Star Union Daiichi Life Insurance is planning to enter into new tie-ups with banks to offer the reverse mortgage product that provides annuity payments to the beneficiaries till death.

At present, Star Union Daiichi Life Insurance has a tie-up with Central Bank of India through which it offers the reverse mortgage. This is the only partnership between a bank and a life insurer under the new scheme launched four months ago.

M Balachandran, chairman, Star Union Daiichi Life Insurance, told Financial Chronicle the company is looking at both private sector and public sector banks. “We are in talks with a number of banks for tie-ups to offer reverse mortgage. The tie-ups could be with a private sector or public sector bank. We are willing to tie up with any bank that is willing to sell the scheme,” he said.

Reverse mortgage involves a deal where the owner of a residential unit pledges the property to the lender in exchange of monthly annuity payments after attaining a certain age. The purpose of the deal is to provide assured income to the owner during old age. Under the deal, the bank takes possession of the property after the death of the owner or it may be taken over by the person inheriting the property after making the agreed payment to the bank.

Balachandran said that the company also plans to aggressively promote the new scheme that was drafted by the National Housing Bank. He admitted that the reverse mortgage product that offers annuities (monthly payments) till death compared with the earlier product, which limits annuities to 20 years, has also not received a good response from the market. “The market has to be made aware of the benefits of the new scheme and the misconceptions that are prevailing in the market over reverse mortgage have to be removed,” Balachandran said.

While property owners have been reluctant to part with their ownership documents of their property, the lenders are wary of entering into reverse mortgage deals on account of problems of valuation of properties and fears of getting tangled into litigation if the property has to be sold to realise dues.

“The scheme should surely catch up once people become aware of benefits,” he said. The new scheme is available for senior citizens above the age of 60.