After nearly two years, country’s largest insurer, Life Insurance Corporation of India (LIC) will launch a Unit-Linked Insurance Plan (ULIP) with intention to take advantage of prevailing positive sentiment in the stock markets.
This would also help LIC to achieve its target of Rs 45,000 crores of new premium income in financial year 2012-13 and increase its market share.
At present, LIC has market share of 75% in terms of premium and 81% in terms of number of policies sold. LIC’s last ULIP –Samridhi Plus –, a guaranteed NAV plan, was launched in February 2011.
ULIP used to be a favorite investment option for investors pre-September 2010, when Insurance Regulatory and Development Authority (IRDA) came out with stiff norms. IRDA mandated minimum mortality cover and increased lock-in period from three years to five years. As a result, ULIPs took a huge beating and ULIP premiums, which accounted for 90% of first-year collection of life insurance companies, saw their share fall to less than 30%. As of 31 March 2012, share of ULIPs in LIC’s premium was 20% down from over 70% in pre-2010 period.
Private life insurers view this development of LIC as positive step for the industry. If LIC goes aggressive on ULIPs and launches new products, it will benefit the industry as a whole. LIC has greater reach and with its huge agency network it will be able to reach thousands of customers and explain the advantages of ULIPs. And people would be able to re-accept ULIP as good product for long term investment purpose. LIC’s these efforts would be able to bring ULIPs back to prominence in the market.
In addition, LIC will also launch a pension product shortly. LIC has filed both products with IRDA for approval and expecting approvals soon.
On the pension product front, LIC is the sole player till now. In January 2012, IRDA has said that pension products will have to guarantee an assured benefit in the form of non-zero rate of return that would be disclosed upfront. New regulations had led to slower approval of pension products which has resulted in dearth of pension products in the market.
Categories: News | Tags: IRDA, LIC, Life Insurance Corporation of India, Pension Products, ULIP
vinay mohanty
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