March 31, 2009
With the launch of Smart ULIP, now SBI Life Insurance too has joined the bandwagon of ULIP market. Similar players in the market include LIC jeevan Varsha, ICICI Return Guarantee Fund, IDBI Fortis Bondsurance and Birla Sun Life Platinum Plus. You can read my take on those policies by following the links mentioned for each of those. Now, here is a quick review of SBI life Smart ULIP. As usual, first the good things about this product:
•The Smart ULIP product provides NAV guarantee that is the highest of 168 fortnightly NAVs during first seven years or NAV at maturity, whichever is higher. •In case of the unfortunate event of the death of the insured during the policy term, the nominee receives the higher of fund value or sum assured. •Shorter premium paying term (3 or 5 years).
•Tax benefit on both premiums [U/s 80C] and maturity amounts[U/s 10(10D)] •Investment is managed by SBI Life – policy holder need not panic in volatile market Now the bad:
•Short term – just 10 years!
•Too many charges
•Premium allocation charges : 15% in 1st yr, 5% for next 2-4 yrs for 3-5 yrs terms respectively. •Admin charges – Rs 60/- per month for full term.
•For first three years, annual administration charges of Rs 5 per 1000 of sum assured. •Fund management charge 1.5% pa. Fund management charge can be increased to 2.5% pa •Mortality charge levied on 1st day of each policy month. For more details on this product check the brochure and see the benefit illustration here. Verdict:
This product may appear to be better than other ulip products in the market but not better than a combination of mutual funds with term insurance. I still suggest you folks not to combine insurance with investment. Invest of specific products for each purpose and reap the best benefits from each of those. I know many of you may not agree with me, again it boils down to individual requirement and the phase at which an individual looks at these products. Whatever the case may be, I welcome your comments and suggestions. Tagged as: insurance, investment, sbi, smart, ulip
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1 Deepak April 1, 2009 at 9:43 am
At least SBI made an honest effort in saying the various charges involved upfront unlike other ULIPs. I think these charges are not too high Mohan, when compared with other ULIPs in the market. Reply
2 Sandeep Garg April 1, 2009 at 12:09 pm
Charges are too high. I am agree with Mohan that we should separate our investment with insurance. But it is too difficult to do. Charges for annual premium 50000 are as follow
1) 7500 Premium allocation charges
2) 720 Policy admin charges
3) 1250 Sum Assured related charges
4) 624 Fund Mgmt Charges (@ 6% gain) subject to higher if u think gain is more. 5) 428 Mortality Charges
6) 1301 Service Tax
Total charges 11823
Fund invested are 50000 – 11823 = 38177
This is for first Year
For 2nd and 3rd years charges are around 6912 and 7623.
So think twice before go ahead. You are paying 1.5 lac in 3 years and investing only 1.2 lac. Now again you will get the unit on the basis of amt u pay per year that will decreasing as NAV get high and high. And in the last you will get highest NAV. Reply
3 Mohan April 4, 2009 at 9:22 pm
Yup. This is the first product I have seen with so much clarity being provided to the customer upfront. @Sandeep Garg
True. But all other similar products in the market aren’t any different. Just that they don’t show all the charges opaquely. Reply
4 Suraj April 5, 2009 at 7:44 pm
Thank u Sandeep
u are calculating my way. Many do not know about these charges and the agents used to lure the people for high returns if the market is “BULL”....