The Hindu Business Line : LIC eyes Rs 1,000 cr premium from new gratuity scheme

GRATUITY PLUS: Mr T.S. Vijayan (right), Chairman, Life Insurance Corporation of India, and Mr D.K. Mehrotra, Managing Director, at a press conference in Mumbai on Thursday. - Shashi Ashiwal

Mumbai , June 22

Life Insurance Corporation of India is eyeing Rs 1,000 crore of new business premium from its newly launched group gratuity scheme called "Gratuity Plus".

Mr T.S. Vijayan, Chairman, LIC, said that there had been demand for a unit linked gratuity scheme from the corporation's customers. "Despite the volatility in the market, there will be stability in our growth or equity oriented fund because it is long-term in nature," he said.

The corporation hopes to rake in Rs 4,000 crore as new business premium by the end of the fiscal, against last year's Rs 3,900 crore, Mr Vijayan said.

The corporation has registered new business premium of Rs 715 crore as on June 15 against Rs 469 crore in the year-ago period.

LIC manages funds of over Rs 15,000 crore and 30,000 clients under its conventional gratuity business as on May 31. The corporation's funds under all the group schemes are around Rs 45,000 crore.

Switch option

The existing customers of the conventional gratuity scheme can exercise the option of switching to the unit-linked version. They also have the option to make one free switch per annum between funds. If there is a rise in the stock market and the fund grows, the employer can reduce the contribution the next year, but on the other hand, if there is a fall, the company will have to top up the balance.

Gratuity Plus does not have an exit load and the allocation rate is 100 per cent from the fourth year irrespective of the size of the contribution. Customers have the option of choosing between four funds — Bond, Income, Balanced and Growth fund. The maximum exposure to equity and the growth funds will be 40 per cent. The fund management charges range between 0.65 per cent and 0.8 per cent. The NAV has been pegged at Rs 10 per unit for the next month.

In terms of the individual life insurance business, Mr Vijayan said that currently a little over 50 per cent of the new business came from ULIPs.

The corporation will also expand its agency force from 10 lakh to 11 lakh agents by the end of the fiscal, he said.