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SEBI has asked LIC MF and UTI MF to discontinue their MF schemes offering insurance coverage, said two sources privy to the development.
SEBI has reportedly asked them to abstain from receiving fresh inflows in their ULIPs for now, said sources. A source from one such fund house said, “We have sought clarification from SEBI on this as the circular is applicable for schemes offering SIP insurance.”
Both the fund houses will accept applications form till 3 pm, June 30.
Another senior official requesting anonymity said the scheme offered by his company is approved by the government. He understands that the latest communication is applicable for facilities like SIP Insure, SIP Plus, Smart SIP, Century SIP and so on.
Currently, the MF industry has two solution-oriented schemes which offer insurance coverage – LIC MF Unit Linked Insurance and UTI Unit Linked Insurance Plan. Both the schemes offer mortality benefits i.e. nominees get sum assured on death of unit holders.
Earlier, this week, SEBI has directed fund houses not to bundle insurance or any other financial product with schemes like SIP insure. The market regulator said, "It is informed that no existing schemes or one which are proposed to be launched shall have bundled products e.g. insurance features with respect to scheme investments," the letter stated.
