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New Delhi, March 27: Life Insurance Corporation of India (LIC) has brought back its popular Bima Nivesh plan for the coming fiscal in a new avatar.
The policy, essentially treated as a fixed deposit by investors, replaces the earlier Bima Nivesh, which carried an interest rate of 5.5 per cent. The revamped policy will offer 6 per cent interest and a higher bonus.
One of its highest selling policies in 2002, the plan had a yield of nearly 8 per cent. The corporation sold around 10 lakh policies. But it was later discontinued and then restarted at a lower rate of interest. However, it remained popular as the policy gives guaranteed returns.
The plan is available for a period of five and 10 years. According to the premium structure, it is Rs 995 per thousand sum assured for a five-year term and Rs 976 for a 10-year period. The bonus is guaranteed at Rs 50 per thousand sum assured for a five-year term and Rs 55 for a 10-year plan.
The main difference between Bima Nivesh 2004 and 2005 is that while the former had a lower premium and bonus structure, the cost of both these components will be high in the latter in order to maximise returns for policyholders.
?The motive behind introducing the new Bima Nivesh plan is to re-work on the cost and the yield structure. Considering the market scenario with increased competition from private players, it is impossible for any insurance company to guarantee a certain kind of return endlessly,? said a senior LIC official.
LIC has set a target to sell close to 5 lakh policies in 2005-06 against 2 lakh this year. The plan, however, has done rather badly in terms of sales in the current financial year.
When it was launched in 2002, 8 lakh policies were sold. ?This is because the bonus was Rs 60 per thousand sum assured in 2002 for a five-year term and Rs 40 in 2004, a direct cut of Rs 20. This impacted our sales,? the official said.
LIC is positioning it as a better deal than a bank fixed deposit, which does not have a life cover. Bima Nivesh can be clubbed with a term assurance rider.
