Skip to main content

Insurance with Covers Bundled in one Product

 


   The idea of getting something free along with your main object of desire is always thrilling. Be it a conditioner with a shampoo or a toothbrush with toothpaste. The financial and investment space, too, has its share of add-on offerings. For instance, mutual fund schemes come with free life insurance cover, credit cards and home loans come with personal accident policies where customers do not have to pay the premium, and, of course, there are zero-cost covers for new cars.


However, skeptics will always point to the age-old axiom that there are no free lunches. After all, the company or the intermediary that offers freebies could have passed on the benefits in the form of lower charges instead, they argue.
Besides charges, there are aspects and implications that you need to take into account before giving in to any such temptation.

Mutual Fund Schemes With Free Life Insurance

Reliance Mutual Fund has been, of late, promoting its SIP Insure facility heavily. Birla Sun Life is another fund house offering a similar product named Century SIP. Under such schemes, typically, you invest under a list of specified schemes through the SIP (systematic investment plan) mode. Should anything happen to you before the expiry of the scheduled investment period, the insurance cover will get triggered. For instance, under Reliance MF's SIPInsure facility, the sum assured, which is equal to balance SIPs, is invested in the same fund chosen by the insured, in the nominee's name.


And, obviously, you do not have to pay any premiums for the life cover, usually provided under a group insurance scheme. The costs are borne by the fund house from the fund management charges investors pay. But, redemption under such mutual fund-cum-insurance schemes may not be as simple as a regular fund. There could be additional costs in terms of higher exit loads if one were to redeem these schemes within the no-exit period.


While the concept of putting in place a mechanism to fulfil a goal even in the investor's absence seems appealing, you also need to ascertain whether the attached insurance cover is commensurate with your current liabilities and dependants' future needs.


An overall term cover is much more comprehensive and easy to keep track of while evaluating your life insurance needs in future. It is much better to separate your insurance needs from your investment portfolio. If you were to have a combined insurance and investment plan via a SIP insure, etc, or a Ulip, your asset allocation gets extremely constrained by the funds offered and it becomes much more difficult to administer and rebalance yearly the overall allocations of the portfolio.


Then, such schemes also come with an upper limit on the life cover. For instance, if your MF insurance scheme offers a cover of . 10 lakh, it will not serve your purpose entirely if your requirement is for . 50 lakh.


To the extent of notional premium saved towards the free insurance provided by these schemes, the investor is at an advantage. But one must keep in mind that the primary focus should be on investment and, hence, the premium saved should not be the major consideration in choosing this option. If the scheme one is investing in is good and suits one's investment needs, the added free insurance is one more plus point for the investor.

Popular posts from this blog

Post Office Deposits Interest Rates

Best SIP Funds to Invest Online   SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich For further information on Top SIP Mutual Funds contact  Save Tax Get Rich on 94 8300 8300 OR You can write to us at Invest [at] SaveTaxGetRich [dot] Com
Read more

HDFC Capital Protection Oriented Fund – Series II 36M May 2014 NFO

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300     HDFC Capital Protection Oriented Fund – Series II 36M May 2014 NFO will be open for subscription from 16th May 2014 to 30th May 2014. The key features of the scheme are as mentioned below:   Type of Scheme A Close Ended Capital Protection Oriented Income Scheme Benchmark Crisil MIP Blended Index Fund Manager Mr. Anil Bamboli , Mr. Vinay R Kulkarni & Mr. Rakesh Vyas New Fund Offer (NFO) Period 16 th May 2014 to 30 th May 2014. Minimum Application Amount Rs. 5000 and in multiples of Rs.10 thereafter Plans/ Options Offered Growth and Dividend Payout Facility Liquidity To be listed For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
Read more

How to PPF Account extension after maturity

A PPF account can be retained after maturity without making any further deposits. The balance will continue to earn interest till it is closed. Public provident fund or PPF remains one of the most popular savings options for the long term despite a gradual decline in interest rates over the years. PPF accounts have a maturity period of 15 years and they can be extended. If there is no fund requirement, financial planners say, PPF account holders should extend the account beyond 15 years. In terms of income tax implications, PPF accounts enjoy the benefit of EEE (exempt-exempt-exempt) status . Under Section 80C, contribution up to Rs 1.5 lakh in a financial year qualifies for income tax deduction. The interest earned and maturity proceeds are also tax free. What are your options when a PPF account matures? 1) A PPF account can be closed after the expiry of 15 financial years from the end of the year in which the account was opened. 2) The subscriber can retain his
Read more

SUNDARAM SELECT MIDCAP

Best SIP Funds Online   SUNDARAM SELECT MIDCAP is a mid-cap focused fund has shown remarkable consistency in outperforming both its benchmark index and the category over many years. It takes a sharper tilt towards mid-caps compared to its peers. While the fund manager used to take large positions in his conviction picks, he has moderated exposure to his top bets over the past year. He has also chosen to stay away from capital guzzling businesses instead favouring those with efficient capital allocation practices. SUNDARAM SELECT MIDCAP fund boasts of a superior risk-reward profile compared to many of its peers, and while it has underper formed slightly over the past one year, its proven track record in the hands of a capable fund manager provides comfort. It remains a worthy pick in the midcap basket. SIPs are when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich For further inform
Read more

HDFC Prudence Fund - Invest Online

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   HDFC Prudence Fund Balanced funds are excellent investment options for investors with moderate risk tolerance, since they give very good risk adjusted returns. It is very surprising why balanced funds are not nearly as popular as diversified equity funds, despite being around in India for nearly two decades. Balanced funds are essentially hybrid funds with both debt and equity in its portfolio mix, to balance the portfolio risk. These portfolios typically hold up to 70% of its portfolio assets in equities and the balance in fixed income. On a risk adjusted basis, balanced funds have delivered excellent returns compared to other equity fund categories, e.g. large cap or diversified equity mutual funds. The chart below shows a comparison of category returns between large
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now