SBI Life Smart Money Back Saver Plan: Good or Bad? A Detailed Review

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Can the SBI Life Smart Money Back Saver Plan help you achieve your financial goals with confidence, or is it simply another traditional insurance plan with modest returns?

Does the SBI Life Smart Money Back Saver Plan strike the right balance between protection and savings, or are there better alternatives available?

Is the SBI Life Smart Money Back Saver Plan a smart way to secure guaranteed benefits, or could it limit your wealth creation potential?

In this article, we take a detailed look at the plan’s features, benefits, and limitations to help you make an informed decision.

What is the SBI Life Smart Money Back Saver?

SBI Life Smart Money Back Saver is an Individual, Non-linked, Participating, Life Insurance Savings Product.

This is a Regular Premium product, where the premium payment term is the same as the policy term and offers periodic payouts at defined intervals while providing life insurance coverage throughout the policy term.

What are the features of the SBI Life Smart Money Back Saver?

Periodic cash pay-outs during the SBI Life Smart Money Back Saver Plan policy term to support planned financial goals.
Total survival benefits (including final maturity benefit) of 130% of the Sum Assured, paid through increasing payouts of 10%, 15%, 25%, and 35% of the Sum Assured at specified intervals.
A maturity benefit equal to 45% of the Sum Assured, along with applicable bonuses.
Encourages disciplined savings through regular premium payments.
Flexible policy term ranging from 20 to 25 years to align with long-term financial objectives.
Premium discounts available for higher Sum Assured options.
Option to enhance protection through the Accident Benefit Rider.
Tax benefits may be available as per the prevailing provisions of the Income Tax Act.

Who is eligible for the SBI Life Smart Money Back Saver?

	Minimum	Maximum
Entry Age	30 days	45 years
Maturity Age	20 years	70 years
Sum Assured	₹ 3,00,000	No limit; subject to Board-approved Underwriting Policy
Premium Payment Term/ Policy Term / Pay-out Period (in Years)	Premium Payment Term	Policy Term
	Regular Premium (Same as policy term)	20-25 years
Premium Frequency	Yearly, Half-Yearly and Monthly
Premium Amount	Yearly – ₹18,000 Half-yearly – ₹10,000 Monthly – ₹ 2,000	No Limit, subject to Board-approved Underwriting Policy
Rider	SBI Life – Accident Benefit Rider (UIN:111B041V01) Option A: Accidental Death Benefit (ADB) Option B: Accidental Partial Permanent Disability Benefit (APPD)

What are the benefits of the SBI Life Smart Money Back Saver?

1. Death Benefit

In the unfortunate event of the death of Life Assured during the policy term, provided the SBI Life Smart Money Back Saver Plan policy is in force, the Death Benefit is payable as a lump sum, which is the higher of the following:

Sum Assured on Death plus Vested Reversionary Bonuses, if declared, plus Terminal Bonus, if any.
105% of the Total Premiums Paid up to the date of death,

where Sum Assured on Death is the higher of Sum Assured or 11 times the Annualised Premium

The death benefit mentioned above is payable irrespective of any Survival Benefits already paid.

2. Survival Benefits

The Survival Benefits instalments expressed as a fixed percentage of Sum Assured are payable on survival of Life Assured till the end of the specified policy years during the SBI Life Smart Money Back Saver Plan policy term, subject to the policy being in force, and are as follows:

Survival Benefit Instalment as a Percentage of Sum Assured
End of the Policy Year/ Policy Term	20	21	22	23	24	25
4	10%	10%	10%	10%	10%
5						10%
8	15%	15%	15%	15%	15%
10						15%
12	25%	25%	25%	25%	25%
15						25%
16	35%	35%	35%	35%	35%
20	45%					35%
21		45%
22			45%
23				45%
24					45%
25						45%
TOTAL	130%	130%	130%	130%	130%	130%

2. Maturity Benefits

On survival of Life Assured till the end of the policy term, provided the policy is in force, Sum Assured on Maturity plus Vested Reversionary Bonus if declared, plus Terminal Bonus, if any, is payable as a lump sum. Where, Sum Assured on maturity is equal to 45% of Sum Assured.

Grace Period, Discontinuance and Revival of the SBI Life Smart Money Back Saver?

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.

Discontinuance

Lapse: If the first full policy year’s premium(s) have not been paid, the policy shall lapse without acquiring Reduced Paid – Up value on the expiry of the grace period from the date of the first unpaid premium. All the benefits under the policy shall cease, and no benefit shall be payable under the policy.

Reduced Paid-up Value: After completion of the first policy year, the policy acquires Reduced Paid-Up value if at least the first full policy year’s premium(s) have been paid, and any subsequent premiums have not been paid. Once the policy becomes Reduced Paid-up, no further reversionary bonus will be vested as the Policy shall not be entitled to participate in future profits. However, the already vested reversionary bonuses, if declared, shall remain attached to the Reduced Paid-up policy.

Revival

If premiums are not paid within the grace period 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

Free Look Period for the SBI Life Smart Money Back Saver

The SBI Life Smart Money Back Saver Plan policyholder has a free look period of 30 days beginning from the date of receipt of the policy document, whether received electronically or otherwise, to review the terms and conditions of the policy.

In the event the policyholder disagrees with any of the SBI Life Smart Money Back Saver Plan policy terms and conditions, or otherwise and has not made any claim, the policyholder has the option to return the policy to the company for cancellation.

Surrendering the SBI Life Smart Money Back Saver

An In-force or Reduced Paid-up Policy can be surrendered at any time during the Policy Term for a Surrender Value. The higher of Special Surrender Value (SSV) or Guaranteed Surrender Value (GSV) is payable as Surrender Value.

Upon the payment of the Surrender Benefit in a lump sum, the SBI Life Smart Money Back Saver Plan policy will terminate, and no future benefits will be payable.

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

The Special Surrender Value (SSV) shall become payable after completion of the first policy year, provided one full policy year’s premium(s) have been received.

What are the advantages of the SBI Life Smart Money Back Saver?

The maturity benefit is paid as a lump sum by default. However, the Settlement Option allows the maturity proceeds to be received in a structured payout manner.
A loan facility is available for up to 50% of the policy’s surrender value.
Premium rebates are offered for choosing a higher Sum Assured.
Optional riders can be added to enhance the policy’s coverage and protection.
Provides guaranteed cash payouts at regular intervals during the policy term.

What are the disadvantages of the SBI Life Smart Money Back Saver?

Regular survival benefit payouts may be spent on discretionary expenses instead of being invested toward long-term financial goals.
The maturity benefit is not entirely guaranteed, as the bonus component depends on the insurer’s future bonus declarations and may vary over the policy term.
The plan offers limited flexibility, with no option to customise the policy term or premium payment term.
Survival benefits are paid at predetermined intervals and cannot be deferred, which may not always align with your financial requirements.
Frequent cash payouts reduce the amount that remains invested, limiting the power of compounding and potentially lowering long-term wealth creation.

Research Methodology of SBI Life Smart Money Back Saver

The SBI Life Smart Money Back Saver Plan offers guaranteed periodic payouts (survival benefits) during the SBI Life Smart Money Back Saver Plan policy term, along with a maturity benefit at the end of the policy.

While these regular cash inflows may appear attractive, it is essential to evaluate the overall return potential of the plan before investing.

One of the most effective ways to assess this is by calculating its Internal Rate of Return (IRR) using the benefit illustration provided in the policy brochure.

Benefits Illustration – IRR Analysis of SBI Life Smart Money Back Saver

Consider a 35-year-old male opting for the SBI Life Smart Money Back Saver Plan with a Sum Assured of ₹5 lakhs.

The policy term is 25 years, the premium-paying term is 25 years, and the annual premium payable is ₹27,353.

Male	25 years
Sum Assured	₹ 5,00,000
Policy Term	25 years
Premium Paying Term	25 years
Annualised Premium	₹ 27,353

Benefits under the illustration:

Survival Benefits: Payable at the end of the 5th, 10th, 15th, and 20th policy years, amounting to 85% of the annualised premium in total.
Maturity Benefit: Payable at the end of the 25th policy year and consists of the Sum Assured on Maturity (45% of the annualised premium), along with any declared Vested Reversionary Bonus and Terminal Bonus.

		At 4% p.a.		At 8% p.a.
Age	Year	Annualised premium / Maturity benefit	Death benefit	Annualised premium / Maturity benefit	Death benefit
25	1	-27,353	5,00,000	-27,353	5,00,000
26	2	-27,353	5,00,000	-27,353	5,00,000
27	3	-27,353	5,00,000	-27,353	5,00,000
28	4	-27,353	5,00,000	-27,353	5,00,000
29	5	-27,353	5,00,000	-27,353	5,00,000
30	6	22,647	5,00,000	22,647	5,00,000
31	7	-27,353	5,00,000	-27,353	5,00,000
32	8	-27,353	5,00,000	-27,353	5,00,000
33	9	-27,353	5,00,000	-27,353	5,00,000
34	10	-27,353	5,00,000	-27,353	5,00,000
35	11	47,647	5,00,000	47,647	5,00,000
36	12	-27,353	5,00,000	-27,353	5,00,000
37	13	-27,353	5,00,000	-27,353	5,00,000
38	14	-27,353	5,00,000	-27,353	5,00,000
39	15	-27,353	5,00,000	-27,353	5,00,000
40	16	97,647	5,00,000	97,647	5,00,000
41	17	-27,353	5,00,000	-27,353	5,00,000
42	18	-27,353	5,00,000	-27,353	5,00,000
43	19	-27,353	5,00,000	-27,353	5,00,000
44	20	1,47,647	5,00,000	1,47,647	5,00,000
45	21	-27,353	5,00,000	-27,353	5,00,000
46	22	-27,353	5,00,000	-27,353	5,00,000
47	23	-27,353	5,00,000	-27,353	5,00,000
48	24	-27,353	5,00,000	-27,353	5,00,000
49	25	-27,353	5,00,000	-27,353	5,00,000
50		3,54,375		7,28,125

	IRR	1.78%		5.65%

Based on the illustration:

At a 4% bonus scenario, the IRR works out to 1.78% as per the SBI Life Smart Money Back Saver Plan maturity calculator.
At an 8% bonus scenario, the IRR works out to 5.65% as per the SBI Life Smart Money Back Saver Plan maturity calculator.

The IRR analysis highlights a key concern: despite locking your money in the policy for 25 years, the returns generated are relatively modest.

Such low return potential makes it difficult for the plan to meaningfully contribute towards long-term financial goals such as retirement, children’s education, or wealth creation.

Further, the life insurance cover offered under the plan is limited and may not be sufficient to meet a family’s future financial needs.

As a result, the plan falls short on both fronts—it neither provides adequate life cover nor delivers compelling investment returns.

For investors seeking meaningful wealth accumulation and comprehensive financial protection, the SBI Life Smart Money Back Saver Plan may not be an efficient solution.

SBI Life Smart Money Back Saver Vs. Other Investment

The SBI Life Smart Money Back Saver Plan combines life insurance and investment into a single product. However, this bundled structure often limits the effectiveness of both components.

A more efficient approach is to keep insurance and investments separate, allowing you to achieve better protection, higher return potential, and greater financial flexibility.

SBI Life Smart Money Back Saver Vs. Pure-term + Equity Mutual Fund

For comparison, consider purchasing a pure term life insurance policy with a Sum Assured of ₹5 lakhs. Such a policy would cost approximately ₹2,800 per year for a 25-year term with a premium-paying period of 25 years.

This leaves ₹24,553 annually available for investment. Assuming this amount is invested in an equity mutual fund based on the investor’s risk profile, the long-term wealth creation potential can be significantly higher.

Pure Term Life Insurance Policy
Sum Assured	₹ 5,00,000
Policy Term	25 years
Premium Paying Term	25 years
Annualised Premium	₹ 2,800
Investment	₹ 24,553

To ensure a fair comparison, withdrawals are made from the mutual fund investment at the same intervals and amounts as the survival benefits provided under the SBI Life Smart Money Back Saver Plan.

At the end of the 25-year period, the remaining units are redeemed, and long-term capital gains tax is applied only at final redemption after considering the annual LTCG exemption of ₹1.25 lakh.

		Term insurance + Equity Mutual Fund
Age	Year	Term Insurance premium + Equity Mutual Fund	Death benefit
25	1	-27,353	5,00,000
26	2	-27,353	5,00,000
27	3	-27,353	5,00,000
28	4	-27,353	5,00,000
29	5	-27,353	5,00,000
30	6	22,647	5,00,000
31	7	-27,353	5,00,000
32	8	-27,353	5,00,000
33	9	-27,353	5,00,000
34	10	-27,353	5,00,000
35	11	47,647	5,00,000
36	12	-27,353	5,00,000
37	13	-27,353	5,00,000
38	14	-27,353	5,00,000
39	15	-27,353	5,00,000
40	16	97,647	5,00,000
41	17	-27,353	5,00,000
42	18	-27,353	5,00,000
43	19	-27,353	5,00,000
44	20	1,47,647	5,00,000
45	21	-27,353	5,00,000
46	22	-27,353	5,00,000
47	23	-27,353	5,00,000
48	24	-27,353	5,00,000
49	25	-27,353	5,00,000
50		19,09,836

	IRR	10.68%

Under this approach, the post-tax IRR of the Term Insurance + Equity Mutual Fund strategy works out to 10.68%, substantially higher than the returns generated by the SBI Life Smart Money Back Saver Plan.

Equity Mutual Fund Tax Calculation
Maturity value after 25 years	20,77,123
Purchase price	6,13,825
Long-Term Capital Gains	14,63,298
Exemption limit	1,25,000
Taxable LTCG	13,38,298
Tax paid on LTCG	1,67,287
Maturity value after tax	19,09,836

The advantage of separating insurance and investments extends beyond higher returns. It also provides greater liquidity and flexibility, allowing investors to redeem funds when required rather than being restricted to predetermined payout schedules.

In conclusion, the SBI Life Smart Money Back Saver Plan locks investors into a long-term commitment with relatively low returns, inflexible cash-flow structures, and inadequate life insurance coverage.

In contrast, a combination of a pure term insurance policy and equity mutual fund investments offers superior return potential, better tax efficiency, enhanced flexibility, and a more effective way to achieve long-term financial goals.

Final Verdict on SBI Life Smart Money Back Saver

The SBI Life Smart Money Back Saver Plan aims to provide periodic cash payouts along with life insurance protection. However, a closer analysis reveals that it underperforms on both counts.

The plan offers relatively low returns and limited insurance coverage, making it inadequate for addressing your family’s long-term financial needs.

While the survival benefits provide liquidity at predetermined intervals, these payouts may not coincide with your actual financial requirements and it also has a high agent commission.

As a result, they can either encourage unnecessary spending or fail to provide sufficient support when funds are genuinely needed. Consequently, the plan adds limited value as both an investment and an insurance solution.

A more effective approach is to first secure your family’s financial future through a pure term life insurance policy. Term insurance offers significantly higher coverage at a much lower cost, ensuring adequate protection for your dependents.

The savings generated by choosing term insurance can then be invested in a diversified portfolio aligned with your financial goals, investment horizon, and risk appetite.

This approach provides greater flexibility, improved return potential, and a higher likelihood of achieving long-term financial objectives.

Money-back plans are generally not an efficient solution for generating regular cash flow or building wealth. Instead, consider creating a comprehensive financial plan that matches your unique circumstances and goals.

Do Quora, Facebook, and Twitter have the final say when it comes to financial advice?

Consulting a Certified Financial Planner (CFP) can help you design a suitable investment strategy and make informed decisions that support your long-term financial well-being.

SBI Life Smart Money Back Saver Plan: Good or Bad? A Detailed Review

Table of Contents:

What is the SBI Life Smart Money Back Saver?

What are the features of the SBI Life Smart Money Back Saver?

Who is eligible for the SBI Life Smart Money Back Saver?