRR of 10.28% (post-tax).
The potential returns of term insurance and PPF combination align with the inflation rate, while the term insurance and ELSS combination yield returns that outpace inflation. This approach supports long-term wealth accumulation, a benefit that is lacking in the Canara HSBC Promise4 Future Plan.
In the Canara HSBC Promise4 Future Plan, premiums are paid for a limited period in exchange for life coverage and survival or maturity benefits, depending on the chosen option.
However, the plan lacks any distinctive features, and the returns are low for a long-term investment and it also has a high agent commission.
Additionally, the sum assured may not adequately meet a family’s basic financial needs. As a result, this plan falls short of serving both insurance and investment purposes.
With subpar returns, limited life coverage, and no unique benefits, the Canara HSBC Promise4 Future Plan may not be a suitable addition to your portfolio.
For effective financial security, consider a pure-term life insurance policy with sufficient coverage, typically available at affordable premiums.
To achieve your life goals, investing in a diversified portfolio aligned with your risk tolerance and investment horizon is essential. Keeping insurance and investment separate can enhance overall financial outcomes.
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For a customized financial strategy, consult a Certified Financial Planner, who can offer expert guidance in creating a plan for a secure and prosperous future.
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