Private life insurer SBI Life has recently announced the launch of Smart Income Protect, a traditional plan that offers guaranteed returns.
Like several other products launched in the last few months, this policy comes with a limited premium payment term, after which the payout period commences.
However, unlike most other plans, Smart Income Protect is a participating policy, entitling you to bonuses that the insurer may declare.
The policyholder is required to choose a premium payment term of five, ten or 15 years. The annual payouts will start once your chosen period comes to an end. This amount, 11% of the sum assured or the paid up sum assured, will be paid out over a period of 15 years. In addition, bonuses, if any, announced in the interim will be handed over to the policyholder as a lump-sum at maturity.
In case the policyholder dies before the end of term, the nominee will get the sum assured plus accumulated bonuses, if any.
According to the illustration in the product’s official communication, a 40-year-old policyholder paying premium of Rs 38,680 over 15 years will get annual payouts of Rs 55,000 for the next 15 years. In addition, if bonuses are declared, s/he will be entitled to lump-sum amount of Rs 3 lakh or Rs 1.68 lakh (assuming returns of 10% and 6% respectively).
The sum assured, which the nominee will get in the event of the policyholder’s death, will be Rs 5 lakh.
The policyholder can also choose to buy optional riders including accidental death benefit, accidental total and permanent disability and critical illness.
Upside: Risk-averse customers could find the combination of the guaranteed returns and possible bonuses attractive.
Downside: Like all other endowment plans, this one also lacks a transparent charge structure; policyholders do not get a clear picture of their premium amount actually invested.
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