ICICI Prudential SIP Insure – Is it different

ICICI prudential Mutual fund has launched a new product / service with the name ICICI Prudential SIP Insure. This is a new product for ICICI, but not for investors as there are already such products available in the market. Reliance Mutual fund has the same product with the same name i.e. Sip insure and Birla Sun life Mutual fund calls this product as Century SIP. This article is meant for detailing the features and making a comparison of ICICI Prudential Sip insure VIS a Vis other similar products in the market.

What is ICICI Prudential SIP Insure

This actually is not a product in itself but a feature or facility bundled in a product. ICICI Prudential SIP insure facility is an add on feature of Life insurance cover under Group term insurance to individual investors opting for SIP in the designated schemes.

It provides free life insurance to its investors at no extra cost.

Amount of life insurance cover available:

If SIP INSURE continues, the insurance cover would be as follows

• Year 1 : 10 times the monthly SIP Insure instalment
• Year 2: 50 times the monthly SIP INSURE instalment
• Year 3 onwards: 100 times the monthly SIP INSURE instalment

Which means that if someone is investing in this product with 5000 p.m. SIP instalment, His insurance cover would be in first year Rs 50,000/- , in second year Rs 2.50 lakh and third year onwards Rs 5 lakh.

All the above mentioned limits are subject to maximum cover of Rs. 20 lacs per investor across all schemes/plans/folios.

This feature is similar to that of Birla Sun life century SIP , but different from Reliance SIP insure where the life insurance cover available is the amount equivalent to aggregate balance of unpaid SIP instalments , subject to maximum of Rs 10 lakh.

Let’s take an example to understand this feature:

Mr XYZ (35) has started a SIP of Rs 2000/- in SIP insure facility for 15 years. The maximum insurance cover available under different plans would be as follows:

Reliance SIP Insure =2000*15*12 = Rs 3.60 lakh

Birla Century SIP =2000*100 = Rs 2 lakh

ICICI Pru SIP Insure =2000*100 = Rs 2 lakh

One thing to note here is that where the insurance cover by BIRLA and ICICI will stay the same till the end of tenure, there the insurance cover by Reliance keeps falling with every further SIP instalment.

Comparison of Sum assured in different years

Year	Reliance	Birla	ICICI
Year 1	3,60,000	2,00,000	2,00,000
Year 5	2,40,000	2,00,000	2,00,000
Year 10	1,20,000	2,00,000	2,00,000

 Other example:

Mr XYZ (35) has started a SIP of Rs 15000/- in SIP insure facility for 15 years. The maximum insurance cover available under different plans would be as follows:

Reliance SIP Insure =15000*15*12 = Rs 27 lakh but maximum limit is Rs 10 lakh

Birla Century SIP =15000*100 = Rs 15 lakh

ICICI Pru SIP Insure =15000*100 = Rs 15 lakh

In terms of insurance coverage, one can figure out that Birla and ICICI are offering Insurance cover of 8.33 times the annual premium/investment payment

Comparison of Sum Assured in different years

Year	Reliance	Birla	ICICI
Year 1	10,00,000	15,00,000	15,00,000
Year 5	10,00,000	15,00,000	15,00,000
Year 10	9,00,000	15,00,000	15,00,000

Age block for ICICI Pru Sip Insure investment

The insurance cover will be available for individuals aged above 18 years and not more than 46 years, at the time of the first investment. Only the First / Sole unit holder will be covered under the insurance. No insurance cover will be provided for the second / third unit holder.

This feature is similar to the plan of other companies.

Commencement and cessation of Insurance cover:

The insurance cover will start only after completion of first 45 days; however accidental deaths are covered from day 1.  In case of Birla Century SIP these conditions is same, but in Reliance SIP insure the condition is of 90 days.

If SIP INSURE discontinues, the insurance cover would be as follows:

• SIP INSURE discontinues before 3 years: Insurance cover stops immediately

•SIP INSURE discontinues after 3 years: Insurance cover equivalent to the value of units accumulated under SIP INSURE investment at the start of each policy year, subject to a maximum of 100 times the monthly instalment, capped at the maximum of 20 lacs.

The insurance cover will also cease

• At the end of the tenure. i.e., upon completion of 55 years of age.

• Redemption / switch-out (fully or partly) of units purchased under the scheme in which SIP INSURE facility is availed before the completion of the SIP INSURE tenure.

Tenure of ICICI Prudential SIP INSURE

55 Years less the current completed age of the investor.

For e.g. an investor at the age of 40 years 5 months , tenure of ICICI Prudential sip inure shall be a period of 14 years and 7 months i.e. period remaining for the attainment of 55 years of age

 Load structure

Entry Load: NIL; Exit Load: 1% if redeemed within1 year; Nil thereafter

Here Reliance Sip Insure is expensive, as they charge exit load of 2% anytime the fund gets withdrawn before the completion of tenure.

Should you invest in ICICI Prudential SIP Insure?

Now here comes the big question, Should one go for this product.

On the face of it, this looks quite interesting to invest in. It is more or less like a normal SIP but with insurance cover attached and that too with no extra cost.  Yes, it is with no cost as the total expenses and NAV of the products will remain same as of “no insurance” products.

Unlike Reliance, where you have to bear expenditure of 2 % anytime you want to exit out of a fund, this product does not charge any exit load after 1 year. Thus even if you want to exit due to non-performance of the scheme or you are “in disciplined” investor, there’s no harm in investing this product. But for small investor , the insurance coverage would be less as comapred to reliance sip insure.

But please understand that this should not be the only feature which induces you to start investing in ICICI Prudential SIP Insure. You need to select the product first as per your risk profile, past performance , peer comparison , goals targeted and then you may go ahead with this sip insure feature if you like.

Also be sure that you should be adequately insured through term insurance products and should not depend on the insurance offered by these mutual fund houses. The idea of not mixing insurance with investments applies here also, of course with the same reasons. Take this insurance coverage as add on coverage in your financial profile but it should not be the only coverage.