VR Logo

Regular SIP or SIP Insure?

You shouldn't pick a mutual fund house or a scheme only for the free life insurance cover

I want to start a new Systematic Investment Plan (SIP) from the New Year. But when I tried to register a SIP in the mutual fund site, it gives two options: Normal SIP or Insure SIP. What is difference between them? What are the charges for Insure SIP? Which is better? I am 23 years old.
- Harshal

It seems, your mutual fund is giving you free insurance cover along with your Systematic Investment Plan (SIP). Some mutual funds like Reliance, Birla Sun Life, ICICI Prudential, etc offer this facility to their investors. Some funds offer an insurance cover that would be in multiples of the investment made in a particular year. Some fund houses offer the unpaid SIPs up to a pre-fixed figure if the customer dies during the tenure of the SIP. Although the insurance cover is offered free, these funds charge a high exit load on early redemptions. Here is a story from our archives that would give you a better picture: Insurance For Investment.

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.

Post Your Query