Wait for Ulip plan from LIC gets longer
India's largest insurer yet to file product in segment under new regime
ndividuals seeking to buy a Unit-Linked Insurance Plan (Ulip) from the Life Insurance Corporation of India (LIC) may have to wait a little longer for this product to hit the market. This is because LIC is currently in a wait-and-watch mode towards the Ulip segment and focused on strengthening its traditional product portfolio.
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.
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.
Buy LIC Now because Service tax will make LIC Plans more Expansive from January 2014
From January 2014, LIC policies will cost more. Life Insurance Corporation, which accounts for 83 per cent of the market share, will levy service tax of around 3 per cent on all non-unit-linked products beginning January 1, 2013.
This means if the annual premium for your non linked policy from LIC is Rs 10 lakh, you will have to pay an additional Rs 30,000 ie about 3% Service Tax.
While private insurers add a service tax component to the premium paid by customers, LIC has not been levying the tax on its popular endowment and money-back plans.
From October, however, all LIC policies will attract a separate service tax, says a senior company official. LIC collected Rs 1,87,000 crore as premiums towards its non-unit linked polices in 2011-12.
IRDA DIKTAT
In a recent announcement, insurance watchdog IRDA (Insurance Regulatory and Development Authority) mandated that service tax shall not be included in the contractual premium, but collected from policyholder separately.
Speaking to Business Line, a senior official from LIC said, “We will start charging service tax of about 3 per cent upfront to policyholders from October 1, as prescribed by the IRDA.
“We are currently absorbing the service tax as a part of the policyholder’s funds, as the share capital of the Government (which is our owner) is just around Rs 100 crore.”
He further explained that when service tax is charged separately, LIC may be able to pay higher bonuses on the policies.
All along LIC has been paying the service tax from the money in the policyholders’ account (which holds the premium collected and income from investments). It is the surplus in this account that is declared as bonus on traditional plans.
Customers may, however, see this move only as an additional burden.
A few LIC agents whom Business Line spoke to said the service tax was a deterrent particularly for immediate annuity plans and single premium products where the premium is usually large. Sources: Business Line
This means if the annual premium for your non linked policy from LIC is Rs 10 lakh, you will have to pay an additional Rs 30,000 ie about 3% Service Tax.
While private insurers add a service tax component to the premium paid by customers, LIC has not been levying the tax on its popular endowment and money-back plans.
From October, however, all LIC policies will attract a separate service tax, says a senior company official. LIC collected Rs 1,87,000 crore as premiums towards its non-unit linked polices in 2011-12.
IRDA DIKTAT
In a recent announcement, insurance watchdog IRDA (Insurance Regulatory and Development Authority) mandated that service tax shall not be included in the contractual premium, but collected from policyholder separately.
Speaking to Business Line, a senior official from LIC said, “We will start charging service tax of about 3 per cent upfront to policyholders from October 1, as prescribed by the IRDA.
“We are currently absorbing the service tax as a part of the policyholder’s funds, as the share capital of the Government (which is our owner) is just around Rs 100 crore.”
He further explained that when service tax is charged separately, LIC may be able to pay higher bonuses on the policies.
All along LIC has been paying the service tax from the money in the policyholders’ account (which holds the premium collected and income from investments). It is the surplus in this account that is declared as bonus on traditional plans.
Customers may, however, see this move only as an additional burden.
A few LIC agents whom Business Line spoke to said the service tax was a deterrent particularly for immediate annuity plans and single premium products where the premium is usually large. Sources: Business Line
LIC to open special office in Uttarakhand to settle claims
Read more at: http://news.oneindia.in/2013/06/25/lic-open-special-office-in-uttarakhand-to-settle-claims-1245292.html
New Delhi, June 25: State-run Life Insurance Corporation (LIC) has decided to open special office in Uttarakhand and relax norms to expeditiously settle life insurance claims in the calamity-hit state. "LIC will be opening a special office in that area to attend to all the claimants and relax the usual requirements for claim settlement", LIC acting chairman Thomas Mathew told reporters after a meeting with Finance Minister P Chidambaram. According to sources, Chidambaram had suggested to the insurance major taking additional measures and relaxing norms with regard to missing persons to expeditiously settle insurance claims.
Read more at: http://news.oneindia.in/2013/06/25/lic-open-special-office-in-uttarakhand-to-settle-claims-1245292.html
Read more at: http://news.oneindia.in/2013/06/25/lic-open-special-office-in-uttarakhand-to-settle-claims-1245292.html
New Delhi, June 25: State-run Life Insurance Corporation (LIC) has decided to open special office in Uttarakhand and relax norms to expeditiously settle life insurance claims in the calamity-hit state. "LIC will be opening a special office in that area to attend to all the claimants and relax the usual requirements for claim settlement", LIC acting chairman Thomas Mathew told reporters after a meeting with Finance Minister P Chidambaram. According to sources, Chidambaram had suggested to the insurance major taking additional measures and relaxing norms with regard to missing persons to expeditiously settle insurance claims.
Read more at: http://news.oneindia.in/2013/06/25/lic-open-special-office-in-uttarakhand-to-settle-claims-1245292.html