The Life Insurance Corporation of India ( LIC ), which controls close to 70% of the life insurance market, has introduced the third gender as an option in its proposal forms in line with Supreme Court 2014 verdict recognising it. Till now, policy buyers could choose between 'male' and 'female' as gender options. Now transgender applicants can opt for the 'third gender' category.The move is significant given LIC's market dominance that drives trends in the sector. Though the National Pension System also recognises the third gender, other insurance companies and mutual funds do not seek this information. The know-your-customer (KYC) process, a prerequisite for making investments or opening bank accounts, also does not accommodate the third gender as an option. Incidentally, the option was included in Indian passports more than 10 years ago in 2005."The honourable Supreme Court, in a landmark judgement lauded by human rights groups, called on the government to ensure their (third gender) equal treatment. We have taken up the advice for implementation," said SK Roy, chairman, LIC. The Insurance Regulatory and Development Authority of India (IRDAI) has approved the new proposal form.For most insurance companies, introducing the option may be a trifle difficult. LIC does not have differential premiums based on gender. But other companies have lower premiums for females because of their longer life expectancy. These companies will have to grapple with the issue of pricing premiums for the third gender.Though LIC’s premium tables for all three genders are uniform, it has put in place an additional layer of underwriting for insurance applications from the transgender community."All third gender cases are referred to the central office and the risk factor is assessed on a case to case basis. The cases are underwritten with medical reports only," said an LIC spokesperson.The decision to provide the third option is in line with the April 2014 Supreme Court ruling recognising the transgender community as the third gender."The move is also a reflection of the changes in the society and income profile of the transgender community. Over the years, their sources of livelihood have broadened, boosting their income, which is one of the key considerations for buying life insurance," said financial planner and LIC agent Poonam Rungta.While hailing it as a "welcome" development, Pallav Patankar, director of programmes at the Humsafar Trust, said the utility value of life insurance for the transgender community is limited. "It is a step in right direction, but at present, members of the community do not look at insurance as a viable instrument," he said."Being an illiquid instrument, it may not serve the needs of the Hijra community, for instance, as they deal heavily in cash. Very few have even a bank account in the first place."Providing proof of income, too, can be a challenge, as is identifying insurable interest, which is the core principle of life insurance. The absence of legal sanctity and policy framework means that members of the LGBT (lesbian, gay, bisexual, transgender) community find it difficult to transfer not only insurance benefits, but also property or other assets to their partners."For instance, in case of Hijras, who will get the insurance proceeds--the gurus, chelas or the biological family? There are no official documents to define the relationships. An insurance policy will make sense only in the context of an enabling legal framework," he added.