Non-resident seeks Rs 100 cr life cover from LIC

The Life Insurance Corporation of India (LIC) has received a proposal to insure the life of a non-resident Indian (NRI) for Rs 100 crore.

"The proposal is currently being evaluated," said an LIC official.

If the proposal is accepted, this would be the largest policy issued to an individual by the state-owned insurance company. The largest policy issued by the state life insurer is a Rs 50 crore policy given to an exporter.

Interestingly, the average size of most NRI policies today ranges between Rs 50 lakh and Rs 1 crore.

Senior LIC management refused to disclose any details of the NRI buying the policy. However, overseas Indians tend to buy annuity products for their dependents living in India. They usually prefer products that offer single premium paying terms or those thbat ahve a short premium-paying duration.

One of the largest policies bought by an NRI in the Middle East stands at 2 million pounds. "NRIs are interested in investing in LIC policies because the interest rates in India are higher than in other parts of the world," said a senior corporation official.

LIC's brand name and high claims record in excess of 99 per cent also explain why the state corporation tends to draw NRI business.

Today international insurance business accounts for 2 per cent of LIC's total business recorded. The NRI business that comes directly to LIC's operations in India stands at less than 0.1 per cent, said company officials.

"The growth depends upon interest rate fluctuations," said Hemant Bhargava, head of SBU-international operations, at LIC.

Last year's growth was in excess of 35 per cent, partly on account of maturity of the Resurgent India Bonds in October 2003, he added.

Overseas Indians have two options when buying plans from LIC. They can come to India and buy a policy directly from the corporation.

Alternatively, they can buy a cover from LIC while overseas, but the corporation caps the sum assured at Rs 1 crore.

"Since we cannot see the person and the medical examination is done abroad, we limit the size of the insurance cover," said officials.

Otherwise 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.

"It depends upon underwriting rules and the earnings and the paying capabilities of the individual," said Bhargava.

The biggest issue facing NRIs is deciding which currency they want the policy in. If an NRI wants the proceeds of the policy in rupees, he needs to purchase the cover from India; otherwise he would have to take an exchange rate view, said Bhargava.