State-owned Life Insurance Corporation said today it would take to the internet to sell its policies for the first time, starting with the launch of a 'pure term' plan.
Seeking to diversify its operations further, LIC has also has decided to participate in infrastructural debt funds (IDFs) and enter the venture capital business, officials announced while presenting the corporation's quarterly results in Mumbai.
"We are in the process of designing a pure term product which would be sold both online and through agents," LIC executive director marketing S Roy Chowdhury said. "The rates will be lower than what is charged at the moment."
LIC charges a higher premium for its term plans than private competitors. For example, a 30-year-old non-smoker has to pay an annual premium of Rs7,300 on a Rs25-lakh policy under LIC's term plan Amulya Jeevan, while the person can buy online similar policies from private rivals like ICICI Prudential and Kotak Life for half that price.
LIC's online term policy seeks to reduce that gap by saving on agent commission, which is particularly high in the state-run company's case. But at the same time, its move is expected to prompt rivals to reduce their rates further.
LIC is also betting big on bancassurance, or selling policies through bank branches. Vipin Anand, another LIC executive director, said the insurer has set a target to double its income from Bancassurance this financial year to 5 per cent of its total new business income.
The insurer is targeting new business income of Rs54,000 crore this year. At present, 20 banks, including United Bank, UCO Bank, Central Bank, Corporation Bank, BoM and PNB, sell LIC policies.