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Mutual fund + insurance: Is it a safe bet?

One of the biggest trends in the insurance industry is to bundle insurance with investment in a single financial product like a unit linked insurance plan, ULIP. This has proved immensely popular with consumers and is one of the most lucrative segments of the industry. Not surprisingly mutual funds want a part of the action too and are offering similar products: ie mutual funds which also provide insurance cover. But do these make sense for YOU to buy them?

The basic idea is that you enroll in a systematic investment plan, SIP, for a fixed period and along with it you get life insurance cover as an extra for free. The three main plans of this kind are Reliance SIP + Insure, Birla Sun Life Century SIP and Kotak Star Kid.

Text: NS Sawaikar
Illustrations: Uttam Ghosh

Also read: 10 things money can't buy

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