A systematic investment plan (SIP) is an investment vehicle offered by many mutual funds to investors, allowing them to invest small amounts periodically instead of lump sums. The frequency of investment is usually weekly, monthly or quarterly. During the present corona crisis pandemic situation, mutual fund companies are offering special offers in investing in SIP wherein on investing in SIP, you may get an insurance cover of your invested money up to 50 lakhs.
The lockdown has been very challenging to various sections of society. The poor struggle for survival and the privileged or middle-class and rich section of the society enjoy sitting at home and working from home. This has compelled middle-class average earning people to save their money in an effective and efficient manner. An increasing number of deaths due to corona and untimely deaths in a family of single men earning has increased the demand for insurance for a year. People found investing in the Systematic Investment Plan (SIP) much safer compared to investing in equity.
More people started investing in life insurance and health insurance. Looking into the present pandemic situation, many mutual fund companies are offering special offers giving insurance cover with SIP for free. On the basis of the SIP amount and its tenure, insurance cover is being decided. A few mutual fund houses offering these special offers of providing insurance over with SIP for free include PGIM India Mutual Fund, ICICI Prudential, Nippon India Mutual Fund, SIP Insurance, and Aditya Birla Sunlife Century SIP. If you invest in these following fund houses, then you will be able to get the benefit of insurance without any kind of medical examination.
This offer is being given by most fund houses on all equity and hybrid schemes offered by them. Most of these fund houses are offering SIP insurance for the people of the age group 18 to 51 years on one condition if and only if they invest in any eligible schemes. Since it is a group insurance policy, this is valid only till the age of 55 years. However, a few fund houses offer this to the people of the age 60 years.
Presently many mutual fund houses are giving 20 times more insurance coverage than what amount was invested in SIP in the first year. And in the second year, you can get 75 times more return on what you invested in the first year. In the third year, one can get 120 times more cover on the investment made. As per information from PGIM India Mutual Fund, you can get a return on the cover ranging from 20 to 120 times which is almost equal to 50 lakhs.
For example: in the first year, the first month, you have started to invest from Rs. 10,000 then the insurance cover you get is 20 times or Rs.2 lakh. In the second year, insurance cover will be 75 times or Rs. 7.5 lakh. And in the third year, you will receive Rs.12 lakh or 120 times. If in case the person dies in the third year then his nominee will be eligible to get the sum assured and mutual fund units.
The main point to be noted here is that if you get SIP with insurance cover then it is mandatory for you to keep investing till 3 years and on discontinuing within 3 years, you won’t be receiving the benefit of insurance as promised. And by running the SIP insurance for 3 years, you will continue to receive the benefit of insurance. And when the investment is stopped, the amount of cover will be reduced.