Systematic Investment Planning (SIP) insurance is an add-on feature of life insurance cover to individual investors opting for SIP in designated schemes. It helps to encourage individual investors to save and invest regularly through SIP and help achieve their financial objective without any hindrance.
This is because SIP returns are based on long-term investments. If the mutual fund investor dies two to three years into the investment journey, the corpus will be too small. This is where a term life insurance cover takes care of major financial goals. The SIP insurance market in India is a three-way race between ICICI Prudential, Reliance Mutual Fund and Aditya Birla Mutual Fund. Aditya Birla MF used to offer a smaller SIP insurance cover, but it has now changed it to Rs 50 lakh.
SIP insurance facilities
So far, Reliance SIP Insure provides life insurance cover to investors at no extra cost (i.e free of cost). In the unfortunate event of the demise of an investor during the tenure of the SIP, the nominee would get the maximum assured amount subject to a limit of Rs 50 lakh.
ICICI Prudential MF’s SIP Plus facility is also similar. In SIP Plus, the sum insured in 1st year is 10 times of the monthly SIP Plus instalment, in 2nd year the sum insured is 50 times of the monthly SIP Plus instalment and from 3rd year onwards the sum insured is 100 times of the monthly SIP Plus instalment. All the above limits are subjected to a maximum cover of Rs 50 lakh per investor across all schemes/plans/folios.
What has changed
It was Aditya Birla Sun Life MF’s Century SIP facility which lagged behind in maximum sum insured. If Century SIP continues, the insurance cover for Year 1 was 10 times the monthly Century SIP instalment. In Year 2, the cover was 50 times the monthly Century SIP instalment. From Year 3 onwards, the cover was 100 times the monthly Century SIP instalment. But, all the above-mentioned limits are subject to a maximum cover of Rs 25 lakh per investor across all schemes/plans/folios of Aditya Birla Sun Life Mutual Fund.
Now, Aditya Birla MF has changed the maximum sum insured cover limit. Now, all the above-mentioned limits are subject to a maximum cover of Rs 50 lakh per investor across all schemes/plans/portfolios of the AMC. This brings it at par with Reliance and ICICI Pru SIP insurance facilities.
Also, do note that the Century SIP facility with revised provisions will now be made available for fresh Systematic Investment Plan (SIP) applications received under Aditya Birla Sun Life Regular Savings Fund, Aditya Birla Sun Life Medium Term Plan and Aditya Birla Sun Life Credit Risk Fund (specified schemes) on or after the effective date ie November 1, 2018 .
Further, the fund-house has said that no fresh SIP applications with Century SIP facility will be accepted in Aditya Birla Sun Life Infrastructure Fund, Aditya Birla Sun Life International Equity Fund – Plan A and Aditya Birla Sun Life Commodity Equities Fund – Global Agri Plan on or aſter the effective date. However, the revised provisions under the CSIP facility will be applicable to existing investors who had availed this facility in the above-mentioned schemes.
Separately, the fund-house is also discontinuing its RSP facility. RSP stood for Recurring Savings Plan. This facility offered under specified schemes is being discontinued from November 1, 2018. Accordingly, existing investors who had availed RSP facility under the specified schemes will now be covered under Century SIP facility.