LIC House loans and othe type of policies
Life Insurance Corporation
LIC Housing Finance Ltd. (LICHFL) is one of the largest housing finance companies in India. Almost 93% of the company’s loans are to retail customers and the balance 7% to project developers. The promoter, namely LIC of India, meets 8% of the total fund requirements, whereas 80% is funded by term loans from banks, bonds and debentures, and the remaining 12% in the form of refinance from NHB and others.
LIC Housing Finance Ltd. is one of the largest Housing Finance companies in India. The main objective of the Company is providing long term finance to individuals for purchase, construction, repair and renovation of new and existing houses. The Company also provides finance on existing property for both business and personal needs and gives loans to professionals for purchase, construction of Clinics, Nursing Homes, Diagnostic Centres, Office Space etc. The mission of the company is to provide secured housing finance at affordable cost, maximizing shareholders value with higher customer sensitivity.
The asset quality has shown improvement over the period with GNPA of 1.69% and NNPA of 0.73% as on Dec 2008. LICHF’s funds are sourced from term loans from banks, bonds and debentures constituting 80% of borrowing and term loans from the promoter of the Company, LIC of India, contributing 8% of the total borrowing and the remaining 12% in form of refinance from NHB and others. The weighted average cost of total funds as on Dec 08 is 9.65%.
On the asset front, 93% of outstanding loan is in the individual segment, yielding 11.5% and the balance is towards builder loans, yielding 15% - 16%. LICHF’s average loan size has increased to around Rs 12 lakh as compared to around Rs 10.6 lakh last year.
It is fourth in terms of market share (including banks), with 6-7% market share in home loan disbursements in FY08. It has 130 marketing offices across 450 locations in the country. The company has a large mobilisation network of over 6800 home loan agents, 1292 direct sales agents and 535 customer relation associates. The company has loan outstanding of Rs 229.40 bn as at December 31, 2008.
Risk & Concerns
* Challenging real estate market: The real estate market in India is becoming a lot challenging. This could lead to marked slowdown in business and higher delinquencies. * Stiff competition: The Company could see loss of market share to commercial banks and pressure on spread due to interest rate cuts announced by PSU banks on home loans. * High exposure to project developers: The Company has made a deliberate strategy to increase exposure to project developers, which could also increase its NPA levels. * Increase in the average loan size: An increase in the average loan size might result in non repayment, increasing NPAs and hurting profitability.
Types of Life Insurance Policy
* Term Insurance Policy
* Whole Life Policy
* Endowment Policy
* Money Back Policy
* Annuities And Pension Term Insurance Policy
Most of the products offered by Indian life insurers are developed and structured around these "basic" policies and are usually an extension or a combination of these policies. So, what are these policies and how do they differ from each other? Term insurance policy:
* A term insurance policy is a pure risk cover for a specified period of time. What this means is that the sum assured is payable only if the policyholder dies within the policy term. For instance, if a person buys Rs 2 lakh policy for 15-years, his family is entitled to the money if he dies within that 15-year period. * What if he survives the 15-year period? Well, then he is not entitled to any payment; the insurance company keeps...
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