The corona epidemic has made us aware of the need for regular investment and the importance of insurance. It has also had an impact. Since the Corona crisis, the demand for insurance and the desire to save has increased among the people. In view of this changing trend, mutual fund houses have also changed the strategy to attract investors. Mutual fund houses are now offering the benefit of free insurance cover to those who start a new SIP ie a Systematic Investment Plan.
Some select mutual fund houses of the country have started offering free insurance cover with SIP. Among the SIPs in which insurance cover is also being provided, ICICI Pru. Mutual funds SIP Plus, Nippon India Mutual Fund, SIP Insurance, and Aditya Birla Sunlife Century SIP are the major ones. That is, if investors start investing with these SIP plans, then they will start getting the benefit of insurance without a medical examination. Insurance experts say that there are many intricacies in taking advantage of insurance with SIP, which the investor must first understand.
The Cover Being Given Under Group Term Insurance
The insurance cover given with SIP is actually group term insurance. It has been combined with SIP. An investor can avail of this term cover with the introduction of SIP. Fund houses are offering the benefit of term insurance to investors aged 18 to 51 years. Under this, the cover is being given till the age of 55 years.
How Much is the Cover
Presently, select mutual fund houses are offering insurance cover 10 times more than the SIP amount in the first year. The second-year is giving 50 times the investment amount and the third year giving 100 times more cover. At the same time, Nippon India is providing 120 times the cover of the SIP amount.
Understand by Example
If you invest Rs 1000 per month in a SIP scheme with insurance cover, then you will get a cover of Rs 10,000 in the first year, a cover of Rs 50 thousand in the second year, and a cover of Rs 1 lakh in the third year. That is, if the SIP person dies for some reason for the third year, then his nominee will get one lakh rupees along with the mutual fund units. However, the fund houses are only giving this benefit to new investors. Older investors will have to start a new SIP to take this advantage.
Investment Required for Three Years
If an investor has availed insurance cover with SIP, then he will have to make regular investments for at least three years. Termination of SIP before three years will end the benefit of term insurance. At the same time, after running the SIP for three years, he will continue to get the benefit of term insurance. However, the amount of cover will be reduced when the investment is stopped.
Would It be Right to Invest?
Financial experts say that the option of free term insurance cover with SIP is not bad. For example, if you buy term insurance of Rs 50 lakh and you are 30 years old, then you have to pay an annual premium from Rs 4000 to Rs 10,500. A Premium amount will be saved with this scheme. Yes, the investor must see where the fund houses are investing their money and how it is performing. The investment decision should be taken only after assessing all the points.