Due to non-payment of SIP installments within a specified period, investors get worried about the losses in mutual funds. Such a situation can come up due to many reasons, you are facing any financial crisis or the situation of your job or business is not sure. In such a situation, it is natural that you will not be able to pay the SIP installments regularly. Since SIPs are a long-term investment option, there is no need to worry if you miss out on paying a few installments in between. On the contrary, in an insurance policy, if you forget to pay the annual premium, there is a possibility of your policy being deactivated or inoperative whereas the investment made by you in SIP will continue to give you returns and you can withdraw it anytime. If you become excessively irregular in SIP payment, your financial goals will not be met on time and your wealth accumulation will also be less.
Although Mutual Funds companies do not penalize you for the default of SIP installments, if you miss three consecutive installments, the SIP will be automatically cancelled. Your bank may penalize you for dishonest (auto) debit payment, that is, for non-fulfillment. Therefore, it is advised to you to submit an application to stop SIP 30 days before stopping the SIP if you are anticipating any cash crunch in future. When your financial condition gets better, you can start a new SIP.