LIC focuses on guaranteed return policies amidst declining markets

26 December 2008

With the stock markets taking a plunge, insurance companies are now launching guaranteed return products. Though this is not new, the strtegy reflects a complete u-turn from the position when Insurance companies fought shy of guaranteed products and were going whole hog in promoting unit-linked insurance plans (ULIPs).

However, with financial market uncertainty prospective customers are confused about the available investment optionsas they seek products that not only offers complete protection of capital but also assures a reasonable rate of return.

Public sector giant Life Insurance Corporation of India has now announced the launch of Jeevan Aastha, a closed-ended single premium product which offers guaranteed benefits to customers on maturity and death.

The plan offers a guaranteed addition of Rs100 per annum for every thousand of the maturity sum assured for a 10-year term and Rs90 per thousand for policies with a 5-year term.

Policy holders can enjoy risk coverage equal to the basic sum assured, which would be six times the maturity sum assured, plus guaranteed additions in the first year of the policy.

In case of death after the first year, double the maturity sum assured, along with a guaranteed addition, would be payable. However, incase of death in the last year of the policy, twice the maturity sum assured along with guaranteed additions and loyalty addition, if any, would be paid to the nominees.