When Birla Sunlife launched a product with name recurring savings plan, on the face of it looks like a different and new product. But when you check this out in detail you will find that it’s like any other Systematic Investment Plan. The main difference is that it is available with optional “Free Life insurance Cover”. Let’s look at this product in detail and find out its suitability in your profile.

Features of Birla Sunlife Recurring savings Plan

This Plan is all about Investing in 2 specified debt plans through SIP. The 2 specified plans are:

a)      Birla Sunlife Medium Term Plan

b)      Birla Sunlife Monthly Income Plan

In addition to this, one may opt for “Free life insurance cover” along with the Investment.

How much would be the “Free life Insurance cover” ?

Life insurance cover will depend on the monthly investment Installment and is offered under group insurance scheme. The coverage would be:

–          Year 1 – 10 times of Monthly RSP Installment

–          Year 2 – 50 times of Monthly RSP Installment

–          Year 3 onwards – 100 times of Monthly RSP Instalment.

Subject to maximum of Rs 20 lakhs.

This insurance cover would cease if RSP discontinues within the first 3 years of Investment. But if RSP continues for at least 3 years and then discontinued then the Insurance cover would be equivalent to the value of units allotted at the start of each policy year subject to maximum of 100 times the monthly instalment.

How is it different from Century SIP?

Century sip is another product of Birla Sunlife mutual fund family where the same insurance covers are offered under some specific plans. RSP is no different from century sip. It is just that Recurring savings plan is only meant for the above mentioned 2 schemes but century SIP is eligible for other equity schemes too besides these 2 schemes.

This means that Century SIP in Birla Sunlife MIP and Birla Sunlife MTP is equal to RSP with Insurance covers.

Other Conditions to invest in Birla Sunlife Recurring savings Plan.

1. Age limit: Min 18 Years, Max 46 years.
2. Exit Load: 2% if exit in first year, 1% if exit in next 2 years and NIL after completion of 3 years.
3. Partial withdrawal: is allowed subject to exit load and insurance cover will be ceased if withdrawal happens before completion of RSP Tenure.

Performance record of the specified funds under Birla Sunlife recurring savings:

Should One Invest in Birla Sunlife Recurring savings?

One thing is very clear that the whole purpose of Birla for launching this product is to bring attention on two of its funds. Otherwise when these are already in the century SIP scheme and also available for SIP in normal course, it does not make sense to start with a fresh product.

From an investor’s perspective, it depends on the purpose of Investment. I don’t advise mixing insurance with investments. So if the Insurance coverage is the purpose one should go with only pure term plan. If investment is the purpose then again one should weigh the different options available and depending on the time horizon and risk profile one should select the funds. SIP in debt fund is very much comparable to bank recurring deposit. The tax efficiency, liquidity and returns offered in debt funds have always been very attractive from investment point. If you understand the working of insurance endowment plans and can do bit of maths to find out their return then you may also compare such plans with them too. But do keep in mind that Insurance plans come with some additional tax benefits.

So the bottom line is that product is good, returns are good but still no different. One should look out for all other options too before selecting Birla Sunlife recurring savings.