Unit-64 was India’s first Mutual fund, started by Unit Trust of India, a government financial institution. It was an utterly opaque fund where units were sold at prices that had no correlation to underlying asset prices, which by the way were never disclosed. It was also mis-sold as guaranteed dividends and the yield was somewhere close to 10% year after year, decade after decade. Many folks saw this as a fixed-income fund that was marketed and deemed safe. Once it unraveled, the government stepped in and split UTI into two, with a special purpose vehicle to hold the units which were eventually redeemed and investors did not suffer any loss as far as I can recall.
Coming to LIC if there is pain coming here, it can be lot more damaging since the funds with an Insurer would be much higher than a mutual fund. One huge perceived and perhaps unfair advantage that LIC has over other Insurers is that the investor’s money has sovereign guarantee so the risk of eventual default is low as things stand today. It is safe to assume and act on the belief that any Insurance or Provident fund is a giant Ponzi scheme that needs an ever growing subscriber base to sustain it. A younger demographic thus becomes essential for such schemes and companies to live, and Indian Retirement funds may have a few more decades left in it.