Do you know that it had been a common practice that the Asset Management Companies (AMCs) clubbed insurance products with mutual funds schemes.
In a letter addressed to the Association of Mutual Funds in India (AMFI), SEBI remarked that it has observed several mutual fund schemes offering bundled insurance products like ‘SIP Insurance’ and no mutual fund company should offer such product.
Some have disregarded the move, but many have appreciated the stance taken by SEBI.
For over a decade mutual fund firms have been bundling insurance policies with SIPs to attract investors.
There are certain drawbacks when it comes to the combo pack offered by such AMCs. For over a decade mutual fund firms have been bundling insurance policies with SIPs to attract investors.
Moreover, the mutual funds were offering the benefits of insurance at no additional costs which helped in gaining the popularity of the said scheme.
The insurance coverage for life in these policies were mostly in the range of 100 to 120 times the SIP amount, but subject to mandatory payment of instalments till a certain time but the underlying drawback to it is that SIPs have always been recommended for long term.
The insurance coverage for life in these policies were mostly in the range of 100 to 120 times the SIP amount
People who bought this SIP+ Insurance had to mandatorily contribute to SIPs for a predefined term even if the scheme is not performing as per reasonable standards.
The coverage would end when the SIP matures or the investor attains the age of 55, or if the investor cancels the SIP for any reason.
In most circumstances, the insurance would begin to pay off as soon as you signed up for a SIP.
Suicide in the first year of SIP was the sole exception.
It is important to understand that insurance on mutual fund SIP can also lead to a situation of underinsurance if an investor has no other insurance plans.
" Since the average SIP limit is just Rs 3,500 per month, the insurance cover decreases automatically and that can be insufficient for an investor."
Hence, investors who bought the bundle of SIP+ Insurance would continue to have benefits of both but is the life cover derived from the investment scheme enough?
You might be making good returns on your SIPs but your attached insurance is not as useful, instead you can buy a regular life/ term insurance plan with us.
How Do WE help you?
We at CKP assist you in providing Term Plan adhering to your needs and requirements. We do understand the importance of a swift response and also assist you in getting your claims approved in a brisk too.
Book an appointment with us to understand more about the benefits .You can reach out to us at info@ckpinsurance.in or +91 9920099273.
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