HDFC Life offers policy with benefits of whole-life annuity

Mumbai: HDFC Life has launched a life insurance plan that mimics the features of a whole-life annuity but with the advantage of tax-free pay outs.

The new scheme — HDFC Life Sanchay Par Advantage — is the third in the series of the ‘Sanchay’ investment plans and comes close on the heels of Sanchay Plus, which was launched in March 2019 and garnered over Rs 1,500 crore by guaranteeing an internal rate of return of close to 6% on the premium.

“In the few days since its launch, the policy has got a market share of 17-20% of sales in terms of premium income. At this rate, we expect to get premium of Rs 700-800 crore by March 2020,” HDFC Life chief actuary Srinivasa Parthasarthy said.

Sanchay Par Advantage does not guarantee a return as the objective is to enable investors’ participation in equity. However, the company has provided illustrative returns of 6.5-6.7%. The plan is structured for those looking for regular income by allowing buyers to choose between immediate income or deferred annuity. The policy gives an option to avail cover for whole life (until the age of 100).

Life insurance policies are required to have a sum insured, which is ten times the annual premium to avail tax breaks on the premium and to have tax-free returns. HDFC Life’s plan has a premium paying term of 8, 10 and 12 years with the maturity period going to 100 years. Since the value of the accumulated fund is equal to the sum insured in a few years the cost of life cover is only a few basis points enabling even 60-year-olds to buy the policy for returns.

Source: The Times of India