Non-single premium income of life insurers has seen a 8.1% rise for the April to December period in the retail segment. While this means good news for the life insurance industry, which is seeing an overall dip of 3.8% in new business premiums for the same period, single premium is seeing a dip of 6.4%.
According to data from Insurance Regulatory and Development Authority (Irda), single premium for the individual segment fell to Rs 10,518.48 crore for the period as compared to Rs 11,238.48 crore in the last fiscal. The new business premiums for non-single segment rose to Rs 30,169.57 crore. compared to Rs 27,892.84 crore in the same period last fiscal.
Single premiums products are those, where the premium is paid as a lump-sum amount. Non-single premium product are those, where premium is paid at regular intervals.
Life insurers, are of the view that, the single premium segment is down, due to the fact that in the linked-premium segment, the slowdown in market performance has led to the slump in sales. G V Nageswara Rao, MD & CEO, IDBI Federal Life Insurance said that single premium segment has been impacted significantly, due to both linked (market-linked products, termed Ulips) and non-linked products seeing lower sales.
Lack of tax incentives has also decreased appetite for these products. Rao explained that insurers had also introduced guaranteed single premium products and they were popular among customers for a certain period. "But, the changes in tax benefits for insurance products in last budget had changed the attractiveness of these products. Hence, sales went down," he added.
The 2012-13 Union Budget had proposed that a life insurance policy will be eligible for tax benefits under the Income Tax Act only if the sum assured is at least 10 times the annual premium. This impacted single premium products, as the sum assured on death is less than 10 times the single premium in these products.
Group single premium products, however, have continued to sell. As per Irda data, there has been 11.7% increase in new premium collections for group single product segment. Insurers, attributed this, to the nature of the group segment. The chief distribution officer of a private life insurance firm said that the group segment was linked to the employee benefits and has been single premium in nature.
According to data from Insurance Regulatory and Development Authority (Irda), single premium for the individual segment fell to Rs 10,518.48 crore for the period as compared to Rs 11,238.48 crore in the last fiscal. The new business premiums for non-single segment rose to Rs 30,169.57 crore. compared to Rs 27,892.84 crore in the same period last fiscal.
Single premiums products are those, where the premium is paid as a lump-sum amount. Non-single premium product are those, where premium is paid at regular intervals.
Life insurers, are of the view that, the single premium segment is down, due to the fact that in the linked-premium segment, the slowdown in market performance has led to the slump in sales. G V Nageswara Rao, MD & CEO, IDBI Federal Life Insurance said that single premium segment has been impacted significantly, due to both linked (market-linked products, termed Ulips) and non-linked products seeing lower sales.
Lack of tax incentives has also decreased appetite for these products. Rao explained that insurers had also introduced guaranteed single premium products and they were popular among customers for a certain period. "But, the changes in tax benefits for insurance products in last budget had changed the attractiveness of these products. Hence, sales went down," he added.
The 2012-13 Union Budget had proposed that a life insurance policy will be eligible for tax benefits under the Income Tax Act only if the sum assured is at least 10 times the annual premium. This impacted single premium products, as the sum assured on death is less than 10 times the single premium in these products.
Group single premium products, however, have continued to sell. As per Irda data, there has been 11.7% increase in new premium collections for group single product segment. Insurers, attributed this, to the nature of the group segment. The chief distribution officer of a private life insurance firm said that the group segment was linked to the employee benefits and has been single premium in nature.
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