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SBI Life Smart Bachat Plan

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SBI Life Smart Bachat Plan Review


SBI Life Smart Bachat Plan is a participating endowment plan which offers benefits of insurance, savings and tax benefits. You can have a policy term anywhere between 10 to 25 years and select a premium payment term of 5, 7, 10 or 15 years. The plan has 2 options to select from:
  • Endowment Option
  • Endowment Option with in-built Accidental Death and Total Permanent Disability Benefit
We will understand the workings of this plan with the help of a few examples.
 
Launch Date 06th December, 2016
Policy Type Endowment
UIN 111N108V01
 

How does SBI Life Smart Bachat Plan work?


When buying the SBI Life Smart Bachat Plan, the customer has to decide on the following:
  1. Plan Option
    • Option A - Endowment Benefit only
    • Option B - Endowment Benefit with Accidental Death & Total Permanent Disability Benefit
  2. Basic Sum Assured - this is the amount of cover that you want. You can choose a minimum amount of Rs. 3,00,000. There is no upper limit.
  3. Policy Term - this is the period for which you wish to have the cover. The term can be anything between 10 to 25 years.
  4. Premium Payment Term - you need to pay premiums for this many years. You can choose between 5, 7, 10 & 15 years.
Based on the option selected, basic sum assured, your age and the policy term, the premium payment term selected, your annual premium will be decided.


COMPARE THIS PLAN WITH OTHER ENDOWMENT PLANS


 

Benefits in the SBI Life Smart Bachat Plan


Death Benefit in LIC Limited Premium Endowment Plan
  • In case you had opted for Option A - Endowment Benefit Only
In case of the death of the policyholder before the end of the policy term, the nominee will receive all of the following:
  • “Sum Assured on Death” - this is defined below
  • Vested Simple Reversionary Bonus
  • Final Addition Bonus if declared 
The Sum Assured on Death mentioned above is defined as the higher of the following:
  • 10 times the Annualised Premium
  • Basic Sum Assured
The premiums mentioned above refer to premiums without the tax component and also does not consider any rider premiums.
  • In case you had opted for Option B - Endowment with in-built Accidental Death & Total Permanent Disability Benefit
In case of the death of the policyholder before the end of the policy term, the nominee will receive all of the following:
  • “Sum Assured on Death” - this is defined below
  • Vested Simple Reversionary Bonus
  • Final Addition Bonus if declared
  • “Accidental Death Benefit” - this is defined below
The Sum Assured on Death mentioned above is defined as the higher of the following:
  • 10 times the Annualised Premium
  • Basic Sum Assured
The premiums mentioned above refer to premiums without the tax component and also does not consider any rider premiums.

The Accidental Death Benefit mentioned above is defined as the lower of the following:
  • Basic Sum Assured
  • Rs. 50 lakhs subject to the condition that the total sum assured under this benefit on all individual policies from SBI Life does not exceed Rs. 50 lakhs 
The Death Benefit under all options shall always be greater than 105% of all premium paid.

 
Maturity Benefit in SBI Life Smart Bachat Plan

At the end of the policy term, the policyholder will receive the following:
  • Basic Sum Assured
  • Vested Simple Reversionary Bonus
  • Terminal Bonus if declared

Survival Benefits in case you have selected Option B

In case of Accidental Total Permanent Disability, you will get the lower of the following as a lumpsum amount and your policy will continue.
  • Basic Sum Assured
  • Rs. 50 lakhs subject to the condition that the total sum assured under this benefit on all individual policies from SBI Life does not exceed Rs. 50 lakhs
All your future premiums will be waived and the policy will continue.
 

SBI Life Smart Bachat Plan with an Example


We have Ravi Sehgal, age 30 who wishes to buy this plan. He goes in for the plan with the following:

Sum Assured - Rs. 3,00,000
Term - 10 years
Premium Payment Term = 5 years


Based on these parameters, his annual premium will be as follows:

Option A - Rs. 56,331 + Taxes
Option B - Rs. 56,763 + Taxes

We will assume Ravi has taken Option B in these example.

Note: In this scenario, the customer can claim income tax deduction under Section 80C of only Rs. 30,000 and not on the entire premium amount. That is because the under this section only 10% of the Sum Assured is allowed to be tax exempt.


Death Benefit

Scenario 1 : If Ravi dies after 4 policy years.

Now Sum Assured on Death is the highest of the following:
  • 10 times the Annualised Premium = 10  x 56,763 (for Option B) = 5,67,630
  • Basic Sum Assured = Rs. 3,00,000
Hence the Sum Assured on Death = Rs. 5,67,630

His nominee gets the sum of the following:
  • Sum Assured on Death = Rs. 5,67,630
  • Simple Reversionary Bonus = 4 x 15,000 = Rs. 60,000
  • Terminal Bonus = Nil
Here we have assumed the Simple Reversionary Bonus Rate of 2.5% of Sum Assured. We also observe that the company has declared an interim bonus rate of 2.5% of the Sum Assured. So the bonus in a year will be 2 x 2.5% x 3,00,000 = Rs. 15,000. Please keep in mind that is an assumption - the actual bonus rates will only be known when SBI Life declares it every year.

His nominee will get Rs. 5,67,630 + Rs. 60,000 = Rs. 6,27,630

In case, Ravi had died due to an accident, his nominee would receive the following benefits:

In addition to the Rs. 6,27,630 his nominee would receive the lower of the following:
  • Basic Sum Assured
  • Rs. 50 lakhs subject to the condition that the total sum assured under this benefit on all individual policies from SBI Life does not exceed Rs. 50 lakhs
Lower of the above is Rs. 3,00,000. So in total his nominee would receive Rs. 6,27,630 + 3,00,000 = Rs. 9,27,630

Scenario 2 : After 4 years, Ravi is permanently disabled due to an accident

He will get the lower of the following as a lumpsum and his policy will continue:
  • Basic Sum Assured
  • Rs. 50 lakhs subject to the condition that the total sum assured under this benefit on all individual policies from SBI Life does not exceed Rs. 50 lakhs
So he gets Rs. 3,00,000 as a lumpsum amount and his life cover will continue.


Maturity Benefit 

Scenario 3 : If Ravi survives till the end of the policy term of 10 years - He will get the sum of the following:

At the end of the policy term, the policyholder will receive the following:
  • Basic Sum Assured = Rs. 3,00,000
  • Vested Simple Reversionary Bonus + Terminal Bonus = 2 x 10 x 2.5% x 3,00,000 = Rs. 1,50,000
  • Terminal Bonus if declared = 30% x 1,50,000 = Rs. 45,000 
Here we have assumed the Simple Reversionary Bonus Rate of 2.5% of Sum Assured. We also observe that the company has declared an interim bonus rate of 2.5% of the Sum Assured. So the bonus in a year will be 2 x 2.5% x 3,00,000 = Rs. 15,000. We have assumed the Terminal bonus rate to be 30% of all Simple, Interim and Special bonus declared. 

Note: Please keep in mind that is an assumption - the actual bonus rates will only be known when SBI Life declares it every year.

On Maturity Ravi will get = Rs. 3,00,000 + Rs. 1,50,000 + Rs. 45,000 = Rs. 4,95,000
 

Sample Premium Illustration of SBI Life Smart Bachat Policy


Here are the sample tabular premium rates (inclusive of taxes) payable by a healthy, non-tobacco user male for different combinations of age, Sum Assured and policy term. We have gone with the current applicable tax rate of 4.5% for such policies.

<< Use standard premium graph. Get values from SBI Life site>>

<<Premium Calculator>>
 

Eligibility Criteria for buying SBI Life Smart Bachat Policy

 
  Minimum Maximum
Basic Sum Assured Rs. 1,00,000 No limit
Policy Term 10 years 25 years
Premium Payment Term (PPT) 5, 7, 10 or 15 years
Entry Age Option A - 8 years
Option B - 18 years
50 years
Maximum Maturity Age 65 years
Premium paying frequency Annually, Half-yearly, Quarterly, Monthly
Premium Annual - Rs. 5,100
Half-yearly - Rs. 2,600
Quarterly - Rs. 1,350
Monthly - Rs. 450
No limit

Tax Implications in SBI Life Smart Bachat Plan

  • Premiums – The premiums paid for the plan are exempt from taxation under Section 80C of the Income Tax Act. 
  • Maturity Claim – Maturity amount is exempted from tax under Sec 10(10D) of the Income Tax Act  
  • Death Claim – Death claims received under the plan are free from taxation under Section 10(10D) of the Income Tax Act
 

Other Benefits in the SBI Life Smart Bachat Plan

  • Free-look Period – If the policyholder is not happy with the plan, he can cancel the policy within 15 days of receiving the policy bond. This period is called the free-look period. Upon cancellation, the premium paid net of any applicable expenses would be returned.
  • Grace Period - In case of Yearly, Half-yearly and Quarterly premium payment mode you have a grace period of 30 days from the premium due date. In case of monthly premium payment mode, the grace period is of 15 days. 
  • Loan - You can avail a loan against this plan once it acquires a Surrender Value
  • Surrender Value - If you surrender the plan anytime before paying 3 years of premiums, you will not be paid anything back. In case you have paid at least 3 years premiums, the policy will acquire a Surrender Value. Check the Surrender Value of SBI Life Smart Bachat Plan.
If you have any questions on the SBI Life Smart Bachat Policy, drop in a line in the comments and we will be happy to help out.


 
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