AMFI wants MFs to offer insurance products

AMFI has made a proposal with the capital markets regulator to allow the mutual fund houses to offer insurance cover to investors along with their regular schemes.

Association of Mutual Funds of India (AMFI) has made a proposal with the capital markets regulator to allow the mutual fund houses to offer insurance cover to investors along with their regular schemes.

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“We are waiting for the in-principle approval from the regulator,” said AP Kurien, chairman AMFI. “We have proposed that the mutual fund companies will tie up with the insurance companies and offer insurance products, the premium for which will be collected separately.” The association chairman is of the view that this will add greater diversity to the mutual fund offering to the investors.

If allowed, mutual funds may come up with different insurance covers tagged with their products. Like, if an investor stays with a scheme for three years, he would be offered a certain insurance cover. If he stays for five years, he may be offered a more attractive cover.

The industry is taking the move in good faith. “It will see mutual funds offering insurance as bundled product and then the customer will have the choice to decide,” said Jaideep Bhattacharya, chief marketing officer, UTI Asset Management.

However, the mutual fund industry needs a level-playing field with the insurance industry. The distributors apparently get commissions of up to 40 per cent in the first year on insurance products sold whereas the commission structure in the mutual fund industry is much lower at around two to 2.5 per cent.