The Hindu Business Line : LIC plans to launch two unit-linked schemes

The two new products will be linked to endowment and pension plans respectively, Mr R.K. Vashishtha, Managing Director, LIC, told Business Line here today.

"While investing in a unit-linked product, a customer must look at, what is the performance of the options offered, how much of the money invested is actually being translated into units and what are the overhead charges," he said.

Currently, LIC has only one unit-linked product in its portfolio, `Bima Plus', of which it has sold 57,000 policies for a premium income of Rs 149.42 crore, as on February 15.

However, the tenure of this product spans only 10 years.

The new product, which will be linked to the endowment plan, will offer cover for 30 years.

The equities market is on a bull run, so there is a tendency to look for quick returns from the market. However, customers are advised to go in for plans depending on their individual capacities for absorbing risk. LIC will offer the various choices that are available in the market so that they have the options to choose from, but customers should take prudent decisions when it comes to investments related to equities market, said Mr Vashishtha.

In keeping with the insurers' plans of revamping its portfolio, based on the suggestions received by its research and development department, LIC plans to withdraw from the market, the high yielding single premium policy with triple cover `Bima Nivesh', giving a yield of 6.5 per cent, as soon as the regulatory clearances are in place.

This will be replaced by another product offering, a variant of `Bima Nivesh', with only a single cover and possibly a lower yield.

As part of its efforts to add more innovative products to its portfolio, LIC recently launched a flexible term assurance plan called `Jeevan Saral.' Despite having been launched towards the end of the fiscal, the scheme has already garnered 36,305 proposals and earned a premium income of Rs 5.12 crore as on February 28,, Mr Vashishta said.

"We wanted feedback from the people in the market, like agents and development officers in different zones, in terms of the changes that can be made in the existing products, and the improvements that can be brought about in the service areas and based on that we are taking the necessary steps forward," he said.

Speaking on LIC's plans for international expansions, Mr Vashishtha said, LIC is scouting the European and the US markets for joint venture business opportunities but as of now nothing concrete has emerged.

"One of the main problems in setting up business in places like the US is that you need a separate license for each state, which can be rather inconvenient. When we do go into this market, we will foray into the distribution business, so that we can get a feel of the market first. But while we are negotiating for the JV, it will be under the understanding that we may eventually also get into the insurance business there," he said.

Meanwhile, LIC will shortly set up an offshore company in Mauritius, which will cater to the needs of the African market. Around 3.5 per cent of LIC's annual premium income is constituted by its international operations.

The insurer already has a presence in Sri Lanka, Nepal, Bahrain and Oman.