LIC policyholder’s legal heirs have no right to seek plan and nominee details – CIC order

28-Sep-2022

Legal heirs of a LIC policyholder have no right to receive the policy details if they are not declared as nominees in the plan, according to a recent order of the Central Information Commission (CIC).

Seeking details of the nominees and policies held by his late father, the appellant filed an appeal under the Right to Information Act, 2005 before the Central Public Information Officer (CPIO), Life Information Corporation of India (LIC), Chhattisgarh. The appellant had asked who the nominees of two policies held by his father were and how much sum insured was provided to them

The CPIO, however, denied the information. Not satisfied with the order, the appellant filed a first appeal (FAA) dated 18-11-2020, requesting the information should be provided to him. Through an order dated 15-12-2020, the FAA held the CPIO’s reply. Following this, the appellant filed a second appeal before the Commission on the ground that the information was not provided to him.

What the CIC said

During the hearing, LIC’s CPIO said they had denied the requested information to the appellant “as disclosure of which would affect the commercial interest of the third party, and the same is exempted under section 8 (1) (d) of RTI Act, 2005.”

In the order dated 21st September 2022 (Wednesday), the CIC observed that the appellant “is neither the policy holder nor the beneficiary of the said policies. Therefore, the benefits of the policies can only be provided either to the policyholder or the beneficiary (nominee) as indicated in the policy.”

According to the order, being a legal heir doesn’t give the appellant the right to receive the requested information.

“The Commission observes that just because the appellant is the legal heir of his deceased father does not give him the right to receive the requested information. Hence, the legal heirs do not have any right to receive the policy-related details. In view of this, the Commission is of the opinion that the desired information has rightly been denied by the respondent under relevant provisions of the RTI Act, 2005 vide their letter dated 28.10.2020 and the same is being upheld by the Commission,” the CIC said in its order while disposing of the matter.

Source : Financial Express

Financial planning trends among Gen Z, and why adding life insurance is important

17-May-2022

The super proactive millennials and Gen Z currently make up the majority of the Indian population. Be it earning, saving or gaining the return on investments, they have absolutely outdone all previous generations.

According to a survey, a surprising 32 percent of the Indian Gen Z are inclined toward saving more than spending, and only 5 percent said they’d choose leisure over saving. Now, one can’t deny the role of the global pandemic in this sort of a mentality where the youth is highly aware of financial planning, their health, and consequently, the importance of insurance. Moreover, as natural risk-takers, the Gen Z tend to set themselves to start earning early, which makes it crucial for them to know proper financial planning.

Now, with the evolving mindset of the current generation, the modes of financial planning and insurance have also leveled up. It’s all better and easier because all that Gen Z counts on are the convenience of planning and ease of execution. Because let’s face it, nobody likes long lines and piles of paperwork.

What attracts today’s youth are the return on investments and lucrative bids, but what they fail to understand is the importance of being prepared for emergencies. Consequently, life insurance remains a push product that has to be force-sold to them.

Why should Gen Z get term insurance early in life?

Adding a term life insurance policy is not mandatory if you don’t have dependents. But buying a policy at an early age helps you to lock your premium at a lower cost, thus reducing the total expenditure on life insurance over the course of time. Also, it becomes extremely important when you have any kind of loan to ensure your family doesn’t face humiliation from the bank for loan recovery.

And, of course, there’s the advantage of tax benefits under Section 80C of the Income Tax Act. 1961.

What’s most important here is that the Gen Z considers the following factors in choosing the right insurance:

● Brand name

The first step in selecting the best insurance policy will be a good brand name with an excellent track record.

● Claim settlement ratio

This is the total percentage of claims that an insurance provider settles in a year out of the total claims made on the company. The claim settlement ratio of a brand should not be less than 95 percent.

● Premium affordability

The premium you pay for your policy will differ from company to company. If you take the insurance through an agent, the premium amount will be higher. Thus, it is advisable that you get the insurance online and with no middlemen involved.

● Sum assured

The Sum Assured (SA) is the fixed amount that a nominee will get in case of any unfortunate event to the insured person. The policy buyer should make sure that the SA is sufficient to fulfill the needs of the nominee.

● Riders to add

An insurance rider is an add-on to the basic insurance policy. The policy buyer should never forget to add critical illness and accidental death riders along with the policy, as these riders provide additional coverage and added protection against the risk.

Starting early with proper financial planning and getting insured can prove to be the smoothest way to a comfortable future. And since the new generation is more likely to be the creators of their success stories rather than the followers of someone else’s, they’d need financial security more than anything else.

Source : Money Control

Life insurers log new business premium growth of 84 pc in April, led by LIC

10-May-2022

Life insurance companies logged 84 percent growth in their cumulative new business premium at Rs 17,940 crore in April 2022, primarily helped by LIC, Irdai data showed.

All 24 life insurers had collected Rs 9,739 crore as a new business premium during the same month a year ago.

The largest insurer, state-owned LIC’s first-year premium or new business premium more than doubled (at 141 percent rise) to Rs 11,716 crore as against Rs 4,856.76 crore in April 2021, the Insurance Regulatory and Development Authority of India (Irdai) said.

LIC commands the largest market share of 65.31 percent, while the rest of the 23 private players have the remaining 34.69 percent.

The rest of the private sector players witnessed over a 27 percent jump in their combined new business premium at Rs 6,223 crore. Their collective first-year premium was Rs 4,882 crore in April 2021.

In terms of percentage growth, LIC was followed by Star Union Dai-ichi Life (122 percent) and Tata AIA Life (107 percent growth).

There was a 32 percent jump in terms of a number of policies/schemes at 13,21,098 in April this year by all the 24 players.

Of this, LIC witnessed a 31.92 percent increase in policy sales at 9,13,141, while the private players saw a 33.87 percent rise at 3,04,748.

Source : Financial Express

Life insurers’ new business premium income rises 13% in FY22

19-Apr-2022

Collective new business premium income of life insurance companies’ witnessed a 12.93% year-on-year growth to Rs 314,263 crore for the last financial year, from Rs 278,278 crore in the previous fiscal, backed by a rise in group single premium and group yearly renewable premium, data from Irdai showed on Monday.

The new business premium, or the first-year premium, of 23 private sector life insurance companies, posted a 22.74% Y-o-Y growth to Rs 115,503.12 crore for 2021-22, while IPO-bound LIC registered a 7.92% Y-o-Y increase to Rs 198,759.85 crore. Notably, for 2020-21, the life insurance sector’s first-year premium grew by 7.49%.

Due to the Covid-19 pandemic lockdown and resultant impact, premiums were affected in FY21 and resultant different growth after the same, the base effect may also be possible in monthly FY22 numbers,” a note from CareEdge said.

LIC continues to maintain its dominant share in the first-year premium for FY22 (LIC share of 63.2% vs 36.8% share of private companies). The private sector has continued to gain market share, given that it has been growing at a faster pace compared to LIC,” CareEdge said in its note.

Among major insurers in the private sector, HDFC Standard Life posted a 20.05% y-o-y jump in new premium to Rs 24,301.07 crore for the last fiscal, while for ICICI Prudential Life Insurance, it was up by 15.37% to Rs 15,035.52 crore. SBI Life Insurance’s new business premium income was up 23.43% to Rs 25,458.29 crore, Bajaj Allianz Life was up by 44.72% to Rs 9,135.82 crore and Max Life jumped 15.78% to Rs 7,904.35 crore.

However, Future Generali witnessed a drop of 12.64% in the new year premium to Rs 456.97 crore for the last fiscal. Aegon Life was down by 73.02% to Rs 16.67 crore, according to the Irdai data.

The first-year premium of life insurers reported a robust y-o-y growth rate of 37.30% in March 2022 and reached Rs 59,608.98 crore. “The robust growth in monthly numbers can be attributed to an increase in single premiums for both individual and group segments in the last month of the financial year (with individuals undertaking tax planning measures), with LIC substantially outpacing its private peers for the second month in a row,” CareEdge said.

Source : Financial Express

New biz premium income of life insurance companies up 13% at Rs 3.14 lakh crore in FY22

18-Apr-2022

New business premium income of all the life insurance companies rose by nearly 13 percent to Rs 3,14,263 crore in fiscal 2022, data from Irdai showed on Monday.

Twenty-four life insurance companies had a total premium income of Rs 2,78,277.98 crore from new business in the previous fiscal.

Soon-to-be listed public sector insurance behemoth LIC registered about 8 percent growth in its new business premium income at Rs 1,98,759.85 crore in 2021-22, against Rs 1,84,174.57 crore in the previous fiscal, as per the data shown by the Insurance Regulatory and Development Authority of India (Irdai).

The rest of the 23 life insurance companies belonging to the private sector had a combined new business premium of Rs 1,15,503.15 crore during the fiscal, up 23 percent from Rs 94,103.42 crore.

In terms of market share, LIC commanded 63.25 percent of the market and the rest of 36.75 percent by the 23 private entities, as per Irdai data.

Source : Financial Express

What LIC’s policyholders must know about investing in its IPO

22-Feb-2022

Insurance behemoth Life Insurance Corporation of India (LIC) is likely to come out with its initial public offering (IPO) in March. It’s draft red herring prospectus (DRHP) does not specify the offered size, but the central government will offload 31.6 crore shares or 5 percent of its stake in the company.

Besides the humungous issue size – estimated to be anywhere between Rs 50,000 crore to Rs 90,000 crore – the IPO is also being talked about for the unique quota it has created.

In a first-of-its-kind move, LIC has decided to carve out a policyholders’ quota in its public issue. While the exact portion is yet to be finalized, it can go up to 10 percent. “The aggregate of reservations for the eligible policyholder(s) shall not exceed 10% of the offered size,” its draft prospectus stated.

However, as a policyholder, you need to fulfil a few conditions to be eligible for the reservation. Here is all that you need to know before investing in the IPO.

What is the proportion of shares that will be reserved for policyholders in its public issue?

LIC has not specified the exact portion to be reserved for policyholders. However, the threshold is 10 percent. “The aggregate of reservations for eligible policyholder(s) shall not exceed 10 percent of the offer size,” the DRHP stated. As a policyholder, you can invest a maximum of Rs 2 lakh under the quota.

How can I find out if I am eligible for the policyholders’ quota?

Individuals with even one LIC policy as on February 13 (the date on which the DRHP was filed) and the bid or offer opening date can apply under the policyholder reservation portion. That is, you if you have purchased a policy after February 13, you will not qualify. If you are an annuitant – that is, if you are deferred or immediate pension policyholder receiving regular pension – you, too, will be allowed to apply. But if your deceased spouse was an annuitant and you have been receiving the annuity after her death, you will not be eligible for this reservation. Those covered under group policies will not be eligible to apply under this quota.

There is a lot of talk around the discount that policyholders who wish to participate in the IPO will get. What is the quantum?

Yes, LIC policyholders are likely to get a discount on the issue price. However, LIC has not specified the quantum of discount so far. If finalised, it will be revealed at least two working days prior to the bid opening date. “Any discount between 5-10 percent would be a good discount,” says Shyam Sekhar, Founder, iThought Financial Consulting LLP, a wealth management firm.

LIC is running campaigns on PAN updation, but I have not completed the process yet. Do I still have time?

Updating PAN in LIC’s records is mandatory. Make sure that you complete the process of updating your PAN on LIC’s portal by February 28. If you fail to do so, you will not be considered an ‘eligible’ policyholder, LIC has made this clear.

I do not have a demat account. Can I use my parent’s or spouse’s demat account to apply?

Having a demat account is mandatory to participate in IPOs. And, as a policyholder who wishes to apply for LIC’s IPO, you should be the first account holder in your demat account. If it is joint account, then you should be the first or primary holder.

Is there any minimum sum assured or premium requirement to be eligible to bid under the quota or later for allotment?

LIC has not laid down any such condition to qualify for the quota. Similarly, allotment is not linked to the number of policies, premium amount or sums assured.

My mother has designated me as a nominee in her policy. Can I apply under the quota?

No. The quota is for policyholders not beneficiaries, so you will not be eligible. Likewise, beneficiaries who have received the death claim amount after the policyholder’s death cannot bid under the policyholder reserved portion.

I have been a long-time LIC policyholder, but now I live abroad. Can I apply under the quota?

Only resident Indians are allowed to bid under the quota.

My husband and I have a joint life policy. Can both of us bid under the policyholder reservation portion?

No. Only one of the two will be eligible to bid under the quota. PAN of the person who would be applying should be updated on LIC portal.

I am an LIC employee and also hold its policies. Can I apply under employee, policyholder as well as retail portions?

Yes, you can. “Application made in the policyholder reservation portion, employee reservation portion and retail portion – here all 3 bids would be considered as valid applications and will not be rejected as multiple bids,” the DRHP says.

Likewise, if you make applications under employee, policyholder and non-institutional portion, all three bids will be considered valid. However, let’s consider a scenario where you make applications under employee and policyholder quota as well as retail portion along with non-institutional category. Here, applications made in retail and non-institutional portions will be considered multiple bids and both will be rejected.

The surplus available for paying bonuses to participate policyholders is set to go down gradually, post-IPO. As a policyholder, should I be worried?

Yes and no. It is a fact that the profit-sharing arrangement is set to change and from FY25, 90 percent surplus will be available to policyholders, down from the current level of 95 percent. This could mean lower regular bonuses for you, though the change in profit-sharing ratio is not the only factor that determines the bonus rate. “Each product has a different bonus rate…also, if something more positive happens, bonuses could improve too. It all depends on how the corporation performs in relation to the (year’s) assumptions,” LIC Chairman MR Kumar said on Monday.

Besides, as Moneycontrol has often pointed out, it is best to keep your investment and insurance needs separate. Buy a large term cover - the simplest and most cost-effective form of insurance - to protect your dependents and invest through mutual funds to meet your long-term goals. Par products come with returns of 5-6 percent, opaque structure, relatively higher commissions and steep exit barriers. They don’t make for ideal long-term wealth creation avenues.

Source : Money Control

Here are the top 10 stocks of ULIPs managed by LIC

17-Feb-2022

Though LIC has been the dominant player in managing life, pension, annuity, and group insurance products, it has minuscule exposure to Unit Linked Insurance Plans (ULIPs). According to regulatory body IRDAI’s Annual Report of 2020-21, LIC’s overall investment value (Assets Under Management) is Rs 34 lakh crore, of which ULIPs accounted for less than 1 percent or Rs 24,775 crore (as of March 2021). LIC’s ULIP pie among life insurers was also minuscule, at just 5 percent of the overall AUM of Rs 5.2 lakh crore (as of March 2021). The latest monthly factsheet of LIC’s shows that there are 63 ULIP funds offered to policyholders. Their managed corpus as of December 31, 2021, was Rs. 23,034 crore. About Rs 14,400 crore was invested in equity assets. LIC has disclosed only the top 10 holdings for each ULIP portfolio. Here are the top stocks held by most LIC ULIP plans. Currently, there are 46 equity-related ULIP funds offered by LIC. Data as of December 2021.

The total number of LIC’s ULIP Funds that held the stock in their top 10 holdings: 40. ICICI Bank was the most preferred stock among the ULIP funds offered by LIC. Pure equity ULIP funds such as LICI ULIP(Nivesh Plus) & SIIP Growth, Jeevan Plus Growth, Market Plus Growth, Market Plus I Growth, Endowment Plus Growth, Money Plus Growth, and Profit Plus Growth held significant exposure to the stock.

The total number of LIC’s ULIP Funds that held the stock: 36. The stock of the Infosys held by LIC ULIP funds includes Endowment Plus Growth, Health plus fund, Money Plus I Secured, Profit Plus Balanced, and Money Plus Growth.

The total number of LIC’s ULIP Funds that held the stock: 34. The stock of the IT major is held by the funds that include Profit Plus Balanced, Money Plus Balanced, Market Plus Growth, Jeevan Plus Growth, Future Plus Growth, and LICI ULIP(Nivesh Plus) & SIIP Growth.

The total number of LIC’s ULIP Funds that held the stock: 33. Future Plus Growth, New Endowment Plus Secured, New Endowment Plus Growth, and Money Plus Secured were a few ULIPs offered by LIC that held the stock of L&T in December 2021.

The total number of LIC’s ULIP Funds that held the stock: 33. ULIP funds like Money Plus Balanced, Profit Plus Balanced, ChildFortune Plus Secured, and Gratuity Plus Balanced held the stock of Reliance Industries.

The total number of LIC’s ULIP Funds that held the stock: 31. Future Plus Growth, Profit Plus Secured, Future Plus Secured, and Profit Plus Balanced were few LIC ULIPs held the stock in their portfolio.

The total number of LIC’s ULIP Funds that held the stock: 25. ULIP funds such as Market Plus I Secured, LICI ULIP(Nivesh Plus) & SIIP Secured, LICI ULIP(Nivesh Plus) & SIIP Growth and LICI ULIP(Nivesh Plus) & SIIP Balanced held the stock of HDFC Bank.

The total number of LIC’s ULIP Funds that held the stock: 20. Future Plus Income, Market Plus Growth, Money Plus Growth, and Future Plus Income were few LIC ULIP funds that held the stock of the ITC.

The total number of LIC’s ULIP Funds that held the stock: 17. Few LIC ULIP funds that had significant exposure in the portfolio in December include Market Plus Secured, Pension Plus Mixed, Gratuity Plus Income Fund, Market Plus I Secured, and Health protection plus fund.

The total number of LIC’s ULIP Funds that held the stock: 17. The stock of Tata steel was held by LICI ULIP(Nivesh Plus) & SIIP Balanced, LICI ULIP(Nivesh Plus) & SIIP Growth, New Endowment Plus Balanced, and Future Plus Growth.

Source : Money Control