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Savings-linked general insurance plans on cards

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Our Bureau

Mumbai, Feb. 10

THE market could soon see the introduction of a host of savings-linked general insurance products. The National Insurance Academy is designing a series of such innovative products for companies such as General Insurance Corporation of India, UTI Mutual Fund and United India Insurance Company.

Dr K.C. Mishra, Director, National Insurance Academy (NIA), said that it had designed such long- term fire, motor, engineering and healthcare products for GIC. Since GIC is a re-insurer, it will only provide reinsurance while the product will actually be offered by insurance companies.

The concept of the long term or the savings-linked insurance product means that the bonus one receives for making no claims is credited to a `savings account'. In the area of health insurance, for instance, there can be long-term products for the present as well as the next generation. For example, in the case of a `generational health product', if a person does not make any claims on his health insurance policy, then the discounts in the premium will be credited to an account. Once the discount becomes 100 per cent, the individual does not have to pay any more premium for the rest of his life.

In the case of an `inter-generational health product' benefits such as tax rebates can be passed on to the next generation as well. Dr Mishra said that UTI Mutual Fund had expressed interest in introducing a similar health rider with its mutual fund product.

He said US-based companies such as Janus and Vanguard had popularised such products.

National Insurance Academy is also working on a savings-linked health insurance plan for United India Insurance Company.

Mr M.K. Garg, Chairman, United India Insurance Company, said that currently 60 per cent of the insurance business was `return-linked'. Hence, a savings-linked insurance product will be popular because it inculcates the habit of saving, takes care of premium payment and the customer also receives returns.

(This article was published in the Business Line print edition dated February 11, 2006)
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