LIC Future Plus is a blockbuster, may garner Rs 1000 cr in a month

Selling like hot cakes, Future Plus, the unit-linked pension plan of the Life Insurance Corporation of India (LIC), has already mopped up over Rs 600 crore and is expected to get Rs 1,000 crore within first month of its launch.

No other insurance plan of any insurance company has received such an overwhelming response in less than a month of its introduction. The plan was introduced on March 4 and will continue to be sold at a net asset value of Rs 10 till April 4.

Future Plus is one of the cheapest unit-linked pension plans in the market today. Offering a choice of four different funds "" bond, income, balance and growth "" LIC is charging among the lowest management fee of 1-1.5 per cent plus an administration charge of Rs 15 per month.

LIC has sold over 1.7 lakh policies till date. This is the state corporation's second unit-linked insurance plan (ULIP) after Bima Plus.

"This reflects the market's readiness for a unit-linked pension plan, and the fact that our elderly population is on the rise and hence in need of protection post-retirement," said senior LIC executives.

The launch of Future Plus has also come at a time when many individuals buy tax-saving investment plans. A pension plan such as Future Plus offers a tax deduction up to Rs 10,000 under section 80CCC.

Most private insurance players have seen phenomenal growth in the sale of ULIPs, and for many, these plans account for about 65-70 per cent of total premium collections.

In the case of LIC, ULIPs account for about 26 per cent of its new business income. Bima Plus collected over Rs 2,098 crore with the sale of 6.89 lakh policies during the financial year ended March 15.

LIC has decided to shift its product focus and introduce new products on the unit-linked platform. Having launched an investment plan and a pension plan, it is now planning to introduce a unit-linked endowment plan and a unit-linked money-back plan.

"Our new insurance plans will mostly be unit-linked. There is an advantage here since the investment risk is passed onto the policyholder and these products require less solvency margin," said R N Bhardwaj, chairman, LIC.

"There is greater demand for unit-linked plans, which are faring better than traditional policies," said Bhardwaj.

With the stock market booming and touching new highs, and interest rates remaining relatively stable, policyholders view ULIPs boosting returns.