SEBI Plans to Introduce a New Combo Product Pairing Mutual Funds With Term Life Insurance

The Securities and Exchange Board of India (SEBI) is working on an innovative financial product aimed at increasing financial inclusion across the country. SEBI’s Chairperson, Madhabi Puri Buch, recently shared details about a new initiative that will allow investors to pair mutual fund investments with life insurance. 

This development, expected to expand access to financial products, particularly in rural areas, will offer an affordable combination of insurance and investment options to underserved communities. The regulator’s ongoing efforts are designed to address the needs of investors while leveraging technology to enhance trust in the financial system.

New Product Aimed at Expanding Financial Access

SEBI’s new product will give investors the option to link their mutual fund investments with life insurance, specifically a term life policy. This initiative aligns with the regulator’s goal of reaching more investors, especially in rural areas where Systematic Investment Plans (SIPs) remain underdeveloped, despite their vast potential. By introducing a low-cost, bundled offering, SEBI aims to provide an accessible solution that meets the financial needs of a broader demographic. The new product will also keep the marginal cost of the additional life insurance premium minimal, benefiting both investors and financial service providers.

Buch highlighted that SEBI’s efforts are targeted at growing the reach of mutual funds, particularly in areas where SIP investments are still low. She emphasised that the new combo product would address the demand for affordable insurance solutions alongside investment opportunities, which is a step towards financial inclusion for rural and underserved communities.

SEBI’s Focus on Trust and Security in the Digital Ecosystem

In addition to the combo product, SEBI is also focused on increasing trust in the financial ecosystem by leveraging technology. The regulator is planning to introduce the “Pay Right” initiative, which will allow investors to verify the authenticity of a UPI ID before making financial transactions. This initiative aims to combat digital fraud, ensuring that investors can confirm they are making payments to legitimate recipients.

The emphasis on digital assurance comes at a time when fraud in the digital space is becoming a growing concern. By integrating robust KYC (Know Your Customer) protocols, SEBI plans to help differentiate legitimate financial intermediaries from fraudulent entities, reinforcing investor confidence in the digital landscape.

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