SBI Life Saral Swadhan Supreme Plan: Good or Bad? A Detailed Review

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Is SBI Life Saral Swadhan Supreme the plan that provides life coverage and ensures you a return of premiums?

Can the SBI Life Saral Swadhan Supreme Plan provide guaranteed returns and ensure peace of mind and financial security?

Can the SBI Life Saral Swadhan Supreme Plan secure your family’s future while growing your savings?

In this review, we’ll examine the plan’s features, benefits, and potential limitations. These insights aim to help you assess whether it’s a suitable life insurance option for your needs.

What is the SBI Life Saral Swadhan Supreme?

SBI Life Saral Swadhan Supreme is an Individual, Non-Linked, Non-Participating, Life Insurance Savings Product. Upon survival, you get the return of the total premium paid at the end of the policy term.

SBI Life Saral Swadhan Supreme Plan will not only safeguard your loved ones but also create a financial safety net that circles back to you.

What are the features of the SBI Life Saral Swadhan Supreme?

Pay premium regularly or for a limited (7/10/15 years) period
You can choose a policy term from 10 years to 30 years
Get 100% of Total Premiums Paid as a Maturity benefit.
Enhanced Protection through Optional Accident Benefit Rider.
Tax Benefits as per the prevailing norms under the Income Tax Act, 1961.

Who is eligible for the SBI Life Saral Swadhan Supreme?

	Minimum	Maximum
Age at Entry	18 years	50 years
Maximum age at maturity	65 years
Sum Assured	₹ 25,00,000	₹ 50,00,000
Policy term	10 years	30 years
Premium paying term	Limited premium – 7/10/15 years, Regular Premium
Premium frequency	Yearly, Half-yearly and Monthly

What are the benefits of the SBI Life Saral Swadhan Supreme?

1. Death Benefit

In the unfortunate event of death of the Life Assured during the SBI Life Saral Swadhan Supreme Plan policy term, the Sum Assured on Death will be payable to the Nominee 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 Paid up to the date of death.

2. Maturity Benefit

On survival of the Life Assured up to maturity, 100% of the total premiums paid during the SBI Life Saral Swadhan Supreme Plan policy tenure, shall be paid in a lump sum.

Grace period, Lapsed and Paid-up Policy and Revival of SBI Life Saral Swadhan Supreme

Grace period

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.

Lapsed and Paid-up Policy

If the first full policy year’s premium has not been paid, the policy shall lapse without acquiring paid-up benefits after the expiry of the grace period from the date of the first unpaid premium.

All the benefits under the SBI Life Saral Swadhan Supreme Plan policy shall cease and no benefit shall be payable under the Policy.

After completion of the first policy year, the policy acquires Reduced paid-up value only if at least the first full policy year premium(s) has been paid and thereafter premiums are not paid within the grace period, the policy shall continue as paid-up policy till maturity.

Paid-up Sum Assured on death = {Sum Assured on Death* (The total period for which premiums have already been paid / The maximum period for which premiums were originally payable)}

Revival

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

Free Look Period for the SBI Life Saral Swadhan Supreme

In case you disagree with any of the policy terms and conditions, you have the option to return the SBI Life Saral Swadhan Supreme Plan policy within 30 days beginning from the date of receipt of the policy document, whether received electronically or otherwise.

Surrendering SBI Life Saral Swadhan Supreme

The policyholder can surrender the in-force policy or paid-up policy at any time during the SBI Life Saral Swadhan Supreme Plan policy term, after payment of at least one full policy year’s premium.

Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV), whichever is higher, is paid as Surrender Value.

The policy acquires Guaranteed Surrender Value only if at least the first 2 full policy years’ premiums have been paid.

The SBI Life Saral Swadhan Supreme Plan policy acquires Special Surrender Value after completion of the first policy year only if at least the first full policy year’s premium (s) has been paid.

What are the advantages of the SBI Life Saral Swadhan Supreme?

Additional riders can be included with the base policy for enhanced coverage.
A policy loan is available, allowing up to 50% of the surrender value to be borrowed.

What are the disadvantages of the SBI Life Saral Swadhan Supreme?

The sum assured may be insufficient to meet basic family needs.
The return of premium features raises the overall premium cost.
The plan does not offer any bonus or loyalty additions.

Research Methodology of SBI Life Saral Swadhan Supreme

With the SBI Life Saral Swadhan Supreme, you pay premiums either for a limited period or throughout the policy term to receive life cover. At maturity, all the premiums you paid already are refunded, but without any bonuses or added value.

Essentially, the premium refund is a simple return of the total premiums paid, without accounting for the time value of money. As a result, the plan’s Internal Rate of Return (IRR) is zero. Here’s an example to illustrate this:

Benefit Illustration – IRR Analysis of SBI Life Saral Swadhan Supreme

A 40-year-old female purchases the SBI Life Saral Swadhan Supreme plan with a sum assured of ₹50 lakhs. The policy term and premium payment term are both set for 25 years, with an annual premium of ₹42,998.

Female	40 years
Sum Assured	₹ 50,00,000
Policy Term	25 years
Premium Paying Term	25 years
Annualised Premium	₹ 42,998

Age	Year	Annualised premium / Maturity benefit	Death benefit
40	1	-42,998	50,00,000
41	2	-42,998	50,00,000
42	3	-42,998	50,00,000
43	4	-42,998	50,00,000
44	5	-42,998	50,00,000
45	6	-42,998	50,00,000
46	7	-42,998	50,00,000
47	8	-42,998	50,00,000
48	9	-42,998	50,00,000
49	10	-42,998	50,00,000
50	11	-42,998	50,00,000
51	12	-42,998	50,00,000
52	13	-42,998	50,00,000
53	14	-42,998	50,00,000
54	15	-42,998	50,00,000
55	16	-42,998	50,00,000
56	17	-42,998	50,00,000
57	18	-42,998	50,00,000
58	19	-42,998	50,00,000
59	20	-42,998	50,00,000
60	21	-42,998	50,00,000
61	22	-42,998	50,00,000
62	23	-42,998	50,00,000
63	24	-42,998	50,00,000
64	25	-42,998	50,00,000
65		10,74,950

	IRR	0.00%

By paying this premium regularly, she would receive ₹10.74 lakhs at maturity after 25 years. However, due to the absence of any added benefits, the IRR for this cash flow remains zero as per the SBI Life Saral Swadhan Supreme Plan maturity calculator.

In essence, the plan offers life coverage for the term and refunds the premiums if the insured person survives, resulting in no actual return on investment.

For pure life coverage, a term insurance policy would be a more cost-effective choice. With SBI Life Saral Swadhan Supreme, you’re paying a higher premium solely to have the premiums returned at the end of the term.

SBI Life Saral Swadhan Supreme Vs. Other Investments

The only benefit of the SBI Life Saral Swadhan Supreme is its life cover. However, a pure-term life insurance policy offers the same coverage at a much lower premium compared to a return-of-premium policy.

Let’s explore a scenario to see how a pure-term policy, combined with separate investments for life goals, could be more efficient.

SBI Life Saral Swadhan Supreme Vs. Pure-term + PPF/ELSS

For example, a pure-term policy with a sum assured of ₹50 lakhs (for a female) costs ₹10,700 annually for a 25-year term.

In contrast, the annual premium for the same coverage under SBI Life Saral Swadhan Supreme is ₹42,998. By opting for the pure-term policy, you would save ₹32,298 each year, which could be invested according to your risk preference.

Pure Term Life Insurance Policy
Sum Assured	₹ 50,00,000
Policy Term	25 years
Premium Paying Term	25 years
Annualised Premium	₹ 10,700
Investment	₹ 32,298

High-risk investors might look to equity-based options, while low-risk investors could favour debt instruments. In this example, we assume investing the surplus in a PPF account (a debt instrument) and an Equity Linked Savings Scheme (ELSS), which focuses on equity.

		Term Insurance + PPF		Term insurance + ELSS
Age	Year	Term Insurance premium + PPF	Death benefit	Term Insurance premium + ELSS	Death benefit
40	1	-42,998	50,00,000	-42,998	50,00,000
41	2	-42,998	50,00,000	-42,998	50,00,000
42	3	-42,998	50,00,000	-42,998	50,00,000
43	4	-42,998	50,00,000	-42,998	50,00,000
44	5	-42,998	50,00,000	-42,998	50,00,000
45	6	-42,998	50,00,000	-42,998	50,00,000
46	7	-42,998	50,00,000	-42,998	50,00,000
47	8	-42,998	50,00,000	-42,998	50,00,000
48	9	-42,998	50,00,000	-42,998	50,00,000
49	10	-42,998	50,00,000	-42,998	50,00,000
50	11	-42,998	50,00,000	-42,998	50,00,000
51	12	-42,998	50,00,000	-42,998	50,00,000
52	13	-42,998	50,00,000	-42,998	50,00,000
53	14	-42,998	50,00,000	-42,998	50,00,000
54	15	-42,998	50,00,000	-42,998	50,00,000
55	16	-42,998	50,00,000	-42,998	50,00,000
56	17	-42,998	50,00,000	-42,998	50,00,000
57	18	-42,998	50,00,000	-42,998	50,00,000
58	19	-42,998	50,00,000	-42,998	50,00,000
59	20	-42,998	50,00,000	-42,998	50,00,000
60	21	-42,998	50,00,000	-42,998	50,00,000
61	22	-42,998	50,00,000	-42,998	50,00,000
62	23	-42,998	50,00,000	-42,998	50,00,000
63	24	-42,998	50,00,000	-42,998	50,00,000
64	25	-42,998	50,00,000	-42,998	50,00,000
65		22,19,522		43,36,845

	IRR	5.20%		9.56%

If the surplus is invested in a PPF account, it would yield a final maturity value of ₹22.19 lakhs, providing an IRR of 5.20%.

Alternatively, an ELSS investment could grow to a pre-tax value of ₹48.23 lakhs over 25 years, with a post-tax value of ₹43.36 lakhs, yielding a post-tax IRR of 9.56%.

ELSS Tax Calculation
Maturity value after 25 years	48,23,187
Purchase price	8,07,450
Long-Term Capital Gains	40,15,737
Exemption limit	1,25,000
Taxable LTCG	38,90,737
Tax paid on LTCG	4,86,342
Maturity value after tax	43,36,845

This strategy generates a significantly larger corpus than the return-of-premium feature in the SBI Life Saral Swadhan Supreme.

By investing the premium savings in line with your financial goals, you can build wealth more effectively. This comparison highlights that return-of-premium policies have higher premiums than pure-term policies, which reduces their overall efficiency for investment purposes.

Final Verdict on SBI Life Saral Swadhan Supreme

The SBI Life Saral Swadhan Supreme provides life cover but at a high premium, and the benefits don’t justify the extra cost. Additionally, the sum assured under this plan may fall short of meeting a family’s essential needs.

For life cover, it’s best to avoid return-of-premium or participating policies. A pure-term life insurance policy is a more effective choice, offering substantial coverage at a lower premium and also it has a high agent commission.

The premium difference between a traditional policy and a pure-term policy can be put to better use by investing according to your financial goals and preferences. This allows you to build wealth by creating a diversified investment portfolio aligned with your goals, time horizon, and risk tolerance.

When it comes to financial advice, are Quora, Facebook, and Twitter the final word?

A pure-term policy acts as a secure foundation for goal-based financial planning. For optimal results, consider consulting a Certified Financial Planner (CFP), who can guide you in selecting the right combination of insurance and investment products tailored to your needs.

SBI Life Saral Swadhan Supreme Plan: Good or Bad? A Detailed Review

Table of Contents:

What is the SBI Life Saral Swadhan Supreme?

What are the features of the SBI Life Saral Swadhan Supreme?

Who is eligible for the SBI Life Saral Swadhan Supreme?