DLF Pramerica Life Launched U-protect term plan

DLF Pramerica Life Insurance has launched a pure term insurance plan that provides higher life protection cover at an affordable premium, especially for women. Premium rates are substantially lower for women, making the plan, U-protect, particularly attractive for women customers, the company said.

While the minimum sum assured in the plan is Rs 25, 00,000, the consumer can take additional riders for accidental death benefit or critical illness, it said.

"With a minimum annual premium of Rs 4,000, U-protect are affordable for customers across multiple income groups," DLF Pramerica Life managing director and CEO Pavan Dhamija said.

The company is a joint venture between realty major DLF and Prudential International Insurance. It started operations in 2008 and operates 40 branch offices and 86 branch units across Delhi, Haryana, Punjab and Gujarat.

Reliance Life plans to build up traditional products

Reliance Life Insurance Company, a part of Reliance Capital is looking to enhance its offering for protection-oriented plans, as it plans to launch couple of riders that will give the insured added protection at nominal cost. The company has filed two new riders ‘family income benefit’ and ‘waiver of premium’, for which regulatory approvals are awaited.

The firm is also looking to launch competitive online term insurance plan.

“The regulator has already reiterated its focus on protection by increasing the minimum life cover for Ulip policies. We are taking that further by offering opportunities to increase protection beyond the basic life cover,” said Malay Ghosh, CEO, Reliance Life Insurance during a media interaction.

Reliance Life is further considering the launch of fixed benefit simplified health insurance plan for individuals.

The company has, over the last couple of fiscal years, seen significant reduction in its operating losses and is set for turnaround in current fiscal as it aims at profit of over Rs300 crore. The company, which had reported loss of Rs129 crore in FY11, has been making operating profits every month since the last three quarters.

The firm is targeting regular premium of Rs5,000 crore and new business premium (NBP) of Rs3,500 crore in the current fiscal, with half of it likely to come from traditional plans.

The largest private insurance firm (by number of policies) is open to bancassurance strategy, which would help it to significantly increase its topline.

“Reliance Life has been approached by several banks for tie-up with equity partnership and we are keenly exploring innovative partnership models,” said Ghosh.

The company, which has been in the forefront in reaching out to rural mass market, is also launching rural career agent programme, under which it would induct 6,000 agents during the year. It would also recruit 4,000 sales managers during the fiscal, taking the total sales manager’s strength to 12,000.

The company has seen 31% growth in its assets under management (AUM) during fiscal 2011 to `17,855 crore and islooking at doubling it in the next three years.

Return-of-premium alternative may be positive for some

Despite financial planners untiringly extolling the virtues of pure risk covers — term insurance plans offered by life insurance companies — a vast majority of future policyholders remain unconvinced about having to split out a premium without being assured of any financial benefit in return, should they outlive the policy tenure.

This perception has contributed to the status of unit-linked insurance plans (ULIP) and endowment plans, which offer an investment module, but come at a significantly higher cost. Few policyholders realise that in the bargain, they may have settle for an insufficient life cover.

For those seeking the middle ground between the two options, some life insurers offer return-of-premium plans, with HDFC Standard Life’s Premium Guarantee plan being the latest among them. Others with similar product offerings include ICICI Prudential Life, Bajaj Allianz Life and Birla Sun Life.

Under HDFC SL’s Premium Guarantee plan, winning maturity, the policyholder is entitled to receive an amount equivalent to all the premiums — excluding any extra premium charged due to underwriting, revival or alteration charges, if any — paid through the policy’s tenure. In the event of the insured’s death during the policy term, the sum assured will be provided to his/her dependants.

As for the policy, a 30-year-old female opting for a term of 25 years will have to pay a premium of Rs 7,330 per annum for a sum assured of Rs 10 lakh. On maturity, the policyholder stands to collect a sum of around Rs 1, 83,250.

Compared to ULIPs, which provide life cover that is not equal with the premium outgo, the plan is surely cheaper, and seems like a compelling buy for an individual whose primary aim is to maintain her family’s interests in the event of her death, but all the same, wishes to get the premium back if she survives the term.

While it does address one of the key concerns of many policyholders, one needs to bear in mind that the comfort and peace of mind it offers comes with a cost attached. A comparison between the premiums charged by HDFC SL’s Term Assurance Plan (pure protection cover) and Premium Guarantee Plan (return-of-premium policy) shows that the former is more cost-effective.

Assuming the aforementioned parameters to be the same, the Term Assurance Plan will entail an annual premium of just Rs 2,541. The difference between the premium payable in the case of the two plans — that is, Rs 4,789 per annum — if invested for the same period in other instruments like equities or even debt, can get much higher maturity proceeds than the amount one can expect if one survives the tenure of the Premium Guarantee plan.