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Mutual Fund Scheme with Insurance Cover One Should Choose for Investment

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Long term investment option appears to be a good approach to build strong financial wealth but many investors are uncomfortable with such plans because of its long tenure. In fact, introduction of the long term capital gains tax on equity oriented mutual funds was not strong enough to bring happiness in life of every investor. Taking benefit of this, life insurance companies started campaigns that highlighted the advantage of unit linked investment plans over equity Mutual Funds in front of taxation department. These schemes attracted investors more and they started buying policies and plans having inbuilt life cover. This method of investment in mutual fund through Systematic Investment plans is somehow convenient to the investor as they are less subjected to market risk than any specific mutual fund scheme.

What is Mutual Fund Scheme with Life Cover?

It is an additional facility of life insurance cover offered to an investor who wishes to invest his saving through systematic investment plans. These schemes can also be considered as a group insurance cover having a minimum lock-in period of 3 years but they’re available on only selected schemes by the mutual fund house. In these insurance schemes usually the life covers in the 1st, 2nd and 3rd years becomes a specific multiple of the SIP amount which may be 10, 50 or 100 times depending on the portfolio and financial objective of the investor. For example, if an investor choose a plan having life cover of Rs 10,000 in SIP then the life cover in the 1st, 2nd and 3rd years onwards will be Rs 1 Lakh, Rs 5Lakh and Rs 10 Lakh respectively.

Read more about what are benefits of investing in mutual funds in India?

Who Can Claim Life Cover?

Anyone who’s between 18 years to 51 years can enroll for mutual funds having life cover facility. IF ia single scheme is adopted by multiple holders then only the first policy holder is authorized to receive benefits and facilities offer by such insurance cover. In case of multiple holders, first holder needs to represent a declaration of good health to the facilitator. In these schemes the investor is provided with the life insurance in form of a group term insurance where the fund house provides mortality charges to the investor.

Fund houses like Reliance Mutual Fund, Aditya Birla Sun Life Mutual Fund and ICICI Prudential Mutual Fund have been launched for the investors that deliver maximum life cover to the investor.

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ICICI Prudential Mutual Fund:- This fund was introduced with life insurance cover 6 years ago that has SIP insure as an additional but optional feature apart from SIP option. A life insurance company offers the group life insurance cover to the investor but the premium that is offered for such cover is borne by ICICI Prudential AMC. The minimum instalment for all schemes under ICICI Prudential mutual funds having life cover is Rs 1000 and investors can only optimize the SIP Insure till 55 years only.

Reliance Mutual Fund:- Reliance Mutual fund having life cover is also available with additional SIP Insure feature under group insurance for those investors who opt for SIP in select schemes. The facility of group term insurances offers free life insurance cover to the investors. In case of the death of an investor before the completion of the requisite systematic investment plan, the insurance cover acts as a protection for all the unpaid instalments and nominee of the cover plan can continue the scheme without making any further contribution to the existing plan. In Reliance SIP Insure, maximum cover than an investor can avail is set to Rs 21 Lakh for investors looking for long term horizon.

Aditya Birla Sun life Mutual Fund:- In these mutual funds with insurance cover, an investor is offered with cover up to 100 times to their monthly SIP. If an investor chooses the Century SIP Option, he receives the insurance cover of 10 times the SIP amount for the 1st year followed by 50 times for the 2nd year and 100 times for the 3rd year onwards. The limit for maximum cover for an investor in these SIP schemes is set to Rs 25 Lakh for investor and it can be easily start off by anyone above 18 years & below 51 years with a minimum SIP instalment of Rs 1000 per month.


All these mutual funds schemes offer free life insurance cover to the investors and there is no need for an investor to pay any premium for life covers. In case of demise of an investor, remaining SIP is paid through insurance cover only & nominee didn’t need to pay even a single penny to continue the scheme. So, contact your financial planner right now and invest in any of these funds having life cover to ensure a strong and stable financial wealth for your family.

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Mr. Ajay Kumar Jain, M.Sc, Chairman And Managing Director
Being the Chairman And Managing Director, he focuses on holistic investment planning and wealth management and tries to make investment planning simpler for retail and HNI investors. Investor education is one of the prime things that Mr. Ajay Jain focuses on as he believes financial education is the foundation of successful investing. With over two decades of experience, Mr. Jain has made a mark in the Indian mutual fund industry due to his compassion and sheer hard work.

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