Life Insurance Corporation of India has decided to relaunch its traditional single-premium without-profit insurance polices to offer increased returns in line with rise in interest rates in recent times.
It is going to offer the products under Bima Nivesh and Jeevan Akshay insurance plans. LIC officials said this is an attempt at passing on the benefits of higher interest rates to its customers. The single-premium policies where it has proposed repricing also include 'guaranteed returns' products.
Interest rates have gone up by 25-50 basis points across short, medium and long terms in the last six to seven months. Keeping this in mind, LIC has filed revised policies with Insurance Regulatory and Development Authority for approval, the officials said.
The single-premium policies account for 10-15
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per cent of LIC's total premium income. During April-October 2005, LIC's individual single-premium income was Rs 3,786.65 crore (Rs 37.86 billion) and group single-premium income was Rs 1,541.20 crore (Rs 15.41 billion).
LIC will either enhance the returns offered on the single-premium products or reduce the premium charged. The premium paid upfront will be reduced or the benefit amount paid on maturity of the policy would be increased.
The guaranteed policies are plans where the payment at the end of the tenure is fixed, and without-profit policies are products that are not entitled for bonus announced by insurance companies.
The total number of individual single-premium policies sold by LIC this year so far totalled over 10.51 lakh and group single-premium policies were 7,611.
