Lic Clocks 86% Rise In First Premium During March

The proposed five per cent service tax on life insurance policies has had little impact on the sales of life cover following the budgetary announcement.

The Life Insurance Corporation of India (LIC) continued to experience heightened growth in the first fortnight of March. The state-owned corporation sold over eight lakh policies in the first 15 days, reflecting a rise of 32.2 per cent over the corresponding fortnight last year.

In terms of collection, LIC mopped up more than Rs 320 crore during the period, a jump of 86.3 per cent in first premium income. This was in individual policies alone.

 

With just 10 days left, LIC is keeping its fingers crossed and hopes to meet its target for the fiscal ended March 2002. "Things are going so well, I hope it continues and we are able to cross Rs 2,00,000 crore in sum assured and sell over two crore policies this fiscal," said LIC managing director N C Sharma.

Apparently sale of insurance policies has not been affected following the budgetary announcement, said Sharma, adding that over 30 per cent of total business takes place in the last month of the fiscal.

"The service tax issue has to be a reality. It is not so far," said Sharma when asked if agents are selling life covers to prospective policyholders on the basis of the proposed service tax. LIC has weighed the option of taking the burden onto its own books. However, Sharma stated that this would be a huge burden and may not be feasible in the years to come. "It will affect bonus on policies," he added.

LIC has reported a growth of 57 per cent in total income from premium to Rs 39,159 crore in the first 11 months. The growth in investment income has been lower at 10 per cent to touch Rs 17,000 crore. This is on account of the reduction in interest in government securities. Together, this brings LIC's total income so far to Rs 56,773 crore.

Meanwhile, LIC has informed its divisional offices that its Children Money Back Plan, which offers an assured return of Rs 80 per Rs 1,000 sum assured, will close on March 30. This follows LIC withdrawing plans where there was a guarantee on the sum assured.

"The reduction in interest rates forces us to do so," said Sharma. Earlier on March 15, LIC withdrew Jeevan Sanchay, another money back plan targeted at those in the age group of 14 and above.