We might see more of policies offering both life and health covers: Manoj Jain, MD & CEO, Shriram Life Insurance
The life insurance companies are working towards offering better health insurance products going forward. And they feel that pension and health market is the way forward for them.
You recently launched Assured Income Plus plan. Do you see your customers preferring traditional product in 2016? Or, was the launch to cater to the tax-saving season?
Our company caters to the entry level customers in the market. The customers in this segment don’t understand linked products. Even participating products is not meant for this segment of the market as these products make tall claims of bonuses and returns, which may or may not be happen. Our customer base is no so much the salaried but small businessmen.
Hence, we launched a non-linked non-participating endowment assurance plan, which tells the customer, right at the beginning, what he will get at maturity.
In this product, the buyer pays premiums for five years and after another five years, he will start earning a guaranteed monthly income from the 11th year. This product can be bought as part of one’s retirement planning portfolio as one gets monthly income from the 11th year. It is also a good product for those who do not understand the stock market. Also, it can be used as a gift to your children or grandchildren where the parent becomes the life insured.
The flip side to buying this product is that the returns earned are less as it is a guaranteed product and hence invests cautiously. Also, commissions are high for agents selling non-participating products.
Non-participating products form 40% of our incremental portfolio.
Among the traditional plans are terms plans being preferred or investment plans?
Among customers preferring traditional plans also, there are segments. For instance, youngsters who are in well-paying jobs like information technology professionals typically understand stock markets and are not looking for investment opportunities with insurance products. They prefer buying term policies as they invest through mutual funds and shares and are able to earn 10-12% annualised returns. We don’t cater to this segment.
Those who are not so investment savvy opt for traditional investment products.
These days insurance buyers are recommended online term plans but your company does not offer one. Why so?
We have filed an online term plan with the regulator. We will launch it in the next 30 days. We will not offer very high coverage; it will cover only up to a sum of Rs 50 lakh. With this product we target the salaried also.
So far we have one online Return of Premium Term Plan, which returns 80% of the premium paid if the policyholder survives the policy term.
You offer Women Insurance Plans – term, child, health and retirement. What is the advantage of buying women-specific plans? Do you see your female customers opt for these over regular plans?
Whenever women come looking for insurance policies we advise them to consider the women-specific ones. Buying a woman specific policy offers a cost advantage by two years of age. For example, a 50-year old woman will be charged a premium of a 48-year old man as the life expectancy of a woman is higher than that of a man.
We insure even those women who may not be working and her husband is not insured. We offer smaller covers of Rs 3 lakh or Rs 5 lakh to this segment. Additionally, we offer credit shield to self-help groups’ women employees who have taken loans from microfinance companies.
How does the industry’s product mix look like?
Private players’ portfolio consists of 40% unit-linked policies, 50-55% traditional investment policies and around 5% term policies. Companies that have very strong bancassurance partners are selling 60-65% ulips.
Are you seeing redemption pressure on ulips due to the volatile equity market? Or, are you seeing an uptick in its sales?
There is no redemption pressure for ulip policyholders. In fact, we are seeing a slight uptick in demand for ulips. This is so because, I assume, ulip policyholders are now aware of how the markets work and are looking to buy when markets are low.
Is there a demand for fixed benefit health products, may be catering to specific disease, from life insurers? Are you also looking to launch any such product?
Our company only offers riders on the health insurance side. We are looking to launch a Hospital Cash rider that will pay Rs 5,000, Rs 3,000 or Rs 10,000.
Lot of work is happening in the health insurance space by life insurers. The industry feels pension and health market is the way forward.
What kind of product innovation likely in the insurance market?
We are likely to see policies that will offer both life and health insurance covers. There are some innovations expected on the distributions channels like one where our company tied-up with Telenor to provide Rs 10,000 cover on every recharge of Rs 50-Rs 100. We got 7 million customers through this channel.
What kind of products are you looking to roll out in 2016?
We will launch an online term plan, a Hospital Cash rider, a traditional annuity plan and some group plans.
What are your expectations from the Union Budget both from the industry and policyholders’ perspective?
The government should provide a separate deduction limit of Rs 1-1.5 lakh for life insurance and not mix with Section 80C instruments. This will further the push to buy life insurance products. There can also be an additional Rs 50,000 deduction given for investing in New Pension and other pension products.
What is your outlook for the industry over the next couple of years?
The industry will grow at a rate of 8-10%. However, the growth of the industry is coming from higher premium collection not higher number of policies being sold. It should be vice versa.
What are the challenges the industry might face in the near future?
Productivity and retentions of agents will continue to be a challenge. This is so largely because agency is never taken up full time. It is a part-time job and hence retention and productivity is a concern.