At this time, buy term insurance even at 85

For the first time in India, senior citizens up to 85 years will be able to buy term insurance without any medical checks. Companies are realizing that while it makes sense to catch them young, it is the seniors who have the investible funds.

IDBI Federal Life Insurance-the three-way joint venture between public sector IDBI Bank, Federal Bank and European insurers Aegis- has floated a whole-life policy which allows individuals as old as 85 to buy insurance cover. While whole-life policies are not new to the Indian market, most providers, including Life Insurance Corporation, restrict maximum age at entry at 60 years. "To our knowledge, we are the first company to offer this cover to those as old as 85," said G Nageswara Rao, MD, IDBI Federal General Insurance.

Typically, life insurance is bought with the objective of providing income protection to dependents and since most people retire in their sixties the target market for life insurers is the working population. "We have found that there is a large section among senior citizens who want to buy insurance because they would like to bequeath an inheritance for their relatives," said Rao. He said that another of the impediments was the medical checks which are required from all senior citizens. IDBI Federal's policy requires no checks. However, the policy does restrict maximum sum insured to Rs 5 lakh and limits the benefit to 125% of the sum insured if there is death in the first two years.

IDBI Federal is the second company to target late entrants. Earlier, Max New York Life introduced a fast-track policy which allows those who missed out on buying insurance earlier an opportunity to build up a retirement corpus within a short time.

According to Rao, the limits on death benefits in the first two years of the policy would take care of any adverse selection by people suffering from serious ailments. The cost of cover also increases along with age. While the person who buys insurance at 50 will end up paying only Rs 3,300 an 85-year-old will pay 10 times that much. "While the premium may be high you have to bear in mind the average life expectancy for those entering at the maximum age," said Rao. According to the World Health Organization, life expectancy at birth for Indian males is 63 while for females is 66. Insurers, however, don't go by general life expectancy but at the longevity of the insured population, which tends to be better than the rate for the general population.

IDBI Federal plans to bring down the cost of the product by selling it directly to customers. "Initially, we will offer the product to customers of IDBI Bank and Federal Bank. But in the near future we will start marketing this product to everybody," said Rao. In the west whole-life plans are popular way of estate planning because it enables the inheritors escape estate tax. However, inIndia this is not a driver since inheritances are tax-free.

IDBI Federal aim at 70% increase in total premium

IDBI Federal Life Insurance yesterday said it is aiming at a 70(%) per cent growth in total premium collections throughout the current fiscal.
Established in March, 2008, IDBI Federal Life had recorded a total business premium of Rs 400 crore in the 2009-10 financial years.
"Our premium income during the April-August period grew by 70(%) per cent to Rs 251 crore. We are hoping to close the fiscal with a related growth in premium income," IDBI Federal MD and CEO G V Nageswara Rao told PTI.
The company also plans to come with one new product in both the ULIP and traditional section by the end of the fiscal.
"We will focus on retirement and child plan products under the category of ULIP and traditional products, for which we would be filing to the regulator, IRDA," Rao said.
IDBI Federal is a joint venture of IDBI Bank, Federal Bank and European Insurance firm Ageas (earlier known as Fortis Insurance International), with a shareholding of 48(%) per cent, 26(%) per cent and 26(%) per cent, respectively.
The insurer has issued over 2.10 lakh policies offering an assured sum of Rs 9,819 crore till July, 2010, and has a presence in 53 cities.
In terms of premium collections from new business, the company's incomes grow by 23(%) per cent to Rs 135 crore at the end of August.
"We aim at a similar growth trend in new business income for the remaining half of the fiscal," Rao said.
The company had last month launched a new ULIP product, Federal Wealthsurance Milestone Plan, which was compliant with the new IRDA guidelines.
As per the new IRDA guidelines effective from September 1, the commission paid to distributors and expenses charged by insurers will no longer be front-loaded and will be distributed over the lock-in period of the schemes, which has been raised to 5 years from 3 years earlier.
Currently, ULIP products account for about 80(%) per cent of the total premium collected by the 23 private life insurance companies.

Loansurance Group Life Plan launched | IDBI Federal Life Insurance

IDBI Federal Life Insurance launched a group cover for loans - Loansurance Group Life Plan - a solution that will enable investors protect their borrower's assets and savings.

Customers of the plan gets to cover their borrowers, it could be a loan taken by any individual or by a business entity, against default in case of death of the person who is responsible for loan repayment.

To quote IDBI Federal Life Insurance Managing Director and CEO, G V Nageswara Rao - "Loansurance can help lending institutions to build strong bonds and customer loyalty by ensuring that their debt does not become a burden on their families in their unfortunate absence. They would also be protected from the risk of non-payment of the loan due to death of the borrower".

The unique feature of the plan is its cost-effective way to ensure that the outstanding debt is settled in the unfortunate event of death of the insured member.

The plan comes with two cover options
1. Reducing cover - the insurance cover reduces as per the benefit schedule
2. Level cover - the insurance cover remains unchanged throughout the cover term.