OM Kotak Mahindra Life Insurance Company has scaled down its guaranteed rate of assured return on single premium product, Kotak Insurance Bond, by 80 basis points, bringing down the maximum rate of return to 6.49 per cent from 7.3 per cent earlier.
With the realignment in the rate, OM Kotak has also substantially increased the maximum investment limit on the bonds to Rs 1 crore from Rs 20 lakh earlier.
Since the Reserve Bank of India announced a downward revision in the bank rate in the credit policy, hit by the falling yields, insurance companies have been paring their guaranteed rates on assured products, starting with the Life Insurance Corporation of India. At the same time, customer continue to prefer parking large-sized funds into safe schemes that give assured returns, Shivaji Dam, managing director, said.
Under the revised rate of return, a policyholder investing Rs 1.2 lakh in the single premium bond for 10 years would get 181 per cent return on his first Rs 50,000 and 185 per cent for the balance Rs 70,000. This means at the end of the tenth year, he will get Rs 2.2 lakh. Prior to the revision in the rates, he would have got Rs 2.30 lakh.
Further, in line with the falling interest rates on alternate investment options, there has been demand from high networth investors including the export community and filmstars, to hike the cap on the maximum amount one can invest in Kotak Insurance Bonds.
