SIP Cover: Get insurance cover with no extra cost along with your Systematic Investment Plan

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Published: June 29, 2020 1:57 PM

SIP Cover is one of the options before investors to have a free life insurance cover to protect themselves and their investment at the time of COVID-19 pandemic.

Novel Coronavirus COVID-19, COVID-19 pandemic, life insurance, Systematic Investment Plan, SIP, SIP Cover, mutual fund, MF investment, ICICI Prudential SIP Plus, Nippon India SIP Insure, ABSL Century SIPThe insurance cover starts with the commencement of SIP without any medical test.

Insurance is a much-discussed topic in times of COVID-19, as the number of cases of the Novel Coronavirus infection has surged despite the lockdown. With the virus fear gripping the nation, more and more people are now looking for health insurance and life insurance covers.

SIP Cover is one of the options before investors to have a free life insurance cover to protect themselves and their investment at the time of COVID-19 pandemic.

Three Asset Management Companies (AMCs) – ICICI Prudential, Aditya Birla Sun Life (ABSL) and Nippon India – at present offer free optional in-built insurance cover to the people investing in mutual funds (MFs) through a Systematic Investment Plan (SIP) based on their SIP contributions and tenure.

To encourage SIP investors, AMCs bear the cost of insurance, but to ensure that investors stick to their investments for a long duration, withdrawals – be it full or partial – are discouraged.

Usually, the insurance cover starts with the commencement of SIP without any medical test, but the cover ceases if an investor makes even partial withdrawal during the investment period.

In case of the unfortunate death of an investor, the free add-on life cover would prove handy for the investor in achieving his/her financial goals.

A maximum insurance cover of Rs 50 lakh may be availed by investors with entry age between 18 and 51 years of age.

For ICICI Prudential & Nippon India, the life cover continues up to 55 years of age, while the cover ceases at the age of 60 years for the ABSL MF investors.

The minimum investment tenure is 3 years for ICICI Prudential SIP Plus and Nippon India SIP Insure, while ABSL Century SIP has a fixed tenure of 60 minus the current age of the investor.

The quantum of life cover depends on the monthly SIP amount and investment tenure. In the first year, the quantum of cover will be 10 times the monthly SIP amount and 50 times in the second year. From the third year onward, the cover will be 100 times for ICICI Prudential SIP Plus and ABSL Century SIP, while it will be 120 times for the Nippon India SIP Insure.

The insurance amount may not be sufficient to cover your life, but it would be sufficient to cover your SIP investment against the risk of premature death.

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