Apr 27, 2009

Guaranteed ULIPs: Analysis of SBI Life SMART ULIP

I’m writing this post in response to a comment by a reader (see 'Amazing Fact about Life Insurance') who is in doubt whether ‘SMART ULIP’ from SBI Life is really smart and unique because it is offering a guaranteed NAV at the time of maturity based on the highest NAV during last 7 years.

Well, first let’s state a few facts about SBI Life-Smart Ulip. As per the official illustration and brochure of the SBI Life Insurance Company following facts come out about SMART ULIP:

1. Minimum annual premium is Rs 50,000. Premium paying term is 3 and 5 years while the policy term is 10 years.

2. Sum assured of SMART ULIP is 5 times the annual premium.

3. SMART ULIP offers only one fund option called “Flexi-Protect Fund”. While minimum investment in debt and equity is ‘NIL’, the maximum can be up to 100 per cent in both equity and debt.

4. As per the SBI Life-SMART ULIP official illustration which is based on a 40 year old individual paying an annual premium of Rs 50,000 for five years, maturity value at the end of 10 years is Rs. 3,03,469 if the invested money earns a rate of return (assumed) of 6% and Rs 4,09,954 if the invested money earns a rate of return (assumed) of 10%. Further, it states that ‘reduction in yield’ is 3.49% (for 6% interest rate) and 3.61% (for 10% interest rate), respectively. Put simply, as per the illustration IRR or the ‘Effective yield’ works out to be 2.51% and 6.39% for 6% and 10% rate of interest respectively.

However, if we calculate IRR of a cash outflow of Rs 50,000 each (at the beginning of first five years) and cash inflow of Rs 3,03,469 at the end of 10th year, IRR works out to be 2.44% instead of 2.51%. Similarly, for a cash inflow of Rs 4,09,954 the correct IRR is 6.33% and not 6.39%. However, this difference is not significant from the point of view of the purpose of this discussion.

5. The guaranteed NAV of SMART ULIP on maturity will be the highest of the NAV during the first seven years. In other words, if the NAV at the time of maturity (which is ten years) is less than the guaranteed NAV ( which will be the highest of the NAV during the first seven years) then guaranteed NAV will be payable.

SBI Life-SMART ULIP : Analysis
To better comprehend this analysis of SBI Life-SMART ULIP, you should first understand a few hidden secrets about ULIPs (Unit linked insurance plans). Now let’s analyse the features of SMART ULIP :

1. Low Risk Coverage: The risk coverage of SMART ULIP at just 5 times the annual premium is too low.

2. High Cost: SMART ULIP is a type I Ulip with an expense ratio of 3.61% (based on company illustration for a 40 year old individual) is too high as compared to expense ratio of best ULIPs based on IRR. In other word, IRR or ‘Net Yield’ of SMART ULIP is one of the lowest among all the ULIPs.

3. Lack of transparency: One of the advantage ULIPs have over traditional insurance plans is transparency. But, on this account also SMART ULIP is lacking. How? As per the brochure, while the minimum investment in equity and debt is specified as ‘NIL’, the maximum can be up to 100 per cent. Put another way, the company can invest in the debt and equity in any ratio as it deems fit since the fund investment is at the total discretion of the company. It is quite possible that the company may keep the majority or the entire investible surplus / funds parked in bank FDs and debt funds.

4. Lack of Flexibility: As there is only one fund option called “Flexi-Protect Fund’, the fund-switching facility in not available in SMART ULIP .

5. The Guarantee is meaningless: As regards the NAV guarantee in SMART ULIP, it is just another cheap marketing trick to garner more funds from unsuspecting investors. In fact, it is very unlikely that at the time of maturity NAV will be less than guaranteed NAV. It is highly improbable, if not impossible. Why?

First, please note that guaranteed NAV in SBI Life-SMART ULIP is the highest of the NAV during first seven years and not ten years (the duration of the Ulip plan). Second, the majority of the investment is probably going to be in debt. Now, tell me, what are the chances that the NAV at the end of 10thyear is going to be less than the NAV at the end of 7th year? Just go and ask any analyst or a portfolio manager and you’ll know.

The guarantee can make sense if the ULIP plan offers that the minimum investment in equity will be 50 per cent and the guaranteed NAV will be the highest of NAV during the entire term of the plan (and not just first seven years).

Finally, tell me do you pay any extra charges for getting assured returns from a PPF or a bank FD?

So, in summary, this Type-I ULIP product is low on insurance coverage with high expense ratio, lack of transparency & flexibility and no option for fund switching. These all demerits are on account of guaranteed NAV which is unlikely to materialize because anyway the maturity NAV will be higher than the guaranteed NAV.

This is my opinion. If you don’t agree or have a different point of view about the SBI Life-SMART ULIP , you can write in the Comment Box below.

Also see:

1. Is it Complexity or Confusopoly?

2. ULIPs - 5 Secrets

3. Capping of ULIP Charges by IRDA - A Review

4. Life Insurance - Most Amazing Thing

5. 5 Common Myths about Life Insurance

6. 10 FAQs about ULIPs


  1. I agree with the details provided. The guarantee is meaningless because of Nill in equity and the highest recorded NAV for seven years is of no meaning....

  2. These kinds of ULIP schemes cheat people and the layman gets fooled by the tricks.

  3. Dear Fisher ..

    Many thanks for the review. Me and my friends were looking for some feedback/reviews about this scheme recently.

    Just playing the devil's advocate here..From what I can see on the SBI life website, this plan was launched in March 2009 with unit face value = Rs 10.00. As of 11/05/09, the NAV is slightly over 12.20. That is over 20% appreciation in about 2 months. If the majority of fund was parked in fixed/Debt instruments, would it have made such returns in such a short time span??.

    The charges look steep indeed. But, that would not be surprising considering the fact that this fund would need very active management - i.e assuming it invests a significant percentage in equities!.

    Thanks again

  4. Hi Joe,

    Great point, well said! However, aren’t you really missing the woods for the trees?

    As you must be aware that initially at the time of subscription of SBI Life-SMART ULIP, your money is put into Money Market Fund which is a 100% debt fund and later on, on specific reset dates, it gets transferred to FlexiProtect Fund. Now as on 13 May 2009, NAV of Flexi Protect Fund is 12.45 and that of Money Market Fund is 12.42 (as per SBI Life Website).

    Can you please explain how can the NAV of both funds is almost same?

    Second, assuming that FlexiProtect Fund of SBI Life-SMARTULIP is, in fact, investing the majority corpus in equities right now, do you have any assurance that after the closing of the subscription period, or say after two or three years, they won’t transfer it entirely (or the majority portion) to debt?

  5. Dear Fisher i invested Rs 1Lac in SBI Life Smart UlIP for 5 years premium plan .So according to you what should i do now.shall i stop paying or reduce my premium time for 3 years and later withdraw the amount.plz advise

  6. Hi Mulkeet,

    It is good to know that you realize your folly. Remember the old adage, “Fool me once, shame on you; fool me twice shame on me”. Making mistakes is a part of life. However, it is very important to learn from them and move on.

    Anyhow, let me inform you that although you made the mistake of investing in SBI Life-SMART ULIP, it turned out to be a blessing in guise. How? There are basically two reasons behind it. First, as of now, FlexiProtect fund of SBI Life-SMART ULIP is indeed invested in equities (I don’t know the exact proportion). Second, you happened to invest in the SMART ULIP at a time when the markets were languishing at the near bottom.

    As on 18th May 2009 (i.e., yesterday) the NAV of the FlexiProtect Fund of the SBI SMART ULIP was Rs 13.84 as against NAV of Rs 10.19 as on 1/04/09 which translates into an extraordinary gain of roughly 36% with in 47 days. Thanks to Indian voters, yesterday Sensex jumped by 2,110.79 points (17.34%), the biggest single-day gain in the history of Sensex. Consequently, the NAV of FlexiProtect fund went by Rs 1.34 (from Rs 12.50 to Rs 13.84), a single day appreciation of 10.72% in the NAV.

    However, don’t think that I’m endorsing the SBI Life-SMART ULIP. The current excellent performance is entirely due to market factors and not because of any special features of “SBI Life-SMART ULIP”. Besides, doubt regarding shifting of the entire or majority corpus from equity to debt still remains.

    Finally, my advice to you is to remain invested in SMART ULIP (because policy surrender in the initial years is too costly); keep on paying the premiums and move out in the fifth year when the surrender charges falls to nil. In the mean time, have fun and improve your MQ so that you don’t commit such financial mistakes in future.

  7. Hi Mulkeet,

    Just to make you more happy, the highest NAV recorded for SMART ULIP is 14.2, which means 42% growth, at this recession. So, it will definitely perform well in coming years and our FV will be rewarding. Don't worry.

    Finally SBI is more than 200 year old company, and not a new and inexperienced entrant. They don't go by theories but by experience.

    Will you not go to a doctor by his experience? or by his education qualifications?

    And for no reason they received The Best Insurer award for 2008 from outlook money.
    All the very best.

  8. Subbu, how does the Outlook Money ranking make a difference? While ranking the life insurance companies / products, the choice is not between the good and the bad but between the bad and the worst.

    Right now, the basic premise on which entire life insurance industry is based is flawed.

    Tell me, what’s the definition of life insurance or assurance? Why call yourself a life insurance company when you’ve no interest in providing insurance (which means providing financial protection to the family of life assured in the case of his death). The fact is that all of you are running investment companies (and that too at a very exorbitant cost) in the guise of life insurance business. Is it ethical? But who cares?

    Furthermore let me correct you, you’re not a doctor but rather a pharma company interested in selling your financial drugs through chemists (agents) who can’t even correctly spell the name of the medicines they’re selling (and that too without any doctor’s prescription). And, financial doctor’s (who are needed the most) are completely missing from the scene.

  9. SBI Life SMART ULIP a nightmare of charges

    Dear Friends,
    PLease dnt get caught with the catchy line of SMART ULIP from SBI, please see the Benefit Illustration.
    Just to give you a snapshot considering we go for a 50000 premium 5 year plan for a male of 30 years and you will realise that u spend a whopping 11.5% only against charges such as Policy Administration, premium allocation, sum assured and mortality other than the fund management charge (which is also quite high aprroximately 11.5 % again at a conservative interest rate of 6%) so u actually end up spending 55000 - 57000 only against charges in your 10 year term.
    Now for all those investors who want to invest or have invested for the purposes of getting tax free returns by 10(10 D), u have already lost aprrox 22% into charges in your ten year term and your yield thereby decreases....suggest to put directly into Top performing Mutual funds and in Ten years you will get much much better yields for the same investment even after 30% tax cut you have to pay over your returns.

    And Mr. Fisher I really liked your reply to Mr. SUBBU.

  10. n_praman@bsnl.inSeptember 14, 2009

    Age taken for calculation is 40 years; when it is considered for the person in the age group of 25 to 30 years, we do see the good return on investment. Taking of 40 years as set example, cannot be considered for all. Hence, I do (First) object over the calculation based image.

    My second objection is: No switching option. When, one has capablity to perform switching at the periodic interval, and has enough time to watch the movement, why one should opt for ULIP; instead they can directly invest in stock market. The main purpose of investment by an ordinary individual is diverted, here and one cannot expect the meat in vegetable vendor shop.

    My third objection is : If NAV goes down at the end of the term, what???? It is very clear they would be paid the highest NAV over 168 declared dates. Hence, one cannot see the NAV goes down and no need to put graph in his mind, always; which may invite BP as in the case of stock traders.

    On the above major point of view and the 3 objections, the statement made by an analyst is not correct; which seems like a comparison of Elite group with the Poverty group. Or in other words Stock traders with the Ordinary investors.

  11. NAV ca be high as we can see here, but as we all know that the charges are deducted thru cancelling the units and not by lowering the NAV. SO net yield is low

  12. Please post a comparison of ICIC pru life pinnacle, SBI smart ULIP, TATA AIG Invest Assure Apex. And resommend the best one. send me your reply / post URL to gbhasha(at)gmail(dot)com

  13. This comment has been removed by a blog administrator.

  14. Fisher,

    Thanks for the great insight, so what is the option? SIP with a term plan or is there any better approach

  15. Kirti: Yes, the simple and best approach is to go for a term plan for life insurance and select a good mutual fund for investment purpose and make regular investments in it either yourself or through the medium of SIPs.

  16. Thanks Fisher...a follow up question. The financial advisers typically argue that the annual premium you are paying for term plan is sunk money where as in case of ULIP the mortality charges come down over a period of time. Any counter thoughts on this

  17. Kirti: I think I need not answer this question. If you carefully read other posts related to life insurance particularly term plans and Ulips published in this blog, you’ll understand.

  18. Well, Fisher gave his opinion and that may be right or wrong to you depending upon your situation and your investment goals. In my opinion, this smart ULIP definitely has high cost asociated and is not at all suited as an investment vehicle if you have time in your hands to manage your own portfolio of mutual funds or equities. It is debatable whether it is a good investment vehicle at all when compared with other mutual funds out there. It could however prove as a better investment vehicle if we see another correction like the recent one after the seven years (period of highest NAV calculation) and fund maturity (10 years). What are the chances of that happening? Certainly more than 0% but not very high either (or I don't know). So, if you need protection against this unknown risk (especially people 10 or so years away from retirement), this could be an option to consider. Because, although there is no certainty of getting benefits of equity investment, there is an opportunity to get equity benefits (if fund keeps investing in equities) with downside protection at the time when you really need the money (at maturity). If you are going to work for a long time before you retire, hardcore equity investment would still be a better option although the risk would be higher too. Just my 2 cents as I see it. Of course I am not an investment expert or professional but I do actively manage my personal investments.

  19. WEll there are people who just think think think and think ..

    Whether its cheap publicity or Marketing Gimik i have invested in sbi smart plus it started with NAV AT 10 reached at 15.16 and again at 14.16 .( RS 99 500)
    I say when the race is on try to participate rather that discussing it >People compare ulip plan with charges but they are open charges not hiden chargeslike endowment plans ..mortality charges are low as compare to term insurance .there are other benefits with ULIP .However people sale it in wrong way Private insurance company manage a cumulative asset of 31 billion dollar and ulip contributes to a larger extend .
    well i appreciate the analysis given by the author on a certain product ...


  20. Hi Fisher, I understand there has to be conservative investment philosophy behind such guaranteed instrument. Can you enlighten how exactly the fund is managed?

  21. Niyati: Sorry! Nobody knows.

  22. Hi Fisher, I am Sunil, 31 years old from Hyderabad. I ALMOST decided to buy 'one among the three ULIPs' but revisiting and might end-up not buying any of those.
    In general, you suggested to invest in term+MFs and I was doing the same {majorly to the extent of Rs.1 Lac/to the extent of 'Sec. 80(c)benifit}.
    I can save upto Rs.1 Lakh every year, I invest Rs. 26000 in 'LICs-Jeevan Anand', Rs. 10000 in 'LICs-Jeevan Anmol' and been investing about Rs.50000 in ELSS/MF. Is this the right blend? Oflate, with the bombardment of ads on 'Retirement plans', I started thinking whether to invest in them. Please suggest/comment on 1)my present investment portfolio/allocation 2)Your inputs on 'Retirement Plans'. My risk apetite is medium and Your sugestions HELPS me in deciding my 2010 investment plans.

  23. Sunil: For section 80C, life insurance and retirement plans are a strict no-no! Instead go for ELSS and PPF.

    For more details, spare a few moments of your precious time to read the blog.

  24. fine explanation,

  25. Thanks for that piece Fisher, however can U comment on Retirement plans in general? I was worried about the charges etc. Is the guaranteed monthly pension good benefit/overweighs the overheads? or are there any alternative investment modes to cater to the financial needs after retirement?


  26. Sunil, I’ve yet to discuss the retirement plans of life insurance companies in detail.

    Anyhow, again the best approach for retirement planning is to go for PF and PPF for debt, Gold ETFs for gold and good diversified equity funds for equity.

  27. All Insurance company in India are cheats. I get call from ICICI Prudential that because of aniversary year they are giving special plan with zero admin charges but when I got the plan document they charged flat 25%. I called the advisor and he said it is by mistake and new document will be coming soon. No new document came and because 15 period passed , they decline my complaint for fraud and cheating. Here the ICICI Pru employee first gave false information and misguided me, he didn't advised me to cancel the policy but said to wait for new policy document. Anyway let them manage my Rs 30 thousand. I closed all my accounts with ICICI, ICICIDirect worth around 1 crores. emailed to all the NRI friends and forums.

  28. Raj: What's the lesson we learn from this?

    Precaution is always better than cure.

  29. Krishan Kumar Sharma 6th of Jan 2010
    Tomarrow i am going to invest Rs 50000/- in SBI SMART ULIP.After reading Fisher explaination i have changed my mind now i am not investing in SBI ULIP and I am very much thankful to FISHER for the wonderful explaination.

  30. Hi,
    Could you please share some information about ICICI Prudential Pinnacle product as well? Is this product as expensive as SBI's Smart ULIP and so avoidable?

  31. Ajay: Ok, I might try it. Just wait for sometime.

  32. sasi:i have started the SBI SMART ULIP just three months back.I have come across lot of speculations about ulip plans.will i be able to terminate the policy and get back the money?....

  33. Good and Valuable guidelines given by Fisher.The ULIP articles IN outlook can be misleading as one has to study the Plan before investments.The ULIP Distributors are taught not to speak much about charges. So Buyers Beware.


  34. Hi Fisher,
    I'm 31 year old. I was thinking of invest in ICICI Prudential Pinnacle Fund. But after reading your explanation I'm confused what to do. So would you please share some information about ICICI Prudential Pinnacle product? Should I go ahead with this product or not?

  35. Deb,

    Why are you people forcing me to write a review of ICICI Prudential Pinnacle when you already know that I never write a positive review of insurance products particularly ULIPs?

    Anyway, there should be no reason to feel confused. If there is any doubt.. read the post again. And if doubt still remains, read the entire blog.

  36. Hi Fisher,

    My mom just got retired in January 2010 and through a friend reference invested in SBI Smart ULIP (200000 p.a. x 3 years) on 6th Feb, 2010, without going into details. Is there any way to stop this policy being processed (payment is made by ECS) and if not, I just wanted to know would there be any deduction if I return the policy during the freelook period.


  37. Aditya,

    A 60-year old retired women investing in a life insurance..really Amazing! Is this some kind of joke.. if not, then it’s really smart of SBI Life.

    Anyway, it’s good that you’ve realized the mistake well in time. If you return the policy with in the free look period, the only deduction would be stamp duty & cost of medical check-up.. a very small price to pay. Just go ahead.. don’t delay.

  38. Thanx a lot Fisher for that information.

    One more thing I request everybody in this forum. If anybody of you have invested in SBI Smart ULIP Series I, could you plz tell me know the amount you have invested (yearly premium) and the current value of money at this moment. You can get the value by logging into account information on SBI Life Insurance website. I need such figures so that I can put those before my parents and if possible to get them out of this policy.


  39. I was planning to invest in SBI Smart Ulip,but after reading this article i have changed my mind.
    Can you please advise where can i invest some 30000 Rupees foer tax saving purposes. i am really confused. i am 35 years old.

    Gunjan Singh

  40. Gunjan,

    Are you expecting me to hold your hand and spoon feed you? See..information is already available on this blog..learn to make some efforts on your part.

  41. Hi Fisher,Gunjan And All Confuced Mind Guys,

    BE PRACTICAL MAN....Any way SBI LIFE's SMART ULIP NAV grow from 10 to 16 in 10 months.It is 60% growth in 10 months.Same time market grow 81%.If Market goes to 35000 in 2015.... this NAV WILL COMES TO 35.After that,If sensex will go for 15000 or 45000...NO PROBLEM TO YOU.ANYWAY YOU WILL GET MINIMUM 200% RETURN IN SMART ULIP....BUT,In Money market or Bond market you have to wait for this for 25 yrs.IN mutual fund and in other ULIPS you have to watch carefully for the full period also you have to transfer funds to other funds(Like Balance and Bond funds).SEE,IF YOU HAVE MORE KNOWLEDGE ABOUT SHARE MARKET, ULIPS,MUTUAL FUNDS PUT YOUR MONEY ANYWHERE AND KEEP WATCH,OTHERWISE SIMPLY PUT IT IN SBI LIFE SMART ULIP.YOU'LL NEVER LOSE YOUR MONEY.


  42. Poor Rich ManMarch 17, 2010

    Can anyone tell where SBI will pay everyone from.
    Lets say they collect 100 Crores in 2010 from all of us when NAV is 10.
    The NAV rises to 50 anytime in the next 6 years & falls to 20 in the seventh year. It remains stagnant between 20 & 23 in the next three years.
    In 2020 SBI has to return 500 Crores to us ( at highest NAV ) when their fund corpus has reduced to 200 -230 Crores ( at current NAV). Where will they get money to meet this shortfall ??
    Guys understand nothing in life comes free.
    These schemes are a SCAM . I dont know what IRDA is doing ??

  43. I have been reading this blog today on insurance products as I was looking out for a good plan to invest in for my child. I had obtained schemes like Komal Jeevan and Child Career Plan just last week. I also did a rough calculation (coz the returns are not in one instalment to be able to work out easily but spread over 5 years). The entire policy is for 25 years and the return averages around 7.5% which is ridiculous/apalling considering the period in question. I might as well work backward and invest a lumpsum in NSC/KVP and keep rotating it every 6/8 years and behold i will have the same/ better returns at the end of the period. Plus investing for my child theres no tax benefit that I can avail.
    Another thing I considered was Jeevan Saral - the Golden Peacock Award winner. On researching the net I found an article where someone mentioned that the Maturity values as given on an excel sheet is not what arrives finally on the certificate issued by LIC. This led me to approach a different agent for a quote on Jeevan Saral. And though I quite didnt expect it to be so...it was indeed different.
    After reading most of the posts in the blog...now it is but obvious that Life Insurance should be just that...insuring your/spouses life against unpredictable eventualities. Anything else they offer is just trying to pull wool over our eyes.
    Also I have learnt its good to remember "No free lunches in this world" - its very difficult to resist the lure of easy money which is what most of the schemes promise. Its better to be prudent and spend atleast a little time in managing our money (after all we spend so much in trying to earn it).
    Since we are on the topic...for more money management ideas books like Automatic Millionaire, Start Late, Finish Rich by David Bach is really worth reading. Atleast it does not talk abt "being rich overnight" and gives some useful tips on savings and investing.
    Good luck to all in the effort of money management :-)...while I too begin with baby steps along this path. Thanks Fisher for making it all so interesting and informative and at the same time for bringing out the importance of managing your own funds.
    Cheers, Nisha

  44. I also liked the post by Poor Rich Man...its very true what he says.....when funds stand reduced after a certain time..how will they come up with the money to pay off the assured value??
    Maybe the govt will bail them out with tax-payers money???

  45. Fisher hats off to you. You saved my money

  46. ashish agarwalApril 09, 2010

    dear fisher,
    u r right. i am also fooled by SBI LIFE. i have taken this policy in
    hussle but nw i find it worthless. one should really complete his homework before buying a policy. can u suggest a reliable health insurance policy for a family of three with opd benefits please.
    ashish agarwal

  47. Hi Nisha

    I just read your post and found that you have taken Komal Jeevan for your kid. I would like to alert you that the returns from Komal Jeevan are not spread over 5 years but 8 years (if I am not wrong). Like for a 200,000 policy, when your kid turn 18, he would get

    Age Money back from policy
    18 yrs 40,000
    20 yrs 40,000
    22 yrs 60,000
    24 yrs 60,000
    26 yrs Rest of declared bonus, incentives (if any) etc.

    But, the time period where you and your kid need most of the money is when his age is 18-22 years. So this policy does not solve the money back purpose, it gives you majority of the amount when it is not needed or may be not worth. I myself have surrendered the policy after contiuing it for 6 years at a loss of 25000. If you need insurance, you should take any term plan and invest rest of your money in other instruments available in the market and not just buying policies like komal jeevan, jeevan saral, nav guarantee schemes, etc. All these policies are of no use and merely provide a return of 7-8% at the end of the duration and nothing more than that. Invest your money in PPF or Post office schemes where you can take advantage of compound interest also. Keep aside some money for good MFs and take ELSS for tax saving and for insurance, buy any term policy for 25-30 years.

    Hope this will help.


  48. Hi Aditya,

    Thanks for the response. I was def considering the policy last week and as per the details provided to me by the LIC Agent the return is spread over almost 9 years. The one that I was talking abt i guess was the Child Career plan. Any which ways I was in the process of calculating the IRR (estimate) which comes to only around 7.5%. When you consider the time period of investment this really sucks big time. Anyways have made up my mind not to go in for any of these crappy policies. Will now spend sometime in figuring out a good mix for my investment basket. Ofcourse will surely buy a term policy for myself too. Apparently these get cheaper as time goes. So its a good idea to review the policy every 5 years and to discontinue earlier one and buy a fresh one for higher value or retain same value paying lower premia. Any views/opinions on this?? Thanks once again.

    Rgds, Nisha

  49. I have invested Rs 50,000/-in SBIULIP on 31-3-2010. The duration for payment of premium is 3 years. I am confused. have I made a mistake.


  50. Thanks Mr. Fisher...your analysis is really very true. I was thinking to invest in SBI smart ulip...but now i ll not do.

  51. hello mr fisher i had just invested rs one lac in sbi life unit plus 3 pension policy and 5o,ooo in highest nav plan for 3 terms.i want to read ur views on these two.just 2 days ago i got them so i can surrender them free of charge plz reply

  52. I completely agree with Mr. Fisher that ULIPs are just a way for companies to cheat. They do not have any transparency about the portfolio, charges deducted etc. and have poor returns( taking into account - inflation). I have invested in one ULIP when I started my career and didn't knew anything about investment options. But, later on, I increased my knowledge about insurance and investment products. Now, I have invested in mutual funds and have taken term insurance for protection. I think that most of the people make the mistake of taking insurance as investment.

    As for my ULIP, fortunately,I kept investing and due to recession it has given me good returns.

    I have devised a policy for myself, before investing,as follows -
    1) All agents are only interested in their commissions and not in your welfare.
    2) All agents are cheat( Ask them to write the features/discounts mentioned by them in an official email or on a official letterhead. They'll never do it. I have tried it. Call their customer care then and there for confirmation of their claims.)
    4) Never buy a ULIP.

  53. I am trying to invest in ULIP or tax saver Mutual fund for tax purpose.After reading all these comments it looks paying tax itself is better option.Anybody can recommend better tax saving options which should be able to take out after locking period.

  54. i want to know is it better to having a fixd deposit with bank rather then having a smart ulip of sbi life

  55. Dear Fisher,

    I have recently (Aug'2010) invested 5lac, in SBI Life Smart Ulip Series II. Am bit concerned post reading the above reviews. So, total 15lac in 3yrs. I got carried away by SBI Brand name and security for fund. I can wait till 10yrs for the maturity. Will it give me a good return or What would be your advice to me at this stage.

    Rgds Raj

  56. Dear All,

    I have read the entire blog n found it quite interesting. Some comments and analyses are really good; especially those from Fisher. I would like to contribute to this blog by adding some of my views about the Insurance planning.

    I have noticed some common concerns and confusions here regarding insurance and tax. I'll adress these issues in individual posts. These are listed below:
    1. The difficulties in choosing between ULIPs and Term plans
    2. Insurance for Tax saving purposes
    3. Alternatives for availing deduction u/s 80
    4. How much insurance cover one should have?

    Choosing between ULIPs and Term Plans: First of all, I agree completely with fisher in this regard. Insurance products should never be looked at as investments. There is a simple basic reasoning. Insurance is meant for protecting oneself from unforeseen undesirable incidences such as death. When a life insurer sells a policy worth 20,00,000 to you, it assumes your risk and promises to pay the sum of 20,00,000 to you at the maturity or to your nominee in the event of your unfortunate death. In case of ULIP, unlike MFs, the risk of the investment is not completely borne by the insured person. If your MF investment performs poorly you may end up with nothing. However, even if the value of investment done by the ULIP drops to 0, the insurer still has to pay you the sum of 20,00,000. So the insurer has to protect the capital and invest in low risk instruments to take care of the eventuality of your claim. This results in more allocation to debt instruments and your investment returns suffer. Instead, if you stick to the basic principle of insurance, you should take a pure cover on your life i.e. Term Plan. This option is much cheaper than the ULIPs and you are left with a substantial surplus which you can invest in good MFs or other good equity instruments according to your risk profile. You can consult your financial adviser for the correct estimate of your risk appetite and the suitable investment avenues for you.

    Best regards,
    Amol Sathe
    Financial Planner and Adviser

  57. I red this blog very very late and hence I paid a price of investing in SBI Smart ULIP. But when I checked the policy document, the premium should be paid at least for 6 months (in my case) for a policy surrender. The amount will be refunded at the first day of 4th year. Under current market condition my lose will not be too much :(

    Lesson learnt “Fool me once, shame on you; fool me twice shame on me”.

  58. @Dominic

    I just wanted to know how much premium are you paying and the clause on policy bond where you have found this information about premium and what exactly it means (because I also want to surrender) as I am also stuck in this SBI Smart ULIP and want to get rid of it as soon as possible. My premium amount is 2,00,000 per annum x 3 years.



  59. Hello Fisher,

    After extensively reading your blog and many other sources I've come to the conclusion that ULIPs are absolutely avoidable especially the one's guaranteeing higher NAV's.
    Now I am a 22 year old first time investor mainly interested in tax savings under section 80c.
    Now I've been considering the ULIP option, since the market currently is incredibly high (20000 pts!) investing in ELSS does not seem favorable.
    So could you recommend a ULIP (mainly because of their option to switch between debt and equity) which will be more suitable to my needs i.e basically tax saving and decent returns and don't really care about the insurance and would need to withdraw the amnt at 5yrs.
    or should I dump this option and go for an ELSS with SIP not caring about the current high levels and daring to have an optimistic view of the future, if so then which would you recommend? Canera Robeco equity tax saver or HDFC Taxsaver?

  60. Kate,

    You should definitely go for ELSS…to choose the best ELSS, read ‘Best ELSS Funds for 2009-10’.

  61. Are the returns from these ulips taxable on maturity as part of income for that year?

  62. Dear fisher,

    Thanks for the comments highleted by you regarding sbi life S B I LIFE SMART ULIP highest N A v. Have you posted your observations to SBI LIFE FOR THEIR OR THEIR COMMENTS. Needles to mention that SBI LIFE is the only company which does not lend their palms for FDI. As regards to liquidity of the policys on maturity, company is thousand times stronger than other pvt insurancce companies As an investor my worry is whether my investment will give reasonable returns and life cover to take care of my family. There is absolutely no harm in trusting SBI LIFE .



    1. Mr Annymous

      Better than this plan, you would have put in LIC Jeevan anand.

      1000 times better.

      I think you have not invested in this that's why you are not realizing the pain of ours.


    2. Mr Annymous

      Better than this plan, you pay the amount to a charity house.

      10,000 times better. You may go to heaven

      SBI Life takes you to hell for sure

  63. How to get the fund value of sbi smart ulip flexi fund through online?

  64. Dear Friends,
    It is too late to me when I reading this blog.I have invested in SBI LIFE SMART ULIP plan @ Rs50000.00per annum for three years on march 2009.Now after three years when I have invested Total Rs 150000.00.my fund value is only Rs 141000.00.That is a huge loss.what should I do?? please suggest me.Should I wait for 7 years to rise market or withdraw my money immediately.

  65. This blog is an eye opener. I just read it just one day before issuing Rs. 500000.00 cheque. I have changed my mind.

    Thanks to Fisher and all who contributed in this blog.

  66. AnonymousJune 06, 2015

    Dear fisher, Thank you very much for above detailed article, I am currently living abroad. Last year when I visited local SBI branch with my wife I ended up buying two sbi life smart power insurance level cover policies.(1) My policy is for 10 years, premium Rs. 99000 per year, fund is bond fund, (2) My wife's policy is the same with Rs. 50000 annual premium. Buying this policies was a big mistake as I already have 2 life insurance policies and was only looking for pure investment.. Now first year premiums have already been paid Rs. 99000+50000 and second is due on September 2015. I have decided to get rid of both policies with minimum loss. Please advise me which is the best way to stop/terminate or cancel those policies?? Thank you in advice

  67. I spend 50,000 for 3 years starting from 1st march 2009 in Smart ULIP.

    In between in 2012, I checked the value was 141000 but in Dec 2015 it is now nearly 190000, A return of 25% approx in 6 years with insurance is, I think a good deal. Need your comment on this Fisher.

    1. You gave 50000 for first three years. If you have put it in FD, you would have got 8% per year. Which is 4000 per year for each 50k. That would come around 60000. Now you have got only 40000 through ULIP. There is also a catch. Returns of FD is taxable but not ULIP. For example, for my income I have to pay 20% of 60000, which is 12000. So What I would get actually would be 48000, when compared to 40000 through ULIP.

  68. AnonymousJune 10, 2016



  69. Hi I have invested in SBI life SMart Elite with a annual premium of 2lank. It is a balanced fund. Should I stop paying the premium or continue. I think it is risky.


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