HDFC Life Sanchay Fixed Maturity Plan-Review (2023): Is it Good or Bad?

Do you have a list of Milestones or Dreams in your life?

To achieve these milestones, you need to be financially stable. But life is unpredictable & uncertain.

“HDFC Life Sanchay Fixed Maturity Plan”, is a life insurance plan that promises to provide guaranteed returns in the form of a lump sum benefit to help you attain your milestones.

Will the HDFC Sanchay Fixed Maturity plan secure yourself & your loved one’s future with the guaranteed benefit?

Let us first understand the plan’s features & benefits in detail.

Table of Contents

1.) What is HDFC Life Sanchay Fixed Maturity Plan?

2.) Features of HDFC Life Sanchay Fixed Maturity Plan

3.) Eligibility Criteria of HDFC Life Sanchay Fixed Maturity Plan

4.) Benefits of HDFC Life Sanchay Fixed Maturity Plan

5.) How to cancel/surrender HDFC Life Sanchay Fixed Maturity Plan?

6.) Advantages of HDFC Life Sanchay Fixed Maturity Plan

8.) Disadvantages of HDFC Life Sanchay Fixed Maturity Plan

7.) Research Methodology on HDFC Life Sanchay Fixed Maturity Plan

9.) Analysis of Benefit Illustration of HDFC Life Sanchay Fixed Maturity Plan

10.) HDFC Life Sanchay Fixed Maturity Plan vs. Other Investments

11.) Final Verdict on HDFC Life Sanchay Fixed Maturity Plan

What is HDFC Life Sanchay Fixed Maturity Plan?

It is a Non-Linked, Non-Participating, Individual, Savings, Life Insurance Plan. It aims to ensure you and your loved ones are financially protected.
Hdfc Life Sanchay Fixed Maturity Plan offers a guaranteed maturity benefit payable as a Lump Sum at the end of the policy. This plan can be used for various life stage needs such as a child’s education, marriage, retirement corpus as well as financially securing loved ones.

Features Of HDFC Life Sanchay Fixed Maturity Plan:

• Option to choose cover on Single life or Joint life basis.

• Option to pay Regular premium / Limited premium / Single premium.

• A wide range of policy terms to choose from 5 years to 40 years.

• Guaranteed benefit at the of the policy term.

• Rider options enhance the life cover.

• Under the POS variant of the product, a medical examination is not required.

• A higher premium will enhance the benefit.

Eligibility Criteria of HDFC Life Sanchay Fixed Maturity Plan:

Eligibility criteria	Minimum		Maximum
	Single life	Joint life	Single life	Joint life
Age at entry (years)	90 days	90 days	Single Premium: Death Benefit Multiple (DBM) 1.25-1.5 – 70 years Death Benefit Multiple (DBM) 10 – 50 years	Single Premium: 60 years
			Regular/Limited Pay: 65 years Maximum	Regular/Limited Pay: NA
Age at maturity (years)	18 Years		Single life	Joint life
			Single Premium: Death Benefit Multiple (DBM) 1.25-1.5 – 90 years Death Benefit Multiple (DBM) 10 – 70 years	Single Premium: 80 years
			Regular/Limited Pay: 85 years Maximum	Regular/Limited Pay: NA
Premium paying term & Policy term	Premium paying term		Policy term
	Single premium		5 to 40 years
	5		PPT to 40 years
	6
	7
	8
	10
	12
	15
	20
Premium per instalment	Single Premium: 10,000 Annual:  10,000 Half-yearly: 5,100 Quarterly: 2,600 Monthly:  875		No maximum limit, subject to Board Approved Underwriting Policy
Sum assured on death	Single Premium:  12,500  Regular/Limited Pay:  70,000		No maximum limit, subject to Board Approved Underwriting Policy

Some of the criteria have slight variations for policies under the POS variant.

Benefits of HDFC Life Sanchay Fixed Maturity Plan:

Death benefit:

Death benefit Multiple (DBM)

For Single premium: Single life – 1.5 to 1.25 * DBM / Joint Life – 1.5 to 1.25 or 10 – 15 * DBM

For Regular pay: 10 * DBM

Single Life Coverage:

The death benefit payable to the nominee under a Single Life policy shall be the highest of the following:

• Sum Assured on Death

• Death Benefit Multiple (as chosen by the policyholder) times Single Premium (plus any underwriting extra premium) for a Single Pay policy OR 10 times Annual Premium for a Regular/Limited Pay policy

• 105% of Total Premiums Paid till the date of death

• Surrender value applicable as of the date of death

• Upon the payment of the death benefit, the policy terminates and no further benefits are payable.
  

Joint Life Coverage:

First death: The death benefit shall be payable on the first death of any of the lives assured.

The death benefit will be the higher of the following

• Sum Assured on Death

• 105% of Total Premiums paid till the date of death

Upon the payment of this benefit on the first death, the policy continues for the surviving life assured.

Second death: The death benefit payable on the second death (i.e. the death of the surviving life assured)shall be the highest of the following:

• Sum Assured on Death

• Death Benefit Multiple (as chosen by the policyholder) times Single Premium (plus any underwriting extra premium)

• 105% of Total Premiums paid till the date of death

• Surrender value applicable as of the date of death

Upon the payment of this benefit on the second death, the policy will terminate and the policyholder will not get any further benefit.

Maturity Benefit:

Guaranteed maturity benefit (also called Sum assured on maturity) is payable as a lump sum at the end of the policy.

Sum assured on Maturity = Annualised premium / Single premium * GMM

Guaranteed Maturity Multiple (GMM) varies by age and premium payment term

Once the Maturity Benefit is paid, the policy terminates and no further benefits are payable.

Other benefits of HDFC Life Sanchay Fixed Maturity Plan:

Riders:

• HDFC Life Income Benefit on Accidental Disability Rider

• HDFC Life Critical Illness Plus Rider

• HDFC Life Protect Plus Rider

Premium paying frequency:

The premium payable at other than Annual frequency shall be calculated by multiplying the Annual Premium by Conversion Factors as below:

Frequency	Conversion factor
Half-yearly	0.51
Quarterly	0.26
Monthly	0.0875

The grace period, Lapse, Paid-up & Revival:

Grace period:

For the Regular/ Limited Premium payment term you get a grace period of 15 days for the monthly frequency of premium payment and 30 days for other frequencies to pay the premium without any penalty.

Lapse & Paid-up

The policy shall acquire a Guaranteed Surrender Value (cash value) immediately on the payment of a Single Premium and payment of at least the first two year’s premium in case of a Regular/ Limited Pay policy.

Lapse:

If a due premium is unpaid upon the expiry of the grace period, the policy shall lapse if it has not acquired a Guaranteed Surrender Value/span>

Paid-up value:

If a due premium is unpaid upon the expiry of the grace period, the policy shall become reduced paid-up if it has acquired a Guaranteed Surrender Value.

Maturity benefit & Death benefit shall be reduced as Paid-up Sum assured on maturity & Paid-up Sum assured on death proportionate to the number of premiums paid to the number of premiums payable under the policy.

Revival:

You can revive your lapsed/paid-up policy within five years from the due date of the first unpaid Premium and before the expiry of the Policy Term.

How to cancel/surrender HDFC Life Sanchay Fixed Maturity Plan?

Surrendering HDFC Life Sanchay Fixed Maturity Plan:

The policy shall acquire a Guaranteed Surrender Value (GSV) immediately on the payment of a Single Premium and payment of the first two year’s premium in case of a Regular/ Limited Pay policy.

The surrender value payable shall be higher than the GSV and the Special Surrender Value (SSV).
Upon payment of the Surrender Benefit, the policy will terminate and no further benefits shall be payable.

Cancelling during the Free look period:

In case the policyholder is not agreeable to any policy terms and conditions under this product, shall have the option of returning the policy, within 15 days (Distance Marketing mode, this period will be 30 days) from the date of receipt of the policy.

Advantages of HDFC Life Sanchay Fixed Maturity Plan:

• Flexibility in choosing the premium paying term & Policy term

• Joint life option under single premium pay

• Riders to enhance the cover

• Guaranteed benefits can be earmarked for any of the life goals.

• Tax benefit as per Sec 80 C & Sec 10 (10 D).

• No complex terms for calculating the benefits.

Disadvantages of HDFC Life Sanchay Fixed Maturity Plan:

• There is no loan option available under this plan.

• The lock-in period is 2 years for surrender or making it paid up.

• There is no loyalty addition or any other benefits added to the maturity benefit.

• The return on investment won’t be an inflation-beating return.

Research Methodology on HDFC Life Sanchay Fixed Maturity Plan:

Since we have to go through all the important details that we need to know about HDFC Life Sanchay Fixed Maturity Plan, now let me ask you a question.

Do you think you can purchase a plan based on these basic details?

Yes, for me these details are not sufficient to decide whether we should buy this plan or not.

That’s why now we are going to analyse the IRR of HDFC Life Sanchay Fixed Maturity Plan to see how it can benefit us in the long term.

Here I will analyse by calculating the IRR with the online calculator provided by HDFC Life Sanchay Fixed Maturity Plan.

Then, we are going to use the same value to calculate the IRR of other investments.

Later, we are going to compare the HDFC Life Sanchay Fixed Maturity Plan with other investments to see which gives us a better return.

This can help us to decide whether we should purchase this plan or not.

Analysis of Benefit Illustration of HDFC Life Sanchay Fixed Maturity Plan:

We can work out the IRR for the following illustration to find out whether this plan is beneficial to the investor.

Male	40 years
Annual premium	Rs. 1 lakh
Premium paying term	15 years
Policy term	20 years
Sum Assured on death	Rs. 10 lakhs
Sum Assured on Maturity	Rs. 30,68,890

		HDFC Sanchay Fixed maturity Plan
Age	Year	Annualised premium / Maturity benefit	Death benefit
41	1	-1,00,000	10,00,000
42	2	-1,00,000	10,00,000
43	3	-1,00,000	10,00,000
44	4	-1,00,000	10,00,000
45	5	-1,00,000	10,00,000
46	6	-1,00,000	10,00,000
47	7	-1,00,000	10,00,000
48	8	-1,00,000	10,00,000
49	9	-1,00,000	10,00,000
50	10	-1,00,000	10,00,000
51	11	-1,00,000	10,00,000
52	12	-1,00,000	10,00,000
53	13	-1,00,000	10,00,000
54	14	-1,00,000	10,00,000
55	15	-1,00,000	10,00,000
56	16	0	10,00,000
57	17	0	10,00,000
58	18	0	10,00,000
59	19	0	10,00,000
60	20	0	10,00,000
		30,68,890
	IRR	5.45%

The IRR works out to be 5.45% which is similar to bank FD. Also locking funds for a longer period at this rate is not advisable. Any investment should give at least an inflation-beating return.

HDFC Life Sanchay Fixed Maturity Plan vs. Other Investments:

In order to have an inflation-beating return, we shouldn’t mix up insurance & investment. 

A separate term policy for life cover & investment separately for life goals.

Let us assume a similar annual cash flow of Rs. 1 lakh as in the above illustration. We can also assume a term cover for Rs. 10 lakhs (In general life cover is for a higher sum assured). For comparison purposes, we have assumed the same premium paying term & policy term.

Pure term insurance policy:

Sum Assured: Rs. 10 lakhs

Annual premium: Rs 7000

Tenure: 15 years

Balance Amount to be invested in PPF / ELSS: Rs 93000 (1 Lakh less 7000)

HDFC Sanchay Fixed Maturity Plan Vs. PPF vs. ELSS:

		HDFC Sanchay Fixed maturity Plan		Term Insurance + PPF		Term insurance + ELSS
Age	Year	Annualised premium / Maturity benefit	Death benefit	Term Insurance premium + PPF	Death benefit	Term Insurance premium + ELSS	Death benefit
41	1	-1,00,000	10,00,000	-1,00,000	10,00,000	-1,00,000	10,00,000
42	2	-1,00,000	10,00,000	-1,00,000	10,00,000	-1,00,000	10,00,000
43	3	-1,00,000	10,00,000	-1,00,000	10,00,000	-1,00,000	10,00,000
44	4	-1,00,000	10,00,000	-1,00,000	10,00,000	-1,00,000	10,00,000
45	5	-1,00,000	10,00,000	-1,00,000	10,00,000	-1,00,000	10,00,000
46	6	-1,00,000	10,00,000	-1,00,000	10,00,000	-1,00,000	10,00,000
47	7	-1,00,000	10,00,000	-1,00,000	10,00,000	-1,00,000	10,00,000
48	8	-1,00,000	10,00,000	-1,00,000	10,00,000	-1,00,000	10,00,000
49	9	-1,00,000	10,00,000	-1,00,000	10,00,000	-1,00,000	10,00,000
50	10	-1,00,000	10,00,000	-1,00,000	10,00,000	-1,00,000	10,00,000
51	11	-1,00,000	10,00,000	-1,00,000	10,00,000	-1,00,000	10,00,000
52	12	-1,00,000	10,00,000	-1,00,000	10,00,000	-1,00,000	10,00,000
53	13	-1,00,000	10,00,000	-1,00,000	10,00,000	-1,00,000	10,00,000
54	14	-1,00,000	10,00,000	-1,00,000	10,00,000	-1,00,000	10,00,000
55	15	-1,00,000	10,00,000	-1,00,000	10,00,000	-1,00,000	10,00,000
56	16	0	10,00,000	0		0
57	17	0	10,00,000	0		0
58	18	0	10,00,000	0		0
59	19	0	10,00,000	0		0
60	20	0	10,00,000	0		0
		30,68,890		35,54,204		63,08,443
	IRR	5.45%		6.55%		10.85%

1. The above table clearly depicts that the PPF or ELSS investment gives a better return. All these returns are post-tax returns. Based on your risk appetite you can choose an investment vehicle for wealth accumulation. For a risk-averse investor, PPF would be a better option & someone who can take risks can opt for ELSS.

Final Verdict on HDFC Sanchay Fixed Maturity Plan:

 The HDFC Sanchay Fixed Maturity plan is an endowment plan with guaranteed lumpsum benefit payable on maturity. The maturity benefit is a straightforward benefit without any addition like loyalty addition or any other benefit. 

The maturity benefit is a meagre amount, so meeting life goals would be elusive due to inflation. 

Pure term insurance with adequate life cover should be in place before starting wealth accumulation. Start investing based on the risk appetite, time horizon the goal. 

Asset allocation should also be given importance while selecting your investment product. Thereby, you get an inflation-beating return which will help in achieving all your life goals.

If you have any comments or questions, write them in the comment box below.

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