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Please suggest me schemes with SIP Insure facility

I want to invest SIP with insurance benefit, please provide information about fund & features of scheme?

Dec 24, 2015 by Narendra Pandya, Surat  |   Mutual Fund

You have the following options:-

  1. Birla Sun Life Century SIP: The tenure of Century SIP is 55 years minus the age of the investor. However, the investor may discontinue the SIP, at any time, by intimating Birla Sun Life. However, exit load will apply, if redeemed within a certain period. The investor will get a life cover or sum assured of 10 times the monthly SIP instalment in the first year, 50 times the monthly SIP instalment in the second year, 100 times the monthly SIP instalment from year 3 onwards. The sum assured is limited to a maximum cover of Rs 20 lacs. Please note that the life cover will be stopped immediately on the cessation of SIP before 3 years. If Century SIP is discontinued after 3 years, the investor will get a insurance cover or sum assured equivalent to the value of units allotted under Century SIP investment at the start of the each policy year, subject to a maximum of 100 times the monthly instalment. The designated schemes under Century SIP include almost all the top performing funds of Birla Sun Life Mutual Fund, including Birla Sun Life Frontline Equity, Birla Sun Life Top 100, Birla Sun Life Advantage, Birla Sun Life MNC, Birla Sun Life India GenNext Fund, Birla Sun Life Tax Relief 96, Birla Sun Life 95 etc. The century SIP is a good plan that the investor can avail, provided the investor continues the SIP for a minimum of 3 years, otherwise exit loads apply.

  2. ICICI Prudential SIP Insure: The investor will get a life cover or sum assured of 10 times the monthly SIP instalment in the first year, 50 times the monthly SIP instalment in the second year, 100 times the monthly SIP instalment from year 3 onwards. The sum assured is limited to a maximum cover of Rs 20 lacs. Please note that the life cover will be stopped immediately on the cessation of SIP before 3 years. If ICICI Prudential SIP Insure is discontinued after 3 years, the investor will get a insurance cover or sum assured equivalent to the value of units allotted under SIP Insure investment at the start of the each policy year, subject to a maximum of 100 times the monthly instalment. The designated schemes under ICICI Prudential SIP Insure include most top performing funds of ICICI Prudential Mutual Fund. The SIP Insure is a good plan that the investor can avail, provided the investor continues the SIP for a minimum of 3 years, otherwise exit loads apply. Designated schemes under ICICI Prudential SIP Insure include the top performing ICICI Prudential MF funds including, ICICI Prudential Focused Bluechip, ICICI Prudential Value Discovery, ICICI Prudential Dynamic Plan, ICICI Prudential Top 100 Fund, ICICI Prudential Tax Plan, ICICI Prudential Banking & Financial Services Fund, ICICI Prudential Balanced Fund, ICICI Prudential Child Care Plan - Gift Plan etc.

  3. Reliance SIP Insure: Reliance SIP Insure offers life insurance cover or sum assured of up to Rs 21 lacs to investors. In case of an untimely death of the investor during the term of the Systematic Investment Plan (SIP), the sum assured of the investor will be utilized to pay the remaining SIP instalments over tenure of the Plan, which is 55 years minus the age of the investor. The insurance cover ceases when the investor turns 55 or upon the completion of the SIP tenure, whichever is earlier. Only investors between 18 and 51 of age are eligible for the life insurance under the SIP Insure plan. However, you should note that, you should commit a minimum SIP instalment of Rs 1,000 for at least three years. The sum assured is 120 times the monthly SIP instalment. Again, as discussed earlier, be mindful of exit loads. Designated schemes under Reliance SIP Insure include the top performing Reliance MF funds including, Reliance Growth Fund, Reliance Vision Fund, Reliance Tax Saver, Reliance Equity Opportunities Fund, Reliance Small Cap, Reliance Tax Saver, Reliance Regular Savings Fund (Equity and Balanced) etc.

  4. Unit Linked Insurance Plan 1971: This is the oldest Unit Linked Insurance Plan, in fact, much older than the ULIPs offered by the life insurance companies. This scheme offered by Unit Trust of India is also very different from the life insurance ULIP products. It is similar in the respect that, UTI allots ULIP units at the prevailing NAV (No Entry Load) after deduction of premium paid to LIC for Life Insurance cover. However, the cost of life cover of this scheme is much cheaper than the normal LIC term plan, because UTI groups its investors and buys a group insurance plan at a much lower cost. UTI ULIP gives a maximum Insurance cover of upto Rs 15 lacs depending on the target amount selected. Also, as opposed to the other mutual fund schemes with insurance benefits discussed above, ULIP 1971 is more suited to conservative investors, because asset allocation to debt is much higher compared to the other schemes discussed above. Further, you should note that investment in UTI ULIP 1971 scheme is eligible for deduction from your taxable income under Section 80C of the Income Tax Act.

SIP with insurance benefit is good plan to invest in. However, you should bear in mind two important points. Firstly, the insurance cover or sum assured provided by these plans are likely to be inadequate for your needs. A sum assured of 100 times of your monthly instalment, implies a sum assured of around 8 times your annual investment. Extending this logic, assuming your savings is on an average even 20 – 30% of your gross income, your sum assured will be only 2 to 3 times of your gross annual income. Even based on simple thumb rules, this is substantially inadequate in the event of an untimely death. Therefore, even if you subscribe to these plans, you should also buy a term insurance policy of sufficient sum assured, to care of your family’s income needs in case of an unfortunate death. Secondly, these plans have high exit load for early redemptions. Therefore, if you plan to invest in these plans, you should have a long investment horizon.

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