The Economic Times; June 25, 2002

MUMBAI: The price war over term life insurance rates is heating up. Ahead of the LIC's launch of its maiden term insurance product, ICICI Prudential Life Insurance has introduced a term cover, which is the cheapest in lower age groups.

Under ICICI Pru's LifeGuard Level Term Assurance cover, which was launched here on Monday, a 30-year-old male would pay only Rs 2,680 annually for a term of 20 years and secure life cover of Rs 10 lakh. Unlike other endowment products, a term insurance policy provides pure insurance, where the insured gets nothing if he survives for the term of the policy.

Rates offered by ICICI Pru Life appear to indicate that the company is targeting the younger generation. ICICI Pru's rates for individuals below 35 years is even cheaper than rival HDFC Standard Life's. HDFC Standard Life had brought down its term rates by 20-40% earlier this year, which made its rates the cheapest in the industry. At that time, HDFC Standard Life's rates did not appear to leave any scope for further cuts in the industry.

'We never had a term product without a return of premium. This is the first time that we are launching a pure term cover, so we have done our best with the rates,' said Ms Shikha Sharma, CEO, ICICI Prudential Life Insurance. Until now ICICI Pru offered a variation of the term insurance cover where the insured would get a return of premium on maturity of the policy. The company is also offering term insurance as a rider, which is sold as an add-on to an existing insurance policy.

According to Ms Sharma, term insurance is not a very tested market in India, as customers are used to purchasing policies where they get back savings or at least a return of premium. 'We are expecting 10-15% of our policies to be term insurance covers,' said Ms Sharma.

Meanwhile, HDFC Standard Life Insurance said that its own term insurance rates were still competitive. 'In rupee terms, the difference between the premium charged by ICICI Pru and ourselves is very marginal and our premiums are competitive across the spectrum of ages,' said Pankaj Seith, head (marketing), HDFC Standard Life Insurance. HDFC Standard Life's rates for the same Rs 10-lakh cover for a 30 year old for a 20-year term works out to Rs 2,920 - around Rs 240 more than ICICI Pru's. However, the difference reduces as the insured's age increases. Rates of the two are identical for a 20-year term for a person aged 40.

While for the consumer a term insurance cover is a simple no-frills policy, for the insurer it is a high-risk product that has to be underwritten with care. 'There will be medical examination for all proposals,' said Ms Sharma. The policy will be available in all 18 centres across the country where ICICI Pru Life is present. Direct callers will be guided to one of ICICI Pru's 10,000 agents across the country.