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Is the SBI Life Smart Scholar Plus the flexible and comprehensive solution you’re looking for to secure your child’s future?
Can the SBI Life Smart Scholar Plus Plan secure your child’s future while growing their savings?
Is the SBI Life Smart Scholar Plus Plan the right investment option to align your financial goals for your child’s future?
This article explores the features, benefits, drawbacks, and potential returns of the SBI Life Smart Scholar Plus Plan. Since planning for your child’s future can often be influenced by emotions, this review will guide you to make informed decisions, avoiding emotionally driven choices.
Table of Contents:
What is the SBI Life Smart Scholar Plus?
What are the features of the SBI Life Smart Scholar Plus?
Who is eligible for the SBI Life Smart Scholar Plus?
What are the benefits of the SBI Life Smart Scholar Plus?
What are the fund options in the SBI Life Smar Scholar Plus?
What are the charges under the SBI Life Smart Scholar Plus?
Grace period, Discontinuance and Revival of SBI Life Smart Scholar Plus
Free Look period for SBI Life Smart Scholar Plus
Surrendering SBI Life Smart Scholar Plus
What are the advantages of the SBI Life Smart Scholar Plus?
What are the disadvantages of the SBI Life Smart Scholar Plus?
Research Methodology of SBI Life Smart Scholar Plus
Benefit Illustration – IRR Analysis
SBI Life Smart Scholar Plus Vs. Other investments
SBI Life Smart Scholar Plus Vs. Pure-term + PPF / ELSS
Final Verdict on SBI Life Smart Scholar Plus
What is the SBI Life Smart Scholar Plus?
SBI Life Smart Scholar Plus is an Individual, Unit-linked, Non-Participating, Life Insurance Savings Product. It is designed for those who want to secure their child’s future by gaining from the financial markets. SBI Life Smart Scholar Plus Plan offers flexible options to meet your changing requirements.
What are the features of the SBI Life Smart Scholar Plus?
- Designed for parents (Life Assured) with children aged 0 to 17 years.
- Inbuilt Premium Payor Waiver Benefit ensures the policy continues in unforeseen circumstances.
- Offers enhanced wealth creation through 10 diverse fund options.
- Includes Accidental Death and Accidental Total and Permanent Disability (TPD) benefits.
- Provides the twin benefit of insurance cover and market-linked returns.
- Loyalty additions increase your fund value over time.
- Liquidity is available through partial withdrawals.
Who is eligible for the SBI Life Smart Scholar Plus?
| Minimum | Maximum | |
| Age at Entry | Parent (Life Assured): 18 years Child: 0 years |
Parent (Life Assured): 50 Years Child: 17 Years |
| Age at Maturity | Child: 18 years | Parent (Life Assured): 65 Years Child: 25 Years |
| Policy Term | 8 to 25 years | |
| Premium Paying Term | Single Pay: One time at policy inception Limited Pay: 5 years to Policy term minus 1 year Regular Pay: Equal to the policy term |
|
| Premium Range | Single – 75,000 Yearly – 50,000 Half-Yearly – 25,000 Quarterly -15,000 Monthly – 5,500 |
No Limit |
| Sum Assured | Limited Pay / Regular Pay: 10 x Annualized Premium Single Pay: 1.25 x Single Premium |
|
What are the benefits of the SBI Life Smart Scholar Plus?
Death Benefit
In the event of the unfortunate death of Life Assured during the SBI Life Smart Scholar Plus policy term, a lump sum benefit equal to the higher of the Sum Assured or 105% of the total premiums paid up to the date of death will be payable.
All the future premiums due are waived and the SBI Life Smart Scholar Plus policy shall continue to be in force and Fund Value will be payable in maturity.
In the event of the death of the child, no sum assured is payable. Life Assured can either continue the policy or terminate the contract.
Maturity Benefit
On completion of the policy term, maturity benefit i.e. the fund value shall be paid to the beneficiary in a lump sum. The beneficiaries will be:
- The policyholder if he/she survives OR
- Child, in case of death of the life assured during the SBI Life Smart Scholar Plus policy term
What are the fund options in the SBI Life Smar Scholar Plus?
You have the option to invest in any one or a combination of the funds listed below, in multiples of 1%. Each fund has a unique asset allocation, with varying levels of risk depending on the allocation. Select the fund that best matches your risk tolerance and financial goals.
| Asset Allocation | |||||
| 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% | NIL | 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 | NIL | 60-100% | 0-40% | Low to Medium |
| 7 | Money Market Fund | NIL | 0-20% | 80-100% | Low |
| 8 | Bond Optimiser Fund | 0-25% | 0-25% | 75-100% | Low to Medium |
| 9 | Pure Fund | 80-100% | NIL | 0-20% | High |
| 10 | Blue-chip Fund | 80-100% | 0-20% | 0-20% | High |
| Government Securities | Money Market Instruments | ||||
| Discontinued Policy Fund | 60-100% | 0-40% | Low | ||
What are the charges under the SBI Life Smart Scholar Plus?
i.) Premium Allocation Charge:
This charge shall be deducted from premiums at the time of receipt of such premium.
| Policy year | Premium Allocation Charge |
| Single pay | 3.00% |
| Regular and Limited Premium Pay (up to Policy Term) | |
| 1 | 6.00% |
| 2 | 4.50% |
| 3 | 4.50% |
| 4 | 4.00% |
| 5 | 4.00% |
| 6 | 1.00% |
| 7 | 1.00% |
| 8 | 1.00% |
| 9 | 1.00% |
| 10 | 1.00% |
| 11 | NIL |
ii.) Policy Administration Charge:
A monthly Policy administration charge of ₹ 50 per month for Single-Pay policies and ₹ 75 per month for Regular and limited-pay policies shall be deducted.
iii.) Fund Management Charges:
| S no | Name of the fund | Fund Management charges |
| 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 | 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.) Premium Payor Waiver Benefit (PPWB) Charges:
This is not applicable to Single Premium policies and reduced paid-up policies. It is recovered every month.
vii.) Accident Benefit Charges:
This is not applicable for Single Premium policies. Charges are recovered on a monthly basis.
viii.) 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 Scholar Plus policy term.
ix.) Premium Redirection Charge:
A charge of ₹ 100 is applicable for every redirection in excess of one free redirection in the same policy year.
x.) Partial Withdrawal Charge:
A charge of ₹ 100 is applicable for every partial withdrawal in excess of one free partial withdrawal in the same policy year.
Inference from these charges: Your premium is not fully invested in the chosen fund. It is only after deducting various charges that the remaining amount is invested.
Unlike other market-linked products, this SBI Life Smart Scholar Plus plan includes multiple types of charges, which, over time, gradually reduce the overall returns.
Grace period, Discontinuance and Revival of SBI Life Smart Scholar Plus
For other than Single Premium policies
Grace Period
A grace period of 30 days will be allowed for Yearly, Half-yearly & Quarterly premium payment frequencies and a grace period of 15 days will be allowed
Discontinuance
If the policy is discontinued during the lock-in Period i.e. 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 including inbuilt Accident Benefit shall cease.
The discontinuance fund value as of the end of the revival period or the first business day of the 6th policy year, whichever is later, would be paid to you.
If the SBI Life Smart Scholar Plus policy is discontinued after the lock-in Period i.e. first 5 policy years – the policy will be converted into a reduced paid-up policy.
The paid-up sum assured will be calculated as the original sum assured multiplied by a ratio of the “total period for which premiums have already been paid” to the “maximum period for which premiums were originally payable” The Accident Benefit sum assured will be equal to the paid-up sum assured.
Revival
Revive the SBI Life Smart Scholar Plus Policy within the revival period of 3 consecutive complete years from the date of the first unpaid premium.
Free Look period for SBI Life Smart Scholar Plus
In the event you disagree with any of the policy terms and conditions, you will have the option to return the policy within 30 days beginning from the date of the receipt of the policy document, whether received electronically or otherwise.
Surrendering SBI Life Smart Scholar Plus
For Single Premium policies
If the SBI Life Smart Scholar Plus policy is surrendered during the lock-in Period (i.e. first 5 years): You have an option to Surrender at any time during the Lock-in Period.
Upon receipt of the request for Surrender, the Fund Value, after deducting the applicable Discontinuance Charges, shall be credited to the Discontinued Policy Fund. The proceeds from the discontinuance fund shall be paid at the end of the Lock-in Period.
If the SBI Life Smart Scholar Plus policy is surrendered after the lock-in period (i.e. first 5 years): You have an option to Surrender the Policy at any time. Upon receipt of the request for Surrender, the Fund Value as of the date of Surrender shall be payable.
For other than Single Premium policies
If surrender is requested during the first 5 Policy years, then Your Fund Value after deduction of applicable discontinuance charge (if any), will be transferred to the ‘Discontinued Policy Fund’.
The Surrender Value will be payable on the 1st working day of the 6th policy year and the SBI Life Smart Scholar Plus policy will terminate.
If the surrender is requested any time after the completion of 5 policy years, then the fund value will be paid and the policy will terminate.
What are the advantages of the SBI Life Smart Scholar Plus?
- Accidental Death Benefits and Premium Payor Waiver Benefits are automatically included in regular and limited pay policies.
- Two free switches, one free premium redirection, and one free partial withdrawal are allowed per policy year.
- Tax benefits apply to both the premiums paid and the benefits received.
What are the disadvantages of the SBI Life Smart Scholar Plus?
- High charges significantly reduce the potential returns.
- The sum assured may be insufficient to cover the family’s future financial needs.
- The plan has a 5-year lock-in period.
- Loan facility is not available under this SBI Life Smart Scholar Plus plan.
Research Methodology of SBI Life Smart Scholar Plus
Before making any investment, it is crucial to assess the potential returns to avoid emotionally driven decisions. Estimating the returns provides better clarity on the plan’s effectiveness. The potential returns of the SBI Life Smart Scholar Plus should be compared with other investment options. Let’s calculate the IRR based on the figures provided in the policy brochure.
Benefit Illustration – IRR Analysis
A 35-year-old male purchases the SBI Life Smart Scholar Plus with a sum assured of ₹10 Lakhs. The policy term and premium paying term are both 20 years, with an annual premium of ₹1 Lakh.
| Male | 35 years |
| Sum Assured | ₹ 10,00,000 |
| Policy Term | 20 years |
| Premium Paying Term | 20 years |
| Annualised Premium | ₹ 1,00,000 |
At the end of the policy term, the fund value is receivable. The following fund values are for illustrative purposes only, and the assumed returns of 4% and 8% p.a. are not guaranteed, nor do they represent the maximum or minimum returns.
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 36 | 2 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 37 | 3 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 38 | 4 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 39 | 5 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 40 | 6 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 41 | 7 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 42 | 8 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 43 | 9 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 44 | 10 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 45 | 11 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 46 | 12 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 47 | 13 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 48 | 14 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 49 | 15 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 50 | 16 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 51 | 17 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 52 | 18 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 53 | 19 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 54 | 20 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 55 | 23,69,906 | 37,38,799 | |||
| IRR | 1.59% | 5.64% | |||
At a 4% return scenario, the fund value is ₹23.69 Lakhs as per the SBI Life Smart Scholar Plus Plan maturity calculator, providing an Internal Rate of Return (IRR) of 1.59%—lower than a standard savings account interest rate.
At an 8% return scenario, the fund value is ₹37.38 Lakhs, with an IRR of 5.64% as per the SBI Life Smart Scholar Plus Plan maturity calculator, which is less than what you’d earn from a fixed deposit.
Although the SBI Life Smart Scholar Plus is a long-term investment over 20 years, its returns do not outpace inflation, leading to a shortfall in the required corpus. Consequently, this plan may not be the best option for achieving your financial goals for your children.
SBI Life Smart Scholar Plus Vs. Other investments
A comparison with other investments provides deeper insights. Let’s evaluate an alternative approach using the same metrics from the previous illustration.
While the SBI Life Smart Scholar Plus offers both life cover and market-linked investment opportunities, we will explore the efficiency of separating insurance and investment.
SBI Life Smart Scholar Plus Vs. Pure-term + PPF / ELSS
For a pure-term policy with a sum assured of ₹10 Lakhs, the premium would be ₹5,500 annually, over a 20-year term.
The remaining ₹94,500 can be invested based on your risk tolerance—high-risk investors may opt for equity, while low-risk investors may prefer debt instruments. We will compare two scenarios: ELSS for equity and PPF for debt.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 10,00,000 |
| Policy Term | 20 years |
| Premium Paying Term | 20 years |
| Annualised Premium | ₹ 5,500 |
| Investment | ₹ 94,500 |
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 35 | 1 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 36 | 2 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 37 | 3 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 38 | 4 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 39 | 5 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 40 | 6 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 41 | 7 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 42 | 8 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 43 | 9 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 44 | 10 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 45 | 11 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 46 | 12 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 47 | 13 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 48 | 14 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 49 | 15 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 50 | 16 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 51 | 17 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 52 | 18 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 53 | 19 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 54 | 20 | -1,00,000 | 10,00,000 | -1,00,000 | 10,00,000 |
| 55 | 41,94,722 | 69,24,652 | |||
| IRR | 6.62% | 10.77% | |||
At the end of 20 years, the maturity value in the PPF account would be ₹41.94 Lakhs, resulting in an IRR of 6.62%. Even though PPF is a debt instrument, it delivers higher returns compared to the market-linked SBI Life Smart Scholar Plus.
| ELSS Tax Calculation | |
| Maturity value after 20 years | 76,26,031 |
| Purchase price | 18,90,000 |
| Long-Term Capital Gains | 57,36,031 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 56,11,031 |
| Tax paid on LTCG | 7,01,379 |
| Maturity value after tax | 69,24,652 |
For the ELSS investment, after accounting for capital gains tax, the post-tax fund value at the end of 20 years would be ₹69.24 Lakhs, with a pre-tax value of ₹76.26 Lakhs. This results in an IRR of 10.77% (post-tax).
Both these alternative strategies offer IRRs that exceed inflation, while also providing greater liquidity.
In contrast, the potential returns of the SBI Life Smart Scholar Plus are not in proportion to the risk taken. The plan’s limited life cover and subpar returns make it less suitable for long-term wealth creation.
Final Verdict on SBI Life Smart Scholar Plus
SBI Life Smart Scholar Plus offers life cover along with a market-linked investment opportunity. While market-linked products inherently carry risk, investors typically expect higher returns to justify that risk.
However, SBI Life Smart Scholar Plus falls short of delivering the desired alpha, making it less attractive for long-term investors.
The multiple charges associated with this plan diminish overall returns, and the life cover provided is insufficient.
As a result, the plan fails to fulfil both its insurance and investment objectives, making it unsuitable for achieving children-related financial goals and also it has a high agent commission.
It’s essential to ensure that you have adequate life insurance. Pure-term policies offer substantial coverage at affordable premiums. With proper life cover in place, you can then focus on building your investment portfolio using your savings.
Avoid making impulsive financial decisions, especially when planning for your children’s future, as this can impact your financial journey in the long run.
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If you’re unsure or need further clarity, seek professional advice. Consult a Certified Financial Planner who can design an investment strategy tailored to your goals and financial situation before committing your hard-earned money.
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