Do you know SIP with Free Insurance?

What is SIP with Free Insurance?
  • You might have heard the word “Insurance with SIP”. Is it true? So is it SIP or insurance or both??
  • Lets have a look to solve this confusion.
  • Whenever you invest in mutual fund schemes you would get benefited by schemes return but many fund houses now a days providing free insurance cover with your SIP investment. Sounds great??
  • The life insurance provided in SIP with Free Insurance is in a group term insurance.
There are certain conditions bound with insurance cover
  • Age criteria: Minimum age for insurance cover is 51 years and insurance cover valid up to age is 60 years.
  • Insurance is available with some selected schemes only.
  • SIP tenure: For example insurance is only applicable if you continue SIP for 1 year.
  • Maximum insurance cover: For example Aditya Birla sunlife MF provides maximum 25 lakh cover.
  • Minimum SIP amount: There should be some minimum monthly SIP amount.
How it works??
  • When you decide your SIP amount you will get insurance cover multiple of your monthly SIP amount. For example: Aditya birla sunlife AMC provides insurance cover of 10, 20 and 100 times if you continue SIP for 1,2 and 3 years respectively.
  • If there are multiple holders in a scheme, only the first unit holder will be eligible for the insurance cover.
  • A declaration of good health has to be made in this facility.
  • The Insurance claim amount is paid directly to the nominee.    
  • The insurance claim is applicable only when SIP is continued till some predefined time say 1,2 or 3 years
  • Insurance cover is ceased in case of Partial withdrawals, full exit or stopping of SIP.
Exit load structure:
  • No exit load in case of completion of 3 years.
  • 2% of the fund value if amount is redeemed within 1 year.
  • 1% of the fund value if amount is redeemed after 1 year and before completion of 3 years.
Fund houses offering this facility
AMC Scheme Name Cover in year 1 Cover in year 2 Cover in year 3 Max cover(RS.) Cover till age
Aditya Birla Sunlife Centuary SIP 10 times 50 times 100 times 25 lakh 60
ICICI SIP plus 10 times 50 times 100 times 50 lakh 55
Reliance SIP insure 10 times 50 times 120 times 21 lakh 55
Is it worth to go for?
  • The insurance cover with SIP is not individual cover but its group insurance cover subject to some maximum amount decided by Fund houses. For example Rs. 25 lakh in case of Aditya Birla Sunlife Mutual fund. This amount of insurance cover is not sufficient for life cover. That is why an investor should have a term plan having life insurance cover as per his financial need.
  • If your mutual fund schemes is performing well then its good to have free insurance as you don’t have to pay extra premium for insurance cover. But don’t invest in mutual fund scheme only to get free insurance. Your SIP returns must be your first preference in your investment not the insurance cover. Never mix insurance and investment. keep both things separate.


Leave a Reply

Your email address will not be published. Required fields are marked *