All About SIP Insure: How it Functions?

Various mutual fund houses render free term life insurance to individuals who invest in their schemes via SIP. This is provided as an additional feature that will be a top-up for an existing insurance policy of an investor. This additional feature is called SIP insure.

The insurance cover will be provided in the form of term insurance; it will be accessible as a group insurance policy. As an investor, you need not pay any premium, and the insurance coverage will be free. Nevertheless, such an insurance cover will be provided on particular mutual fund schemes offered by fund houses and will be applicable only if you have opted for a 36-months SIP.

Currently, fund houses such as Axis, Nippon, and PGIM offer free life insurance cover for a few of their schemes along with SIPs. They offer complimentary life insurance cover for schemes like equity and equity-linked hybrid schemes.

Mutual funds which come under the insurance-linked fund category render group term insurance cover to an investor without levying any extra charges. The life insurance coverage will be linked to the SIP amount; it will continue till an investor holds an investment.

The minimum and maximum entry age limit concerning SIP insure could vary from fund to fund. For example, in the case of Nippon India Mutual Fund, the minimum entry age limit is 18 years, and the maximum age limit is 51 years. Hence, the insurance cover will expire at the age of 55 years.

SIP insure coverage will cease when an investor redeems an investment. The insurance cover, along with SIP insure will commence when an investor starts their SIP instalments, there will be no waiting period.

Before choosing a free SIP insurance plan, make sure to choose such a facility in schemes that have consistently performed over a long term and have crossed their benchmark regularly. You initiate SIP investments considering your long-term financial goals. When you withdraw even a partial amount to achieve your goal, the coverage will stop. You might have to pay the penalty too.

For any clarifications/feedback on the topic, please contact the writer at bhavana.pn@cleartax.in

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