A clutch of life insurance companies recently launched small-cap index funds, marking a new trend. Life insurers rarely launch such funds: Mutual fund (MF) companies do that.
There is a catch: To invest in a small-cap index fund of a life insurance company, a customer will need to invest in a ULIP (Unit-Linked Insurance Plan). A life insurance company can add an index fund to its suite of ULIP offerings, but a customer can invest in such a fund if she buys a ULIP. A ULIP doubles as an insurance and investment product.
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