Ultra-long bonds: Centre mulls strategy to deepen insurance market, cushion insurers’ businesses

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Subscribe to enjoy similar stories. New Delhi: The Indian government may consider issuing 50-year on-tap bonds in the next fiscal (FY26), in a bid to encourage insurance companies to subscribe and better manage their business, two people familiar with the matter said.

The move, being mulled by the Union finance ministry with the help of the Reserve Bank of India (RBI), would also help the government nudge the industry towards its target of insurance for all by 2047, these people said on the condition of anonymity. For insurers, investing in these 50-year on-tap bonds would provide them with a stronger financial cushion needed to operate a business that handles long-term contracts.

Life insurance companies, for instance, give out policies that may span decades. Insurance companies use money from premiums collected—and their reserves—to invest in bonds and equities.

Typically, they invest the bulk of the monies in fixed-income instruments like bonds so that the assured interest income can help them manage customer claim payouts as well as operational expenses and business expansion over a long period. Also read | Life insurance sector: One industry, diverse fortunes The extended maturity of the 50-year bonds would provide the stability and predictable returns that are essential for insurers managing large policyholder obligations, the people cited above said.

“The need for longer-tenure bonds stems from the finance ministry’s assessment that highlights the need for a secure long-term investment vehicle to help insurers mitigate potential asset-liability mismatches," the first person mentioned above said. Meanwhile, the second person cited above said that while the government is considering an on-tap 50-year bond issuance,