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Pension Plus from LIC a hit

Posted on 21 October 2010 by News Desk

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Life Insurance Corporation of India (LIC) has found success with its Unit Linked Pension Plan in the pension space. LIC has sold more than 30,000 policies of Pension Plus since its launch in September 2010 when the new ULIP norms came into effect.

Pension plans in the Unit Linked category is something which all life insurance players had stayed away from as the new norms required the policy to provide a 4.5% guaranteed rate of return per annum. Most companies were wary of achieving the same and stayed away from the pension plan segment. Only Life Insurance Corporation of India launched the new pension plan called “Pension Plus” and the results are there to see. In fact, the only other life insurance player to launch a pension plan is ICICI Prudential which launched a single premium unit linked insurance product in the pension space called “LifeLink Pension SP”. The company has launched a aggressive campaign to market this product, but it is still early days to gauge the success of the insurance product.

Other life insurance companies are still not ready with pension plans in the ULIP space. LIC has rightly grabbed the opportunity and Pension Plus alone has garnered close to Rs. 150 crores in premium in just a little more than a month.

This will further add to the trust element that people have with LIC. Almost all major life insurance companies chose to stay away when told to provide a minimum guarantee as low as 4.5% per annum - one wonders what use the glossy projections of 6% and 10% were suppose to serve. Even a savings bank account guarantees a rate of return and charges almost nothing!


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Life Insurance Corporation of India (LIC) is one of the financial institutions which have received permission from the Government of India to launch infrastructure bonds.

As per the norms, an individual can invest Rs. 20,000 in infrastructure bonds and save tax on the same. The tax savings will be over and above the 1,00,000 permissible under Section 80 ©. This tax saving would be under Section 80CCF.

The insurance regulator IRDA though has some concerns on insurance companies floating infrastructure bonds. LIC would then need the approval of the regulator before it can proceed with the bonds issue. It seems only equity is allowed as capital for insurance companies and not debt.

Infrastructure bonds can be attractive to high income individuals where they stand to get an additional Rs. 20,000 to invest and save tax over and above the normal avenues.

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Expenses are no more what they used to be some 15 years back. Though our incomes have seen quite a dramatic jump, the expenses too have caught up with the same. In fat some of the important costs like health care have become very expensive and the associated costs will continue to rise. With the costs of education also increasingly dramatically, the most crucial aspects have seen a rise in price which is well beyond the reach of common people. We seem to be living month-by-month!

The importance of pension has hence become paramount in all our lives. We are almost sitting ducks if we have no planned for our retirement at least ten to 15 years in advance. All of a sudden our incomes will dry up and with the sedentary lifestyles which most of India leads, the chances of medical expenses increasing are higher.

This is where the pension insurance can play a crucial role for us. If we plan well in advance, we can at least ensure that we can lead a satisfactory life once we retire. While most insurance companies in India have pension schemes on offer, LIC has launched a pension scheme for the un-organised sector. The plan is called Swalavlamban.

A good majority of Indians earn their living in the un-organised sector and the government needs to plan well in advance so that we start building a social security network which covers the whole of India.

Let’s hope we see more and more low cost insurance plans for which penetrate rural India in a much bigger way.

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