SBI Life Insurance has launched a guaranteed traditional savings plan, called “Smart Income Protect”. It offers tax-free regular income at the guaranteed rate of 11% of the sum assured or paid sum assured for 15 years after maturity. It offers life insurance cover, lump sum benefit at maturity and regular guaranteed payouts for 15 years after maturity.
The policyholder receives a lump sum bonus at maturity and guaranteed payout for 15 years after the maturity. The lump sum bonus, at maturity, comprises vested reversionary bonuses and terminal bonus, if any. In the event of a policyholder’s death, the sum assured is immediately payable to policyholders’ nominee or legal heir as a lump sum, along with the bonuses.
Customers can opt for a premium payment term of five, 10 or 15 years. Offering the possibility of enhancing protection, the plan is equipped with wide range of riders including accidental death benefit rider, accidental total and permanent disability rider and Criti Care 13 non-linked rider, said a press release issued by the company.
For instance, a policyholder aged 40 years, invests Rs 38,680 in SBI Life’s Smart Income Protect, every year, for the next 15 years. At maturity, he would receive a lump sum amount, of Rs 3 lakh or Rs 1.68 lakh projected at 10 percent or 6 percent respectively, as vested reversionary bonus, of. Further, he will continue to receive tax-free annual payouts of Rs 55,000 for 15 years, after maturity. Also, in case of an unfortunate event, during his premium payment term, his nominee or legal heir would receive a sum assured amount of Rs 5 lakh, the release said.
Akshay Mehrotra, Chief Marketing Officer at Policybazaar.com says that while buying an insurance policy which offers guaranteed savings, one should look at the internal rate of return (IRR) and the total amount that you will get back at maturity. Since it is deferred payment, one should look at the time value of money.
“In case of this policy, the actual return will work out to about 5-6%, and not 11%, since the money will come to you only after 15 years. So, why should one look at it when bank fixed deposits are offering returns of 9% or unit linked plans are offering 8%?” Mehrotra says.
