I-Genius, Max’s latest endeavour targeted to groom children, seems to be more in the consultancy space. What is the need of integrating consultancy services with insurance?
Parents are increasingly focusing on the overall development of their children. More than grooming their children for pursuing lucrative careers, parents are focusing on developing their personalities. We launched I-Genuis keeping this paradigm shift in mind. In addition to enable parents to save for their children, we would also like to help them groom their children. Under I-Genius, we would offer 3,000 scholarships worth Rs2 crore. We would also offer consultancy to parents through a panel of experts free of cost. This consultancy will be available through social media and our helpline numbers.
You have only one unit-linked insurance policy (Ulip), but two traditional endowment products for children. For long-term goals for kids, does one need a traditional product, considering they are low on returns and are less transparent?
Ulips are more popular but some people want safety of returns. Traditional products cater to this mindset because the policyholder knows how much he can expect back. Also, investors do not want to actively manage their money, which investing in debt products through Ulips entails them to do.
Do you pass any cost benefits to customers since child Ulips require them to stay invested for a longer term compared with regular Ulips? Are charges low?
We have higher loyalty additions since persistency is relatively good in child Ulips. Our fist-year cost of acquiring business is quite high, so we need to deduct that cost upfront. However, we discount these costs in the form of loyalty additions and maturity bonuses.
Ulips are long-term products but regular Ulips are often bought or sold for shorter periods. On average, what is the tenure of Ulips sold by Max New York Life?
Our average tenure is about 15-18 years. We believe that insurance products are long-term and we sell keeping that in mind.
Insurance is still sold as an investment product in India. The popularity of Ulips is a proof. However, people are still underinsured because the focus remains on investment. Comment.
To begin with, very few people understand a term plan. In fact, selling a term plan is an uphill task because people want returns from their policy. Plus, what we don’t realize is that the risk of death is much less compared with the risk of not saving enough. For most, there is a large gap between earnings and savings to meet their goals. Insurance covers that gap.
Rajesh Sud is the Managing director & CEO of Max New York Life Insurance Co. Ltd