The Hindu Business Line : Unit-linked policies drive LIC(S) growth

NEW business generated by the south zone division of Life Insurance Corporation has more than doubled in the current financial year, driven primarily by the growth in sales of unit linked policies.

Mr R.R. Nair, Zonal Manager of LIC's south zone division, said unit linked policies sold in three-and-a-half months (till July 15) generated a premium income of Rs 142 crore, as against the segment's total premium of Rs 126 crore in 2003-04.

Traditionally, the life insurance market has been dominated by endowment and money back policies. However, almost half the new business generated by south zone in the current year, Rs 291 crore (Rs 117 crore), came from unit linked policies. At the national level, Mr Nair said south zone had contributed about 45 per cent of the business in unit linked policies.

Following the increased importance of unit linked policies in south zone's new business, the average value of a policy has increased to Rs 5,200 from the earlier level of Rs 2,300. Mr Nair said the average value of a unit linked policy is Rs 40,000. Unit linked policies allow policyholders to choose the pattern of investment unlike traditional insurance policies. In many ways, a unit linked policy mirrors a mutual fund.

Though unit linked policies fetch LIC's agents a lower level of commission, Mr Nair said special training sessions to select agents offset drawbacks.