ICICI Pru AMC Launches SIP Plus That Provides Free Life Cover
In an interview with BW Businessworld, Raghav Iyengar, EVP & Head, Retail & Institutional Business, ICICI Prudential AMC throws light on their recently launched “SIP Plus” product that provides a free life cover to SIP investors
Please tell us about some salient features of the recently launched SIP Plus product. Is it applicable only to a select set of schemes or all of them?
SIP Plus is a systematic investment solution offered as an add on benefit by ICICI Prudential Asset Management Company Limited, which aims to create wealth and offers life cover
The Life cover offered is as follows:
Year 1: 10 times the monthly SIP Plus installment.
Year 2: 50 times the monthly SIP Plus installment.
Year 3 onwards: 100 times the monthly SIP Plus installment.
Please note: The insurance cover provided is capped to 50 lakhs per investor across all schemes/plans/folios. At present ICICI Prudential Asset Management Company Limited offers the SIP PLUS feature only across select schemes.
What are some of the terms and conditions applicable to the SIP plus product?
Certain important terms and conditions applicable to the product are as below:
1. Investor will not be eligible for Life cover if SIP is registered for a tenure of less than 3 years or Discontinues before 3 years.
2. Only the First/ Sole unit holder will be covered under the insurance. No insurance Life cover will be provided for the second / third unit holder.
3. The Life cover will be available for individuals aged above 18 years and not more than 51 years, at the time of the first investment.
4. The life cover is subject to a ceiling limit of Rs 50 lakh per investor across all schemes/plans/ folios.
5. Insurance cover will be ceased on completion of 55 years of age (as on the renewal date), but SIP shall continue till the end of tenure if SIP is registered beyond 55 years of age.
What is the structure via which this cover is offered - for instance, who underwrites the risk, who compensates whom for the mortality costs, and the like?
The group term insurance cover is provided by ICICI Prudential Life Insurance Company Ltd and ICICI Prudential Asset Management Company Limited is the Master policy holder and will be funding the premia cost while the underwriting risk rests with the ICICI Prudential Life Insurance Company Ltd. Further, the life insurance cover will be governed by the terms and conditions of the insurance policy.
Is there an additional exit load applicable to a SIP Plus investment vis-à-vis a regular investment?
No. There is no additional exit load applicable for investors who have opted for SIP Plus investment vis a vis regular SIP investments, other than the exit load as applicable to the mutual fund scheme. However, insurance cover shall also cease for respective registration with immediate effect, if redemption/switch out/transfer out transaction is executed (fully or partly)before completion of SIP PLUS tenure
Who bears the cost of underwriting the risk, in case of SIP Plus? Will this cost not be factored into and therefore increase the expense ratio of the scheme - thereby cannibalizing the returns for the entire pool of investors, just to provide a cover to a handful of investors?
The Premium for the cover shall been born by ICICI Prudential Asset Management Company Limited. A Group Life Cover is being provided by ICICI Prudential Life Insurance Company Ltd to all Resident Individual/NRI applicants investing in selected schemes. As such, the add-on, optional feature of getting the Life cover is being offered to all the eligible investors of the select schemes of ICICI Prudential Mutual Fund and thus, there is no preference or bias towards a handful of investors. This additional feature is being offered by the fund house and as such, the premium paid towards such group insurance policy does not form part of the expenses of the mutual fund scheme.
What are some of the things that an investor needs to keep in mind regarding SIP Plus - for example, under what circumstances will the coverage lapse? In case it does, can it be reinstated?
The investor will necessarily be required to furnish his / her date of birth and gender in the application form, in absence of which, no insurance cover can be availed by the investor. The insurance cover under SIP Plus also stops immediately in case the monthly investment is discontinued before 3 years. However, in case the SIP Plus is discontinued after 3 years, the insurance cover equivalent to the value of units allotted under SIP PLUS investment basis the valuation as on 1st business day of month in which renewal confirmation is given. The insurance cover will however be subject to the ceiling limit of 100 times the monthly installment and maximum cover of Rs. 50 lakhs per investor.
Further, Insurance cover shall also cease for respective registration with immediate effect, if redemption/switch out/transfer out transaction is executed (Fully or Partly).
What is the claim settlement process in case of the unfortunate death of the investor?
As per the terms of the group insurance cover, all insurance claims will be settled in India and shall be payable in Indian Rupees only. Insurance claims will be directly settled by the Insurance Company. As per the claim settlement process, the nominee/legal Heir of the insured person is required to fill up the claim intimation form which can be downloaded from the insurance company's website. The duly filled claim intimation form along with the insurance policy cover note, a copy of the death certificate of the insured person and a copy of the cancelled cheque of the nominee and any further document/s as requested by the insurance company is required to be submitted to the life insurance company. Contact details of the insurance company is available on the website and is also mentioned in the SIP Plus transaction forms.