LIC launches 'variable' products with assured returns

State-owned Life Insurance Corporation of India today launched two variable insurance products - Bima Account 1 and Bima Account II - offering a minimum guaranteed interest rate of 6 per cent.

A variable insurance scheme is like a traditional non-market linked plan, but offers a minimum guaranteed interest and the flexibility to increase the sum assured any time during the term of the policy, subject to a threshold.

In a variable insurance plan, the premium, including the top-up premium, net of all charges is credited to the policyholder's account and earns a minimum guaranteed interest.

In November last year, the Insurance Regulatory and Development Authority came out with guidelines for variable insurance plans, forcing insurers to offer a minimum guaranteed interest rate. Insurers cried foul, saying that guaranteeing a minimum interest rate over a long term is difficult and will make such products unattractive to both policy buyers and insurers.

The LIC, however, is optimistic about good sales. LIC's zonal manager (east) R R Dash told newspersons in Kolkata, ''We aim to sell in the eastern zone 10 lakh policies of Bima Account I and Bima Account II with a premium income of Rs1,000 crore during the remaining two months of the current financial year.''

Dash is also hopeful of surpassing the premium income target of Rs6,575 crore for the current financial year. Last financial year, the eastern zone had collected Rs5,262 crore in premium from new policy sales.

''Till December during the current financial year, we had collected Rs4,100 crore premium from selling 32.25 lakh policies, an increase of 30 per cent over the corresponding previous period,'' said K S Nagnyal, regional manager (marketing).

According to Nagnyal, the corporation could earn a premium of Rs92 crore from its Pension Plus and Rs700 crore from the Endowment Plus plan launched in September last year under the new regulations for unit-linked insurance plans (ULIPs).