Reliance SIP + Insure: Reliance SIP Insure plan: Finance Trading Times

Reliance SIP + Insure: Reliance SIP Insure plan

There is a new kind of investment vehicle introduced in the Indian Mutual Fund and Insurance Industry. It’s a combination of SIP (Systematic Insurance Plan) and insurance benefit. The latest offering is from Reliance Mutual Fund and is called the Reliance SIP+Insure Plan.
Reliance SIP Insure plan
But the million dollar question is - How good is this SIP + insurance plan & should the investor invest in such SIP + insure plans?. In this article, let’s try to analyse this investment option called SIP + insure.
As far as I know, there are 2 mutual fund houses who have come out with this kind of plan – one is Reliance Mutual fund with its Reliance SIP + Insure Facility, while the other is Birla with its Century SIP.
What’s this Reliance SIP + Insure plan all about?
This Reliance SIP + Insure plan claims to offer a combo pack of SIP investment with so-called “FREE” insurance offered to the investor.

How does the Reliance SIP + Insure plan work?
Basically, the Reliance SIP + Insure plan works as follows: You decide to put your money in one of the Reliance Schemes through a pre-defined SIP investment amount. The Reliance SIP insure plan offers FREE insurance for the investor to the maximum possible beneficiary amount of the accumulated unpaid SIP amount. So say one decides to opt for the SIP amount of Rs. 10,000 per month and the investor dies after 5 years. So over this 5 year or 60 months, the investor has paid a total of 600,000 Rs. to the Reliance Sip + Insure plan. Suppose that at the time of death of the investor, the investment value has risen to 650,000. Hence, the insurance beneficiary value will be 650,000 for the nominee of the investor. The remaining part of the SIP installments of the deceased will be paid by the insurance company.

What are the investment schemes available for investment under the Reliance SIP + Insure plan ?
The following schemes are available for investments under the Reliance SIP + Insure plan:
• Reliance Growth Fund - Retail Plan
• Reliance Vision Fund - Retail Plan
• Reliance Equity Opportunities Fund - Retail Plan
• Reliance Equity Fund - Retail Plan
• Reliance Equity Advantage Fund- Retail Plan
• Reliance Regular Savings Fund – Equity option
• Reliance Regular Savings Fund – Balanced option
• Reliance Banking Fund
• Reliance Pharma Fund
• Reliance Media & Entertainment Fund
• Reliance Diversified Power Sector Fund – Retail Plan

What are the minimum investment requirement and eligibility criteria for Reliance SIP + Insure plan?
• Minimum Investment for SIP installment: Rs.2000 per month & in multiples of Re 1 thereafter. No upper limit (Why would they mind anyone giving them loads of money to manage)
• Minimum Period of Contribution: 3 years and in multiples of 1 year thereafter.
• Maximum Period of Contribution: 15 years OR till attaining 55 years of age, whichever is earlier (e.g., a person can register an SIP of maximum 10 yrs at the age of 45 yrs.) The insurance cover ceases when the investor attains 55 years of age.
• Mode of payment of SIP installments is only through Direct Debit & ECS ( Post Dated Cheques shall not be accepted). They do not want to get into the hassles of depositing the cheques and getting it cleared.

Related Competitor Product: Birla Century SIP plan

Any tax benefit available with Reliance SIP + Insure plan?
No tax benefit is available with Reliance SIP + Insure Investment plan.

What are the entry load, exit load charges or load structure for Reliance SIP + Insure plan?
Don’t expect any respite from the fund managers when it comes to load structure.
• The Entry Load under Reliance SIP Insure shall be same as applicable to normal purchase /additional purchase transactions in the respective designated schemes. It may be anywhere from 2% to 3% (based upon the standard load of mutual funds – not sure though)
• There will an Exit Load of 2%, if the accumulated units acquired or allotted under Reliance SIP Insure are redeemed or switched out to another scheme before the maturity of SIP tenure as opted in the respective scheme either by the SIP-Insure unitholder or by the nominee.

What are the drawbacks and risks associated with Reliance SIP + Insure plan?
There are many drawbacks in this Reliance SIP + Insure plan.
• The second point listed above, about the exit load is a big drawback. You will have to pay a heavy charge of 2% if you decide to switch your money from one scheme to another
• The entry load may also be higher and will be charged at each of your SIP, i.e. monthly.
• Then there is risk of mutual fund non-performance – no guarantee of any returns
• If you select a non-performing or loss making investment scheme, you will have to pay exit load of 2% to switch to another scheme
• What appears to be a “FREE” Insurance is actually another investment.
• The Insurance cover shall commence after “waiting period” of 90 days from the commencement of SIP installments. Though the waiting period will not be applicable in respect of accidental deaths. The insurance will also not be applicable if the death is due to a pre-existing decease.
• The longer you live, the less insurance cover you get.
• Investment only through ECS and Direct Debit Facility. It may turn out many investors who do not have bank accounts in banks without ECS or Direct debit facility.
• The insurance benefit will NOT be given to the nominee upon the death of the investor. Instead, the nominee will have to continue the scheme, though the remaining SIP amounts will be paid by the insurance company.
Hence, as compared to a life insurance where one gets the money when the insured dies, in Reliance SIP+Insure Plan, the nominee will have to wait to realize the investment value till the end of the entire SIP horizon. Table of Contents
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