Benefit of FREE LIFE INSURANCE COVER with RELIANCE ELSS
Written on Saturday, December 19, 2015
By Anjaneya Gautam- Sr. VP, Mutual Funds, Bajaj Capital Ltd.
With a view to encourage individual investors to save and invest regularly through Systematic Investment Plan (SIP) and help investors to achieve their financial objectives, ‘Reliance SIP Insure’ is provided as an add-on feature of life insurance cover under Group Term Insurance to individual investors opting for the same, without any extra cost to the investors. The cost of the insurance premium will be borne by AMC. Reliance Tax Saver fund is one of the best taxes saving mutual funds in India that invests into equity. This scheme has consistently outperformed its benchmark (S&P BSE 100) and the ELSS category across various time frames.
This is a diversified equity fund with 5 in 1 benefit:
Benefit 1: SIP - Benefits of Power of compounding and Starting Early
Benefit 2: An investor would get tax deduction benefits up to Rs 1.5 lakhs under section 80C.
Benefit 3: Income in the form of dividends is tax-free in the hands of the investors of units of ELSS, specified under section 10(23D).
Benefit 4: At the time of redemption, ELSS gains are exempt from capital gains tax.
Benefit 5: Free Life Insurance Cover at no extra cost
Let’s have a look at how this fund works. An investor does a monthly SIP of Rs.10, 000 for 3 years in Reliance Tax Saver Month (ELSS). If he dies after a period of 2 years, then his Sum Assured = 50 times * monthly sip installment = 50 X 10,000 i.e. Rs. 5 lacs. This amount will be credited to the Nominee's bank account directly by the insurance company, in the event of the death of the Unit Holder.
An investor pays no extra cost for the life insurance offered. The insurance covers you for 21 Lakh per investor and the cover will continue even after SIP discontinues. There is an age criteria for opting this fund. Only individual investors whose entry age is 18 years & more and less than 51 years at the time of investment are eligible, while the cover ceasing age is up to 55 years.
Predefined & Simple calculation of Life Cover for easy understanding:
-Year 1(From 1st to 12th Installment) – 10 Times the Monthly SIP Installment
-Year 2 (After 12th to 24th Installment) – 50 Times the Monthly SIP Installment
-Year 3 onwards (After 24th Installment) – 120 Times the Monthly SIP Installment
Limits above are subject to maximum coverage of Rs. 21 lakhs per investor across all eligible schemes / plans and folios. Since the limit is per investor, all his existing investments in Reliance SIP Insure across all eligible schemes will be considered for calculating the maximum sum assured limit.