Traditional insurance policies back in vogue
Traditional insurance policies that lean on investment in government securities and debt instruments are back in fashion as risk averse buyers are drifting away from policies linked to equities that have got mauled in the market.business Updated: Mar 10, 2009 20:54 IST
Traditional insurance policies that lean on investment in government securities and debt instruments are back in fashion as risk averse buyers are drifting away from policies linked to equities that have got mauled in the market. But not all insurance companies report the trend.
T.S. Vijayan, Chairman, Life Insurance Corporation of India (LIC) said, “The growth in Ulip (unil-linked insurance plan) business has remained negative for us in the last 11 months (April 2008 to February 2009) while the business from traditional policies has been very impressive.”
The behemoth had collected over Rs 10,000 crore from the sale of Jeevan Aastha, a traditional single premium plan that guarantees returns in a five-year lock-in.
“We are seeing a shift towards traditional policies and a bias towards the debt and balanced funds in the case of Ulips. In the total proportion of our new business premium, the share of traditional premium has increased to over 20 per cent from April to January 2009 compared to 15 per cent in the same period of last year,” said Sunil Kakar, finance director at Max New York Life.
However companies like Reliance Life, Aviva Life and ICICI Prudential Life said that they are not witnessing any major shift towards traditional plans.
Almost every life insurer has launched in recent months plans that guarantee the premium or returns.
Kamesh Goyal, CEO at Bajaj Allianz said his firm last year launched an asset allocation fund in which a fund manager decides the mix between equities and fixed income instruments.
“We notice lots of our customers have started opting for this fund,” he said.