LIC plans to hardsell policy portability to expatriates

Risk is transferred to Indian books when expats return home

The Life Insurance Corporation of India (LIC) is encashing on the increasing trend of overseas Indians returning back to the country.

Offering portability of insurance policies to the overseas Indian community as it expands its international operations, LIC has an edge over its global peers when it sells its risk covers.

"The risk is transferred to our Indian books and individuals need not take a new policy or pay a higher premium when they return to India," said D K Mehrotra, the newly appointed managing director, LIC.

This means an individual who has bought a plan at any of LIC's international offices, can ask for a transfer of the policy when he decides to return to India, he added.

"I transferred my policy to LIC's Indian books when I was relocated from Fiji," said Mehrotra. He was earlier executive director, international operations.

Portability of risk covers ensures continuity of an insurance policy bought overseas, which otherwise would need to be surrendered at the time of leaving the country.

LIC has built a product whereby revenue can be transferred to India, and is especially popular with many IT professionals, said Mehrotra.

"We can transfer the surplus to the Indian book, and this will ensure that the full value of the policy is realised," he added.

More importantly, when an individual returns back to India, his risk premium continues to be the same despite having advanced in age.

This is because he had already undergone the necessary risk assessment when he initially bought the cover overseas.

When an individual surrenders his policy taken from an international insurance company, he would get the surrender value of the cover.

"He would not get very much on surrendering his policy and would lose a significant amount of the premium paid on account of expenses," said Mehrotra.

The advantage of portability of risk products is not necessarily applicable to the many Indians working in Dubai or the Middle East.

"Indians in Dubai tend to buy their risk covers from India as they tend to go there for a short period and remit funds back home. This enables them to pay their premiums in rupees," said Mehrotra.

Interest rates being higher in India compared with other parts of the world attracts NRI business to LIC, said a senior corporation official.

Last year's growth was in excess of 35 per cent, he added. Overseas Indians have three options when buying plans from LIC. They can either come to India and buy a policy directly from the corporation.

Alternatively, should they decide to buy a cover from LIC while overseas, the corporation caps the sum assured at Rs 1 crore. Else an overseas Indian like his foreign counterpart can purchase a policy at any of LIC's joint venture companies abroad.

There is no cap on the size of the policy in this case. It depends upon underwriting rules and the earnings and paying capabilities of the individual.