What is SIP Insure Facility?

• 9 March 2017 | 824 Views | By Mint2Save

The Systematic Investment Plan (SIP) is an investment strategy that is offered or presented by fund houses to the investors to make them convenient to invest small sums of money in their mutual funds. The regularity of investment varies from weekly to monthly to quarterly. The systematic investment plan is a suitable way for all the retail investors to contribute in stock market growth. Some of the mutual funds like Birla Sun Life, Reliance and  ICICI Prudential, etc., offer this facility to their investors. Some funds offer an insurance that would be in multiples of the investment made in that year. If the customer dies during the tenure of the SIP, some funds offer the unpaid SIPs up to a pre-fixed figure. Although the insurance cover is offered for free without any charges, these funds charge a highway out load on early redemptions. SIP helps to encourage individual​​​​​​​​​​​​ investors to save more & invest regularly through Systematic Investment Plan and help them to achieve their monetary objective without any hindrance​​​. SIPs have many advantages such as it lower the average purchase cost of investing, it is affordable, it is a substantial innovation over the years to smooth the progress of greater investor participation.

SIP is based on 3 principles that are; you must start early, as SIP allows benefit from the power of compounding i.e. ,growth upon growth or return on the return. Secondly, invest regularly to maintain a consistent pace. As, investing fixed amounts at regular intervals, generally lowers the average cost of your investment and it permits you to purchase more for less when the markets are down and less for more when the markets goes up. Thirdly, invest right SIP installment. The principles of the SIP work well, but only if you invest a suitable amount at regular intervals. SIP Insure Protection and growth potential in one unique investment solution. SIP continues up to maturity and until unfortunate event or death and SIP discontinues before 3 years from the date of 1st installment and after 3 years from the date of investment.

Some of the SIP insures facilities are: Birla Sun Life Century SIP: The tenure of this SIP is 55 years minus the age of the investor. Though, the investor can discontinue the SIP, at whatever time, by intimating Birla Sun Life. But, exit load will definitely apply, if it is redeemed within a certain period. The investor will get a cover or assured sum of 10 times the monthly SIP instalment in the primary year and 50 times the monthly SIP instalment in the second year and then 100 times the monthly SIP instalment from year 3 onwards. The life cover will be stopped immediately if the SIP ends before before 3 years. The designated schemes under Birla Century SIP include about all the top performing funds of Birla Sun Life Mutual Fund, which also includes Birla Sun Life Frontline Equity, Birla Sun Life Top 100, Birla Sun Life Advantage, Birla Sun Life MNC, Birla Sun Life India Gen Next Fund, Birla Sun Life Tax Relief 96, etc.

The other SIP insure facility is offered by ICICI Prudential SIP Insure where the investor will get a life cover or assured sum of 10 times the monthly SIP instalment in the first year and 50 times the monthly SIP instalment in the second year and similarly 100 times the monthly SIP instalment from year 3 onwards. The sum assured is limited to a maximum cover of Rs 20 lacs. If the ICICI Prudential SIP Insure facility is discontinued after 3 years, then the investor will get an insurance life cover or sum assured corresponding to the value of units allotted under SIP Insure at the start of the each policy year, subject to a maximum of 100 times the monthly instalment. The schemes under ICICI Prudential SIP Insure include almost all the top performing funds of ICICI Prudential Mutual Fund. Exit loads will not apply if the investors continue the SIP for at least 3 years. Another facility has of Reliance SIP insured which offers life insurance cover or sum assured of up to Rs 21 lacs to investors. If In case of the death of the investor during the term of the SIP, the sum assured of the investor will be utilized to pay the remaining SIP instalments over the term of the investment Plan, which is 55 years minus the age of the investor. Designated schemes under Reliance SIP Insure include most of the top performing Reliance mutual  funds, including, Reliance Growth Fund, Reliance Vision Fund, Reliance Tax Saver, Reliance Equity Opportunities Fund, etc.