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Kolkata, Oct 2

The dispute over insurance cover for mutual funds, particularly for systematic insurance plans, has temporarily been resolved. On directive from Insurance Regulatory and Development Authority (IRDA), the Life Insurance Council has put on hold the decision to discontinue offer of group covers on mutual fund products. Life Insurance Council, the representative body of the insurance industry, had earlier decided to discontinue the offer of group life insurance cover on mutual fund products with effect from October 1.

This move follows a meeting by the regulators, IRDA and SEBI. However, all the related issues would further be reviewed to arrive at a lasting solution to the problem trespassing into a different regulatory domain. Mutual funds have complaints against unit-linked insurance products (ULIPs), whereas insurers objected to systematic investment plans (SIP) with life insurance cover. IRDA is already is looking into the pricing framework of ULIPs. According to Mr Dhirendra Kumar of Value Research, a mutual fund monitor, there has been serious allegation of mis-pricing the ULIPs. The group insurance cover for SIP investors, on the other hand, was a sweetener, which did not harm for the insurers.

— Our Bureau

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