I have two questions:
i) Some AMCs are offering insurance on SIP schemes. I want to how beneficial such an offer is
ii) If I switch my units from one scheme (diversified) to ELSS (tax saving) in the same mutual fund company, will I get tax benefit?
—Sanjay
There are some fund houses that offer a life insurance benefit if you opt for a systematic investment plan in their schemes. It was initiated by DSPML Mutual Fund in 2005 with the name of Super SIP. Some other players like Birla Sun Life Mutual Fund, Kotak Mutual Fund and Reliance Mutual Fund have come out with the same concept. You will have to look into the details to see which one suits you. For instance, here are some questions you can ask as a guideline.
1. Is there a minimum amount that has to be invested in the SIP?
2. Must the SIP be of a certain tenure?
3. Are all equity schemes of AMC, eligible or is it offered only on certain schemes?
4. Will the insured amount be given to the nominee or be used to continue with the SIP so that the investment plan continues?
5. Will all the insurance expenses be borne by the AMC?
6. Is there any age limit to avail of this scheme?
Now coming to your second question; yes, if you switch your units from one scheme to Equity Linked Saving Scheme (ELSS) of the same AMC after paying the entry load (if applicable), you can avail of the tax benefit from the tax-saving scheme.
This article was originally published on September 04, 2008.
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