SBIL Retire Smart policy: What benefits and surrender options do I have?

Ans: You're approaching your policy's maturity date in March 2026, and here are some options to consider for your SBI Life Retire Smart LP policy:

Understanding the Policy:

• Guaranteed Benefit: This policy guarantees 101% of your total paid premium on maturity. In your case, that's Rs 5,05,000 (1.01*Rs 5 lakh).
• Market Performance: The current fund value of Rs 5.70 lakh reflects how the units you invested in have performed in the market.

Decision Points at Maturity (March 2026):

• Surrender the Policy: You can receive the fund value (Rs 5.70 lakh) along with any guaranteed additions or terminal bonuses offered by SBI Life. However, check the policy documents for any surrender charges that might apply.
• Annuitise the Corpus: This option allows you to convert the total corpus (fund value + guaranteed additions) into a regular income stream through an annuity plan from SBI Life. This provides a guaranteed income but limits access to the principal amount.
• Continue the Policy (if allowed): Check with SBI Life if you have the option to extend the policy term. This allows the fund value to potentially grow further through market gains, but you'll continue paying premiums.

Choosing the Right Option:

Since I cannot give financial advice, here's how to make an informed decision:

• Review Policy Documents: Look for details on surrender charges, guaranteed additions, and the option to extend the policy.
• Contact SBI Life: Talk to your SBI Life advisor or customer care to understand the specific benefits and charges associated with each option.

Consider Your Needs:

• Retirement Income Needs: Do you need a guaranteed income stream (Annuity) or are you comfortable with some market risk for potentially higher returns (Continuing the Policy)?
• Other Retirement Savings: Do you have other sources of retirement income, like a pension or investments?
• Medical Needs: Factor in any potential medical expenses that might require a larger corpus.

Additional Tips:

• Market Performance: Consider the current market conditions. If the market is expected to perform well, continuing the policy might be beneficial.
• Risk Tolerance: How comfortable are you with market fluctuations? Annuities offer stability, while continuing the policy exposes you to market risks.

By carefully evaluating these factors and talking with SBI Life, you can make the best decision to secure your financial future in retirement.

Ans: Thank you for your kind words. Considering the long-term perspective, it's better to stop paying more premiums to the SBI Retirement Smart Plan. While surrendering now might result in a Rs. 50k loss, it prevents further losses and allows you to reinvest the remaining funds in more profitable avenues like mutual funds. Booking a loss now is better than continuing and making further losses.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: If you surrender the policy now then assuming that by now your corpus might have grown to around 14 Lacs(approx) then you have two options:
1. Take monthly pension of around 6K per month for the tenure of your policy annuity period
2. Take 60% of your net fund value i.e. 60% of 14 Lac, so a sum of 8.4 Lac as lumpsum payout. And on the balance 5.6 Lacs you may receive pension of around 2.4K per month for the tenure of your policy annuity period.

If you keep the policy then your Fund Value will keep on growing till the vesting period(Not known)

After the vesting period is over you can buy annuity/pension for the entire fund value or 40% of Fund Value and withdraw 60% of Fund Value.

The annuity plan will be as subscribed by you during purchase of the policy.

Ans: Hello;

It is not advisable to surrender the policy now.

Hold it till maturity. After that you have the option to decide whether you want entire fund value to be used for buying annuity or commute 60% and use balance 40% to buy annuity.

Best wishes!!