PRODUCT FEATURES, PROBLEMS AND PROSPECTS OF INSURANCE RETIREMENT PLANS IN SRI LANKA

ABSTRACT
The insurance retirement plans can play a significant role providing financial security for the people at their old age in the context of the rapid increase of the ageing population in Sri Lanka. The reduction of income at the old age is a serious problem to the person and his family. The life insurance provides old age funds along with the protection of the family by issuing various policies including retirement plans. At present, different types of retirement plans are offered by the life insurance companies in Sri Lanka and it was examined that the benefit options and the cover provided by the insurance companies varies company to company.
The statistical data of the Insurance Regulatory Commission of Sri Lanka indicates that, the penetration of the Gross Written Premium (GWP) of the long term insurance as a percentage of Gross Domestic Product (GDP) remains in the low level around 0.5% during few years. According to the views of the insurance managers of life insurance companies, approximately 10% of the total life insurance policies sold consist of retirement plans. Accordingly, the objective of this paper is to analyze the product features and the life insurance managers’ views about the problems and future prospects of insurance retirement plans offered by the insurance companies in Sri Lanka, examine the demand for the retirement plans offered by the insurance companies and to identify the factors affecting for the low level of sales of the same products by the long-term insurance companies in Sri Lanka and to make the recommendations for further development of the product and the sales .
Twenty five managers form five insurance companies to represent top seven premium generators in long-term insurance were selected using purposive and snowball sampling techniques to collect the data about the product features, problems and future prospects of insurance retirement plans offered by the insurance companies in Sri Lanka. It was revealed that, most of the available retirement plans of insurance companies are not matching with the need of the customers. Some companies provide monthly pension as retirement benefits only for a predetermined certain period of time and other companies provide lump sum payment. Only one company has life time pension option. Only few companies provide guaranteed benefits and many of the companies cannot guarantee the future retirement benefits due to not having stable financial instrument for the long term investment. Some companies are offering many additional covers and others are not providing such benefits. Many companies have given prominence to endowment plans and term assurance. It was observed that, customers are willing to purchase retirements plans. But product features do not match with the customers’ needs. Managers of the insurance companies have identified the demand for retirement plans. But they are not properly promoting the product.

Keywords: Insurance retirement plans, customer demand, problems, future prospects