Invest in SIP and get free insurance, know full benefits, terms and conditions

New Delhi: The COVID-19 pandemic has once again highlighted the need to have a regular investment and the importance of insurance.  

In the aftermath of the COVID-19 crisis, the demand for insurance has also been on the rise. In a bid to tap on this changing trend, mutual fund houses have also changed the strategy to attract investors by offering the benefit of free insurance cover to those who start a new Systematic Investment Plan (SIP), a Live Hindustan report said.

Some select mutual fund houses of the country have started offering free insurance cover with SIP while the prominent among them include ICICI Pru. Mutual funds SIP Plus, Nippon India Mutual Fund, SIP Insurance and Aditya Birla Sunlife Century SIP. Investors who are investing with these SIP plans can get insurance cover without undergoing any medical examination.

The insurance cover given with SIP is actually group term insurance. Mutual Fund houses are offering the benefit of term insurance to investors aged 18 to 51 years. Presently, select mutual fund houses are offering insurance cover 10 times more than the SIP amount in the first year. In the second year they are giving 50 times the investment amount and in the third year they are giving 100 times more cover. At the same time, Nippon India is providing 120 times the cover of SIP amount, the Live Hindustan report said.

If you invest Rs 1000 per month in an SIP scheme with insurance cover, then you will get a cover of Rs 10,000 in the first year, a cover of Rs 50,000 in the second year and a cover of Rs 1 lakh in the third year. This means, the nominee of the SIP investor in the case of an unforeseen death in the third year will get Rs 1 lakh along with the mutual fund corpus. However, the fund houses are only giving this benefit to new investors. Older investors will have to start a new SIP to avail of this scheme.

If an investor has availed insurance cover with SIP, then he will have to make regular investment 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, the Live Hindustan report added.