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?
What are the features of the SBI Life Smart Money Back Saver?
Who is eligible for the SBI Life Smart Money Back Saver?
What are the benefits of the SBI Life Smart Money Back Saver?
Grace Period, Discontinuance and Revival of the SBI Life Smart Money Back Saver?
Free Look Period for the SBI Life Smart Money Back Saver
Surrendering the SBI Life Smart Money Back Saver
What are the advantages of the SBI Life Smart Money Back Saver?
What are the disadvantages of the SBI Life Smart Money Back Saver?
Research Methodology of SBI Life Smart Money Back Saver
Benefits Illustration – IRR Analysis of SBI Life Smart Money Back Saver
SBI Life Smart Money Back Saver Vs. Other Investment
SBI Life Smart Money Back Saver Vs. Pure-term + Equity Mutual Fund
Final Verdict on 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.
|
| 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) | |
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:
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.
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% |
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
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
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.
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.
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.
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:
|
| 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:
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.
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.
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.
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.
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