Wednesday, August 13, 2014

SBI Life Smart Wealth Builder - A Quick Review

With the Bull Market in full swing, Insurance Agents and Bank Officials have started convincing investors that ULIPs are the best way to go. One of my friends pinged me a couple of days back asking me if he should Invest in the "SBI Life - Smart Wealth Builder" scheme. My friend was being pestered by his neighbors to invest in this ULIP because this was the next best investment choice in the country. He dint want to disappoint his neighbors because he obviously has to live in that house for many more years to come. But, at the same time, he dint want to invest in some scheme that isnt good... 

So, I started looking at the details of the ULIP and realized this was yet another ULIP which, if you decide to invest, you will most likely regret your decision.

Read on to find out more...

Basic Info about the Policy - SBI Life Smart Wealth Builder


Smart Wealth Buider is a traditional ULIP policy offered by SBI Life Insurance company. This scheme has two options - a single premium option and a regular premium option. Some of the basic details about this policy are:

Guaranteed Additions up to 125% of one annual regular premium on a regular premium policy, for a 30 year policy term, subject to the Policy being in force till the maturity date.

  • Guaranteed Additions starting as early as 10th policy year onwards
  • No Policy Administration fees for first 5 years for Regular and Limited Premium Paying Term (LPPT) plans, thereby boosting your fund value
  • No Premium Allocation Charge from 11th year onwards 
  • Enhanced investment opportunity through 7 varied Fund Options 
  • Life Insurance coverage, with minimum Sum Assured based on your age
  • Flexible product with an option to increase/decrease your Sum Assured from 6th policy year onwards
  • Minimum Premium Payment Term: 10 years (Max. up to 30 years)
  • The policy offers 7 different investment choices with a varying % allocation towards equities. The policy holder bears ALL the RISK arising out of the Investments. 


Policy Benefits


Policy Maturity Benefit: On completion of Policy Term, Fund Value will be paid out to the Investor.

Death Benefit: Higher of the Fund Value or Sum Assured is payable; with a minimum of 105% of total basic premiums paid till the date of intimation of death.

Tax Benefits: Tax deduction under Section 80 C is available. However in case the premium paid during the financial year, exceeds 10% of the sum assured, the benefit will be limited up to 10% of the sum assured. 


Policy Fees and Charges


If you read the previous two sections, you might actually think the policy may be a good choice. However, you might reconsider the decision after reading this section..

This ULIP has the following charges:

1. Premium Allocation Charges - The amount that will be deducted from your monthly/yearly premium payments so that the insurance company can allocate your premium towards your insurance policy.This number varies from year to year. 

2. Policy Administration Charges - This is the monthly administration charge payable by the policy-holder to the Insurance Company for them to maintain & manage his insurance policy

3. Fund Management Charges - This is the % of your investments you should pay the Insurance company so that they can invest your money into the fund investment choice of your selection. This amount varies based on your fund selection. 

These charges are as follows: 



4. Mortality Charges - This is the amount that gets deducted from your Investments each month to provide you with the life insurance coverage. This varies based on your age and life insurance coverage

5. Switching charges - This is the amount you have to pay to switch from one investment option to another if you exceed the 2 free switches per year. Rs. 100/- per switch

6. Partial withdrawal charges - This is the amount you have to pay if you try to make partial withdrawals from your investments. Every year one free withdrawal is allowed after the minimum lock-in period. Rs. 100/- per withdrawal

7. Other charges - If you want a duplicate copy of your statement, you have to pay this fee. Rs. 100/- per statement

So, how high are the charges?


Let us take a simple example. Lets assume my friend invested in this policy and selected a equity fund in which he paid Rs. 1 lakh each year. Lets see how much will actually get invested. See the table below:



As you can see, during the first year you are losing more than 10% of the amount invested and between years 2 to 5 you are losing more than 7% and between years 6 to 10 you are losing more than 5%. From the 11th year onwards you are losing 2% of your investment as fees & charges. 

And the best part here is that, this table does not cover mortality charges or switching charges. The mortality charges will be usually along the same lines of a pure term insurance policy of the same sum assured. 

Is it worth Investing in such a policy?


No, definitely not. 

You can expect an average of abut 10-12% returns from a well managed equity fund. If the policy takes off about 5-10% of your investments every year for the first 10 years, the amount you are actually investing is getting reduced correspondingly. So, your reduced investments have to add another 5-10% returns in order to equal an equivalent equity oriented scheme. 

In the long run, the stock market can easily help you achieve about 12% or even about 15% during bull markets but a consistent 20% every year is practically speaking - JUST NOT POSSIBLE. 


How to Handle the Person Selling such a Policy?


Ok, this is a tricky part. If you know the person, personally it is a lot harder - say if that person is a relative or a neighbor. So, we gotta be polite and explain them we are not interested. 

The first and foremost selling point from the agents side is that these policie swill give you tax benefits under Section 80C. Yes that is true but so will other investments like ELSS Mutual Funds that will help generate the same amount of returns at 1/10th the fees. Or, other safe investments like PPF or NSC that give you guaranteed returns along with tax benefits. Yes, if you are someone in the 30% tax slab, you save 30% of your taxes to offset the fees you are paying but why should you? Just because it is helping you save taxes doesnt mean you can just pay some random insurance company? 

Secondly, the agent will most likely have a work-up like one of those tables in the pictures above with an extrapolated rate of returns at around 15% or more. The best part is, in those calculations they will consider the full 1 lakh as if it were invested FULLY. Ask them if these returns are guaranteed. They will say NO. What is the point then? 

Tell the agent that you are not interested in paying such high fees. Honestly any ULIP that charges around 2-3% fees each year can be considered for investment but definitely not one that charges 8% or 10%. 

What are my options?


A ULIP is nothing but a life insurance policy and an equity mutual fund combined into one. There are dozens and dozens of excellent equity mutual funds that can easily give you about 10-15% returns every year and that too with less than 1% fees. Since you are anyways gonna pay for the life insurance option provided by the ULIP, why not keep insurance separate and just take a proper insurance policy. 

This is something I have been saying time and again - Please Do Not Combine Insurance and Investments. 

Some Last Words:


If you are someone who is not comfortable with taking risks in equity markets, the agent will most likely tell you to select the Bond fund or Money Market Fund with guaranteed returns. Choosing such a fund scheme in such a high-fee-charging ULIP, you may end up getting less money than what you invested. At least, if you selected an equity fund, if the markets are good, you can break-even and make modest returns of about 5-6%.

Anyways, if you dont want to take risks, there are numerous "Safe" Investment options available and my most recent book covered all of the best "Safe" Investments in India. You might want to check it out. Click here to read the article on Safe Investment Havens

Happy Investing!!!

190 comments:

  1. Thanks a lot for the valid information..Well in that case can you please suggest some reliable investment plan without market risks.

    ReplyDelete
    Replies
    1. See here: http://anandvijayakumar.blogspot.sg/2014/07/safe-investment-havens-of-india.html

      Delete
    2. Hi Anand:
      Today a Bank manager from SBI LIFE came to see me and explained the smart wealth builder plan. I am retied and would like to invest in this plan for my wife who is 57 years now. He said that If I invest Rs.100000 for 5 years, she would get an insurance coverage for a sum assured of Rs.15 lakhs. She can opt the coverage of insurance for 30 years as long as she does not withdraw the invested amount. However she opt for pension every month while insurance coverage continues. I wish to send his brochure to you, which is very flowery. I seek your advise. Kindly advise how I can send the attachment to you for perusal please

      Delete
    3. Mr Mohan - Market linked insurance products especially those with high fees are not advisable for people who are retired or on the verge of retirement. Also, I do not provide personalised financial advise via comments of the blog. If you are interested in a paid engagement pls feel free to reach me at anandvijayakumar007@gmail.com

      Delete
  2. Thank you very much for this excellent write-up !

    ReplyDelete
  3. Good explaination sir

    ReplyDelete
  4. Hello sir,

    It was a nice explanation but on the other side what about those customers who are getting a good rather i should say the excellent ROI.
    Also i would like to add that if you will do a deep analysis of equity market then you will get that the one who remain invested for 10+ years , the
    chances for loss becomes NIL.


    ReplyDelete
    Replies
    1. Hi - No, you cannot generalize as NIL. Yes, in the long run equity markets are always profitable but there is always a chance of a loss.

      Delete
  5. Thanks a lot for this valuable suggestion.

    But if anybody has already taken this SBI smart whether Builder Plan last week with Bond and Balance for 5 year Limited Premium Term Plant with 40000/- premium amount per year. Can he/she withdraw the same now? if yes, is it worth now.? Please share your suggestion to move out from this policy.

    Thanks,

    ReplyDelete
    Replies
    1. Hi,
      If you only bought the product last week you should have a free look period within which you can surrender with only minimal losses. How much you get entirely depends on when you bought it, how much NAV it was when you bought, what the NAV of the units is when you surrender etc.

      Talk to the ULIP Customer care and ask how much you would get back now.

      Delete
  6. I am 55 yrs old and took a 10 year plan @ 99,000/- every year starting Jul 2014. I found that the number of units in the funds are coming down monthly and could not understand why till I read your blog. I feel this is a totally wasted investment even though I save 30.9% as income tax. ELSS is a much better option. My question to you is, what if I stop paying my premium from 2015 onwards? What will I lose besides the insurance cover. Thanks

    ReplyDelete
    Replies
    1. Please read this: http://anandvijayakumar.blogspot.sg/2012/05/should-you-exit-your-ulips-now.html

      As for how much you will get, check the policy document on what happens if you prematurely exit the policy. If you stop paying the amount now, you will be considered a defaulter and may lose a lot of the money you actually invested. On a worst case scenario, if you stop your insurance cover will stop and you may not get your money back. Apart from that there is nothing the ULIP company can do to you

      Delete
  7. If u stop to pay premium than you will get your invested money back at the end of 5th year with the roi of SBI bank sb a/c.

    ReplyDelete
    Replies
    1. Is it written in the ULIP offer document that you will get the SBI Bank Acc interest rate, then yes but I dont think so.

      Delete
  8. Thanks for valuable information.
    Yesterday i got policy document.
    Its shows nav (balance fund) 28.1135 Fund value 35,912.34 and no of units 1277.4056..
    After reading this blog, I am planning to surrender the policy. I dont understand these terms Nav or no of unit. So want to confirm surrendering this policy is good or not?

    ReplyDelete
    Replies
    1. Hi Simer - How much did you invest for these units?

      Learn more about ULIPs and how they work here: http://anandvijayakumar.blogspot.sg/2009/02/ulips-de-mystified.html

      Read this to understand whether you must surrender your ulip: http://anandvijayakumar.blogspot.sg/2012/05/should-you-exit-your-ulips-now.html

      ULIPs are very similar to mutual funds and I recently posted an article about q&a for mutual funds, you can learn more about mutual funds here: http://anandvijayakumar.blogspot.sg/2015/02/all-your-questions-about-mutual-funds.html

      Delete
  9. Dear Sir,
    I am a student getting fellowship and planning to invest. Initially I thought about sbi smart wealth builder to invest in but I have to check it once again. Could you suggest me regarding this. The investment plan should have following things:
    1. Less risk
    2. good returns
    3. No need of tax benefits (since I don't pay taxes)

    ReplyDelete
    Replies
    1. Riyaz, As a student who is not willing to take risk, Bank Recurring Deposits or Fixed Deposits are your best choices. Equity markets come with risk and you may lose your money.

      Delete
  10. Hi Sir,
    Good Day....
    I am looking for a plan, that's why i have contacted to SBI LIFE office , the manager advised me for Smart wealth builder plan, He suggested me to invest 40000/year to till 8Year ( Total invest amount 40000*8 = 3,20,000) and you will got Minimum approx amount 12 lacks after 15year OR approx 37 lacks after 30Year.
    please suggest me it possible or he is making me fool.

    ReplyDelete
  11. Hi Anand,
    Nice to see you blog.. :)
    I have a query, I want to purchase SBI LIFE SMART WEALTH BUILDER plan tha'ts why i contacted to SBI Life office and the manager suggested me for this plan.
    The plan is for 15 year (pay 40,000 till 8 year and no need to pay anything from 9th year to 15 year and after completion of 15 year you will got minimum 12Lacks rs.) and you will also got Tax benefits at the time of Maturity. My concern is it is possible or he is telling me lie. Please help me

    Thanks

    ReplyDelete
    Replies
    1. Hi - Ask the manager to give in writing that you will guaranteed get 12 lacs. if he is able to do that, then buy it. If he says the returns are based on market performance, tell him thank you and leave...

      You invest 3.2 lakhs in 8 years and the amount becomes 5 times in the next 7 years? Thats like becoming 3 times in 7 years.

      I highly doubt that...

      Delete
    2. Hi Anand,
      Much thanks for your valuable feedback.
      I know no one can give the proofs in written, But what your experience says about this policy, I know you much better know about it.
      Please let me and advise how much return I can expect after 15th year as per current market. Or suggest me any other Plan.

      Thank you

      Delete
    3. Hi,
      No investment can guarantee this much growth. Its just impossible. If they are talking about an average of around 12% to 15% - then yes equity investments have the ability to give this kind of returns in the long run.

      Anyways - I do not provide investment recommendations esp. ULIPs through the blog. However, I do recommend some good investments from different categories of mutual funds in my book. You can consider buying the book to learn more. Check it out here: http://anandvijayakumar.blogspot.sg/2015/03/your-complete-guide-to-indian-income.html

      Delete
  12. dear sir,
    i am also comparing between SBI Wealth builder or better in any good MF.
    could you pls suggest.
    regards

    ReplyDelete
    Replies
    1. Hi - I just published the second edition of my tax saving book where I have recommended the best funds to invest. You can consider buying the book here: http://anandvijayakumar.blogspot.sg/2015/03/your-complete-guide-to-indian-income.html

      You can pay using your credit card or debit card and download the book instantly.

      Delete
  13. Nagaraju
    Dear sir
    i have taken sbi smart wealth builder plan in march 2014.i have paid 1,00,000 per year(2014 & 2015) the period to be paid is 5 years . looking all your comments i wanted to cancel my policy .after cancelling how much i can get back

    ReplyDelete
    Replies
    1. There are a lot of factors like what type of product you chose, when you made the deposits, what the NAV's were etc that determine how much you will get. Contact the policy customer care. they can tell you how much you will get

      Delete
  14. Hi Anand

    I am willing to buy SBI Life – eWealth Insurance , kindly request your advise on how the policy would be ?

    Warm Regards,
    Sathish.

    ReplyDelete
    Replies
    1. Sathish, Let me see if I can write up a review of the product. Check the fees & charges and compare against what is reviewed here and if the fees are high then I wouldnt recommend it.

      Delete
  15. Can you please recommend any ELSS plan for investment?

    ReplyDelete
    Replies
    1. My recommendations in terms of best mutual funds, not just ELSS but also other categories are available in my book on Indian Income tax. You can purchase the book here: http://anandvijayakumar.blogspot.sg/p/books-by-this-blog-author.html

      Delete
  16. Hello Anand,

    I am planning to invest 28000/- per year for 17 years for "SBI life smart champ" and I may get
    18th year - 25%
    19th year - 25%
    20th year - 25%
    21st year - 25% + bonus.

    But i am not sure SBI will give all these. Could you please suggest me which plan is better to invest for my child.

    Regards,
    Ramesh

    ReplyDelete
    Replies
    1. No company/product can guarantee 25% returns. Are they willing to give it in writing in the policy document to say that they will definitely give this much returns?

      Delete
  17. Hello Anand,

    I am willing to buy SBI Life – Smart Champ Insurance , kindly request your advise on how the policy would be ?

    Regards,
    Ramesh G

    ReplyDelete
    Replies
    1. Sorry Ramesh - I do not provide personalized investment advise on this blog. Apologies.

      Delete
  18. Hello sir,
    My self harikumar this month I took the poly sbi weak yearly 100000 premium. I don't want ti continue I want to surrender the policy how much amount I can get.pls help me. Thankyou for valuable time.

    ReplyDelete
    Replies
    1. There are a lot of factors like what type of product you chose, when you made the deposits, what the NAV's were etc that determine how much you will get. Contact the policy customer care. they can tell you how much you will get

      Delete
  19. hey anand,
    i recently invested in the sbi ewealth policy as i was looking for an insurance plan.there is no premium allocation charges in the policy plus they are providing me with tax exemption on the maturity amout and also on the premium paid.Is it a good decision?

    ReplyDelete
    Replies
    1. Tax benefit alone is never a good reason to invest in a certain product. Some ULIP products dont charge premium allocation charges but do charge other fees. I took a quick look at this product and can see that they charge Rs. 45 each month for the lifetime of the policy as administration charges. Plus you have fund management charges which is 1.35% for equity funds. Apart from this they have mortality charges and other fees as well.

      If you are choosing the equity fund and want to stay invested in the long run, it looks like an ok option but your returns will be entirely dependent on the stock market performance.

      If you want to choose the bond or money market option, the investment is pointless as you will probably make about 4 or 5% returns in the end after factoring in all the fees and charges you will end up paying.

      Delete
  20. Hi anand,

    Please help me for purchasing safe investment havens book online, as it is not showing any option to pay online & also the option pay by credit or debit card are silent. Kindly help.

    Prashant
    8143266992

    ReplyDelete
    Replies
    1. Prashant - Thank you for your interest in the book. You can actually click the "Buy Now" link just above the book preview in this page: http://anandvijayakumar.blogspot.sg/p/books-by-this-blog-author.html to pay via credit card and download the book instantly.

      If you are facing issues, reach me at anandvijayakumar007@gmail.com and I will get back to you with more details.

      Thanks
      Anand

      Delete
    2. Thanks for info anand.

      I need some more information regarding this plan, one of person from SBI life contacted me regarding same plan, after reading your blog I refused his offer but still he try to convince me by offering some returnable amount like he will give me back 4000 rs yearly with some terminology he mentioned that I actually forgot. But he told as for 1Lakh I will recieve after deduction 93500 rs as an amount on which I will get benefit and 4000 rs he will return me back so final amount will be 97500. Also he told like premium allocation charges at first year will be 6% & 2nd year onwards 2% only. Policy admin charges will be 1-1.5% after 10th year. Fund management charges 1%. mortality charges 60 Rs per year.

      Shall I go forward?? As I thought to buy PPF. but in PPF I need to invest for 15 years and here just 5 years and then no further investments till 15 years. Benifits after 15 years will be same?

      Kindly guide.
      Prashant

      Delete
    3. Prashant - Firstly I think the amount the agent is talking about returning to you is probably via cash personally. SBI does not refund anything.

      Secondly - am not sure how you say benefits are the same between PPF and this. PPF is 100% safe. yes it is 15 years maturity but you wont lose a single penny that you invest. This is a stock market related investment and worst case scenario you could lose all your money.

      Thirdly, ask for the premium allocation charges part that the agent is promising - "In Writing". dont take verbal comments. Usually agents say a lot of things that arent really true just for selling you the product. So, be careful.

      Delete
    4. Sir, this chaitanya SWB Policy i paid 1lakh in july2015 & to pay upto 5 yrs every year 1 lakh. Term is 30 yrs. SBI Person said to me after 30yrs that i get 2crores. Is it possible to get this much amount for me.

      Delete
    5. As far as I know, Your investment has to grow at 14% year on year in order to achieve 2 crores in 30 years. Yes, in boom market years the stock market can give a 14 or 15% returns but not every year is a boom market.

      So, if you ask me - there is NO WAY you will get 2 crores at the end of 30 years.

      If the agent can give in Writing in SBI Letter head stating that there is a guarantee you will get 2 crores, then excellent, let me know the agents name so I can also invest.

      Delete
  21. Hello sir,

    My self Abhishek kumar Trivedi my father took the poly sbi wealth builder with 100000 premium. He died after recently, how much claim would I get from Sbi wealth Builder he had paid only one premimum. Secondly can SBI deny my claim.

    Thanks

    ReplyDelete
    Replies
    1. If the main policy holder is dead, the survivor/nominee can make a claim for the current value in the account. Who is the nominee per your dads investment? If it is you, then there will be no issues. If not, the nominee is the one who can claim the money. If he has not nominated anyone, then get a legal heir certificate to show that you are the legal heir of your father and then make a claim.

      Reg. the amount - It depends on a lot of factors like how much fees was deducted, what type of fund he selected, market performance etc. So, pls contact customer care, they can tell you current value of the investment

      Delete
  22. Hi, 2 days back I have invested Rs.30,000/- in SBI Smart Wealth Builder plan as annual premium, but now I am in very much confusion that this plan is good or not..and 30,000 is big amount for me. and one more thing I want to ask that if I stop paying premium from next year than should I get my money back after 3 years. Please suggest

    ReplyDelete
    Replies
    1. Anonymous,
      You could read my review of the product in this article and decide on whether this is a suitable product for you. Most ULIP Products come with hefty fees (including this one) and may not be profitable for all.

      Anyways, if you stop paying your premium, the ULIP provider will charge penalties and fees and after 3 years you will get a very small amount only.

      If you are not sure you can use the free-look period and surrender your policy to get back your initial investment(minus risk cover and market losses) now. If you stop paying, you may not even get this much. The amount you get will probably be much lower

      Delete
  23. Nitish gosavi
    Dear sir I am 55 year old I don't have any term or insurance plan on me I have a loan of 12 lakhs ...so am investing 50k in SBI smart wealth insurance... But after reading this am dough ting my investment now what to do..??

    ReplyDelete
    Replies
    1. Mr. Nitish - How long have you been investing in this plan?

      Read this: http://anandvijayakumar.blogspot.com/2012/05/should-you-exit-your-ulips-now.html

      I think this article will help you decide.

      Delete
  24. Hiii,
    A week ago i took this policy at regular annual premium of 30000 for 30 yrs. I wil pay for 30 yrs. Bt after reading ur review on this, I am bit confused about it. They are saying as i am investing for a long term i ll b getting good returns. I realy dnt wanna waste my earnings on some useless plan. What to do...???

    ReplyDelete
    Replies
    1. Hi,
      Yes, in the long run equity invesments are very good. If you will definitely continue investing for 30 years then there is a good chance you will get good returns.

      Most ULIP Plans are not that great considering the high fees. So, think wisely and decide.

      Thanks

      Delete
  25. Hiii Anand,
    I am willing to buy BSLI WEALTH ASSURE. I need ur advise on this.

    Thank U......

    ReplyDelete
    Replies
    1. Hi,
      I havent reviewed that ULIP Plan in detail yet. But, when I did a quick search on google about the plan, it says the premium allocation charges are quite high just like this plan reviewed in this article

      So, think wisely before you invest.

      Anand

      Delete
  26. Thanks a lot.....Anand.....

    ReplyDelete
  27. Hi Anand,

    Thanks for the valuable inputs on the policy details and the trends. Can you please share the similar pattern(with tabular format with returns/fees) of returns if we go with Single premium for SBI Wealth Builder

    ReplyDelete
  28. Hello Anand,

    Myself Deepak Temker Purchased Policy from SBI Life Smart Wealth Builder last week.

    As per the advise from Agent, I was told to pay 1 lack every year for 5 years and from 6th year i don't need to pay any amount and the returns shows below

    Term Wealth Bond
    1 0
    2 0
    3 0
    4 0
    5 0
    6 635336
    7 688387
    8 746055
    9 808759
    10 991938

    And the term goes till 30 Years with wealth Bond amount of 4670221.

    I was also told that the wealth bond amount may also increase and the agent divided 1 lack as 60% (Equity Fund 40 % and Bond Fund 60 %).

    Kindly suggest me if i get the guaranteed amount as per the policy.

    ReplyDelete
    Replies
    1. Do you have any statement signed by SBI saying they guarantee this amount?

      The fund seems to invest in Equity and Bonds - neither of which can guarantee returns. So, I highly doubt you will get the returns promised. Maybe the agent was telling you this to get you to invest.

      You are investing 5 lakhs and expecting 46 lakhs at the end of 30 years which is an astronomical growth. This kind of returns is quite difficult for a full equity investment and with 60% in bond, I highly doubt if this is possible.

      Delete
    2. Hello sir,
      While asking for locker in a bank , they have insisted me to purchase this policy.
      Initially i have accepted it without getting any details about it since i was in need of locker in a bank.
      Now after reading this blog , i feel to have loss of my money.
      Should i surrender this policy?
      Will they stop my locker facility on surrender of this policy ?
      Any idea ?

      Delete
    3. Kunal - Banks arent supposed to sell such products when customers ask for a locker but unfortunately they still do it. You can surrender the policy but you will lose a lot of money if you just signed up for the policy. Check out the policy document to understand how much you will lose and then decide.

      if you surrender the policy, there is a chance that the bank will arm-twist you to surrender the locker because lockers are in heavy demand and folks will sign up for products like this or put up big fixed deposits even though its not right...

      Delete
  29. Dear Sir,
    This is very helpful information. I would have gone through these details sometime before.
    I have paid an amount of Rs.9000 through online today as first three months amount . I have taken up this SBI ewealth policy for 15 years term investing 3000/month .
    I have received below details in email from Policybaazar.
    May I proceed further with documentation or do i cancel this policy

    uotation No. OLEWL0000000007623054325
    Policy Term (in years) 15 Yrs.
    Premium Frequency Monthly
    Premium Payment Term 15 Years
    Premium (Rs) 3,000
    Sum Assured (Rs) 360,000
    Projected Fund Value at 4% p.a. (Rs) 649,816
    Projected Fund Value at 8% p.a. (Rs) 891,022

    Kindly suggest

    ReplyDelete
    Replies
    1. Hi - Have you fully reviewed all the fees and charges? I feel this product is on the high side in terms of fees and if the amount invested is adjusted for these fees/charges - the proposed fund value may be much lower.

      By the way - The amount you are paying in 15 years (@ 3000 per month) is Rs. 5.4 lakhs. Why is the sum assured only 3.6 lakhs?

      Delete
  30. Sir I've taken did policy ten daysback. The bank people told me to invest 50,000 for five years..n stop paying for another five years .I would be getting d double amount I.e 5.00000 assured. Even if I want to take back after five years..I would be getting 3.50000.he told.is it worthy

    ReplyDelete
    Replies
    1. Hi Sampath - If they have given you a written commitment then I cannot comment much but I doubt if it is possible.

      Delete
  31. Excellent Anand. Thanks for a good explanation about detials of the weath builder policy. An SBI executive is after my life to buy this ULIP With an yearly premium of 40k. She says, this is the only way she can get me a locker. Can you advice on what steps/alternate options i can put to her so that i get the locker w/o hassle.

    ReplyDelete
    Replies
    1. Hi - unfortunately this is very rampant in India and bank officials use this type of leverage to sell lockers which are in very high demand. You can try to refuse politely and try to negotiate as explained in these 2 articles

      http://anandvijayakumar.blogspot.sg/2013/06/everything-you-would-ever-want-to-know.html

      http://anandvijayakumar.blogspot.sg/2012/12/your-bank-could-be-cheating-you.html

      Delete
  32. OMG thanku thanku so much Anand sir today one of the agent meet me in bank and told me to open sbi wealth builder policy...so i go through this blog.. thanks you save me.. Sir my age is 27 year i m going to open PPF account with sbi with 120000 per year till 20 years..i think after 20 year i got aprox 3400000... and the best part of this you have to deposite min 500 per year...sir is there any other policy to get better return..with zero risk and tax benefite ??

    ReplyDelete
    Replies
    1. If you want Zero risk and Tax Benefits - PPF is your best option. All ULIPs and ELSS that offer tax benefits come with risks.

      Delete
  33. can u please comment on icici maximiser fund V,,,i shall be very grateful

    ReplyDelete
  34. Hi Anand.
    Thanks for this helpful advice.
    My Dad is going to get retired from Defence Services after serving for 30yrs he is 50yrs old and one of his friend asked him to take this ULIP plan.
    I just wanted to know is this the right time to invest in this ULIP plan is it worth investing 30 40k for next 15 years? If not what should be the area in which he should invest with low risk and reasonable benefits.

    ReplyDelete
    Replies
    1. Aniket - No, I dont think this scheme is good for a retired pensioner because of the high charges and high equity exposure.

      Reg. where to invest: I would recommend you pick up my book on safe investments or tax savings to find out more on the where to invest part. see here: http://anandvijayakumar.blogspot.sg/p/books-by-this-blog-author.html

      Alternately, if you want proper financial advise, we can work out the same too. for a small/reasonable fee, I can help review your/your fathers financial situation and help share investment suggestions.

      Do let me know if you are interested.

      Thanks
      Anand

      Delete
  35. Hi Anand,
    This is Ciara from Kolkata. I already buy SBI LIFE SMART WEALTH BUILDER for 5 years. My yearly premium is 50,000, Sum assured 5 laks. I paid 2 premium. Start 25.11.2014 1st premium and today I paid my 2nd premium. So I want to ask after 6 years how i return on this policy. I know that is not possible to the exact amount, but please let me know the approx amount. Awaiting for your reply.

    ReplyDelete
    Replies
    1. How to return - contact the agent who sold you the policy and they can help you with that.

      whether to return - Please read this: http://anandvijayakumar.blogspot.sg/2012/05/should-you-exit-your-ulips-now.html

      As for how much you will get, check the policy document on what happens if you prematurely exit the policy. If you stop paying the amount now, you will be considered a defaulter and may lose a lot of the money you actually invested. On a worst case scenario, if you stop your insurance cover will stop and you may not get your money back. Apart from that there is nothing the ULIP company can do to you

      Delete
  36. Hi Anand,
    Thanks for your reply. I don't understand one thing, I invest 1 laks, I mean my policy premium 50,000 per year. But when I log on my policy then show - Value‎ Bond Fund‎ Units 3689.63‎ In Rs‎.‎94713.97 and Nav‎ 25.67 then now at present can I run for loss? Please clarify, Actually I'm NRI person, and at this moment I'm staying in Kolkata and one of SBI Manager request me to invest to this SBI LIFE SMART WEALTH BUILDER for 5 years. I don't understand properly. Awaiting your reply.

    ReplyDelete
    Replies
    1. Hi - this plan is one of the high fee plans. without knowing when you invested and how long you have been invested its quite hard for me to comment on why you are at loss. usually bond funds can generate returns of around 8-9% and for the first 5 years the fee ranges between 7-10%, So, even if you continue to invest for 5 years, the best case scenario will be - your principal will be in tact with 0 growth.

      If you want proper financial planning/advise - feel free to reach me @ my email ID - anandvijayakumar007@gmail.com and we can work out a financial planning exercise for you.

      Thanks
      Anand

      Delete
  37. You review is indeed very helpful to everyone here!
    Can you please suggest some alternate plan with low charges and high returns?

    ReplyDelete
    Replies
    1. Hi Vamshi, thanks for your feedback. I do not provide personalized financial advise through the blog or the comments section. If you are looking for investment advise or financial advise do contact me via my email anandvijayakumar007@gmail.com and we can take this forward.

      Thanks.

      Delete
  38. respected sir ,
    i have invested rs-50000/- per year for 5 years. how much amount i will get in 5th year with balanced ratio in smart wealth builder policy . and can i withdraw my amount in 5th year because i will not carry forward my money for next years.

    ReplyDelete
    Replies
    1. I think the minimum term is 10 years so I dont think you can withdraw at the end of 5 years.

      How much you will get - that depends on when the money is invested each month/year, the NAV at investment etc. I cannot comment on that based on the info provided

      Delete
  39. your review is good.but if someone is in slab of 30/ income tax..isnt it good option... if already invested in ppf also.

    ReplyDelete
    Replies
    1. No, definitely not. What makes you say that?

      Yes 30% tax saving is good but there are better options out there that give you the same tax benefits and dont erode your wealth like this. Just because you get tax benefits @ 30% doesnt mean you just flush your money down some random investment right?

      Delete
  40. Hi Anand ,
    I have committed for investment for 30-40 k yearly to one of my relative who is an agent of SBI.He has suggested this policy.What is the alternate best investment/insurance plan you suggest against it?

    ReplyDelete
    Replies
    1. Sorry Sunil, I do not provide personalized investment advise through the blog. If you want, we can work out a personal financial planning deal for a small fee.

      Alternately, you can consider my book on Indian Income Tax where you can find investment advise plus tax savings

      Delete
  41. Thank you very much !! Its very helpfull....

    ReplyDelete
  42. Hi Anand Sir
    I want to invest 4k for my 5 yr old son. Pls advice if child insurance plan is good or should I go for another option. pls advice.

    ReplyDelete
    Replies
    1. Sorry Malti - I do not provide personalized investment advise through the blog. If you want, we can work out a personal financial planning deal for a small fee.

      Alternately, you can consider my book on Indian Income Tax where you can find investment advise plus tax savings

      Delete
  43. Dear Sir,

    i would like to invest Rs.100000/- pa for 20yrs..one of my friends suggested SBI Life Smart Wealth Builder for long term investment cum tax savings purpose... He says that Mutual Fund Charges are high ( Mutual Fund Company will take Upto 3%p.a on Tatal fund)... it means that upto 3% on increased fund value is very very High....if we take 12% average Returns in 20yrs.. Definitely SBI Smart Wealth builder Gives better returns...one more point he was mentioned that SBI Life will be adding some loyalty units in the 10yr.15yr and 20year.i.e Rs.45000... as per Allocation charges it will be Rs.50000.. pls give me an Advise..

    ReplyDelete
    Replies
    1. Hi - SBI is one of the costliest ULIPs and you are worried about the 2-3% charges for mutual funds.

      loyalty units will be insignificant if you consider the fees they deduct in the initial years. Anyways, the decision is yours.

      Delete
  44. Hello Sir,

    Thanks for your wonderful explanation.

    I have invested in SBI smart wealth builder for 10 years with premium tenure of 5 years. Annual premium is 50000 and the sum assured is 5L. It is invested as bond fund.

    I am not sure if this is an good investment and i opened it because of availing a locker facility in Kolkata SBI branch.

    In paper, 5L mentioned as death benefits and maturity benefits as total fund value at the end after taking out all charges so am bit confused if i can get at least 5L as maturity benefits after ten years.

    May I know any thoughts you may have?

    Thanks in advance,
    Debabrata

    ReplyDelete
    Replies
    1. Bond funds can generate an average of around 8-10% returns and with the high fees on this product, doubling of your 2.5 lakh investment in 5 years - I dont think so.

      yes the policy document may mention death benefits of 5 lakhs but if you survive the policy it would only offer the current fund value.

      Does the policy document say - Guaranteed Maturity Proceeds of 5 lakhs??

      Delete
  45. Can I cancel my smart wealth builder policy. I received it on 8 Jan 2016. Today is 4 feb2016

    ReplyDelete
    Replies
    1. All ULIPs offer a mandatory 30 day free look period. So, technically yes you can surrender. But note that you wont get back all of your first year premium. There may be some deductions.

      Delete
  46. Thanks Anand, one of my relatatives was after me about this policy for a few days now. So after reading this post, my decision is NO. Excellent Write-up as someone said. Good on you. Ravi Itha

    ReplyDelete
  47. Hi Anand I have invested money in SBI smart wealth builder it's almost 3 months so can I Sarender this policy
    plz reply asap

    ReplyDelete
    Replies
    1. You can surrender the policy any time you want Shivani but the catch is, if you surrender before the minimum lock-in period you will be subject to hefty penalties & charges as explained in this article.

      As its almost 3 months, you are no longer in the free look period So, surrender will be very costly. Think and choose wisely.

      Delete
  48. Can I Sarender my policy I bought sbi smart wealth builder or else can I convert this policy in fixed deposite

    ReplyDelete
    Replies
    1. This is a ULIP Product. You wont be allowed to convert this into a fixed deposit. If you are looking for safe investment options, check out my book on safe investments in india.

      See here: http://anandvijayakumar.blogspot.sg/p/books-by-this-blog-author.html

      Delete
  49. Thanks for such wonderful post Anand.
    And I got a doubt here.
    I bought SBI LIFE SMART WEALTH BUILDER for 10 years. My yearly premium is 50,000 for 5 years. And the Sum assured is 5 lakhs after my policy term(10 years).
    May I know what 'sum assured' refers in this policy document ? Doesn't it mean that I would be getting a assured amount of 5 Lakhs after my policy term ?
    Please clarify my above doubt.

    Thanks in advance.

    ReplyDelete
    Replies
    1. Hi - Sum assured basically refers to the minimum amount that the company promises to pay you at the end of the policy term. So yes, you will definitely get 5 lakhs or more at the end of the 10th year.

      Delete
  50. Hi, My father is touching 61 years of age and is planning to invest in this fund. He plans to invest 1,00,000 for 5 years for which he has been assured to get about 9.56 lacs after 10 years. Would you advice investing in this fund & does this provide such returns?

    Thanks in advance...

    ReplyDelete
    Replies
    1. Anonymous - I have already answered this question to many others before you. Just scroll up and read the answers to other reader comments.

      Is the insurance agent is willing to give in writing that your dad will get 9.56 lakhs at the end of the 10th year no matter what?

      Delete
  51. Hi Anand,
    If I invest 1,00,000 for 5 years in this policy will I not be getting 10,00,000 as minimum sum assured at the end of 10 years? Can you compare this with term deposit of 5,00,000 @ 8.5% ROI after accounting for 30% tax slab? I think wealth builder will fetch me more than the term deposit isnt it?

    ReplyDelete
    Replies
    1. My friend - Using Tax saving of 30% as an excuse to invest in a high-fee ULIP is like throwing away money and saying that someone would've found the money so hopefully it will be used well.

      We have Tax Saving Fixed Deposits with 5 year tenures that also offer the same 30% tax savings. If I wanted to have guaranteed returns, I would rather choose FDs than pay hefty fees to a ULIP.

      What is the guarantee that the Wealth builder will fetch more returns? can you help me with that?

      Anyways, it is your money and if you wish to invest in the scheme, it is entirely your decision.

      Best Wishes

      Delete
  52. I am in 20% income tax slab, l have been sold this scheme yesterday with 1.2 lakh annual premium for sum assured of 8.4 lakhs with promise of getting 8 lakhs at end of 5 years and full tax benefits for premium and appreciated amount, please advise whether promised benefits are real, are there better options, is it possible to withdraw now.

    ReplyDelete
    Replies
    1. Hi,
      I have already shared my views about the product in this article and I dont think its a good investment. Even if it offers 20% tax benefit, so do many other better products.

      Yes you can withdraw but unfortunately you will lose a big chunk of your first year premium

      Delete
  53. I WANT TO INVEST 6OOOO PER YEAR..FOR 10 YEARS, SHOULD I GO FOR SBI EWEALTH INSURANCE? IS IT WORTHY?

    ReplyDelete
    Replies
    1. Hi, I have already explained my opinion about the product. Am not sure what you expect further.

      Delete
  54. Hi Mr. Anand

    Im 44 years old and forced to take SBI Life insurance...they suggested me wealth builder but after reading your article, i told them to suggest another good plan..They have suggested SBI Endowment policy...Could pl suggest whether I should go for that or any other insurance plans available in SBI. My investment details are
    Age - 44, Premium Per Annum - 50,000 - Max I can pay 5 to 8 years.

    pl suggest and guide

    ReplyDelete
    Replies
    1. Endowment products can barely generate 6% rate of returns. I have talked about Insurance products in great detail in my book on Insurance. You may wanna check it out here: http://anandvijayakumar.blogspot.sg/p/books-by-this-blog-author.html

      Delete
  55. Great post...specially liked the paragraph about how to avoid the agent. I did everything similar to what you had mentioned except in the last part I myself pointed out to the agent that his calculations show return on investment as more than 10% per annum and not as 4 or 8% as mentioned on the pamphlet. I ended up praising the policy as his boss who called me said these are confirmed returns and only due to IRDA requirement they do not mention it. The way he mentioned I thought after deducting policy admin etc charges their wealth builder - bond fund gives return of 10.31% return and wealth builder - equity fund gives return of 14%. Since last evening I am searching performance and returns of this fund online but have not found information anywhere. Please help so that I can reject the agent, who is my close relative, with proper stats.

    ReplyDelete
    Replies
    1. Finding returns online is a bit tricky but just tell them you are not convinced to buy the product and move on

      Delete
  56. Dear Anand,

    This is a complete wrong communication from your end to the Investors. ULIPS are obviously recommended for an investor who is not interested in checking the market on regular basis and for the ones who have a long term apetitite. 70% of ULIPS multi fold the investments when they wait for more than 7 years and where we obviously have 5 years locking period. Any investment made in long term had always given results which are much higher than the Bank or NSC bonds Interest.

    Coming back to your point of " 20% Return Per annum 'JUST NOT POSSIBLE'",

    Lets take example of INFOSYS TECHNOLOGIES LIMITED which is started in 1981 with a mere 10000 rupees capital in Pune and has gone to IPO in 1993 for an offer price of RS 95.00. It has reached to a price of Rs. 8,100/- in the year 1991 and Infosys was among the 20 biggest companies by market capitalization on the NASDAQ.

    So for an investor who has invested in 1981 has received 8100 in 12 years of time making his investment(Rs 90) to 100 times that he invested. If we divide these returns in 12 years, the investor has received around 90% per annum returns which a normal investor, unaware of the market conditions with no time from his day to day life can easily achieve via ULIPS.

    I know that I have taken Infosys which is an equity as an example rather than mutual funds where ideally ULIPS invest major portion of the fund. These mutual funds in turn invest in the equities and other debt, Liquid instruments. So, the investments made in ULIPS are directly routed to the Equities and other financial instruments.

    Now coming back to Mutual Funds which also cover the Life Insurance to 100 times only when your Monthly Systematic Investment Plan is in Active. The moment you stop your Monthly SIP's the Mutual Funds your Life Cover is gone....

    Note: Systematic Investment Plan is nothing but buying the Mutual Funds every month just as you pay for a Personal or Home Loan...

    ULIPS provide the Life Insurance until the Maturity or until an uncertainity takes place in the life of the Policy Holder. ULIPS not only cover your Life but will also waive off your further premiums and will give back the complete claim in case of PERMANENT DISABILITY or TOTAL ACCIDENT. This is one of the best features of the ULIPS.

    *** The Insurance Regulatory and Development Authority (Irda) clamped down in 2010, capping the annualised charges of Ulips at 2.25% for the first 10 years of holding. The charges were fixed at this rate because it was the average cost charged by competing products such as mutual funds.

    Moreover, Indian markets are known for the Robust surviellance and transparent trading system. Currently, all the global markets are echoing that Indian markets are the most sorted markets to invest and are seeing India as one of the higher revenue generating ECONOMY. FIIs have invested a net of $43.5 billion so far in 2014-15— expected to be their highest investment in any fiscal year in India. Of this, a huge chunk—$26.3 billion—was invested in debt and it is their record investment in the asset class, while equities absorbed $17.2 billion.

    I definetly suggest all the Low and Mid level investors to go for ULIPS seeing the growth of the Indian Markets and also reap the benefits by standing for atleast 10+years which can be used for their family, near and dear ones.

    Regards,
    Murali

    ReplyDelete
    Replies
    1. Mr. Murali - lets cover your arguments one by one

      1. Can you name those 70% ulips that have multi-folded investments in 5 or 7 or even 10 years? i would be curious to know

      2. Infosys is just one example. Do you want to quote the best performing stock from the market and claim that all ulips will give similar returns? What about all those stocks which went down in value? do we ignore them?

      By the way you misunderstood my statement, my point is - no ULIP can guarantee a 20% year on year returns every year. There may be a few good years and a few bad but 20% each year, just not possible and i am not going to change my statement

      3. I could very easily buy a term life policy for a fraction of the hefty premiums that ulips charge and get the same coverage. Why do you want to compare ulip with a MF SIP that offers insurance as a bonus? Compare it with proper insurance products

      4. It would be good if you could share more info about ulips that have actually provided returns as you are claiming after the 7 or 10 year holding period. Most ulips aren't that old and assuming they will give exorbitant returns will be illogical.

      plus - the fees part, insurance companies have ingenious ways of adding fees and charges outside of the 2.25% you mentioned because this 2.25% is only for policy administration charges. As far as i know, ulips still charge high fees. take this sbi product for example - are they charging less than 2.25% totally? Did you check out the section on fees & charges??

      You may like ulips and feel comfortable investing in them but that doesn't mean everyone should. I prefer low free products rather than products that take a bulk of my money and distribute to agents and advertising agencies.

      Delete
  57. Hello Sir,

    Could you please explain about SBI Life- Smart Elite policy?

    I'm 26 years old. When I went to bank they are suggesting me take this policy. They are saying as -I have to pay 150000 p.a. for 5 years which makes a total of 750000 for 5 years. So that at the end of 6th year i'll get 1500000 as return. Is it possible and true?

    ReplyDelete
    Replies
    1. No, I don't think this is possible. If the agent is willing to give in Writing that you will 100% guaranteed get 15 lacs at the end of the 6th year which is endorsed by SBI life insurance, then sign for the policy. IF he says returns are linked to market performance then ask him to give a realistic number and not fancy stories

      Delete
  58. Hi Sir,
    I took sbi elite scheme in the last week of july 2016. I have not received the policy document at my home yet. Can i quit this policy today ?

    ReplyDelete
    Replies
    1. Usually we get a 15 or 30 day free look period on insurance products and so, if you are within that period then yes.

      PS: I dont know the free look period details so make sure to check the policy offer document for the same

      Delete
  59. Dear Anand,

    Greetings! First of all, I would like to appreciate your patience. You have explained very nicely. Thanks for that.

    I am asked to pay limited premium of 40,000 for 10 years policy term. Is it worth of paying. Their calculation is as follows
    While calculating they are not deducting the fund management charge. They deduct 9% of premium allocation charge then adding Equity funds. Finding out the no. of units then taking the 1.35% of this amount as fund management charge and finally showing that we are going to loose very less amount.

    Could you please suggest me whether this plan is worth of having. I have zero knowledge about all these things.

    Thank you in advance.

    ReplyDelete
    Replies
    1. Rajeswar, this product is costly and i have already shared my opinion about the product in this article. Am not sure what more you expect :)

      If you are interested in taking up personalized financial planning, do let me know and I can help you out. Alternately you can also think about buying my books that can help you with proper financial planning. see here: https://anandvijayakumar.blogspot.sg/p/books-by-this-blog-author.html

      Delete
  60. Hello,
    Anand sir,
    My mom 60yrs old have purchased Sbi life smart wealth builder and she has to invest 120000 per year for 5 yrs and she choose bond fund,i just want to know,in her document sum assured is 12lac is written..is it means she will get 12 lacs
    or there are some tricks?? I am Very confused pls. Help.

    ReplyDelete
    Replies
    1. As far as I know, the sum assured is the amount the individual's nominee will get in case the insured dies during the policy period. The maturity amount at the end of the 7th or 10th or whatever year you want to withdraw will be based on the NAV of the fund and not this 12 lakhs

      And, bond funds make an annual return of around 8-9% and after deducting the fees, the amount you may get at maturity will be much much lower than 12 lakhs

      Delete
  61. Hello sir,
    Recently I got a Govt job and I want to invest my money so that I could get a good return in future.I am totally illiterate about all these money market can you please suggest me what kind of investment I should opted to get a good return.In my office SBI agents came and suggest to start with SBI builder with mimimum 2000 pm/ ,can you suggest whether I should go for this or not...

    ReplyDelete
    Replies
    1. Hi - I have already explained my view on the product in the article. Am not sure what specifically you are expecting to help you decide.

      Its yous hard earned money so its your choice on whether you wish to invest in this product

      Delete
  62. Hi Anand,
    I have read many of your comments above and hope you clarify my question as well.
    One of the SBI representative explained me about Smart Wealth Builder policy. He took an example of investing 1lac per year for 5years and that all I should be paying(5Lacs). This amount will be kept in Equity. Term is for 30years. After 30 years, I will be getting something around 80Lacs! He said he is considering only 13% to 15% of returns per year which can be possible from equity in long term(as per him). He took the example that market always performed well in the past for any 10years period(long term). Please let me know if all these numbers are realistic ? I am actually looking for a best insurance policy/saving keeping my 1yr old child.

    /sharath

    ReplyDelete
    Replies
    1. Sharath - Did the person count the amount of fees and charges deducted each year or did he consider the full 1 lac as invested in the first 5 years?

      Yes, stock market can generate 13-15% returns but like i have said in the article, this is a high fee product. it is entirely your decision to choose this if you think it is suitable

      Delete
  63. This is what my agent offering me, on a pamphlet
    100000 Premium per year for 5 years
    after 10th year I have 2 Options
    1. Rs. 12,46,103 one shot amount
    or
    2. Rs. 10,384 per month life long
    Plz advice if I can go with this
    or what questions should I ask him...because I do not see this in SBI website
    plz help

    ReplyDelete
    Replies
    1. is he able to guarantee these amounts in writing? ask this first. If he does on a sbi endorsed agreement guaranteeing this, then you can think about this product

      Delete
  64. sir, last month this wealth builder plan was bought for me by my father .
    no we can not stop bcz returning short money, now pls guide in which equity fund we have to manage in this policy for return good returns. average 12 to 15%.

    ReplyDelete
    Replies
    1. Hi, i don't 12-15% kind of returns is possible especially considering the high fee this product charges even if you choose the fully equity option under this scheme. Your best bet is to choose the option with most equity exposure and hope the returns are higher than what a FD would generate

      Delete
  65. Hi Anand,

    I am quite new to finance planning. I want to invest 100000 per year for 10 years but bit confused where can we get maximum return without risks.
    could you please suggest some option.

    ReplyDelete
    Replies
    1. You could check out my book on indian income tax where i have explained a retirement plan with similar investments that can help you retire as a crorepati. Check it here:https://anandvijayakumar.blogspot.sg/p/books-by-this-blog-author.html

      Alternately if you want, we can also work out a personalised financial plan for you for a reasonable fee. let me know if you are interested.

      Delete
  66. Anand - If you are investing in Market it means there is risk. You can not say that it is not worth it BECAUSE
    - First Principal for the investors is MAKE it for LONG RUN
    - Second, If you want good returns think about MF for short Run
    So In your point of view - your opinion is good for short run but for LONG it is just a waste. I TOTALLY DISAGREED to you.

    ReplyDelete
    Replies
    1. Shrikant - You are free to decide and choose what investment instrument you want to put your money and disagreeing is totally fine.

      My opinion is based on the fact that the product charges high fees and cannot guarantee the returns promised by the sales agents. This article is just my opinion of the product and is not a direct recommendation of any sort.

      Delete
    2. Hi Anand,

      one of sbi life agent told me if you will invest 50k per year for 5 yr, you will get maturity in 11year 6lakh.. is it possible,

      Delete
    3. Its super unlikely you will get such an amount.

      If the agent can give you in writing that the 11 lakh at the 6th year is guaranteed then i would believe him. otherwise - i wouldn't

      Delete
  67. Recently one agent suggested this plan by Paying 1-lakh P.A for 5 year and wait for 25 year and maturity amount (5 +25 = 30 year) will be around 1.6 crore rupees. He was claiming that 12 to 15 % returns every year. Agent claims that mutal funds for long run will yeild more benefit than short term.
    Can you please help since i have given Post dated cheques for this month 22-01-2017.
    OR share me your details for personalised financial plan. OR reach me at commented gmail id.

    ReplyDelete
    Replies
    1. Hi - blogger doesn't show me ur email id. Reach me at anandvijayakumar007@gmail.com and I will send you details of the personalised financial planning.

      Yes mutual funds generate good Long term returns but assuming 12-15% average for every year for 30 years is unrealistic. So, no I don't think you will get 1.6 crores. If you are lucky and market is good you may get maybe 30-40% of that and that too is not guaranteed.

      Delete
  68. Hi Anand

    Thank you for providing detailed and clear illustrations on this ULIP plans.
    Recently I came across SBI life insurance branch manager to resolve some of the doubts for an existing life insurance. Post that, he explained me about this Bond Fund by quoting those good number of returns since inception with 40% Govt holdings in it, proving it completely safe and secure.
    Plus, the 80C deductions :D

    I could relate to your every point mentioned under heading 'How to tackle Agents'.. :D

    ReplyDelete
  69. Hi I have invested in SBI life Smart Elite. I have paid only one premium. Should I stop paying it?

    ReplyDelete
    Replies
    1. Hello Raj - I do not provide customised financial advise via the blog comments. Pls contact me via my email anandvijayakumar007@gmail.com and I will share you the details of the consultation services.

      Anand

      Delete
  70. Hi Ananad,

    Last week I purchased SBI Smart wealth builder about 20 year tenure with paying term for 5 years with 60000 per annum. In proposal document they mentioned like 6lakh is sum assured and invested 100% in bond fund. when i check the fund value @8% rate after 10 years is 457288/-. After reading your blog i am planning to return/reject the policy based on free-look period. Could you please advice whether this is wise decision or not?

    Thanks,
    Shiva

    ReplyDelete
    Replies
    1. Shiva - bond fund can only generate around 8-9% returns during Good years but with falling rates that's highly doubtful. Considering the fees you pay and the growth of the bond fund, it would be a surprise if you manage even 6% net returns.

      The decision is yours my friend. Good luck.

      Delete
  71. I have invested Rs 51000 on it on 8th of feb 2016. Can I surrender It? below are the Figures on today.
    Fund Name Nos of Units NAV Per unit(Rs) Value (Rs)
    SBI Life Equity Fund 585.5301 70.8613 41491.42407513
    SBI Life Bond Fund 348.6999 29.4348 10263.91181652
    Fund value(Rs.) 51755.34

    ReplyDelete
    Replies
    1. Pls read this: http://anandvijayakumar.blogspot.sg/2012/05/should-you-exit-your-ulips-now.html

      Delete
  72. Hi anand, Unfortunately i took this plan and they are saying that charges of cancellation is going to cost high. Please advise if i would atleast get the money i invested in this or not. I am getting worried if my actual investment will also get eroded

    ReplyDelete
    Replies
    1. Hi, there is a high chance that your actual investment amount may not get returned fully. Usually the deductions are the risk coverage for the no. of days you kept the policy active plus whatever market value your investment has lost in those days. As ULIP Value is by NAV, they will return the market value as per NAV and not as per the rupees you invested.

      So, yes your actual investment will also get eroded. You can consult customer service and decide if you wish to lose only this much now or take the risk of losing a lot more in the coming years as well

      Delete
    2. Theysay if i cancel now, i would still gte the money i invested after 5 years..Is it true?

      Delete
    3. No, I don't think so. How can that be? If you cancel you won't get anything in 5 years

      Delete
  73. Hi Anand ,

    I just took this policy of 1 lakh 25 thousand per year for 20 year tenure with paying term for 5 years and I invested 75% in equity and 25% in Bond , I took this because my 80c section was completely empty , my age is 27 years(able to take risks) now what should I do ?

    ReplyDelete
    Replies
    1. Investing in such high cost policies just for section 80c is not a good idea. There are so many other much nicer / Better returns yielding products in the market. You can consider buying my book on Indian income tax to understand more about them and choose the right product.

      Alternately, if you want personalised investment planning reach me via email and I can help you out.

      Delete
  74. Hi,

    This is Pitambar taken SBI Life Smart Wealth Builder Plan last week for 5 years ( 50,000.00 * 5 ) as annually fifty thousand.The After five year the fund will be locking for another 5 years. Then total 10 year term plan.

    As per the bank manager, After 10 year I will getting around 9 lacs.

    Can any one tell me is it right or the bank manager made me fool?

    Thank & Regards,
    Pitambar

    ReplyDelete
    Replies
    1. Like i have answered the many people like you before, i don't think 9 lacs is possible at the end of the 10th year. That is nearly 4 times your investment in 5 years (you are investing only 2.5 lakhs at the end of 5 years) which is extremely unlikely

      Delete
  75. Hi,

    I have invested in 3 of these policies (SBI Life Smart Wealth Builder LP) of Rs.50,000 each (50000x3) last year and now after reading your article I am considering to continue it or not. The policy agent told me that after 5 years I will be able to withdraw around 9.5-10L. My main aim for investing was Tax benefit and good returns.

    Please help me out here, what should I do:
    1. Should I discontinue the premium and let it go into discontinued funds and withdraw it after 5 years?
    2. Continue paying premium for 5 years and withdraw it, then how much will be the guaranteed return?

    Thanks in advance.

    ReplyDelete
    Replies
    1. You got 3 policies? Oh my goodness. Pls read this: http://anandvijayakumar.blogspot.sg/2012/05/should-you-exit-your-ulips-now.html

      Guaranteed return depends on when you withdraw. check the policy document for more info. Talk to your agent and check if the 9-10 lakhs is guaranteed am sure he will say No.

      Delete
  76. Wealth builder plan (SBI) FOR A PREMIUM OF 3 LAKH TO PAY FOR 5 YRS AND MATURITY AT 11TH YR.IS THAT GOOD TO CARRY ON PLEASE SUGGEST RISKS AND GIVE APPROXIMATE maturity amount...

    ReplyDelete
    Replies
    1. How do you expect me to provide forecasted returns that are linked to stock market? Sorry.

      If you want feedback on whether this is a good product - i have already explained my opinion in this article. Am not sure what else you want to hear.

      if you want to decide whether it is good idea to continue this or any other ulip read this: http://anandvijayakumar.blogspot.sg/2012/05/should-you-exit-your-ulips-now.html

      Delete
  77. I took this policy in the year 2014 (with premium 100000/- yearly) believing the sweet words of an agent. After knowing the truth I stopped paying the next premiums. Now, will I get my amount after 5 years?

    ReplyDelete
    Replies
    1. Yes you will get some amount but not the full 1 lac as you have stopped paying the premiums and the company will deduct the yearly fees and charges from that 1 lac and only refund the remaining

      Delete
  78. I have this policy with premium 100000 per year. The payment term is for 5 years that means 5 lacs total premium and maturity after 10 years. The agent said after 10 years I will get 1000000 (10 lacs). Is it true? I have already paid 2 premiums shall I continue or surrender.

    ReplyDelete
    Replies
    1. if you want to decide whether it is good idea to continue this or any other ulip read this: http://anandvijayakumar.blogspot.sg/2012/05/should-you-exit-your-ulips-now.html

      The chances of getting 10 lacs are not that great as most times agents use extrapolated figures showing returns of 20% or more.

      Delete
  79. Hi, I invested in this smart wealth builder policy last year. I need to pay Rs 50,000 each year for 5 years and after the 10th year, the document says sum assured-Rs 5,00,000. So does it mean I will surely get atleast 5,00,000 at the end of year or if I am lucky can be more?? So if I don't withdraw the money after 5th year and wait till the maturity i.e 10 years, then would it be a nice investment option than Fixed deposits since it will give only the fixed 7-8% return but I guess this sbi policy will give more if i wait for the maturity period of 10 years?

    ReplyDelete
    Replies
    1. sum assured 5 lacs means you will get 5 lacs at the end of the policy term of 10 years. If you withdraw before, you will not get that money.

      Delete
  80. Can u comment on SBI life smart privilege ulip?

    ReplyDelete
    Replies
    1. Sure, I can try to write something in the coming weeks. If you want personalised investment advise or immediate feedback on the product reach me on my email id anandvijayakumar007@gmail.com

      Delete
  81. Hi Anand, You have mentioned Sum assured for the policy Smart Wealth Builder Plan in 2 ways. Which one is considered? 1. Sum assured amount will be given only if the insured person passes away. Otherwise the actual amount after tenure would be less than the sum assured. 2. sum assured 5 lacs means you will get 5 lacs at the end of the policy term of 10 years

    ReplyDelete
    Replies
    1. Hi - Sum assured s the amount you get at the end of the policy tenure or if the policy holder dies during the tenure - it is either or types. So, if a policy holder dies during the policy he will get the 5 lacs irrespective of how much premiums he/she paid. If they survive or outlive the policy they will get the higher of 5 lacs or the current value/NAV of the investment. This 5 lacs assured amount is mentioned to provide protection to investors money in case the stock market tanks in the last year of investment

      Delete
  82. Very good explanation and completely based on facts.
    I already invested in this last year going by the person stating that the returns are market based. I never explained about the charges nor I bothered to ask. Now, i got a return of 3% when the balanced fund shows a return of 15%. And then i realised the huge charges involved.

    I agree, its better to have a pure insurance policy and invest separately in Funds.

    I don't want to continue this. Any idea if I can break this investment and how?

    ReplyDelete
    Replies
    1. Thanks Krishna. This is the reason why most ulip investors are disappointed while seeing returns because the amount you invest is assumed as 100% invested while calculating returns while agents conveniently forget their fees.

      Anyways, withdrawing now would result in significant losses as ulips have bad exit clauses in the first few years. Read these articles, they will help you

      https://anandvijayakumar.blogspot.sg/2016/05/should-i-invest-in-ulips-yes-or-no.html

      http://anandvijayakumar.blogspot.sg/2012/05/should-you-exit-your-ulips-now.html

      Delete
  83. Thanks sir for such a good information in so simple words and without using any jargons.
    Sir, I bought (as these were recommended by an SBI manager who talked like a real well-wisher) two policies of premium 100000 each in July 2015. I have just paid my third premium for both of these. I felt like cheated when I saw my policy details a few days back. Will it be a good move to discontinue the policies and get whatever they give as I won't be losing any money further.

    ReplyDelete
    Replies
    1. Pls read this: http://anandvijayakumar.blogspot.sg/2012/05/should-you-exit-your-ulips-now.html

      Delete
  84. sir good morning,
    i took sbi smart wealth builder plan at the time of house loan ,sep-2017 is my third year pay met due ,untill now i paid 50,000pa .totally 1 lak i paid to day my fund value is on 1 lak Rs.1750/- only gain ,according to bank manager only 5 yers to pay ,then no need to pay ... now what is better one do with this ,shall i continue same , now i am in abroad if i want to close this policy what to do.

    ReplyDelete
    Replies
    1. Pls read this: http://anandvijayakumar.blogspot.sg/2012/05/should-you-exit-your-ulips-now.html

      If you want to close the policy, you need to do it when you visit india

      Delete
  85. On 20th this month SBI will be IPO will be launched,will there be significant increase in NAV value.Is this good opportunity to invest in such SBI scheme .Also are there any norm which assure garuntee 8-9 % returns in worst conditions

    ReplyDelete
    Replies
    1. That is for the company. It will not impact the returns of this product.

      No there is no such product that can guarantee 8-9% in worst conditions

      Delete
  86. Anand Sir,

    Can you suggest high return funds with slight risk. I am not interested in share or no knowledge in share.

    Thank you

    ReplyDelete
    Replies
    1. Sorry, I don't provide personalised investment advise for free. Contact me via email if you want to subscribe for a paid engagement

      Delete
  87. You said it well that this policy will not fetch return like mutual fund or other high return schemes ,Where the charges are nominal and return are high . But I personally felt you missed the distinction between Life insurance and mutual fund investment .I would like to consider a case, to define how this investment options works.
    Let us consider ten people opted for the above life insurance product and same set of people also opted for mutual fund with annual investment option of one lakhs . For sure the return after ten years will be much higher in case of mutual fund . But this equity linked mutual fund will not include tax savings under 80 c and 10 10 D. Moreover let us consider a scenario where one of the above ten people died after payment of first premium . Mutual fund company will pay to the nominee only one lakhs rupees but the life insurance company will pay ten lakhs rupees to the nominee which is the sum assured. If In a worst case scenario five people died then life insurance company will have to pay fifty lakhs rupees and mutual fund will pay just what was invested. To conclude my opinion , I would like to ask you a question as to how can you expect high return from a life insurer which can loose crores of rupees or even go bankrupt in worst case scenario . Let us not compare life insurance with mutual fund or other high return share options . But instead look for things like does your life insurer has strong capital base , branch penetration , complain resolution percentage, claim settlement percentage, sum assured multiple and possible maturity benefits .Life insurance are long term savings options with average return ,higher sum assured and tax gain benefits.

    ReplyDelete
    Replies
    1. Mr. Dilip - some comments from my side:

      1. I perfectly understand the difference between life insurance and mutual fund. Mutual fund is an investment, life insurance is an insurance - there is a big difference. I WILL NOT and DO NOT recommend buying an insurance product for investment

      2. There are plenty mutual funds that offer the same tax benefits and even offer some life insurance as a bonus as long as you are invested without charging customers hefty fees

      3. There are plenty of pure insurance products that offer a lot of coverage for small fees. If i want coverage for 1 crore, I can sign up for a pure term insurance which will cost me around 15-20k rupees per year instead of paying 1 lakh per year for a 10 lakh coverage from a product that will also include risk from market investments.

      4. The job of an insurer is to plan for the worst case scenario and hence premiums change every year when claim ratios change. As an investor or blogger I will only recommend from the investor/custmer stand point. there are plenty of experts getting paid big money being employed by the insurance company to think about whether the company has capital, branch penetration tc.

      Just to repeat myself - Life insurance IS NOT A Savings option.

      Delete
  88. hello sir good evening,,,in this january i invest first payment in smart wealth builder policy,,i read all ur comments and i want to surrender it,,,i m living in euorpe,,my agent returned me 8ooo rupee from first payment,,i want to ask u its good for me to continue or not beacause he tell me after 5 year i get 7,5 lakhs ,,,but i m not sure know,,,whts ur suggestion,,pls tell me,,sorry for my english ,,bcs in euorpe we spaek other language,,also i send next payment in my account,,so how can i stop it,,,pls help me ,,,thanks

    ReplyDelete
    Replies
    1. Manjit - as explained in this article (https://anandvijayakumar.blogspot.sg/2012/05/should-you-exit-your-ulips-now.html) the decision is yours as there are many factors to consider that are exclusive to the individual. If you are interested in personalised financial advise contact me via email at anandvijayakumar007@gmail.com and I can help you out for a nominal fee. Thanks

      Delete
  89. Hi sir
    Nice post. Thanks for that.
    I have enquired with the bank.
    He has explained in the below way.
    Pay 1 lakh for 5 years and leave it for another 5 years.
    From 11th yr u will received 1 lakh till the life time.
    This wealth builder is not linked to mutual funds.
    Is it true??

    ReplyDelete
    Replies
    1. Hi - Ask the guy to give in writing that you will guaranteed get 1 lac every year for as long as you are alive. if he is able to do that, then buy it. If he says the returns are based on market performance, tell him thank you and leave..

      PS: I don't think its practically possible . What if you live for 40 years after the 10th year? So by paying 5 lacs you get 40 lacs? that is plain bluff and is never ever going to happen

      Delete

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