After showing a 27.22 per cent increase in new premium collection at Rs 1,24,396 crore in fiscal 2016-17, Life Insurance Corporation is raring to go with new plans. The insurance behemoth has launched its second product — the first being two endowment assurance plans for individuals having Aadhaar card last month — in quick succession after a long break. At a time when interest rates in the country are going downward, LIC has for the first time come out with a 100-year plan ‘Jeevan Umang’ with an assured return of 8 per cent.
Exuding optimism, LIC chairman VK Sharma said good days are ahead for the industry. “Next three to five years is the period of insurance business… as an industry we have shown double digit growth and LIC has been ahead of the industry. We expect that we will be in the double digit growth in the current fiscal also,” Sharma said.
The latest 100-year plan which provides cover up to age 100 offers a combination of income and protection. The product placement is such that this plan is available from age 90 days to 55 years. There is no upper limit to the Basic Sum Assured but it will be in multiples of Rs 25,000 with premium paying terms having option of 15, 20, 25 and 30 years. This plan provides for annual survival benefits from the end of the premium paying term till age 99 and a lump sum payment at the time of maturity or on death of the policyholder during the policy term.
“India’s opening up to globalisation has ushered in many changes in the demographics of employed and employable personnel. There has been a meteoric rise in the career and finances of personnel which has most of the times been followed by steep plummeting at jet speed too, or worse being handed over a pink slip, when the economic scenario changes. This volatility leaves this generation of executives vulnerable,” Sharma said.
“I see a huge opportunity for LIC to tap into this segment providing long term income and protection. LIC should be a major part of their investments and savings portfolio, because it does have products which can insulate them from such stark contrasts in life,” Sharma said.
The uniqueness of the is that Guaranteed Survival Benefit is payable on the life assured surviving to the end of the premium paying term, provided all due premiums have been paid or the paid up value in Rs 2 lakh or more. “The survival benefit will be equal to 8 per cent per annum of Basic Sum Assured and paid-up Sum Assured respectively. The first survival benefit payment is payable at the end of premium paying term and thereafter on completion of each subsequent year till the Life assured survives or till the policy anniversary prior to the date of maturity, whichever is earlier,” Sharma said.
When asked whether 8 per cent return is sustainable, Sharma said, “we are getting good returns on our investments… which is sufficient to pay the policy holders.” The death benefit will not be less than 105 per cent of all the premiums paid as on date of death. “The first survival benefit payment is payable at the end of premium paying term and thereafter on completion of each subsequent year till the life assured survives or till the policy anniversary prior to the date of maturity, whichever is earlier,” Sharma said.
In April, it launched two Aadhaar-based plans. While the Aadhaar Shila is a plan exclusively designed for women, the other scheme Aadhaar Stambh is meant for men. Absolute amount assured on death under Aadhaar Stambh is 100 per cent, whereas for Aadhaar Shila it is 110 per cent of basic sum assured.
LIC which currently has around 26-27 products plans to come out with another 55-60 products in the next one or two years across the segment. The corporation’s total assets rose 12.81 per cent to Rs 24.42 lakh crore as of December 2016, from Rs 21.65 lakh crore in the year-ago period. Its gross total income increased 15.76 per cent to Rs 3.37 lakh crore till December from Rs 2.91 lakh crore, driven by the new business premium.
