HDFC Life, one of India's leading insurance providers, is currently experiencing some slowdown in its savings policies. Shedding light on this scenario in an exclusive interview with CNBC-TV18, the company's CEO and Managing Director Vibha Padalkar said, that the policies with premiums below Rs 5 lakh have witnessed substantial growth, ranging between 15 to 17 percent.
However, the real concern arises when we look at policies with premiums exceeding Rs 5 lakh, she said.
This growth in policies with premiums below Rs 5 lakh has been particularly robust, and it indicates a healthy demand for insurance policies in the sub-Rs 5 lakh premium segment.
"In the higher premium segment, however, the growth rate has been much lower, with new policy growth hovering around 9 percent," confirms Padalkar.
This contrast between the two premium segments highlights the core issue faced by HDFC Life — a slowdown in the demand for higher-value insurance policies.
Padalkar suggests that the slowdown in policies with premiums over Rs 5 lakh might be temporary. She believes that the machinery responsible for selling policies in the sub-Rs 5 lakh premium range is functioning efficiently and experiencing healthy growth. As a result, the number of policies (NOP) in this segment has shown promising growth. However, she acknowledges that it will take some time for the demand for policies with premiums exceeding Rs 5 lakh to pick up again, especially in their wealth channels.
Savings plans, in general, serve as financial instruments for wealth accumulation while providing insurance coverage. These plans are designed to cater to individuals' specific financial needs, offering flexibility and varying risk levels based on individual preferences. Savings plans are often introduced by the Indian Government, public sector banks, or financial institutions, ensuring the safety and security of the invested capital. Moreover, these plans are considered low-risk investments while still offering attractive returns.
A look at savings plans:
Savings Plan | Returns Interest Rate | Lock-in Period | Minimum and Maximum Premium Amount | Tax benefits |
Unit Linked Insurance Plans (ULIPs) | 12-15% p.a. | 5 years | Varies as per the plan | Tax exemption u/Section 80C and Section 10(10D) |
Money-back Plans | 8-15% p.a. | 3 years | Varies as per the plan | Premiums paid annually are tax-exempted under section 80C and Sec 10(10D) |
National Savings Certificate (NSC) | 7.00% p.a. | 5 years | Rs. 1000- No limit | Tax exempted u/Section 80C |
Public Provident Fund (PPF) | 7.10% | 15 years | Rs 500-1.5 lakh | Tax exemption u/Section 80C |
Post Office Savings Scheme | 4.00% p.a. | N/A | Rs 500- No limit | Tax exempted u/Section 80TTA |
Senior Citizen Savings Scheme | 8.00% | 5 years | Rs 1,000- 15 lakh | TDS is deducted, and interest is taxable as per the tax slab. |
Sukanya Samriddhi Yojana | 7.60% | 18 years age of girl child | Rs 250- Rs 1.5 lakh | Tax exempted u/Section 80C |
Atal Pension Yojana | N/A | Minimum 20 years | Up to Rs 5,000 | Tax exempted u/Section 80C |
Employee Provident Fund | 8.6% | Until retirement and resignation | 24% of the basic salary | Tax exempted u/Section 80C |
National Pension Scheme | 7-12% | 10 years | Rs 500-No limit | Tax exempted u/Section 80C |
(Source: Policybazaar)
First Published: Sept 25, 2023 3:46 PM IST
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