TIP = TERM INSURANCE PLAN of a pure term insurance policy
SIP = SYSTEMATIC INVESTMENT PLAN of a balanced equity mutual fund
(A) TIP + SIP CALCULATION:-
1. Even when an investor starts TIP and SIP together at a ripe age of 40 years (earlier the better), for whatsoever reasons, he is an all-round winner:-
2. Let's say he pays annual premium of 12,000, i.e. 1,000 per month, for 30 years, in a TIP of 50 lakh assured sum.
3. And he also invests 60,000, i.e. 5,000 per month, for 30 years, in a SIP of a Balanced mutual fund of, say, just 10% CAGR.
4. He will earn 1.04 crores after 30 years upon his survival (i.e. his SIP corpus).
5. Upon his unfortunate death after 5, 10, 15, 20 or 25 years, his family will get around 54 lakh, 60 lakh, 70 lakh, 86 lakh or 1.12 crores respectively (i.e.TIP benefit + SIP corpus).
1. Even when an investor starts TIP and SIP together at a ripe age of 40 years (earlier the better), for whatsoever reasons, he is an all-round winner:-
2. Let's say he pays annual premium of 12,000, i.e. 1,000 per month, for 30 years, in a TIP of 50 lakh assured sum.
3. And he also invests 60,000, i.e. 5,000 per month, for 30 years, in a SIP of a Balanced mutual fund of, say, just 10% CAGR.
4. He will earn 1.04 crores after 30 years upon his survival (i.e. his SIP corpus).
5. Upon his unfortunate death after 5, 10, 15, 20 or 25 years, his family will get around 54 lakh, 60 lakh, 70 lakh, 86 lakh or 1.12 crores respectively (i.e.TIP benefit + SIP corpus).
(B) TIP + SIP score in terms of:-
1. Flexibility in deciding your insurance cover
2. Liquidity in corpus withdrawal
3. Mortality charge of insurance cover
4. Overall fund management charges
5. Higher premature death benefits
1. Flexibility in deciding your insurance cover
2. Liquidity in corpus withdrawal
3. Mortality charge of insurance cover
4. Overall fund management charges
5. Higher premature death benefits
(C) In the above scenario, if you opt for a tax-saving (ELSS) fund instead of a Balanced fund, you can also avail Sec 80C tax benefits on both TIP premium and SIP investment.
(D) For retirement income upon survival, a regular income stream can also be generated through Systematic Transfer Plan (STP) of the accumulated Mutual Fund (MF) corpus, suiting your monthly expenses at that time, while letting the MF corpus continue to grow by the power of compounding.