The Economic Times is reporting that India’s largest insurer, Life Insurance Corporation (LIC), is planning to enter the reverse mortgage space. A senior official at the company told the Times it’s in discussions with the National Housing Bank (NHB) (housing regulator).
“Once we get clearances from within our organisation, we’ll explore opportunities with other banks and start offering this service,” he said.
The decision to enter the business is big due to LIC having a 29% share in the life insurance business according to the Insurance Regulatory Development Authority (IRDA). Reverse mortgages have yet to take off in India, but recent improvements to the product enable borrowers to receive lifetime payments through an annuity.
“It is expected that the modified scheme (RMLeA) that provides life-long annuity to the buyer and his or her spouse will catch up with the entry of LIC in this segment,” a finance ministry official said.
As per the existing scheme, LIC will provide payments in the form of annuity to the policy holder. “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 official said.