विशेषज्ञ की सलाह चाहिए?हमारे गुरु मदद कर सकते हैं
kannan
Ramalingam Kalirajan10872 Answers |Ask - Follow
Mutual Funds, Financial Planning Expert - Answered on May 15, 2025
Asked on - May 15, 2025
Hi sir
I have invested 6 lakh and 10 lakh per year in the smart privilege plus plan. Can you suggest the disadvantage and advantages of this plan. Shall I continue this plan upto five years.
Thanks in advance
Ans: You are investing Rs. 6 lakh and Rs. 10 lakh per year in Smart Privilege Plus. That is a significant financial commitment. You deserve appreciation for the discipline and seriousness you show towards your financial future.
Now let us study this plan carefully.
Let’s evaluate both the advantages and disadvantages, and then decide what’s best for you. This answer will give a full 360-degree view.
Understanding What This Plan Actually Is
This is a ULIP – a Unit Linked Insurance Plan.
It mixes life insurance and investment in one product.
Your premium is split into two parts.
One part goes towards life cover.
Other part is invested in equity or debt funds.
This is not a mutual fund. It is an insurance-linked product.
Advantages of Smart Privilege Plus Plan
Gives life insurance along with investments.
Offers the option to choose equity or debt fund mix.
Can switch between funds without tax during the policy term.
Gives some tax benefits under Section 80C.
If policy is continued for long term, it may create decent corpus.
After 5 years, partial withdrawals are allowed, if needed.
Insurance payout is tax-free under current laws (Section 10(10D)).
Premium waiver and other riders may give some safety cushion.
Disadvantages of Smart Privilege Plus Plan
Very high charges in the early years.
Policy administration, premium allocation, fund management fees reduce your investment.
First 2 to 3 years, returns are very low due to charges.
Not flexible for regular top-ups or goal-based investing.
Returns are not transparent or comparable to mutual funds.
Lock-in of 5 years. You can’t touch your money before that.
Fund options inside ULIP are limited and less aggressive.
Switching between funds needs tracking and timing.
Insurance cover provided is usually insufficient.
Not good if you want to exit in short term.
Should You Continue This Plan?
You are putting Rs. 16 lakh every year into this plan.
That is a very high commitment for a ULIP.
If you have already completed 5 years, assess the fund value now.
If it is underperforming, it is better to surrender and move to better options.
Even if you're in the 2nd or 3rd year, it is better to assess soon.
The cost of staying in a low-growth product is huge.
What You Can Do Now – Step-by-Step
Ask the insurance company for current fund value and surrender value.
Compare the growth with mutual fund performance over same period.
Check your original policy brochure for charges and deduction details.
If you’ve completed 5 years, surrender is penalty-free.
If not, weigh how much penalty applies now vs. staying for full term.
Consult with a Certified Financial Planner before surrendering.
Don’t act in a hurry. Assess based on facts.
What to Do with the Surrender Value?
Once you surrender, you will get back some amount.
That money should be re-invested properly.
Use mutual funds through a Certified Financial Planner.
Do not invest in direct funds.
Regular plans give you advice, monitoring and adjustments.
Why You Should Avoid Direct Funds
Direct funds may look cheaper.
But they don’t give you ongoing guidance.
No rebalancing or review happens.
Without advice, mistakes are common.
Use regular plans via an MFD who is a CFP.
Why Actively Managed Funds Are Better Than Index Funds
Index funds simply copy the market.
In falling markets, they also fall fully.
Actively managed funds adjust to reduce risk.
They try to outperform the index.
For long-term goals, they give better returns than passive index funds.
How a Better Strategy Will Help
Mutual funds have more transparency.
Charges are lower compared to ULIPs.
You can choose funds as per goal and risk.
SIP can start from Rs. 500 monthly.
You can add or stop any time.
No lock-in except in tax-saving ELSS funds.
If You Have Life Insurance Goals
Buy pure term life cover.
Coverage should be minimum 15–20 times your yearly income.
Premium is very low for term plans.
No investment part. Full focus is on risk protection.
If You Have Investment Goals
Use equity mutual funds through a regular plan.
For short term goals, use debt mutual funds or liquid funds.
Choose SIPs based on risk and time horizon.
Review performance once a year with a CFP.
Tax Rules You Should Know (If You Exit This Plan)
ULIP maturity is tax-free if annual premium is under Rs. 2.5 lakh.
If premium is more than Rs. 2.5 lakh, maturity becomes taxable.
New rules treat such ULIPs like mutual funds.
Short-term gains are taxed at 20%.
Long-term gains above Rs. 1.25 lakh taxed at 12.5%.
Check if your ULIP qualifies under this rule.
Common Mistakes to Avoid Going Forward
Don’t mix insurance with investment again.
Don’t take plans with lock-ins and high charges.
Don’t choose products just for tax-saving.
Don’t invest based on friend or agent recommendation.
Don’t ignore review. Recheck all plans every year.
Final Insights
ULIPs like Smart Privilege Plus are sold as all-in-one solutions. But they are complex. They often give lower returns. Charges eat up early years. You have better choices today. You deserve flexibility, control, and transparency. If you have crossed 5 years, this is a great time to exit. Reinvest through SIPs with the help of a Certified Financial Planner. Your wealth journey will be simpler, clearer and stronger.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
(more)
Now let us study this plan carefully.
Let’s evaluate both the advantages and disadvantages, and then decide what’s best for you. This answer will give a full 360-degree view.
Understanding What This Plan Actually Is
This is a ULIP – a Unit Linked Insurance Plan.
It mixes life insurance and investment in one product.
Your premium is split into two parts.
One part goes towards life cover.
Other part is invested in equity or debt funds.
This is not a mutual fund. It is an insurance-linked product.
Advantages of Smart Privilege Plus Plan
Gives life insurance along with investments.
Offers the option to choose equity or debt fund mix.
Can switch between funds without tax during the policy term.
Gives some tax benefits under Section 80C.
If policy is continued for long term, it may create decent corpus.
After 5 years, partial withdrawals are allowed, if needed.
Insurance payout is tax-free under current laws (Section 10(10D)).
Premium waiver and other riders may give some safety cushion.
Disadvantages of Smart Privilege Plus Plan
Very high charges in the early years.
Policy administration, premium allocation, fund management fees reduce your investment.
First 2 to 3 years, returns are very low due to charges.
Not flexible for regular top-ups or goal-based investing.
Returns are not transparent or comparable to mutual funds.
Lock-in of 5 years. You can’t touch your money before that.
Fund options inside ULIP are limited and less aggressive.
Switching between funds needs tracking and timing.
Insurance cover provided is usually insufficient.
Not good if you want to exit in short term.
Should You Continue This Plan?
You are putting Rs. 16 lakh every year into this plan.
That is a very high commitment for a ULIP.
If you have already completed 5 years, assess the fund value now.
If it is underperforming, it is better to surrender and move to better options.
Even if you're in the 2nd or 3rd year, it is better to assess soon.
The cost of staying in a low-growth product is huge.
What You Can Do Now – Step-by-Step
Ask the insurance company for current fund value and surrender value.
Compare the growth with mutual fund performance over same period.
Check your original policy brochure for charges and deduction details.
If you’ve completed 5 years, surrender is penalty-free.
If not, weigh how much penalty applies now vs. staying for full term.
Consult with a Certified Financial Planner before surrendering.
Don’t act in a hurry. Assess based on facts.
What to Do with the Surrender Value?
Once you surrender, you will get back some amount.
That money should be re-invested properly.
Use mutual funds through a Certified Financial Planner.
Do not invest in direct funds.
Regular plans give you advice, monitoring and adjustments.
Why You Should Avoid Direct Funds
Direct funds may look cheaper.
But they don’t give you ongoing guidance.
No rebalancing or review happens.
Without advice, mistakes are common.
Use regular plans via an MFD who is a CFP.
Why Actively Managed Funds Are Better Than Index Funds
Index funds simply copy the market.
In falling markets, they also fall fully.
Actively managed funds adjust to reduce risk.
They try to outperform the index.
For long-term goals, they give better returns than passive index funds.
How a Better Strategy Will Help
Mutual funds have more transparency.
Charges are lower compared to ULIPs.
You can choose funds as per goal and risk.
SIP can start from Rs. 500 monthly.
You can add or stop any time.
No lock-in except in tax-saving ELSS funds.
If You Have Life Insurance Goals
Buy pure term life cover.
Coverage should be minimum 15–20 times your yearly income.
Premium is very low for term plans.
No investment part. Full focus is on risk protection.
If You Have Investment Goals
Use equity mutual funds through a regular plan.
For short term goals, use debt mutual funds or liquid funds.
Choose SIPs based on risk and time horizon.
Review performance once a year with a CFP.
Tax Rules You Should Know (If You Exit This Plan)
ULIP maturity is tax-free if annual premium is under Rs. 2.5 lakh.
If premium is more than Rs. 2.5 lakh, maturity becomes taxable.
New rules treat such ULIPs like mutual funds.
Short-term gains are taxed at 20%.
Long-term gains above Rs. 1.25 lakh taxed at 12.5%.
Check if your ULIP qualifies under this rule.
Common Mistakes to Avoid Going Forward
Don’t mix insurance with investment again.
Don’t take plans with lock-ins and high charges.
Don’t choose products just for tax-saving.
Don’t invest based on friend or agent recommendation.
Don’t ignore review. Recheck all plans every year.
Final Insights
ULIPs like Smart Privilege Plus are sold as all-in-one solutions. But they are complex. They often give lower returns. Charges eat up early years. You have better choices today. You deserve flexibility, control, and transparency. If you have crossed 5 years, this is a great time to exit. Reinvest through SIPs with the help of a Certified Financial Planner. Your wealth journey will be simpler, clearer and stronger.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment