Mumbai: Life Insurance Corporation (LIC) has entered into understandings with half a dozen banks to distribute its insurance products across India.

Besides Corporation Bank and Oriental Bank of Commerce, where LIC already holds strategic stake, the other banks that plan to distribute LIC products are Indian Overseas Bank, Bank of Punjab, Nedungadi Bank and Central Bank of India. In addition, a couple of non-bank institutions have also shown interest in selling LIC’s policies.

Officials say LIC has not announced its plans as yet since the existing laws do not allow banks to sell insurance policies as a corporate agent. With amendments to the IRDA Act being passed by both the houses of the parliament, it is only a matter of time before the amendments are notified.

LIC also plans in future to come out with tailor-made products for sales through the bancassurance channel. These will be simple products that do not require much counselling.

But since the commission in plain products, such as term insurance and loan cover policies, is very low, there is not much of commission income that an agent can earn in individual sales of these policies.

“Since LIC has over 98 per cent market share, it is the first choice for any bank that wishes to earn fee income through sales of policies. Some banks that have insurance plans of their own have also expressed interest in selling our policies,” says an official.