What is SIP with protection?

[Prsagar]

A few mutual fund houses

are offering free, optional, inbuilt insurance cover to their investors based on their systematic investment plan (SIP)
contributions and tenure.

The cost of insurance is borne by the fund house. The objective is to encourage their
investors to continue their SIPcontributions as well as stay invested for the long term.

The addon life cover would help investors achieve their crucial financial goals in the
event of the unfortunate death of the investor. Insurance cover usually starts with the commencement of the SIP without
need for medical tests.

Qualification models

Investors aged between 18 and 51 years at the time of investment are eligible for the SIP plus insurance scheme.
In case of multiple holders, only the first holder will be eligible for the insurance cover. Examples of products on offer are ICICI Prudential SIP Plus, Aditya Birla Sun Life Century SIP and Nippon India SIP
Insure. Maximum life cover on offer is ₹50 lakh.

How it functions

Fund houses place different terms and conditions regarding the minimum and maximum tenure for availing the SIP plus Insurance bundled product. The continuity of the life insurance cover is typically capped at 55 - 60 years of age. The cover terminates as

the investor reaches the maximum age. The value of cover is a multiple of your SIP instalment: 10 times for year 1, 50 times for year 2, and 100 times for year 3. A higher SIP sum gets you higher covered.

 

[Nova]

The mutual funds which contain the insurance component in them are called ELSS. Which covers the insurance and the mutual fund included. They kind of often are safe and also we have to think of them from the investment angle. It is always better to go with the mutual funds which are kind of safer that way. I know few of them who have components of the insurance and some also have the health insurance and other options to choose the growth or the debt component.

I think if some of the fund houses are accommodating like that. It can be beneficial as well. I know for sure that a lot of times such type of the fund houses always help you with choosing but make sure don't buy something you don't need at all.