Child insurance is the new buzzword in life insurance. Seeing huge growth potential in this segment, insurers are pushing sales by introducing innovative products for a child’s education and protection.
Offers such as death benefit, policy continuation and premium waiver are attracting policyholders. In 2008-09, almost a fifth, or Rs 18,000 crore, of the new business premium income came from child plans. Insurers expect that growth of this segment will be faster than the industry average.
In addition to over 100 per cent growth in this segment, insurers also expect better discipline in terms of premium payment.
“Every parent is concerned about a child’s education and protection. People think about education before retirement or even their child’s marriage. Since the reason for investing is not only investment, there are lesser chances of lapsation,” said Rishi Mathur, vice-president, product and customer management, Bharti Axa Life Insurance. In the past one year, insurers have poured in a lot of money in advertising this segment.
Insurers feel education and advertisements play a crucial role in pushing child insurance. “After the campaign in October last year, we saw sales go up by 30 per cent. The momentum is still maintained. We have rationalised our approach by training the agency force,” said Akshay Mehrotra, head of marketing at Bajaj Allianz Life Insurance.
“At present, 30-35 per cent premium income comes from child insurance. We expect this to be one of the drivers of growth. It will grow in line with our overall growth,” said Mathur.
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Insurers also offer bonus benefit after completing a certain number of years of policy. For instance, Aegon Religare’s bonus option on the child insurance kicks in after the 10th year of the policy.
Unlike earlier, insurance companies are not just covering education but also hobbies, talent and other skills. Likewise, Aegon had advertised a child plan by making a footballer, a guitarist, a pilot and an architect out of a baby. Max New York Life had come up with Shiksha Plus, insuring funds for other talents.
“We are looking at a 100 per cent growth in this segment. The best part is that it is a long-term product and the benefit comes after 10-15 years. It serves the purpose of meeting the child’s future goals by securing future premium in case of demise,” said Rajiv Jamkhedkar, CEO of Aegon Religare.
A recent Nielsen study on the perceived need for insurance suggests this went up sharply between 2008 and 2009. The focus of insurance has shifted from retirement, earlier the main need for policyholders.