Overview

SBI Smart Scholar was a Unit-Linked Insurance Plan (ULIP) offered by SBI Life Insurance to help parents build a market-linked corpus for their child's future while providing life insurance protection. The plan has since been withdrawn and is no longer available for new purchases. SBI Life now offers Smart Scholar Plus as its successor for new customers.

Eligibility Criteria:

  • Parent Entry Age: 18 to 50 years
  • Child Entry Age: 0 to 17 years
  • Policy Term: 8 to 25 years
  • Premium Payment Options: Single pay, limited pay, and regular pay.

Under SBI Smart Scholar, the parent was the life assured, while the policy aimed to create a corpus for the child's future education and other financial milestones. The plan combined life cover with market-linked investments and included a Premium Payor Waiver Benefit (PPWB) under eligible regular and limited pay policies.

Choosing a child insurance plan is a long-term financial decision, especially when it combines life insurance with market-linked investments. Although SBI Smart Scholar has been withdrawn, many existing policyholders and prospective buyers still search for the plan.

This guide covers the key details of the SBI Smart Scholar plan, including how the plan worked, its fund options, charges, benefits, and who it was suitable for. It also includes a brief overview of Smart Scholar Plus, the plan that has replaced it.

Before buying a child ULIP, make sure your family's protection needs are covered. Book a free call or chat with a Ditto advisor on WhatsApp.

What Is SBI Smart Scholar?

SBI Smart Scholar was an individual, unit-linked, non-participating child insurance plan offered by SBI Life Insurance. It was designed to help parents build a market-linked corpus for their child's future while providing life insurance protection.

Under the plan, the parent was the life assured and paid the premiums. After deducting the applicable policy charges, the remaining premium was invested in market-linked funds chosen by the policyholder.

At maturity:

    • The policyholder received the fund value if the life assured survived the policy term.
    • The child received the fund value if the life assured died during the policy term.

Smart Scholar Plus (Current Version)

SBI Smart Scholar has been withdrawn and is no longer available for new purchases. SBI Life now offers Smart Scholar Plus, the successor child ULIP with updated features, fund options, benefits, and charges. Existing SBI Smart Scholar policyholders continue to be covered under the terms of their original policy, while new customers can only purchase Smart Scholar Plus.

Key Features of SBI Smart Scholar

    • Eligibility and Policy Term: The plan was available for parents aged 18 to 50 years with children aged 0 to 17 years at entry. Depending on the option selected, the policy term ranged from 8 to 25 years.
    • Loyalty Additions: Eligible in-force policies received loyalty additions in the form of additional fund units at specified intervals based on the selected policy term. These additions aimed to enhance the fund value over the long term. Reduced paid-up policies were not eligible for loyalty additions.
    • Accident Benefit: The plan offered accidental death and accidental total and permanent disability benefits under eligible regular pay and limited pay policies. The accident benefit sum assured was equal to the base plan's sum assured, subject to a maximum limit of ₹50 lakh per life under the product. In the event of accidental permanent disability, the benefit was paid in 10 equal annual installments.
    • Life Cover With Premium Payor Waiver Benefit: If the insured parent died during the policy term under an eligible regular pay or limited pay policy, SBI Life paid the higher of the sum assured or 105% of the total premiums paid as the death benefit. All future premiums were waived under the Premium Payor Waiver Benefit (PPWB), allowing the policy to continue until maturity. This benefit was not available under single-pay or reduced paid-up policies.
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Fund Options and Investment Strategy

SBI Smart Scholar offered 10 market-linked investment funds, allowing policyholders to invest according to their risk appetite and their child's financial goals. The available funds included Equity Fund, Top 300 Fund, Equity Optimizer Fund, Growth Fund, Balanced Fund, Bond Fund, Money Market Fund, Bond Optimizer Fund, Pure Fund, and Blue Chip Fund.

Policyholders could invest in one or more funds, with a minimum allocation of 1% in each selected fund, provided the total allocation did not exceed 100% of the premium. The plan offered funds with varying levels of exposure to equity, debt, and money markets. The investment objective, asset allocation, risk profile, and fund management charges for each fund were detailed in the product brochure.

1) Fund Switching: The plan allowed policyholders to change their fund allocation during the policy term.

    • Two free fund switches were available in each policy year.
    • Additional fund switches were charged at ₹100 per request.
    • The minimum switch amount was ₹5,000.
    • Unused free switches could not be carried forward to the next policy year.

2) Premium Redirection: From the second policy year, policyholders could change the allocation of future premiums without affecting their existing investments.

    • One premium redirection was allowed free of charge every policy year.
    • Additional requests attracted a charge of ₹100 each.

3) Partial Withdrawals: The plan permitted partial withdrawals from the sixth policy year, provided premiums had been paid for the first five policy years.

The following conditions applied:

    • Minimum Withdrawal: ₹5,000 (in multiples of ₹1,000).
    • Maximum Withdrawal: 15% of the fund value.
    • One free withdrawal every policy year.
    • A maximum of two withdrawals in a policy year.
    • Up to five withdrawals during the policy term for policy terms of up to 10 years.
    • Up to 10 withdrawals for policy terms exceeding 10 years.
    • Withdrawals could not reduce the fund value below 50% of the total premiums paid.

If the life assured died during the policy term, the nominee or appointee could not make partial withdrawals until the child attained the age of majority.

4) Market-Linked Returns: As a ULIP, SBI Smart Scholar did not offer guaranteed returns. The fund value depended on the Net Asset Value (NAV) and the performance of the selected investment funds.

SBI Life illustrated potential maturity values using assumed annual gross returns of 4% and 8% after applicable charges, as prescribed by the Insurance Regulatory and Development Authority of India (IRDAI). These were only illustrative scenarios and should not be interpreted as guaranteed or expected returns.

Ditto's Take: Like most ULIPs, SBI Smart Scholar combined insurance with market-linked investments. Before investing in a similar child ULIP, it is worth comparing the costs, flexibility, and life cover with alternatives such as a standalone term insurance plan combined with investments in mutual funds, the Public Provident Fund (PPF), the Sukanya Samriddhi Yojana (SSY), or the National Pension System (NPS).

Charges Under SBI Smart Scholar Explained

    • Policy Administration Charge: A monthly policy administration charge was deducted by canceling units from the fund value. It was ₹75 per month for regular pay and limited pay policies and ₹50 per month for single-pay policies.
    • Fund Management Charge (FMC): The Fund Management Charge (FMC) was deducted daily by adjusting the fund's Net Asset Value (NAV). The charge ranged from 0.25% to 1.35% per year, depending on the selected fund. Equity-oriented funds carried the highest FMC.
    • Mortality Charge: A monthly mortality charge was deducted for the life insurance cover. The amount depended on the age of the life assured and the sum at risk.
    • Premium Allocation Charge: This charge was deducted from each premium before the remaining amount was invested. For regular pay and limited pay policies, it was 6% in the first policy year, 4.5% in policy years 2–3, 4% in policy years 4–5, 1% in policy years 6–10, and 0% from the 11th policy year onwards. For single-pay policies, a flat 3% premium allocation charge applied.

The plan also included a Premium Payor Waiver Benefit (PPWB) Charge, an accident benefit charge, a discontinuance charge, and transaction charges, as specified in the policy terms.

Illustrative Returns

The SBI Smart Scholar brochure includes an illustration for a 35-year-old parent investing ₹1,00,000 annually for 20 years for a 5-year-old child, with 100% allocation to the equity fund and a sum assured of ₹10 lakh. 

Assuming a total investment of ₹20 lakh, the illustration showed maturity fund values of ₹24,84,011 at an assumed 4% annual gross return and ₹39,25,820 at an assumed 8% annual gross return. These return assumptions were prescribed by the Insurance Regulatory and Development Authority of India (IRDAI) and were meant only for illustration. Based on these illustrations, the policyholder's estimated net Internal Rate of Return (IRR) works out as follows:

Illustrative Gross Fund Return (IRDAI Assumption)Illustrative Maturity Fund ValueEstimated Net Internal Rate of Return (IRR)
4%₹24,84,0112.02% p.a.
8%₹39,25,8206.06% p.a.

These are illustrative calculations based on the insurer's benefit illustration and should not be treated as guaranteed or expected returns.

Who Should Buy SBI Smart Scholar?

    • Parents who already had adequate term life and health insurance and wanted an additional market-linked investment to build a corpus for their child's future. The plan combined life insurance with long-term investing and included an inbuilt Premium Payor Waiver Benefit (PPWB) under eligible policy options.
    • Parents who were comfortable with market risk and understood that the fund value depended on the performance of the underlying investment funds and that returns were not guaranteed.
    • Long-term investors who could remain invested for at least 8 years and were comfortable with the mandatory five-year ULIP lock-in period.
    • Investors who preferred a bundled product that combined insurance and market-linked investments instead of managing separate insurance policies and investment products.

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Conclusion

SBI Smart Scholar could have been a suitable option for parents comfortable with market-linked investments who wanted to combine life insurance with long-term savings for their child's future in a single product. However, before investing, it was important to have adequate term life insurance and health insurance, as these provided much stronger financial protection for the family.

If the primary goal was to build a corpus for a child's future at a lower cost, it was worth comparing SBI Smart Scholar with a Systematic Investment Plan (SIP) in mutual funds paired with a standalone term insurance plan. Comparing both approaches could have helped parents choose the option that best matched their financial goals, risk appetite, and budget.

Frequently Asked Questions

Is SBI Smart Scholar better than a mutual fund SIP for a child's education?

Not necessarily. SBI Smart Scholar combined life insurance and market-linked investments in a single Unit Linked Insurance Plan (ULIP), but it also included multiple policy charges that could have reduced long-term returns. For many families, a combination of a standalone term insurance plan and a Systematic Investment Plan (SIP) in mutual funds may have offered greater flexibility, lower costs, and potentially better wealth creation.

What were the minimum premium and lock-in period for SBI Smart Scholar?

The minimum premium was ₹75,000 for single pay, ₹50,000 for yearly, ₹25,000 for half-yearly, ₹15,000 for quarterly, and ₹5,500 for monthly premium payment modes. As a ULIP, SBI Smart Scholar had a mandatory five-year lock-in period, during which withdrawals and surrender proceeds were subject to policy rules.

What happens to SBI Smart Scholar if the parent (proposer) has passed away?

If the insured parent died during the policy term, SBI Life paid the higher of the sum assured or 105% of the total premiums paid as the death benefit. Under eligible regular pay and limited pay policies, all future premiums were waived through the Premium Payor Waiver Benefit (PPWB), and the policy continued until maturity. The fund value was then paid according to the policy terms.

Could SBI Smart Scholar be surrendered before maturity, and what would the policyholder receive?

Yes. If the policy was surrendered during the five-year lock-in period, the fund value, after applicable discontinuance charges, was transferred to the discontinued policy fund and became payable only after the lock-in period ended. If the policy was surrendered after five years, the prevailing fund value was paid, and the policy was terminated.

What returns did SBI Smart Scholar deliver?

SBI Smart Scholar did not provide guaranteed or fixed historical returns because the fund value depended on the performance of the selected market-linked funds. The insurer provided benefit illustrations based on assumed annual returns of 4% and 8%, as prescribed by the Insurance Regulatory and Development Authority of India (IRDAI). These illustrations were only indicative and did not represent actual or guaranteed returns.

Did SBI Smart Scholar offer guaranteed returns?

No. SBI Smart Scholar was a Unit-Linked Insurance Plan (ULIP), so its returns were market-linked. The fund value depended on the performance of the chosen investment funds and could increase or decrease with market movements. The investment risk was borne by the policyholder.

Was the maturity amount from SBI Smart Scholar tax-free?

The death benefit was tax-exempt under Section 11 (previously Section 10(10D)) of the Income Tax Act, subject to applicable tax provisions. The maturity benefit was tax-exempt only if the policy satisfied the conditions prescribed under Section 11, including the applicable premium limits for ULIPs. If these conditions were not met, the maturity proceeds could have been taxable.

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