Leading private insurer Reliance Life plans to launch a new pension plan as early as next month and has sought the sector regulator IRDA’s approval for the same, a top official said.
Several private insurance companies are mulling offering new pension schemes after IRDA (Insurance Regulatory and Development Authority) revised pension product guidelines and removed the 4.5 per cent return guarantee requirement.
However, Reliance Life Insurance, part of Anil Ambani-led Reliance Group’s financial services arm Reliance Capital, would be among the first few to launch a fresh pension plan.
“We have filed one accumulation policy with IRDA and are expecting to get approval by this month-end. If everything goes as per our plans, we will be coming up with a new pension plan by next month-end or early November,” Reliance Life President and Executive Director Malay Ghosh told PTI.
With this new annuity product, Reliance Life is also planning to give capital guarantee and an option to take debt, equity or bond whatever is chosen by the insured.
Ghosh further said that Reliance Life believes that policyholder should be given an option to choose the annuity providers.
“The reason is simple. If the insured is not happy with the old insurer, the policyholder should be give a right to change the service provider. Long-term policyholders should be given the freedom and flexibility to choose the annuity provider.”
Talking about the index-linked insurance plans (ILIPs), he said that it is still at a conceptual stage.
“We are working on the nitty-gritty and will announce details soon,” he added.
Recently, IRDA revised product design draft guidelines for traditional products. The latest draft has paved way for a new category of product called ILIPs in life insurance business. At present, life insurance has two categories of products– traditional plans and unit-linked insurance plans.
ILIP, which will have a lock-in period of five years, is likely to hit the life insurance market soon. The premium paying term will be same like that of a regular premium plan till the policy term or a single premium.
According to IRDA, an ILIP will be promoted as an unbundled product, meaning it cannot be sold with any other financial product. Many insurance products are bundled with other products like online air ticket bookings, credit cards, vehicles, consumer durables, home loans or personal loans.
On unit-linked plans ( ULIPs), Ghosh said there are some teething problems in the context of new guidelines.
“We have some concerns relating to the five-year lock-in period, surrender charges, discontinuance fund. But it is too early to offer comment,” he said.
