Review: SBI Life Poorna Suraksha: A Term Plan with increasing Critical Illness Cover

Most term life insurance plans give you an option to add a critical illness rider to your base plan. You have to pay an additional premium to get coverage for critical illnesses.

A few life insurance plans have inbuilt critical illness coverage. We discussed LIC Jeevan Shiromani in an earlier post.

SBI Life – Poorna Suraksha plan is different. It is a term insurance plan with increasing critical illness coverage (and decreasing life coverage).

How SBI Life Poorna Suraksha plan works?

Total Sum Assured is divided into 2 parts.

1. Life Cover Sum Assured (Death Benefit)
2. Critical Illness Sum Assured (Critical Illness Benefit)

Total Sum Assured = Life Cover Sum Assured + Critical Illness Sum Assured

Total Sum Assured remains constant during the term of the policy. The premium too remains constant during the term of the policy.

However, the breakup between Life Cover Sum Assured and Critical Illness keeps changing during the policy term.

The policy starts with 80:20 ratio between Death Benefit and Critical Illness Benefit.

However, with each policy year, Critical Illness Benefit goes up by a certain amount while the Death Benefit goes down by the exact same amount.

For instance, if you purchase a 30-year policy, the Critical Illness benefit will go up by 5%  (of the initial coverage amount) each year while Death Benefit will go down by the amount of hike in Critical Illness Benefit.

Let’s understand the policy with the help of an example.

A 30 year old person purchases SBI Poorna Suraksha plan with a Sum Assured of Rs 1 crore. The policy term is 30 years.

In the first year, the Death Benefit is Rs 80 lacs while the Critical Illness benefit is Rs 20 lacs (80:20).

In the second year, Critical Illness Benefit goes up by 5%.  As mentioned in the table above, the CI coverage goes up by 5% for a 30-year policy. Therefore, CI coverage goes up to Rs 21 lacs, an increase of Rs 1 lac (5% of Rs 20 lacs). Death Benefit goes down by Rs 1 lac to Rs 79 lacs.

In every subsequent policy year, CI benefit will go up by Rs 1 lac and death benefit will go up by Rs 1 lac.

SBI Poorna Suraksha Plan: Policy Benefits

On diagnosis of a critical illness

1. Critical Illness Sum Assured (CI Benefit) is paid to you.
2. Critical Illness coverage gets automatically lapsed. No more payout if you are diagnosed with a critical illness the second time.
3. The policy continues with Life Cover Benefit Sum Assured.
4. All future premiums are waived off.
5. In the event of death before maturity, your nominee will get Life Cover Benefit Sum Assured (Death Benefit).

Continuing with the above example, if the policyholder were diagnosed with a critical illness in the 11th policy year, he/she will be paid Rs 30 lacs and all the future premium instalments will be waived off. If the policyholder dies during the term of the policy, the insurer will pay Rs 70 lacs to the nominee. Do note death benefit remains constant once the CI benefit is paid i.e. the death benefit will remain constant at Rs 70 lacs from 11th till the end of 30th year.

The coverage is for 36 critical illness. As I see, most major illnesses including cancer, myocardial infarction, kidney failure etc are covered. I am not qualified to comment on the severity part.

Survival period is 14 days. Survival period is the period the policyholder must survive after the diagnosis of the critical illness for the CI claim to be paid.

For instance, if the policyholder dies 7 days after diagnosis of critical illness, CI benefit will not be paid. Only death benefit will be paid.

Death Benefit

Your nominee will get Life Cover Benefit Sum Assured. Remember, your Life Cover Benefit Sum Assured keeps reducing each year.

If the policyholder is not diagnosed with critical illness till death, Critical Illness Sum Assured will not be paid.

Maturity Benefit

There is no maturity benefit since SBI Poorna Suraksha is a term life insurance plan.

What do I think of SBI Life Poorna Suraksha?

Frankly, I do not completely understand the logic behind such product structuring. The assumption is that, with each policy year, your life insurance requirement will go down while the critical illness coverage requirement will go up.

I find this logic quite flawed.

I understand the chances of getting diagnosed with a critical illness will go up as you grow older. However, that does not mean your life insurance requirement will go down.

I do understand that life insurance requirement keeps fluctuating over the course of your life. Life cover need increases when you add responsibility (marriage, the birth of kids, loans etc). Life cover requirement goes down when those financial responsibilities are taken care off and as you amass wealth. It may even go down to zero when you have accumulated enough wealth.

For instance, a 30-year old who recently got married and is planning to have kids will likely see his life insurance requirement go up as and when kids are born. This plan may not be the right fit for such a life stage.

You may want a life cover till the age of 60. However, you may want to own a critical illness cover beyond the age of 60. In this plan, you can’t separate them. In fact, that is the case with critical illness riders too. You get critical illness coverage only so long as your term plan is running.

Whether you should purchase critical illness coverage is a different question. I do not have a black and white answer.

However, if you plan to have critical illness coverage, it is better to purchase a standalone critical illness plan (rather than purchasing through a rider or as an inbuilt feature with your term plan).

A  term plan and a standalone critical illness plan.

As for SBI Poorna Suraksha plan, I see it more as a marketing initiative.

Source/ Additional Read

SBI Life Poorna Suraksha Policy Brochure

SBI Poorna Suraksha Policy Document

SBI Poorna Suraksha Page on SBI Life Website