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What is the SBI Life Smart Future Star Plan? What are the features of the SBI Life Smart Future Star Plan? Who is eligible for the SBI Life Smart Future Star Plan? What are the benefits of the SBI Life Smart Future Star Plan? 1. Death benefit 2. Death or Accidental Total Permanent Disability (ATPD) of Proposer 3. Maturity Benefit Grace Period, Lapsed & Paid-up Policy and Revival of SBI Life Smart Future Star Plan Free Look Period for SBI Life Smart Future Star Plan Surrendering SBI Life Smart Future Star Plan What are the advantages of the SBI Life Smart Future Star Plan? What are the disadvantages of the SBI Life Smart Future Star Plan? Research Methodology of SBI Life Smart Future Star Plan Benefit Illustration – IRR analysis of SBI Life Smart Future Star Plan SBI Life Smart Future Star Plan Vs. Other Investments SBI Life Smart Future Star Plan Vs. Pure-Term + ELSS Final Verdict SBI Life Smart Future Star PlanWhat is the SBI Life Smart Future Star Plan?
SBI Life – Smart Future Star is an Individual, Non-Linked, Participating, Life Insurance, Savings Product. This product provides bonuses to boost your savings and lump sum maturity to secure your child’s financial future. While its built-in Waiver of Premium gives you peace of mind, you also get the flexibility to customize the plan to fit your child’s needs and ambitions.What are the features of the SBI Life Smart Future Star Plan?
- Life Cover & Protection: Provides life cover for the child along with an inbuilt Waiver of Premium benefit in case of the proposer’s death or accidental total permanent disability.
- Flexibility: Offers a limited premium payment term of 7, 10, or 12 years, with a policy duration ranging from 15 to 25 years.
- Savings & Maturity Benefit: Pays out the sum assured on maturity along with any accrued bonuses, if declared, as a lump sum benefit.
- Payout Options: Allows flexibility to receive the maturity amount either as a lump sum or in instalments.
Who is eligible for the SBI Life Smart Future Star Plan?
| Minimum | Maximum | |
| Proposer’s age at entry | 18 years | 65 years |
| Child’s age at entry | 30 days | 15 years |
| child’s age at maturity | 18 years | 35 years |
| Premium paying term | 7/10/12 years | |
| Policy term | 15 to 25 years | |
| Annualised premium | Yearly: 40,000Half-Yearly: 20,400Monthly: 3,400 | No limit |
| Sum assured | 4,00,000 | No limit |
| Premium frequency | Yearly, Half-yearly and Monthly | |
What are the benefits of the SBI Life Smart Future Star Plan?
1.Death benefit
On Death of the Child (Life Assured), during the SBI Life Smart Future Star Plan Policy Term provided the policy is in force, the higher of the following will be payable in Lumpsum to the nominee or legal heir:- Sum Assured on Death plus vested Reversionary Bonuses, if declared, plus Terminal bonus, if any. OR
- 105% of the Total Premiums Paid up to the date of death.
- Sum Assured OR
- 11 times of Annualized Premium
2.Death or Accidental Total Permanent Disability (ATPD) of Proposer
On the occurrence of either Death or Accidental Total Permanent Disability (ATPD) of the Proposer during the Premium Payment Term, provided the policy is in force, future premiums falling due on and after the date of death or ATPD under the policy will be waived off.3.Maturity Benefit
On survival of the Child (Life Assured) till the end of the SBI Life Smart Future Star Plan policy term, provided the policy is in force, the following is payable in lumpsum: Sum Assured on Maturity plus vested Reversionary Bonuses, if declared plus Terminal bonus, if any. Where Sum Assured on Maturity is equal to Sum Assured.Grace Period, Lapsed & Paid-up Policy and Revival of SBI Life Smart Future Star Plan
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 Policy
If the first full policy year’s premium(s) 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.Paid-up Policy
After completion of the first policy year, the SBI Life Smart Future Star Plan policy acquires Reduced paid-up value, if at least the first full policy year’s premium(s) has been paid and any subsequent premiums have not been paid. Revival If premiums are not paid within the period of grace and the policy is not surrendered, the policy may be revived for full benefits within five consecutive complete years from the date of the first unpaid premium while the life assured is still alive.Free Look Period for SBI Life Smart Future Star Plan
In the event the SBI Life Smart Future Star Plan policy holder disagrees with any of the policy terms and conditions, or otherwise and has not made any claim, the policyholder has the option to return the policy within 30 days beginning from the date of receipt of the policy document, whether received electronically or otherwise,Surrendering SBI Life Smart Future Star Plan
The SBI Life Smart Future Star Plan policy acquires Guaranteed Surrender Value only if at least the first 2 full policy years’ premiums have been paid. However, Special Surrender Value shall become payable after completion of the first policy year, provided one full policy year’s premium(s) has been received. Special Surrender Value (SSV) or Guaranteed Surrender Value (GSV), whichever is higher, is payable as Surrender Value.What are the advantages of the SBI Life Smart Future Star Plan?
- High Sum Assured Benefit: Enjoy a discount on the tabular premium for a higher sum insured.
- Policy Loan Facility: Borrow up to 50% of the surrender value if needed.
- Waiver of Premium: An inbuilt feature that ensures financial security by waiving future premiums in the event of the proposer’s demise.
What are the disadvantages of the SBI Life Smart Future Star Plan?
- Non-Guaranteed Benefits: Since the plan includes bonuses, the benefits are not guaranteed.
- Life Cover for Child: The child is the life insured, meaning the death benefit is payable in case of the child’s demise, despite life coverage for a child being unnecessary.
Research Methodology of SBI Life Smart Future Star Plan
The SBI Life Smart Future Star Plan is a savings-cum-insurance product where premiums are allocated to both savings and insurance components. To assess whether this plan effectively supports financial goals, it is crucial to analyse its Internal Rate of Return (IRR) using actual figures from the SBI Life Smart Future Star Plan policy brochure.Benefit Illustration – IRR analysis of SBI Life Smart Future Star Plan
For instance, a 35-year-old male opts for this plan with a sum assured of ₹6.32 lakh, a policy term of 20 years, and a premium payment term of 10 years, paying an annual premium of ₹50,011. Upon maturity, he is entitled to receive a payout, including bonuses.| Male | 35 years |
| Sum Assured | ₹ 6,32,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 50,011 |
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -50,011 | 6,32,000 | -50,011 | 6,32,000 |
| 36 | 2 | -50,011 | 6,32,000 | -50,011 | 6,32,000 |
| 37 | 3 | -50,011 | 6,32,000 | -50,011 | 6,32,000 |
| 38 | 4 | -50,011 | 6,32,000 | -50,011 | 6,32,000 |
| 39 | 5 | -50,011 | 6,32,000 | -50,011 | 6,32,000 |
| 40 | 6 | -50,011 | 6,32,000 | -50,011 | 6,32,000 |
| 41 | 7 | -50,011 | 6,32,000 | -50,011 | 6,32,000 |
| 42 | 8 | -50,011 | 6,32,000 | -50,011 | 6,32,000 |
| 43 | 9 | -50,011 | 6,32,000 | -50,011 | 6,32,000 |
| 44 | 10 | -50,011 | 6,32,000 | -50,011 | 6,32,000 |
| 45 | 11 | 0 | 6,32,000 | 0 | 6,32,000 |
| 46 | 12 | 0 | 6,32,000 | 0 | 6,32,000 |
| 47 | 13 | 0 | 6,32,000 | 0 | 6,32,000 |
| 48 | 14 | 0 | 6,32,000 | 0 | 6,32,000 |
| 49 | 15 | 0 | 6,32,000 | 0 | 6,32,000 |
| 50 | 16 | 0 | 6,32,000 | 0 | 6,32,000 |
| 51 | 17 | 0 | 6,32,000 | 0 | 6,32,000 |
| 52 | 18 | 0 | 6,32,000 | 0 | 6,32,000 |
| 53 | 19 | 0 | 6,32,000 | 0 | 6,32,000 |
| 54 | 20 | 0 | 6,32,000 | 0 | 6,32,000 |
| 55 | 7,11,948 | 6,32,000 | 13,19,300 | 6,32,000 | |
| IRR | 2.29% | 6.35% |
SBI Life Smart Future Star Plan Vs. Other Investments
The SBI Life Smart Future Star Plan offers life protection for your child along with maturity benefits. However, in personal finance, life insurance is primarily meant for the earning member of the family, not the child. Since the child is the primary policyholder, the life cover becomes redundant, making the premium paid towards it inefficient. Additionally, an IRR analysis of the plan shows that it fails to generate an adequate corpus, making it a suboptimal choice for financial planning. Instead, let’s explore an alternative strategy that utilizes the same premium amount more effectively.SBI Life Smart Future Star Plan Vs. Pure-Term + ELSS
A more efficient approach would involve securing the parent’s life through a pure-term insurance policy with a sum assured of ₹10 lakh. The annual premium for this policy is ₹8,700, with a policy term of 20 years and a premium paying term of 10 years. This ensures adequate financial protection for the family in case of an unforeseen event. The remaining premium amount can then be invested separately based on individual risk tolerance, allowing for better wealth accumulation.| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 10,00,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 8,700 |
| Investment | ₹ 41,311 |
| Age | Year | Term Insurance premium + ELSS | Death benefit |
| 35 | 1 | -50,011 | 10,00,000 |
| 36 | 2 | -50,011 | 10,00,000 |
| 37 | 3 | -50,011 | 10,00,000 |
| 38 | 4 | -50,011 | 10,00,000 |
| 39 | 5 | -50,011 | 10,00,000 |
| 40 | 6 | -50,011 | 10,00,000 |
| 41 | 7 | -50,011 | 10,00,000 |
| 42 | 8 | -50,011 | 10,00,000 |
| 43 | 9 | -50,011 | 10,00,000 |
| 44 | 10 | -50,011 | 10,00,000 |
| 45 | 11 | 0 | 10,00,000 |
| 46 | 12 | 0 | 10,00,000 |
| 47 | 13 | 0 | 10,00,000 |
| 48 | 14 | 0 | 10,00,000 |
| 49 | 15 | 0 | 10,00,000 |
| 50 | 16 | 0 | 10,00,000 |
| 51 | 17 | 0 | 10,00,000 |
| 52 | 18 | 0 | 10,00,000 |
| 53 | 19 | 0 | 10,00,000 |
| 54 | 20 | 0 | 10,00,000 |
| 55 | 22,73,834 | 10,00,000 | |
| IRR | 10.00% |
| ELSS Tax Calculation | |
| Maturity value after 20 years | 25,21,795 |
| Purchase price | 4,13,110 |
| Long-Term Capital Gains | 21,08,685 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 19,83,685 |
| Tax paid on LTCG | 2,47,961 |
| Maturity value after tax | 22,73,834 |
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