HDFC Life Guaranteed Income Insurance Plan(GIIP)
We all have dreams for ourselves and our families. The dream may be about higher education for our children for a daughter’s wedding or simply for a self-reliant retirement. We make so much effort toward the well-being of our families.
HDFC Life Guaranteed Income Insurance Plan aims to help you build these financial reserves for all expected and unexpected expenses in the future. Will the HDFC Life Guaranteed Income Insurance Plan help you achieve this? What are the Advantages(pros) and Disadvantages(cons) of HDFC Life Guaranteed Income Insurance Plan?
In this review, let us find out whether this HDFC Life Guaranteed Income Insurance Plan is a Good or bad option to aid you in achieving your dreams.
1.)An overview of HDFC Life Guaranteed Income Insurance Plan
2.)Features of HDFC Life Guaranteed Income Insurance Plan – Analysis
3.)Eligibility Criteria of HDFC Life Guaranteed Income Insurance Plan – Analysis with Illustration
4.)HDFC Life Guaranteed Income Insurance Plan – Review of Benefits in Detail
5.)The Grace Period, Lapse, Reduced Paid-up, and Revival of HDFC Life Guaranteed Income Insurance Plan GIIP – Analysis
6.)Free Look period of HDFC Life Guaranteed Income Insurance Plan – Analysis
7.)Surrendering HDFC Life Guaranteed Income Insurance Plan
8.)Advantages of HDFC Life Guaranteed Income Insurance Plan – Analysis
9.)Disadvantages of HDFC Life Guaranteed Income Insurance Plan – Analysis
10.)Research Methodology of HDFC Life Guaranteed Income Insurance Plan – Analysis
11.)Benefit Illustration – IRR(Internal Rate of Return i.e. Interest Rate) Analysis of HDFC Life Guaranteed Income Insurance Plan – Analysis
12.)HDFC Life Guaranteed Income Insurance Plan vs. Other Investment Products
13.)HDFC Life Guaranteed Income Insurance Plan vs Other Investment Options – Review Conclusion
14.)Final Verdict on HDFC Life Guaranteed Income Insurance Plan – Good or Bad?
The HDFC Life Guaranteed Income Insurance Plan is a non-linked, non-participating individual life insurance savings plan that delivers Guaranteed Tax-Free Benefits at the end of the premium payment term and a Guaranteed Death Benefit during the Policy Term. This is a product designed to help you save money.
Please read the official brochure of HDFC Life Guaranteed Income Insurance Plan Here, for more policy details.
| Minimum | Maximum | ||
| Age at entry | 30 days | 65 years | |
| Age at Maturity | 18 years | 99 years | |
| Sum Assured | As per the Minimum Premium | No Limit | |
| Premium Payment Frequency | Monthly, Quarterly, Half-yearly and Annual | ||
| Policy Term | Premium Paying term | Pay-out term | Minimum Premium |
| 16 | 8 | 8 | 24000 |
| 20,30,35,40 | 10 | 10,20,25,30 | 18000/12000 |
| 24,32,37,42 | 12 | 12,20,25,30 | 12000 |
| 30 | 15 | 15 | 12000 |
Regular Guaranteed Income (GI) is a regular, monthly, or yearly payout for the remaining term of the policy after completion of PPT. This flexibility of changing the GI payout frequency from yearly to monthly and vice-versa is available. GI is a Survival Benefit and shall cease on the death of the life assured. Payouts are calculated as a percentage of the Sum Assured selected.
Sum Assured is paid on survival of the life assured along with the due installment of GI at the end of the Policy Term.
GDB is an inbuilt life protection cover and is guaranteed at a higher of
It is applicable across the entire term of the HDFC Life Guaranteed Income Insurance policy and shall not be reduced by the Guaranteed Income already paid. GDB is payable as per the chosen option between options A and B
Option A of HDFC Life Guaranteed Income Insurance Plan: Lump sum Under this option, GDB is paid as a lump sum.
Option B of HDFC Life Guaranteed Income Insurance Plan: FIP Family Income Payout (FIP) is 110% of the GDB paid in 60 equal monthly installments
Grace period
The Grace Period for payment of the premium shall be 15 days, where the HDFC Life Guaranteed Income Insurance policyholder pays the premium on a monthly basis; and 30 days in all other cases.
Lapse
If premiums are not paid for at least 2 consecutive years, the HDFC Life Guaranteed Income Insurance policy will lapse at the end of the Grace period and all benefits will cease immediately.
Reduced Paid-up
The HDFC Life Guaranteed Income Insurance policy is eligible for Reduced Paid-Up Benefit if at least 2 full years’ premiums are paid. The HDFC Life Guaranteed Income Insurance policy will acquire a Reduced Paid-up state on the date of expiry of the Grace period if the policy is not surrendered.
Revival
The HDFC Life Guaranteed Income Insurance Policy can be revived during the Policy Term, within a period of 5 years from the date of the first unpaid premium.
If the HDFC Life Guaranteed Income Insurance Policyholder disagrees with any of the terms and conditions, he/she has the option to return the policy within a period of 15 days (30 days if the Policy is sourced through Distance Marketing) from the date of receipt of the HDFC Life Guaranteed Income Insurance Policy document.
The HDFC Life Guaranteed Income Insurance policy acquires Guaranteed Surrender Value if at least two full years’ premiums are paid. For HDFC Life Guaranteed Income Insurance policies that have paid at least 2 full years’ premiums, the amount payable on Surrender in HDFC Life Guaranteed Income Insurance Policy is higher than the Special Surrender Value (SSV) and the Guaranteed Surrender Value (GSV).
HDFC Life Guaranteed Income Insurance Plan is an endowment where all the benefits are guaranteed. From an investor standpoint, we should check the return on investment. For this let us calculate the Internal Rate of Return i.e. Interest Rate (IRR) of this policy using the figures given in the benefit illustration.
A 35-year-old male buys HDFC Life Guaranteed Income Insurance plan for an annual premium of ₹ 50,665. The Policy Term is 30 years and the premium paying term is 15 years. The sum assured is ₹ 7,76,088.
| Male | 35 years |
| Sum Assured | 7,76,008 |
| Policy Term | 30 years |
| Premium Paying Term | 15 years |
| Pay-out period | 15 years |
| Annualised premium | 50,665 |
He will pay regular premiums at the beginning of each HDFC Life Guaranteed Income Insurance policy year for 15 years and will be eligible for a regular Guaranteed Income of Rs 1,00,881, equivalent to 13% of the Sum Assured, payable to him annually till the end of the 30th policy year starting from the end of 16th Policy Year.
After completion of the HDFC Life Guaranteed Income Insurance Policy Term viz. at the end of the 30th year, a Maturity Benefit of Rs 7,76,008 will be payable to him along with the last payout of the regular Guaranteed Income.
| HDFC GIIP | |||
| Age | Year | Annualised premium / Maturity benefit | Death BenefitDeath Benefit |
| 35 | 1 | -50,665 | 7,76,008 |
| 36 | 2 | -50,665 | 7,76,008 |
| 37 | 3 | -50,665 | 7,76,008 |
| 38 | 4 | -50,665 | 7,76,008 |
| 39 | 5 | -50,665 | 7,76,008 |
| 40 | 6 | -50,665 | 7,76,008 |
| 41 | 7 | -50,665 | 7,76,008 |
| 42 | 8 | -50,665 | 7,76,008 |
| 43 | 9 | -50,665 | 7,76,008 |
| 44 | 10 | -50,665 | 7,76,008 |
| 45 | 11 | -50,665 | 7,76,008 |
| 46 | 12 | -50,665 | 7,76,008 |
| 47 | 13 | -50,665 | 7,76,008 |
| 48 | 14 | -50,665 | 7,76,008 |
| 49 | 15 | -50,665 | 7,76,008 |
| 50 | 16 | 0 | 7,76,008 |
| 51 | 17 | 1,00,881 | 7,76,008 |
| 52 | 18 | 1,00,881 | 7,76,008 |
| 53 | 19 | 1,00,881 | 7,76,008 |
| 54 | 20 | 1,00,881 | 7,76,008 |
| 55 | 21 | 1,00,881 | 7,76,008 |
| 56 | 22 | 1,00,881 | 7,76,008 |
| 57 | 23 | 1,00,881 | 7,76,008 |
| 58 | 24 | 1,00,881 | 7,76,008 |
| 59 | 25 | 1,00,881 | 7,76,008 |
| 60 | 26 | 1,00,881 | 7,76,008 |
| 61 | 27 | 1,00,881 | 7,76,008 |
| 62 | 28 | 1,00,881 | 7,76,008 |
| 63 | 29 | 1,00,881 | 7,76,008 |
| 64 | 30 | 1,00,881 | 7,76,008 |
| 31 | 8,76,889 | ||
| IRR | 6.25% | ||
In the above illustration, the IRR for the cash flow is calculated at 6.25%. You get a regular income but the drawback here is the same amount is receivable throughout the policy year.
Is the IRR of HDFC Life Guaranteed Income Insurance Plan Good or Bad?
Inflation eats away the purchasing power of money. In the fifteenth year, the Survival Benefit will be minuscule.
Also, the Survival Benefit won’t help you in meeting any of your big-ticket expenses. In most cases, it would end up in discretionary expense.
Now it’s time to do some analogy between HDFC GIIP and other investments. Let us assume that the same amount is invested in another instrument for the first 15 years and the accumulated corpus is invested to have regular income similar to the benefit illustration.
Apart from this, we need to set aside an amount for Life cover. A life cover for ₹ 8 Lakhs sum assured would cost ₹ 4000 per annum. So, you are left with ₹ 46,665 p.a. for investment.
| Pure Term Life Insurance | |
| Sum Assured | ₹ 8 Lakhs |
| Premium Paying Term | 15 years |
| Pay-out period | 15 years |
| Annualised premium | 4,000 |
| Investment | 46,665 |
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death BenefitDeath Benefit | Term Insurance premium + ELSS | Death BenefitDeath Benefit |
| 35 | 1 | -50,665 | 8,00,000 | -50,665 | 8,00,000 |
| 36 | 2 | -50,665 | 8,00,000 | -50,665 | 8,00,000 |
| 37 | 3 | -50,665 | 8,00,000 | -50,665 | 8,00,000 |
| 38 | 4 | -50,665 | 8,00,000 | -50,665 | 8,00,000 |
| 39 | 5 | -50,665 | 8,00,000 | -50,665 | 8,00,000 |
| 40 | 6 | -50,665 | 8,00,000 | -50,665 | 8,00,000 |
| 41 | 7 | -50,665 | 8,00,000 | -50,665 | 8,00,000 |
| 42 | 8 | -50,665 | 8,00,000 | -50,665 | 8,00,000 |
| 43 | 9 | -50,665 | 8,00,000 | -50,665 | 8,00,000 |
| 44 | 10 | -50,665 | 8,00,000 | -50,665 | 8,00,000 |
| 45 | 11 | -50,665 | 8,00,000 | -50,665 | 8,00,000 |
| 46 | 12 | -50,665 | 8,00,000 | -50,665 | 8,00,000 |
| 47 | 13 | -50,665 | 8,00,000 | -50,665 | 8,00,000 |
| 48 | 14 | -50,665 | 8,00,000 | -50,665 | 8,00,000 |
| 49 | 15 | -50,665 | 8,00,000 | -50,665 | 8,00,000 |
| 50 | 16 | 0 | 8,00,000 | 0 | 8,00,000 |
| 51 | 17 | 1,00,881 | 8,00,000 | 1,00,881 | 8,00,000 |
| 52 | 18 | 1,00,881 | 8,00,000 | 1,00,881 | 8,00,000 |
| 53 | 19 | 1,00,881 | 8,00,000 | 1,00,881 | 8,00,000 |
| 54 | 20 | 1,00,881 | 8,00,000 | 1,00,881 | 8,00,000 |
| 55 | 21 | 1,00,881 | 8,00,000 | 1,00,881 | 8,00,000 |
| 56 | 22 | 1,00,881 | 8,00,000 | 1,00,881 | 8,00,000 |
| 57 | 23 | 1,00,881 | 8,00,000 | 1,00,881 | 8,00,000 |
| 58 | 24 | 1,00,881 | 8,00,000 | 1,00,881 | 8,00,000 |
| 59 | 25 | 1,00,881 | 8,00,000 | 1,00,881 | 8,00,000 |
| 60 | 26 | 1,00,881 | 8,00,000 | 1,00,881 | 8,00,000 |
| 61 | 27 | 1,00,881 | 8,00,000 | 1,00,881 | 8,00,000 |
| 62 | 28 | 1,00,881 | 8,00,000 | 1,00,881 | 8,00,000 |
| 63 | 29 | 1,00,881 | 8,00,000 | 1,00,881 | 8,00,000 |
| 64 | 30 | 1,00,881 | 8,00,000 | 1,00,881 | 8,00,000 |
| 31 | 10,57,725 | 26,24,725 | |||
| IRR | 6.57% | 8.60% | |||
In the above illustration, the IRR(Internal Rate of Return i.e. Interest Rate) is calculated at Term Insurance + PPF resulting in 6.57% and the IRR of Term Insurance + ELSS resulting in 8.60%.
Under PPF, the accumulated corpus at the end of 15 years is ₹ 12.65 Lakhs. This amount is invested under a 7% instrument return where you withdraw ₹ 1,00,881 annually for the next 15 years. The final corpus value is taken out along with the final payout.
Under ELSS, the accumulated corpus at the end of 15 years is ₹19.48 lakhs (Pre-Tax Value). After the Capital Gains Tax deduction, the final Maturity Value is ₹18.33 Lakhs. This amount is invested under a 7% instrument return where you withdraw ₹ 1,00,881 annually for the next 15 years. The final corpus value is taken out along with the final payout.
| Maturity value after 15 years | 19,48,417 |
| Less | |
| Purchase price | 6,99,975 |
| Long-term capital gains | 12,48,442 |
| Exemption limit | 1,00,000 |
| Taxable LTCG | 11,48,442 |
| Tax paid on LTCG | 1,14,844 |
| Maturity value after tax | 18,33,573 |
The IRR for PPF + Pure term combo is 6.57%. The IRR for ELSS + Pure term combo is ₹ 8.60%. Instead of withdrawing annually if we stay invested, the returns would be much better. Here, we disturb the power of compounding.
HDFC Life Guaranteed Income Insurance Plan vs. HDFC Life Super Income Plan
Read the complete review of The HDFC Life Super Income Plan Here! It is a non-linked, limited-pay money-back insurance plan. This plan includes guaranteed benefits and additional bonuses to help individuals anticipate their financial needs. This insurance plan also provides the customer with guaranteed income for 8 to 15 years.
HDFC Life Guaranteed Income Insurance Plan vs. HDFC Life Smart Pension Plan
You can read the complete review of HDFC Life Smart Pension Plan Here! The HDFC Life Smart pension plan promises to assist you in saving for retirement.
We have compared and analysed HDFC Life Guaranteed Income Insurance Plan (GIIP) with other investment products and found that for long-term wealth creation and security. Pure Term Insurance + PPF or ELSS is a better option.
The HDFC Life Guaranteed Income Insurance Plan is a traditional insurance plan that offers a combination of life insurance protection and guaranteed benefits.
One of the primary features of this plan is the guaranteed income benefit. Policyholders receive regular income payouts at specified intervals during the Policy Term, which can be monthly, quarterly, half-yearly, or annually. These payouts are guaranteed and provide a steady source of income.
The income benefit seems to be beneficial but when considering inflation, it loses its value down the lane. Ultimately, any annual income should keep up with the inflation, i.e., you need a step-up income year after year which is missing in the HDFC Life Guaranteed Income Insurance Plan.
If Insurance Agents try to push you into this plan. Please remember that it is only for the “HDFC Life Guaranteed Income Insurance Agent Commission” that they get for selling you this plan.
Alternatively, if you invest your corpus in a diversified portfolio, your debt allocation will take care of regular needs while the equity allocation helps in wealth accumulation.
Are you searching for financial planning-related doubts on social media platforms like Quora, Facebook, Twitter, etc.? It is better to find a professional Financial Planner who can provide you with a Comprehensive Financial Plan.
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