Is SIIP better than SIP? - Big Risk Big Win with Rishi

Today, in the second issue of The Newsletter, BIG RISK BIG WIN with Rishi will take a look at one of the best forms of investment (SIP) and how LIC (Life Insurance Corporation of India) has done a masterful job in perfecting this investment plan.

Now the question remains, "IS SIIP BETTER THAN SIP?". Let's start by looking into both of the investment plans.

SIP is a Systematic Investment Plan and SIIP is a Systematic Investment Insurance Plan.

SIP: Systematic Investment Plan:

Instead of making a lump-sum commitment, Mutual Funds offer a Systematic Investment Plan (SIP), which allows investors to invest a specified amount(less as Rs. 500) in a Mutual Fund scheme at regular intervals, such as once a month or once a quarter. It's convenient because you may direct your bank to debit the amount every month.

SIPs allow us to invest in a disciplined manner without having to worry about market volatility or market timing. Mutual Funds' SIPs are by far the best way to get started in the world of long-term investing. To get the most out of your investments, your mantra should be "Start Early, Invest Regularly."

SIIP: Systematic Investment Insurance Plan:

So now that we know the basics of SIP, let's discuss what actually is a SIIP. SIIP is an Insurance plan by LIC (Life Insurance Corporation of India) that resembles SIP in almost every aspect.

The SIIP from LIC is a non-participating, life insurance plan that provides investment cum insurance coverage during the policy's term. LIC's SIIP plan, as an insurance cum investment plan, offers a variety of entertaining investing alternatives.

Furthermore, the plan provides comprehensive coverage for the investor's family in the event of any unforeseen circumstances. Individuals can benefit from LIC's SIIP by gaining long-term investment returns and building a financial cushion for a secure future.

Benefits Offered by LIC SIIP Plan

Death Benefit

• Death before the date of commencement of risk:

If the invester dies before the risk period begins, the beneficiary(nominee) of the insurance will receive an amount equal to the unit fund value(The amount invested at the market value at the time)

• Death after the date of commencement of risk:

In case of demise of the investor after the commencement of risk, the death benefit is payable as highest of:

• Unit fund value; or
• 105% of the total premium paid till the date of death reduced by partial withdrawals if any; or
• The basic sum assured amount on death, reduced by partial withdrawal if any.

The death benefit can be availed by the beneficiary either as a lump-sum amount or in installments.??

Maturity Benefit

If all premiums have been paid in full, the LIC will pay the investor an amount equal to the unit fund value plus a refund of mortality charges.

Features of LIC’s SIIP Plan

Let’s take a look at some of the salient features of the SIIP.

• The plan offers 4 fund options to choose from. (Bond Fund, Secured Fund, Balanced Fund, Growth Fund) [I will write a separate article about the Type of Funds]
• The policyholder can make free switches between funds.
• The plan offers the option of add-on rider benefits(read below) to enhance the coverage of the policy.
• Partial withdrawals of funds are applicable under the policy.

Optional Benefits Offered by LIC SIIP

Rider Benefits

If the insured person dies in an accident, the accidental benefit sum assured is paid to the policy's beneficiary as a lump sum under this rider option.

Partial Withdrawals

The policyholder can withdraw parts of the units at any point after the insurance has been completed for five years, as long as all of the premiums have been paid in full.

Other Details of LIC’s SIIP Plan

Free-look Period

The insurer provides a 15-day free-look period during which the insurance holder can cancel the policy if he or she is dissatisfied with the terms and conditions of the policy.

Grace Period

A grace period of 30 days is offered by the policy to pay the due premium, in case the policyholder fails to pay the premium within the premium paying tenure.

Exclusion

If the policyholder commits suicide within 12 months of the date of policy initiation or the date of policy revival, the beneficiary of the policy is entitled to the unit fund value available as of the date of intimation of death, along with a death certificate.

Conclusion by Author:

In this issue of the newsletter, I have covered almost everything about the SIIP by LIC and how it provides you with a more secure way to do long-term investment. My personal suggestion is that if you go for SIIP don't forget to opt for the Rider Benefit. I will end this newsletter here.

Please comment below and let me know what do you think of SIIP and my newsletter. Also, any kind of suggestion to improve is welcomed.

Ciao for now! See you next week.