The economic slowdown, followed by the risk averseness among the investors and the mis-selling of Ulips have impacted the growth of private life insurers during the first half of this fiscal and helped the LIC to increase its market share to 62 percent.

In the first quarter of this fiscal, LIC emerged as the only life insurer among the top 10 in India that witnessed a positive growth in the total premium collection. The total premium collection of all other life insurers' has declined in the range of six to 50 percent while LIC's total premium collection increased by 19.99 percent during the first quarter of this fiscal compared with the same period last year.

Yashish Dahia, the co-founder and CEO of policybazaar.com, said: "Due to the economic slowdown, investors preferred government-owned LIC as a safe haven over the private life insurers. Apart from this, the mis-selling in ULIPs was a major deterrent factor for the investors to become risk averse."

He said: "Investors realised that when they invested say Rs 100 in a ULIP about Rs 40 to 50 were deducted on account of charges such as premium or fund allocation and administration and only Rs 50 to 60 were invested in the markets."

He said, "Due to the collapse of the stock markets, the value of that investment came down to Rs 25 to 30."

Uday Shankar Roy, the MD and CEO of SBI Life, said: "During the first quarter, traditional products were in demand that gave an advantage to LIC. Going forward, SBI Life would focus on regular premium base products."

In the short run, the total premium collection may not see huge growths but in the long-term it would give a sustainable source of premium collection.