Life Insurance Marketing in India (C) The Changing Product & Pricing Norms
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PRODUCT INNOVATIONS Contd..Three optional
riders, for critical illness and permanent total disability, accidental
death and dismemberment and hospital cash benefits accompanied both LifeLong
and LifeSaver. The company also announced its plans to launch a term-plan,
which would return the premium back to the policyholder at the end of the
policy period, an individual pension product and group protection product
for corporates. According to company sources, unitized products were more
flexible, as the customer would be able to increase or reduce the level of
protection or savings benefits.
LIC REJIGS ITS PORTFOLIO
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With the above developments in the market, LIC too had to gear up for
competition. In the year 2002, LIC introduced a new facility — the term
assurance rider — that would accompany select life insurance policies.
This facility provided an extra risk cover, which was double the
existing risk cover under the plan, subject to an overall limit of Rs 25
lakh. In addition to Anmol Jeevan, it introduced a few other new
policies in early 2002 – ‘Jeevan Anand'(a combination of an endowment
and a whole life plan), ‘Jeevan Rekha'(a combination of money back and
whole life plan), ‘Jeevan Surabhi'(a money back policy) and ‘Jeevan
Mitra'(an endowment policy). |
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The ‘Jeevan Surabhi'policy offered early payment of survival benefits and money
back facility. LIC also launched a new ‘Bima Kiran'policy, which had an
accident benefit and extended term cover beyond maturity period in addition to
risk cover during the term of the policy.
In addition to the new launches, LIC also made changes to its product portfolio
by withdrawing certain schemes and bringing down returns on some others. In
March 2002, the company withdrew ‘Jeevan Sanchay,'its children's growth scheme
and the children's money back policy due to the falling yield on investments. It
also brought down the assured returns on its newly launched schemes following a
0.5% rate cut by the Reserve Bank of India and the depressed sentiments in the
market. Initially, Bima Nivesh offered about 10.5% assured return and it was
reported that newer schemes would assure returns lower than 9.3% (Refer Exhibits
III, IV & V for a comparison between the policies of LIC and other players).
In late 2001, LIC launched a special campaign to revive people's interest in its
policies, which now carried customer-friendly incentives. A 30% waiver on late
fees was offered (subject to a ceiling of Rs 250) during the period of this
campaign. Additional incentives were allowed relaxation in the procedures for
mandatory self-declaration of good health and offered spot revival facilities.
FUTURE IMPLICATIONS
QUESTIONS FOR DISCUSSION
EXHIBIT I DIFFERENT TYPES OF LIFE INSURANCE POLICIES
EXHIBIT II PRODUCTS FOR INDIVIDUALS OFFERED BY DIFFERENT COMPANIES
EXHIBIT III COMPARING ENDOWMENT POLICIES
EXHIBIT IV COMPARING MONEY BACK POLICIES
EXHIBIT V COMPARING TERM LIFE POLICIES
ADDITIONAL READINGS & REFERENCES
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