Insurance With SIP

Insurance With SIP

Insurance With SIP

Mutual fund companies are constantly coming up with new innovations to attract investors. We are looking at releasing new funds, adding some benefits to the funds. They also began offering life insurance coverage to investors at no extra cost. What is the benefit of this facility where investment and insurance are available simultaneously? What should we see? Let’s find out.

Systematic Investment Plan (SIP) Fund companies are arranging to provide group life insurance policy coverage to investors at no extra cost. This insurance is available to those under 18-51 years of age. Whether the key investment in financial planning and insurance is in one place … we need to understand its limitations.

If three years have passed

The minimum duration of a Systematic Investment Plan (SIP) is three years to receive insurance through investment. This protection goes away even if the sip is canceled in the middle or the investment is withdrawn and switched to another scheme. The insurance is valid until the maximum age of 55-60 years, even if you stop sipping after three years.

How much

The value of the insurance policy depends on the amount of the sip. Usually, it is up to 10 times the amount of sip‌ in the first year. Increases 50-fold in the second year. 100 times in the third year. For example, if your SIP costs Rs. 1,000 per month, the first year insurance cover is Rs. 10,000, the second year Rs. 50,000 and the third year Rs. 1 lakh.


The maximum limit of group insurance offered by mutual fund companies is Rs 50 lakh. Some companies have set the maximum limit at Rs 20 lakh. It is important to note that these are not an alternative to traditional term policies. This is not enough, especially for those with high incomes.

There are fees

If the investment is withdrawn prematurely, a sales fee (exit load) of up to two percent of the value of the fund will be levied. Insurance coverage is no longer available. These fees are the same even in the event of the death of the investor if the investment is withdrawn before the nominee period.

The investment will continue 

Mutual fund-based insurance policy schemes offered by some companies provide for continued investment for a specified period even after the death of the investor. The rest of the SIP installments are paid by the insurance company. The nominee can continue this scheme. Or have the ability to claim.

Be clear about the rules when choosing such schemes. These vary depending on the fund companies. When it comes to making a claim, the nominee should contact the insurance company that provides the protection, not the fund company. Of course, insurance and investment are both different. The two should not be seen together. This insurance should be considered as an additional benefit that only comes with investments.

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