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Unit-linked insurance plans are unable to attract the attention of investors as they did earlier, even in the present tax-savings season.
The sales mix of private life insurers show that traditional, pure life products have almost choked the growth of unit-linked plans.
Before the introduction of new regulatory norms about one-and-a-half-years ago, unit-linked plans were hot favourites of the investors, especially during November-March period when insurance is also purchased to save income-tax.
“At this juncture, ULIPs are not growing beyond 60 per cent of the private life insurance segment,” Mr Tarun Chugh, Executive Vice-President, ICICI Prudential Life Insurance Company, said.
Before the enforcement of new regulations in September 2010, unit-linked products accounted for about 95 per cent of the business of private life insurers.
SALES STRATEGY
The sales strategies have also been changing to what has been called a need-based or goal-based selling.
The industry has been witnessing a differentiated set of customers who are buying insurance for varied reasons with a tilt towards long-term protection.
According to Mr V. Viswanad, Head, Products and Persistency Management, Max New York Life Insurance Company, all sales channels of his company would migrate to a need-based sales strategy.
“It is not a question of ULIPs and traditional products but what suits a customer,” he said.
Even going by this parameter, the share of traditional products in sales has been increasing.
The sales mix of ULIPs and traditional products was 60:40 per cent for Max New York about a year-ago.
“In terms of number of policies, it's 45:55,” he added.
NOT FOR TAX
Further, the objective of tax-saving is no longer a driver for insurance sales, Mr Viswanad said.
“According to a study by AC Neilsen, tax-savings was only the fifth reason to buy insurance even in 2010,” he said.
A proprietary study conducted by Max New York Life six months ago shows this position has slipped further, he added.
All this, however, has led to fewer unit-linked products in the market. According to an official of the Insurance Regulatory and Development Authority, there are about 80 products now compared with over 270 one-and-a-half-years ago.
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