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A few mutual fund houses are offering free optional in-built insurance cover to their SIP investors based on their SIP contributions and tenure. The cost of insurance is borne by the fund house. The objective is to encourage their SIP investors to continue their SIP contributions as well as stay invested for the long term. The add-on life cover would help investors in achieving their crucial financial goals in the event of the unfortunate death of the investor. The insurance cover usually starts with the commencement of the SIP without any requirement for medical tests.

Eligibility criterion of SIP plus Insurance products

Individual investors aged between 18 to 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.

Is it Worth Investing in SIP with Insurance Scheme?

The primary objective of investing in mutual funds is to achieve one’s financial goals and create wealth as per his investment horizon, risk appetite and asset allocation strategy. Hence, one should invest in the mutual fund schemes offering free life cover only if they have an excellent track record of beating their benchmarks and peer funds in the past and have enough potential to continue to do so in the future.

If the mutual fund(s) offering the free life cover satisfies all the crucial fund selection parameters, then the investor should make sure to opt for the add-on life covers. Doing that will enhance their total life cover at no extra cost. However, investors should continue to review the performance of these funds at periodic intervals. The availability of free life cover should never influence the decision to invest in or redeem these funds.

Investors should also adequately enhance their life covers through regular term insurance plans at periodic intervals without factoring in the free life cover provided by the bundled MF plus insurance products.