LIC to focus on unit-linked products

"Our new plans will mostly be unit-linked based. There is an advantage in this since the investment risk is passed on to the policyholder and these products require less solvency margin," said R N Bhardwaj, chairman of LIC, which today launched its unit-linked pension plan, 'Future Plus'.

"We also propose to introduce a group plan on the unit-linked platform shortly in view of the demand from corporates," said Bhardwaj. Today most insurance players are selling maximum unit-linked insurance plans (ULIP). Thirty per cent of LIC's incremental business is from the sale of Bima Plus, the first ULIP plan in the country.

Sale of ULIP has seen 1097 per cent increase in the number of policies sold by LIC in the first half of fiscal 2005. At the same time, it has also helped LIC shore up its average premium income by as much as 60 per cent from Rs 2,658 in 2003-04 to Rs 4,252 in the first half of the current year.

Premium collection from ULIP plans has risen by over 751 per cent to Rs 1,201.56 crore in the first six months of the current year against a mere Rs 141.12 crore during the corresponding period last year.

"There is greater demand for unit-linked plans, which are faring better than traditional policies," said Bhardwaj. This is because with the stock market booming, while interest rates remain stable, policyholders expect ULIP to boost returns.