LIC moves northward in south

South tops zones in selling unit-linked policies

Who said south Indians are risk averse? Check out the numbers of unit-linked policies sold by the largest life insurer the Life Insurance Corporation (LIC) southern zone and you will eat your words.

LIC southern zone has sold a whopping 4,260 Bima Plus policies during April to November 2003 compared with 15 policies sold during the same period last year.

"The southern zone has been ranked the first place among all the LIC zones in selling unit-linked policies termed as the LIC's Bima Plus policy," senior officials in LIC southern zone said

The Bima Plus policy was launched in February 2001 and until now the major chunk of about 67 per cent of the total policy sold were endowment policies.

According to LIC officials, the major reason for the significant jump in the number of Bima Plus policies sold was the increasing awareness among people about unit-linked policy and its benefits.

LIC officials point out that previously people went in for only endowment policies but with falling interest rates on saving deposits people increasingly are willing to take a little more risk and opt for unit-linked policies.

Other factors which have contributed indirectly is that most of the private life insurance companies offer unit-linked policies and the resultant pressure on LIC agents to sell unit-linked policies has been much higher.

The better performance from the insurance behemoth's agents comes despite the fact that the commission paid to them is a flat five per cent on the policy sold and has not been increased.

Unit-linked policy are also considered to be more transparent compared to endowment policies as the consumer is given the full information regarding their investments and returns earned on them periodically.

"Under the unit-linked policy, the customer has the discretion of choosing between the various investments options linked to risk given under the policy. With higher risk involved in the investments the higher is the yield. A unit of Bima Plus worth Rs.10 two years ago has a net asset value of Rs.16.86 if it is a secured fund, Rs.18.18 if it is a balanced fund and Rs.21.11 if it is a risk fund," the official said.

The southern zone had sold about 15.16 lakh policies involving a premium income of Rs.395.14 crore from April to November 2003. The LIC southern zone comprises of Tamil Nadu, Kerala and Pondicherry.