Life Insurance Marketing in India (C) The Changing Product & Pricing Norms

<<Previous

PRODUCT INNOVATIONS Contd..

According to company sources, it planned to offer high quality service to customers. This way, it could distinguish itself from others on the service plank along with the product aspects. The company also offered its customers a choice between the base products (the company offered two products – the endowment policy and the money back policy) each of which would be accompanied by four riders (critical illness, accidental death benefit, waiver of premium and double sum assured), according to the requirements of the customer. HDFC Standard Life offered 14 pre-packaged products from which customer could choose the one that best suited their needs. Also, the customers were allowed mix and match the benefits in order to create a most suitable product according to their needs. The company also planned to introduce unit-linked products and individual pension products after the required amendments were made to the Insurance Bill.

According to an insurance agent, ICICI policies had an edge over LIC's policies meant for long-term investors, because ICICI offered compound interest while LIC offered simple interest. It was reported that, for a 20-year endowment policy, ICICI Prudential Save ‘n'Protect, the annual premium was lower than that of LIC's endowment policy. ICICI even offered accident benefit and disability benefit riders with a marginally higher premium of Rs 270 per annum. ICICI Prudential also launched a pension plan ‘ICICI Pru Forever'which would provide the policyholder a fixed income after a certain period of time with additional riders such as critical illness benefit, major surgical benefit, accident and disability benefit.

Tata AIG came up with whole life policy known as MahaLife, which would provide life cover for 100 years, with guaranteed annual payments of 5% of the sum assured each year from the 13th year for the rest of the policyholder's life. Policyholders needed to pay premiums only for the first 12 years of the policy or until their depending on death whichever came earlier.

Aviva launched three products in early 2002 – LifeLong, a whole life flexible protection plan, LifeSaver, a premium endowment savings plan, and LifeBond, a single premium investment bond. These three products were available under two options – ‘unit linked'and ‘unitized with profits.'Aviva was the first company in India which offered ‘unitized with profit'products (like unit-linked products, under ‘unitized with profit,'the premium was spilt into many units. A part of the investment returns were held back by the insurance company to offset market fluctuations during the term of the policy, and the surplus was distributed as terminal benefits).

2010, ICMR (IBS Center for Management Research).All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means - electronic or mechanical, without permission.

To order copies, call +91- 8417- 236667 or write to ICMR,
Survey No. 156/157, Dontanapalli Village, Shankerpalli Mandal,
Ranga Reddy District,
Hyderabad-501504. Andhra Pradesh, INDIA. Ph: +91- 8417- 236667,
Fax: +91- 8417- 236668
E-mail: info@icmrindia.org
Website: www.icmrindia.org