New products, new approaches at HDFC Standard Life

Usha Somayaji
20 June 2001

Pension products. Mortgage redemption cover. Unit-linked products. These are some of the insurance 'goodies' that can be expected to come from HDFC Standard Life Insurance, the 82:18 insurance joint venture between housing financing major HDFC and the UK-based insurance major, Standard Life Insurance.

Pension products are expected to come by October this year, and mortgage redemption covers, towards the end of the year. A little later, we can expect market related unit-linked products. "The pension business has enormous potential, as less than 10 per cent of the Indian workforce is covered by pension", enthused Deepak Parekh, chairman, HDFC Standard Life Insurance.

He was in Pune, to launch the company's new branch - it's sixth in the country - and a new insurance product, the Group Term Insurance, that caters to the needs of the corporate sector to cover their employees under one umbrella insurance scheme. "Need" is the factor that HDFC Standard Life is hinging its business on, making its products meet the differing needs of the customers, and structuring the product accordingly.

"With pension products, we will need to separate out the two parts -- of accumulation, during the saving period, and annuity, when you begin the pay-out," says Mr. Parekh. This kind of bifurcated pattern is what the company plans to pursue for pension products, although the final shape is yet to be decided.

The other area is that of mortgage redemption, where it can be seen to have an edge over the competition, given its pool of housing loan customers in flagship HDFC. "Mortgage redemption is a big business overseas, we shall try to bring it here in the last quarter of this year," Mr. Parekh said. The focus would be on the capital component of the loans, particularly housing loans. However, the fact that the portion of the capital, in addition to the interest component was included for tax relief in India, this element too had to be factored in into any scheme, according to him.

The strategy adopted by HDFC Standard Life to attract customers has been through customisation of its products. Its earlier products, the Endowment and the Money Back policies came with the facility to customise, as does its latest product, Group Term Insurance. Endowment and Money Back plans come with additional benefits such as critical illness, double sum assured, accidental death benefit and waiver of premium, which the customer can mix and match, as he or she wishes.