As life expectancy rises, LIC lowers premium rates for some age groups

The Life Insurance Corporation has passed on the benefits of a new mortality table to its policyholders, said SK Roy, Chairman. LIC rejigged its portfolio to adopt a new mortality table in accordance with regulatory requirements. The new table incorporates the improved average life expectancy of Indians — which has moved from 60 years in 1996 to 65 years in 2011.

This has resulted in the premium being a little lower (about 10 per cent, according to the risk pricing for mortality), say financial advisors. Asked about the actual pricing gains for customers, Roy, while declining to mention a specific number, said: “The level would depend on age groups and products.

“At higher ages, it is quite significant, because mortality over the 20-year term has improved dramatically as far as longevity is concerned.”

Asked about the impact of the new product regime which came into effect from January 1 this year, Roy said LIC has around eight products in place that takes care of 90 per cent of market requirements.

Other products for niche markets will be brought in gradually. He also clarified that LIC has no intention of launching a unit-linked product (ULIP) at the moment.

“We want to concentrate on the traditional platform which has always been the mainstay of LIC,” he said. Agreeing with the view that the products that went out of operation (under the new regulatory regime) were iconic, Roy, in a lighter vein, compared these to the retirement last year of the Indian cricket team’s famed middle-order batsmen.

These products used to generate a significant portion of LIC’s total sales.

Asked about the current fiscal’s targets, Roy felt that sales would pick up in these two months, which are traditionally the strong months for the industry.

He said, “We had budgeted a growth of 12 per cent in first premium income, but we are right now at 30 per cent growth, so in the current year we are already two-and-a-half times our targeted growth.”

Speaking about investments made by LIC, Roy said at least about ₹5,000 crore more would be invested in the next two months, taking its total equity investments this fiscal to a minimum of ₹40,000 crore. Total investments, including debt, would be ₹2.20-lakh crore, he said.