"The target is our existing policyholders who are over 50 years old," said Kazuhiko Sunagawa, deputy general manager of Nippon Life's investment trust marketing section.

"These customers will receive insurance money after their contracts mature. If we don't offer them something, they are potential lost customers," he said in a recent interview.

Some four million Nippon Life customers are over 50 years old. They are estimated to have 100 trillion yen ($854 billion) in financial assets, he said.

The company expects tough competition in the lucrative mutual fund business after December, when Japanese insurers and banks will be allowed to sell mutual funds, known as investment trusts in Japan.

Nippon Life plans to offer 10 different funds through its branches.

There are alsoplans to increase its sales staff from 500 to 1,500 beginning next April and to 5,000 a year after that, Sunagawa said.

Earlier this month, Nippon Life announced that asset management subsidiary Nissay Asset Management Corp (Namco) had agreed with US asset management firm Putnam Investments to form a mutual fund alliance.

Putnam and Namco plan to develop and market a line of yen-denominated foreign securities mutual funds.

Sunagawa said Nippon Life will sell mutual funds developed by Namco, ones developed jointly by Namco and Putnam and funds developed by other fund management companies.

"We will sell about 10 funds initially, but we are flexible about selling more funds in the future depending on our customers' requirements," he said.

Nippon Life expects competition will be tough among those seeking to attract part of the massive government-run postal savings investments which start maturing from next year.

Postal savings investments maturing over the next three years carry high interest rates of7 to 9 per cent.

The current record-low interest rates the holders would get by reinvesting the money in the postal system means they will be looking to shift some of the money into mutual funds, he said.

"We understand our main rival (in the investment trust business) is the banks," he said.

Japan's big banks, faced with bleak prospects in their traditional lending business, have said that they are keen to tap into the mutual fund market.

But Sunagawa said he was confident Nippon Life would do well because its sales staff has closer relations with their policyholders than the banks do with their depositors.

"Half of 1,200 trillion yen worth of financial assets held by individuals (in Japan) is owned by people over 60 years old. They will be the main customers who invest in mutual funds," he said.