Life insurance companies in Nepal have experienced a significant boost in business, driven by declining interest rates on bank fixed deposits.
According to data from the Nepal Insurance Authority (NIA), life insurers collected Rs 4.24 billion in premiums from fixed deposit-linked life insurance policies as of mid-March this year—an increase of 2.29 times compared to Rs 1.28 billion during the same period last fiscal year.
Fixed deposit life insurance combines the features of a fixed deposit—offering a guaranteed return—with the financial protection of a life insurance policy.
Insurers say the rising popularity of such products is likely due to a steep drop in fixed deposit interest rates, which some banks have slashed to as low as 5.5 percent annually due to excess liquidity.
Overall, life insurance companies collected over Rs 100 billion in premiums, with new policy premiums rising by 7.2 percent during the first eight months of the current fiscal year.
