Hi i have purchased sbi smart priviledge plan. I have taken for a single premium of 8 lakhs. Its been 6 months and i dont see any growth in my fund. In fact my amount is only decreasing. I really dont have much knowledge in stock market and all. Am very much worried about my money. If anyone have taken same plan pls share your experience in this

Ans: This SBI Life Smart Privilege Plan review delves into the plan's features to help you decide if it aligns with your financial goals. While it promises a blend of insurance and investment benefits, there are several drawbacks to consider before you invest.

Disadvantages of SBI Life Smart Privilege Plan:

Lower Returns: ULIPs typically underperform compared to pure investment options like mutual funds. Insurance and administrative charges eat into your returns. The review calculates that even with an 8% CAGR in underlying funds, the plan's Internal Rate of Return (IRR) is only 6.74%.

Multiple Charges: The plan comes with a variety of charges, including premium allocation charges (up to 5 years), policy administration charges, fund management charges, surrender charges (if you exit early), partial withdrawal charges, premium redirection charges, and mortality charges. These fees reduce your overall returns significantly.

Limited Liquidity: You're locked in for at least 5 years. There are surrender charges if you withdraw your money before the policy term ends, further restricting access to your invested amount.

Market Dependence: Unlike traditional life insurance, your returns depend on market performance and your chosen fund within the plan. This introduces investment risk.

No Loan Facility: Unlike some ULIPs, SBI Life Smart Privilege Plan doesn't allow you to take loans against your policy.

Lack of Transparency: The underlying funds in this plan are less transparent compared to those offered by mutual funds. This makes it difficult to assess the risks involved.

Alternatives to Consider:

PPF + Term Insurance: This combination offers guaranteed returns with PPF and pure life coverage with a term insurance plan. The review suggests a PPF investment with a term insurance plan might yield a better return (around ?1.63 Cr) compared to SBI Life Smart Privilege Plan (around ?1.57 Cr) for the same investment over 15 years.

ELSS Mutual Fund + Term Insurance: This option provides potentially higher returns with an ELSS Mutual Fund, but carries investment risk. However, the review estimates a potential return of ?2.5 Cr with an ELSS Mutual Fund compared to ?1.57 Cr with SBI Life Smart Privilege Plan (for the same investment over 15 years).

Before You Invest:

Investment Goals: Align your investment with your short-term or long-term financial goals.
Risk Tolerance: Consider your comfort level with market fluctuations.
Financial Advisor: Consult a financial advisor for personalized investment advice based on your needs and risk tolerance.
Conclusion:

The SBI Life Smart Privilege Plan might seem attractive, but the review highlights several disadvantages, particularly lower returns compared to alternatives. Consider exploring options like PPF or ELSS Mutual Funds with term insurance for potentially better returns and flexibility. Always consult a financial advisor before making any investment decisions.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in