Its a regular Mutual fund with a free insurance cover upto 10 lakh. This does not qualify for any tax rebate under 80C.
Other salient features include :
- Insurance cover upto 10 lakhs. This cover is not for cover but for your investment. Beneficiary will not receive the amount of 10 lakhs. What the beneficiary receives is the fund value (based on NAV) based on the amount paid and the balance amount (just the amount not NAV based)
- Minimum amount of 2000/- per month.
- Minimum term of 1 year and in multiples of 1 year thereafter.
- It does not provide life insurance cover in its strict sense. What it provides is the cover for the balance term in case of death.
- In the event of death the beneficiary has the choice to continue with the term or withdraw.
- Exit load to withdraw is 2%.
- 10 Lakh is the maximum amount they will pay under the unpaid fund amount in the case of death. Let’s say an investor has opted for a SIP amount of 8000 for 15 years. He has already paid for 1 year (amount of 96000). Fund value based on the NAV at the end of the year is 11000. Then the unfortunate event has occured and the beneficiary’s nominee will receive the following amount.
- Fund value based on the paid up term = 110000
- Balance amount to be paid for 14 years = 1344000. Since this is greater than the cover of 10 lakh, the beneficiary will receive 10 lakhs.
- Total amount received is 11,10,000 rupees.
Should you go for it? My answer would be a resounding yes. It does two things at the same time.
- It inculcates an investment habit of saving regularly via SIP through monthly payments.
- It provides insurance cover for the term taken.
Caveat is, it really does not cover all your insurance needs. You still need to take a life insurance policy.