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CSEET · Economic and Business Environment · Indian Financial Markets

A unit-linked insurance plan sold by an insurer invests the premium in market-linked funds. Which statement about regulation of this product in India is correct?

IRDAI regulates the insurer and its unit-linked plan because it is an insurance product, even though funds are invested in markets. SEBI separately regulates mutual fund schemes. The RBI does not approve insurance plans, and the claim of no oversight is wrong.

  1. ASEBI alone regulates the insurer and the plan, since it invests in securities
  2. BIRDAI regulates the insurer and the insurance plan, while SEBI regulates mutual fund productsCorrect
  3. CThe RBI approves the plan since it involves bank deposits
  4. DNo regulator oversees such plans because they are market-linked

Explanation

A unit-linked plan is an insurance product, so the insurer and the product fall under IRDAI, including investment norms for insurers. SEBI regulates mutual fund schemes, which are different products. Saying SEBI alone regulates it ignores that the insurer is licensed by IRDAI, and the RBI does not approve insurance plans.

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