MF News SEBI to reintroduce bundling of insurance with mutual funds

SEBI to reintroduce bundling of insurance with mutual funds

SEBI Chief has said that the combo product will help the industry increase its penetration in rural areas.

Team Cafemutual Feb 3, 2025

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SEBI Chairperson Madhabi Puri Buch said that the market regulator will reintroduce a new combo product in which it will allow bundling of term insurance cover with mutual funds, according to a few media reports.

Buch was speaking at an event organised by ICAI. "We are now proposing to come out with a consultation paper again, to try and include insurance pure and simple vanilla life, term life insurance, along with our mutual funds, which is our main product for financial inclusion, and so that we are able to go, including to people where we have very, very low value SIPs coming from the hinterland, and to be able to offer them a combo product of term life insurance along with the mutual fund investment," Buch said.

In 2022, SEBI directed fund houses not to bundle insurance or any other financial product with MF schemes like insurance.

Following this, LIC MF and UTI MF discontinued their MF schemes offering insurance coverage. Also, several fund houses offering insurance with long term SIPs also discontinued this facility

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2 Comments

Anup Agarwal · 1 month ago `

There is no point in clubbing MF with insurance. Both are different themes and in MF we work with minimum cost so that investors are benefitted. Insurance is financial cover which is a form of security or cover in case of mishappening. Whereas MF is linked to wealth accumulation and achievement of goals which a family thinks in positive mood and future planning.

Both have different pitch.

DEBRAJSENGUPTA · 1 month ago `

What she is proposing was in vogue sometime back. Namely Century SIP with Aditya Birla. It was SEBI who withdrew it. The problem is Mutual Fund is still perceived as a short-term bet for earning a High Return. Goal-based planning via SIP is much more on paper rather than in reality. The basic shortcoming are/was if any of the SIPs were dishonored by the Bank due to insufficient funds or Clients wanting to change the date for Auto-debit etc, the insurance clubbed with the investment would go for a toss. If Mutual Funds can bring in some discipline to stop Redemption and allow a maximum of 2 failed SIPs to continue the facility. SEBI should also warm up to the AMCs to run commercials on TV and Social media the importance of having this combo for family's protection.

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