SBI Life Smart Power Insurance Plan – Review

sbi life smart power insurance plan

SBI Life Smart power insurance plan is a non participating unit linked insurance plan. Non participating policy is that where policy does not participate in the profits of the life insurer and thus does not receive any bonus. Unlike Traditional participating plans the benefits and features of this kind of policy is clearly defined. Besides the regular and common features of ULIPs, the USP of SBI Life Smart Power Insurance Plan is the option of “increasing Sum assured” and Trigger benefit in Investment funds.  Lets understand the policy in detail.

SBI Life Smart Power Insurance Plan – In brief

SBI Life Smart Power Insurance Plan is a Unit linked insurance Plan. Like all other ULIPs it is also having a Minimum Lockin period of 5 years. Thus you cannot surrender or withdraw the funds before 5 years. The Sum assured you get is the multiple of Annual Premium you decide to pay. The maximum sum assured can never go beyond Rs 1 crore. This policy has one unique feature of increasing sum assured which says that the Sum assured will get increased by 10% every 5 years after the 6th year of policy term. The Premium you pay gets invested into Equity & debt (after deduction of allocation charges) as per the option you chose. Among other regular funds available under “Smart fund option”, there’s another unique option available to investor which is called “Trigger fund “ . This option will do the automatic rebalancing of the allocation in equity and debt after every 15% up and down of equity portfolio. SBI call it a “Buy low and Sell High” strategy.

On Maturity you will get the fund value or on death your nominees will get higher of the fund value or sum assured, subject to minimum of 105% of total Basic premium paid till the time of death.

SBI Life Smart Power Insurance Plan – Key Features

 

Features Details
Entry age Minimum 18 years, Maximum 45 years
Age at maturity 65 years (Maximum)
Policy term 10, 15 to 30 years
Premium Paying Term Same as Policy Term
Sum assured Minimum- Higher of 10 times annual premium or (0.50*annual Premium*term)Maximum : 20 times annual premium

SBI Life Smart Power Insurance Plan – Unique Features

There are 2 different/unique features in SBI Life Smart Power Insurance Plan.

Increasing sum assured – Unlike the Level cover option where sum assured remain the same throughout the policy term, this increasing sum assured option if opted will automatically increase the initial sum assured by 10% every 5 years starting from 6th year. Do note that Mortality charges will also get increased with the increase in sum assured.

Trigger Fund option – This option is available along with the other regular investment funds option. In this fund your premium amount (net of charges) will be invested 80% in equity and 20% in debt.  On every 15 % rise or fall in the NAV of the equity fund the portfolio will be rebalanced at 80:20 level.  Thus this trigger point will lead to redistribution of surplus or shortage generated in the funds. This way if NAV rises by 15% then automatically there will be a profit booking from equity funds and when NAV falls by 15% there’ll be automatically purchase at this level by selling bond fund units.

SBI Life Smart Power Insurance Plan – Charges

Premium allocation charges: 

Policy Year

Premium Allocation Charge (% of Premium)

Year 1

5.75%

Years 2-5

4.00%

Years 6-7

3.50%

Year 8

2.50%

Year 9

2.00%

Year 10 onwards

1.50%

Policy administration charge: Rs 33.33 per month

Fund management Charges: Maximum upto 1.35%

 Besides the above charges there are Mortality charges which depend on age and sum assured of the life assured. Other charges like Premium redirection charge, switch charge  etc.  will be levied if insured opt for these services. Discontinuation charges have been standardized by IRDA and are the same in all ULIPs.  Read how pension plan in India works to have an idea on discontinuation charges.

Should you invest in SBI Life Smart Power Insurance Plan?

From Insurance view point it is not difficult to understand ULIPs and SBI Life Smart Power Insurance Plan is also not different. Problem with ULIPs lies in the investment angle. When there are other low cost, transparent, flexible and structured investment options available, then why should anyone get into such insurance cum investment plans where we don’t know the fund managers, the investment process, fund structure, compulsory payments with high costs. It is very much visible that ULIPs or any Investment cum insurance plan is meant for those investors which are not disciplined in their savings. Such plans results into compulsory payments, and high charges are the costs that they have to pay to be in discipline, otherwise investors will be punished again with some heavy discontinuation charges. So as always view still remain the same, Buy term insurance for your insurance needs and invest in different flexible instruments as per your risk profile and goals targeted.

Also read : 8 financial planning tips to keep your finances happy

Products like SBI Life Smart Power Insurance Plan are not required when you are financially planned and disciplined.

 

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