Money Matters

  • Ifthikar Bashir
  • Publish Date: Apr 9 2018 1:37AM
  • |
  • Updated Date: Apr 9 2018 1:37AM
Money Matters

Can I withdraw or redeem my ELSS investments made via Systematic Investment Plan after the lock-in period? Should I have to wait for the lock-in period of my last SIP to get over?

Umar Altaf, Sopore


Equity Linked Saving Schemes, or ELSS, or tax saving mutual fund schemes come with a mandatory lock-in period of three years. The lock-in period is applicable to every Systematic Investment Plan instalment in ELSS. You can redeem an SIP investment only after the lock-in period.


I am a first-time investor but I can take risks. I want to invest in mutual funds for a tenure of 10-15 years. How should I go about it? 

Wasim, via email


Even if you are ready to take risks, as a new investor when you actually face a market correction, you might be in a different situation. I will still suggest you stick to a balanced fund for the first 2-3 years and then move to all equity funds. If you want some tax-saving benefits, you may choose ELSS funds rather than a balanced fund.


I have heard that mutual fund schemes are handled by fund managers. How important is the role of the fund manager?

Arshad M, Regal Chowk, Srinagar

He is the most important person when it comes to a mutual fund scheme. When you are buying insurance or stock from a broker, the person involved is important but the delivery there is highly structured and defined. The fund manager is a person who is entrusted with managing your money. We worry when a person managing a fund for a long time changes. So the fund manager is all important.


I am a green card holder in United States. I want to know if an NRI, PIO or OCI can invest in mutual funds. If yes, how? 

Faheem, via email

Overseas Citizens of India and Persons of Indian Origin are treated on a par with a Non Resident Indian in all transactions. This means an OCI or POI can invest in Indian mutual funds. However, only a few mutual fund houses accept investments from American and Canadian citizens at the moment. 

You can download a soft copy of the KYC form available on the websites of mutual funds, Amfi and KYC Registration Agencies. Submit this form, along with the necessary documents, to a KRA’s point of service in person. You can also send it by post or courier to the KRA agency if the In-Person Verification is completed. In the case of NRIs or PIOs, the IPV should be completed by the distributor or a scheduled commercial bank. This can be done online as well.

The documents you will require to complete the process include a recent photograph, PAN card, identity and address proof, a certified copy of the passport, overseas and permanent address and your PIO card. NRIs and PIOs can get these documents attested by authorised officials of overseas branches of scheduled commercial banks registered in India, public notaries, court magistrate, judge, or the Indian embassy or consulate general in the country they reside in. If the proof of identity or address, or other specified documents are in a foreign language, they have to be translated into English before submission.

I want to buy a senior citizen health insurance plan for my mother, who is 55, and father, who is 60. Which plan would be best for them?

Mehvish, Peerbagh, Srinagar


Since one of your parents is a senior citizen, you should compare a family floater plan that includes both parents with two individual policies and choose the best option. Some insurance companies have designed policies to cater to the needs of senior citizens. These policies typically cover both hospitalisation and domiciliary hospitalisation – wherein the patient is bedridden but not hospitalised for some reason. The premiums will be on the higher side for senior citizen plans.

While choosing a health plan, the first thing to ensure is that it provides adequate coverage and the premium is within your budget. You should also check the clause dealing with pre-existing diseases. The waiting period for covering pre-existing diseases differs from one insurer to another and ranges from two to four years. Consider policies that have a lower waiting period. Remember that most health policies will not reimburse you for any treatment undergone within 30 days of buying the policy. Most health insurance companies offer both cashless – wherein the insurer reimburses the hospital directly – as well as reimbursement facilities. It is better to go for the cashless facility as it saves the trouble of arranging funds to pay the hospital bills. It also involves less paperwork and hassle than the reimbursement facility. Check the network of hospitals in your city where the cashless facility is available and see whether an empanelled hospital is near your residence. You can explore Apollo Munich’s Optima Restore or policies offered by ICICI Lombard. Both have good ratings and claim settlement ratios.


I have been investing in ICICI Prudential Life Insurance through a Systematic Investment Plan since November 2009. Should I continue investing in this plan or should I stop the policy and opt for an Equity Linked Savings Scheme, which has a lock-in period of only three years. Also, would it be better to withdraw or hold on to the policy?

Nighat, via email

It seems you are a victim of mis-selling. The salesperson might have sold you an insurance product instead of an investment product. ICICI Prudential Life Insurance is a life insurance company that sells insurance plans. You may be actually paying a monthly premium for an insurance product that might have an investment element in it. You can invest through a Systematic Investment Plan only in a mutual fund scheme. I suggest you check your records to verify whether you have bought an insurance product or a mutual fund scheme.

You cannot compare an insurance product with a mutual fund scheme or ELSS. They serve different purposes. If you want a life insurance cover, buy a pure-term insurance plan. They have lower premium and you can buy a very large cover by paying small premiums. If you want to invest for a period of at least five years, you can consider investing in equity mutual fund schemes like ELSS. Though ELSSs have a mandatory lock-in period of three years, invest in them only if you have an investment horizon of around five years.

Discontinuing an insurance plan is problematic, not least because you may incur tax and you may also lose money. You have to consider these aspects before surrendering a plan.