As a parent, you would want the best for your child.
But what if something were to happen to you unexpectedly?
Who will be able to give the best possible care for your child in your absence?
Exactly why you should be considering a backup plan for your child to be taken care of financially.
Here, SBI Life Insurance Child Plan – Smart Scholar is a life insurance plan for parents who have children aged between 0 and 17.
What does SBI promise with this plan?
“At the end of the policy term, the maturity value accumulated in your fund value can be used for your child’s higher education, marriage, etc.”.
“In case you are not around, SBI Life Insurance Child Plan – Smart Scholar protects your child’s future by paying the fund value at the end of the policy term to your child”.
But wait,
“கண்ணால் காண்பதும் பொய், காதால் கேட்பதும் பொய், தீர விசாரிப்பதே மெய்”
“Even what we see with our own eyes, and what we hear with our ears, can be deceiving. But a deep analysis can reveal the truth!”
As a parent, you certainly would be emotional about your child. But, this is where insurance companies capitalize on.
So for some time keep your emotions aside and read our comprehensive policy review with the pros and cons of SBI Life Insurance Child Plan – Smart Scholar
1.) What is SBI Life Insurance Child Plan – Smart Scholar?
2.) Features of SBI Life Insurance Child Plan – Smart Scholar
3.) Eligibility Criteria of SBI Life Insurance Child Plan – Smart Scholar:
4.) Benefits of SBI Life Insurance Child Plan – Smart Scholar
5.) Fund Options of SBI Life Insurance Child Plan – Smart Scholar
6.) Free look-up period of SBI Life Insurance Child Plan – Smart Scholar
7.) The Grace period, Discontinuance & Revival of SBI Life Insurance Child Plan – Smart Scholar
8.) Surrendering your SBI Life Insurance Child Plan – Smart Scholar
9.) Various Charges of SBI Life Insurance Child Plan – Smart Scholar
10.) Advantages of the SBI Life Insurance Child Plan – Smart Scholar
11.) Disadvantages of the SBI Life Insurance Child Plan – Smart Scholar
12.) Research Methodology
13.) IRR of SBI Life Insurance Child Plan – Smart Scholar: Example with an illustration
14.)SBI Life Smart Scholar Vs Other Investment Plans – A Comprehensive Analysis
15.) SBI Life Smart Scholar Vs Other Investment Plans – Review: Conclusion
16. SBI Child Plan – Who Should Invest? (Advisory)
17.) Who Should Avoid SBI Smart Scholar Plan?
18.) Final Verdict on SBI Life Insurance Child Plan – Smart Scholar
SBI Life Insurance Child Plan is an Individual, Unit Linked, Non-Participating Life Insurance Product. This is a ULIP that offers life protection as well as savings.
It claims to fulfil your child’s dream requiring heavy finances by accumulating corpus based on market returns.
Before investing in SBI Life Smart Scholar child plan, parents should evaluate whether the policy aligns with future education expenses and inflation-adjusted financial goals.
Will this give a better ROI (Return on Investment)? Is it a one-time investment plan for your child?
Let us explore.
| Minimum | Maximum | |
| Age at entry | Parent (Life Assured): 18 Years | Parent (Life Assured): 57 Years Child: 17 Years |
| Child: 0 Years | ||
| Age at Maturity | Child: 18 Years | Parent (Life Assured): 65 Years Child: 25 Years |
| Plan type | Single premium / Limited Premium up to the policy term | |
| Policy term | 8 – 25 years | |
| Premium paying term | Single premium or 5 to 25 years | |
| Basic Sum Assured | Limited Premium up to the policy term: 10 x Annualised Premium Single Premium: 1.25 x Single Premium | |
Premium paying term:
| Plan Type | Premium Frequency | Minimum (in Rs) | Maximum (in Rs) |
| Single | Single | 75000 | No Limit, Subject to Board Approved Underwriting Policy |
| PPT greater than or equal to 8 years: | Yearly | 24000 | |
| Half-Yearly | 16000 | ||
| Quarterly | 10000 | ||
| Monthly | 4000 | ||
| PPT 5 Years to 7 Years | Yearly | 50000 | |
| Half-Yearly | 25000 | ||
| Quarterly | 125000 | ||
| Monthly | 4500 |
This makes the SBI Smart Scholar plan flexible to accommodate different financial capacities of parents.
Death benefit:
If the policyholder passes away during the policy term (other than by accident), then the nominee will receive either of the two benefits mentioned below:
Benefit 1: A lump sum benefit equal to the higher of the Basic Sum Assured or 105% of the total premiums received up to the date of death will be payable.
Benefit 2: The insurer continues to pay your future premium(s) on your behalf (in-built Premium Pay or Waiver Benefit) and the accumulated fund value will be paid at maturity.
In case of accidental death or accidental total and permanent disability, Additional benefit equal to Accident Benefit Sum Assured is payable.
Maturity benefit:
If the policyholder survives throughout the policy term, then the policyholder will get the total fund value paid in the form of a lump sum either to the policyholder; if he/she survives
(or)
Their Child, in case of death of the Life-Assured during the policy term.
SBI Smart Scholar Calculator:
Parents can use the SBI Smart Scholar returns calculator online to estimate the future corpus for their child based on their premium payments and fund allocation.
It is offered for all policy terms irrespective of premium frequencies.
Depending on your policy term, it would be given for in-force policies on completion of specific durations.
The same will be added through the allocation of units at the end of the relevant policy year.
1% x [Average fund value over the 1 day of the last 24 policy months].
The SBI Smart Scholar calculator online can help estimate the maturity corpus for long-term child education planning based on premium amount and policy duration.
You will be eligible for Income Tax benefits/exemptions as per the Income Tax Act, Section 80C & Section 10(10D) India. (subject to change)
Premium Pay or Waiver Benefit (PPWB):
It is an inbuilt feature under this Insurance product. In case of death of the life assured, SBI Life Insurance Company will pay all the future premiums at respective future premium dates.
On maturity of the policy term, the child will be entitled to receive the Total Fund Value.
Accident benefit:
It is also an inbuilt feature, where the benefit differs as mentioned below:
However, the policy will continue with basic life benefits and you would continue to pay all the due premiums thereafter.
Investment can be done in any one or any combination of the below-mentioned funds (in multiples of 1%)
| S no | Fund name | Risk Profile | Asset allocation | ||
| Equity | Debt | Money market | |||
| 1 | Equity Fund | High | 80-100% | 0-20% | 0-20% |
| 2 | Top 300 Fund | High | 60-100% | – | 0-40% |
| 3 | Equity Optimizer Fund | High | 60-100% | 0-40% | 0-40% |
| 4 | Growth Fund | Medium to High | 40-90% | 10-60% | 0-40% |
| 5 | Balanced Fund | Medium | 40-60% | 20-60% | 0-40% |
| 6 | Bond Fund | Low to Medium | – | 60-100% | 0-40% |
| 7 | Money Market Fund | Low | – | 0-20% | 80-100% |
| 8 | Bond Optimizer Fund | Low to Medium | 0-25% | 25-75% | 0-25% |
| 9 | Pure Fund | High | 80-100% | – | 0-20% |
The risk value for different funds is calculated in the above illustration.
SBI Smart Scholar equity fund options are designed to align with varying risk appetites, from conservative debt funds to aggressive equity allocations.
Flexibility option:
Switching Option: The policyholder is allowed to take up to two switches free of charge in a policy year and more than that, a charge of 100 will be levied per switch. The Minimum switch amount is Rs. 5000.
Premium Redirection: Allowed from the 2nd policy year onwards. One premium redirection request is allowed free of charge in each policy year and over that, a charge of 100 will be levied per redirection request.
Partial withdrawals: Available from the 6th policy year onwards, provided the policyholder has paid at least 5 premiums. The Minimum Partial withdrawal amount allowed is 5,000 & the maximum is 15% of the current fund value.
If the policyholder is not satisfied with the terms and conditions of SBI Life Insurance Child Plan – Smart Scholar after purchasing the policy, then the policyholder can return the policy by stating the return within 15 days from the date of purchasing the policy.
The free look-up period will be 30 days if the policy is purchased through electronic mode.
Grace period:
SBI Life Insurance Child Plan offers a grace period of 30 days for Yearly, Half-yearly & Quarterly modes of premium payment and 15 days for monthly modes of premium payment.
If premiums are not paid within the grace period, the policy may lapse, impacting the child’s future benefits.
What happens after the policy SBI- Smart Scholar is discontinued?
If SBI Life Insurance Child Plan is discontinued during the first 5 policy years:
Upon the expiry of the grace period, the fund value after deducting the applicable discontinuance charges shall be credited to the discontinued policy fund and the risk cover and rider cover, if any, shall cease.
Parents can monitor the fund growth through the SBI Smart Scholar fund value tracker online.
On the first business day of the 6th policy year, the fund value would be paid to the policyholder.
If SBI Life Insurance Child Plan is discontinued after the first 5 policy years:
Upon expiry of the grace period, the policy will be converted into a reduced paid-up policy.
You can either revive or completely withdraw from the policy.
This feature ensures partial continuity of the plan, even if financial situations change for the parent.
What is the Revival period of SBI Smart Scholar?
SBI Life Insurance Child Plan’s revival period is 3 years from the date of your first unpaid premium, during which you can revive your policy, by paying all due premiums without any interest or fee.
It is recommended to use the SBI Smart Scholar calculator to check potential fund growth before reviving the plan.
If surrender is requested during the first 5 Policy Years, then
Your Fund Value after deduction of applicable discontinuance charge (if any), will be transferred to the ‘Discontinued Policy Fund’ (Interest – 4% p.a.).
Fund Management Charge of Discontinued Policy Fund shall be deducted. The Fund Value will be payable on the 1st working day of the 6th policy year.
If the surrender is requested any time after the completion of 5 policy years, then
The fund value will be paid immediately to the policyholder.
Parents should weigh the impact of surrendering early versus continuing the plan to achieve long-term education goals.
Surrender Value:
How ‘Surrender Value’ is calculated?
surrender value will be calculated as 60 percent of the premiums paid minus the sum total of the first-year premium,
If you paid any Extra premium or rider premium, it is also taken into account while the surrender value is calculated.
In other words,
Surrender value = (60/100 * premium paid) – (first year premium + extra premium + rider premium)
Parents using the SBI Smart Scholar calculator can estimate surrender value to make informed decisions.
Premium Allocation charges
| Policy Year | Limited Premium Paying Term (up to Policy Term) | Single Premium Policy |
| 1 | 6.00% | 3.00% |
| 2 | 4.50% | NA |
| 3 | 4.50% | NA |
| 4 | 4.00% | NA |
| 5 | 4.00% | NA |
| 6 | 1.00% | NA |
| 7 | 1.00% | NA |
| 8 | 1.00% | NA |
| 9 | 1.00% | NA |
| 10 | 1.00% | NA |
| 11th year onwards | 0.00% | NA |
The premium allocation charges for consecutive policy years are calculated in the above illustration.
Policy Administration: Comprehensive Review of all charges levied
A monthly Policy Administration Charge of Rs. 50 per month shall be deducted & the capital is Rs. 500 per month.
This cost should be factored in when comparing SBI Smart Scholar vs other child ULIP plans.
Fund Management Charges: Illustration
| Fund name | Fund Management charges |
| Equity Fund | 1.35% |
| Top 300 Fund | 1.35% |
| Equity Optimizer Fund | 1.35% |
| Growth Fund | 1.35% |
| Balanced Fund | 1.25% |
| Bond Fund | 1.00% |
| Money Market Fund | 0.25% |
| Bond Optimizer Fund | 1.15% |
| Pure Fund | 1.35% |
| Discontinued fund | 0.50% |
Discontinuance Charges: Review
For Single Premium Policies: Illustration
| Year of Discontinuance | For Single Premium up to 3,00,000 | For Single Premium above ` 3,00,000 |
| 1st year | Lower of 2% of (Single Premium or Fund Value) subject to a maximum of 3,000 | Lower of 1% of (Single Premium or Fund Value) subject to a maximum of 6,000 |
| 2nd year | Lower of 1.5% of (Single Premium or Fund Value) subject to a maximum of 2,000 | Lower of 0.70% of (Single Premium or Fund Value) subject to a maximum of 5,000 |
| 3rd year | Lower of 1% of (Single Premium or Fund Value) subject to a maximum of 1,500 | Lower of 0.50% of (Single Premium or Fund Value) subject to a maximum of 4,000 |
| 4th year | Lower of 0.5% of (Single Premium or Fund Value) subject to a maximum of 1,000 | Lower of 0.35% of (Single Premium or Fund Value) subject to a maximum of 2,000 |
| 5th year onwards | Nil | Nil |
Discontinuance charges for other than Single Premium Policies:
| Year of Discontinuance | For Annual Premium up to 50,000 | For Annual Premium above 50,000 |
| 1st year | Lower of 20% x (AP or FV) subject to a maximum of 3,000 | Lower of 6% x (AP or FV) subject to a maximum of 6,000 |
| 2nd year | Lower of 15% x (AP or FV) subject to a maximum of 2,000 | Lower of 4% x (AP or FV) subject to a maximum of 5,000 |
| 3rd year | Lower of 10% x (AP or FV) subject to a maximum of 1,500 | Lower of 3% x (AP or FV) subject to a maximum of 4,000 |
| 4th year | Lower of 5% x (AP or FV) subject to a maximum of 1,000 | Lower of 2% x (AP or FV) subject to a maximum of 2,000 |
| 5th year onwards | Nil | Nil |
Mortality Charges:
The SBI Life Insurance Child Plan’s mortality charges will be based on your age and the sum at Risk at the time of charge deduction.
Premium Pay or Waiver Benefit (PPWB) Charges:
These charges are deducted on the first business day of each policy month from the fund value by way of the cancellation of units.
Accident Benefit Charges:
Monthly Charges (for in-force policies) = Accident Sum Assured x (Annual rate / 12)
Where the Annual rate is `0.50 per 1000 Accident Sum Assured.
Switching Charge:
A charge of 100 is applicable for every switch, more than two free switches in the same policy year during the policy term.
Premium Redirection Charge:
A charge of 100 is applicable for every redirection in excess of one free redirection in the same policy year.
Partial Withdrawal Charge:
A charge of 100 is applicable for every partial withdrawal over one free partial withdrawal in the same policy year.
Partial withdrawals are only available from the 6th policy year, unlike other SBI child plans with more flexible liquidity options.
This plan can be a good option if you are looking for a long-term, market-linked SBI child ULIP plan, but it may not suit those seeking liquidity before 6 years.
You can read further details of the SBI Life Insurance Child Plan in its brochure (pdf).
Use the SBI Smart Scholar calculator and review tools to assess if it aligns with your child’s future education needs.
A careful review of SBI Smart Scholar plan details and SBI Life Smart Scholar benefits is important before choosing it as a dedicated child investment solution.
Since we have all the information we need, now it’s time to analyze this SBI Life Insurance Child plan – Smart Scholar by calculating its IRR for the worst-case scenario and the best-case scenario by using the SBI Life Insurance Child plan online calculator.
Then let us compare the IRR of the SBI Life Insurance Child Plan with other alternate investments to see which gives you a better return in the long run.
Many parents comparing SBI Smart Scholar vs Sukanya Samriddhi Yojana also evaluate long-term returns, flexibility, and child education corpus creation before making a decision.
Let us assume,
Mr Shyam (parent) age – 35 years
Child’s age – 5 years
Policy term (PT) – 20 years
Premium Payment term (PPT) – 20 years
Premium – ₹ 1, 00,000 p.a
Basic Sum Assured: ₹ 10, 00,000
Fund – 100% Equity fund
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 36 | 2 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 37 | 3 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 38 | 4 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 39 | 5 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 40 | 6 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 41 | 7 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 42 | 8 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 43 | 9 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 44 | 10 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 45 | 11 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 46 | 12 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 47 | 13 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 48 | 14 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 49 | 15 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 50 | 16 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 51 | 17 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 52 | 18 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 53 | 19 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 54 | 20 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 55 | 23,43,641 | 37,07,729 | |||
| IRR | 1.49% | 5.57% | |||
Now let’s calculate the IRR for the worst-case scenario.
Here in the worst-case scenario, let us take the assumed gross return as 4% p.a
Then,
The fund of Rs. 1,00,000 invested annually by Mr. Shyam at the rate of 4% will accumulate into Rs. 23,43,641 in 20 policy term years of the SBI Life Insurance Child Plan.
Here, the IRR (Internal Rate of Return) works out to be 1.49% which is lower than a savings bank account interest, showing limited growth potential for SBI Smart Scholar in a low-return environment.
In the best-case scenario, let’s take the assumed gross return as 8%. Then,
As per the SBI Life Insurance Child Plan online calculator, at the end of the policy term, we get an IRR (Interest Rate) of 5.57% and Rs. 37,07,729 as a maturity benefit.
Even in the best-case scenario, returns may not beat inflation consistently, which is a key consideration in any SBI Smart Scholar review.
Parents using the SBI Smart Scholar maturity calculator should compare post-tax returns with mutual funds and PPF before finalising the plan.
You still can’t consider it as an inflation-beating rate of return.
Note: These are not guaranteed returns and they are not higher or lower limits of returns as Unit Linked Life Insurance products are subject to market risks.
Do you prefer seeing this IRR analysis as a YouTube video?
Many investors evaluating SBI Smart Champ vs Smart Scholar plans for kids mainly compare guaranteed benefits, market-linked returns, and flexibility.
Please check out our video review of SBI Life Smart Scholar below with expert analysis and illustration.
SBI Life Smart Scholar Vs SBI Life Smart Champ Plan – Review
SBI Life – Smart Champ Plan is an Individual, Non-linked, Participating, Life Insurance Savings product.
This plan promises to protect your child’s future by meeting his/her educational needs when you are not around.
There are two bonus options as well – reversionary bonus & terminal bonus
Please check out the detailed review below with precise returns calculation and IRR analysis with illustrations.
Is it Worth Investing in SBI Life Smart Champ Plan? – Review (2024)
Let us see how investing with a similar cash flow in the combination of PPF + Pure Term Insurance goes,
Here, the sum assured is assumed higher as this plan continues even after the death of the insured & also has a premium pay or waiver benefit inbuilt.
Total Cash Outflow: Rs. 1,00,000 (12,600 + 87,400)
Pure Term Policy’s Sum assured: Rs. 1 crore
Premium to pay for Rs. 12,600
Policy Term: 20 years
Balance amount to be invested in PPF: Rs. 87,400
| Term Insurance + PPF | |||
| Age | Year | Term Insurance premium + PPF | Death benefit |
| 35 | 1 | -1,00,000 | 10,00,000 |
| 36 | 2 | -1,00,000 | 10,00,000 |
| 37 | 3 | -1,00,000 | 10,00,000 |
| 38 | 4 | -1,00,000 | 10,00,000 |
| 39 | 5 | -1,00,000 | 10,00,000 |
| 40 | 6 | -1,00,000 | 10,00,000 |
| 41 | 7 | -1,00,000 | 10,00,000 |
| 42 | 8 | -1,00,000 | 10,00,000 |
| 43 | 9 | -1,00,000 | 10,00,000 |
| 44 | 10 | -1,00,000 | 10,00,000 |
| 45 | 11 | -1,00,000 | 10,00,000 |
| 46 | 12 | -1,00,000 | 10,00,000 |
| 47 | 13 | -1,00,000 | 10,00,000 |
| 48 | 14 | -1,00,000 | 10,00,000 |
| 49 | 15 | -1,00,000 | 10,00,000 |
| 50 | 16 | -1,00,000 | 10,00,000 |
| 51 | 17 | -1,00,000 | 10,00,000 |
| 52 | 18 | -1,00,000 | 10,00,000 |
| 53 | 19 | -1,00,000 | 10,00,000 |
| 54 | 20 | -1,00,000 | 10,00,000 |
| 55 | 38,79,563 | ||
| IRR | 5.96% | ||
Here, the IRR (Internal Rate of Return) works out to be 5.96% which is still more compared to the IRR of the SBI Life Insurance Child Plan at its assumed gross returns of 4% and 8%.
This indicates that risk-free or conservative investment options may outperform the ULIP in terms of IRR.
Parents looking for SBI child education plan alternatives often prefer combining term insurance with PPF because of lower costs and better transparency.
But, if your risk tolerance is higher, you can try other alternatives as mentioned below.
Let us see how investing with a similar cash flow in the combination of ELSS + Pure Term Insurance goes,
Here, the sum assured is assumed higher as this plan continues even after the death of the insured & also has a premium pay or waiver benefit inbuilt.
Total Cash Outflow: Rs. 1,00,000 (12,600 + 87,400)
Pure Term Policy’s Sum assured: Rs. 1 crore
Premium to pay for Rs. 12,600
Policy Term: 20 years
Balance amount to be invested in ELSS: Rs. 87,400
| Term insurance + ELSS | |||
| Age | Year | Term Insurance premium + ELSS | Death benefit |
| 35 | 1 | -1,00,000 | 10,00,000 |
| 36 | 2 | -1,00,000 | 10,00,000 |
| 37 | 3 | -1,00,000 | 10,00,000 |
| 38 | 4 | -1,00,000 | 10,00,000 |
| 39 | 5 | -1,00,000 | 10,00,000 |
| 40 | 6 | -1,00,000 | 10,00,000 |
| 41 | 7 | -1,00,000 | 10,00,000 |
| 42 | 8 | -1,00,000 | 10,00,000 |
| 43 | 9 | -1,00,000 | 10,00,000 |
| 44 | 10 | -1,00,000 | 10,00,000 |
| 45 | 11 | -1,00,000 | 10,00,000 |
| 46 | 12 | -1,00,000 | 10,00,000 |
| 47 | 13 | -1,00,000 | 10,00,000 |
| 48 | 14 | -1,00,000 | 10,00,000 |
| 49 | 15 | -1,00,000 | 10,00,000 |
| 50 | 16 | -1,00,000 | 10,00,000 |
| 51 | 17 | -1,00,000 | 10,00,000 |
| 52 | 18 | -1,00,000 | 10,00,000 |
| 53 | 19 | -1,00,000 | 10,00,000 |
| 54 | 20 | -1,00,000 | 10,00,000 |
| 55 | 64,05,561 | ||
| IRR | 10.14% | ||
From the illustration, the IRR is calculated at to be 10.14%, which is not only an inflation-beating return but also a very better return compared to SBI Life Insurance Child Plan – Smart Scholar.
Key Takeaway: Term Insurance + ELSS offers far superior post-tax returns compared to SBI Smart Scholar, making it a more efficient choice for long-term child education planning.
Investors checking SBI Smart Scholar returns review often realise that separating insurance and investment may generate higher wealth over long durations.
SBI Life Insurance Child plan – Smart Scholar Vs. PPF / ELSS:
| IRR (Post tax) | Sum Assured | Final Maturity Value (post-tax) | |
| SBI – Smart Scholar (@ 4%) | 1.47% | 10 Lakh | 23,43,641 |
| SBI – Smart Scholar (@ 8%) | 5.57% | 10 Lakh | 37,07,729 |
| Term Insurance + PPF | 5.96% | 1 Crore | 38,79,563 |
| Term Insurance + ELSS (Post-tax) | 10.14% | 1 Crore | 64,05,561 |
We have calculated the post-tax IRR (Internal Rate of Return) in the above illustration.
| ELSS Tax Calculation | |
| Maturity value after 20 years | 70,53,069 |
| Purchase price | 17,48,000 |
| Long-Term Capital Gains | 53,05,069 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 51,80,069 |
| Tax paid on LTCG | 6,47,509 |
| Maturity value after tax | 64,05,561 |
You can see that the returns calculated for Term Insurance + ELSS are much higher compared to SBI – Smart Scholar.
This comparison clearly shows why many financial planners do not consider SBI Smart Scholar a high-return child investment plan.
In the case of the death of the policyholder during the policy term, Rs. 10 lakhs are paid which will still not be sufficient to meet any expenses for your child’s future.
If you have read the review carefully till this point, you might have concluded by now.
Yes! ELSS or PPF + Pure Term Insurance is a far better option compared to SBI Smart Scholar.
Instead of getting carried away by the advertisement of a new plan in the market, we should compare and analyze it with other investment options.
This will in turn help us to review and calculate the best plan for our future.
Do you want to have a look at our YouTube Hindi video review of SBI Life Insurance Child Plan – Smart Scholar.
After analyzing the SBI Life Insurance Child Plan – Smart Scholar in detail, it’s important to be honest about who should actually consider this plan.
Based on returns, liquidity, and cost, we do not recommend this plan as a primary investment for your child’s future.
1. Limited Appeal Despite Insurance & Investment Combo:
While the plan provides insurance coverage plus market-linked returns, the actual returns are modest and often lower than simpler investment options like PPF or ELSS combined with term insurance.
Even though there are inbuilt benefits like Premium Waiver and Accident coverage, these come at a cost that reduces your effective investment growth.
2. Not Suitable for Parents Seeking Inflation-Beating Returns:
SBI Smart Scholar’s IRR in realistic scenarios (4–8% assumed returns) is lower than alternative investment strategies. Parents aiming for inflation-beating growth for their child’s education or marriage would likely achieve better results through ELSS or term insurance + equity investments.
3. Limited Liquidity Makes It Risky:
The plan locks your money for the first 5 policy years, and partial withdrawals are only allowed after that.
Parents who may need flexible access to funds should avoid this plan, as emergencies or unforeseen expenses cannot be addressed easily.
Unlike some child investment plans in SBI, Smart Scholar has stricter liquidity conditions during the initial years.
4. High Cost and Charges Reduce Returns:
With premium allocation charges, fund management charges, mortality charges, and other costs, a significant portion of your premium is used to pay fees rather than invested, further reducing the potential corpus at maturity.
Summary:
In conclusion, while SBI Life Insurance Child Plan – Smart Scholar is marketed as a one-stop solution for child education and protection, it falls short on returns, flexibility, and cost-effectiveness.
Parents who want to maximize long-term wealth for their child should consider PPF, ELSS, or term insurance + equity mutual fund combinations instead.
These options are simpler, more transparent, and provide higher, inflation-beating returns.
Bottom line: If your goal is financial security and growth for your child, SBI Smart Scholar is not the recommended choice.
Parents considering SBI policy for child education should carefully analyse whether insurance and investment should be combined in a single product.
Parents expecting high wealth creation from an SBI child ULIP plan should carefully assess whether the SBI Life Smart Scholar plan matches their expectations.
While it combines insurance and investment, the actual SBI Smart Scholar returns after charges may not be sufficient for long-term inflation-beating growth.
This plan may also not suit investors who want liquidity and flexibility.
Since the SBI Smart Scholar child plan comes with a lock-in period and market-linked risks, parents seeking stable or easily accessible investments may prefer alternatives like PPF, ELSS, or Sukanya Samriddhi Yojana.
Those comparing SBI Smart Scholar vs Sukanya Samriddhi Yojana or looking for the best SBI child plan should also evaluate charges, fund performance, and long-term returns carefully before investing.
Compared to other alternate investments, SBI Life Insurance Child Plan did not give an inflation-beating return.
But why do insurance agents try to sell this product to you?
Just like many ULIP policies in the bazaar, this plan gives a high agent commission. As simple as that.
So, if you don’t want to take any investment risk, then you can go for risk-free investments such as PPF, RBI Bonds, etc.
If you want to take investment risk to earn better maturity value, then you can choose an equity mutual fund with the help of your financial planner.
As for the insurance plan, compared to ULIP, you can choose an individual insurance plan at a low cost with high life coverage.
In conclusion, analyzing SBI Life Insurance Child Plan makes it clear that it’s not a one-stop or a one-time investment solution for your child’s financial future.
Pro Tip: Use the SBI Smart Scholar calculator regularly to simulate fund growth and make informed decisions before committing to a ULIP plan.
Whether SBI Smart Scholar is good or bad ultimately depends on your expectations around returns, liquidity, and insurance coverage.
Please don’t confuse yourself by reading amateur “reviews” of this plan on social media platforms like Quora, Facebook, Twitter, etc. Consult a professional financial planner to clear your doubts.
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Nice article for this , how is this policy compared to sukanya samridi yojana one because many says it is better to sukanya plan , please make article on this