Skip to main content

All about mutual funds with insurance cover

While mutual funds remain the best saving instrument, insurance ensures financial security at the time of crisis. When mutual funds come with the added insurance cover, it sounds like an icing on the cake.
Let’s get into the details of mutual funds with insurance benefits and find out if it’s a wise choice or not!

What are mutual funds with insurance cover?

  • There are some mutual fund companies including Birla Sun Life Mutual Fund, Reliance Capital Asset Management Company and ICICI Prudential Mutual Fund, that provide a complimentary life insurance cover to their SIP investors investing in certain schemes.
  • The cover provided is a term insurance policy, where the insurance company pays out money only in case of death of the investor.

Is there a minimum period of investment in mutual funds with investment cover?

Yes, if the investor stays invested for at least three years, only then he is eligible for insurance.

What if the investor exits the fund before 3 years?

The cover ceases if SIP is discontinued before the completion of three years.

A few more important things to know!

  • Maximum sum assured is about 10 times the SIP instalment in year one, about 50 times in year two and about 100 times in year three.
  • The facility is available to all investors in a few select schemes till the last SIP instalment or 55 years of age, whichever is earlier.
  • Most of the policies cover insurance immediately after the commencement of SIP. However, only accidental deaths are covered for the first 45 days.

Why do mutual funds with free insurance cover make sense?

  • They come with a benefit of free life insurance cover.
  • Investors don’t have to pay premium for life cover.
  • The insurance cover will be used to pay the SIP amount in case the investor dies.

A few words of caution!

  • There is an exit load of up to 2%.
  • Insurance is just a free component. One must select well rated funds first and then opt for the add-on to enjoy the extra benefit at no additional cost.
  • While you opt for this feature while starting an SIP with the mutual fund, at time of claim, you would need to deal with the insurance company. The AMC does not gaurantee claim settlement.
  • If you discontinue your SIP within three years, you will lose your insurance coverage.
  • It will cover only the first unitholder. The second and third unitholders do not get any insurance cover.

Comparison of the schemes from different mutual fund companies


Comments

Post a Comment

Popular posts from this blog

Group v/s individual maternity health plans- what you should know

Group v/s individual maternity health plans- what you should know Maternity coverage is an essential coverage that one seeks in a health insurance plan. This can cover a wide range of medical expenses related to pregnancy such as pre-natal check-ups, hospitalization expenses during delivery and post-natal care and expenses of newborn baby etc. In most of the group health insurance plans offered by the employer, maternity coverage is automatically included. Maternity cover is also offered as an add-on rider to individual health plans by many insurance providers to give financial backup during the crucial phase of pregnancy. Let’s take a look at both the plans to understand what should be chosen to have a wider range of coverage. What is a group health plan with maternity cover? Group health insurance is a health plan that particularly covers a group of people like employees of an organization or of a society. Basically, it is the  health insurance plan  offered by th...
1 comment
Read more

What is Primary Market?........................

What is primary Market? A primary market issues new securities on an exchange for companies, governments and other groups to obtain financing through debt-based or equity-based securities. When a company decides to go public for the first time by raising an  Initial Public Offering (IPO) , it is done in the primary market. Since the securities are sold for the first time here, a primary market is also known as the New Issue Market (NIM). During an  IPO , the company sells its shares directly to the investors in the primary market. The entire process of raising investment capital by selling new stock to investors through an IPO is known as underwriting.  Once the shares are sold, they are bought and sold by traders in the secondary market.
Post a Comment
Read more

Basic of Mutual Fund......

MUTUAL FUND A mutual fund is a professionally managed  investment fund  that pools money from many investors to purchase  securities . A mutual fund is formed when capital collected from different investors is invested in company shares, stocks or bonds. Shared by thousands of investors (including you), a mutual fund is managed collectively to earn the highest possible returns. The person driving this investment vehicle is a professional fund manager. Mutual funds have become a very popular avenue for investment for many investors because of the benefits that they have. They allow investors market-linked returns, diversified risks through asset allocation, affordability through SIPs and ease of liquidity. Given these benefits and the potential of attractive returns, investors choose to invest their disposable savings in mutual funds. Mutual funds come in many different variants and when it comes to choosing the best fund, investors are often confuse...
Post a Comment
Read more