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HDFC Life Sanchay par Advantage Plan - Should You Buy

HDFC Life Sanchay Par Advantage Plan [Review]: Should You Buy?

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HDFC Life Sanchay par Advantage Plan is a non-linked, participating Life Insurance Plan. The unique feature of this plan is that you will receive the advantages of this policy until you reach 100 years of age!!

The company claims it to be a Sanchay (means save and grow) Plan with advantage. In this article, we will do a detailed analysis of its ‘Sanchay’ aspect and we will have a look at any disadvantage on their claimed ‘advantage’!

Let’s read on and figure out what this plan has for you in its basket!!

Table of Contents

HDFC Life Sanchay Par Advantage: Key Features

Below are the key features and Basic Eligibility Criteria of this plan:

    This policy comes under 2 options:

      (i) Immediate Income Option; and
      (ii) Deferred Income Option
  • Life cover with protection till the age of 100 years,
  • Basic eligibility criteria are shown in the below table:

    • hdfc par advantage key features

  • The policy term will be 100 minus the age of entry. Let us say, you are 30 years old, then your policy term will be 100-30=70 years!
  • he Minimum Death Benefit shall be 105% of Total Premiums Paid as on date of death.
  • The minimum premium per instalment is Rs.25,000; you can choose to pay it annually, half-yearly, quarterly, or monthly as shown below.

hdfc premiumLet’s have a look at this brief video description reviewing all the major aspects of the HDFC Life Sanchay par advantage plan. For details continue reading this article.

Now, let us discuss the 2 options provided by this policy. We will start with an Immediate Income option.

HDFC Sanchay Par Advantage: Immediate Income Option

Let us say you are 30 years old, choose to pay an annualized premium of Rs. 1 Lac for the premium payment term (PPT) of 8 years.

As the policy option name suggests, HDFC Sanchay Par Advantage will start paying cash bonuses immediately on completion of a year of the first premium payment. And it will continue to pay the cash bonuses on completion of each policy year.

Policy Term will be 70 years. That is, you will receive the Cash Bonuses throughout the policy term of 70 years. The amount of cash bonuses varies based on the company’s performance in the given year.

You can get the Cash Bonus at a different rate of returns, as shown below:
HDFC Assumed Rate of returnPlease note that the Cash Bonuses are NOT the guaranteed bonuses!
Below image shows the description (Image Source: Product Brochure)
hdfc income policy termAs you can notice from the above description in the image:

  • The assured sum will be Rs. 8 Lacs.
  • And, there will be a terminal bonus of
      •  Rs. 10,31,000 at 4% assumed rate of return, or
       Rs. 1,59,34,000 at 8% assumed rate of return.

Note that terminal bonuses are not guaranteed as well.

But if we take the best-case scenario of an 8% assumed rate of return, you will receive

  • Rs. 30,000 per annum throughout the policy term, and
  • The non-guaranteed terminal bonus of Rs. 1,59,34,000 at maturity.

We will do the detailed illustration and analysis of this best-case scenario to see what all advantages this policy can provide!!

Before we get into illustration, let’s have a look at the other option of this plan, which is a deferred income option.

HDFC Sanchay par Advantage: Deferred Income Option

Let us take the same example as given in the previous option.

Let us say you are 30 years old, choose to pay an annualized premium of Rs. 1 Lac for the premium payment term (PPT) of 8 years.

In this option, you will receive a guaranteed income along with Cash Bonuses, once you finish your premium paying term.

You have to pay your premium payments for the 8th year, then you will start receiving the guaranteed income from next year onwards till 25 years along with non-guaranteed bonuses, as described below:

For 25 Years, you will receive:

  • the guaranteed income of Rs. 28,400.
  • Cash Bonus of Rs. 42,600 p.a. (assumed at 8% returns), or Cash bonus of Rs. 1,100 p.a. (assumed at 4% returns). [Cash bonuses are not guaranteed.]

After the 25 years duration,

You will only receive non-guaranteed Cash Bonuses as shown in this table:
hdfc assumed rate of returnsIf declared, then you may receive this bonus amount all throughout the policy term of 70 years.
hdfc cash bonus policy termApart from guaranteed income and non-guaranteed bonuses, this option will also provide the non-guaranteed terminal bonuses, at maturity as shown in this table:
hdfc rate of returns

Calculation of Guaranteed Income:

There is a process of declaring the amount of Guaranteed Income. You are getting the guaranteed income of Rs.28,400 for 25 years because your premium payment term is 8 years and you are 30 years old. For different entry age and for different Premium Payment Term, Guaranteed Income is calculated as shown in the table below:
hdfc calculation guarnteed income rateNow, we will calculate the average returns provided by both options of this policy. We will consider the same examples with the best-case scenario… that is at an assumed rate of return of 8%.

The Assured Death Benefits in the above example for both options will be Rs.12,50,000 in both options. For more details on death benefits, you can refer to the HDFC Life Sanchay Par Advantage Product Brochure.

Our core objective in this post is to make you aware of the investment aspect of this plan. Whether you should invest or avoid this plan!

Let’s do the real analysis of both options in the next section.

HDFC Life Sanchay Par Advantage: Analysis and Review

From the above description, it may seem like that this policy has truly covered the lifetime until you become 100 years old; by providing regular income throughout 70 years. But if you notice it closely you will find that:
1. In the deferred income option,
For calculating IRR, we are taking the best case scenario at 8% assumed rate of returns, as shown in this table:

hdfc policy durationUsing the above data, we will get the IRR to be around 4.8%!!

Please note, this IRR is for the best-case scenario of an 8% assumed rate of returns. It is better not to consider the worst-case or even the average case scenario for this option!!

Even saving bank accounts can give you better returns at this amount.

4% return rate in 70 long years!! Don’t you think that there are better options available for you, if only you care to explore a bit further?

We will discuss alternative options in the later section. Now, let’s have a look at the immediate income option.

2. In the immediate income option, the best-case scenario is that you are receiving the cash bonus of Rs. 30,000 per annum (at 8% rate of interest) until you are 100 years old!

The below table (shortened version) shows the overall duration of 70 years, from the year 2020 till 2090, here we will calculate the average returns of your investment in this policy.

hdfc premium payemntsImmediate income option is providing you with the IRR of 5% as their best cash bonuses assumed at 8%. Along with all your premium payments you have to pay the GST charges.

Do you think it is a great deal for your financial future?

With both of these variants, you are getting the returns in the range of approximately 5%!

So what you should do, if you want greater returns for a long term of 60-70 years?

Well, if you are looking for long term investment then you must consider investing in Equity Mutual Funds. There you will get the long term returns in the range of 12% to 15% and you will experience the power of compounding in your invested capital. Let’s take an example,

You choose to invest Rs. 8 Lacs as a Lumpsum payment into equity Mutual Fund, within 25 years the future value of your investment will be Rs. 1,58,30,773, at the assumed rate of return of 12%! Have you noticed it? Just Rs.8 Lacs can make you 1.5 crores within the 25-year duration.

You can keep invested for any number of years and your principal amount will get compounded. You can also choose to invest through SIPs if you don’t want to pay the lump-sum payment.
Mutual fund returns

You can use this Online Mutual Fund Calculator to find the future value of your desired investment value and investment duration, take the returns in the range of 12% to 15%.

If you are risk-averse then, instead of investing in this policy, you can deposit Rs.1,00,000 per annum for any number of years you want into the PPF account or FD Scheme. Here, you will get the assured returns in the range of 7% to 8%. That will make you Rs.1.3 crores in 35 years with Rs.8 Lacs invested capital!

‘Disadvantage’ of HDFC Life Sanchay Par Advantage

In the Immediate income option, you are getting a nominal amount of Rs. 14,500 per annum. In the Deferred Income option, you are receiving merely Rs. 2,500 per annum for 70 years long term!

It is like, your friend asks you for Rs.8 Lacs and promises to pay back any random small amount every single year till you attain the age of 100 years!! Will you lend money to your friend with such a vague promise?

Of course NOT!

In the best-case scenario, this policy promises you to pay Rs. 1.5 crores at maturity. That is, if you start investing from the year 2020, you will get Rs.1.5 crores (non-guaranteed) in the year 2090!! Still, the average return rate will be merely 5%, which can’t even beat the rate of inflation, which is growing rapidly!

Talking about the maturity bonus of Rs.1.5 crores, which you may get from this policy in 70 long years!! But as you have seen the analysis discussed in the previous section:

  • With Mutual funds, you will generate Rs.1.5 crores within 25 years of investment duration.
  • PPF will generate Rs.1.5 crores in 37 years, and these are guaranteed returns!

I hope now you have understood that though they claim it to be an “Advantage” Plan, actually it is a “Disadvantage” Plan.

Have you ever thought as to why your Financial Advisor is still trying to sell you this product?

If your Financial Advisor recommends or convinces you to buy it, BEWARE! it’s because they may get a commission of 30-40%. If your premium is 90,000, your advisor may get around 27,000 to 36,000 as commission out of your premium. So it is for the commission they are selling you and not for your interest or because it meets your financial goals.

So always check about the product, its review, returns, if it beats inflation, and especially if it meets your financial needs. If not, then do not opt for it just because your advisor tells you to do so.

If your Bank Relationship Manager also tries selling you this product, NOT TO WONDER, the bank also gets a commission. Relationship managers have pressure to sell these kinds of products and also have targets, hence there is a lot of misselling happening.

They missell telling that there is around 8 to 9% returns from these products. (Nowadays the complaints on bank misselling have increased) Hence before you buy a product verify the truth on the HDFC Life website as to what the actual returns are.

There is a lot of marketing and advertisements to attract customers but if you are not an ignorant customer, you wouldn’t fall prey for these kinds of products.

Many are behind complicated products thinking that it must be good, but it is not so. PPF, Mutual Funds, Term Insurance though are old and boring, have no marketing gimmicks in them.

They are simple and easy to understand and also fulfills its purpose. Complexity kills transparency. Less transparency makes it easier to mis-sell.

One more place where it becomes easier to missell is when the investors have no much knowledge of these products, they often tend to believe whatever is said to them. So never be an ignorant investor. Buy a product only if you can understand it. Avoid complicated investment products like HDFC Life Sanchay Par Advantage.

How much is really guaranteed in HDFC Life Sanchay Par Advantage?

Returns are guaranteed only if you complete the payment: If you miss to pay the premium or surrender the policy, the policy benefits will reduce.

They portray the guaranteed part, but how much is guaranteed?

Check your final returns, it’s only 4 to 5%.

GST: You will also have to pay the GST on the premium, after that the returns will become even lower.

Liquidity: Investment will be locked until the income period starts.

If you are looking for wealth creation, then this is not the right product: PPF would give higher returns.

How will this plan even benefit you?

Do you still think this is a good plan?

YES, If you feel that 4% is enough to meet your financial goals, and if it beats inflation.

YES, If you feel that no other investment can give you 4% returns or more.

If your answer was NO, then don’t opt for it. If you have already purchased it, here is a way to cancel it.

HDFC Life Sanchay Par Advantage: How to cancel this plan?

If you have signed up this policy without understanding the complete details of this policy or you signed up because your bank relationship manager pushed it to you, there is a way out. You can come out of this policy.

There will be a free look period of 15 and 30 days as defined below

If you have taken this plan directly from the company then you have the option to return the policy by stating the reason within 15 days from the date of receipt of the policy.

Whereas, if you have taken this policy through some other medium such as online, telephone, which does not involve face to face interaction, then you will have a free look-in period of 30 days.

On receipt of your letter along with the original policy document, you will get the refund of your paid premium, but it will be subject to deduction of the proportionate risk premium for the period on cover, the expenses incurred by the company for stamp duty and medical examination if any.

In case, if you want to cancel this policy during your policy term, then the deductions will be as shown in the below table:
hdfc premium paying termBased on your Premium Paying Term and Policy year when you want to cancel, the surrender value factors as a percentage of your premium paid will be, as shown in the table.

For example, if you want to cancel your policy in the 4th policy year, & your PPT is 8 years; then you will receive 50% of the premium that you paid to the company.

For more details, you can visit hdfclife.com

Also, you can call their Toll free number (from 9 am till 9 pm, all days): 1800-266-7227

Final Verdict

In short, you should AVOID investing in HDFC Life Sanchay Par Advantage.

Though they claim it to be a “Sanchay” Policy with “Advantage”; but actually it is a “Vyaya” policy with “disadvantage”, as you might have noticed in the analysis and illustration given above!!

Also, they claim to pay Cash Bonuses for 70 long years but all these bonuses are not guaranteed!

In the best-case scenario, this policy offers returns in the range of 4%-5%, which can’t even beat the rate of inflation. Even the returns provided by your Saving Banks are better than this policy, as they are assured!

Therefore, as an alternative, you must invest in equity Mutual Funds, as you are planning to invest for the long term. For better clarity on Mutual Fund investment, you must read this Comprehensive and Complete Guide to Mutual Funds.

You can also check out the review of HDFC Life Sanchay plus.

In case if you have any further queries in this article feel free to ask them in the comment section.

For more details on investment and your customized financial planning, you should book your FREE consultation call by clicking the link below:

30 Mints Offer

88 thoughts on “HDFC Life Sanchay Par Advantage Plan [Review]: Should You Buy?”

  1. Hello, thank you for this post. However, I have already made the mistake of taking it as I believed the insurance agent (entirely my fault) and thought what he was saying was the truth. I have already paid 1 year premium on 1Lakh + 4500 tax.

    Now they are calling me 5 times a day to pay the 2nd year premium. If I dont pay, I lose all of my investment. The lock in period is 2 years, after that if I surrender, I will get assured 60,000 only(from my 2 Lakh investment).

    So my question is should I stop paying now and consider 1 Lakh to be the payment for my foolishness or should I continue?

    Reply

  2. Thanks for such details. I was looking it as bank personnel suggested me this policy. But whenever I asked them IRR they bypass me. I was about to calculate that but find that in your post. Thank you.

    Reply

  3. You said that one cam gey better return in FD and PPF. Do you think that interest rate would by 7-8% after 50 yrs from now. Because internet rates are falling continuously.

    Reply

    1. “Hi Ashok Singh,

      As you said there is no guarantee that FD and PPF interest rate be the same after 50 yrs.

      But Mutual Fund investment can give you better return for long-term investment. It is better to compare various investment schemes before investing.”

      Reply

  4. This is so so helpful. Thanks a lot for illustrating this. My RM just tried to sell this, I am so glad I read this. Going to bash this guy now for selling lies

    Reply

  5. Hello sir, My advisor saying If u take policy of 30k per year, the next year onwards itself you will get 11,400/- not after 8yrs as you said. Please clarify

    Reply

    1. “Hi Muzammill,

      Thank you for notifying us. Actually there are two options available in HDFC Life Sanchay Par Advantage.

      Option: 1 Immediate Income Option and
      Option: 2 Deferred Income Option

      In option-1, you can get cash bonus from the 1st premium term onwards. But on the other hand, in option-2,you can get cash bonus once you finish your premium paying terms.

      So, please clarify the options from your advisor before making a decision. “

      Reply

  6. Hello

    Hats off, You are a libra. Your in depth analysis has helped many people. Its a worth reading. Thank you

    Reply

  7. What if I exit this plan on 13th year, as their of 1L/ year illustration and 4.8L as money back every year and 8% of guaranteed bonus + Terminal Bonus. 17L altogether?

    Reply

    1. Hi Dinesh,

      If you are completed your PPT, then you will receive 90% of the premium you have paid once you surrender the policy.

      Reply

  8. Thank you for detailed analysis. Can you please suggest any good similar plans with higher returns other than MF/SIP. I am inclined to buy one such policy. Please advice.

    Reply

  9. i just got a call from my RM to convince on the same. I have kept on the hold saying will get back to you on this. good did not fall for it.

    Reply

  10. Hi I am really confused and regretting now. Today itself I have got this plan but what they are saying is completely different. They asked me to pay one lac for each year and do not have to pay for 7th and 8th year. Also I can withdraw my money / surrender my policy anytime I want but they did not mention that they will deduct some amount. ??? Could you please guide me. what will be the final amount if I term the plan lets say in 3rd or 4th year and after let say 8 years? what will be the exact amount that I will be getting?

    Reply

    1. Hi,

      Once you purchase a premium plan, either you can continue or surrender your insurance plan.

      Based on your Premium Paying Term and Policy year when you want to cancel, the surrender value factors as a percentage of your premium paid will be change.

      If you want to surrender your plan in the 3rd or 4th year, then you will get 35% to 50% of the premium you have paid.

      After 8 years, you will get 60% to 80%

      For more details, you can visit hdfclife.com

      Reply

    1. There is a free look period of 15 and 30 days to cancel the policy.

      If you have taken this plan directly from the company then you have the option to return the policy by stating the reason within 15 days from the date of receipt of the policy.

      Whereas, if you have taken this policy through some other medium such as online, telephone, which does not involve face to face interaction, then you will have a free look-in period of 30 days.

      On receipt of your letter along with the original policy document, you will get the refund of your paid premium, but it will be subject to deduction of the proportionate risk premium for the period on cover, the expenses incurred by the company for stamp duty and medical examination if any.

      Reply

  12. i bought this policy on 25th march 2020 and want to surrender now on 6march 2021. is it good to surrender or i shall continue.

    Reply

  14. Immediate Income Option – as per your illustration cash bonus is paid out after the premium payment term of 8 years, but when I enquired in the bank, they are saying the cash bonus is paid out right after the year of inception i.e. if I pay premium this year 2021, I will get the bonus in 2022 and so on. can you please clarify this?

    Reply

    1. Hi,

      In the Immediate Income Plan, you will receive the cash bonus from your 2nd premium payment term onwards. So, yes what the bank officials said is true.

      Reply

  15. can you give more clarity on the Immediate Income Option. Your illustration shows the cash bonus receipts only after the PPT of 8 years, but the bank manager says we will get the bonus right after from next year i.e. if I paid the premium this year 2021, I will get the cash bonus in 2022 for Rs.30,000. Can you clarify if this is the case?

    Reply

    1. Thank you for notifying us Abdul. As your Bank Manager said, you will get your cash bonus from the next year onwards.

      Reply

  16. Hi
    I took this policy with a yearly premium of 1 Lac and for 6 years, opted for immediate income. Now after reading this i have realized i have made a big mistake.
    My 1year will be completing in this Feb’21.
    Shall I discontinue with this policy.

    Reply

    1. Hi Ishita Gupta,

      It is advisable to work out the outcome before you decide. Because if you decided to surrender your insurance plan, then you might need to some amount will be deducted from the premium you have paid.

      If you want, you can consult a financial planner to choose the better option.
      Or
      You can take advantage of our free complimentary financial plan consultation and talk to our financial planners.
      Get your appointment here: https://www.holisticinvestment.in/complimentary-financial-plan-consultation/

      Reply

  17. I have opted for 1 lakh per year for 6 year option and I was asked to make the first premium of 1 lakh. Subsequently, they have agreed to make it in 4 quarter i.e. 25000 x 4 + GST and they have issued the policy. I was not satisfied with the policy details. I have approached offices of HDFC Life Insurance as a customer looking for this policy and none of them could give any proper explanation about the quantum of returns and the surrender value. Their illustration shows 23500 cash bonus per annum. I was assured that besides the annual income, on 7th year I will get back the invested amount of Rs. 6 lakh but at one branch I was told that I will be getting only Rs.4.87 lakhs or so. It seems neither the brokers nor the company people are in a position to give any concrete explanation. The illustration shows cash bonus at 8% is non guaranteed and none of them could give any satisfactory explanation. Now I am planning to cancel the policy within 15 days. Your analytical approach seems to convincing. Thanks.

    Reply

  18. Yesterday I was fully convinced after meeting the bank guy…thank god i read you review today, A big NO to them.

    Thanks a lot for the detailed explanation, i became more aware now.

    Reply

  19. i invested in this policy in december 2020 considering my RM suggestions and then realised that i have fallen prey. Is there any way i can save myself now?

    Reply

    1. Since you have already taken this insurance plan, then you have two options.
      Option: 1 You can surrender and encash the policy. And reinvest the surrender value and future premium money with better investment plans like PPF or MF.
      Option: 2 You can continue with the insurance plan until the policy matures.
      It is advisable to work out the outcome of both the options and proceed with the better option.
      80% of the times, option 1 is better.

      You can consult a financial planner to choose the better option.
      Or
      You can take advantage of our free complimentary financial plan consultation and talk to our financial planners.
      Get your appointment here!
      https://www.holisticinvestment.in/complimentary-financial-plan-consultation/

      Reply

  20. Hello,
    I have been misguided by banker and now its already 6 months since i have purchased this policy.
    Can i do something to stop this policy?
    Will i get refund of premium that i have already paid?

    Reply

    1. You can cancel the policy during the free look period of 15 and 30 days.

      On receipt of your letter along with the original policy document, you will get the refund of your paid premium, but it will be subject to deduction of the proportionate risk premium for the period on cover, the expenses incurred by the company for stamp duty and medical examination if any.

      Reply

  21. Thank you for the review. Quite helpful. It might be a vague query but can you give some idea about what possibly can be the best Investment options seeing Market conditions today.

    Reply

  22. So only you are the genuine one to say invest in mutual fund that you recommend, which will give Gauranteed return of 12% as mentioned in your review.
    And people should believe this .
    Where is the gaurantee in equity investment for 12%
    You are just using this platform to demarket another brand and market your products .

    Reply

    1. Hi Kishore,
      it’s our genuine review. We are not aiming to demarket any brand. It’s upto investors to choose their investment plans. As financial planners, we are just giving them suggestions to ease their work.

      Reply

  25. Really an eye opener for all the investors, preventing them losing hard earned money at the hands of there mis sellers. They are really mean even being known faces around you.

    Reply

  26. When the RM told me about this policy today, I couldn’t understand anything. So, I said I’ve to read the policy details and will get back. I tried to understand this policy, but couldn’t. I somehow landed on your website and tried to go through the policy details and am still lost. Maybe I’m not that investment savvy to understand such intricate things. The only thing I understood from the entire writeup is ‘Don’t Invest’ in this product and that’s enough for me. Thanks for the heads up.

    Reply

  27. Yesterday I took this policy, now I want to cancel. May I know the procedure to cancel this. Please help me on this. Thanks in advance.

    Reply

    1. Hi Bharathi,

      Good that you realised it early. You have 15 days free looking period for the policy. Within that 15 days, you can surrender the policy without any charges.

      Please go ahead and surrender asap.

      Reply

  30. I was about to invest in this. Good that I read your review before investing. Now i don’t invest in this. Thanks a lot for your in depth analysis.

    Reply

    2. I have received the policy document today and after reading your article I have decided to cancel it ,will I get back my full premium without any deduction my premium amount is 150000

      Reply

      1. There is a free look period of 15 and 30 days to cancel the policy.

        On receipt of your letter along with the original policy document, you will get the refund of your paid premium, but it will be subject to deduction of the proportionate risk premium for the period on cover, the expenses incurred by the company for stamp duty and medical examination if any.

        Reply

      1. Thanks for this article , my HDFC relationship manager is forcing me to take this policy.
        now i will not take this policy , who know what will be return after 5 years , there is no guarantee return mentioned in Policy
        only either 4% or 8 % , its better invest in post office some good scheme is there.

        Reply

  37. Thanks much…I was about to check about this plan as my RM suggested. Thank god accidentally check this review.

    Reply

  41. Thanks for the info. Definitely it gives a balanced view. We are warned not to fall for RM who pushes this product.

    Reply

  42. Could you please explain how come after depositing 1 lakh per annum for 8 years + GST ie. total 8,18,000 and receiving 15934000 after 70 years yield only 5 % pa.?

    Reply

    1. Though it looks like a huge sum, considering the period – 70 years…it is very fewer returns.

      @5% returns, money doubles every 14 years. Let us say the eighth year value is 8.18 L, then it doubles to 16.36 L at the end of (8 years+14 years) 22 years. It again doubles to 32.72 L at the end of 36 years. It doubles to 65.44 L at the end of 50 years. Again it doubles to 130.88 L at the end of 64 years. It reaches 159 L at the end of 70 years.

      Insurance companies play with this power of compounding to attract us.

      Reply

      1. they are thinking customers are fool , before selecting any policy think 4 times , read articles and then buy.
        if they are not given in writing about return then there is huge risk.
        My HDFC relationship manager is chasing me since one moth to but this Sanchay advantage policy but after reading this article and comparing with PPF/mutual fund , no benefit.
        pl also check post office there is some good policy and return upto 7%

        Reply

      2. Hai sir, last year I took this policy…. the manager told me to pay 1 lakh rupees every year for 10 years and from the 12th year, he told that I would get around 80000 rupees per month and I took the policy and paid the first year premium and now I am thinking to stop this policy due to less monetary benefit!! Plz guide me whether to continue or stop this policy!!!! as there was little Ben

        Reply

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