LIC premium income in first half increases 60%

Unit-linked plans' business rockets 1100%

The Life Insurance Corporation of India (LIC) has recorded a 1097 per cent increase in the number of unit-linked plans sold in the first half of fiscal 2004-05.

The products, which are selling like hot cakes, have helped shore up the insurance major's premium income.

LIC's premium income rose by 62.71 per cent to Rs 3,476.34 crore in the first six months of 2005, against Rs 2,136.57 crore in the corresponding period of 2003-04.

There has seen a 60 per cent rise in the average premium per policy from Rs 2,658 in 2003-04 to Rs 4,252 in the first half of the current year.

Rise in average premium income comes largely on the back of sale of unit-linked plans. Premium collection from these polices increased by over 751 per cent to Rs 1,201.56 crore against Rs 141.12 crore during the same period under review.

"Policyholders see greater value in unit-linked plans, and these are faring better than the traditional plans," said S B Mathur, chairman LIC.

Policyholders are not getting good returns in other financial investments, hence are looking at unit-linked plans to boost their returns.

At the same time, with LIC targeting high-networth individuals, premium income from traditional insurance policies continued to rise by 18 per cent to Rs 2,213.67 crore. "But unit-linked plans have beaten the sale of traditional policies," said LIC officials.

"LIC could have fared better had it not been for development officers agitating against the recent change in the incentive programme," added officials.

Many development officers though collected and deposited premiums, failed to complete the policy proposals, which now will be accounted for in the current month.