New guidelines for linked and non-linked insurance policies were implemented in life insurance from January 1, 2014 onwards. These rules made changes in the product structure and surrender benefits, making the product more transparent for the customer.
Under the new norms, life insurance companies had to stop selling existing products and introduce new ones. LIC, too, withdrew its products from the market and introduced new guidelines-compliant variants of the products including money back plans.
However, there has not been any Ulip product launch in 2014 under the new guidelines. Ulips constitute less than 10 per cent of the total product mix of LIC and the rest comprises traditional life insurance products.
The last time the life insurer launched a Ulip plan was in January 2013, that too after a gap of two years. The product, 'Flexi Plus', was a unit-linked assurance plan which provided a lumpsum benefit on death and also the maturity benefit irrespective of survival of the policyholder. However, with the new product guidelines being implemented, this product had to be replaced.
LIC, which has planned to launch 15-20 products in the first phase of the new product regime, has filed only traditional products with the Insurance Regulatory and Development Authority (Irda) and no Ulips. A senior LIC executive explained there was no urgency to launch a Ulip.
In December 2013 as well, LIC’s chairman S K Roy had said the insurer’s priority is to get traditional products in place.
Ulips, which used to be a darling of investors, took a beating following stiff norms set by the insurance regulator in September 2010, mandating a minimum mortality cover and increase in the lock-in period from three years to five years.
As a result, Ulip premiums, which accounted for 90 per cent of the first-year premium of life insurance companies, saw their share fall to less than 30 per cent. Recent data shows that the share of Ulips in LIC’s new premium is less than 10 per cent, down from over 70 per cent in the pre-2010 period.
However, LIC customers, especially the technology-savvy ones, have reason to cheer. For, the insurer has already filed an online term plan with the insurance regulator and, once approved, customers can purchase it online. The insurer already has an immediate annuity plan, Jeevan Akshay VI, which is fully online.