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Can the SBI Life Smart Fortune Builder Plan be the ultimate strategy for building wealth while safeguarding your family?
Can the SBI Life Smart Fortune Builder Plan be your trusted partner in achieving both financial freedom and peace of mind?
Can the SBI Life Smart Fortune Builder Plan empower you to secure tomorrow without compromising today’s growth potential?
In this article, we’ll explore the plan’s features, benefits, drawbacks, and associated charges. We’ll also analyze its potential returns using an Internal Rate of Return (IRR) calculation, providing a deeper insight into the plan’s value as a long-term investment.
Table of Contents:
What is the SBI Life Smart Fortune Builder Plan?
What are the features of the SBI Life Smart Fortune Builder Plan?
Who is eligible for the SBI Life Smart Fortune Builder Plan?
What are the benefits of the SBI Life Smart Fortune Builder Plan?
What are the Fund Options available in SBI Life Smart Fortune Builder?
What are the charges under the SBI Life Smart Fortune Builder Plan?
Grace Period, Discontinuance and Revival of SBI Life Smart Fortune Builder Plan
Free Look Period in SBI Life Smart Fortune Builder Plan
Surrendering SBI Life Smart Fortune Builder Plan
What are the advantages of the SBI Life Smart Fortune Builder Plan?
What are the disadvantages of the SBI Life Smart Fortune Builder Plan?
Research Methodology of SBI Life Smart Fortune Builder Plan
Benefit Illustration – IRR Analysis of SBI Life Smart Fortune Builder Plan
SBI Life Smart Fortune Builder Plan Vs. Other Investments
SBI Life Smart Fortune Builder Plan Vs. Pure-term + PPF/ELSS
Final Verdict on the SBI Life Smart Fortune Builder Plan
What is the SBI Life Smart Fortune Builder Plan?
SBI Life – Smart Fortune Builder is an Individual, Unit-linked, Non-Participating, Life Insurance, Savings Product.
SBI Life Smart Fortune Builder Plan aims to meet all your insurance & financial needs through a single product. You can avail the benefit of life coverage and enhanced wealth creation opportunities through market-linked returns.
What are the features of the SBI Life Smart Fortune Builder Plan?
- Life insurance coverage is provided throughout the SBI Life Smart Fortune Builder Plan policy term.
- Access to enhanced investment opportunities with a choice of 12 varied fund options.
- For regular and limited pay plans, no policy administration fees are charged during the first 5 years.
- From the 11th policy year onward, there are no premium allocation charges.
- Guaranteed Addition based on the policy term; the longer the term, the higher the guaranteed addition.
Who is eligible for the SBI Life Smart Fortune Builder Plan?
| Minimum | Maximum | |
| Age at Entry | 2 years | 55 years |
| Age at Maturity | 18 years | 70 years |
| Plan | Regular Pay/ Limited Pay / Single Pay | |
| Premium payment Term (PPT) & Policy Term (PT) | PT | PPT |
| Regular pay: 15 to 30 years | Same as the policy term | |
| Limited Pay: | ||
| 15 to 30 years | 7/10/12 years | |
| 20 to 30 years | 15 years | |
| Single pay: 5 to 30 years | one-time payment at policy inception | |
| Annual Premium amount | Regular pay: ₹ 40,000 | ₹ 2,50,000 |
| Limited Pay: ₹ 50,000 | ||
| Single pay: ₹ 65,000 | ||
| Premium Frequency | Single / Annual | |
| Basic Sum Assured | Regular pay & Limited pay: 10* Annualised premium | |
| Single pay: 1.25* Single pay | ||
What are the benefits of the SBI Life Smart Fortune Builder Plan?
1. Death benefit
In case of death, the nominee will receive the higher of the following:
- Fund Value as on the date of death intimation or
- Basic Sum Assured Less Applicable Partial Withdrawals (APW) or
- 105% of the total Premiums received up to the date of death less Applicable Partial Withdrawals
2. Maturity Benefit
On survival of the life assured up to maturity, the Fund value shall be payable in a lump sum.
3. Guaranteed Additions
On completion of specific durations and at maturity guaranteed additions are rewarded. For Regular Pay & Limited Pay policies it is expressed as a percentage of Annualized Premium. For Single Pay policies, it is a percentage of the Single Premium.
What are the Fund Options available in SBI Life Smart Fortune Builder?
You can allocate your investment across any of the following funds, in increments of 1%. Each fund has a unique asset allocation and risk profile, so it’s essential to match your personal risk tolerance with that of the chosen fund(s).
| S.no | Name of the fund | Equity & Equity Related Instruments | Debt Instruments | Money Market Instruments | Risk Profile |
| 1 | Equity Fund | 80-100% | 0-20% | 0-20% | High |
| 2 | Top 300 Fund | 60-100% | 0-40% | 0-40% | High |
| 3 | Equity Optimiser Fund | 60-100% | 0-40% | 0-40% | High |
| 4 | Growth Fund | 40-90% | 10-60% | 0-40% | Medium High |
| 5 | Balanced Fund | 40-60% | 0-40% | 20-60% | Medium |
| 6 | Bond Fund | – | 60-100% | 0-40% | Low to Medium |
| 7 | Money Market Fund | – | 0-20% | 80-100% | Low |
| 8 | Bond Optimiser Fund | 0-25% | 75%-100% | 0-25% | Low to Medium |
| 9 | Pure Fund | 80-100% | – | 0-20% | High |
| 10 | Midcap Fund | 80-100% | 0-20% | 0-20% | High |
| 11 | Corporate Bond Fund | 70-100% | 0-30% | 0-30% | Low to Medium |
| 12 | Blue-chip Fund | 80-100% | 0-20% | 0-20% | High |
| Discontinued Policy Fund | – | 60-100% | 0-40% | Low |
What are the charges under the SBI Life Smart Fortune Builder Plan?
i.) Premium Allocation Charge
This charge shall be deducted from Premiums as they are paid, before the allocation of units each time a Premium is received. The percentage depends on the premium paying term and the SBI Life Smart Fortune Builder Plan policy year.
ii.) Policy Administration Charge
A Policy Administration Charge shall be deducted monthly.
For single pay – 0.10% of Single Premium
For limited and regular pay – 0.20% per month from the 6th policy year onwards.
iii.) Fund Management charges
| S.no | Name of the fund | Fund Management Charge (p.a.) |
| 1 | Equity Fund | 1.35% |
| 2 | Top 300 Fund | 1.35% |
| 3 | Equity Optimiser Fund | 1.35% |
| 4 | Growth Fund | 1.35% |
| 5 | Balanced Fund | 1.25% |
| 6 | Bond Fund | 1.00% |
| 7 | Money Market Fund | 0.25% |
| 8 | Bond Optimiser Fund | 1.15% |
| 9 | Pure Fund | 1.35% |
| 10 | Midcap Fund | 1.35% |
| 11 | Corporate Bond Fund | 1.15% |
| 12 | Blue-chip Fund | 1.35% |
| Discontinued Policy Fund | 0.50% |
iv.) Discontinuance charges
Discontinuance charges are calculated as a percentage of a Single Premium or Fund Value. It varies according to the year of discontinuance.
v.) Mortality Charges
Mortality charges are deducted each policy month from Fund Value by way of cancellation of units. This is charged based on your age and Sum at Risk.
vi.) Switching Charge
A charge of ₹ 100 is applicable for every switch, in excess of two free switches in the same policy year during the SBI Life Smart Fortune Builder Plan policy term.
vii.) Partial Withdrawal Charge
A charge of ₹100 is applicable for every partial withdrawal in excess of one free partial withdrawal in same policy year
Inference from these charges: Your premium isn’t entirely invested in your selected fund right away. Instead, a portion goes towards covering various charges, with only the remaining amount allocated to the investment.
Unlike some other market-linked products, this plan applies various charges, which, over time, can diminish your overall investment returns.
Grace Period, Discontinuance and Revival of SBI Life Smart Fortune Builder Plan
Grace Period
A grace period of 30 days will be allowed to pay the premium.
Discontinuance of Policy
If the SBI Life Smart Fortune Builder Plan policy is discontinued during the first 5 policy years: the fund value after deducting the applicable discontinuance charges, shall be credited to the discontinued policy fund, and the risk cover shall cease.
The proceeds of the discontinued policy shall be payable at the end of the lock-in period or date of surrender whichever is later.
If the SBI Life Smart Fortune Builder Plan policy is discontinued after the first 5 policy years: the policy will be converted into a reduced paid-up policy. The paid-up sum assured is the multiplication of the original sum assured with the total number of premiums paid / the original number of premiums payable.
Revival
The SBI Life Smart Fortune Builder Plan offers a revival period of 3 years from the date of the first unpaid premium, during which you can revive your policy, by paying all due premiums.
Free Look Period in SBI Life Smart Fortune Builder Plan
In case you disagree with any of the terms and conditions, you have the option to return the SBI Life Smart Fortune Builder Plan policy, within 15 days for policies purchased through channels other than Direct Marketing, for electronic policies (30 days for policies sold through distance marketing electronic policies), from the date of the receipt of the policy document.
Surrendering SBI Life Smart Fortune Builder Plan
If you surrender in the first 5 policy years, then – Your Fund Value net of appropriate discontinuance charges (if any) at the time of surrender request will be transferred to the Discontinued SBI Life Smart Fortune Builder Plan Policy Fund.
The Fund Value will be payable any 1 working day of the 6th policy year the policy will terminate.
If you surrender after the completion of the first 5 policy years, the fund value is payable immediately the policy will terminate.
What are the advantages of the SBI Life Smart Fortune Builder Plan?
- The nominee has the option to receive death benefit payments in instalments during the settlement period.
- Two fund switches per policy year are allowed at no additional cost.
- Premium redirection is available starting from the second policy year.
- Partial withdrawals can be made from the sixth policy year or upon the life assured reaching age 18, whichever occurs later.
- Guaranteed additions increase with the length of the policy term, providing higher additions for longer terms.
What are the disadvantages of the SBI Life Smart Fortune Builder Plan?
- There is a 5-year lock-in period.
- Loan facility is not available under this plan.
- After applicable charges are deducted, only the net premium is invested.
- The life cover provided by this plan may be insufficient.
Research Methodology of SBI Life Smart Fortune Builder Plan
Estimating potential returns is essential when evaluating a market-linked product, as it allows for comparison with other investment options and supports more informed decisions. Let’s analyze an example provided in the policy brochure for the SBI Life Smart Fortune Builder Plan.
Benefit Illustration – IRR Analysis of SBI Life Smart Fortune Builder Plan
Consider a 35-year-old male investing in the SBI Life Smart Fortune Builder Plan with a sum assured of ₹5 lakhs. The SBI Life Smart Fortune Builder Plan policy and premium payment terms are set for 30 years, with an annual premium of ₹50,000.
At the end of the SBI Life Smart Fortune Builder Plan policy term, the accumulated fund value will be payable.
| Male | 35 years |
| Sum Assured | ₹ 5,00,000 |
| Policy Term | 30 years |
| Premium Paying Term | 30 years |
| Annualised Premium | ₹ 50,000 |
The brochure provides projected returns based on assumed investment rates of 4% and 8%. It’s important to remember that these returns aren’t guaranteed and don’t represent the full range of possible outcomes.
The maturity benefit will depend on various factors, including the SBI Life Smart Fortune Builder Plan’s actual performance over time.
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 36 | 2 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 37 | 3 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 38 | 4 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 39 | 5 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 40 | 6 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 41 | 7 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 42 | 8 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 43 | 9 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 44 | 10 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 45 | 11 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 46 | 12 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 47 | 13 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 48 | 14 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 49 | 15 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 50 | 16 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 51 | 17 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 52 | 18 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 53 | 19 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 54 | 20 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 55 | 21 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 56 | 22 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 57 | 23 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 58 | 24 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 59 | 25 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 60 | 26 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 61 | 27 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 62 | 28 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 63 | 29 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 64 | 30 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 65 | 21,73,761 | 42,93,472 | |||
| IRR | 2.30% | 6.13% | |||
In the 4% return scenario, the estimated fund value is ₹21.73 lakhs, yielding an Internal Rate of Return (IRR) of 2.30% as per the SBI Life Smart Fortune Builder Plan’s Maturity calculator.
In the 8% return scenario, the estimated fund value is ₹42.93 lakhs, with an IRR of 6.13% as per the SBI Life Smart Fortune Builder Plan’s Maturity calculator.
Though the policy term is 30 years, the returns may not be favourable for a long-term investment strategy. Over time, inflation will drive up the cost of your financial goals, and the returns from the SBI Life Smart Fortune Builder may fall short of keeping pace.
This suggests a possible shortfall in achieving the desired corpus if you choose this ULIP plan.
SBI Life Smart Fortune Builder Plan Vs. Other Investments
The SBI Life Smart Fortune Builder Plan is a market-linked product; however, its returns don’t even compare to those of a debt instrument. Given the disproportionate risk and return in the previous case, let’s look at alternative investment options that offer better risk-adjusted returns.
ULIPs combine insurance and investment, but separating these components can often be more advantageous. Using the same parameters as in the previous illustration, let’s examine two scenarios.
SBI Life Smart Fortune Builder Plan Vs. Pure-term + PPF/ELSS
For life coverage, a pure-term insurance policy with a sum assured of ₹5 lakhs costs ₹3,600 annually for a 30-year term. In the previous case, the premium was ₹50,000. Opting for a pure-term policy leaves a balance of ₹46,400, which can be invested.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 5,00,000 |
| Policy Term | 30 years |
| Premium Paying Term | 30 years |
| Annualised Premium | ₹ 3,600 |
| Investment | ₹ 46,400 |
Investment choices can be based on your personal risk tolerance. Risk-averse investors may prefer debt options like PPF while risk-seeking investors can explore equity investments like ELSS funds.
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 35 | 1 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 36 | 2 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 37 | 3 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 38 | 4 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 39 | 5 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 40 | 6 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 41 | 7 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 42 | 8 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 43 | 9 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 44 | 10 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 45 | 11 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 46 | 12 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 47 | 13 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 48 | 14 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 49 | 15 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 50 | 16 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 51 | 17 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 52 | 18 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 53 | 19 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 54 | 20 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 55 | 21 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 56 | 22 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 57 | 23 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 58 | 24 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 59 | 25 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 60 | 26 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 61 | 27 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 62 | 28 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 63 | 29 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 64 | 30 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 65 | 47,79,482 | 1,11,63,505 | |||
| IRR | 6.70% | 11.05% | |||
PPF Investment: Estimated maturity value is ₹47.79 lakhs with an IRR of 6.70%, closely matching the 8% scenario for the SBI Life Smart Fortune Builder Plan. Despite being a debt instrument, PPF yields higher returns than the 8% scenario in the ULIP.
ELSS Investment: The estimated pre-tax maturity value is ₹1.25 crores. After capital gains tax, the net maturity value is approximately ₹1.11 crores, with a post-tax IRR of 11.05%.
| ELSS Tax Calculation | |
| Maturity value after 30 years | 1,25,41,577 |
| Purchase price | 13,92,000 |
| Long-Term Capital Gains | 1,11,49,577 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 1,10,24,577 |
| Tax paid on LTCG | 13,78,072 |
| Maturity value after tax | 1,11,63,505 |
This approach clearly shows that separating insurance from investment can yield significantly better returns, enhancing wealth accumulation and supporting faster financial growth compared to the SBI Life Smart Fortune Builder Plan.
Final Verdict on the SBI Life Smart Fortune Builder Plan
The SBI Life Smart Fortune Builder Plan combines life insurance with market-linked investments, but like other ULIP plans, it comes with various charges that reduce the amount available for investment.
Our returns analysis highlights the SBI Life Smart Fortune Builder plan’s real impact, showing that its long-term returns are relatively low.
For a market-linked product, such modest returns suggest an imbalanced risk-to-return ratio. Additionally, the sum assured may not be sufficient to meet a family’s basic needs, potentially hindering your overall financial plan in the long run.
On the whole, the SBI Life Smart Fortune Builder Plan is not the right choice for wealth accumulation in the long run and it also has a high agent commission.
A pure-term life insurance policy could be a better option for life coverage, offering essential protection for your family. For achieving your financial goals, building a diversified investment portfolio across asset classes is crucial in navigating complex financial conditions.
When it comes to financial advice, are Quora, Facebook, and Twitter the final word?
Selecting suitable insurance and investment products requires careful evaluation. If this process feels challenging, consulting a Certified Financial Planner can be valuable. Their expertise can help you identify the right products aligned with your financial goals and needs.
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