Lic Recasts Bima Nivesh, Lowers Returns

Life Insurance Corporation of India has recast its single premium product and a new Bima Nivesh Plan will be in the market from tomorrow, where the guaranteed returns have been scaled down by 100 basis points. Further, in an effort to widen the scope of the policy, the firm has reduced the minimum entry age from 35 to 18.

LIC had received approval from the Insurance Regulatory and Development Authority of India (Irda) to revise the scheme on last Friday.

The revised Bima Nivesh plan offers guaranteed returns of Rs 75 per Rs 1,000 invested for a period of five years and Rs 80 for every Rs 1,000 invested for the next five years. This is as opposed to the earlier Rs 85 for the first five years and Rs 90 for the next five years.

Other changes on the anvil include plans to introduce more riders for accident and critical illness. These are yet on the drawing board stage and have yet to go for the Irda approval.

LIC is also looking at scaling down the returns on its pension plans such as Jeevan Suraksha, Jeevan Aksha and Jeevan Dhara, where the assured returns are in the region of 10 to 11 per cent. The benefit is quite high and needs to be scaled down in keeping with the falling returns, said senior officials.

The revision in the single premium insurance cover followed LIC's inability to pay the earlier high benefits on the cover in the region of 9.5 to 10.5 per cent for a period of five to 10 years. A top brass said against the returns on 10-year government paper offered at 9.3 to 9.4 per cent, LIC was offering 10.5 per cent for a 10-year cover.

"Earlier we could afford to do so as yields on government papers were on the higher side at 11 to 11.25 per cent," he said.

The maximum cover has also been increased from Rs 10 lakh to Rs 50 lakh. The revised policy further offers term assurance cover as a rider at additional premium up to a sum assured of Rs 5 lakh subject to a medical examination. Additional modifications have been made to make the scheme more attractive for the younger generation.