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Free Insurance on SIP Investments

Availing free insurance on SIPs in ICICI Prudential's equity funds is a good idea. But keep these points in mind before going ahead

I came to know about something called 'SIP Insure' that is provided by ICICI Prudential AMC on some of their funds. I read through the brochure and it mentions that the performance of the fund is in no way related to the insurance and it is a Group Insurance policy. It sounds like insurance is provided free of cost. So is it advisable to go with it and invest in some of the good funds like ICICI Prudential Dynamic and ICICI Prudential Focused Bluechip with the SIP Insure facility? Am I missing something here?
- Naveen Chunganahalli

Availing of free insurance by signing up for an SIP with ICICI Pru's equity funds is a good idea. It will provide you with a group term insurance cover of 10 times the monthly SIP installment during the first year. The cover will increase to 50 times during second year and to 100 times from the third year onwards subject to maximum cover of Rs 20 lakh per investor across all folios and schemes. Performance of the fund is in no way influenced by this add-on.

This SIP will cease either when the tenure ends or upon redemption/switch out (fully/ partially) before the end of the term.

Before adding such a feature to your SIP it would be good to consider the following points:

  • Insurance is just a free component. Do not start SIP to get free insurance. Select well rated funds first and then opt for the add-on to enjoy the extra benefit at no additional cost.
  • Buy an adequate Term Insurance cover. Do not depend on this feature for your insurance needs as it will be insufficient.
  • While you opt for this feature while starting an SIP with the mutual fund, at time of claim, you would need to deal with the insurance company. The AMC in no way guarantees claim settlement.
  • If you discontinue your SIP within three years, you will lose your insurance coverage.
  • It will cover only the first unitholder. The second and third unitholders will not get any insurance cover.

Having said this, the two ICICI Pru funds that you have selected are good ones and you can go ahead with your investment.

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