Bima Nivesh Ii Logs Rs 326 Crore Premiums In 15 Days

Bima Nivesh II, the single premium product of the Life Insurance Corporation of India (LIC), mopped up a whopping Rs 326.20 crore in premiums between December 1 and 15 following the corporation's decision to slash the rate of return on the product.

A total of 44,557 policies were issued during the period with the minimum investment of Rs 25,000 per proposal.

The huge mobilisation of funds has been attributed to the high return on the scheme as compared to other investment instruments available in the market. Investors rushed to invest in the scheme when LIC announced on December 1 its intention to slash the rate of return on the product.

Prior to the latest revision, Bima Nivesh II offered 8.4-9.5 per cent on policies varying between 5 and 10 years.

Effective December 17, the revised product -- christened 'New Bima Nivesh' -- continues to offer the same terms and conditions, but the guaranteed addition has fallen by Rs 10 for every Rs 1,000 sum assured.

This means, in the case of a five-year cover, a policyholder gets Rs 60 per Rs 1,000 sum assured and for a 10-year cover he gets Rs 65 per Rs 1,000 sum assured.

LIC was forced to re-align its interest rates in keeping with the 300 percentage fall in gilt yields, especially at the long end of the market since the beginning of the fiscal.

This affected the return on LIC's investments as 60 per cent of its Rs 2,90,000 crore worth funds is lying in government securities, mostly long-dated papers.

Incidentally, this is the second downward revision in Bima Nivesh during fiscal 2001-02, the first being in July this year. The high return on the product has attracted investments worth Rs 4,487.28 crore between April 1 and December 15.