ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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ULIPs and Mutual Funds: The Unidentical Twins

The expansion in the life insurance sector in the post-deregulation period has seen a disproportionate growth of unit-linked insurance plans. However, ULIPs have little value in promoting long-term savings. Moreover, if the insurance and pension sectors are to support infrastructure investments and the development of the corporate bond market, then life funds, rather than short-term investment products, should be the preferred instruments. Given that insurance companies and mutual funds operate under different regulatory regimes with separate prudential norms, the Financial Stability and Development Council should constitute a joint forum between the Securities and Exchange Board of India and the Insurance Regulatory and Development Authority that will focus upon orderly development of MFs and ULIPs.

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