Life Insurance Products and it’s Comparison

Marketlinked returns have become the norm today. This is the reason why insurance companies launch unitlinked plans in different avatars. Important segments of the consumer market no longer consider life insurers as competing only with other life insurers. In an effort to gain market power and thereby to protect or enhance profitability the issue of product development and innovation, including pricing and marketing innovation, is all the more important with the continued convergence among financial service competitors.

• The most significant innovation of the Birla Sun Life and AMP Sanmar is that it has provided social security insurance cover to the rural and society's poorer sections. In the rural and nontraditional business, these two have rightfully claimed distinction for product innovation. The products include insurance cover, with a very low rate of premium, for livestock, poultry, ducks, fishery, horticulture, sericulture, agriculture, pump sets, gramin personal accident, hut insurance, tribal welfare, etc., whereas such facilities were not made available by GIC nor LIC till 2002.
• If we observe the trend of ULIPS in insurance market, after the insurance sector is opened, private players, came up with aggressive marketing strategies to establish their presence. ‘Modern’ products, which are unitlinked life insurance policies where the investment risks is borne by the policyholder. The LIC hardly took any step for this purpose until recently.
• Falling interest rates [The last five years saw interest rates fall dramatically by 400 basis points]. This was also initiated by the private players owing to cut throat competition.The liberalization was also accompanied by wider product offerings by the insurers [ex. Endowment plan, pension plans etc] as compared to the products of LIC.
• In a Whole life policy, the sum assured with bonus is paid out either on death or survival till a predetermined age. Whole life policies expire at age 100. A few expire earlier. Whole life insurance policies are valuable because they provide permanent protection and accumulate cash values for emergencies or bequeaths. Since it is unrealistic to expect the policyholders to keep paying level annual premiums beyond certain age, most insurance companies provide an option to the policyholders to pay their premiums over a shorter term called premiumpaying term. LIC stands nowhere near this mark of cover of 100years by Tata AIG. Again, we find that there is only one nonparticipating whole life policy available in the Indian market.
• LIC has done a reasonably good job of introducing a couple of new products over the last twothree years, but there has been very little innovation in the sector in general. The majority of the products available today are also skewed more towards investment return rather than death benefit. With the advent of competition, many new products will be introduced in the market and customers will benefit from more value and options as a result.