LIC to phase out four old plans

For the Life Insurance Corporation of India (LIC), it's time to change the old order for the new. The insurance major is set to bury four old schemes in July as part of a move to phase out old, unpopular products and replace them with new schemes.

Bhavishya Jeevan (a short-term premium paying endowment plan), Jeevan Balya (a children plan), Jeevan Sukania (a plan targeted at minor girls) and Asha Deep II (a cover for four major surgery and diseases) are being phased out from LIC's list of 40-odd insurance plans on July 31.

Keeping products, which are not in much demand, adds to cost as the corporation has to undertake valuation exercise and illustrations, as well as provide the necessary literature across the 2,048 branches, said a senior LIC official.

"With negligible demand for these plans, which were introduced in the late 80s and early 90s, keeping these products alive make little sense to continue these plans and undertake costs for the same every year," he added.

In 2002-03, LIC agents sold just about 322 Jeevan Balya policies. Similarly, Jeevan Sukania sold just about 13,500 policies in 2003-04 against LIC's total policy sales touching 2.7 crore during the year.

This follows greater interest in some of LIC's new children plans like Jeevan Kishore and other moneyback plans, which have been broadbased to offer greater flexibility to policyholders.

The entry age of Jeevan Kishore for instance, now starts from the time the child is born as against one year earlier. Correspondingly, the annual premium gets reduced.

Plans like Bhavishya Jeevan, targeted at professionals like actors and sportsmen whose career span may be of short duration, attracted about 1,000 new sales in fiscal 2003.

"There are many new products offering similar benefits like Jeevan Anand, Jeevan Shree, Bima Plus unit-linked, Bima Nivesh 2004, which have proved to be more attractive for those seeking single premium covers or short-term premium endowment plans," said LIC officials.

Since LIC introduced critical illness riders last year, there is little need for a parallel plan. This explains why Asha Deep II sold just about 35,000 policies during the year.

It might be recalled that the state insurer withdrew Jeevan Asha II (covering minor critical illnesses) in October last year when it launched its critical illness rider in keeping with the competition.

Meanwhile, actuaries are re-looking at LIC's Komal Jeevan child plan, which offers a guaranteed annual bonus of 7.5 per cent. However, no final view has been taken.