SBI LIFE - SMART ELITE PLAN TYPE – UNIT LINKED




If you are going to buy this policy my question is that why you are going to buy this one? It must be ascertained. It is also advisable to read about these charges carefully as your hard earned money is going to invest in ulip plan on purely your own risk and all risk will be borne by yourself.

1.    Premium allocation charge.

This is deducted from the premium upfront. It is a percentage of the premium appropriated towards charges before allocating the units under the policy. This charge is levied to recover the initial expense incurred towards issuing the policy such as the distributor fee and the cost of underwriting. The balance is the investible amount used to purchase units of the funds chosen by the policyholder. Though the Insurance and Regulatory and Development Authority, or IRDA, has set guidelines that ensure a cap on these charges from the fifth year onwards, the premium allocation charges in the first few years continues to remain significantly high.

2.    Policy administration charge.

This charge is deducted towards the administrative expenses incurred by the company towards the maintenance of the policy. So the costs towards the paperwork, the premium intimation, and so on and so forth will be covered under this head. It is usually levied on a monthly basis. This charge could either be flat throughout the policy term or could increase at a pre-determined rate. Alternatively, it could be a flat rate during the initial 3-5 years and then increase by a fixed percentage every year.

3.    Fund management charge.

This charge is towards managing the fund and is levied as a percentage of the value of assets. This fee is deducted before arriving at the net asset value, or NAV. Though it differs from fund to fund, as per the IRDA cap, life insurance companies cannot charge fund management fees more than 1.35% per annum. Usually, the debt-oriented ULIPs will have a much lower fund management fee than their equity-oriented counterparts. What investors must bear in mind is that the fund management costs are levied on the accumulated amount, not just the premium paid. Therefore, in real terms, as the corpus grows, the actual amount deducted as fund management fee goes up.

4.    Mortality charges.

This is charged towards providing you the insurance cover. When a policy is issued, the insurance company assumes the insured person will live to a certain age based on their current age, gender and health conditions. This charge compensates the insurance company in case the insured person doesn’t live to the assumed age. It is generally charged once a month. The actual amount paid under this head depends on the amount of life cover sought, the age of the policy holder and other such details. The methodology of computing the mortality charges along with the mortality charge table is generally a part of the policy document. When insurance buyers purchase an insurance-cum-investment product, such as a ULIP, their primary objective is investment. In fact, they may be sufficiently well covered with an additional term policy. However, they still have to pay the mortality charge that comes with the plan.

5.    Surrender charges or discontinuance charge.

A surrender charge may be deducted for premature encashment of units, either partial or full. This charge is usually calculated as a percentage of the fund or of the annualized premiums. IRDA has laid down guidelines on the maximum surrender charges that can be levied by life insurance companies. The surrender charge or the discontinuance charge shall not exceed 50 basis points per annum on the unit fund value and no other charge apart from this shall be levied by the insurer on surrender of the policy. Having understood these charges, what you also need to understand is that IRDA has set guidelines to limit the impact of these charges on the overall return from the investible portion of your premium. From the completion of the fifth year – which is the lock-in period, the cost needs to be spread over the period in such a way that the difference between gross yield (what the plan would have earned if no charges were deducted) and net yield (what the plan earns after deduction of charges) should not exceed more than that mentioned in the table below. Number of years elapsed since inception Maximum reduction in yield* 5 4.00% 6 3.75% 7 3.50% 8 3.30% 9 3.15% 10 3.00% 11 and 12 2.75% 13 and 14 2.50% 15+ 2.25% * Difference between gross and net yield in term of percent per annum For example, if you hold the policy for 10 years and if the investments in your policy's stock bucket have reaped 15% return, you should get at least 12% (maximum permissible charges are 3%) at the 10th policy anniversary.  This ensures that the difference between the gross yield and the net yield is not huge.

Some time above charges may disturb you.

NAV Computation

(Market Value of Investment held by the fund Value of Current Assets - Value of Current Liabilities & Provisions, if any) / Number of Units existing on Valuation Date (Before creation/redemption of units)

All About - SBI LIFE - SMART ELITE

Advantages of the Plan.

Security ensuring your family’s financial protection
Flexibility to pay premiums for a limited term or single payment, and choose from a wide range of funds
Liquidity – with partial withdrawals from the 6th policy year

Introductions – This is the ULIP Policy offered various fund option to invest along with risk coverage. The Linked Insurance products do not offer any liquidity during the first five years of the contract. The policyholders will not be able to surrender/withdraw the monies invested in Linked Insurance Products completely or partially till the end of fifth year

Are you seeking solutions to propel your wealth creation efforts? Do you prefer greater flexibility in managing your investments? 

Policy Elegibility – a person who have minimum age of 18 years and maximum age of 6o years
Can purchase this policy.
Age of Maturity – Maximum 5 Years
Policy Term - 5 to 10 years
Premium Frequency – Single/Yearly/Half-yearly/quarterly/Monthly
Premium paying term – 5/8/10 years and single premium
Premium Range – For limited premium 1.50 Lakhs for yearly, 0.75 lakh for half yearly, 0.38 lakh for quarterly, monthly 0.13 lakh. There is no limit for maximum premium. For single premium minimum 2 lalkhs premium required. There is no limit for maximum premium.
Sum Assured – For Limited Premium – if your age is below 45 year the sum assured is 10 times of your annulised premium and if your age is above 45 years then 7 times of annulised premium.For single premium- your age is below 45 year the sum assured is 1.25 times of your annulised premium and if your age is above 45 years then 1.10 times of annulised premium
Maturity Benefits – Fund Value or Fund value can take in installments.
Death Benefit- For Gold Option - Higher of Fund Value or Sum Assured# is payable; with a minimum of 105% of total premiums paid till the time of death
For Platinum Option - Fund Value plus Sum Assured is payable; with a minimum of 105% of total premiums paid till the time of death

Premium Allocation Charges – For Limited premium payment policies – Every year 3% of the premium during premium payment. After that there are no charges. For Single premium – 2% of the premium on first year.

Policy Administration Charges - Rs. 60 per month for limited premium payment term and Rs. 50 per month for single premium policy by the way of deducting unit price.

Fund Management Charges – For Equity and balance fund – 1.25% of fund and for bond fund 1% and Money Market fund0.25% and Discontinue Policy 0.50%



Summarised detail of the plan



Verdict: This plan is good to invest in share market through this ulip plan along with risk coverage advantages. Flexibility of premium payment and mode give you ease to take this policy. It is ADVISABLE; you must compare other available investment option before investing in this policy to ascertain best return.

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