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Life Insurance - Why is LIC withdrawing plans and reducing returns?

21 Jan 2003

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This is because the rate of return is aligned to market rates. And its not just the Life Insurance Corporation (LIC) but even private insurers will have no choice but to reduce the returns that they have been offering or withdraw plans that are no more feasible. And this is done with a view to benefit the policyholder in the long run inspite of the ups and downs of the stock markets.

But LIC, it may be noted, is in a better position to offer competitive rates of returns considering its huge investments in a number of financial instruments in the past since it plans to sell, trade and re-position its existing securities. In other words the corporation will be able to leverage on its past investments for future gains which private insurers unfortunately will not be able to since they have only recently opened shop.

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