SBI Life Insurance launched a unit linked plan -- Smart Wealth Assure-- aiming to provide guaranteed fixed returns to the policyholder.
Smart Wealth Assure guarantees at beginning a pre-specified NAV applicable at the end of the 10-year term, SBI Life said in a statement.
SBI Life Smart Wealth Assure is a single premium plan and offers policyholders optional Accidental Death benefit and partial withdrawal ability from 6th policy year onwards.
The scheme would be available at a minimum amount of Rs 50,000, and would cover policyholders from 8 years to a maximum 65 years of age with a policy term of 10 to 30 years.
With launch of Smart Wealth Assure, SBI Life now has a bouquet of eight Ulips catering to the long-term wealth creation and life insurance needs of different customer segments.
"Our aim is to assemble a large and attractive suite of Simple and Smart products so as to allow our customers to choose relevant solutions that best meet their needs, aligned to their income and risk profile," SBI Life Insurance MD & CEO M N Rao said.
The fund would provide guaranteed fixed returns, which provide the policy holder to choose for either of equity fund or P/E Managed Fund or Bond Fund, it added.
Usually the Return Guarantee Fund aims to provide guaranteed fixed return by investing mostly in fixed income securities, namely debt instruments.
As of January, 2011, SBI Life''s market share among private life insurers stood at 18.9(%) per cent, while it was 5.6(%) per cent when it came to total market share.
Wednesday, March 9, 2011
Tuesday, March 1, 2011
ULIPs to get costlier with boost in service tax
The projected increase in the service tax on life insurance products will make both traditional and unit-linked insurance plans, or Ulips, more expensive. The industry expects the costs to go up by 50-75 basis points (one bps = 0.01%).
Although companies are yet to figure out the crash of the proposed increase, most insurance executives said premiums may go up by as much as 75 basis points.
"Policies are going to get costlier with the increase in service tax. While traditional plans will cost nearly 50 basis points more, Ulips may see a 75 basis points increase," said SB Mathur, secretary general, Life Insurance Council.
The budget for FY12 has proposed a 50(%) per cent increase in service tax for traditional plans - where investments from the premium collected are made as per the regulatory rule. Currently, policyholders of traditional endowment or money back plans need to pay 1(%) per cent of the total premium as service charge.
In Ulips, where the policyholder chooses the investment mix (how much to put in equity or debt), the service tax will be charged on the portion of the premium not allocated for investment, like premium allocation and policy administration charges. At present, the service tax is only on humanity and fund management charges.
"This taxing of the allocation charges and policy administration charges will affect the yield, and we imagine at least 20-25 bps reduction in yield for the policyholder," said G Srinivasan, CFO, Bharti Axa Life Insurance.
A senior executive of a life insurance company said efforts made by the Insurance Regulatory and Development Authority, or Irda, to increase the returns for policyholders by capping the charge will get neutralized to an extent.
Insurers, however, are not clear whether the service tax will be part of the 3(%) per cent cap on the total charges.
Last year, Irda had put a cap on various charges, including surrender and fund management charges. The difference between the gross and the net yield is capped at 3(%) per cent for policies with less than 10 years of maturity; for policies with a maturity of more than 10 years, the difference is capped at 2.25(%) per cent.
P Nandagopal, managing director of IndiaFirst Life Insurance, said there is no clarity on whether the service tax will come under the charges prescribed for Ulips. "In case it is outside the 3(%) per cent cap, the premium will go up for policyholders. If it is within the prescribed cap, insurers will have to control expenses well."
"The increase in service tax will increase the cost of insurance for policyholders," said GV Nageswara Rao, managing director and CEO of IDBI Federal Life Insurance Company.
Although companies are yet to figure out the crash of the proposed increase, most insurance executives said premiums may go up by as much as 75 basis points.
"Policies are going to get costlier with the increase in service tax. While traditional plans will cost nearly 50 basis points more, Ulips may see a 75 basis points increase," said SB Mathur, secretary general, Life Insurance Council.
The budget for FY12 has proposed a 50(%) per cent increase in service tax for traditional plans - where investments from the premium collected are made as per the regulatory rule. Currently, policyholders of traditional endowment or money back plans need to pay 1(%) per cent of the total premium as service charge.
In Ulips, where the policyholder chooses the investment mix (how much to put in equity or debt), the service tax will be charged on the portion of the premium not allocated for investment, like premium allocation and policy administration charges. At present, the service tax is only on humanity and fund management charges.
"This taxing of the allocation charges and policy administration charges will affect the yield, and we imagine at least 20-25 bps reduction in yield for the policyholder," said G Srinivasan, CFO, Bharti Axa Life Insurance.
A senior executive of a life insurance company said efforts made by the Insurance Regulatory and Development Authority, or Irda, to increase the returns for policyholders by capping the charge will get neutralized to an extent.
Insurers, however, are not clear whether the service tax will be part of the 3(%) per cent cap on the total charges.
Last year, Irda had put a cap on various charges, including surrender and fund management charges. The difference between the gross and the net yield is capped at 3(%) per cent for policies with less than 10 years of maturity; for policies with a maturity of more than 10 years, the difference is capped at 2.25(%) per cent.
P Nandagopal, managing director of IndiaFirst Life Insurance, said there is no clarity on whether the service tax will come under the charges prescribed for Ulips. "In case it is outside the 3(%) per cent cap, the premium will go up for policyholders. If it is within the prescribed cap, insurers will have to control expenses well."
"The increase in service tax will increase the cost of insurance for policyholders," said GV Nageswara Rao, managing director and CEO of IDBI Federal Life Insurance Company.
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