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"AGENTS find it more rewarding to sell single premium policies as there are no hassles of renewal" P Nandagopal MD and CEO, IndiaFirst Life Insurance
First-year premium of such policies up 191% to Rs 4,414 crore in Jan-Dec 2010 PRIVATE life insurers are betting big on single premium life insurance policies for growth this quarter as the financial year draws to a close, leaving people scrambling for ways to invest for saving tax.
According to the numbers disclosed by the Insurance Regulatory and Development Authority (Irda), the first year premium of individual, single premium insurance policies sold by private insurers, has seen a 191 per cent growth to Rs 4,414 crore, for the period January-December 2010, as against Rs 1,512 crore for the period January-December 2009.
With insurance firms witnessing maximum action in the January-March period when people invest as part of their tax planning, the numbers are only expected to grow further.
The regular premium policies, on the other hand, witnessed a 10 per cent drop in first year premium collection to Rs 16,245 crore during the period January-December 2010, as against Rs 18,126 crore in the corresponding period the previous year.
While convenience is one primary reason for the popularity of single premi um policies over the regular-premium policies, capping of commission on Ulips has also helped in the growth of single premium life insurance policies, industry experts say.
"Earlier there was a significant difference in the commission rates for single and regular premium policies. After the capping of agents' commission by Irda, the commission for single premium policies has remained at 2 per cent, while the commission for regular premium policies has been slashed from 15 per cent to 5 per cent. In a way agents find it less demanding to sell the single premium policies as there are no hassles of renewal," said P Nandagopal, MD and CEO, IndiaFirst Life Insurance. While single-premium policies could best be a short-term investments, regular premium policies will help in developing a steady saving behaviour, experts say.
"Single premium policies are preferred by those in sectors like agriculture, trade and media for whom longterm financial commitment is uncertain. When they get windfall gains they would prefer a single premium policy and pay a lump sum as premium," SB Mathur, secretary general, Life Insurance Council of India, said.
While agents may now be devoid of the hassles of renewal, low commission rates that leave lesser money in their hands still disappoints them. "The Swarup Committee in its recommendations criticised the commission structure that allowed agents to take up to 40 per cent commission," he added.
Source :- mydigitalfc
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