BENGALURU (Reuters) - India's ICICI Prudential Life Insurance Company reported a lower new business margin on Tuesday, hurt by persistent decline in demand for high-value policies and as customer preference shifted towards low-margin products.

Value for new business (VNB), the expected profit from new policies, fell 19.5% to 22.27 billion rupees ($267 million) for the year ended March 31, dragging the VNB margin to 24.6% from 32% a year earlier.

Life insurers have seen a rising share of low-margin unit-linked insurance plans (ULIPs) amid a strong domestic equity market.

The NSE Nifty 50 Index rose 2.7% in the January-March period, logging its fourth straight quarterly gain and scaling record highs.

Continued weak demand for high-value policies post-tax implementation changes is also weighing heavily on their VNB margins, analysts said.

The decline in VNB margin is primarily on account of the shift in the underlying product mix towards unit-linked business, the company said in an exchange filing.

The linked segment contributed 43.2% to the overall product mix by annualised premium equivalent (APE) for the year, ICICI Prudential added.

APE, a key metric for insurers, is a gauge of sales that gives the annualised total value of all single premium and recurring premium policies. The company's APE sales grew 4.7% for the year.

The ICICI Bank-backed insurer posted a net premium income growth of 17% to 147.88 billion rupees for the three months ended March 31.

The company's fourth-quarter profit after tax fell 26% to 1.74 billion rupees from a year earlier.

Rival HDFC Life Insurance also reported a decline in new business margin last week.

Shares of ICICI Prudential closed 2.3% higher ahead of results. The stock had gained nearly 14% during the March quarter.

($1 = 83.3070 Indian rupees)

(Reporting by Dimpal Gulwani in Bengaluru; Editing by Sohini Goswami)