Mumbai, January 11, 2005
Business Standard
The Life Insurance Corporation of India (LIC) has received a proposal
to insure the life of a non-resident Indian (NRI) for Rs 100 crore.
The proposal is currently being evaluated, said an LIC
official.
If the proposal is accepted, this would be the largest policy issued
to an individual by the state-owned insurance company. The largest
policy issued by the state life insurer is a Rs 50 crore policy given
to an exporter.
Interestingly, the average size of most NRI policies today ranges
between Rs 50 lakh and Rs 1 crore.
Senior LIC management refused to disclose any details of the NRI buying
the policy. However, overseas Indians tend to buy annuity products
for their dependents living in India. They usually prefer products
that offer single premium paying terms or those thbat ahve a short
premium-paying duration.
One of the largest policies bought by an NRI in the Middle East stands
at 2 million pounds. NRIs are interested in investing in LIC
policies because the interest rates in India are higher than in other
parts of the world, said a senior corporation official.
LICs brand name and high claims record in excess of 99 per cent
also explain why the state corporation tends to draw NRI business.
Today international insurance business accounts for 2 per cent of
LICs total business recorded. The NRI business that comes directly
to LICs operations in India stands at less than 0.1 per cent,
said company officials.
The growth depends upon interest rate fluctuations, said
Hemant Bhargava, head of SBU-international operations, at LIC.
Last years growth was in excess of 35 per cent, partly on account
of maturity of the Resurgent India Bonds in October 2003, he added.
Overseas Indians have two options when buying plans from LIC. They
can come to India and buy a policy directly from the corporation.
Alternatively, they can buy a cover from LIC while overseas, but the
corporation caps the sum assured at Rs 1 crore.
Since we cannot see the person and the medical examination is
done abroad, we limit the size of the insurance cover, said
officials.
Otherwise an overseas Indian like his foreign counterpart can purchase
a policy at any of LICs joint venture companies abroad. There
is no cap on the size of the policy.
It depends upon underwriting rules and the earnings and the
paying capabilities of the individual, said Bhargava.
The biggest issue facing NRIs is deciding which currency they want
the policy in. If an NRI wants the proceeds of the policy in rupees,
he needs to purchase the cover from India; otherwise he would have
to take an exchange rate view, said Bhargava.