HDFC Life Sanchay Plus Review: 4.03x Is Not the Best Option

Is HDFC Life Sanchay Plus a good plan?

It is a non-participating, non-linked savings plan, so every rupee it pays is contractual. Nothing about it is hidden, and the death benefit floor is better constructed than most. On HDFC Life's current brochure (UIN 101N134V30), its options return 5.14% to 6.40% a year on the brochure's own illustrations for a 30-year-old paying ₹1,00,000 a year. One of those, Long Term Income, is illustrated at age 30 although the brochure's eligibility table gives that option a minimum entry age of 31.

What makes it worth a close read is that it carries four options, and they do not rank the same way depending on which number you look at. The option showing the biggest multiple is not the option paying the best rate. That is the whole case for computing the rate, demonstrated inside one product.

The four options, both ways round

From HDFC Life's own sample illustration in the current brochure: a healthy male aged 30, paying ₹1,00,000 a year plus taxes, surviving the term. The brochure illustrates Life Long Income at age 50 instead, so it sits below the comparable three. It also illustrates Long Term Income at age 30, although the option's stated minimum entry age is 31; we use the brochure's own illustration as printed. Income is paid in arrears, at the end of each year shown.

Read the multiple column and Long Term Income is the clear winner of the comparable three, at 3.63 times the money paid in against Guaranteed Maturity's 2.66.

Read the rate column and that ordering reverses. Guaranteed Maturity returns 6.40% a year; Long Term Income returns 6.34%. The plan paying back the larger multiple is paying it back over a much longer stretch, 16 years longer, and the extra years are doing the work that the multiple takes credit for.

A multiple more than a third bigger, for no extra return. The two rates are almost level, so the choice between these options is about when you want the money – a lump sum at year 20, or an income from year 12 to year 36 – not about which pays more. The multiple hides that completely.

Life Long Income shows this most starkly

The Life Long Income option displays 4.03 times the premiums paid, the biggest number anywhere in the brochure. It returns 5.36% a year.

The reason is simply time: it pays ₹79,750 a year from year 12 until age 99, which from an entry age of 50 is 38 years of payments. Multiply anything by 38 years and the total looks impressive. Divide it properly by the time taken and it is a middling rate.

To be fair to the option, it is illustrated at entry age 50 rather than 30, so it is not competing directly with the other three. But the lesson transfers: the longer a plan runs, the more flattering its multiple and the less that multiple tells you.

What the spread actually is

Worth saying plainly, because it cuts both ways: the three options illustrated at age 30 land between 5.14% and 6.40% a year. Nothing here is predatory and nothing is remarkable. The spread within a single product is about one and a quarter percentage points.

That is the honest verdict on guaranteed savings plans generally. They pay what they pay, the figure is knowable in advance, and the decision is whether that rate is one you want for the next two or three decades. Our guide to reading a benefit illustration sets out how to run this on any quote you are handed, and our page on the real return on guaranteed income plans sets Sanchay Plus beside the other guaranteed plans on the market.

The death benefit is well built

This is the part of the filing that deserves credit. The death benefit is the sum assured on death plus accrued guaranteed additions. Under death benefit Option I, the sum assured on death is the highest of:

• 10 times the annualised premium, or 1.25 times a single premium,
• 105% of total premiums paid,
• the guaranteed sum assured on maturity, or
• an absolute amount assured on death, equal to the sum assured.

Under Option II it is the higher of 7 times the annualised premium (5 times from age 50) or 105% of total premiums paid.

Taking the highest of four floors rather than a single figure is a defensive structure, and the 10x-annualised-premium leg means the early years are not thin. On a ₹1,00,000 annual premium the brochure shows a death benefit at inception of ₹12,00,000 on the Guaranteed Maturity option.

That said, the same caution applies as on every savings plan: ₹12 lakh is not income replacement. If people depend on your earnings, that job belongs to term insurance, and the distinction is set out in life insurance vs term insurance.

Eligibility, and who each option is built for

Entry from 301 days on the two Guaranteed options means they are sold as child plans, usually against a known future cost. Life Long Income opens at 50, which places it as a retirement-income product rather than a savings one.

Minimum instalment premium is ₹30,000 a year, or ₹15,000 half-yearly, ₹7,500 quarterly, ₹2,500 monthly, and ₹30,000 for single pay.

What to ask before signing

1. Ask which option you are being quoted, by name. A multiple quoted from one option tells you nothing about another, and the rates differ by up to one and a quarter percentage points.
2. Ask for the rate, not the multiple. If the answer comes back as "you get X times your money", the question has not been answered.
3. Get the illustration for your own age and premium. The published example is a 30-year-old on ₹1,00,000 a year; yours will differ.
4. Check the tax position. Whether the payouts are tax-free depends on the tax law and on your total premiums; our guide to reading a benefit illustration covers the conditions to run on your own premium and sum assured.
5. Separate the cover question. Decide protection and saving independently, then see whether bundling still appeals.

FAQs

What return does HDFC Life Sanchay Plus give?

On HDFC Life's current published illustration (UIN 101N134V30) for a 30-year-old paying ₹1,00,000 a year, the three options illustrated at that age return between 5.14% and 6.40% a year. Guaranteed Maturity is the strongest at 6.40%, paying ₹26,57,500 at year 20 against ₹10,00,000 of premiums. Your own figures will differ with age, option and term.

Which Sanchay Plus option is best?

On the published age-30 examples, each at ₹1,00,000 a year, Guaranteed Maturity (10 premiums, 20-year term) returns the most at 6.40% a year, just ahead of Long Term Income's 6.34% (10 premiums, income to year 36; illustrated at 30 although its stated minimum entry age is 31), despite showing a much smaller multiple. Long Term Income displays 3.63 times the premiums paid against Guaranteed Maturity's 2.66 times, and still returns slightly less, because it takes 16 years longer to pay out.

Why does the option with the biggest multiple return less?

Because a multiple ignores time. Life Long Income shows 4.03 times the premiums paid, the largest figure in the brochure, and returns 5.36% a year, because it pays out over 38 years. The longer a plan runs, the more flattering its multiple looks and the less it tells you about the rate.

What is the death benefit on Sanchay Plus?

The sum assured on death plus accrued guaranteed additions. Under Option I the sum assured on death is the highest of 10 times the annualised premium, 105% of total premiums paid, the guaranteed sum assured on maturity, or the absolute amount assured; under Option II it is the higher of 7 times the annualised premium (5 times from age 50) or 105% of premiums paid.

What is the minimum premium for Sanchay Plus?

₹30,000 a year on annual mode, ₹15,000 half-yearly, ₹7,500 quarterly, ₹2,500 monthly, or ₹30,000 as a single premium, across all four options.

Can I buy Sanchay Plus for a child?

The Guaranteed Income and Guaranteed Maturity options accept entry from 301 days, so yes, they are commonly sold as child plans against a known future cost such as education. The return is the same as it would be for any other life assured, so judge it on the rate rather than on the framing.

Related Guides

• Guaranteed income plans: the real return
• Reading a benefit illustration
• Life insurance vs term insurance
• HDFC Life Sanchay Par Advantage review