AMCs are launching free life cover with SIP investments. Should you opt for it?

Fund houses, namely ICICI Prudential AMC, Reliance Mutual Fund and Birla Sun Life Mutual Fund, have launched an add-on feature, which is providing life insurance cover to the investors. The life insurance cover provided is available to investors of select schemes of these fund houses and is directly proportional to the monthly SIP investments being made by the investor. This feature provides coverage against the uncertainties of life besides enabling investors to accumulate wealth.

  • Invest in mutual fund schemes from leading AMCs
  • Easy, paperless, hassle-free sign up
  • Free life insurance cover of up to ₹1.5 crores based on value and term of SIP
  • Insurance cover exists even after termination of SIP*

*Only if termination of SIP is after 3 years

The cover provided is a term insurance policy, where the insurance company will pay out money only in case of death of the investor.
1. Some mutual fund companies provide a complimentary life insurance cover to their SIP investors investing in certain schemes.
2. The cover provided is a term insurance policy, where the insurance company will pay out money only in case of death of the investor.
3. The investor has to have investment tenure of at least of three years to be eligible for this facility. Cover ceases if SIP is discontinued before the completion of three years.
4. Maximum sum assured is about 10 times the SIP installment in year one, about 50 times in year two and about 100 times in year three.
5. The cover will continue till the investor reaches the age of 50-55 as mentioned at signup even if the SIP stops after completing three years
“Just don’t do an SIP only for the free insurance cover. Ensure that it suits your objectives as this is an additional cover and not a substitute for your term plan,”
The feature is an add-on optional one and that too at no additional cost. The premium for such insurance cover is funded by the fund houses.
Age criteria of investors to be eligible for add-on feature
Investors aged above 18 years and not more than 51 years at the time of the first investment are eligible to opt for the insurance cover. Further, the cover ceases as the investor crosses the maximum age as prescribed by the fund house.

How does it work?

In order to be eligible for the insurance cover, the SIP registered should be for a period of three years and above. The cover is 10 times the monthly SIP installment in the first year, which increases to 50 times in the second year and then 100 times third year onwards. There are caps to maximum cover by these AMCs. The following table gives an idea of how this life cover feature works:

What if an investor exits mid-way / stops SIPs / withdraws partially?

If the investor discontinues the monthly investment before three years, the insurance cover stops immediately.

However, in case the SIP with insurance is discontinued after three years, the insurance cover is available equivalent to the value of SIP units so allotted as per the valuation on the first business day of the month in which renewal confirmation is given.


One of the key advantages of SIP with insurance cover is that the scheme provides a free group insurance cover to the investor without any extra cost. This insurance coverage shall continue to pay the SIP amount in case of premature death of the investor to achieve his investment goals.


This add-on insurance feature is not available under all schemes and therefore it provides limited choice to the investor in terms of selecting the funds. The insurance coverage is provided to only the first unit holder and is not extended to joint/ second unit holder.

Mutual fund investments are subject to market risk. Insurance coverage has to be settled with AMC or though group insurance provider. Please read the offer documents before making any investment decision.

Arabinda Kundu


Courtesy : Economics times, money control.

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admin August 12, 2019 0 Comments

What is a SIP and what are its benefits?

A Systematic Investment Plan (SIP) is a small, regular investment in mutual funds for a fixed time period.

Suppose you want to have 5,00,000 in 5 years for a car. Just like you’d save little by little to build a corpus to purchase it, you can start a SIP in a mutual fund for it. There are several advantages a SIP gives you over regular savings, the potential to earn higher returns being the foremost.

What are the benefits of a SIP?

  1. SIPs make sure you invest regularly – With a SIP, you set your investing on auto-pilot I.e. a predetermined sum of money is invested on a fixed date for the time frame and period you’ve selected. SIPs on a monthly basis are the most common.
  2. Start small with a SIP– You can start investing with as little as 500. There is no limit on the maximum you can invest. Every small instalment will contribute to your overall corpus.
  3. SIPs give you flexibility– You can choose your SIP amount, date of debit, frequency of SIP and the period until which your SIP should run.
  4. SIPs allow you to average out investment costs– When you purchase units of a mutual fund, you get each unit at the NAV (price per unit). This NAV depends on the performance of the scheme and is subject to change. So, when you invest periodically through a SIP, for the same amount you could be purchasing units at different NAVs, thus averaging out investment costs. When the NAV is low, you’ll get more units for the same amount, and vice versa. Here’s an example:
SIP Date SIP Amount NAV per unit Number of units (SIP amount/ NAV)
1st Oct 2018 1000 10 100
1st Nov 2018 1000 10.5 (increased) 95.238 (lesser units)
1st Dec 2018 1000 9.5 (decreased) 105.26 (more units)
Total 3000 300.49
Average cost per unit (Total amount/total number of units) 9.98
  1. Variety of SIPs– Investors have several options when it comes to setting up SIPs. Apart from the regular SIPs, they can choose from Flexi-SIPs and Step-up SIPs too. A Step-up SIP increases your SIP by an amount you fixed at an interval you fix – say if your current SIP is 1000, you can choose to step this up by another 1000 annually. So, from year two, your SIP amount is 2000, year 3 it is 3000 and so on. With a Flexi-SIP, you invest a fixed amount regularly like a SIP, but can invest more when the markets are falling subject to a maximum limit you choose, lesser when markets are rising subject to the minimum investment value of the fund.

Reaching your financial goals is so much easier with a SIP. Start one today, and march one step at a time to wealth.

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Ajit Narasimhan July 24, 2019 0 Comments