Amidst rising mass redemptions of Ulip policies following the end of the five-year lock-in period, life insurers are trying hard to retain their policyholders, saying remaining invested would help them get better returns as the market is likely to rise further.
Though many companies have confirmed that they are witnessing mass-scale redemption of old Ulip policies, they refused to share any numbers.
Investors are redeeming those policies which they had bought before the new regulations came into being five years ago.
These investments offer 100 per cent surrender value from first year provided they redeem after the five-year lock-in.
Earlier, the lock-in was for three years and there was a surge in Ulip sales before the new regulations came into being in December, 2010.
Those investors who have surrendered their policies will get their money from January.
As per the data collated by industry body Life Insurance Council, total investment in Ulips stood at Rs 3.62 trillion as of March, 2015.
"We are trying to contact our policyholders to revive their policies as equity market has done well and is likely to do so going forward.
"Also, so far investors who have opted for equity-linked
Ulips have got better returns," HDFC Life MD & CEO Amitabh Chaudhry told PTI without sharing any numbers.
He was quick to add that they can't but allow redemption for those who are keen to do and admitted that those opted for government bonds offer higher at around 8 per cent over equity linked Ulip schemes.
According to LIC Secretary General V Manickam, as on March 2015, total investment in Ulips was Rs 3.62 trillion and 19 per cent of them were invested in government securities.
Bharti AXA Life has also confirmed that they are witnessing mass redemptions and are trying to woo investors to go in for reinvestment.
"We are seeing redemptions of Ulips that were bought
in 2010. Though we can't stop them from redeeming, we are trying to woo them to remain invested by telling them that since the market has been doing well they will get better returns if they continue with us," Bharti Axa Life MD and CEO Sandip Ghosh said.
But PNB Metlife, which claims to have half of its assets under management under Ulip portfolio, said it has not seen any major rise in redemptions as most of its policies are longer tenure ones.
"Most of our Ulips have longer maturity or 10 years and above and hence we have almost no impact of the mass redemptions happening currently," PNB Metlife MD and CEO Tarun Chugh said.
PNB Metlife has given returns of 2-6 per cent above the benchmark to its Ulip policyholders and half of its Rs 13,000-crore AUM are in Ulip portfolio, he added.
