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PGIM MF withdraws term insurance cover under its Smart SIP

PGIM India Mutual Fund has announced the withdrawal of the complimentary term insurance cover offered to eligible investors under its Smart SIP facility in the equity, fund of funds, and hybrid schemes. 

The schemes covered under this facility are PGIM India Large Cap Fund, PGIM India Midcap Opportunities Fund, PGIM India Equity Savings Fund, PGIM India ELSS Tax Saver Fund, PGIM India Markets Equity Fund, PGIM India Flexi Cap Fund, and PGIM India Hybrid Equity Fund. 

The Smart SIP is a complimentary offer from the fund house that provides life insurance cover to investors between 20 and 120 times the monthly SIP installment or 50 lakhs, whichever is lower. The premium was borne by the fund house as part of the PGIM group’s term insurance cover. 

For the existing investors who availed of the offer, the insurance cover is valid till 16 May and will stand withdrawn after that. 

ICICI Mutual Fund, too, which provided insurance cover under ‘SIP Plus’, suspended the offering from 1 June 2021, for all the fresh registrations until further notice. However, the suspension was only for fresh registrations and did not impact the insurance coverage applicable to the existing investors. 

With this move by PGIM MF, existing investors who are dependent on the insurance cover from investments in the asset management company—fully or partially—have to buy a new policy to meet their requirements.

“In my opinion, SIP Insure as a product has always been an add-on. It is not something one can entirely depend on for their life insurance requirements. But if somebody did so, then as an investor they made a mistake. Nevertheless, any change that the AMC brings about in the product cannot hurt the existing investors who bought the product with such features,” said Kirtan Shah, founder and CEO, Credence Wealth Advisors. 

Commenting on this notice, Ajit Menon, CEO, PGIM India Mutual Fund, said, “The insurance feature on SIPs was only a complimentary feature paid for by the AMC and not part of any scheme expenses paid by investors in those specific schemes. We are discontinuing it as we see challenges in providing a uniform service experience given the uncertainties triggered by the pandemic. The primary goal for investors has always been to leverage the investment mandate of the scheme in line with their asset allocation requirements and investment goals. We encourage our investors to therefore continue with their investments.” 

Exit option 

The unitholders of the Smart SIP facility are being provided an option to withdraw their investments made in the above schemes, without applicability of any exit load for a period of 30 days starting 1 April and ending on 30 April. 

The exit option to the unitholders under the PGIM India ELSS Tax Saver Fund, will be available to only those whose units under the statutory lock-in period of three years i.e. under section 80C of the Income-tax Act, 1961 is completed. Note that redemption/switch-out may entail tax consequences.

No action is required in case you are in agreement with the aforesaid changes, which will be deemed as your acceptance. 

“The decision to stay invested in or move out should not be made if the insurance is available or not but whether the performance of the scheme is suiting investor’s requirement,” added Shah.

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