Data shows that the share of Ulips in the new premiums and annualised premium equivalent (APE) has significantly come down over the last one year for the top life insurers. Products like non-par savings term which offer better margins are being preferred.
Unit-linked insurance plans (Ulips) seem to be falling out of favour among private life insurance companies. Data shows that the share of Ulips in the new premiums and annualised premium equivalent (APE) has significantly come down over the last one year for the top life insurers.
Take HDFC Life Insurance for instance. For the nine-month period (April to December 2019), share of Ulips in individual APE dropped to 28 percent compared to 59 percent in the year-ago period. In the same period, the share of non-par savings rose from 14 percent in 9MFY19 to 52 percent in 9MFY20.
Vibha Padalkar, MD & CEO, HDFC Life Insurance said that the company has been focussing on a balanced product mix. While the share of unit-linked products stood at around 33 percent for the quarter, she added that the company is comfortable with this mix.
Similarly, for ICICI Prudential Life Insurance the Ulip share in individual APE decreased to 68.5 percent in 9MFY20 from 79.6 percent in FY19. For Q3, linked product business contribution to APE to below 70 percent. This was over 80 percent in the previous fiscal.
However, NS Kannan, MD & CEO, ICICI Prudential Life Insurance, said that apart from protection, Ulips are a focus segment.
Protection plans and non-par savings policies have a better rate of margin than unit-linked plans. Hence insurers seem to be preferring a higher mix of pure term plans. Further, the recent stock market volatility has also made the Ulips unattractive among customers due to dwindling investment returns.
When it comes to SBI Life Insurance, there was a rise in Ulip share on a new business premium basis in 9MFY20 to 60 percent from 49.7 percent in 9MFY19. However, it was a drop from 72.8 percent levels of FY19. Non-par savings on the other hand rose to 11.4 percent in 9MFY20 compared to 1.6 percent a year ago.
Max Life Insurance which is the company held by Max Financial Services saw its share of Ulips in product mix come down from 40 percent in 9MFY19 to 37 percent in 9MFY20. Non-par savings rose to 20 percent from 6 percent in the same period.
Bank-led insurance companies sell a majority portion of Ulip products. This is because these plans are meant to be insurance-plus-investment products and have a higher premium. Bancassurance-led insurers find it easier to sell it to bank customers.Exclusive offer: Use code "BUDGET2020" and get Moneycontrol Pro's Subscription for as little as Rs 333/- for the first year.
