Mar 6, 2008

LIC to close down 'Market Plus' (ULIP Policy) by end-March

MUMBAI: Life Insurance Corporation of India (LIC) is set to close down one of its best-selling unit-linked insurance plans (Ulips) — 'Market Plus' — on March 31. Sources said the corporation had decided to close the scheme since the size was unwieldy.

Currently, 'Market Plus' is the only unit-linked pension plan with LIC and was launched in July 2006 as a replacement for 'Future Plus', the corporation's maiden pension Ulip.

The scheme has been one of the best sellers for LIC in the last quarter, with close to 15% of its premium income coming from this product alone. Brisk sales of 'Market Plus' in January 2008 have helped LIC regain much of the marketshare it lost earlier this year. The scheme is available as a regular premium plan as well as a single premium plan.

'Market Plus' was introduced a year after the launch of 'Future Plus' and incorporated the minimum three year lock-in period prescribed by the regulator. The net asset value of 'Market Plus', which was Rs 10 on July 5, 2006 the date of the launch, has gone up to 12.28% — a growth of over 22.8%. In the same period, the Sensex has risen nearly 60%. 'Future Plus', which was launched in 2005 has a net assets value of 17.72% under its growth option.

The advantage of 'Market Plus' pension plans over regular insurance plan was that they could be purchased with or without life insurance cover. Moreover, if a buyer chose to invest in a policy without buying life cover he could still do so.

Such covers benefits older buyers who have large investments to make as they do not have to go for a medical underwriting, which may result in increasing their cost of insurance. case the policy is taken without life cover, then the Fund Value of the units held in the Policyholder's Unit Account shall be payable either as a lump sum or as a pension. The amount of pension will depend on the then prevailing immediate annuity rates under the annuity option chosen.

Sources said that LIC had a pension plan ready and was waiting for the market plus scheme to close before it launch the new plan. In the past, LIC had gained vastly from the closure of schemes in the last quarter. The announcement of a schemes closure has resulted in a sharp growth in sales as investors saw this as a limited period offer.  Source-