The UTI Mutual Fund Unit Plan was launched in 1993 and has finally been
terminated in February this year though the notice has been sent to
investors just a few days ago. The open-ended scheme also suspended its
fresh sale of units in the year 2000. It was a one-time investment scheme,
which allowed mutual fund investments and also assured a Rs 5 lakh health
cover post-55 years of age. However, the investor at 55 years of age started paying premium for the future health cover and nearly 75,000 investors have actually been refunded this money because of the termination of this scheme.
*The reason for the collapse of the scheme:*
New India Assurance, the company providing the health cover said that the
premium rates and the increasing health expenses made it unfeasible and
unviable to provide health insurance to investors at a nominal cost.
Also in 2003, when UTI was restructured, SEBI said no MF house could offer
schemes that provide assurance of any kind, which is why the scheme was
terminated.
*Which age group will be affected most by this move?
It is the age group between 55- 58 yeas who have been hurt the most, who started paying their premium but still do not have their health cover. So for eg if one invests about 1 lakh at the age of 50 years and at 55 years he starts paying a premium for the health cover of Rs 6,000 a year but the scheme terminated before he turns 58 years, so while the entire premium he has paid to date gets refunded back to him but that is of no interest and to add to that no health cover is available which he assumed he would get at a later date as he had specifically invested in this scheme for this benefit. Therefore, these set of investors have been hurt the most due to termination of this scheme.
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