ICICI Prudential's free insurance with SIP: Should you go for it?

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ICICI Prudential's free insurance with SIP: Should you go for it?
Each time you invest in a Systematic Investment Plan (SIP) from ICICI Prudential you are entitled to free life insurance. This comes free of cost and is borne by the asset management viz: ICICI Prudential AMC. There are select schemes of the fund like ICICI Prudential Dynamic and ICICI Prudential Focus which have performed reasonably well in the past, making them good bets for an SIP. First let us understand why an SIP and then the benefits from ICICI Prudential's free insurance.

An SIP is a plan, wherein you invest fixed sums every month in some of the schemes, as mentioned above through various mutual fund houses like SBI Mutual Fund, Canara Bank Robeco, Axis Mutual Fund and others.

How the ICICI Prudential's free insurance with SIP works?

By investing in the SIP you get free group insurance cover, as a multiple of your SIP investment. For example, in the first year the cover would be 10 times the SIP, while in the second year it increases to 50 times the monthly SIP and in the third year it goes up to 100 times with a maximum cover of Rs 20 lakhs.

Age limits and medicals

The maximum age of entry is 46 years and there are no medicals that are required.

Should you opt for it?

Now, just because a mutual fund scheme is offering free insurance, you cannot go for it. You have to see if the fund is performing well. What if you invest in the scheme, get insurance, but the fund's net asset value has given you negative returns. The idea is to go for good SIPs and not chase insurance. Having said that there is little doubt that some of ICICI Bank's schemes like the ICICI Prudential Dynamic have done well, giving you an opportunity to invest as well as gain from insurance.

One must also remember that you should buy adequate insurance and not depend on the SIP for insurance. For example, the maximum cover mentioned above is Rs 20 lakhs. This may not be sufficient and you might want to take a separate insurance cover.

Conclusion

Go for the scheme not for the sake of insurance, but, because some of the schemes of ICICI Prudential have done well in the past. If they are giving you free life insurance consider the same a great blessing for you.

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