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PNB MetLife sells ULIP as small cap fund and all eyes are on the insurance regulator

This is due to the fact that ULIPs are insurance products by definition, and a portion of the premium is invested in the stock market. The remaining portion establishes the life cover, or the sum payable to the beneficiaries of an insured person in the case of their demise.

Written by Thelearnvine

Planned is the IRDAI According to a person acquainted with the situation, the IRDAI is anticipated to intervene in this instance to stop any possible mis-selling.according to a person with knowledge of the situation, to take action in this instance to stop any mis-selling. Presently, PNB MetLife India Insurance Co. is offering a unit-linked insurance plan under the small-cap fund brand, which might lead to the insurance product being missold.
 

This is due to the fact that ULIPs are insurance products by definition, and a portion of the premium is invested in the stock market. The remaining portion establishes the life cover, or the sum payable to the beneficiaries of an insured person in the case of their demise.
Mutual funds refer to programs that invest in the stock market as small-cap funds. The Securities and Exchange Board of India created the laws that oversee the mutual fund sector and, consequently, these schemes. Mutual funds must distinctly declare the degree of risk associated with these investments in order to comply with these requirements. The highest level of risk, referred to as "very high," is associated with small cap funds.

According to the PNB MetLife commercial, "In this policy, the policyholder bears the investment risk in (the) investment portfolio." There are no more restrictions on the risk that the policyholder bears.
There is a five-year lock-in period for ULIPs. Withdrawals, either whole or partial, are often only allowed once this time has passed. Except for equity linked savings plans, which are devices that save taxes, equity mutual fund schemes do not have a lock-in term of this kind.

Regulatory Action
According to a source who is familiar with the case, the Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority of India (IRDA) are both aware of the situation, and there is regulatory convergence and understanding between the two organizations.
According to the source, Profit under condition of anonymity since the information is confidential, the insurance regulator is anticipated to intervene in this instance to stop any mis-selling. It is anticipated that both regulators will respond.

Company Response
"We firmly believe that the advertisement does not in any way mislead or misrepresent the product." PNB MetLife is dedicated to giving clients honest and transparent information about its goods and services. Before making any decisions, we advise prospective policyholders to carefully examine their goals and risk tolerance."

Additionally, it made it clear that the "PNB MetLife Small Cap Fund" "is not a ULIP product, but a ULIP fund," and it said that the product launch was conducted in accordance with the necessary regulatory procedures.
But the company's ULIP plan is the only way to purchase the small-cap fund.
It further stated that its "Sales Literature and Benefit Illustration issued to prospective policyholders clearly mentions this fund as “very high risk," stating that it had "internally advised our distributors of the very high-risk nature of funds and the need to remain invested for the long term to see material gains."
 

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