MR Microinsurance_2012_03_29.indd - International Labour ...

Savings in microinsurance
While the product may be criticized as providing a limited range of options
and no more than fair value for money on early termination, its simplicity makes
it easily understood and it appears to fulfil a significant need for pure protection
with limited savings.
This is probably the most important lesson that may be learned from the SBI
Life experience. The insurer has taken the view that customers appreciate the
straightforwardness of the product, a simply defined sum assured with limited
exclusions and a clearly defined cash-back payment at maturity. The volume of
product sales appears to support this view. SBI Life has commenced a programme
to roll out the product across India.
8.2.4 ICICI Prudential’s Anmol Nivesh
ICICI Pru has developed a policy that combines saving and insurance in a design
not far removed from a classic endowment contract: it is a regular-premium
investment-linked policy that guarantees, on maturity and death, a benefit no
lower than the value of premiums paid, less the value of any partial withdrawals
to that point. It has been launched on a pilot basis to workers in the tea plantations
of Assam, in India’s north-east, and is untested elsewhere.
Elements used from the design of the classic endowment include:
– the combination of a death benefit and a maturity benefit, both attracting
investment returns, but with guarantees,
– a unit-linked approach to investment returns, with assets held in low-risk
instruments,
– a range of policy terms (7 to 15 years) and sum assured options ranging from
INR 6 000 to INR 30 000 (US$130 to US$650), and
– a conventional set of charges, a premium allocation charge, policy administration
charge and mortality charge that do not unduly detract from the effectiveness
of the guarantees.
However, the designers of this product have been innovative in a number of
respects, all of which assist the policyholder. Examples of these include the following:
– Cover continuance option. The life insurance cover continues, for those who
have selected this option, even if premiums are stopped, any time after the third
anniversary of the product, avoiding an automatic surrender procedure.
– Bonus allocation of units. Policyholders are motivated to persist by an allocation
of five per cent of one full years’ premium every fifth anniversary. The policy
administration charge also ceases at the end of five years.
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