LIC Nomura Mutual Fund today announced the launch of its facility called ‘Auto Premium Payment System” (APPS) in collaboration with LIC of India for investors to make timely payment of their LIC insurance premiums.
Nilesh Sathe, Director & Chief Executive Officer, LIC Nomura Mutual Fund said, “This scheme is one of its kind in the country introduced by LIC Nomura MF in association with LIC of India. Auto Premium Payment System (APPS) will create a distinctive and hassle free avenue for payment of premium and will help us increase our retail base.”
What is it: Through this facility, your insurance policy premium amounts will be remitted on the due date to LIC by LIC Nomura Mutual Fund from your mutual fund holdings .
Which schemes quality: You can avail this facility if you have invested in any of the 3 schemes: LIC Nomura MF Liquid Fund, LIC Nomura MF Savings plus Fund, LIC Nomura MF Income plus Fund.
What’s the procedure: Once you have invested in anyone of the qualifying schemes, you need to register for an auto-SWP (Systematic Withdrawal Plan) facility, by filling the mandate. You will need to submit the mandate at any of the mutual fund's or insurance branches.
Cost: You don’t need to pay a charge to use the facility. In fact, you don’t need to pay an exit load when your funds from mutual funds are moved via APPS to pay your insurance policy premiums. In fact, if you don’t have adequate balance in your mutual fund holdings, and your payment bounces, you won’t be charged a fine. However, if you fail to make the payment then you will have to use the alternate mode of payment, like cheque, ECS or net banking.
Firstpost take: If you are someone who misses premium dates, this facility might work for you since risk of policy lapsing is eliminated, as long as you have balance in mutual fund schemes. However, this can be as easily done by giving standing instructions to your bank or setting up an ECS. For those who prefer keeping funds in cash schemes (which could offer higher returns) than in a current account or savings account, this facility might work better. Since you don’t have to pay anything extra for the facility, this might just work as an alternative mode of payment.