Life Insurance Corporation (LIC), plans to venture into the reverse mortgage sector. LIC is in initial talks with the home loan regulator, National Housing Bank (NHB), for offering this scheme to its clients, a top official in the company said.
He said, “Once we get clearances from within our organisation, we’ll explore opportunities with other banks and start offering this service”.
LIC’s entry in this sector is important as it has a big base. Till date, the association between banks and insurance companies for reverse mortgage scheme has failed to take off. NHB’s reverse mortgage loan-enabled annuity scheme (RMLeA) has just approved 40 loans valued at Rs 100 crore.
According to the present scheme, LIC will make payments as annuity to the policy holder. The official said, “Once the assessed value of the house and the loan amount to be disbursed is decided, LIC will start making payments till the policy holder survives”.
The bank will make complete payment of the entire loan amount to LIC after the policy commences which LIC can invest according to the company’s investment directives.
LIC’s home loan division, LIC Housing Finance, is already providing the reverse mortgage scheme. A LICHF official said, “We can explore the linkages between the two companies. Since LICHF already has the product there is existing synergy”. Currently only Star Union Daiichi Life Insurance has an association with Central Bank of India for providing the reverse mortgage.