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Can the SBI Life Smart Wealth Builder Plan truly help you achieve your financial goals without high-risk investments?
Can the SBI Life Smart Wealth Builder Plan provide the balance of security and growth that most investors crave?
Can the SBI Life Smart Wealth Builder Plan be the one-stop solution for both wealth creation and financial protection?
This article will explore the plan’s key features, benefits, limitations, and associated costs. Through an Internal Rate of Return (IRR) analysis, we’ll estimate potential returns and compare them to alternative investment options.
Table of Contents:
What is the SBI Life Smart Wealth Builder Plan?
What are the features of the SBI Life Smart Wealth Builder Plan?
Who is eligible for the SBI Life Smart Wealth Builder Plan?
What are the benefits of the SBI Life Smart Wealth Builder Plan?
What are the Fund Options available in SBI Life Smart Wealth Builder?
What are the charges under the SBI Life Smart Wealth Builder Plan?
Grace Period, Discontinuance and Revival of SBI Life Smart Wealth Builder Plan
Free Look Period in SBI Life Smart Wealth Builder Plan
Surrendering SBI Life Smart Wealth Builder Plan
What are the advantages of the SBI Life Smart Wealth Builder Plan?
What are the disadvantages of the SBI Life Smart Wealth Builder Plan?
Research Methodology of SBI Life Smart Wealth Builder Plan
Benefit Illustration – IRR Analysis of SBI Life Smart Wealth Builder Plan
SBI Life Smart Wealth Builder Plan Vs. Other Investments
SBI Life Smart Wealth Builder Plan Vs. Pure-term + PPF/ELSS
Final Verdict on SBI Life Smart Wealth Builder Plan
What is the SBI Life Smart Wealth Builder Plan?
SBI Life Smart Wealth Builder is an Individual, Unit Linked, Non-Participating, Life Insurance Product. SBI Life Smart Wealth Builder Plan aims to meet all your insurance & financial needs through a single product.
You can avail the benefit of life coverage and enhanced wealth creation opportunities through market-linked returns.
What are the features of the SBI Life Smart Wealth Builder Plan?
- Life insurance coverage is provided throughout the SBI Life Smart Wealth Builder Plan policy term.
- Access to enhanced investment opportunities with a choice of 11 diverse fund options.
- For regular and limited pay plans, no policy administration fees are charged during the first 5 years.
- From the 11th policy year onward, there are no premium allocation charges.
- Guaranteed additions, depending on the policy term, can reach up to 125% of one annual regular premium over the SBI Life Smart Wealth Builder Plan policy duration.
Who is eligible for the SBI Life Smart Wealth Builder Plan?
| Minimum | Maximum | |
| Age at Entry | 2 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: 12 to 30 years | Same as policy term | |
| Limited Pay: | ||
| 12 to 14 years | 7 years | |
| 15 to 19 years | 7/10/12 years | |
| 20 to 30 years | 7/10/12/15 years | |
| Single pay: 5 to 30 years | one-time payment at policy inception | |
| Annual Premium amount | Regular pay: ₹ 30,000 | ₹ 2,50,000 |
| Limited Pay: ₹ 40,000 | ||
| Single pay: ₹ 65,000 | ||
| Premium Frequency | Single / Annual | |
| Basic Sum Assured | Regular pay & Limited pay: 10* Annualised premium | |
| Single pay: 1.25* Single pay | ||
What are the benefits of the SBI Life Smart Wealth Builder Plan?
1. Death benefit
In case of death, the nominee will receive the higher of the following:
- Fund Value as on the date of death intimation or
- Basic Sum Assured Less Applicable Partial Withdrawals (APW) or
- 105% of the total Premiums received up to the date of death less Applicable Partial Withdrawals
2. Maturity Benefit
On survival of the life assured up to maturity, the Fund value shall be payable in a lump sum.
3. Guaranteed Additions
Guaranteed Additions at a pre-specified percentage of Annual Premium/Single Premium, would be made to the Fund Value at the end of the 10th SBI Life Smart Wealth Builder Plan policy year and every 5th year thereafter.
What are the Fund Options available in SBI Life Smart Wealth Builder?
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 | Discontinued Policy Fund | – | 60-100% | 0-40% | Low |
What are the charges under the SBI Life Smart Wealth Builder Plan?
i.) Premium Allocation Charge:
This charge shall be deducted from Premiums as they are paid, before the allocation of units each time a Premium is received. The percentage depends on the premium paying term and the SBI Life Smart Wealth Builder Plan policy year.
ii.) Policy Administration Charge:
A Policy Administration Charge shall be deducted monthly.
For single pay – ₹ 50 per month
For limited and regular pay – ₹ 60 per month from the 6th policy year onwards.
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 | 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 SBI Life Smart Wealth Builder Plan policy month from Fund Value by way of cancellation of units. This is charged based on your age and Sum at Risk.
vi.) Switching 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 Wealth Builder Plan policy term.
vii.) Partial Withdrawal Charge:
A charge of ₹100 is applicable for every partial withdrawal in excess of one free partial withdrawal in same policy year
Inference from these charges: Your premium is not fully invested in the chosen fund upfront. Instead, a portion is directed to cover various charges, with the remaining amount allocated to investment. In other market-linked products, such segmented charges may not apply. Over time, these charges can reduce the overall returns on your investment.
Grace Period, Discontinuance and Revival of SBI Life Smart Wealth Builder Plan
Grace Period
A grace period of 30 days will be allowed to pay the premium.
Discontinuance of Policy
If the SBI Life Smart Wealth Builder Plan 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 the risk cover shall cease.
The proceeds of the discontinued SBI Life Smart Wealth Builder Plan policy shall be payable at the end of the lock-in period or date of surrender whichever is later.
If the SBI Life Smart Wealth Builder Plan policy is discontinued after the first 5 policy years: the 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 Wealth Builder 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 Wealth Builder Plan
In case you disagree with any of the terms and conditions, you have the option to return the SBI Life Smart Wealth Builder Plan policy, within 15 days for policies purchased through channels other than Direct Marketing, for electronic policies (30 days for policies sold through distance marketing electronic policies), from the date of the receipt of the policy document.
Surrendering SBI Life Smart Wealth Builder Plan
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 any 1 working day of the 6th policy year the SBI Life Smart Wealth Builder Plan policy will terminate.
If you surrender after the completion of the first 5 policy years, the fund value is payable immediately the SBI Life Smart Wealth Builder Plan policy will terminate.
What are the advantages of the SBI Life Smart Wealth Builder Plan?
- The nominee has the option to receive death benefit payments in instalments during the settlement period.
- Two fund switches per policy year are allowed at no additional cost.
- Premium redirection is available starting from the second 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 Wealth Builder Plan policy term, providing higher additions for longer terms.
What are the disadvantages of the SBI Life Smart Wealth Builder Plan?
- There is a 5-year lock-in period.
- Loan facility is not available under this plan.
- Only the net premium, after applicable charges are deducted, is invested.
- The life cover provided by this plan may be insufficient.
Research Methodology of SBI Life Smart Wealth Builder Plan
Estimating potential returns is crucial for evaluating a market-linked product, as it enables comparison with other investment options and supports informed decision-making. Here is an Internal Rate of Return (IRR) analysis using data from the policy brochure.
Benefit Illustration – IRR Analysis of SBI Life Smart Wealth Builder Plan
Consider a 35-year-old male investing in the SBI Life Smart Wealth Builder Plan with a sum assured of ₹5 lakhs. The SBI Life Smart Wealth Builder Plan policy and premium payment terms are set for 30 years, with an annual premium of ₹50,000.
| Male | 35 years |
| Sum Assured | ₹ 5,00,000 |
| Policy Term | 30 years |
| Premium Paying Term | 30 years |
| Annualised Premium | ₹ 50,000 |
At the end of the policy term, the fund value is payable. Please note that the assumed returns of 4% and 8% p.a. are purely illustrative and are neither guaranteed nor set boundaries on potential 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 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 36 | 2 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 37 | 3 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 38 | 4 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 39 | 5 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 40 | 6 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 41 | 7 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 42 | 8 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 43 | 9 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 44 | 10 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 45 | 11 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 46 | 12 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 47 | 13 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 48 | 14 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 49 | 15 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 50 | 16 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 51 | 17 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 52 | 18 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 53 | 19 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 54 | 20 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 55 | 21 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 56 | 22 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 57 | 23 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 58 | 24 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 59 | 25 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 60 | 26 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 61 | 27 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 62 | 28 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 63 | 29 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 64 | 30 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 65 | 21,74,877 | 42,95,463 | |||
| IRR | 2.30% | 6.13% | |||
Under the 4% scenario, the estimated fund value is ₹21.74 lakhs with an IRR of 2.30% as per the SBI Life Smart Wealth Builder Plan’s maturity calculator.
Under the 8% scenario, the estimated fund value is ₹42.95 lakhs with an IRR of 6.13% as per the SBI Life Smart Wealth Builder Plan’s maturity calculator.
For long-term investors, it’s essential to aim for returns that comfortably exceed inflation. Here, the IRR falls below expected inflation rates, indicating a likely shortfall in building the desired corpus.
Consequently, the SBI Life Smart Wealth Builder Plan may not support the achievement of significant financial milestones.
SBI Life Smart Wealth Builder Plan Vs. Other Investments
Comparing the SBI Life Smart Wealth Builder Plan with other investments provides a valuable perspective. Let’s examine the same benefit illustration to see if separating life cover and market-linked investments could yield higher returns.
SBI Life Smart Wealth Builder Plan Vs. Pure-term + PPF/ELSS
For a life cover, a pure term insurance policy with a sum assured of ₹ 5 lakh costs ₹3,600 annually, with a policy term of 30 years. For the same metric, the premium is ₹ 50,000 in the previous illustration.
Opting for a pure-term life insurance policy leaves a balance of ₹46,400, which can be invested as per risk preference.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 5,00,000 |
| Policy Term | 30 years |
| Premium Paying Term | 30 years |
| Annualised Premium | ₹ 3,600 |
| Investment | ₹ 46,400 |
Low-risk investors might prefer debt instruments, while higher-risk investors could lean toward equity options. Here, we consider PPF (debt) and ELSS (equity) as examples.
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 35 | 1 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 36 | 2 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 37 | 3 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 38 | 4 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 39 | 5 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 40 | 6 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 41 | 7 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 42 | 8 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 43 | 9 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 44 | 10 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 45 | 11 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 46 | 12 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 47 | 13 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 48 | 14 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 49 | 15 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 50 | 16 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 51 | 17 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 52 | 18 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 53 | 19 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 54 | 20 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 55 | 21 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 56 | 22 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 57 | 23 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 58 | 24 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 59 | 25 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 60 | 26 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 61 | 27 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 62 | 28 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 63 | 29 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 64 | 30 | -50,000 | 5,00,000 | -50,000 | 5,00,000 |
| 65 | 47,79,482 | 1,11,63,505 | |||
| IRR | 6.70% | 11.05% | |||
PPF Investment: The maturity value is estimated at ₹47.79 lakhs with an IRR of 6.70%, which closely resembles the 8% scenario of the SBI Life Smart Wealth Builder Plan. As a debt instrument, PPF provides higher returns than the market-linked ULIP.
ELSS Investment: The estimated pre-tax maturity value is ₹1.25 crores. After accounting for capital gains tax, the net maturity value is approximately ₹1.11 crores, with a post-tax IRR of 11.05%.
| ELSS Tax Calculation | |
| Maturity value after 30 years | 1,25,41,577 |
| Purchase price | 13,92,000 |
| Long-Term Capital Gains | 1,11,49,577 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 1,10,24,577 |
| Tax paid on LTCG | 13,78,072 |
| Maturity value after tax | 1,11,63,505 |
This alternative strategy indicates that splitting insurance and investment yields better returns. These returns are significantly higher than those of the SBI Life Smart Wealth Builder Plan, enhancing wealth accumulation and accelerating your financial progress.
Final Verdict on SBI Life Smart Wealth Builder Plan
The SBI Life Smart Wealth Builder is a typical ULIP that combines market-based investments with life insurance. However, investors who accept the high risks of market-linked products usually seek returns that outpace inflation.
Unfortunately, the SBI Life Smart Wealth Builder Plan falls short in generating alpha, resulting in a less optimal balance of risk and return and it also has a high agent commission.
Despite its name, the “Wealth Builder” plan does not effectively support wealth-building. A deeper analysis reveals that its relatively low returns, limited sum assured, and restricted fund access make it a less suitable choice for those focused on wealth creation.
High charges in ULIPs often hinder the ability to achieve strong returns. A more efficient strategy is to keep investments and insurance separate. Adequate life insurance coverage can be secured through a pure-term policy at an affordable premium.
When it comes to financial advice, are Quora, Facebook, and Twitter the final word?
Wealth creation can be achieved by building a well-diversified investment portfolio that aligns with your financial goals and risk tolerance. For tailored guidance, consulting a Certified Financial Planner can help you create a robust investment strategy suited to your needs.
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