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SBI Life Insurance has launched a guaranteed traditional savings plan called Smart Income Protect. It offers tax-free regular income at a guaranteed rate of 11 per cent of the sum assured or paid sum assured, for 15 years after maturity.
The offer comes with a life insurance cover. The policyholder will receive a lump sum bonus at maturity, and regular guaranteed payout for 15 years after the maturity. The lump sum bonus comprises vested reversionary bonuses and terminal bonus, if any.
In the event of the policyholder's death, the sum assured is immediately payable to policyholders' nominee or legal heir as a lump sum, along with the bonuses.
Customers can opt for a premium payment term of five, 10 or 15 years. Offering the possibility of enhancing protection, the plan is equipped with wide range of riders including accidental death benefit rider, accidental total and permanent disability rider, and Criti Care 13 non-linked rider, according to a press release issued by the company.
For instance, a policyholder aged 40 years invests Rs 38,680 in SBI Life's Smart Income Protect every year for the next 15 years. At maturity, he would receive a lump sum amount of Rs 3 lakh or Rs 1.68 lakh, projected at 10 percent or six per cent respectively, as vested reversionary bonus. Further, he will continue to receive tax-free annual payouts of Rs 55,000 for 15 years, after maturity. Also, in the case of an unfortunate event during his premium payment term, his nominee or legal heir would receive an assured amount of Rs 5 lakh, the release said.
However, experts said one should also look at the time value of money, since the payout will start only upon maturity.
According to Akshay Mehrotra, chief marketing officer at Policybazaar.com, while buying an insurance policy that offers guaranteed savings, one should look at the internal rate of return (IRR) and the total amount that one will get back at maturity.
"In this policy, the actual return will work out to about five-six per cent, and not 11 per cent, since the money will come to you only after 15 years. So, why should you not look at it when bank fixed deposits are offering returns of nine per cent or unit linked plans are offering eight per cent?" Mehrotra asks.