India, Aug. 18 -- Sometime over the course of financial year 2025-26, the unthinkable will happen. The assets under management (AUM) in the Indian mutual fund industry will overtake those in the life insurance industry and end the current financial year just below the Rs.80 lakh crore mark. Not just in terms of size, but also in terms of reach: Life insurance penetration (percentage of life insurance premiums to GDP) has remained stuck at less than 3% for over a decade, while the share of mutual funds in household savings has gone up to 8.4% in March 2023 from insignificant levels earlier.

While the mutual fund SIP has become a household name, the bad smell around mis-sold life insurance products refuses to go away. The reason for this c...