LIC's Bold Move: Unveils Two New Insurance Plans to Supercharge Growth – Are You Ready for These Market-Linked Benefits?

Life Insurance Corporation of India (LIC), the nation's largest insurer, has introduced two new life insurance products designed to enhance its diverse offerings and cater to evolving customer needs. These new plans, LIC’s Protection Plus (Plan 886) and LIC’s Bima Kavach (Plan 887), strategically cover both the linked-savings and pure-risk segments of the market.

Introducing LIC's New Offerings

• LIC aims to strengthen its market position by launching these two distinct insurance solutions.
• Protection Plus targets customers seeking market-linked growth with their savings, while Bima Kavach focuses on individuals needing robust pure life protection.

LIC's Protection Plus (Plan 886) Explained

• Protection Plus is a non-participating, linked individual savings plan.
• It uniquely blends market-linked investment features with life insurance coverage.
• Policyholders have the flexibility to choose their investment fund and adjust the sum assured during the policy term.
• Top-up premium contributions are allowed alongside the base premium.

Key Features of Protection Plus

• Entry Age: 18 to 65 years.
• Premium Payment Options: Regular and limited pay (5, 7, 10, 15 years).
• Policy Terms: 10, 15, 20, and 25 years.
• Basic Sum Assured: Minimum 7 times annual premium (below 50 yrs) or 5 times (50 yrs & above).
• Maturity Age: Up to 90 years.
• Maturity Benefit: Unit fund value (base + top-up) is paid; mortality charges deducted are refunded.

LIC's Bima Kavach (Plan 887) Explained

• Bima Kavach is a non-linked, non-participating pure risk plan.
• It is designed to provide fixed and guaranteed death benefits.
• The plan offers two benefit structures: Level Sum Assured and Increasing Sum Assured.
• Flexibility is provided through single, limited, and regular premium payment options.
• Benefits can be received as a lump sum or in instalments.

Key Features of Bima Kavach

• Entry Age: 18 to 65 years.
• Maturity Age: 28 to 100 years.
• Minimum Sum Assured: ₹2 crore; no maximum limit subject to underwriting.
• Policy Term: Minimum 10 years for all premium types, up to 82 years.
• Special Features: Offers special premium rates for women and non-smokers, and enhanced benefits for larger coverages.

Strategic Importance for LIC

• These new products are crucial for LIC's strategy to diversify its revenue streams and capture a wider customer base.
• Protection Plus aims to attract investment-oriented customers, while Bima Kavach strengthens the company's presence in the pure protection segment.

Market Context

• The Indian insurance market is competitive, with private players increasingly innovating their product offerings.
• LIC's new launches are expected to enhance its competitive edge and potentially drive sales growth.

Impact

• This development is expected to positively influence investor sentiment towards Life Insurance Corporation of India, potentially boosting its market share and profitability.
• It may lead to increased customer acquisition in both savings and protection categories.
• The launches signify LIC's proactive approach to product innovation in response to market demands.
• Impact Rating: 7/10

Difficult Terms Explained

• Non-participating Plan: A life insurance plan where policyholders do not share in the profits of the insurance company. Benefits are fixed and guaranteed.
• Linked Plan: A type of insurance policy where the policyholder’s investment component is linked to market performance, such as equity or debt funds.
• Unit Fund Value: The total value of units held by a policyholder in a linked insurance plan, based on the performance of the underlying investment funds.
• Mortality Charges: The cost of insurance cover deducted from the policyholder's premium or fund value to pay for the life risk.
• Non-linked Plan: An insurance policy where the investment component is not linked to market performance; returns are typically guaranteed or fixed.
• Pure Risk Plan: A life insurance product that provides only a death benefit. It does not typically include a savings or investment component.
• Sum Assured: The fixed amount that will be paid to the nominee in case of the policyholder's death.
• Underwriting: The process by which an insurance company assesses the risk of insuring a person and determines the premium rates.