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Volume 10, Issue 8, August 2014
 


Demat Policies from LIC
Life Insurance Corporation of India has begun negotiations with external agencies to de-materialise its life insurance policies. The objective of this initiative is to safeguard the policyholders against theft of policy papers and the insurance companies towards cutting down operational costs.

LIC is having talks with the data management firms in this regard. ”

The IRDA (Insurance Regulatory and Development Authority) had announced the launch of Repository System during September last year with a view to enable the public to maintain the policies in electronic form. The regulator has also tied up with five data management firms to act as intermediaries with whom the e-accounts will be maintained.

At a time when PM Narendra Modi’s Pradhan Mantri Jan Dhan Yojana has picked up momentum with financial inclusion, where each bank account opened under the scheme, a life cover of Rs. 30000 will be granted by LIC, this initiative is set to take off in a fast track mode.

Lapsed Policy Revival Campaign by LIC Coimbatore  
The Divisional Office in Coimbatore LIC has launched Lapsed Policy Revival Campaign on August 16th which will be open till November 15, 2014. Within three days of announcing the drive, the Divisional office has revived about 40% of the lapsed policies. During the campaign, it was found out that the lapses were higher on the quarterly payments rather than on half-yearly and annual payment modes.

Under this campaign, LIC has given lifeline to the lapsed policies along with late fee concession ranging between Rs. 1000 to Rs. 2500 depending on the arrear premium payments.

It was also reported that the pending outstanding on the claims was nil where the company has cleared claim settlements to the tune of Rs. 654 crores during 2013-14. According to the reports, the number of death claims stood at 7,800 and the sums settled thereof stood at Rs. 6.1 crore.

Interview with Mr. Kshitij, MD, CEO of Exide Life Insurance
Q: What’s your view on the proposed move to hike FDI limit in insurance to 49 per cent?
A: It is very good news that the Cabinet has approved a proposal to increase the FDI cap to 49% cap in Insurance. The industry over the last 12 years has attracted over Rs. 34,000 crores of capital across all the private life insurance companies. Over the next five to ten years the industry requires as much if not more capital to be able to fund its growth and expansion. With the increase in limit, the insurance industry expects to get not only the capital but also technical and product expertise of foreign partners. The industry at this stage needs long-term capital for continued growth and expansion which only FDI can bring in.

Q: Any plans raise foreign capital or induct partner in the near term?
A: Exide Life Insurance is well-capitalized and is not looking at inducting a foreign player in the short term. We have a solvency margin of 239 percent as of March this year which means that in the immediate future the organization does not require any fresh capital to fund its growth. In the long term, it is however our intention to induct a new foreign shareholder.

Q: How was the transition from a multinational brand to an Indian identity?
A: In anticipation to the change we had increased the number of seats at the call center. But there was hardly any change in call volumes. We had managed communication to customers very effectively through both regular snail mail, e-mail, SMSes and through face-to-face customer engagement program. Exide is a 100-year-old and strong Indian brand. People were worried as it was not known to have a presence in financial services. A lot of people would say extension from an unrelated category is a challenge. But the transition happened beautifully. Our existing customers are happy as new business has gone up, but it’s early to say because first quarter is a small portion of the year’s business. But new biz growth is good. I am now of the belief that the fact we are Indian is going to work for us. We are now 100% owned by Exide. They are our major shareholder since 2005, when they acquired 50% of business and the rest in March last year.

Q: Was there any churn in customer base?
A: Forget about churn, there were no queries from customers as they understand that Exide is a company for over three generations. Brand Exide is associated with two values -- longevity and trust and that’s going to work for us. Rebranding was the easy part. But now living the brand is the difficult part. So we have identified four values we are going to be known for -- dependable, dynamic, responsive and foresighted, this is what we want our organization to be known for. On the business side, I am hopeful that this year, after a gap of 4 years, the life insurance industry will find growth. We are among the top five players in the South. Since Exide has good awareness in the East, the most attractive market, we are opening up 12 locations there. After opening in West Bengal, Bihar and Jharkhand, then we will go to North and West. Need to come up with a detailed plan to leverage on Exide’s presence.

Q: On distribution side would be looking at partnering with banks?
A: Our business has three main distribution channels. Agency is the core which accounts for 60% of business. Our tie-up with ING Vysya Bank accounts for 20% of the business and balance through tie up with co-operative banks. For the tier III cities and rural areas, we rely on co-operative banks and then we have agents and brokers. The co-operative banks have extremely good relationship with their customers. We are open to partnership with public sector banks and are in touch with a number of them.

Q: Any new products launches or in the pipeline, especially after re-branding.
A: We have 4 products in the pipeline. We have not launched any products after rebranding. We are waiting for approval for at least a couple of products which will bring a good benefit to the market.

Courtesy: Hindu BusinessLine

Click2Protect Plus – Term Insurance Plan from HDFC Life
HDFC Life’s Click2Protect Plus is an extension of HDFC Life’s flagship plan Click2Protect and comes with additional benefits and multiple options to choose from. This is a traditional, non-participating pure term insurance plan. The policy will be available through all sales channels.

The plan offers many unique features such as option to the customer to increase his life cover at key milestones during his lifetime.

The plan offers four options - life, extra life, income and income plus. Under the ‘life’ option, the entire sum assured is paid to the nominee at one shot upon death of the policyholder. In the ‘income’ option, the nominee gets only 10 per cent of sum assured at the time of the policyholder’s death, with the remaining paid as monthly income over the next 15 years. In the ‘Income plus’ option, the nominee gets the full sum assured plus monthly income for 10 years. The monthly income will be equivalent to 0.5 per cent of the sum assured. Say the sum assured is Rs. 50 lakh, on the policyholder’s death, the nominee will get the full Rs. 50 lakh immediately and from the next year, he/she will get ?25,000 every month for the next 10 years. The ‘extra life’ option provides an additional cover for death due to an accident.

Under all the options above, there is also a ‘life stage protection’ feature, which lets one increase the sum assured under the policy at the time of key events such as a marriage or birth of a child.

Tax on Insurance Income
In the Budget 2014-15, the Government introduced a new provision with respect to taxation of returns from life insurance policies.

The provision states that all life insurance policies that are not eligible for tax exemption under Section 10 (10D), will see 2 per cent tax deducted at source on the sum paid to the policyholder.

Not all life policies are tax-exempt. Many don’t know this or knowingly evade it. And it is difficult for the income tax department to determine the nature of the policy and check its taxability at the time of assessment.

Now the onus is on the insurer, who has to deduct TDS on all policies where maturity proceeds are taxable. These will automatically come to the notice of the policyholder as also the IT Department.

Insurance policy receipts that are not eligible for tax exemption under Section 10 (10D) will be taxed as normal income at the individual’s slab rate. We all know that contributions toward a life insurance policy are eligible for tax deduction under Section 80C of the Income Tax Act.

This means that the sum paid toward the premium of insurance policies can be deducted from one’s total income for the year to arrive at the taxable income. Further, the proceeds on maturity or upon surrender of the policy are tax-exempt under Section 10 (10D). This means that the proceeds are tax-free income for the individual.

With the insurer deducting TDS on such policies, there will be a trail that will help the income tax department trace evaders. At the same time, the new provisions spare small investors. The provision will not be applicable in cases where the proceeds from a life policy in a year are less than 1 lakh.

LIC Coimbatore Unveils Jeevan Rakshak Policy
Jeevan Rakshak is a non-linked, non medical plan. It is a low premium-high benefit plan aimed at catering the insurance needs of segments of the society. It is open to the age group of 8 and 55. The premium payment mode includes annual, half-yearly, quarterly and monthly (ECS) and also under salary saving scheme. The minimum sum assured is Rs. 75,000, and in multiples of Rs. 5,000 thereafter, subject to a maximum of Rs. 2 lakh.

Coimbatore LIC Divisional Office aims to sell one lakh Jeevan Rakshak policies during this fiscal year.

MAX Life Records Profit After Tax up by 9%
Max Life Insurance today announced it Quarterly Results for the period ended June 30th 2014. The company continued its profitable growth journey during the first quarter of the Financial Year 2014-15 and has outperformed the industry as well as the private life insurers to record New Business Premium of Rs. 468 crore, growth of 22% over the corresponding period last year.

Max Life Insurance further increased its market share to 12.3%, an increase of 74 bps amongst private life insurers and maintained its rank as the fourth largest private life insurer. The Gross Written Premium of the Company grew 10% to Rs.1458 crores. During the period Shareholder Profit after Tax grew 9% to Rs. 102 crore.

Max Life Insurance also performed well on other business parameters during Q1 FY 2014-15 as compared to corresponding period in the previous year:

Source: The Hindu Business Line

Smart Wealth+ from DHFL Pramerica Life Insurance
DHFL Pramerica Life Insurance Co. Ltd. (DPLI) has launched a non-participating Unit Linked Insurance Plan named under Smart Wealth +. This plan is designed to meet the dual needs of customers viz. wealth creation and protection. It caters to the risk appetite of those who seek high investment returns, along with the benefits of a life cover.

The Plan offers a choice of four market linked-funds for investment which addresses the wealth creation needs of customers with diverse risk appetites - from conservative to aggressive. It also offers customers an option to augment their cover by opting for the Accidental Death Benefit Rider. Apart from the Regular Premium Payment Term, the Plan provides customers a Limited Premium Payment Term option to align the payment tenure with their financial priorities.

Smart Wealth+ offers loyalty Additions in the form of Persistency Units to encourage customers to stay invested in the policy to keep their families protected and to achieve their long-term financial goals.

The Fund Conservation option at Maturity allows customers to systematically switch investments to debt funds during the last three years of the policy.

The Settlement option offers customers the choice of keeping the fund invested and then liquidating the units at any time within five years from the date of maturity, or opting for periodic installments as specified on the date of maturity.

LIC to offer cover for Jan Dhan Yojana Scheme of the PM’s New Scheme
The Finance Ministry has asked state-owned Life Insurance Corporation (LIC) to submit details on structuring the Rs. 30,000 life cover to be offered under the 'Jan Dhan Yojana', unveiled by Prime Minister Narendra Modi on August 28.

According to unofficial reports, from LIC officials, a senior level meeting has been convened by the financial services secretary Monday morning to decide who will pay the premium for providing the life insurance policy and other modalities.

The personal accident cover premium will be paid by the RBI-promoted National Payment Corporation, which is the nodal agency for the inclusion drive.

According to the scheme, only those who are above 18 and below 59 will be eligible for the life cover. Secondly, though the accounts are not mandatorily linked to Aadhaar numbers, the life cover is strictly open for only those who have the Aadhaar to avoid duplication, the official explained.

The Rs. 30,000 life cover premium is likely to be somewhere between Rs. 90 and Rs. 100. The policy will come in the form of one-year renewable term policy which will be valid life-long, which means that premium has to be paid annually till the insurer's death, he said.

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