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Reasons Why Life Insurance is Great Sector to Invest In

Why Life Insurance is Great Sector to Invest In
October 01, 2018
Apart from Fast-Moving Consumer Goods (FMCG), consumption and banking sectors for sustained returns, investors have the Insurance sector to look at as a great investment space. The First Initial Public Offering (IPO) of a pure life insurance company, ICICI Pru came in September 2016. This was followed by the SBI Life IPO, which came in September 2017 and then HDFC Life in November 2017.

Listed below are a few reasons why Life Insurance is considered a good investment option:
  1. Low Penetration

    The ratio of premium to Gross Domestic Product (GDP) in India is only 2.7 percent compared to a world median of 3.5 percent, or Thailand’s 4 percent or South Africa’s 11 percent. This makes Life insurance an exciting high growth sector.
  2. Underinsurance

    We not only have the issue of lower penetration, but also under-insurance. People who are aware and have taken an insurance policy are grossly underinsured. Both these factors mean faster growth opportunities.
  3. Fastest growing economy

    Our population is only growing at about 1.2 percent. This means, the per capita income will grow at a much more rapid pace. This leaves space for fast growth.
  4. Foreign Institutional Investors and pension funds like them

    Long-term institutional investors like pension funds and other FIIs love the life insurance sector for the visibility it offers.  And knowing the growth possibilities in the sector, they are likely to hold these stocks for a really long term. 
  5. The long term capital gain gifts

    This year’s budget exempted the investments through Unit Linked Insurance Plan (ULIPs) from the Long Term Capital Gains (LTCG) tax. While direct equity and mutual fund units will bear the LTCG impact, the ULIPs will be exempted. This gives the ULIPs a tax differential, which will make them a preferred vehicle of equity investments. As more money flows into ULIPs the Assets under management (AUMs) of these insurance companies will rise, enabling them to improve their returns to their shareholders.
  6. High Growth

    New business in life insurance premium has increased at a Compound Annual Growth Rate (CAGR) of 24.3 percent for 2015-17. Life insurance companies enjoy a lower corporate income tax rate of 14.3 percent.

Life Insurance is the best sector to make an investment in the present. HDFC LIFE offers various plans to help you plan your investment.

https://www.hdfclife.com/

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.