TABLE

Sr. No. Title Pg. No.

1. INTRODUCTION 3- 19

2. INTRODUCTION TO THE TOPIC 20- 49

3. RESEARCH METHODOLOGY 50- 54

4. LITERATURE REVIEW 55

5. DATA ANALYSIS 56- 81

6. CONCLUSIONS 82

7. SUGGESTIONS 83- 84

8. QUESTIONS 85- 89

9. BIBLIOGRAPHY 90

1
 TABLE OF CONTENTS

Sr. Title Pg. No.

No.
INTRODUCTION To Insurance
1.  Meaning
 Definition of insurance
3- 19
 Characteristics of insurance
 Function of insurance
 History
 Overview
2. INTRODUCTION TO THE TOPIC

 Introduction to LIC
 Milestone
 Role of Insurance Sector in India
 Types of Life Insurance
20- 49
 Role of LIC
 Products by LIC
 Life Insurance companies in urban sector
 Network of LIC
 Current status
 Why LIC is trusted brand of India
 Role of LIC in international market

3. RESEARCH METHODOLOGY
 Scope of the study
 Need for the study
50- 54
 Objectives of the study
 Research design
 Limitation of the study

4. LITERATURE REVIEW 55

5. DATA ANALYSIS 56- 81

6. CONCLUSIONS 82

2
 7. SUGGESTIONS 83- 84

Introduction

What is an insurance?

Insurance is a term in law and economics. It is something people buy to protect themselves from losing money.
People who buy insurance pay what is called premium every month and promise to be careful. In exchange
for this, if something bad happens to the person or thing that is insured, the company that sold the insurance
will pay money back.

There are different kinds of insurance. One kind is called “life insurance” which pays somebody else called
the beneficiary money if the person who has life insurance dies or become seriously ill. Actuaries are the
people who figure out how much the premium should be. They balance how much the insurer might have to
pay out. If any actuary thinks that there is a big chance that the company will have to pay out, he will make
the premium higher.

Meaning:

Insurance is a cover used or protecting oneself from the risk of a financial loss. It is important to understand
that risk is a part of any person’s life and that it increases as a person increases in age, responsibility and
wealth. Insurance is risk coverage against financial losses and should not be taken as an investment instrument.

There are mainly two parties involved in this- the insurer and the insured. The insurer is the insurance company
who will provide the cover to the insured against any financial losses. The insured may be an individual person
or a group people like an employer, members of a society, etc.

In preventing adverse selection, the underwriter must consider physical, psychological and moral hazards in
relation to applicants. Physical hazards include those dangers which surround the individual or property,
jeopardizing the well-being of the insured. The amount of the premium is determined by the operation of the
law of averages as calculated by actuaries. By investing premium payments in a wide range of revenue-
producing projects, insurance companies have become major suppliers of capital, and they rank among the
nation largest institutional investors.

3
The insurance industry in India has come a long way since the time when businesses were tightly regulated
and concentrated in the hands of a few public sector insurers. Following the passage of the Insurance
Regulatory and Development Authority Act in 1999, India abandoned public sector exclusivity in the
insurance industry in favour of market-driven competition. This shift has brought about major changes to the
industry. The inauguration of a new era of insurance development has seen the entry of international insurers,
the proliferation of innovative products and distribution channels, and the raising of supervisory standards.

By mid-2004, the number of insurers in India had been augmented by the entry of new private sector players
to a total of 28, up from five before liberalization. A range of new products had been launched to cater to
different segments of the market, while traditional agents were supplemented by other channels including the
Internet and bank branches. These developments were instrumental in propelling business growth, in real
terms, of 19% in life premiums and 11.1% in non-life premiums between 1999 and 2003.

There are good reasons to expect that the growth momentum can be sustained. In particular, there is huge
untapped potential in various segments of the market. While the nation is heavily exposed to natural
catastrophes, insurance to mitigate the negative financial consequences of these adverse events is
underdeveloped. The same is true for both pension and health insurance, where insurers can play a critical role
in bridging demand and supply gaps. Major changes in both national economic policies and insurance
regulations will highlight the prospects of these segments going forward. Insurance or assurance, device for
indemnifying or guaranteeing an individual against loss. Reimbursement is made from a fund to which many
individuals exposed to the same risk have contributed certain specified amounts, called premiums. Payment
for an individual loss, divided among many, does not fall heavily upon the actual loser. The essence of the
contract of insurance, called a policy, is mutuality. The major operations of an insurance company are
underwriting, the determination of which risks the insurer can take on; and rate making, the decisions regarding
necessary prices for such risks. The underwriter is responsible for guarding against adverse selection, wherein
there is excessive coverage of high-risk candidates in proportion to the coverage of low risk candidates.

In preventing adverse selection, the underwriter must consider physical, psychological, and moral hazards in
relation to applicants. Physical hazards include those dangers which surround the individual or property,
jeopardizing the well-being of the insured. The amount of the premium is determined by the operation of the
law of averages as calculated by actuaries. By investing premium payments in a wide range of revenue-
producing projects, insurance companies have become major suppliers of capital, and they rank among the
nation's largest institutional investors.

4
 Definition of insurance

Insurance is a contract whereby, in return for the payment of premium by the insured, the insurers pay
the financial losses suffered by the insured as a result of the occurrence of unforeseen events. With the help of
insurance, large number of people exposed to a similar risk makes contributions to a common fund out of
which the losses suffered by the unfortunate few, due to accidental events, are made good.

General definition:

In the words of John Magee, “Insurance is a plan by which large number of people associate themselves
and transfer to the shoulders of all, risks that attach to individuals.”

Fundamental definition:

In the words of D.S. Hansel, “Insurance may be defined as a social device providing financial
compensation for the effects of misfortune, the payment being made from the accumulated contributions of
all parties participating in the scheme.”

Contractual definition:

In the words of justice Tindall, “Insurance is a contract in which a sum of money is paid to the assured
as consideration of insurer’s incurring the risk of paying a large sum upon a given contingency.”

General Definition:

The general definitions are given by the social scientists & they consider insurance as a device to protection
against risks, or a provision against inevitable contingencies or a co-operative device of spreading risks. Some
of such definitions are given below:

5
 In the words of John Magee, ―Insurance is a plan by which large number of people associate
themselves & transfer to the shoulder of all, risks that attach to individuals.

 In the words of Sir William, ―The collective bearing of risks is insurance.

 In the words of Boone & Kurtz, ―Insurance is a substitution for a small known loss (the insurance
premium) for a large unknown loss, which may or may not occur.

 In the words of Thomas, ―Insurance is a provision, which a prudent man makes against for the loss
or inevitable contingencies, loss or misfortune.

 In the words of Allen Z. Mayer, ―Insurance is a device for the transfer to an insurer of certain risks
of economic loss that would otherwise come by the insured.

 In the words of Ghosh & Agarwal, ―Insurance is a co-operative form of distributing a certain risk
over a group of persons who are exposed to it.

6
 CHARACTERISTICS OF LIC INSURANCE

 Sharing of Risks

Insurance is a co-operative device to share the burden of risk, which may fall on happening of
some unforeseen events, such as the death of head of the family, or on happening of marine perils or loss of
by fire.

 Co-operative Device

Insurance is a co-operative form of distributing a certain risk over a group of persons who are
exposed to it. A large number of persons share the losses arising from a particular risk.

 Evaluation of Risk

For the purpose of ascertaining the insurance premium, the volume of risk is evaluated, which
forms the basis of insurance contract.

 Payment of happening of specified event

On happening of specified event, the insurance company is bound to make payment to the
insured. Happening of the specified event is certain in life insurance, but in the case of fire, marine or
accidental insurance, it is not necessary. In such cases, the insurer is not liable for payment of indemnity.

 Amount of payment

The amount of payment in indemnity insurance depends on the nature of losses occurred,
subject to a maximum of the sum insured. In life insurance, however, a fixed amount is paid on the happening
of some uncertain event or on the maturity of the policy.

7
  Large number of insured persons

The success of insurance business depends on the large number of persons insured against similar
risk. This will enable the insurer to spread the losses of risk among large number of persons, thus keeping
the premium rate at the minimum.

 Insurance is not a gambling

Insurance is not a gambling. Gambling is illegal, which gives gain to one party & loss to the
other. Insurance is a valid contract to indemnity against losses. Moreover, insurable interest is present in
insurance contracts & it has the element of investment also.

 Insurance is not charity

Charity pays without consideration but in the case of insurance, premium is paid by the insured to
the insurer in consideration of future payment.

 Protection against risks

Insurance provides protection against risks involved in life, materials & property. It is a device
to avoid or reduce risks.

 Spreading of risk

Insurance is a plan, which spread the risks & losses of few people among a large number of
people. John Magee writes, ―Insurance is a plan by which large number of people associates themselves
& transfer to the shoulders of all, risks attached to individuals.

8
  Transfer of risk

Insurance is a plan in which the insured transfers his risk on the insurer. This may be the reason that
Mayer son observes, that insurance is a device to transfer some economic losses to the insurer, and
otherwise such losses would have been borne by the insured themselves.

 Ascertaining of losses

By taking a life insurance policy, one can ascertain his future losses in terms of money. This is done
by the insurer to determining the rate of premium, which is calculated on the basis of maximum risks.

 A contract

Insurance is a legal contract between the insurer & insured under which the insurer promises
to compensate the insured financially within the scope of insurance policy, & the insured promises to
pay a fixed rate of premium to the insurer.

 Based upon certain principle

Insurance is a contract based upon certain fundamental principles of insurance, which includes
utmost good faith, insurable interest, contribution, indemnity, cause proximal, subrogation, etc., which are
the basis for successful operation of insurance plan.

 Utmost Good Faith

Insurance is a contract based on good faith between the parties. Therefore, both the parties are
bound to disclose the important facts affecting to the contract before each other. Utmost good faith is one
of the important principles of insurance. To conclude, insurance is a device for the transfer of risks from the
insured to the insurers, who agree to it for a consideration (known as premium), & promises that the
specified extent of loss suffered by the insured shall be compensated. It is a legal contract of a technical
nature.
9
 FUNCTION OF INSURANCE

PRIMARY FUNCTIONS:

The primary functions of insurance include the following.

 Provide Protection

The primary function of insurance is to provide protection against future risk, accidents and
uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for the losses of risk.
Professor Hopkins observes & Insurance is a protection against economic loss, by sharing the risk with others.

 Collective bearing of risk

Insurance is a device to share the financial loss of few among many others. Dinsdale opines, insurance
is a mean by which few losses are shared among longer people. Similarly, William observes, & The collective
bearing of risks is insurance. All the insured contribute the premiums towards a fund and out of which the
persons exposed to a particular risk is paid.

 Assessment of risk

Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. Risk is
the basis for determining the premium rate also.

 Provide certainty

Insurance is a device which helps to change from uncertainty to uncertainty. This may the reason that John
Magee writes that the function of insurance is to provide certainty. Similarly, Riegel and-Miller observe,
&Insurance is device whereby the uncertain risks may be made more certain.

10
SECONDARY FUNCTIONS:

 Prevention of losses

Insurance cautions individuals and businessmen to adopt suitable device to prevent unfortunate
consequences of risk by observing safety instructions; installation of automatic sparkler or alarm systems,
etc. Prevention of losses causes lesser payment to the assured by the insurer and this will encourage for
more savings by way of premium. Reduced rate of premiums for more business and better protection to the
insured.

 Small capital to cover larger risks

Dinsdale observes, insurance relieves the businessmen from security investments, by paying small
amount of premium against larger risks and uncertainty.

 Contributes towards the development of larger industries

Insurance provides development opportunity to those larger industries having more risks in their
setting up. Even the financial institutions may be prepared to give credit to sick industrial units which
have insured their assets including plant and machinery.

OTHER FUNCTIONS

 Means of savings and investment: insurance serves as savings and investment, insurance is a
compulsory way of savings and it restricts the unnecessary expenses by the insured’s the purpose of
availing income-tax exemptions also, people invest in insurance.

 Source of earning foreign exchange: Insurance is an international business. The country can earn
foreign exchange by way of issue of marine insurance policies.

11
 Promotes exports insurance makes the foreign trade risk free with the help of different types of
policies under marine insurance cover.

 To carry on capital redemption business, annuity certain business or reinsurance business in so far as
such reinsurance business relating to life insurance business.

 To invest the funds of the Corporation in such manner as the Corporation may think fit and to take all
such steps as may be necessary or expedient for the protection or realisation of any investment;
including the taking over of and administering any property offered as security for the investment until
a suitable opportunity arises for its disposal.

 To acquire, hold and dispose of any property for the purpose of its business.

 To transfer the whole or any part of the life insurance business carried on outside India to any other
person or persons, if in the interest of the Corporation it is expedient so to do.

 To advance or lend money upon the security of any movable or immovable property or otherwise.

 To borrow or raise any money in such manner and upon such security as the Corporation may think
fit.

 To carry on either by itself or through any subsidiary any other business in any case where such other
business was being carried on by a subsidiary of an insurer whose controlled business has been
transferred to and vested in the Corporation by this act.

 To carry on any other business which may seem to the Corporation to be capable of being conveniently
carried on in connection with its business and calculated directly or indirectly to render profitable the
business of the Corporation.

12
 History of Insurance

The story of insurance is probably as old as the story of the mankind. The same instinct that prompts modern
businessman today to secure themselves against loss and disaster existed in primitive men also. They too
sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of
sacrifice in order to achieve security. Though the concept of insurance is largely a development of the recent
past, particularly after the industrial era-past few centuries-yet its beginnings date back almost 6000 years.

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu. The writings talk in
terms of pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics
and famine. This was probably a pre-cursor to modern day insurance. Ancient Indian history has preserved the
earliest traces of insurance in the form of marine trade loans and carriers’ contracts. Insurance in India has
evolved over time heavily drawing from other countries, England in particular. 1818 saw the advent of life
insurance business in India with the establishment of the Oriental Life Insurance Company in Calcutta. This
Company however failed in 1834. In 1829, the Madras Equitable had begun transacting life insurance business
in the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in the last three decades
of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started
in the Bombay Residency. This era, however, was dominated by foreign insurance offices which did good
business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance
and the Indian offices were up for hard competition from the foreign companies.

In 1914, the Government of India started publishing returns of Insurance Companies in India. The Indian Life
Assurance Companies Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian
Insurance Companies Act was enacted to enable the Government to collect statistical information about both
life and non-life business transacted in India by Indian and foreign insurers including provident insurance
societies. In 1938, with a view to protecting the interest of the Insurance public, the earlier legislation was
consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control
over the activities of insurers.

The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of
insurance companies and the level of competition was high. There were also allegations of unfair trade
practices. The Government of India, therefore, decided to nationalize insurance business.
13
An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and Life Insurance
Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as
also 75 provident societies—245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s
when the Insurance sector was reopened to the private sector.

The demand for nationalization of life insurance industry was made repeatedly in the past but it gathered
momentum 1944 when a bill to amend the Life Insurance Act 1938 was introduced in the legislative assembly.
However, it was much later on the 19th of January, 1956, that life insurance in India was nationalized. About
154 Indian insurance companies, 16 non-Indian companies and 75 provident were operating in India at the
time of nationalization. Nationalization was accomplished in two stages; initially the management of the
companies was taken over by means of an Ordinance, and later, the ownership too by means of a
comprehensive bill. The Parliament of India passed the Life Insurance Corporation of India was created on
1September, 1956, with the objective of spreading life insurance much more widely and in particular to the
rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover
at a reasonable cost.

Life Insurance in its modern form came to India from England in the year 1818.Oriental Life Insurance
Company started by Europeans in Calcutta was the first Life Insurance Company on Indian soil. All the
insurance companies established during that period were brought up with the purpose of looking after the
needs of European community and Indian natives were not being insured by these companies. However, later
with the efforts of eminent people like Babu Muttylal Seal, the foreign life insurance companies started
insuring Indian lives. But Indian lives were being treated as substandard lives and heavy extra premiums were
being charged on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance
companies in the year 1870, and covered Indian lives at normal rates. Starting as Indian Enterprise with highly
patriotic motives, insurance companies came into existence to carry the message of insurance and social
security through insurance to various sectors of society

14
 Overview

Parties to contract:

The person responsible for making payments for a policy is the policy owner, while the insured is the person
whose death will trigger payment of the death benefit. The owner and insured may or may not be the same
person. For example, if Joe buys a policy on his own life, he is both the owner and the insured. But if Jane, his
wife, buys a policy on Joe's life, she is the owner and he is the insured. The policy owner is the guarantor and
he will be the person to pay for the policy. The insured is a participant in the contract, but not necessarily a
party to it.

The beneficiary receives policy proceeds upon the insured person's death. The owner designates the
beneficiary, but the beneficiary is not a party to the policy. The owner can change the beneficiary unless the
policy has an irrevocable beneficiary designation. If a policy has an irrevocable beneficiary, any beneficiary
changes, policy assignments, or cash value borrowing would require the agreement of the original beneficiary.

In cases where the policy owner is not the insured also referred to as the celui qui vit or CQV, insurance
companies have sought to limit policy purchases to those with an insurable interest in the CQV. For life
insurance policies, close family members and business partners will usually be found to have an insurable
interest. The insurable interest requirement usually demonstrates that the purchaser will actually suffer some
kind of loss if the CQV dies. Such a requirement prevents people from benefiting from the purchase of purely
speculative policies on people they expect to die. With no insurable interest requirement, the risk that a
purchaser would murder the CQV for insurance proceeds would be great. In at least one case, an insurance
company which sold a policy to a purchaser with no insurable interest who later murdered the CQV for the
proceeds, was found liable in court for contributing to the wrongful death of the victim Liberty National Life
v. Weldon, 267 Ala.171 1957.

Contract terms:

Special exclusions may apply, such as suicide clauses, whereby the policy becomes null and void if the insured
commits suicide within a specified time usually two years after the purchase date; some states provide a
statutory one-year suicide clause. Any misrepresentations by the insured on the application may also be

15
grounds for nullification. Most US states specify a maximum contestability period, often no more than two
years. Only if the insured dies within this period will the insurer have a legal right to contest the claim on the

basis of misrepresentation and request additional information before deciding whether to pay or deny the
claim.

The face amount of the policy is the initial amount that the policy will pay at the death of the insured or when
the policy matures, although the actual death benefit can provide for greater or lesser than the face amount.
The policy matures when the insured dies or reaches a specified age such as 100 years old.

Costs, insurability, and underwriting:

The insurance company calculates the policy prices premiums at a level sufficient to fund claims, cover
administrative costs, and provide a profit. The cost of insurance is determined using mortality tables calculated
by actuaries. Mortality tables are statistically based tables showing expected annual mortality rates of people
at different ages. Put simply, people are more likely to die as they get older and the mortality tables enable the
insurance companies to calculate the risk and increase premiums with age accordingly. Such estimates can be
important in taxation regulation.

In the 1980s and 1990s, the SOA 1975–80 Basic Select & Ultimate tables were the typical reference points,
while the 2001 VBT and 2001 CSO tables were published more recently. As well as the basic parameters of
age and gender, the newer tables include separate mortality tables for smokers and non-smokers, and the CSO
tables include separate tables for preferred classes.

The mortality tables provide a baseline for the cost of insurance, but the health and family history of the
individual applicant is also taken into account (except in the case of Group policies). This investigation and
resulting evaluation is termed underwriting. Health and lifestyle questions are asked, with certain responses
possibly meriting further investigation. Specific factors that may be considered by underwriters include:

 Personal medical history

 Family medical history
 Driving record
 Height and weight matrix, otherwise known as BMI

16
Based on the above and additional factors, applicants will be placed into one of several classes of health ratings
which will determine the premium paid in exchange for insurance at that particular carrier.

Life insurance companies in the United States support the Medical Information Bureau, which is a clearing
house of information on persons who have applied for life insurance with participating companies in the last
seven years. As part of the application, the insurer often requires the applicant's permission to obtain
information from their physicians.

Automated Life Underwriting is a technology solution which is designed to perform all or some of the
screening functions traditionally completed by underwriters, and thus seeks to reduce the work effort, time
and/or data necessary to underwrite a life insurance application. These systems allow point of sale distribution
and can shorten the time frame for issuance from weeks or even months to hours or minutes, depending on the
amount of insurance being purchased.

The mortality of underwritten persons rises much more quickly than the general population. At the end of 10
years, the mortality of that 25-year-old, non-smoking male is 0.66/1000/year. Consequently, in a group of one
thousand 25-year-old males with a $100,000 policy, all of average health, a life insurance company would
have to collect approximately $50 a year from each participant to cover the relatively few expected claims.
(0.35 to 0.66 expected deaths in each year × $100,000 pay-out per death = $35 per policy.) Other costs, such
as administrative and sales expenses, also need to be considered when setting the premiums.

A 10-year policy for a 25-year-old non-smoking male with preferred medical history may get offers as low
as $90 per year for a $100,000 policy in the competitive US life insurance market.

Most of the revenue received by insurance companies consists of premiums, but revenue from investing the
premiums forms an important source of profit for most life insurance companies. Group insurance policies are
an exception to this.

In the United States, life insurance companies are never legally required to provide coverage to everyone, with
the exception of Civil rights act compliance requirements. Insurance companies alone determine insurability,
and some people are deemed uninsurable. The policy can be declined or rated increasing the premium amount
to compensate for the higher risk, and the amount of the premium will be proportional to the face value of the
policy.

17
Many companies separate applicants into four general categories. These categories are Preferred best,
preferred, standard, and tobacco. Preferred best is reserved only for the healthiest individuals in the general
population. This may mean, that the proposed insured has no adverse medical history, is not under medication,
and has no family history of early-onset cancer, diabetes, or other conditions. Preferred means that the
proposed insured is currently under medication and has a family history of particular illnesses. Most people
are in the standard category.People in the tobacco category typically have to pay higher premiums due to the
higher mortality. Recent US mortality tables predict that roughly 0.35 in 1,000 non-smoking males aged 25
will die during the first year of a policy. Mortality approximately doubles for every extra ten years of age, so
the mortality rate in the first year for non-smoking men is about 2.5 in 1,000 people at age 65. Compare this
with the US population male mortality rates of 1.3 per 1,000 at age 25 and 19.3 at age 65 without regard to
health or smoking status.

Death proceeds:

Upon the insured's death, the insurer requires acceptable proof of death before it pays the claim. If the insured's
death is suspicious and the policy amount is large, the insurer may investigate the circumstances surrounding
the death before deciding whether it has an obligation to pay the claim.

Payment from the policy may be as a lump sum or as an annuity, which is paid in regular instalments for either
a specified period or for the beneficiary’s life.

Accidental death:

Accidental death insurance is a type of limited life insurance that is designed to cover the insured should they
die as the result of an accident. "Accidents" run the gamut from abrasions to catastrophes but normally do not
include deaths resulting from non-accident-related health problems or suicide. Because they only cover
accidents, these policies are much less expensive than other life insurance policies.

Such insurance can also be accidental death and dismemberment insurance or AD&D. In an AD&D policy,
benefits are available not only for accidental death but also for the loss of limbs or body functions such as
sight and hearing.

Accidental death and AD&D policies very rarely pay a benefit, either because the cause of death is not covered
by the policy or because death occurs well after the accident, by which time the premiums have gone unpaid.
To know what coverage they have, insureds should always review their policies. Risky activities such as
parachuting, flying, professional sports, or military service are often omitted from coverage.
18
Accidental death insurance can also supplement standard life insurance as a rider. If a rider is purchased, the
policy generally pays double the face amount if the insured dies from an accident. This was once called double
indemnity insurance. In some cases, triple indemnity coverage may be available.

Senior and pre-need products:

Insurance companies have in recent years developed products for niche markets, most notably targeting seniors
in an aging population. These are often low to moderate face value whole life insurance policies, allowing
senior citizens to purchase affordable insurance later in life. This may also be marketed as final expense
insurance and usually have death benefits between $2,000 and $40,000. One reason for their popularity is that
they only require answers to simple "yes" or "no" questions, while most policies require a medical exam to
qualify. As with other policy types, the range of premiums can vary widely and should be scrutinized prior to
purchase, as should the reliability of the companies.

Health questions can vary substantially between exam and no-exam policies. It may be possible for individuals
with certain conditions to qualify for one type of coverage and not another. Because seniors sometimes are not
fully aware of the policy provisions it is important to make sure that policies last for a lifetime and that
premiums do not increase every 5 years as is common in some circumstances.

Pre-need life insurance policies are limited premium payment, whole life policies that are usually purchased
by older applicants, though they are available to everyone. This type of insurance is designed to cover specific
funeral expenses that the applicant has designated in a contract with a funeral home. The policy's death benefit
is initially based on the funeral cost at the time of prearrangement, and it then typically grows as interest is
credited. In exchange for the policy owner's designation, the funeral home typically guarantees that the
proceeds will cover the cost of the funeral, no matter when death occurs. Excess proceeds may go either to the
insured's estate, a designated beneficiary, or the funeral home as set forth in the contract. Purchasers of these
policies usually make a single premium payment at the time of prearrangement, but some companies also
allow premiums to be paid over as much as ten years.

19
 INTRODUCTION TO LIC

Life Insurance is a contract that pledges payment of an amount to the person assured (or his nominee) on the
happening of the event insured against.

The contract is valid for payment of the insured amount during:

 The date of maturity, or

 Specified dates at periodic intervals, or
 Unfortunate death, if it occurs earlier.

Among other things, the contract also provides for the payment of premium periodically to the corporation by
the policyholder. Life Insurance is universally acknowledged to be an institution, which eliminates „risk‟,
substituting certainty for uncertainty and comes to the timely aid of the family in the unfortunate event of
death of the breadwinner.

By and large, life insurance is civilization’s partial solution to the problems caused by death. Life insurance,
in short, is concerned with two hazards that stand across the life-path of every person.

Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance
Company stated by Europeans in Calcutta was the first life insurance company on Indian Soil. All the
insurance companies established during that period were brought up with the purpose of looking after the
needs of European community and Indian natives were not being insured by these companies. However, later
with the efforts of eminent people like Seal, the foreign life insurance companies started insuring Indian lives.

20
But Indian lives were being treated as sub-standard lives and heavy extra premiums were being changed on
them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the

year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives,
insurance companies came Tito existence to carry the message of insurance and social

security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of
such companies inspired by nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance
companies. The United India in Madras, National Indian and National Insurance in Calcutta and the Hindustan
Co-operative Insurance Company took its birth in one of the rooms of the house of the great poet Rabindranath
Tagore, in Calcutta. The Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were
some of the companies established during the same period. Prior to 1912. India had no legislation to regulate
insurance business. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were
passed. The Life Insurance Companies Act, 1912 made it necessary that the premium rate tables and periodical
valuations of companies should be certified by an actuary. But the act discriminated between foreign and
Indian companies on many accounts, putting the Indian companies at a disadvantage.

The first two decades of the twentieth century saw lot of growth in insurance business. From 44 companies
with total business-in force as Rs. 22.44 crore, it rose to 176 companies with total business-in-force as Rs. 298
crore in 1938. During the mushrooming of insurance companies many financially unsound concerns were also
floated which failed miserably. The Insurance Act 1938 was the first legislation governing not only life
insurance but also non-life insurance to provide strict state control over insurance business. The demand for
nationalization of life insurance industry was made repeatedly in the past but it gathered momentum in 1944
when a bill to amend the Life Insurance Act 1938 was introduced in the Legislative Assembly. However, it
was much later on the 19 of January, 1956, that life insurance in India was nationalized. About 154 Indian
insurance companies, 16 non-Indian companies and 75 provident were operating in India at the time of
nationalization, nationalization was accomplished in two stages; initially the management of the companies
was taken over by means of an Ordinance, and later, the ownership too by means of a comprehensive bill. The
Parliament of India passed the Life Insurance Corporation Act on the 19 of June 1956, and the Life Insurance
Corporation of India was created on 1 September, 1956, with the objective of spreading life insurance much
more widely and in particular to the rural areas with a view to reach all insurable persons in the country,
providing them adequate financial cover at a reasonable cost.
21
LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the
year 1956. Since life insurance contracts are long term contracts and during the currency of the policy it
requires a variety of services need was felt in the later years to expand the operations and place a branch office

at each district headquarter, re-organization of LIC took place and large numbers of new branch offices were
opened. As a result of re-organization servicing functions were transferred to the branches, and branches were
made accounting units. It worked wonders with the performance of the corporation. It may be

seen that from about 200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores only in
the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with
re-organization happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum
Assured on new policies.

Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices, 7 zonal offices and
the corporate office. LIC’s Wide Area Network covers 100 divisional offices and connects all the branches
through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer on-lint
premium collection facility in selected cities. LIC’s ECS and ATM premium payment facility is an addition
to customer convenience. Apart from on-line Kiosks and IVRS, Info Centres have been commissioned at
Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With
a vision of providing easy access to its policyholders, LIC has launched its SATELLITE SAMPARK offices.
The satellite offices are smaller, leaner and closer to the customer. The digitalized records of the satellite
offices will facilitate anywhere servicing and many other conveniences in the future.

LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving
fast on a new growth trajectory surpassing its own past records. LIC has issued over one crore policies during
the current year. It has crossed the milestone of issuing 1,01,32,955 new policies by 15 th Oct, 2005, posting
a healthy growth rate of 16.67% over the corresponding period of the previous year.

From then to now, LIC has crossed many milestones and has set unprecedented performance records in various
aspects of life insurance business. The same motives which inspired our forefathers to bring insurance into
existence in this country inspire us at LIC to take this message of protection to light the lamps of security in
as many homes as possible and to help the people in providing security to their families.

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 Milestones

Some of the important milestones in the life insurance business in India are:

1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning.

1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business.

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance
business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information
about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting
the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies are taken over by the central government and
nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5
crore from the Government of India.

The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company
Ltd., the first general insurance company established in the year 1850 in Calcutta by the British

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 Role of Insurance Sector in India

PROTECTIVE ROLE

Insurance has been playing protective role towards the development of industry and commercial institutions.
The major protective measures have been:

Protection from risks arising out of natural calamities

Insurance has also been playing important role in protecting the industry and commercial activities from
natural calamities like fire, marine losses, floods, earth quakes, cyclones etc.

Protection from the risks caused by human beings

Insurance provides protection against risks caused by human beings such as strikes by workers, their
negligence in carrying out work, theft and evil disturbances and many other such acts. In addition to the issue
of policies against such causes, insurance also issues policies to protect the industry and commercial
institutions from the loss of money in transit.

Protection against statutory liabilities

Insurance also plays the role of protecting the industry and commerce in fulfilling statutory liabilities towards
the workers, arising out of industrial accidents. The employer is bound to compensate such workers under the
provision of Workers Compensation Act. In case the employer obtains an accidental policy in favour of
employees; the money to be paid as compensation to the accident victims, can be chimed from the insurance
company.

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Financial security

Insurance provides financial security also to industry and commerce. Exports of goods to other countries by
sea, storage of goods in safe god owns and various other kinds of financial losses are secured by insurance
policies.

Protection from loss of profits

Insurance also has extended its role of prot6cting different industrial and commercial activities, it provides
protection against losses arising from shops or factories. It also undertakes to indemnity the loss of profits
from business functions this way, the loss of profits and property / both are protected.

Protection of debts

A trader can protect himself by taking appropriate policy against the credit sales or property kept on security
against goods or property. Thus, the insurance protests the trader even in case the debtor dies or of damages
to the goods.

Protection to the business institution due to sudden death of the me key man the successful operation and
development of a business largely depends on its directors, managers and administrative personnel. Sudden
and untimely death of such person may badly affect the functioning of the business and many problems may
also arise in day-to-day functioning of business. Insurance plays important role by insuring the life of key man
in the business so that the future can be protected safely from uncertainties.

Provides stability in commercial and industrial activities Insurance companies extend various kinds of
assistance to business enterprise to run the business regularly and continuously. It plays important role in
partnership business by insuring the life of partners so that in case of death of any partner, the claim received
from the insurance company can be used for meeting payment to the dependents of deceased partner.

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PROMOTIONAL ROLE OF INSURANCE

Insurance plays important role in setting up industrial and commercial units; by way of capital
formation, new investment, industrial entrepreneurship, under-writing of shares and investment in capital
market. In addition to protective measures, it plays promotional role also, which are briefly described below:

Extension of credit facilities

Insurance extends credits to industrial and commercial institutions. An entrepreneur can get insurance of
unit, plant and machinery, or permanent assets purchased by him and get them mortgaged with the financial
institutions for getting credit.

Facilities industrialization and commercialization

Insurance contributes for the development of various commercial activities like buying-selling,
transportation, communication, warehousing, packaging, advertising and publicity, and agricultural
marketing etc. It is due to the insurance facility that many utility serves are created and the business solves
various problems arising out of business conducts.

Increases business and industrial efficiency

The efficient management of industrial and commercial activities become possible due reductions in business
risks. Insurance provides protection from various risks and thus it increases the business efficiency.

Investment in shares and debentures

Insurance companies extends its support for the development and expansion industrial and commercial
activities by investing in shares and debentures.

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Contribution towards the development of basic industries

Insurance has contributed much towards the development and expansion of basic industries like iron and
steel cement, engineering, chemicals, petrochemicals, electric goods, fertilizers, etc. by investing in shares
and debentures

Contribution towards fulfilment of social and statutory obligations

Insurance institutions in the country also have been contributing much in fulfilment of social and statutory
obligations by contributing well in social welfare schemes operated by industrial establishments, social
security, schemes, workers compensation plan, payment of gratuity etc.

Contribution towards development of international trade

The various policies issued by marine insurance companies help for the development of international trade
by protecting the exporters/ importers from marine losses and risks. This role of insurance companies has
been helpful in earning more foreign exchange by increased participation by traders in international trader.

Extension of export credit

Export Credit and Guarantee Corporation (ECGC) extends export credit to the exporters and in cases where
the importers commit defaults in making payment to the exporter, the ECGC compensate the exporter
through its policy issued for this purpose.

Increase competing ability among small and medium-scale units

Insurance acts as a source among the small and medium scale industrial units to compete with larger
industrial units. Large-scale industries can bear the expenses for protection against risks and uncertainties
by getting insurance against such losses.

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 TYPES OF LIFE INSURANCE

There are various types of policies and schemes prepared to suit the need of different individual. You can
avail the one that satisfy your budget and need. Life insurance can be broadly divided into 3 types:

 Term life insurance

 Whole life insurance
 Universal life insurance

What is Term Life Insurance?

In this type of life insurance, financial coverage is provided for a certain period of time according to the terms
of the policy. When the term period gets over, the policy holder can either end the policy or continue it by
paying annual premiums.

Term life insurance does not provide permanent coverage but is good for those who want temporary
protection on a limited budget. If you are thinking of availing a short term life insurance policy to pay off
loans, term life insurance policy is the right option for you. It can be renewed according to the policy holders
wish and need.

What is Whole Life Insurance?

In this type of life insurance, the insured is provided with permanent financial protection. It is a long
insurance plan where the policy holder needs to pay premiums annually. There are various types of whole
life insurance that individuals can avail in accordance to their needs such as Non-participating, Participating,
Indeterminate premium, Economic, Limited Pay, Single Premium and Interest sensitive. But all life insurance
companies may not offer all the types of whole insurance policies stated above.

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What is Universal Life Insurance?

This is a permanent life insurance plan which has flexible terms. It allows some of the benefits such as death
benefits, saving benefits to be reviewed and changed according to the policy holder need. In this policy, the
insured enjoys not only benefits of term life insurance but also cash value premiums that are above the cost
insurance are credited as cash value. You can choose from the 3 types of universal life insurances, i.e. Single
premium, fixed premium and flexible premium, in accordance to your requirement.

Single premium universal life insurance: In single premium universal life insurance, the policy holder pays a
big premium amount at the beginning of the policy. The policy remains active as long as the cost of insurance
COI is covered by the initially paid amount.

Fixed premium universal life insurance: In fixed premium universal life insurance, the policy holder makes
monthly or yearly payments of fixed amount for a certain period of time.

Flexible premium universal life insurance: In this option of universal life insurance, the policy holder can pay
monthly premiums of his choice as long as the minimum payment amount is covered.

Life insurance is therefore an essential step towards safeguarding the future of your family. People should
understand how these life insurance policies work and avail the one that seems suitable to their needs. Take
the help of a good insurance agent who will help you with details of the policies available.

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 ROLE OF LIC

The insurance industry recorded a booming growth of 35% in premium income during2004-05 with the 13
private sector players walking away with. An impressive 129%while the Life Insurance Corporation of India
recorded a 21% growth. The market share of state behemoths dropped to 78% in 2004 05 from 87% a year
ago. According to ASSOCHAM Eco Pulse Study, the industry premium increased to Rs253.42bn in 2004-05
from Rs187.1bn in 2003-04. The LIC total premium for the year 2004-05 amounted to Rs197.85bn as against
the Rs162.84bn during previous year. The figures for the first two months of the fiscal 2005-06 also speak of
the growing share of the private insurers.

The share of LIC for this period has further come down to 75%, while the private players have grabbed over
24% share. “With the huge potential the market has, the Government should, more seriously look into
increasing the FDI cap in the sector company ICICI Prudential has increased its share from 6.25% in 2004-05
to 7.68% in current fiscal. The opening up of the sector has given some of the most innovative products like
the customized insurance policies and now the unit linked policies that have gained much of customer
attention. The sector has huge potential and certain other new and innovative areas can also be looked into
for enhancing market share and premium income.

HDFC is next in the row with 2.91% market share which has increased from 1.92%last fiscal followed by TATA
AIG which now shares 2% of the market from 1.18%last fiscal. Birla Sun life share has dropped from 2.45%
during to 1.76% in first two months of 39;06. SBI life comes next with 1. 72% share and has in fact dropped
a few percent points from last year. Max New York life and Aviva Life Insurance have captured more than 1%
share each from less than 1% share.

Others like ING, AMP Met Life and Sahara India have less than 1 % share. The detail of the market share of
life insurance companies is attached. The market share of the private players has doubled every year from
5.6% in 2002-03 to, 12% in2003-04 and close to 22% in 2004-05. The state insurance company has the biggest
advantage of its huge network which the company can use to penetrate into rural market that is still lying
untapped. Another option with the life insurance companies to capture more and more market share could
be product innovation and constantly developing an insurance product in order to meet the ever-changing
requirements of the customer. Quality customer service and education can be another area where a
company can differentiate itself 48 from other companies.
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 PRODUCTS BY LIC

INSURANCE PLANS

1. New Jeevan Anand

Features

Product summary:
LIC's New Jeevan Anand Plan is a participating non-linked plan which offers an attractive combination of
protection and savings. This combination provides financial protection against death throughout the lifetime
of the policyholder with the provision of payment of lumpsum at the end of the selected policy term in case
of his/her survival. This plan also takes care of liquidity needs through its loan facility.

1. Benefits:

Death benefit: Provided all due premiums have been paid, the following death benefit shall be paid: · On
Death during the policy term: Death benefit, defined as sum of “Sum Assured on Death” and vested Simple
Reversionary Bonuses and Final Additional bonus, if any, shall be payable. Where, “Sum Assured on Death”
is defined as higher of 125% of Basic Sum Assured or 10 times of annualised premium. This death benefit
shall not be less than 105% of all the premiums paid as on date of death. The premiums mentioned above
exclude service tax, extra premium and rider premiums, if any. On death of policyholder at any time after
policy term: Basic Sum Assured

Benefits payable at the end of Policy Term: Basic Sum Assured, along with vested Simple Reversionary
Bonuses and Final Additional Bonus, if any, shall be payable in lump sum on survival to the end of the policy
term provided all due premiums have been paid.

Participation in Profits: The policy shall participate in profits of the Corporation and shall be entitled to
receive Simple Reversionary Bonuses declared as per the experience of the Corporation during policy term
provided the policy is in full force. Final Additional Bonus may also be declared under the plan in the year
when the policy results into death claim during the policy term or due for the survival benefit payment provided
the policy is in full force and has run for certain minimum term.

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2. Optional Benefit:

LIC’s Accidental Death and Disability Benefit Rider: LIC’s Accidental Death and Disability Benefit
Rider is available as an optional rider by payment of additional premium during the policy term. In case of
accidental death during the policy term, Accident Benefit Sum Assured will be payable as lumpsum along
with the death benefit under the basic plan. In case of accidental permanent disability arising due to accident
within 180 days from the date of accident, an amount equal to the Accident Benefit Sum Assured will be paid
in equal monthly instalments spread over 10 years and future premiums for Accident Benefit Sum Assured as
well as premiums for the portion of Basic Sum Assured which is equal to Accident Benefit Sum Assured
under the policy, shall be waived.

2. Jeevan Shree-I

Product summary:

This is an Endowment Assurance plan offering the choice of many convenient premiums paying terms. It
provides financial protection against death throughout the term of plan with the payment of maturity amount
on survival to the end of the policy term.

Premiums:
Premiums are payable yearly, half-yearly, quarterly or through Salary deductions, as opted by you, throughout
the premium paying term or till earlier death. Alternatively, premium may be paid in one lump sum Single
premium.

Guaranteed Additions:
The policy provides for the Guaranteed Additions at the rate of Rs. 50/- per thousand Sum Assured for each
completed year for first five years of the policy. The Guaranteed Additions are payable along with the Basic
Sum Assured at the time of claim.

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Bonuses:
The policy participates in the profits of the Corporation’s life insurance business from the 6th year onwards.
It will get a share of the profits in the form of bonuses. Simple Reversionary Bonuses will be declared per
thousand Basic Sum Assured annually at the end of each financial year. Once declared, they will form part of
the guaranteed benefits of the plan.

Benefits

Death Benefit:
The Sum Assured along with guaranteed additions and vested bonuses, if any, is payable in a lump sum on
death of the life assured during the policy term.

Maturity Benefit:
The Sum Assured along with guaranteed additions and reversionary bonuses, if any is payable in a lump sum
on survival to the end of the policy term.

Supplementary/Extra Benefits:
These are the optional benefits that can be added to your basic plan for extra protection/option. An additional
premium is required to be paid for these benefits.

Surrender Value:
Buying a life insurance contract is a long-term commitment. However, surrender value is available on the plan
on earlier termination of the contract.

Guaranteed Surrender Value:

The policy may be surrendered after it has been in force for 3 years or more. The guaranteed surrender value
is 30% of the basic premiums paid excluding the first year’s premium. In case of a single premium policy the
guaranteed surrender value is 90% of the single premium paid excluding any extra premium.

33
Corporation’s policy on surrenders:
In practice, the Corporation will pay a Special Surrender Value – which is either equal to or more than the
Guaranteed Surrender Value. The benefit payable on surrender reflects the discounted value of the reduced
claim amount that would be payable on death or at maturity. This value will depend on the duration for which
premiums have been paid and the policy duration at the date of surrender. In some circumstances, in case of
early termination of the policy, the surrender value payable may be less than the total premium paid.

PENSION PLANS

1. LIC’s NEW JEEVAN ANAND

LIC’s New Jeevan Nidhi Plan is a conventional with profits pension plan with a combination of protection
and saving features. This plan provides for death cover during the deferment period and offers annuity on
survival to the date of vesting.

1. Benefits:
a) Benefit on Vesting: Provided the policy is in full force, on vesting an amount equal to the Basic Sum
Assured along with accrued Guaranteed Additions, vested Simple Reversionary bonuses and Final
Additional bonus, if any, shall be made available to the Life Assured.

The following options shall be available to the Life Assured for utilization of the benefit amount.

1. To purchase an immediate annuity

The Life Assured shall have a choice to commute the amount available on vesting to the extent allowed under
Income Tax Act. The entire amount available on vesting or the balance amount after commutation, as the case
may be, shall be utilized to purchase immediate annuity at the then prevailing annuity rates. Commutation
shall only be allowed provided the balance amount is sufficient to purchase a minimum amount of annuity as
per the provisions of section 4 of Insurance Act, 1938.

In case the total benefit amount is insufficient to purchase the minimum amount of annuity, then the said
amount shall be paid as a lump sum to the Life assured.

The annuity shall only be purchased from Life Insurance Corporation of India.

34
 2. To purchase a new Single Premium deferred pension product from Life Insurance Corporation
of India
Under this option the entire proceeds available on vesting shall be utilized to purchase a single premium
deferred pension product provided the policyholder satisfies the eligibility criteria for purchasing single
premium deferred pension product.

The Life Assured will have to intimate his / her intention to go for a particular option available on the date of
vesting at least six months prior to the date of vesting.

b. Death Benefit:
Death during first five policy years: Provided the policy is in full force, Basic Sum Assured along with
accrued Guaranteed Addition shall be paid as lump sum or in the form of an annuity or partly in lump sum
and balance in the form of an annuity to the nominee.

Death after first five policy years: Provided the policy is in full force, Basic Sum Assured along with accrued
Guaranteed Addition, Simple Reversionary and Final Additional Bonus, if any, shall be paid as lump sum or
in the form of an annuity or partly in lump sum and balance in the form of an annuity to the nominee.

In any case, provided all due premiums have been paid, the total death benefit at any time shall not be less
than 105% of the total premiums paid (excluding taxes, extra premium and rider premium, if any).

The amount of annuity will depend on the payable lump sum and the then prevailing immediate annuity rates.

c. Guaranteed Additions: The policy provides for Guaranteed Additions @ Rs.50/- per thousand Basic Sum
Assured for each completed year, for the first five years.

d. Participation in profits: Provided the policy is in full force, depending upon the Corporation’s experience
the policies shall participate in profits from 6th year onwards for a Simple Reversionary Bonus at such
rate and on such terms as may be declared by the Corporation.
Final Additional Bonus may also be declared under the policy in the year when the policy results into a claim
either by way of death or on vesting, provided the policy has run for certain minimum term.

35
 1. Optional Benefit:
LIC’s Accidental Death and Disability Benefit Rider: LIC’s Accidental Death and Disability Benefit Rider
is available as an optional rider by payment of additional premium under regular premium policies. In case of
accidental death, the Accident Benefit Sum Assured will be payable as lumpsum along with the death benefit
under the basic plan. In case of accidental disability arising due to accident within 180 days from the date of
accident, an amount equal to the Accident Benefit Sum Assured will be paid in equal monthly instalments
spread over 10 years and future premiums for Accident Benefit Sum Assured as well as premiums for the
portion of Basic Sum Assured which is equal to Accident Benefit Sum Assured under the policy, shall be
waived. If the policy becomes a claim either by way of death or the policy vests before the expiry of the said
period of 10 years, the disability benefit instalments which have not fallen due will be paid in lump sum.

The Accident Benefit Sum Assured may be opted for an amount up to the Basic Sum Assured subject to
minimum of Rs. 1,00,000 and maximum of Rs. 50 lakhs under individual as well as group policies with LIC
of India. This benefit will be available only till the vesting age.

SPECIAL PLANS

1. Bima Nivesh

Features

Bima Nivesh 2005 is a plan with compound rate of guaranteed additions and loyalty additions. This is the
revised version of our popular Bima Nivesh Plan 2004 and is introduced to meet the overwhelming demand
for a single premium plan from our customers. It is a single premium, ideal investment plan for those who
have no regular income but good periodical income. Bima Nivesh 2005 is available for terms 5 and 10 years.
The guaranteed surrender value is payable after the policy has run for at least one year. Term Assurance Rider
is also available by payment of a single premium at the option of the proposer.

Benefits

 Guaranteed Additions: Guaranteed additions at the compound rate of Rs.50 per thousand Sum
Assured per annum for the policy with term of 5 years and at the compound rate of Rs.55 per thousand
Sum Assured per annum for the policy with term of 10 years.

36
  Loyalty Addition: Depending upon the Corporation's experience with regard to mortality, interest
and expenses and based on term of the policy, Loyalty addition, if any, may be declared by the
corporation and paid on maturity.

 Maturity Benefit: The Basic Sum Assured along with compounded Guaranteed Additions will be
payable. Loyalty addition, if any, will also be added to this benefit.

 Payment on death: In case of the unfortunate death of the Life Assured during the term of the policy,
Sum Assured along with the accrued guaranteed additions will be payable.

 Surrender Value: Surrender value is payable after the policy has run at least for one
year.

GROUP SCHEME

1. Group Term Insurance Scheme

A) Nature of the Scheme:

Group term Insurance Scheme is meant to provide life insurance protection to groups of people.
Administration of the scheme is on group basis and cost is low. Under Group Term Insurance Scheme, life
insurance cover is allowed to all the members of a group subject to some simple insurability conditions without
insisting upon any medical evidence. Scheme offers covers only on death and there is no maturity value at the
end of the term.

B) Premium Chargeable:
Group Term Insurance Scheme is at present offered under One Year Renewable Group term assurance plan.
Every year on Annual Renewal date LIC charges the premium depending upon the changes in size and age
distribution of the age group.

37
C) Different Schemes:
Group term Insurance Scheme has a number of varieties. The Scheme may provide for a uniform cover to all
members of the group or graded covers for different categories of members, cover for all amounts of
outstanding housing loans or vehicle advances, or some other benefits e.g., life cover to supplement pension
or PF benefits in case of death. The schemes may have add-ons like Double Accident Benefit, Critical Illness
Benefit, Disability benefit etc.

D) General Features of various Group Insurance Schemes:

 PREMIUM:
The premium under such scheme may be wholly paid by the employer or the Nodal Agency. However,
the scheme may be contributory i.e. the members may also contribute.

 DOUBLE ACCIDENT BENEFIT:

Double Accident Benefit, i.e. payment of double the sum assured on death due to accident without
permanent disability benefit, may be allowed under Group Insurance Schemes for an extra premium.

 ELIGIBILITY:
For Group Insurance Scheme in lieu of EDLIS the insurability condition is that should be a member
of the Provident Fund Scheme of the employer. For other GI Schemes of employer-employee groups
the insurability condition is that the member should not be absent on ground of sickness on the entry
date. For all non-employer-employee Group Schemes the basic insurability condition is that the
member should be in good health on the date of entry.

 ADMINISTRATION OF THE SCHEME:

At the commencement and thereafter on each Annual Renewal Date, the Group Policyholder will have
to send all the member's data and particulars of the new entrants from time to time to the P & GS unit
of LIC. Detailed OYRGTA premium calculation will be made on each Annual Renewal Date.

38
 1. Janashree Bima Yojana (JBY)

Features

The objective of the scheme is to provide life insurance protection to the rural and urban poor persons below
poverty line and marginally above the poverty line.

ELIGIBILITY: A person who is Aged between 18 and 59 years. Below or marginally above poverty line. A
member of any of the approved vocation/occupation groups.

NODAL AGENCY: A State Government Department which is concerned with the welfare of any such
vocation/occupation group, a Welfare Fund/ Society, Village Panchayat, NGO, Self-Help Group, etc.

MINIMUM MEMBERSHIP SIZE: Twenty-five.

BENEFIT ENHANCED

In the events of Death other than by accident of the member, an amount of Rs.30,000/- is payable. death/total
permanent disability, due to accident, an amount of Rs.75,000/-is payable. Permanent partial disability, due to
accident, an amount of Rs.37,500/- is payable.

PREMIUM: The premium under the scheme is Rs.200/-per annum per member. *50% of the premium i.e.
Rs.100/- will be contributed by the member and/or Nodal Agency/State Government. Balance 50% will be
borne by the Social Security Fund.

TAX BENEFITS

The aggregate amount of deduction under all the relevant sections viz. section 80C, section 80CCC and section
80CCD shall not, exceed Rs.1 Lakh.

1) Deduction from Income for payment of Premium (Sec. 80C).

(a)life insurance premia.

The insurance premia paid for a policy is eligible for deduction. The premium paid should not be in excess
of 20% of capital sum assured.

39
(b) Contribution to Deferred Annuity Plans:
The premia paid for a Deferred Annuity; provided such contract does not contain a provision to exercise an
option by the insured to receive a cash payment in lieu of the payment of annuity is eligible for deduction.

(c) Contribution to Pension/Annuity Plans:

Contribution to New Jeevan Dhara-I and New Jeevan Akshay-V Schemes of LIC are qualified for rebate
under this section.

2) Income tax exemption on Maturity/Death Claims proceeds under Section 10(10D)

All the benefits payable under a Life Insurance policy are tax free. However, in cases the premium paid in
excess of 20% of the capital sum assured within a year, benefits paid excess of premiums will be taxable. The
benefits from a key man Insurance policy and any sum received under Sec 80DD, Sub-section (3) are also
taxable.

3) Jeevan Nidhi Plan & New Jeevan Suraksha - I Plan (U/s. 80CCC) Amounts paid from the taxable income
to premiums of the above annuity are deductible.

4) Deduction under section 80D Medical Premium paid for a Health Insurance policy is deductible to the
extent of Rs. 15000 for an assessed and/or his family members’ policy/s. A separate exemption to the extent
of Rs. 15,000 for premiums paid for an assesses parent is also available. If any one or both of the parents are
Senior citizens, then an enhanced exemption limit of Rs. 20,000 is available. Section 80D also covers payment
of premium exclusively for Critical Illness Rider.

5) Jeevan Aadhar Plan (Sec.80DD)

Premium paid for LIC’s Jeevan Aadhar Plan (for the maintenance of a handicapped dependent) is eligible for
deduction from the total income to the extent of Rs.50,000 and to the extent of Rs.75,000/- where handicapped
dependent is suffering from specified severe disability.

6) Exemption in respect of commutation of pension under Jeevan Suraksha & Jeevan Nidhi
Plans. (Section 10(10A):

A payment received by way of commutation of pension from Jeevan Suraksha & Jeevan Nidhi Annuity plans
is exempt from tax.

40
 Life Insurance Companies in Urban Sector

Life insurance is possibly the most- retail of all financial services, and is required by people of all
segments and in all locations. At a broad level, ICICI Prudential aims to secure the families of the middle and
upper class working people in urban India. To this end, they have pursued a pan-India distribution strategy
and backed it up with arrange of products that meets the needs of a wide range of people, be they from rural
or urban areas. Today, they have branches in 74 locations and rural presence in more than 15 states. Certainly,
the majority of the business still comes from urban areas such as metros and mini-metros. However, they have
seen rural business grow significantly and expect it to continue making greater contribution in the years to
come.

LIC chairman VK Sharma would like to see around 20% of Life Insurance Corporation’s (LIC) investments
go towards building urban infrastructure and municipal bodies.

LIC used to invest in municipalities earlier for creating infrastructure, but it was one area where it wasn’t doing
enough, he said. LIC had cumulatively invested around Rs 30,000-40,000 crore in this sector, but currently it was Rs
6,000 crore, he said. Other insurance firms too are not investing here, he pointed out.

LIC is investing in municipal bonds and in many cases, they are the only buyers of these bonds, Sharma said,
adding that while they want to invest, there was a need to create more sustainable models to invest in which would
make the 20% investment target achievable. Sharma was speaking at the annual CD Deshmukh memorial seminar at
the National Insurance Academy in Pune.

After 2000, when the Union government ended LIC’s monopoly, the insurance business in India has
seen hectic activity. The advertisement expenditure of life insurance players, for instance, increased to Rs199
crore in 2006, up by a whopping 58% from 2004, according to data from MindShare Insights, the research
arm of MindShare, a media buying agency.

Until July, LIC had clocked a total premium income of about Rs14,000 crore, while the private players
managed to corner Rs5,700 crore (about 40% of LIC’s), according to IrDA. The growth figures, too, favor
LIC. Last year, the company’s premium income grew by 118%, compared with an industry average of 110%.

41
 Network Of LIC

All Life Insurance Corporation branches in the country would be interconnected under Metro Area
Network (MAN) inaugurated here on Thursday.

Speaking at the function, K Vaidyalingam, LIC southern zonal manager, said about 1500 branches
would be getting covered under MAN in which the premium amount of the policy holder could be remitted in
any branch. Besides, the policy holder gets his status report, policy position, revival and quotation from the
network. In every one hour the system got upgraded, he said.

In southern region there are about 10 lakh new policy holders with a business of Rs 6500 crore. About
settlement of claims, 92 per cent of policies were settled on or before maturity, he said, adding, LIC was in a
better position and 100 per cent connectivity was taking place.

Kottayam stood third in premium collection during the period between April to August 2002, the first
being Kozhikode and Thiruvananthapuram in second position in southern region.

The premium amount collected in 2001 was Rs.74,000 crore through 2.32 crore new policies by 8.2
lakh agents. LIC has introduced a new group insurance scheme for Corporation Bank deposit holders.

A network security policy, or NSP, is a generic document that outlines rules for computer network
access, determines how policies are enforced and lays out some of the basic architecture of the company
security/ network security environment. The document itself is usually several pages long and written by a
committee. A security policy goes far beyond the simple idea of "keep the bad guys out". It's a very complex
document, meant to govern data access, web-browsing habits, use of passwords and encryption, email
attachments and more. It specifies these rules for individuals or groups of individuals throughout the company.

Security policy should keep the malicious users out and also exert control over potential risky users
within your organization. The first step in creating a policy is to understand what information and services are
available (and to which users), what the potential is for damage and whether any protection is already in place
to prevent misuse.

In addition, the security policy should dictate a hierarchy of access permissions; that is, grant users
access only to what is necessary for the completion of their work.

While writing the security document can be a major undertaking, a good start can be achieved by using
a template. National Institute for Standards and Technology provides a security-policy guideline.

42
 CURRENT STATUS

Over its existence of around 50 years, Life Insurance Corporation of India, which commanded a
monopoly of soliciting and selling life insurance in India, created huge surpluses, and contributed around 7 %
of India's GDP in 2006.

The Corporation, which started its business with around 300 offices, 5.6 million policies and a corpus of INR
459 million, has grown to 2,048 offices servicing around 180 million policies and a corpus of over INR 3.4
trillion.

The organization now comprises 2048 branches, 100 divisional offices and 8 zonal offices, and employs over
1 million agents. It also operates in 12 other countries, primarily to cater to the needs of Non Resident Indians.

With the change in the India's economic philosophy from the early 1990s, and the subsequent relaxation of
state control over several sectors of the economy, the monopolistic position of the Life Insurance Corporation
of India was diluted, and it has had to compete with a number of other corporate entities, Indian as well as
transnational Life Insurance brands.

In the financial year 2006-07 Life Insurance Corporation of India's number of policy holders are said to have
crossed a whopping 200 million fourth in terms of population of the countries of the world.

43
 WHY LIC IS TRUSTED BRAND OF INDIA?

1. As a Govt of India owned Company, LIC is 51 + years old in the field of life insurance and money
management. LIC's Life Fund size as on day is more than Rs 5 Lakh Thousand Crores.

2. Any LIC policyholder or the nominee will vouch for the best claims settlement from LIC. Perhaps, this
is the only institution where you as a policyholder are virtually chased till such time your claim cheques
is handed over to you!

3. LIC has won `NDTV Profit Leadership Award 2007 under Life Insurance Category', `Outlook Money
Award 2007 as the best Life Insurer', `CNBC Awaaz Consumer Award 2007 as the best Life Insurance
Company', `Golden Peacock Award for excellence in Corporate Governance 2007', `Web 18 Genius of
the Web Award 2007 and many more'.

4. LIC adjudged No.1 Trusted Service Brand for the 4th successive year by ET Brand Equity Survey.

5. LIC has been adjudged Superbrand India for 2004-06 and Reader's Digest `Trusted Brand' Asia 2007.

6. This is the only corporation that is catering to more than 190 million satisfied policyholders in India
and abroad.

7. This is one of the very few institutions that pays ex-gratia interest on pending maturity claims!

44
8. More than 2050 LIC branches all over India are connected together to serve you. You can pay your
premium anywhere in the country.

9. During its long existence, LIC has kept on updating its portfolio by bringing in new plans depending
on public requirement. More than 50 of them are most popular and can be customized to meet any of
your requirements. LIC ULIPs have become extremely popular due to the returns they offer. Money
Plus- latest LIC Unit Linked Plan is a case in point.

10. All LIC Plans come with Sovereign Guarantee i.e., Govt of India Guarantee regarding repayment.
Infact, as of now, only LIC plans enjoy this Govt Guarantee. Beneficiary for this Sovereign Guarantee
is you and you alone as the policyholder/ would-be policyholder.

11. All LIC plans are characterized by low premium, high life insurance coverage and a vast package of
benefits offered by them. Add to this package, section 80C benefit and section 10(10D) benefit on the
maturity proceeds, you will find investment on LIC plans one of the most coveted investment options
available to you.

12. Premium paid under Key-Man Insurance plan is a recognized business expense under section 37(I) of
the Income-Tax Act. For companies making profits, this is a very good incentive indeed.

13. Through Employer-Employee Insurance scheme, you can recognize the worth of your most valuable
employees whose absence you can ill afford to lose.

45
14. Entire contribution to LIC Group Gratuity Scheme is a recognized business expense in the hands of the
employer. In addition, through this scheme, the employer can transfer his gratuity liability to the
corporation and fund the same under cash accumulation scheme. The most popular among all the
companies.

15. LIC is declaring quite an impressive bonus (profits) on all its with-profits policies every year. Extra
attraction under LIC Bonus is (a) it is calculated every year on the insured amount and not on the
premium paid and (b) entire bonus received along with insured amount either by you on maturity of
your policy(ies) or by your nominee in your absence during the currency of your policy(ies) is free from
income-tax under section 10(10D) of the Income-tax Act.

16. On most of the LIC plans, you can borrow to take care of your immediate monetary requirements. None
of the policy benefits get affected as a result of borrowal. Infact, policy loans offer one of the most
attractive investment opportunities.

17. You can pay your premium 3 years in advance at 5% discount. Chief attractions of this advance payment
of premium are (a) there is no possibility of your overlooking your premium payment and getting your
policy(ies) lapsed wherever you are in the world and (b) you will be earning 5% tax-free interest on the
unutilized portion of the amount left with LIC after apportioning the regular instalment.

18. Most of the LIC plans come with Riders to take care of Total and Permanent Disablement due to
Accident and some of the most dread diseases that may result in loss of income.

19. LIC pension plans that guarantee your life pension are extremely popular. You can park your hard
earned money safely with the corporation and enjoy pension as long as you are alive. Due to these
reasons and lot more, LIC should be your obvious choice for all your life insurance requirements.

46
 ROLE OF LIC IN INTERNATIONAL MARKET

Government has allowed 26% foreign equity participation in the insurance sector. This has its
limitations. While most foreign insurers planning to start their services in India were not pleased by this
condition, they reluctantly agreed that this was expected in an opening economy and this will not change their
outlook for India. After all no insurance company can afford to ignore a market of 1bn people. But the fact
remains those they:

• Cannot appoint majority directors on the company board;

• Cannot have say in the day to day workings of the company;
• Can Affect Only Special Resolutions.

This cap, however, will have a great impact on the Indian counterpart to raise 74% of the funds in their
joint venture. To add to this if Indian partners like State bank of India, with over 9000 branches nationwide,
will demand premium for their existing distribution network, we will see the foreign insurance companies
demand hefty premiums for bringing in their global expertise and brand. Mr. Vaidya, Chairman of SBI, has
recently stated that all it is looking for is a good and reliable partner and thequestion of a hefty premium to be
charged to its foreign partner is not significant. The monolith has finally come to business senses foreign
companies are unhappy even about laws pertaining to repatriation of funds. The Stipulated investment criteria
is also something that all players in the sector, be it Indian or foreign, are closing watching. The foreign players
are essentially looking to tap their" global expertise in the variety markets and use that know-how to work in
the Indian scenario. Designing of products, information systems, technical expertise, manpower planning etc.
is what one expects the foreign players to have a say in
Any venture of the joint kinds needs to be between equals. If this is not there then there is every chance that a
partner in the venture will feel increasingly uncomfortable and would be looking to call the joint venture off.

47
INTERNATIONAL OPERATIONS/ASSOCIATES

LIC has always acknowledged the need to expand. Our expanding efforts have been consistent and are evident
though our associations given below for your reference.

INTERNATIONAL OPERATIONS

 LIC Fiji
 LIC Mauritius
 LIC United Kingdom
 LIC (International) B.S.C (C), Bahrain
 LIC (Nepal) Ltd
 LIC (Lanka) Ltd
 Saudi Indian Company for Co-op. Insurance, KSA.
 LIC Mauritius Offshore Ltd.

ASSOCIATES
 LIC Housing Finance Ltd.

 LICHLF Care Homes Ltd.

 LIC Mutual Fund AMC Ltd.

SUBSIDIARIES

LIC owns the following subsidiaries:

 Life Insurance Corporation of India International: This is a joint venture offshore company
promoted by LIC which commenced operations in July, 1989 with the objectives of offering US$
denominated policies to cater to the insurance needs of NRIs and providing insurance services to
holders of LIC policies currently residing in the Gulf. LIC International operates in all GCC countries

 LIC Nepal: A joint venture company formed in 2001 with the Vishal Group of Industries, Nepal.
48
 LIC Lanka: A joint venture company formed in 2003 with the Bartleet Group of Companies, Sri
Lanka
 LIC HOUSING FINANCE LTD.
The Company is recognized by National Housing Bank and listed on the National Stock
Exchange (NSE) & Bombay Stock Exchange Limited (BSE). LIC Housing Finance Ltd.
is one of the largest Housing Finance Company in India. Incorporated on 19th June
1989 under the Companies Act, 1956, the company was promoted by LIC of India and
went public in the year 1994. Its main objective is to provide long term finance for
construction or purchase of houses or apartments. It has a Dubai office.

 LIC MUTUL FUND LTD.

Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989 and
contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was
constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882.

There are some other subsidiaries of LIC which are

1. LIC Mutual Fund Asset Management Company Ltd.
2. LIC HFL Care Homes Ltd.
3. LICHFL Asset Management Company Private Limited.
4. LICHFL Trustee Company Private Limited.
5. LICHFL Financial Services Limited, etc.

49
 Research Methodology

RESEARCH PROBLEMS:

After doing the literature review and understanding the motives of the INSURANCE in India and
benefits achieved there by, question arises whether LIC is beneficial for Insurance sector.

This report gaps lead to the following objectives of the study

SCOPE OF THE STUDY:

The study of impact of liberalization on the life insurance sector has a wide scope. A few suggested areas for
further research may be:

1. Effects of liberalization on the profitability of the Life Insurance Corporation of India.

2. Legal aspect with special reference to consumer protection.

3. Profitability of the life insurers.

4. State-wise analysis of insurance density and penetration to identify measures for increasing both penetration
and density.

FINDING OF THE STUDY:

1) Now days also insurance is most popular as more plain protection against death and people are unaware
about the other aspects of insurance.

2) According to current scenario life and mater insurance are the most popular ones followed by fire
insurance.

3) Majority of people consider the insurance premium paid by them as reasonable.

4) Only few counted people are unaware about the entry of private players into. The insurance industry and
a very high majority of people support their entry.
50
5) By the entry of private players. Consumers are expecting the premium to down which would be the biggest
blessing.

OBJECTIVES OF THE STUDY:

Objective of a research work defines the driving force for a research action. It is the focal point around
which the whole action revolves. This dissertation was undertaken to fulfil the following objectives:

 Spread Life Insurance widely and in particular to the rural areas and to the socially and economically
backward classes with a view to reaching all insurable persons in the country and providing them
adequate financial cover against death at a reasonable cost.

 Maximize mobilization of people’ savings by making insurance-linked savings adequately attractive.

 Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it
holds in trust, without losing sight of the interest of the community as a whole; the funds to be deployed
to the best advantage of the investors as well as the community as a whole, keeping in view national
priorities and obligations of attractive return.

 Conduct business with utmost economy and with the full realization that moneys belong to the
policyholders.

 Act as trustees of the insured public in their individual and collective capacities.

 Meet the various life insurance needs of the community that would arise in the changing social and
economic environment.

 Involve all people working in the Corporation to the best of their capability in furthering the interests
of the insured public by providing efficient service with courtesy.
51
  Promote amongst all agent and employees of the corporation a sense of participation, pride and job
towards achievement of corporate objective.

RESEARCH DESIGN:

A research design is a basic plan which guides the researcher in the collection and analysis of data required

for practicing the research. Infant the research design is the conceptual structure which the research is

conducted. It constitutes the ‘Blue Print’ for the collection, measurement and analysis of the data. The study

is carried out to understand the Consumer Perception about life insurance policies in Kottayam City. For

this study the researcher used exploratory research design. This research covers 50 consumers in Kottayam

city, belonging to various age groups.

Sample Design

a) Population: Customers of LIC Of India

b) Sampling Unit: LIC OF INDIA

c) Sample size: 50 customers

Sampling Technique Adopted:

Convenient sampling

52
LIMITATIONS OF THE STUDY

The research is conducted only in five districts based on per capita income therefore people from low capita
income area were not surveyed.

 The study was limited to the insured population of Haryana State only.

 The researcher approached respondents with the help of insurance agents and personal contacts
therefore the sample respondents were approached from limited area.

 Willingness of the respondents for providing necessary information for the research may have
influenced the results.

 The sample size was large and data was selected randomly therefore easily available policyholders
were approached by the researcher.

53
Research Plans

A systematic and planned move to accomplish the research objective is always appreciable in
conducting a resourceful research work. My dissertation was also accomplished in a systematic way. The
flowchart of my research plan was as follows:

Insight into the INSURANCE INDUSTRY

The motives and benefits of LIC in Insurance Industry.

Collection of data with regard to secondary research

Secondary research was conducted with regard to the short term & long-
term impact study.

Analysis of the research findings was done, which led to certain

conclusions and recommendations.

54
 LITERATURE REVIEW

In the present section an attempt has been made to examine the review of literature related to the study.

Bapat, H.B., Soni, V., Joshi, R. (2014) studied the products offering of largest public sector, Life Insurance
Corporation of India and the private sector giant ICICI Prudential Life Insurance Company Limited on the
aspects of applicability of SERQUAL dimensions to current product offering.

Koftgar, S. (2013), has focused on working of insurance players in Indian scenario and comparison in terms
of growth in insurance industry and trend of customers of investing amount in particular plans. Some important
aspects like amount of investment habits change in attitude of customer’s investment, importance given to the
type of business organization are also analysing.

Sharma, V. & Chauhan, D.S. (2013), analysing the performance of public and private sector life insurance
companies in India. Through privatization of the insurance sector is feared to affect the prospects of the LIC,
the study shows the LIC continuous to dominate the sector. Private sector insurance companies also tried to
increase their market shares.

Nena, S. (2013) has highlighted the growth and performance of LIC by analysing the major source of income
(premium earned) of the sampled unit, as well as the significant heads of the study. The study shows consistent
increase in LIC business. As private players are coming up now a day, competition is increasing and LIC has
made efforts to continue its business.

Shashi, P. (2013), has made an effort to know whether the implemented strategies have truly helped LIC of
India in the changing trends of the society and has also suggested how these recent trends have helped LIC of
India as a whole to manage the existing leading position in the Life Insurance market.

Bedi, H. S. and Singh, P. (2011), revealed that there is a tremendous growth in the performance of Indian Life
Insurance Industry and LIC due to the policy of LPG and due to the emergence of private sector and opening
up for foreign players. There is an increasing trend toward the investment in stock- market by LIC due to the
effective regulation of SEBI and increasing transparency of stock-market.

55
 DATA ANALYSIS

INTRODUCTION TO ANALYSIS:

In order to extract meaningful information from the data them. The analysis can be

conducted by using simple statistical tools like percentages, averages and measures of

dispersion. Alternatively the collected data may be analysed collected, the data analysis is

carried out. The data are first edited, coded and tabulated for analysing by using diagrams,

graphs, charts, pictures etc. Data analysis is the process of planning the data in an ordered

form, combining them with the existing information and extracting from them

Interpretation is the process of drawing conclusions from the gathered data in the study. In

this research the researcher has analysed the data using percentages and graphs.

DATA ANALYSIS TOOLS USED:

In this research the data analysis tools used are percentages and graphs. The various

attributes were analysed separately and the importance to each was calculated on the basis

of the percentage. The rank having the maximum percentage was taken to be preferred

importance to the particular attribute.

After looking at each attribute separately, all the attributes were considered together to

develop a map on the most preferred rank for all the attributes.

56
 1. AGE OF RESPONDENTS?

OPTION RESPONSE PERCENTAGE%

Below 20 8 16%

21-30 24 48%

31-40 11 22%

41-50 4 8%

51-60 2 4%

Above 60 1 2%

TOTAL 50 100%

PERCENTAGE%
60%

50%

40%

30%

20%

10%

0%
Below 20 21-30 31-40 41-50 51-60 Above 60

INTERPRETATION
Majority of the insurance holders are belonging to the age group of 21-30 years.

57
 2. Gender of respondents?

OPTION RESPONSE PERCENTAGE%

MALE 38 76%

FEMALE 12 24%

TOTAL 50 100%

PERCENTAGE%
80%

70%

60%

50%

40%

30%

20%

10%

0%
MALE FEMALE

INTERPRETATION
Most of the insurance holders are male people, so we can reach a conclusion that the male people are more
aware about the insurance and its importance.

58
 3. Do you have life insurance policy?

OPTION RESPONSE PERCENTAGE (%)

YES 45 90%

NO 5 10%

TOTAL 50 100%

PERCENTAGE (%)
100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
YES NO

INTERPRETATION
90% of People Are Having Life Insurance Policy.

59
 4. If yes, then in which company?

OPTION RESPONSE PERCENTAGE (%)

LIC 29 58%

HDFC 9 18%

ICICI 7 14%

OTHERS 5 10%

TOTAL 50 100%

PERCENTAGE (%)
70%

60%

50%

40%

30%

20%

10%

0%
LIC HDFC ICICI OTHERS

INTERPRETATION
Out of all the company majority of the people prefer LIC of India.

60
 5. Occupation?

OPTION RESPONSES PERCENTAGE (%)

SERVICE 25 50%

BUSINESS 10 20%

RETIRED 5 10%

OTHERS 10 20%

TOTAL 50 100%

PERCENTAGE (%)
60%

50%

40%

30%

20%

10%

0%
SERVICE BUSINESS RETIRED OTHERS

INTERPRETATION
From the help of given bar graph, we came to know that the majority people have the service occupation
followed by business.

61
 6. Mode of payment of policy holder?

OPTION RESPONSES PERCENTAGE (%)

MONTHLY 25 50%

QUARTERLY 5 10%

HALF-YEARLY 13 26%

YEARLY 7 14%

TOTAL 50 100%

PERCENTAGE (%)
60%

50%

40%

30%

20%

10%

0%
MONTHLY QUARTERLY HALF-YEARLY YEARLY

INTERPRETATION
Most of the policy holder choose the monthly payment option.

62
 7. What is your major reason for opting LIC investment?

OPTION RESPONSES PERCENTAGE (%)

INSURANCE 15 30%

INVESTMENT 35 70%

TOTAL 50 100%

PERCENTAGE (%)
80%

70%

60%

50%

40%

30%

20%

10%

0%
INSURANCE INVESTMENT

INTERPRETATION
From the above bar graph, we came to know that 70% of people choose LIC to investment and following
30%of people choose LIC for insurance purpose.

63
 8. Are you satisfied with services provided by your Insurance Company?

OPTION RESPONSE PERCENTAGE (%)

YES 42 84%

NO 8 16%

TOTAL 50 100%

PERCENTAGE (%)
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
YES NO

INTERPRETATION
84% of the people are satisfied by insurance companies regarding services.

64
 9. According to you, who have played a major role in the field of Life Insurance Company?

OPTION RESPONSE PERCENTAGE (%)

LIC 28 56%

HDFC 10 20%

ICICI 8 16%

OTHERS 4 8%

TOTAL 50 100%

PERCENTAGE (%)
60%

50%

40%

30%

20%

10%

0%
LIC HDFC ICICI OTHERS

INTERPRETATION
56% Of the People Agree That LIC Of India Had Plays Major Role in Life Insurance Policies.

65
 10.Which Insurance companies have been successful to make strong public base by
advertisement?

OPTION RESPONSE PERCENTAGE (%)

LIC 40 80%

HDFC 4 8%

ICICI 3 6%

OTHERS 3 6%

TOTAL 20 100%

PERCENTAGE (%)
90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
LIC HDFC ICICI OTHERS

INTERPRETATION
According to survey LIC of India have been successful to make strong public base by advertisement.

66
 11.Which Insurance Company has gained massive public support in the current fiscal year?

OPTION RESPONSE PERCENTAGE (%)

LIC 28 56%

HDFC 12 24%

ICICI 8 16%

OTHERS 2 4%

TOTAL 50 100%

PERCENTAGE (%)
60%

50%

40%

30%

20%

10%

0%
LIC HDFC ICICI OTHERS

INTERPRETATION
LIC of India has massive public support in the current fiscal year which is 56%.

67
 12.Do you think Insurance Policy is in the direction of public welfare?

OPTION RESPONSE PERCENTAGE (%)

YES 44 88%

NO 6 12%

TOTAL 50 100%

PERCENTAGE (%)
100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
YES NO

INTERPRETATION
88% of people think that Insurance Policy is in the direction of public welfare.

68
 13.Is retirement bond or pension policy launched by the number of private player as well as
public sector Company in the direction of secured old age?

OPTION RESPONSE PERCENTAGE (%)

YES 45 50%

NO 5 10%

Total 50 100%

PERCENTAGE (%)
60%

50%

40%

30%

20%

10%

0%
YES NO

INTERPRETATION
95% of the people agree that retirement bond or pension policy launched by the number of private player as
well as public sector Company in the direction of secured old age.

69
 14.Do you think that risk coverage factor included in Insurance policy attracts general public
towards the policy?

OPTION RESPONSE PERCENTAGE (%)

YES 40 80%

NO 10 20%

TOTAL 50 100%

PERCENTAGE (%)
90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
YES NO

INTERPRETATION
80% of people think that risk coverage factor included in Insurance policy attracts general public towards the
policy.

70
 15. Do you think that the arrival of so many private companies in this insurance sector
envisage a lot of choice to policy holder?

OPTION RESPONSE PERCENTAGE (%)

YES 30 60%

NO 20 40%

TOTAL 50 100%

PERCENTAGE (%)
70%

60%

50%

40%

30%

20%

10%

0%
YES NO

INTERPRETATION
According to survey 60% people think that the arrival of so many private companies in this insurance sector
envisage a lot of choice to policy holder.

71
 16.Do you agree that customer-centricity and transparency are the buzzwords for success in
this evolving industry?

OPTION RESPONSE PERCENTAGE (%)

YES 43 86%

NO 7 14%

TOTAL 50 100%

PERCENTAGE (%)
100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
YES NO

INTERPRETATION
86% OF PEOPLE agree that customer-centricity and transparency are the buzzwords for success in
this evolving industry.

72
 17. Which sector is better to invest in Life Insurance Company?

OPTION RESPONSE PERCENTAGE (%)

PUBLIC SECTOR 35 70%

PRIVATE SECTOR 15 30%

TOTAL 50 100%

PERCENTAGE (%)
80%

70%

60%

50%

40%

30%

20%

10%

0%
PUBLIC SECTOR PRIVATE SECTOR

INTERPRETATION
70% of people think that public Sector Is Better to Invest in Life Insurance Company.

73
 18. Are You Satisfied with The Services of LIC Of India?

OPTION RESPONSE PERCENTAGE (%)

YES 42 84%

NO 8 16%

TOTAL 50 100%

PERCENTAGE (%)
90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
YES NO

INTERPRETATION
The above figure show that the most people with the LIC policy has been satisfied with the services that are
provided by the LIC to his customer

74
 19. Whether you are aware of all details of policy you have from LIC?

OPTION RESPONSE PERCENTAGE (%)

YES 45 90%

NO 5 10%

TOTAL 50 100%

PERCENTAGE (%)
100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
YES NO

INTERPRETATION
In the above figure shows that the 90% of policy holder of the LIC company is aware by the all details,
Schemes and offers given to them by the company.

75
 20. What would you like more in Insurance Policies of LIC of India?

OPTION RESPONSE PERCENTAGE (%)

MORE BENEFITS 25 50%

MORE SECURITY 25 50%

TOTAL 50 100%

PERCENTAGE (%)
60%

50%

40%

30%

20%

10%

0%
MORE BENEFITS MORE SECURITY

INTERPRETATION
The above figure shows that the people who invest in LIC policy has the both interests, as in more benefits
and also, in more security for the policy

76
 21. What Kind of Investment do you prefer?

OPTION RESPONSE PERCENTAGE (%)

SHORT TERM 13 26%

LONG TERM 20 40%

BOTH 17 34%

TOTAL 50 100%

PERCENTAGE (%)
45%

40%

35%

30%

25%

20%

15%

10%

5%

0%
SHORT TERM LONG TERM BOTH

INTERPRETATION
As shown in the figure the people who invest their money in LIC company has prefer to the long-term
investment as LIC has the more returns in the long-term policy. After long term the people go for the both
short term as well as long term.

77
 22. If you buy a new policy would you like to go for LIC?

OPTION RESPONSE PERCENTAGE (%)

YES 35 70%

NO 15 30%

TOTAL 50 100%

PERCENTAGE (%)
80%

70%

60%

50%

40%

30%

20%

10%

0%
YES NO

INTERPRETATION
The figure shows that the if the exciting policy holder of the LIC goes for the new policy then most of them
will choose the LIC company to invest again and few will go in other company

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 23. The decision to purchase life insurance policies is very important?

OPTION RESPONSE PERCENTAGE (%)

STRONGLY AGREE 22 44%

AGREE 18 36%

NOT DECIDED 8 16%

DISAGREE 2 4%

STRONGLY DISAGREE 0 0%

TOTAL 50 100%

PERCENTAGE (%)
50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%
STRONGLY AGREE AGREE NOT DECIDED DISAGREE STRONGLY DISAGREE

INTERPRETATION
From the above bar graph, we came to know that 44% of people are strongly agree and 36% of people are
agree while 16% of people yet not decided that the purchasing of live insurance policy is important.

79
 24.Do you think that risk coverage is equally important as return from your investment?

OPTION RESPONSE PERCENTAGE%

YES 35 70%

NO 15 30%

TOTAL 50 100%

PERCENTAGE%
80%

70%

60%

50%

40%

30%

20%

10%

0%
YES NO

INTERPRETATION
From the survey we came to know that 70% of people think that the risk coverage is equally important as
much as return from the investment

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 25. What is Overall perception about LIC of India

OPTION RESPONSE PERCENTAGE%

POSITIVE 45 90%

NEGATIVE 5 10%

TOTAL 50 100%

PERCENTAGE%
100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
POSITIVE NEGATIVE

INTERPRETATION

From the given information we came to know that 90% of people says that their overall perception is positive
about LIC of India.

81
 CONCLUSION

After overhauling the all situation that boosted a number of Pvt. Companies associated with
multinational in the Insurance Sector to give befitting competition to the established behemoth LIC in public
sector, we come at the conclusion that :
1) There is very tough competition among the private insurance companies on the level of new trend of
advertising to lull a major part of Customers.
2) LIC is not left behind in the present race of advertisement.
3) The entry of the Pvt. Players in the Insurance Sector has expanded the product segment to meet the different
level of the requirement of the customers. It has brought about greater choice to the customers.
4) Private insurers have restricted reach to the customers
5) LIC has vast market and very firm grip on its traditional customers and monopoly of life insurance products.
6) Bank assurance - that allows life insurers to leverage on the risk product through bank network, was adopted
by private players.

But LIC was also not left behind as picking up majority stake in the corporation Bank and large equity
stake in the Oriental Bank of Commerce. IRDA is also playing very comprehensive role by regulating norms
mandating to private players in this sector, that increases the confidence level of the customers to the private
players.

After Finding’s we can see about LIC features and his The tendency to take the expedient approach
and focus on the far right of the LIC spectrum, Peacetime Contingency Operations and conduct training as
usual, while briefing that the LIC block has been checked, will lead us to a possibly fatal false sense of security.
The probability of becoming involved in a LIC operation is high. The potential to attract international attention,
even with limited forces, is also great. Units have demonstrated that with a balanced training focus and proper
preparation, many pitfalls outlined above can be avoided.

Therefore, the counterinsurgent must also focus on the population to be successful. In terms of military
principles in counterinsurgency, doctrinal precision, professionalism, independence, initiative, force precision,
restraint, combined arms, precision engagement, joint force, effective population based intelligence, integrated
communications, a civil affairs approach and high levels of training are critical.

82
 SUGGESTION

 Product innovation has very important role in expansion of life insurance. New products have been
introduced in the post liberalisation period. However, there is a need to develop products
commensurate with the requirements various market segments. Product innovation matching to the
risk profile of the customers is needed. In this regard insurance products catering to the need of living
too long becomes important as there is an increase in the life span. Pension plans have an important
role.

 There is a need for utmost transparency in the sale of life insurance products. Transparency implies
that the prospective customer should be given full, adequate, and comparable, information about the
product with reference to rates, terms and conditions, risks involved etc. The policyholder should feel
confident that he/she is given complete information about the product. Transparency is not only a
necessary condition but also essential for ensuring fair treatment to the policyholders by insurers.
Insurers and intermediaries have a responsibility of ensuring high persistency ratio.

 Financial impact of lapsation is significant for all stakeholders. Policyholder not only has to suffer
from forfeiture of premium paid but also loss of protection. For insurers the cost of acquisition is not
fully recovered. For intermediaries it means loss of renewal commission. Insurer as the business owner
is in better position to control lapsation and, thereby improve persistency. Product designs, servicing
of policy, economic environment and distribution channels have impact on persistency. Persistency of
life insurance policies can be increased by ensuring that servicing of policies by agents is sustained
and is with a long-term objective of serving the policyholder and not driven by an objective of just
pushing sales.

 The slowdown during the last two years of the study in the life insurance sector needs to be addressed
urgently. In this respect one can quote, CII and Ernst & Young Report (2010), which states that the
growth potential and opportunities for Indian insurance industry is vast.

83
 Insurance is sold and not purchased. Most of customers purchase life insurance as an investment for
tax planning. The Government may think of Special Tax Benefits for insurance products to encourage
purchase of insurance.

 Even after a decade of liberalisation the private players have not been able to gain a respectable market
share. The LIC of India is found to be way ahead of its competitors. Private insurers need to work hard
to expand their business.

 There are no additions to the number of insurers since October 2011. It is necessary to create conducive
conditions to attract new insurers.

 Life insurance savings have a share of 19.8% in the financial assets of the households in the year 2011-
12. There is a need to improve the relative position of life insurance in the financial assets held by the
house hold sector. Insurers need to work at making insurance products relatively attractive and
improving yield.

 Focusing on rural market can contribute to increase in insurance density and insurance penetration.
Tailor made products satisfying the requirements of rural population as well as cost effective
distribution of insurance products is crucial in this respect. Micro Insurance Obligations of IRDA have
been quite effective in expanding coverage of insurance to the severely under-penetrated rural and low-
income segments. However, looking at the unattended need for insurance among low-income and rural
segments, there is an urgent need for further expansion. Compared to individual insurance, group
insurance is extremely inexpensive owing to low cost of distribution, far lower overhead costs due to
issue of a single policy for the whole group, easy underwriting norms and support of nodal agency in
remittance of premium, filing claims, etc. Group insurance may be encouraged. Insurers can benefit
by deploying latest technology.

84
 QUESTIONNAIRE

A STUDY CONDUCTED TO UNDERSTAND THE ROLE OF LIC COMMPANY IN

INDIAN INSURANCE SECTOR.

1. Age of respondents?

a) Below 30
b) 21-30
c) 31-40
d) 41-50
e) 51-60
f) Above 60

2. Gender of respondents?

a) Male
b) Female

3. Do you have life insurance policy?

a) Yes
b) No

4. If yes, then in which company?

a) LIC
b) HDFC
c) ICICI
d) OTHERS

5. Occupation

a) Services
b) Business
c) Retired
d) Others

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6. Mode of payment of policy holder?

a) Monthly
b) Quarterly
c) Half-yearly
d) Yearly

7. What is your major reason for opting LIC investment?

a) Insurance
b) Investment

8. Are you satisfied with services provided by your Insurance Company?

a) Yes
b) No

9. According to you, who have played a major role in the field of Life Insurance Company?

a) LIC
b) HDFC
c) ICICI
d) OTHERS

10. Which Insurance companies have been successful to make strong public base by advertisement?

a) LIC
b) HDFC
c) ICICI
d) OTHERS

86
11. Which Insurance Company has gained massive public support in the current fiscal year?

a) LIC
b) HDFC
c) ICICI
d) OTHERS

12. Do you think Insurance Policy is in the direction of public welfare?

a) Yes
b) No

13. Is retirement bond or pension policy launched by the number of private player as well as public sector
Company in the direction of secured old age?

a) Yes
b) No

14. Do you think that risk coverage factor included in Insurance policy attracts general public towards the
policy?

a) Yes
b) No

15. Do you think that the arrival of so many private companies in this insurance sector envisage a lot of
choice to policy holder?

a) Yes
b) No

87
16. Do you think that the arrival of so many private companies in this insurance sector envisage a lot of
choice to policy holder?

a) Yes
b) No

17. Which sector is better to invest in Life Insurance Company?

a) Public sector
b) Private sector

18. Are you satisfied with the services of LIC of INDIA?

a) Yes
b) No

19. Whether you are aware of all details of policy you have from LIC?

a) Yes
b) No

20. What would you like more in Insurance Policies of LIC of India?

a) More benefit
b) More security

21. What kind of Investment do you prefer?

a) Short term
b) Long term
c) Both

88
22. If you buy a new policy would you like to go for LIC?

a) Yes
b) No

23. The decision to purchase life insurance policies is very important?

a) Strongly Agree
b) Agree
c) Not Decided
d) Disagree
e) Strongly Disagree

24. Do you think that risk coverage is equally important as return from your investment?

a) Yes
b) No

25. What is overall perception about LIC of India?

a) Positive
b) Negative

89
 BIBLIOGRAPHY

Magazine

 Yogism – LIC OF INDIA Magazine

 Outlook Express
 Business today
 Finance & Banking
 Money Outlook

News Paper

 Business standard
 Times of India
 Economic times
 Hindustan times

WEBLIOGRAPHY

 www.bloomberg.com

 www.moneycontrol.com

 www.allbankingsolution.com

 www.scribd .com

 www.rbi.org

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