The Hindu Business Line : SBI Life Money Back Plan

With the launch of its money-back plan a few days ago, SBI Life is the latest to join the list of insurance companies with such a plan in its portfolio. Let us look at how the plan works and what its key features are.

How the plan works

Premium payments have to be made over the entire plan duration, during which the policyholder will receive benefits in a phased manner.

For instance, if one chooses a 10-year plan the policyholder will receive payouts in year eight, nine and 10. Apart from the 10-year term, one could also opt for a 15-, 20-, or 25-year term.

In the case of such plans, there are five payouts made at equal intervals. The final payout will also include a component of bonus which is, however, not guaranteed and is subject to the company's investment performance.

What the policyholder will cumulatively receive on maturity will be a function of the plan duration. In the case of a 10-year plan, the cumulative amount received will be 110 per cent of the basic sum assured along with vested bonuses.

If one opts for the 25-year plan, the total payout would be 125 per cent of the basic sum assured along with vested bonuses. Essentially, the total payout rises with an increase in the plan's duration.

As the benefits are paid out in a staggered fashion, entry into the policy can be timed in such a way that the payouts coincide with important milestones, such as the entry of one's child into college, or marriage. The payout will come in handy to meet out the expenses.

Payout on death

If the policyholder dies during the plan's tenure, the sum assured along with the vested bonus accumulated till that date is paid to the beneficiary.

This is regardless of the earlier milestone payments that the policyholder would have received.

Riders

A set of four riders can also be appended. They include a term rider for added risk cover, a Critical Illness Rider — under which a payout will be made if the policyholder is diagnosed to be suffering from one of six company-specified illnesses — Accidental Death and Permanent Disability Rider; and a Waiver of Premium Rider.

(Readers are requested to compare products featured under this column with similar ones offered by other players.)

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