SBI Shubh Nivesh Plan: Complete Analysis & Review (Updated for 2024)

SBI Shubh Nivesh is an endowment policy, it provides a unique feature of whole life coverage.

The company also claims to provide you with attention-grabbing features such as regular income, multiple benefits of wealth creation, insurance cover, and wealth transfer.

What does this policy have in its basket? Will you get any benefit if you choose to invest in this plan? If you have already taken this policy, should you stay invested in this policy?

In this post, we will critically review its key features and benefits, that will answer all your questions and help you make the right buying decision.

Topic Navigation

1.) SBI Shubh Nivesh Plan: Key Highlights – Review
2.) SBI Shubh Nivesh Plan: Analysis of Basic Features and Eligibility
3.) SBI Shubh Nivesh Plan: Review of Maturity Benefits
4.) SBI Shubh Nivesh Plan: Review of Death Benefits
5.)SBI Shubh Nivesh Plan: Review with Illustration
6.)SBI Shubh Nivesh Plan: Analysis and Review

• SBI Shubh Nivesh Plan (2020 update): Past Performance Review with Illustration
• SBI Shubh Nivesh Plan Vs. Other Alternative Investments Review
• SBI Shubh Nivesh Plan vs SBI Life Smart Privilege Plan
• SBI Shubh Nivesh Plan vs other Investment Plans – Review Conclusion

7.) Limitations of SBI Shubh Nivesh Plan: Analysis
8.) SBI Shubh Nivesh Plan: FAQs
9.) Conclusion: SBI Shubh Nivesh Plan Good or Bad?

SBI Shubh Nivesh Plan: Key Highlights -Review

• You will have the option of choosing the Life Cover for 30 years OR the whole life depending on your insurance needs.
• Flexibility to choose between Single and Regular Premium Payment.
• Additional Rider options are available at an affordable cost. Details are shown below:

• This plan comes with 2 options: An endowment option, and Endowment with a whole life option.

Endowment Option:

Under this option, the Sum Assured + accrued Simple Reversionary Bonus would be paid on the death of the Life Insured within the Policy Tenure as Death Benefit or on survival till the end of the Policy Tenure as Maturity Benefit.

Endowment with whole life option:

Under this option, the policy is converted to a whole life cum Endowment Plan. Thus, the Sum Assured + accrued Simple Reversionary Bonus would be paid at the end of the Endowment Tenure and the policy continues. An additional amount of the basic Sum Assured will be paid on survival till 100 years of age or on the death of the Life Assured, whichever is earlier.

Income Tax Benefit:

Life Insurance premiums paid up to Rs. 1,00,000 are allowed as a deduction from the taxable income each year under section 80C and the Maturity Proceeds are tax-free under section 10(10)D subject to fulfilment of terms and conditions.

SBI Shubh Nivesh Plan: Analysis of Basic Features and Eligibility

All the basic features of this plan such as Policy Term, Premium frequency, Premium paying term, Premium option etc. are shown in the table below.

Image source: SBI Shubh Nivesh Plan Product Brochure

SBI Shubh Nivesh Plan: Review of Maturity Benefits

On survival till the end of the policy tenure, the policyholder will get the Maturity Benefits according to the chosen plan:

Endowment Assurance: Analysis

• • After completion of Policy Tenure, the Basic Sum Assured + vested Simple Reversionary Bonus is paid as Maturity Benefit and the policy terminates

• If the Deferred Maturity Payment option has been chosen, the accrued bonus will be paid on the date of policy maturity and the policyholder may choose to receive the sum assured in regular instalments over the next 5/10/15/20 years as selected

Whole Life Endowment Assurance: Analysis

• After completion of the endowment term, the Basic Sum Assured + vested Simple Reversionary Bonus and Terminal bonuses are paid as Maturity Benefits, provided that the policy is in force.

• If the Deferred Maturity Payment option has been chosen, the accrued bonus will be paid on the date of policy maturity and the policyholder may choose to receive the sum assured in regular instalments over the next 5/10/15 or 20 years, as selected

• An additional amount equal to the basic sum assured will be paid on the attainment of the 100th Birthday!!

SBI Shubh Nivesh Plan:  Review of Death Benefits

In case of the death of the Policyholder within the Policy Term, the nominee will get the death benefits according to the opted plan.

Endowment Assurance:

• • Death before the completion of Policy Tenure: Sum Assured + Simple Reversionary Bonus (if any) is paid to the nominee as Death Benefit and the policy terminates

• The deferred Maturity Payment Option has been opted for and death happens after the completion of the Endowment term: The Balance amount of the Deferred Maturity Payment Option, if any; would continue to be paid to the legal heirs till the end of the stipulated chosen period.

Whole Life Endowment Assurance:

• Death before the completion of the Endowment term: Sum Assured + Simple Reversionary Bonus (if any) is paid to the nominee as Death Benefit and the policy terminates

• If the death happens after the completion of the endowment term and up to 100 years of age: Basic Sum Assured is paid to the nominee as Death Benefit and the policy terminates

• If the deferred Maturity Payment Option has been opted for and death happens after the completion of the Endowment term but before the receipt of the final instalment under the deferred payment option.

• The Basic Sum Assured would be paid to the nominee as Death Benefit and the policy continues. The remaining amount of the Deferred Maturity Payment Option would continue to be paid to the nominee till the end of the stipulated period as chosen.

SBI Shubh Nivesh Plan: Review with Illustration

Let us say, Mr X who is 30 years old; chooses to purchase Endowment with a whole life option in SBI Shubh Nivesh Plan.

After putting all the relevant details, such as Sum Assured, Premium Frequency, Policy Term and Premium Payment Term on the SBI Life Online Calculator:

From the Calculator, we have found that

– To get the Sum Assured of Rs.20 Lacs, Mr X has to pay the annual Premium amount of Rs.1,11,420 for 20 years.

– Maturity Benefits will be Rs.25,98,000 when assumed at the gross return rate of 4%. And Rs.39,32,000 in the best-case scenario considered at 8% Assumed return rate.

Note that we have not considered the additional riders in this calculation.

Watch the visual illustration below!
Insight:

The additional riders are cheaper in cost but let’s first have a look at the entire policy itself, whether it provides good returns for your investment or not! Riders can be considered much later!

We will do the analysis of the returns of this SBI Shubh Nivesh Plan in the best-case scenario of the assumed return rate calculated at 8%  in the next section…

SBI Shubh Nivesh Plan: Analysis and Review

As we have discussed in the illustration that Mr X is paying his Premium of Rs.11,14,200 for 20 years (equal to the policy term)

In this analysis let’s consider that he is getting the SBI Shubh Nivesh Plan Maturity benefit in the best-case scenario, where the assumed (gross) rate of return is calculated at 8%.

These returns are NOT guaranteed but this is the maximum value you may get from this plan!

Let us find out the average returns considering all your premium payments for 20 years and the Maturity Amount of SBI Shubh Nivesh Plan, as discussed in the illustration (previous section)

In the above illustration, the IRR is calculated at 6%.

SBI Shubh Nivesh Plan Maturity Amount Calculator

Therefore, if Mr X pays the annual premiums of Rs.1,11,420 for 20 years and receives the SBI Shubh Nivesh Plan Maturity Amount of Rs.39,32,000, in the best-case scenario.

The average returns will be capped at 6% only!

Key insights from the above analysis:

• Even after considering the best-case scenario, Mr.X will end up getting the returns of 6% and we have not included the taxes that Mr X has to pay along with each of his premiums.

• Taxes will be added to the premiums at the rate of 4.5% in the first year and 2.25% from 2nd year and onwards.

• The assured sum is much LESS than all the premiums that Mr X will pay throughout the policy term of 20 years.

• The maturity benefit at pre-expenses assumed (gross) return rate of 4% is Rs.25,98,000, as we saw in the illustrative example in the previous section.

• The returns are in the range of 2%. Therefore, in the average case scenario, you may expect a 2% return from this plan. It means the returns from this plan will vary between 2% to 6%, with NO guarantees!

SBI Shubh Nivesh Plan (2020 update): Past Performance Review with Illustration

Since the inception of the SBI Shubh Nivesh Plan, it has generated the returns in their bonuses as shown below:

Please note: The returns in Bonuses are percentages of the basic sum assured.

Reversionary Bonuses

Terminal Bonuses

Insight:
As you can notice that in SBI Shubh Nivesh Plan the calculated returns on bonuses have been below average in the past years.

You can easily get more returns than this even from your Saving Bank Account!!

So, basically, it doesn’t make any financial sense to invest or stay invested in this plan.

Now let’s have a look at other investment options.

Lets see how other options could possibly benefit you with the investment of the same amount of money and duration!

SBI Shubh Nivesh Plan Vs. Other Alternative Investments – Review

There is no point investing your money in SBI Shubh Nivesh Plan.

However, if your primary intention is to grow your money, then we recommend you invest your money in PPF or Mutual Funds to get a better value for your money.

Now, let’s compare the returns of SBI Shubh Nivesh Plan Vs. Mutual Funds and PPF.

SBI Shubh Nivesh Plan Vs. PPF – Review

Let us say if you invest Rs.1,11,420 per annum in PPF for 20 years, which provides you with guaranteed returns of 8%.

Therefore, after 20 years the returns from the PPF will be Rs. 55,06,702/-.

PPF Returns after 20 years: ₹ 55,06,702

Don’t you think, these guaranteed returns are much better than the best scenario’s non-guaranteed returns from SBI Shubh Nivesh Plan, where the assured sum is merely Rs.20 Lacs!!

SBI Shubh Nivesh Plan Vs. Mutual Funds – Review

In the case of Mutual funds, let’s say you invest Rs. 30,000 quarterly (or Rs. 1,20,000 annually) through SIP payment in a good equity Mutual Fund, that will generate 12.5% average returns.

You can use this Mutual Fund Online Calculator to find the Mutual Fund Returns.

After 20 years duration, the returns from Mutual Funds will be over Rs.1 Crores!

Mutual Fund Returns after 20 years: ₹ 1,06,17,859

Have you noticed it? You have the potential to grow your amount of Rs.1,11,420 per annum up to Rs.1 Crores and more if only you choose to manage your money wisely!

In SBI Shubh Nivesh Plan the only guaranteed benefit is the Sum Assured, which is Rs. 20 Lacs only!

Returns from SBI Shubh Nivesh Plan Vs. Mutual Funds – Review conclusion

In the above illustration the Guaranteed Returns in 20 years for PPF, Assumed Returns of ELSS and SBI subh Nivesh plan are calculated.

The calculated Returns of Mutual Funds seem to be much higher than the other two.

You can read this Comprehensive Guide to Mutual Funds, to get a good understanding of choosing them.

Now, YOU tell us, will you still go for SBI Shubh Nivesh Plan?

Let’s have a look at the major limitations of this plan in the next section.

SBI Shubh Nivesh Plan vs SBI Life Smart Privilege Plan

‘Smart Privilege Plan’ is a unit-linked investment insurance plan which has 11 different fund options to choose from whereas ‘Shubh Nivesh Plan’ is a endowment policy which promises to provide life long coverage.

Read the complete review here. How Good or Bad is SBI Life Smart Privilege Plan?– Review 2024

 SBI Shubh Nivesh Plan vs other Investment Plans –   Review Conclusion

After a thorough analysis of all other alternative investment options for SBI Shubh Nivesh Plan, Term Insurance + ELSS or PPF seem to be far better options with greater returns.

Limitations of SBI Shubh Nivesh Plan: Analysis

Below are the major limitations of the SBI Shubh Nivesh Plan

• • Lower Returns:As you have seen in the above analysis, this plan is giving you the returns of 6% in the best-case scenario and these are the returns after excluding the GST tax and other charges in this policy. And, returns in the average case scenario are just 2%! Such returns in a 20-year long-duration can’t even beat the rate of inflation!! In other words, you are losing money in this policy.

• • Lack of Flexibility:There is a lock-in period of 5 years in this plan; if you choose to discontinue your policy within this duration, then you need to pay a heavy penalty. Whereas, if you invest in Mutual Fund, you will have the flexibility to cancel and move to the other fund anytime, in case your fund is not performing well.

• • Lack of Transparency:Charges within this policy are not transparent and also the process by which returns are calculated in an online calculator is NOT transparent.

• • Regulatory Authority:Endowment Plans are basically regulated by IRDA. And, IRDA’s regulations are predominantly focused on the Insurance aspect rather than the investment aspect. The investments, such as Mutual Funds investments are regulated by SEBI. So, when you invest your money, look for the right regulatory authority. You should not allow your investments to be handled by an authority that basically regulates the Insurance schemes.

• • Premium Paying Term is equal to the Policy Term! If you are choosing your policy for 20 years, you will have to pay your premiums for 20 years. There is no option to reduce your premium paying term.

SBI Shubh Nivesh Plan: FAQs

If you are still confused about whether this policy is good or bad, then read our answer below.

Should you buy SBI Shubh Nivesh Plan? Is it good or bad?

You should NOT put your money into SBI Shubh Nivesh Plan and it is a BAD policy. If you invest in this policy you may get the non-guaranteed returns in the range of 2% to 6%!! which cannot even beat the rate of inflation!!

What are the other investment options to consider as an alternative to the SBI Shubh Nivesh plan?

As you have noticed in the above analysis, with the same investment, you are getting a guaranteed amount of Rs.55,06,702 from PPF and over Rs. 1 Crore from Mutual Funds.

So, we recommend you go for Mutual Funds. However, if you are risk-averse then you can pick PPF investment.

Along with your investment, we suggest you take up a separate Term Insurance Policy. You can read this cheat sheet to select the best term insurance plan for you.

Also, have a look at our reviews on HDFC Life Click 2 Protect 3D Plus and ICICI Pru iProtect Smart Policy. These articles will help you to choose a better Term Insurance Policy for you!

How to cancel the SBI Shubh Nivesh Plan?

There is a Free-Look in period of 15 Days, if you do not agree with the terms and conditions, you can cancel the policy and the premium will be refunded to you.

However, if you want to discontinue the policy beyond the free-look period, there will be discontinuance charges, you can read this SBI Shubh Nivesh product brochure for more details.

Conclusion: SBI Shubh Nivesh Plan Good or Bad?

You should NOT waste your money on this policy. The returns from this policy are not enough even to beat the rate of inflation, let alone get investment returns!!

Please beware of insurance agents who will try to fool you for their agent commission!

As we have already discussed in the analysis, if you want to grow your money, then consider investing in Mutual funds as the best-preferred option.

And, if you avoid all the investment-related risks, then consider investing in PPF, which provides guaranteed returns of around 8%!

For better Life coverage, consider taking up a standalone Term Insurance Policy. You can read this Cheat Sheet to find a better Term Insurance Plan.

Do you think surfing through social media platforms like Quora, Facebook, Twitter, etc will clear your doubts on financial planning?

Please consult a professional financial planner for advice on comprehensive financial planning.

If you have any more queries on this policy feel free to drop them in the comment below.

To get the suggestion about the right investment and insurance policy customized for your needs, you can book the FREE Complimentary Consultation Call with us by clicking the link below: