February 15 (LBO) – Life Insurance Corporation Lanka is breaking into the untapped pension market in the country offering a long-term product that pays an annuity. “There is a large ageing population in the country,” LIC Lanka General Manager S S Mathiapanan said.
“The joint family system in our culture is breaking down, children are in different countries, making a pension important.”
The firm is now selling a product branded Niranthara (Always) which starts paying an annuity after the holder reaches the age of 45 years at least.
Sri Lanka’s government servants get a pension, while those in the formal private sector are in a contributory scheme that pays a lump sum on retirement.
But only a few private pension products have been offered. Even Sri Lanka’s insurance penetration is low at around 3 percent.
Under the LIC Lanka plan, customers have to pay premiums to build a capital or sum-assured and receive a guaranteed 5 percent a year payment after he completes paying up the premiums.
Customers also stand the chance of earning lumps sums at maturity if investment returns are high in the paying up period and ‘bonuses’ are declared.