Private life insurance companies have garnered more new policy premium, or first year premium, from individuals by selling single premium policies over the past six months.

An FCRB analysis of total individual premium collected in the half-yearly period between September 2010 and February showed that out of the Rs 14,281 crore new policy premium collected by private life insurers on individual policies, as much as 33.55 per cent came from sale of single premium policies. In the previous six months, between March and August 2010, it was 13.69 per cent out of a total of Rs 17,639 crore.

This could be the result of a possible marketing bias adopted by the private insurers in recent months.

However, LIC, the public sector insurance behemoth, saw a drop in single premium collection from Rs 22,407 crore during March-August 2010 to Rs 8,674 crore in the past six months.

Single premium life insurance policies, are one-time premium payment plans, in which an individual pays once, stays invested through the entire policy period and gets the benefit at the end of the policy tenure. A regular, multi-year, premium plan requires a policyholder to pay a premium every year. According to insurance industry analysts, while single premium option suits to those individuals who receive irregular incomes or substantial lump sum like bonuses, it may expose the investment to market volatility and mis-selling.

Regular premium policies promote disciplined savings over a long policy-tenure, which helps to plan for key investment objectives like child’s education, child’s marriage and retirement. In single premium policies, persistent performance of agent is another concern. “Due to the fact that the agents do not have to collect renewal cheques from their single premium policyholders increase scope for mis-selling, whereas in case of regular premium policies the agents have to follow persistency guidelines enforced by Irda,” said Anisha Motwani, director and chief marketing officer of Max New York Life Insurance.

“Regular premiums help customers in long term financial planning and providing the right solution for their needs,” said Mario Perez, director of sales, marketing and products at Canara HSBC Oriental Bank of Commerce Life Insurance.

ICICI Pru Life Insurance Company saw the largest rise in its proportion of new single premium policies to all new policies sold to individuals.

It had collected just Rs 20 crore out of Rs 3,073 crore from selling single premium products to individuals in March-August 2010 period. But in the September 2010-February 2011 period, it collected a large sum of Rs 1,528 crore from single premium policies out of a total of Rs 2,669 crore premium collected from all new individual policies.

Among the private insurers, Bajaj Allianz Life Insurance Company saw the largest fall in reliance on single premium policies sold to individuals (see table).