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How does Reliance SIP Insure works?

If the investor dies during the tenure of the Systematic Investment Plan (SIP), the insurance cover will take care of the unpaid SIP installments

Any comment about Reliance SIP Insure plan? It is a life insurance offered by Reliance MF without any extra cost to their investors.
- Alok Singh

Reliance SIP Insure offers free life insurance cover of up to ₹21 lakh to investors. If the investor dies during the tenure of the Systematic Investment Plan (SIP), the insurance cover will take care of the unpaid SIP installments. Only individual investors between 18 and 51 are eligible for the cover. Investors should commit a minimum SIP instalment of ₹1,000 for at least three years. The insurance cover ceases when the investor turns 55 or upon the completion of the SIP tenure, whichever is earlier.

This is how it works: an investor does a monthly SIP of ₹10,000 for 5 years in Reliance Growth Fund. If he dies after three years, his insurance cover (Sum Assured, in insurance lingo) will be 120 times his monthly SIP installment (120 X 10, 000 = ₹12 lakh). The amount will be paid/credited to the nominee's bank account directly by the insurance company.

Although insurance is offered free, there is cost associated by way of exit load on early redemption. The exit load will be 2% on redemption or switch out of units acquired under Reliance SIP Insure facility before the maturity of the committed SIP Insure tenure or before the completion of 55 yrs of age, whichever is earlier.

Finally, you shouldn't pick a mutual fund house or a scheme only for the free life insurance cover. Always pick a scheme with a good long-term performance record. Also, remember that such SIP insurance offers only a limited life cover (it is linked to the SIP amount and the year in which person dies) and it cannot be a substitute for an adequate life insurance cover. Always buy a term insurance plan to buy a large life insurance cover to safeguard the interest of your financial dependents.

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