How important is a shield to a warrior?

The moment the arrows start coming towards a warrior, his entire life depends on the shield even if he is a Spartan! Why am I saying this?

Against financial threats like inflation, financial planning plays a vital role, paralleling a shield’s importance in war. Just as a Spartan shield safeguards, financial planning defends and empowers, enabling you to achieve your aspirations despite challenges.

SBI Life Saral Swadhan Plus Plan claims to empower your dreams and protect you from uncertainties. This review will look into the advantages and disadvantages of the SBI Life Saral Swadhan Plus plan in detail. This detailed review will answer the question of whether buying the SBI Life Saral Swadhan Plus Plan is a Good or Bad decision.

Let’s begin!

Table Of Contents

1.)What is SBI Life Saral Swadhan Plus Plan?
2.)What are the features of the SBI Life Saral Swadhan Plus Plan?
3.)Who is eligible for the SBI Life Saral Swadhan Plus Plan?
4.)SBI Life Saral Swadhan Plus Plan– Review of Benefits in detail
5.)The Grace period, Reduced paid-up &and Revival of SBI Life Saral Swadhan Plus
6.)Free Look Period of SBI Life Saral Swadhan Plus – Analysis
7.)Surrendering SBI Life Saral Swadhan Plus
8.)What are the Advantages of SBI Life Saral Swadhan Plus?
9.)What are the Disadvantages of SBI Life Saral Swadhan Plus?
10.)Research Methodology of SBI Life Saral Swadhan Plus

• Benefit Illustration – IRR(Internal Rate of Return i.e. Interest Rate) Analysis of SBI Life Saral Swadhan Plus

11.)SBI Saral Swadhan Plus Plan Vs. Other Investment Products

• SBI Saral Swadhan Plus Plan Vs SBI Life Smart Wealth Assure Plan – Review
• SBI Saral Swadhan Plus Plan Vs SBI Life Saral Insure Wealth Plus Plan – Review

12.)Final Verdict on SBI Life Saral Swadhan Plus Plan– Good or Bad Investment Option?

What is the SBI Life Saral Swadhan Plus Plan?

SBI Life Saral Swadhan Plus Plan is an Individual, Non- Linked, Non-Participating, Life insurance Savings product with a Return of Premium. This plan pays back the total premium paid at the end of the policy term, upon survival, which creates a financial safety net that circles back to you.

Refer to the official policy brochure of SBI Life Saral Swadhan Plus for more policy details.

What are the features of the SBI Life Saral Swadhan Plus Plan?

• Life Insurance cover with ease of issuance
• Pay premium regularly or for a limited period – 7/10/15 years
• Flexibility in choosing the policy term from 10 years to 30 years
• Get 100% of Total Premiums Paid as a Maturity benefit.
• Avail Tax Benefits as per the prevailing norms under the Income Tax Act, 1961

Who is eligible for the SBI Life Saral Swadhan Plus Plan?

	Minimum	Maximum
Age at entry	18 years	50 years
Maximum age at Maturity	65 years
Basic Sum Assured	25 Lakhs	50 Lakhs
Policy Term / Premium Paying Term	Premium Payment option	Policy Term
	7 /10 years	15 to 30 years
	15 years	20 to 30 years
	Regular premium	10 to 30 years
Premium Frequency	Yearly, Half-yearly, and Monthly

SBI Life Saral Swadhan Plus Plan– Review of Benefits in detail

Death Benefit

In the unfortunate event of death of the Life Assured during the SBI Life Saral Swadhan Plus policy term, the Sum Assured on Death will be payable to the beneficiary in a lump sum.

Sum assured on death will be higher of:

• Basic Sum Assured or
• 11 times of Annualised Premium or
• 105% of the Total Premiums received up to the date of death.

Maturity Benefit

On survival of the Life Assured till the end of the SBI Life Saral Swadhan Plus policy term, 100% of the total premiums paid during the policy tenure, shall be paid in a lump sum.

The Grace period, Reduced paid-up, and Revival of SBI Life Saral Swadhan Plus

Grace Period

In the SBI Life Saral Swadhan Plus Policy, a grace period of 30 days from the premium due date will be allowed for payment of yearly and half-yearly premiums and 15 days for monthly premiums.

Reduced paid-up

The SBI Life Saral Swadhan Plus policy will acquire paid-up benefit only if premiums have been paid for at least two full policy years and thereafter premiums are not paid within the grace period, the policy shall continue as a paid-up policy till maturity.

Revival

The SBI Life Saral Swadhan Plus policy may be revived within a period of five consecutive years from the date of the first unpaid premium and before the date of maturity.

Free Look Period of SBI Life Saral Swadhan Plus – Analysis

If the SBI Life Saral Swadhan Plus policyholder disagrees with any of the terms and conditions, the

policyholder has an option to return the SBI Life Saral Swadhan Plus policy within a period of 15 days (30 days in case the policy is sold through distance mode and electronic policies) from the date of receipt of the SBI Life Saral Swadhan Plus policy document.

Surrendering SBI Life Saral Swadhan Plus

The SBI Life Saral Swadhan Plus policy acquires Surrender Value only if at least the first two full policy years’ premiums have been paid. The SBI Life Saral Swadhan Plus policyholder may terminate the policy during the policy term by surrendering the policy for a surrender value. The surrender value is higher than the Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).

What are the Advantages of SBI Life Saral Swadhan Plus?

• Policy term, Premium paying term, and Premium paying frequency can be chosen as per convenience.

What are the Disadvantages of SBI Life Saral Swadhan Plus?

• No loan facility is available under this product.
• No loyalty addition or any bonus under this plan.
• The premium paid is returned at maturity without any value addition.

Research Methodology of SBI Life Saral Swadhan Plus

Under SBI Life Saral Swadhan Plus Plan you pay a premium for the entire policy term and enjoy life cover. At maturity, the premium paid so far is returned. There is no bonus or any value addition for what you paid. The return of premium is just a summation of total premiums and the time value of money is not considered here.

So, ultimately the calculation of the Internal Rate of Return will result in zero. Just to illustrate this, we have worked on a benefit illustration below.

Benefit Illustration – IRR(Internal Rate of Return i.e. Interest Rate) Analysis of SBI Life Saral Swadhan Plus

Mrs. Deepika, age 40 years old, working as a Professor has chosen SBI Life – Saral Swadhan Supreme for a Sum Assured of ₹ 50 lakhs with cover till the age of 65. Her regular premium for this life cover is ₹ 42,603 p.a.

Female	40 years
Sum Assured	50 Lakhs
Policy Term	25 years
Premium Paying term	25 years
Annualised premium	₹ 42,603

Age	Year	Annualised premium / Maturity benefit	Death benefit
40	1	-42,603	50,00,000
41	2	-42,603	50,00,000
42	3	-42,603	50,00,000
43	4	-42,603	50,00,000
44	5	-42,603	50,00,000
45	6	-42,603	50,00,000
46	7	-42,603	50,00,000
47	8	-42,603	50,00,000
48	9	-42,603	50,00,000
49	10	-42,603	50,00,000
50	11	-42,603	50,00,000
51	12	-42,603	50,00,000
52	13	-42,603	50,00,000
53	14	-42,603	50,00,000
54	15	-42,603	50,00,000
55	16	-42,603	50,00,000
56	17	-42,603	50,00,000
57	18	-42,603	50,00,000
58	19	-42,603	50,00,000
59	20	-42,603	50,00,000
60	21	-42,603	50,00,000
61	22	-42,603	50,00,000
62	23	-42,603	50,00,000
63	24	-42,603	50,00,000
64	25	-42,603	50,00,000
		10,65,075	50,00,000
	IRR	0.00%

The total premium paid for the 25 years amounts to ₹ 10.65 Lakhs. This amount is returned at maturity. The IRR calculation for this cash flow results in zero.

SBI Saral Swadhan Plus Plan Vs. Other Investment Products

The life cover is the only benefit of SBI Life Saral Swadhan Plus. A pure-term life insurance policy will serve the same purpose, that too with a lesser premium compared to a return of a premium policy. Here, we have worked out a scenario, to understand the efficiency of taking a pure-term life insurance policy and investing separately for life goals.

SBI Saral Swadhan Plus PlanVs. Pure Term + PPF / ELSS

For a sum assured of ₹ 50 Lakhs, a pure term life insurance policy will cost you just ₹ 12,500 p.a. The policy term and premium paying term is 25 years. In the earlier illustration, for the same metric, the premium is ₹ 42,603. This shows that the insurance companies charge you a higher premium and make an illusion that you get an added benefit.

Pure Term Life Insurance Policy
Sum Assured	50 Lakhs
Policy Term	25 years
Premium Paying term	25 years
Annualised premium	₹ 12,500
Investment	₹ 30,103

If you opt for a pure term life insurance policy, you could have saved ₹ 30,103. You can invest this savings in any instrument of your choice. Let us consider investing this amount in PPF or ELSS and work out the rate of return.

Age	Year	Term Insurance + PPF		Term insurance + ELSS
		Term Insurance premium + PPF	Death benefit	Term Insurance premium + ELSS	Death benefit
40	1	-42,603	50,00,000	-42,603	50,00,000
41	2	-42,603	50,00,000	-42,603	50,00,000
42	3	-42,603	50,00,000	-42,603	50,00,000
43	4	-42,603	50,00,000	-42,603	50,00,000
44	5	-42,603	50,00,000	-42,603	50,00,000
45	6	-42,603	50,00,000	-42,603	50,00,000
46	7	-42,603	50,00,000	-42,603	50,00,000
47	8	-42,603	50,00,000	-42,603	50,00,000
48	9	-42,603	50,00,000	-42,603	50,00,000
49	10	-42,603	50,00,000	-42,603	50,00,000
50	11	-42,603	50,00,000	-42,603	50,00,000
51	12	-42,603	50,00,000	-42,603	50,00,000
52	13	-42,603	50,00,000	-42,603	50,00,000
53	14	-42,603	50,00,000	-42,603	50,00,000
54	15	-42,603	50,00,000	-42,603	50,00,000
55	16	-42,603	50,00,000	-42,603	50,00,000
56	17	-42,603	50,00,000	-42,603	50,00,000
57	18	-42,603	50,00,000	-42,603	50,00,000
58	19	-42,603	50,00,000	-42,603	50,00,000
59	20	-42,603	50,00,000	-42,603	50,00,000
60	21	-42,603	50,00,000	-42,603	50,00,000
61	22	-42,603	50,00,000	-42,603	50,00,000
62	23	-42,603	50,00,000	-42,603	50,00,000
63	24	-42,603	50,00,000	-42,603	50,00,000
64	25	-42,603	50,00,000	-42,603	50,00,000
		20,68,681	50,00,000	41,31,117	50,00,000
	IRR	4.79%		9.31%

Under the PPF account, the final maturity value is ₹ 20.68 Lakhs. The IRR for the Pure Term Insurance policy along with PPF Investment is 4.79%. Though the return is lesser than the inflation rate, at the end of 25 years, you get a better corpus compared to SBI Life Saral Swadhan Plus.

Under the ELSS fund, while redeeming the units, capital gains tax arises. We need to set aside the tax liability from the proceeds. This leaves you with an after-tax maturity value of ₹ 41.31 Lakhs. The IRR calculation for the Pure Term Insurance policy along with ELSS Investment results in 9.31% (post-tax return). This rate of return is higher than the inflation rate and you accumulate a sizeable corpus at the end of 25 years.

ELSS Tax Calculation
Maturity value after 25 years	44,95,399
Purchase price	7,52,575
Long-Term Capital Gains	37,42,824
Exemption limit	1,00,000
Taxable LTCG	36,42,824
Tax paid on LTCG	3,64,282
Maturity value after tax	41,31,117

SBI Life Saral Swadhan Plus Plan returns you the premium at the end of the policy term for which they charge you more than the premium required to protect your life. This comparison underlines the difference between a pure term life insurance policy (without profit/ without return of premium or charges) and a traditional life insurance policy (with profit / with return of premium or charges).

SBI Saral Swadhan Plus Plan Vs SBI Life Smart Wealth Assure Plan – Review

Let’s look at some of the features of the SBI Life Smart Wealth Assure Plan:

• Make a single payment and receive benefits for the duration of the policy.
• Liquidity by Partial Withdrawal(s) following the fifth anniversary of the program
• An option to add an accidental death benefit to the product is available.

Read the complete review of the SBI Life Smart Wealth Assure Plan.

SBI Saral Swadhan Plus Plan Vs SBI Life Saral Insure Wealth Plus Plan – Review

Let’s look at some of the features of the SBI Life Saral Insure Wealth Plus Plan:

• Simple monthly payment to support you in realizing your goals.
• Eight fund options are available.
• Systematic Monthly Withdrawal to enable consistent payouts as long as the policy is active.

Read the complete review of the SBI Life Saral Insure Wealth Plus Plan.

Final Verdict on SBI Life Saral Swadhan Plus Plan– Good or Bad Investment Option?

SBI Saral Life Swadhan Plus Plan addresses the life cover need for an investor but with a higher premium. The benefit you get for the higher premium paid is not worth the cost. Definitely, the return of premium is not the trump card for this plan. Beware of insurance agents who will try to push you into this plan for their agent commission!

The difference in premium between a traditional policy and a pure term life insurance policy can be channelised effectively. This can be invested based on your preferences and goals.

The earning member of the family wants to secure the family’s future. This is the main purpose of having a life insurance policy in your insurance basket. The purpose can only be served by a pure-term life insurance policy (This statement is repeated several times in this article, just to emphasise it !!!).

Instead of making investment decisions based on information on social media sites like Quora, Facebook, Twitter, etc, consult a Certified Financial Planner for goal-based financial planning to empower your dreams.