Children plan in life insurance business posts fast growth

The children plan segment in the domestic life insurance industry is growing fast due to increasing awareness among consumers.

Today, the segment accounts for 20-25 per cent of the life insurance space in India.

“There is a growing realisation among people that education in the future would be quite expensive, so people are investing in children plan to ensure their quality education,” private insurer Max New York Life Insurance Senior Director and Chief Distribution Officer Ashish Vohra told Business Standard. “Five years back, the proportion of children plans in life insurance industry was half of today’s volume,” he informed.

Vohra said the segment would continue to grow rapidly, since the education sector had also witnessed the entry of private players in a big way and it has been well accepted that quality education in the future would come at a price. Commenting on the likely effects on life insurance industry due to the proposed Direct Tax Code (DTC), he said according to the disclosures made so far, there were not many incentives for the segment. “However, DTC would encourage long-term life insurance policies with minimum cover of 20 years,” he added.

Meanwhile, Vohra said the growth rate of life insurance industry was likely to dip by 15 per cent for 2010-11, due to certain regulatory issues that had cropped up. “During 2009-10, the new business premium for life insurance segment was about Rs 80,000 crore, which is likely to dip to under Rs 70,000 crore for 2010-11, he said.

He was in town to announce the company’s scholarship programme igenius 2011, which kicks off tomorrow. The programme promises 1,000 scholarships worth Rs 1 crore to students, selected through multi-level pan-India evaluation process.