Lic Seeks Nod For New Bima Nivesh

Life Insurance Corporation of India (LIC) has sought regulatory nod to launch a new Bima Nivesh plan, the most popular product in its stable, to offer greater risk coverage and also reduce the guaranteed return on the triple life cover policy that it intends to launch this week.

Sources said the state-owned insurer has approached Insurance Regulatory and Development Authority (Irda) to offer triple life cover which permits a policyholder's nominee to receive thrice the sum assured as death benefit instead of the present system of an amount equal to the sum assured. This scheme would be in addition to the present Bima Nivesh, which, LIC sources said, will not be withdrawn.

Senior LIC executives told Business Standard that LIC will thus offer policyholders a choice and the best of both worlds -- high returns under the old plan or higher risk cover under the new one.

The guaranteed rate of return will be at Rs 60 per Rs 1,000 as against Rs 65 per Rs 1,000 under the present plan. Also, the plan will allow investments from Rs 25,000 to Rs 10 lakh, but for a fixed period of 10 years, and not a choice of five or 10 years as under the present plan.

Company executives said the decision was taken as many buyers wanted greater risk coverage. At the same time, with interest rates going down further, LIC wanted to reduce the returns on proposed Bima Nivesh scheme, which at present offers 8.35 per cent yield on the 10-year plan.

LIC is awaiting Irda clearance under file and use, but expects to get it by June 10, and introduce the policy next week. According to Irda's 'product file and use norms', insurance companies have to file an application to modify an existing scheme or launch a new product.

Insurers can undertake a change in the scheme if Irda does not raise any queries or does not clear the scheme within 30 days of receipt of the application.