The public sector life insurance company is likely to wind up this plan following the recent directives of the Insurance Regulatory Development Authority (IRDA), the regulator for the insurance sector.
In its latest circular, IRDA has mandated life cover with the unit-linked pension products. It has also banned partial withdrawals during the policy term.
“Pension plans would become expensive after the guaranteed returns are offered compulsorily and this might be one of the reasons why LIC has taken the decision to close the Market Plus-1 in its present form”, said a senior company official.
LIC Market Plus was launched August 18, 2008 and since its launch, it has been one of the best selling products of the public sector insurer.
The product is available with or without risk cover. Provision for pension from early age of 40 years is available in the policy, while the surrender facilities are allowed after three years without surrender charge besides the availability of top-up facility.
Although the product has facilities of both with or without risk cover, most of the customers have opted for without life cover, sources said.
LIC’s Berhampur division in Orissa had earned around Rs 36-crore from this single policy in 2008-09. The quantum of revenue jumped to Rs 65 crore from this policy in 2009-10, said senior divisional manager of Berhampur division, Debasish Prasad Patnaik. Around Rs 6.50 crore was also collected from the division, which covers at least ten southern Orissa districts by June 20 of the current financial year.
The product, according to him, would lose its charm after the new guidelines come into force and the product is restructured. The division aimed at collecting additional premium of Rs 10 crore before the close of the product by the end of June. “We are aggressively marketing the products and have requested the customers to invest to the maximum possible extent in the Plan before June 30”, Patnaik said.
In 2009-10, Berhampur division of the LIC recorded 2,70,309 policies with first premium income of Rs 199.17 crore, registering a growth rate of 3.37 per cent in policies and 19.81 per cent in first premium income.