Articles

From: Bhargav Dasgupta, Executive Director, ICICI Prudential Life Insurance
For: Himika Ganguly, Insuremagic.com, Mumbai
Date: August 31, 2007

1.ICICI Prudential Life Insurance Company, has increased its capital by Rs. 245 crore, taking the total capital investment to Rs. 2060 crore. What would you attribute this growth to?

With the latest capital infusion of Rs. 300 crores, ICICI Prudential Life's capital stands at Rs. 2372 crore as of first quarter ended June 31, 2007. ICICI Prudential is fortunate to be backed by deep-pocketed, strong promoters like ICICI Bank and Prudential plc, who have consistently demonstrated their ability and willingness to invest the sizeable resources necessary for our company to maintain healthy growth rate and be the leader amongst the private life insurers in India. With this capital infusion, our range of products and extensive distribution, ICICI Prudential continues to be well poised to meet the growth requirements, in the coming months.

2.What does your new product Hospital Care aim at?

Hospital Care is structured to enable customers to provide for all expenses associated with hospitalisation, ranging from room charges, doctor and surgery fees, to other incidental expenses. Our research revealed that many customers believe that existing health insurance policies would not cover all the expenses related to hospitalisation or surgical procedure, leaving them with a considerable financial burden. This is compounded by the concern that these policies are not long-term and that once a claim is made, it might not be renewed or will attract a higher premium. We launched Hospital Care to fill this gap in health insurance and also offer customers control over their health spends.

Our latest product in the health segment is Crisis Cover - a 360-degree product that provides policyholders with a comprehensive cover against disease, disability and death. The product is unique because it offers the widest coverage against 35 critical illnesses, total and permanent disability, and death over the long-term, making it the most comprehensive critical illness plan available in India today.

3.How does ICICI Prudential differentiate itself from other insurance companies?

The ICICI Prudential edge comes from our commitment to our customers, in all that we do - be it product development, distribution, the sales process or servicing. Our key differentiators can be summarised as under:

• Our products have been developed after a clear and thorough understanding of customers' needs. It is this research that helps us develop unique products to cover our customers in every step of their life.
• Having the right products is the first step, but it's equally important to ensure that our customers can access them easily and quickly. To this end, ICICI Prudential has an advisor base across the length and breadth of the country, and also partners with leading banks, corporate agents and brokers to distribute our products.
• Robust risk management and underwriting practices form the core of our business. With clear guidelines in place, we ensure equitable costing of risks, and thereby ensure a smooth and hassle-free claims process.
• Entrusted with helping our customers meet their long-term goals, we adopt an investment philosophy that aims to achieve risk adjusted returns over the long-term.
• Last but definitely not the least, our 15,000 plus strong team is given the opportunity to learn and grow, every day in a multitude of ways. We believe this keeps them engaged and enthusiastic, so that they can deliver on our promise to cover you, at every step in life.

4.What is the goal behind your tie up with Share Khan?

ICICI Prudential Life Insurance announced a strategic distribution tie-up with Sharekhan, one of India's leading retail brokerage houses, in June 2007. The partnership has been established under the corporate agency model and will enable Sharekhan to distribute ICICI Prudential Life's protection, wealth creation, retirement solution and health insurance products to their customers across the country.

The goal behind this tie-up can be summarized in our philosophy, which is to partner with a limited number of organizations which have strong brands and long-lasting, trust-based relationships with their customers and build distribution capabilities, around the partner's area of strength. Sharekhan, with its expertise in the area, is an ideal partner for us. We are sure this partnership will help Sharekhan's customers reach us through a channel they already trust.

5.Please tell us more about the ICICI Prudential Flexi Funds?

The two first-of-their-kind funds for unit-linked insurance plans (ULIPs) - Flexi Growth and Flexi Balanced provides greater flexibility to fund managers and enable them to take advantage of growth opportunities across large cap, mid cap and small cap stocks and thereby generate higher long-term returns. They are designed to provide superior returns to the investor over the long-term. With the launch of these two new funds, ICICI Prudential ULIP policyholders now have the option of allocating their investments across six funds, including the earlier four of Maximiser, Balancer, Protector and Preserver.

6.How does the Sensex affect you?

As you are aware, life insurance is a long- term business and the investment philosophy is guided by long term objectives. The Sensex as a barometer of the market offers some indications about the way in which the market is moving while our investment decisions are guided by long term outlook of the economy and the market.

7.Do you have any new policies lined up for the year?

ICICI Prudential Life will continue to launch unique and innovative products to meet customer needs in the health, pensions and wealth creation segment.

8.Is there any advice you would like to give to people who are looking for the right kind of life insurance?

Life Insurance provides for financial security in the event of death or on the inability to earn due to physical disabilities. Besides providing for financial security in the case of one's untimely death, it can be used to accumulate a kitty for your old age, systematically build assets, for funding your child's education and also for saving on taxes.

Protection is a cover that you provide your dependents (parents, wife and children), in case something were to happen to you. This will enable them maintain their lifestyle with the income from your insurance policy. As a thumb rule, you must invest around six to eight times your annual income under a protection scheme. For wealth creation, you can invest in unit linked insurance policies (ULIPs), which can provide you with an insurance cover in addition to opportunity for good returns. With this, you could meet both the needs for protection and wealth creation through a single plan. You should also look at planning your retirement in the early years of your career, so it can compound many times by the time you retire. Retirement planning can be done through pension plans of insurance companies that provide policyholders with an annuity, which is a guaranteed income for life after you have retired.

By opting for any of the above options, policyholders can enjoy a tax benefits u/s 80C.

Keeping the rising cost of healthcare in mind it is advisable for everyone to take up health insurance to support them during any medical emergency. Policyholders can also look at investing in a health insurance plan that will help them pay for hospitalization or any serious illness. In addition to this, health insurance also provides additional tax benefit u/s 80 D on investments up to Rs. 15,000/-.

Life Insurance is basically about covering risk and providing adequate cover in case of death of the breadwinner. A financial planning exercise must precede the purchase of not only a life insurance policy, but any major financial product.

One of the most important aspects to consider when buying a life insurance policy is to ensure that the cover is commensurate with one's current and likely future financial position, i.e. a person who has a high income or is likely to be earning high amounts in the future, would have a high sum assured.

The type of policy that a person buys should be based primarily on his or her needs and goals. One must conduct a financial needs analysis before buying life insurance. This will give them an idea of what their short-term and long-term requirements are, as well as risk profile.