|
Unit-linked pension products, which became unviable for life insurers following the Insurance Regulatory and Development Authority’s (Irda) guidelines in September last year, are slowly making a comeback into the market.
The products, which constituted about 30 per cent of the new business premium of the life insurance market in India earlier, now constitute less than 5 per cent of the business. Many companies find this as a good opportunity to fill the gap present in the market.
For instance IDBI Federal Life Insurance, on Tuesday launched a pension plan, Retiresurance Milestone Pension Plan, a single premium product that meets the guidelines prescribed by the Irda. Many other players like India First Life Insurance, Max New York Life and few others are waiting to launch pension products soon.
“Pension funds is an important segment and we cannot afford do be absent in the segment. We have launched this product, which meets the guidelines prescribed by the Irda, to ensure that we have an entire portfolio of life insurance products,” said GV Nageswara Rao, MD and CEO, IDBI Federal Life Insurance.
The Irda in September last year mandated a guaranteed 4.5 per cent returns on unit linked pension products making it unviable for insurers to provide guaranteed returns on a product that was based on market movements. It meant that almost all of the unit linked pension products in the market had to be withdrawn.
For people looking for high returns through a market linked pension products with multiple premiums that help develop the savings habit, there are no products available due to the Irda guidelines, he says.
With the Irda hinting at a possible review of the guaranteed returns clause on such products, many insurance firms are gearing up for a comeback. “Having a guaranteed return option of 4.5 per cent would only mean that customers would get sub-optimal returns in the long term, which is not good for a pension product,” says P Nandagopal, MD & CEO, India First Life Insurance. Source : Financial Chronicle
|
