Is this HDFC Life’s Sanchay Plus any different from the previous one?

If this Sanchay Plus is better, if at all, is this worth considering as an investment or insurance option?

This review article about the new HDFC Life Sanchay Plus covers the following topics.

• Review of HDFC Life: Company Overview
• Basic Features of HDFC Life Sanchay Plus
• Practical Review of HDFC Life Sanchay Plus Benefit’s 4 Variants
1. Variant No.1: Guaranteed Maturity Benefit – Analysis and Review
2. Variant No.2: Guaranteed Income Benefit – Analysis and Review
3. Variant No.3: Guaranteed Life-Long Income Benefit – Analysis and Review
4. Variant No.4: Guaranteed Long Term Income Benefit – Analysis and Review
• HDFC Life Sanchay Plus: Overall Analysis and Review
• HDFC Life Sanchay Plus: How to cancel the policy?
• Final Verdict

HDFC launched the HDFC Life Sanchay Plus, following the HDFC Life Sanchay endowment insurance plan.

Being the next-version, it sure does have some better features and options than the previous one. It is crafted to be appealing and attractive for every single investor to “invest”. Are these appeal and attractiveness is just a perception created or a reality?

We’ll get to that in this article, after we look into the basic features of HDFC Life Sanchay Plus and the small overview of the company “HDFC Life”.

HDFC Life: Company Overview

HDFC Life is providing its services since the year 2000. Now, it’s almost 19 years since its inception.

The company has been an average player in terms of its Claim Settlement Ratio when compared to its other counterparts. But, over the years its Claim Settlement Ratio has experienced a consistent rise.

Still, a long way to go!

For more details on various Term Insurance, you should read the detailed article on “Cheat Sheet to select the best Term Insurance”.

Now, let’s get into the detailed review of HDFC Life Sanchay Plus and find out whether it is worth buying or not?

HDFC Life Sanchay Plus: Basic Features

• HDFC Sanchay Plus is a non-linked savings endowment insurance plan.
• It offers four different policy benefit options to choose from. They are,
1. Guaranteed Maturity
2. Guaranteed Income
3. Life-Long Income
4. Long Term Income
• The minimum age eligibility for buying of HDFC Life Sanchay Plus policy is 5 years and the maximum age is 60 years.
• The minimum age to be eligible for the maturity benefit is 18 years and the maximum age starts from 71 years.
• This HDFC Life Sanchay Plus requires a minimum premium instalment payment of ₹30,000 a year.
• The HDFC Life Sanchay Plus also offers rider options for ‘Accidental Disability’ and ‘Critical Illness Plus’.
• For detailed features of HDFC Life Sanchay Plus: Click here.

Source – hdfclife.com

These features really look attractive, the “Guaranteed” Maturity and Income benefit options in particular.

Of course, the benefit is “Guaranteed”, but you must look into how much is guaranteed. This HDFC Life Sanchay Plus is marketed as a savings insurance plan and hence must offer a return rate on maturity.

Source – hdfclife.com

A video shown below will give you a brief idea on the review of various aspects under the HDFC Life Sanchay Plus Plan. Let’s have a look

Let’s see how much they have to offer in return with their four different benefit options with practical examples.

Review Of Policy Maturity Options

To enable the review, consider an average person of 30 years old—let’s call him Madhan.

I am assuming the minimum instalment payment of ₹30,000 annual premium. We shall see how much does this average person gets in return.

1. Guaranteed Maturity Benefit: Review

Under this benefit option the HDFC Life Sanchay Plus the maturity benefit is paid as a lump sum amount at the end of the policy term.
Among the three different policy terms as defined below, let’s choose the 20 years policy term, which is the longest. This policy option has a premium payment term of 10 years.
When the policy matures, Madhan will receive the “Guaranteed Maturity” benefit. The guaranteed maturity benefit is the sum of Guaranteed Sum Assured and the Guaranteed Addition.

The Guaranteed Addition differs with different groups of age. It is higher for the younger age group than the older age group. See the table below.

Source – hdfclife.com

In our example, Madhan will receive a Guaranteed Addition of ₹140, which is the maximum Guaranteed Addition possible.

HDFC Life Sanchay Plus Guaranteed Maturity
Age	Year	Premium Payable	Guaranteed Addition
30	1	₹30,000	0
31	2	₹30,000	0
32	3	₹30,000	0
33	4	₹30,000	0
34	5	₹30,000	0
35	6	₹30,000	0
36	7	₹30,000	0
37	8	₹30,000	₹24,000
38	9	₹30,000	₹24,000
39	10	₹30,000	₹27,000
40	11	0	₹27,000
41	12	0	₹30,000
42	13	0	₹30,000
43	14	0	₹33,000
44	15	0	₹33,000
45	16	0	₹36,000
46	17	0	₹36,000
47	18	0	₹39,000
48	19	0	₹39,000
49	20	0	₹42,000
50	21	Guaranteed Sum Assured= ₹3,00,000	Guaranteed Addition= ₹4,20,000
Total Guaranteed Maturity Benefit			₹7,20,000
Return Rate			5.7%

A return rate of 5.7% for a term of 20 long years is not a good investment option at all. It is not even an average investment option.

The Catch: If you think it is not bad, keep in mind that you have to pay the GST in addition to the premium you are paying. If we consider that too, the return rate will be even lesser than 5.7%.

Hence, Guaranteed Maturity is not a wise option at all.

Let’s see whether the other benefit options have anything better to offer.

2. Guaranteed Income Benefit: Review

The Guaranteed Income benefit option of the HDFC Life Sanchay Plus will pay you the maturity benefit as a guaranteed income for a select number of years in arrears.
In this example let us choose the policy plan with 13 years policy term.
It requires a premium payment term of 12 years. The maturity benefits will be paid as Guaranteed Income in arrears.

Madhan will receive this “Guaranteed Income” for 12 subsequent years after the successful completion of the policy term, i.e. from the 14th year to the 25th year.

See the illustration image of Madhan’s plan below.

Technically, the first year premium of ₹30,000 is coming back as ₹69,525 after 14 years. The return rate is approximately 6%.

The Catch: If you think it’s fair enough to consider buying this policy plan, remember. We did not include the GST which you will be paying along with the payment of annual insurance premium. If you weigh that in, the return rate must be only a little over 5%.

In addition, your benefit will be the same throughout the payout period as inflation increases during the payout period. Today’s ₹69,525 will not have the same value after 10 years in the payout period.

Therefore, this “Guaranteed Income” option is not a better option either. Can the other two benefit options reward you better? See it for yourself below.

3. Guaranteed Life-Long Income Benefit: Review

The HDFC Life Sanchay Plus’ Life-Long Income benefit option will attract the masses for sure.

The maturity benefit is paid as guaranteed income from the end of the policy term in arrears until the insured attains 99 years of age.
Guaranteed Life-Long Income looks attractive. But, you can buy it only if your age is between 50 years and 60 years old.
Let’s assume Madhan is above 50—say 53 years old—since it is the basic age requirement. Also, choose the 11 years policy term. See the plan illustration in the image below.

“Life Long Guaranteed Income”

Did they just sell the “Financial Independence” in a single insurance policy?

It’s terrifying how words are used to manipulate investors’ decisions to sell products.

Whatever they do, don’t let yourself be fooled.

The Catch: The return on this “Life-Long Income” policy is shy of 7%. But think about it, a maximum of 7% interest return for a period of almost 50 years is ridiculous.

As we have seen in the above reviews, you’re going to pay more as GST. And the inflation will keep reducing the value of your “income” exponentially.

It may appear good in contrast with the previous options. But from a money-smart investor’s perspective, it is also a big let-down.

The last remaining benefit option claims to have some flexibility. Let’s see what it has under its hood.

4. Guaranteed Long Term Income: Review

The Long Term Income benefit option of the HDFC Life’s Sanchay Plus policy promises to pay the maturity benefit in arrears for a select period of time.
The payout period of the policy varies based on the policy term. However, it ends on the 36th year from the starting year of the policy term.
Let’s assume Madhan buys the 11-year policy term for which he will be paying 10 years of the policy plan. His plan would look like,

A “Guaranteed Income” of ₹32,445 will be paid for a period of 25 years in the chosen policy term. And the total premium paid will be returned at the end of the payout period, i.e. in the 36th year along with the annual maturity benefit.

You get your whole premium money in the end. That is neat, except it is only 25 years later.

The Catch: Even a minimum assumption of just 6% inflation will reduce your ₹3 lakhs by 4.3 times. That is, the worth of your ₹3 lakhs will be lesser than ₹70,000 in today’s value.

Overall, this “Guaranteed Long Term Income” is capable of providing only 6.5% at the most.

A 6.5% return rate for a period of 36 years should not even be an option to consider. And the obvious, you will be paying the GST for your premium payment—reducing the return rate even more.

I must say, this benefit option too is only the same thing in a different wrapper.

Do these plans have anything at all to offer an investor?

HDFC Life Sanchay Plus: Analysis and Review

As you might have noticed from the above analysis that all the 4 variants have some catch in their offerings. Though they use catchy words like “Guaranteed” or “Life-long Income”, but their ROI is less than 6%, which can’t even beat the inflation rate!

So BEWARE, If your Financial Advisor recommends you this plan, it’s because they may get 30-40% as commission. If your premium is 1 lakh, your advisor may get 30,000 to 40,000 as commission out of your premium.

A Bank Relationship Manager may also try selling you this product. This is because the bank also gets a commission to do so. Relationship managers also have pressure to sell these kinds of products and meet targets, hence there is also a lot of misselling happening.

The misselling is that these products give around 8 to 9% returns. So before you buy the product, verify the truth on the HDFClife website as to what the actual returns are.

Many think that as the product looks complicated, it must be a good plan, but it is not the case. PPF, Mutual Funds, Term Insurance though are old, simple and boring, have no marketing gimmicks. They are easy to understand and also fulfils its purpose.

Complexity kills transparency. Less transparency makes it easier to mis-sell.

Avoid complicated investment products like HDFC Life Sanchay Plus.

How much is really guaranteed in HDFC Life Sanchay Plus?

Returns are guaranteed only if you stay the course: The policy benefits will reduce if you surrender the policy or miss the premium payment.

They portray it as guaranteed and life long, but how much is guaranteed?

See what is your final returns. Only 5 to 6% is guaranteed.

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

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

Liquidity: Investment is locked in this plan until the income period starts.

In life long option, you will receive the same amount throughout your life. How will this even benefit you?

And moreover, HDFC Life is an insurance company and not an investment company.

So, if you want higher returns on your investment you should invest in investment vehicles, such as Stocks or Mutual Funds. Though they have risk factors, they will reward you suitably through their higher returns of 12% – 15% if you keep yourself invested in the long term. (or even equivalent to the HDFC Life Sanchay Plus’ term!!)

And, if you are a risk-averse then it is better to invest in PPF, which will give you the guaranteed returns of around 8%! Even FD returns are more respectable than HDFC Life Sanchay Plus. Always, look for higher returns, if you invest any amount of money into any policy.

Therefore, our advice to you is: if you are investing your money for 20 long years, you must consider investing in Mutual Funds. Have a look at the obvious advantages of Mutual Fund as compared to HDFC Life Sanchay Plus:

1. Returns on Investment: HDFC Life Sanchay Plus Vs. Mutual Fund

As we have already discussed returns aspects. Now, let’s look at an example.

In Mutual Funds, the longer you invest, the more power of compounding you will experience! For example, let us say you invest the same amount, that is Rs.30,000 p.a. in Mutual Funds for the duration of 10 years. Means, you have invested Rs.3 Lacs in 10 years.

Your returns will become greater than Rs. 6 Lacs, with a modest interest rate of 13% in Mutual Funds. And, you can withdraw your amount in 11th year.

And, if you want to invest for 20 years, that is total Rs.6 Lacs in 20 years; your returns will become Rs. 28,63,797, which is approximately 5 times your initial investment with a 13% interest rate!

You can use this Mutual Fund Calculator to calculate the returns of your desired investment.

Whereas with HDFC Life Sanchay Plus as you already saw, its return is even lesser than 5.7% after the 20-year long term!!

2. Lock-in Period: HDFC Life Sanchay Plus Vs. Mutual Funds

Mutual Funds do not have any Lock-in period. If you want to cancel your investment SIPs in the first year, there will be an exit load charge of 1%. After 1 year, there will be no charge, you can cancel your scheme anytime.

HDFC Life Sanchay Plus requires you to pay all your annual premiums on time for 10 years in the first variant and so on. Otherwise, you will not receive your benefits of this policy. So, you are locked in for 10 years for paying your premiums.

There is a free look-in period of 15 days, but even if you cancel within 15 days, you will be charged with fees and tax towards Stamp duty, medical examination, and proportionate risk premium.

3. Who is more goal focused? HDFC Life Sanchay Plus Vs. Mutual Funds

Mutual Funds allows you to list your short term (2-5 years) and long term (7+ years) goals and invest accordingly in the right scheme, where you will be benefitted by Higher Returns as compared to any other policy, including HDFC Life Sanchay Plus.

HDFC Life Sanchay Plus is designed to keep you in the comfort zone towards the expectation of future income security. Truth is, you are only receiving the amount that you have given them over a period of 10 years or so. All the added benefits get automatically levelled by the inflation rate!!

Therefore, there is absolutely no point in achieving any major/minor financial goal with HDFC Life Sanchay Plus.

4. Regulatory Authority: HDFC Life Sanchay Plus Vs. Mutual Funds

Mutual Funds are regulated by a reputed agency called SEBI. Whereas, HDFC Life Sanchay Plus is regulated by IRDA, which basically regulate insurance policies.

SEBI ensures greater security and safeguards against all frauds in the Mutual Fund or Stock investments. Whereas, SEBI has no such role to play in such income schemes by HDFC Life or other such companies.

The regulation of IRDA is predominantly focused on Insurance regulation and not on investment regulation. SEBI’s regulation is well evolved in regulating the investments, protecting investor’s interest and proactively taking measures to stop mis-selling.

So, if you are investing your money in the long term, your first priority is to achieve higher returns. Therefore, it is advisable for you to invest in SEBI regulated platforms, such as Mutual Funds or Stock Markets.

We hope that you get an idea of how to make the smart use of your money. If you have any queries until this point, you can ask them in the comment section.

Also read Is it worthwhile to invest in HDFC Sanchay Plus?

How to cancel HDFC Life Sanchay Plus Policy?

Cancellation during the free look-in period:

You can cancel the plan within the free look in the period of 15/30 days from the day of your receipt. Please note:

The free-look period is 15 days from the date of receipt of the policy in case of face to face selling.

Free-look period for the policies purchased through Distance Marketing will be 30 Days from the date of the receipt. Where Distance marketing refers to the policies sold through telephone or online or any other method which do not involve face to face selling.

Your premium will be refunded but they are subject to deduction of the:

• The proportionate risk premium for the period on cover,
• The expenses incurred by the company on medical examination (if any) and
• Stamp duty(if any).

Cancellation after the free-Look In Period:

You can submit your cancellation or complaint request in an Online or Offline Format. A written request or an email with the registered email id is mandatory. You can send your e-mail to service@hdfclife.com.

For more details, you should read this current official document of HDFC Life Sanchay Plus.

All grievances (Service and sales) received by the Company will be responded to within the prescribed regulatory Turn Around Time (TAT) of 14 days.

A policy once returned shall not be revived, reinstated or restored at any point in time and a new proposal will have to be made for a new policy.

In case, you are not satisfied by the company’s response, within 14 days, you may approach the Grievance Cell of the Insurance Regulatory and Development Authority of India (IRDAI) on the following contact details:

IRDAI Grievance Call Centre (IGCC)

TOLL-FREE NO:155255

Email ID: complaints@irda.gov.in

Online- You can register your complaint online at https://www.igms.irda.gov.in/

Address for communication for complaints by fax/paper:
Consumer Affairs Department Insurance Regulatory and Development Authority of India
9th floor, United India Towers, Basheerbagh
Hyderabad – 500 029,
Telangana State (India).

More more updated details you can refer to this Official policy document of HDFC Life Sanchay Plus.

Final Verdict

What is our view on this HDFC Life’s Sanchay Plus endowment plan?

The term “Guaranteed” ultimately seems to be only a marketing plan than a policy plan. A return of 5%-7% in these policy options can never be an investors’ delight but misery. Such returns can’t even beat the inflation for a long duration of 20+ years!!

Instead, you can buy term insurance for life cover at a much lesser price—while you invest the rest of the “premium” in instruments that give better returns.

PPF is also a triple tax Exempt investment instrument that gives return above 8% quarterly.

Or if you are willing to manage risks, there are even better options. You can invest in equity mutual funds for even higher returns, an average of 12% return.

Be money smart and stay away from such low return “savings insurance” plans.