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Can the SBI Life Smart Privilege Plus Plan secure your future while enjoying the privilege of life-long financial growth?
Can the SBI Life Smart Privilege Plus Plan protect your loved ones while maximising your wealth potential?
Can the SBI Life Smart Privilege Plus Plan offer security and the freedom to choose your investments?
This article explores the plan’s features, benefits, drawbacks, and costs. An internal rate of return (IRR) analysis is also included to provide deeper insights into its potential value.
Table of Contents:
What is the SBI Life Smart Privilege Plus?
What are the features of the SBI Life Smart Privilege Plus?
Who is eligible for the SBI Life Smart Privilege Plus?
What are the benefits of the SBI Life Smart Privilege Plus?
What are the Fund Options available in SBI Life Smart Privilege Plus?
What are the charges under the SBI Life Smart Privilege Plus?
Grace Period, Discontinuance and Revival of SBI Life Smart Privilege Plus
Free Look Period in SBI Life Smart Privilege Plus
Surrendering SBI Life Smart Privilege Plus
What are the advantages of the SBI Life Smart Privilege Plus?
What are the disadvantages of the SBI Life Smart Privilege Plus?
Research Methodology of SBI Life Smart Privilege Plus
Benefit Illustration – IRR Analysis of SBI Life Smart Privilege Plus
SBI Life Smart Privilege Plus Vs. Other Investments
SBI Life Smart Privilege Plus Vs. Pure-term + PPF/ELSS
Final Verdict on the SBI Life Smart Privilege Plus
What is the SBI Life Smart Privilege Plus?
SBI Life Smart Privilege Plus is an Individual, Unit-Linked, Non-Participating, Life Insurance, Savings Product.
SBI Life Smart Privilege Plus Plan gives you the flexibility to make multiple switches and premium re-directions among twelve diverse funds with the benefit of loyalty additions to boost your fund value.
What are the features of the SBI Life Smart Privilege Plus?
- Enjoy Life Insurance coverage throughout the SBI Life Smart Privilege Plus Plan policy term.
- Pay premiums throughout the policy term or for a limited period or through a Single Payment, at your convenience
- Invest in a wide range of 12 funds
- No Premium Allocation Charge from 6th policy year
- Loyalty Additions start from the end of 6th policy year for in-force policies
- Manage your changing financial priorities with an unlimited free switching facility
Who is eligible for the SBI Life Smart Privilege Plus?
| Minimum | Maximum | |
| Age at Entry | Regular Pay/Limited Pay: 8 years Single Pay: 13 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: 10 to 30 years | Same as the policy term | |
| Limited Pay: | ||
| 15 to 30 years | Minimum: 5 years, Maximum: Policy term minus 1 | |
| Single pay: 5 to 30 years | one-time payment at policy inception | |
| Annual Premium amount | Yearly: 6,00,000 | No limit |
| Half-Yearly: 3,00,000 | ||
| Quarterly: 1,50,000 | ||
| Monthly: 50,000 | ||
| Single pay: 6,00,000 | ||
| Premium Frequency | Single/Yearly / Half – Yearly / Quarterly / Monthly | |
| Basic Sum Assured | Regular pay & Limited pay: 7* Annualised premium | |
| Single pay: 1.25* Single pay | ||
What are the benefits of the SBI Life Smart Privilege Plus?
1. Death benefit
In case of an unfortunate death of the life assured during the SBI Life Smart Privilege Plus Plan policy term, the beneficiary will receive the highest of the following:
- Fund Value as on the date of intimation of the death claim to the Company or
- Sum Assured less Applicable Partial Withdrawals (APW) or
- 105% of Total Premiums Paid up to the date of death
2. Maturity Benefit:
On survival of the life assured up to maturity provided the SBI Life Smart Privilege Plus Plan policy is in force, the Fund Value as of the date of maturity shall be paid in a lump sum
Loyalty additions
Loyalty additions would be added to existing Fund Value starting from the end of the 6th Policy year and on regular intervals
What are the Fund Options available in SBI Life Smart Privilege Plus?
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 Privilege Plus?
i.) Premium Allocation Charge: (as a percentage of Single/Annualized Premium)
This charge shall be deducted from Premiums as they are paid, before the allocation of units each time a Premium is received.
Single pay: 2%
Limited and regular pay: for the first 5 years – 2.5% p.a. and from the 6th policy year onwards – Nil
ii.) Policy Administration Charge:
A monthly Policy Administration Charge of ₹ 100 (for regular and limited pay) shall be deducted by cancelling units. There is no policy administration charge for single-pay policies.
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.) Partial Withdrawal Charge:
A charge of ₹100 is applicable for every partial withdrawal in excess of two free partial withdrawal in same policy year
Vi.) Switching Charge:
NIL.
vii.) Premium Redirection Charge:
Nil
viii.) Mortality Charges:
Mortality charges are deducted each SBI Life Smart Privilege Plus Plan policy month from Fund Value by way of cancellation of units. This is charged based on your age and Sum at Risk.
Inference from these charges: Your premium is not fully invested in your chosen fund immediately. A portion is used to cover various charges, with only the remaining amount directed toward your investment.
Unlike certain other market-linked products, this plan imposes multiple charges that can gradually reduce your overall investment returns.
Grace Period, Discontinuance and Revival of SBI Life Smart Privilege Plus
For other than Single premium policies
Grace Period
Grace period of 30 days would be allowed for payment of Yearly, Half-yearly & Quarterly premiums and 15 days for monthly premiums
Discontinuance of Policy
If the 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 policy is discontinued after the first 5 policy years: the SBI Life Smart Privilege Plus Plan 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 Privilege Plus 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 Privilege Plus
In case you disagree with any of the terms and conditions, you have the option to return the SBI Life Smart Privilege Plus Plan policy, within 30 days beginning from the date of the receipt of the policy document, whether received electronically or otherwise
Surrendering SBI Life Smart Privilege Plus
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 Policy Fund.
The Fund Value will be payable at the end of the lock-in period (5 years) or date of surrender whichever is later.
If you surrender after the completion of the first 5 policy years, the fund value is payable immediately the SBI Life Smart Privilege Plus Plan policy will terminate.
What are the advantages of the SBI Life Smart Privilege Plus?
- The nominee has the option to receive death benefit payments in instalments during the settlement period.
- Unlimited fund switches are allowed at no additional cost.
- Premium redirection is available starting from the first 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 SBI Life Smart Privilege Plus Plan policy term, providing higher additions for longer terms.
What are the disadvantages of the SBI Life Smart Privilege Plus?
- 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 minimum annual premium of ₹6 lakhs makes the plan unaffordable for many individuals.
Research Methodology of SBI Life Smart Privilege Plus
The SBI Life Smart Privilege Plus offers a systematic way to invest in the market, aiming to help you achieve your long-term financial goals.
To estimate the potential investment value, let’s analyse the benefit illustration figures provided in the policy brochure. Evaluating the projected returns and calculating the Internal Rate of Return (IRR) will provide clearer insights.
Benefit Illustration – IRR Analysis of SBI Life Smart Privilege Plus
Consider a 30-year-old male investing in the SBI Life Smart Privilege Plus with a sum assured of ₹1.05 crores.
The policy term and premium payment term are both 20 years, with an annual premium of ₹15,00,000. At the end of the term, the accumulated fund value is payable.
| Male | 30 years |
| Sum Assured | ₹ 1,05,00,000 |
| Policy Term | 20 years |
| Premium Paying Term | 20 years |
| Annualised Premium | ₹ 15,00,000 |
The brochure projects fund values based on assumed investment returns of 4% and 8%. It’s crucial to note that these returns are not guaranteed and reflect only a limited range of potential outcomes. The actual maturity benefit will depend on the plan’s 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 |
| 30 | 1 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 31 | 2 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 32 | 3 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 33 | 4 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 34 | 5 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 35 | 6 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 36 | 7 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 37 | 8 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 38 | 9 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 39 | 10 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 40 | 11 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 41 | 12 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 42 | 13 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 43 | 14 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 44 | 15 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 45 | 16 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 46 | 17 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 47 | 18 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 48 | 19 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 49 | 20 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 50 | 4,19,26,220 | 6,56,86,822 | |||
| IRR | 3.09% | 6.99% | |||
– At a 4% return: The estimated fund value is ₹4.19 crores, resulting in an IRR of 3.09% as per the SBI Life Smart Privilege Plus Plan maturity calculator.
– At an 8% return: The estimated fund value is ₹6.56 crores, yielding an IRR of 6.99% as per the SBI Life Smart Privilege Plus Plan maturity calculator.
The analysis indicates that the SBI Life Smart Privilege Plus may not justify the associated risks.
As a long-term plan, its returns are suboptimal and may not help accumulate the desired corpus. Choosing this plan could lead to a shortfall in meeting your financial goals.
SBI Life Smart Privilege Plus Vs. Other Investments
Considering the disproportionate risk and return in the SBI Life Smart Privilege Plus, let’s explore alternative investment strategies that offer better risk-adjusted returns.
While ULIPs combine insurance and investment, separating these components often proves more beneficial. Using the same parameters as the previous example, let’s examine two alternative scenarios.
SBI Life Smart Privilege Plus Vs. Pure-term + PPF/ELSS
For life coverage, a pure-term insurance policy with a sum assured of ₹1 crore costs ₹10,000 annually for a 20-year term.
In comparison, the SBI Life Smart Privilege Plus premium was ₹15 lakhs. By opting for a term plan, the remaining ₹14.9 lakhs can be allocated to investments.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 1,05,00,000 |
| Policy Term | 20 years |
| Premium Paying Term | 20 years |
| Annualised Premium | ₹ 10,000 |
| Investment | ₹ 14,90,000 |
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 30 | 1 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 31 | 2 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 32 | 3 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 33 | 4 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 34 | 5 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 35 | 6 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 36 | 7 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 37 | 8 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 38 | 9 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 39 | 10 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 40 | 11 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 41 | 12 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 42 | 13 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 43 | 14 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 44 | 15 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 45 | 16 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 46 | 17 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 47 | 18 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 48 | 19 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 49 | 20 | -15,00,000 | 1,05,00,000 | -15,00,000 | 1,05,00,000 |
| 50 | 6,61,38,996 | 10,89,51,601 | |||
| IRR | 7.04% | 11.15% | |||
Investment choices can align with your risk tolerance:
– Risk-averse investors may prefer debt options like PPF.
– Risk-tolerant investors can explore equity-focused investments like ELSS funds.
1. PPF Investment:
The annual PPF investment threshold is ₹1.5 lakhs, but for this illustration, we assume the full balance is invested.
– Estimated Maturity Value: ₹6.61 crores
– IRR: 7.04%
This surpasses the 8% return scenario of the SBI Life Smart Privilege Plus despite being a low-risk debt instrument.
2. ELSS Investment:
– Estimated Pre-tax Maturity Value: ₹12.02 crores
– Post-tax Maturity Value (after capital gains tax): ₹10.89 crores
– Post-tax IRR: 11.15%
| ELSS Tax Calculation | |
| Maturity value after 30 years | 12,02,41,116 |
| Purchase price | 2,98,00,000 |
| Long-Term Capital Gains | 9,04,41,116 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 9,03,16,116 |
| Tax paid on LTCG | 1,12,89,514 |
| Maturity value after tax | 10,89,51,601 |
Both scenarios demonstrate that separating insurance from investment results in significantly higher returns compared to the SBI Life Smart Privilege Plus.
This approach highlights the advantages of using a pure-term insurance policy for protection and investing the surplus in more efficient financial instruments to maximize wealth accumulation.
Final Verdict on the SBI Life Smart Privilege Plus
The SBI Life Smart Privilege Plus Plan combines life insurance with market-linked investments. However, its long-term returns are moderate and fail to justify the associated costs. Various charges within the plan reduce the amount available for investment, further impacting returns.
A significant drawback of this plan is its high minimum annual premium of ₹6 lakhs. Additionally, as per the Finance Act, 2021, if the annual premium for any year exceeds ₹2.5 lakhs, the maturity proceeds (including bonuses) become fully taxable. This rule significantly reduces the tax efficiency of the plan.
Our analysis of the returns reveals that the plan’s long-term performance is not only relatively low but also lacks tax advantages and it also has a high agent commission.
To effectively achieve your financial goals, building a diversified investment portfolio is a better strategy for accelerating wealth accumulation.
Simultaneously, opting for a pure-term life insurance policy provides superior protection for your family against uncertainties.
When it comes to financial advice, are Quora, Facebook, and Twitter the final word?
Before committing to any investment, thoroughly evaluate the plan to ensure alignment with your financial goals. Seeking advice from a Certified Financial Planner can provide valuable guidance, helping you navigate your financial journey with confidence.
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