INTRODUCTION

1.1 HOME LOAN

A home loan requires a home loan applicant to pledge his/her home as the lender's security for repayment of his/her loan. The lender agrees to hold the title or deed to the applicants property until he/she has paid back the loan plus interest amount.

1.2 NEED FOR HOUSING FINANCE

Housing is one of the basic needs of mankind in terms of safety, security, self-esteem, social status, cultural identity, satisfaction and achievement. It is fundamental requirement both for human existence and settlement. Housing contributes effectively in fixed capital formation as well as creation of productive employment. It plays an important role in countrys economy, typically accounting for around 10 to 20 per cent of total economic activity. It has been estimated that there are around 600 other industries that have links to the housing markets. A stimulus to the demand for housing will have a direct or indirect stimulatory impact on all of these industries. For every rupee invested in India, INR 0.78 is added to the gross domestic product. Since independence, growth in the Indian population has aggravated the problem of housing for Indian citizens. According to the population census of 2001, out of the total population 1027 million about 742 million live in rural areas and 285 million live in urban areas. Urban population is accounted as 27.8% to the total population whereas it was 25.7% under 1991 census. So there is rise of 2.1% in the urbanization of Indian population. This has also brought along with it disproportionately higher demand for housing be it for upper class, middle class and for low income category of population. Despite the growth of housing markets in India, for example, the current housing shortage was estimated to be over 22 million dwelling units between 2002 and 2007. The provision of finance for the purchase of residential housing is, or should be, an important part of any societys financial structure. Compared to a households average income, the purchase of a housing unit is a large investment in many cases it is in fact a households biggest lifetime investment. The question of how to finance this investment is therefore a crucial one. Efficient housing for residential housing can encourage a better matching of households preferences for housing with the available and potential supply of housing, thereby

improving social welfare. A well-functioning housing finance system typically has a catalytic impact on banking activities that link long-term investors with residential mortgage consumers credit.

1.3 HOUSING FINANCE: A CHANGED SCENARIO

Traditionally in India, most people used to depend on their savings while considering buying a home. Provident fund and gratuity amounts received after retirement were the major sources of finance for employed or retired people looking for owning houses. However, with the emergence of housing finance as a major business in the country, an increasingly large number of people are going in for home loans. Earlier it was considered socially unviable to borrow funds. Theres been an evident shift in perception and mindset in the Indian middle class over the last 5 to 10 years, thanks to the impact of liberalization and opening up of the Indian economy, a rise in the average income across households, and a palpable desire to own things now. The present generation is more ambitious than the previous ones cannot be disrupted. Perhaps, it is that ambition which drives young people to buy a house, here is sea change in the Indian families. Indians are shifting from joint family concept to nuclear family concept. Incomes of families are rising and their purchasing capacities as well as loan repaying capacities are going up. Earlier a large number of borrowers used to be in their late 30s or early 40s but today greater numbers of borrowers are in their mid 30s. This change eventually brings more demand for housing finance. These projections suggest that demographic growth in Indias large cities will be high, partly due to population growth and partly due to immigration. These are some of the indications that signal bright future of housing finance industry which is currently facing tough times due to the ongoing economic recession.The major focus of government policies until 1970 was on agriculture and industry and housing was not the priority sector. In the 1970s, a network of housing boards at state level was incorporated with the Housing Urban Development Corporation (HUDCO) acting as an apex body, providing finance and technical support to these boards. After the initiation of the liberalization process in India, the government ha taken number of measures to promote housing from the formal sector and share the task of providing housing finance with the private sector. Incorporation of National Housing Bank (NHB) in the year 1987 as the controlling body to formalize housing finance was

one of the remarkable steps in this direction. Housing finance has emerged as a growth sector these days expected to grow at a phenomenal 39% PA. As per the estimates of NHB housing finance market was 45000 crores during the year 2003-04 and had reached at more than 80,000 crores till the end of 2006. Banks and financial institutions have brought sea changes in their strategies and there is clear shift from sellers market to buyers market. Liberal tax incentives by the government coupled with low and competitive interest rates has made this sector a high growth sector. Institutional growth of housing finance and development corporation (hdfc) and housing and urban development corporation (hudco) has encouraged the private sector banks to enter in to the home loan segment. This has resulted in increase of competitive dynamism among the different players of housing finance. Banks and other housing finance companies are offering attractive loans schemes with so many lucrative add-ons to the customers. Main features of these loan schemes are consumer flexibility, adjustable rate plans, lower processing fees, low Equated Monthly Installments (EMI), lower margin money, no prepayment penalty etc. many of the players of housing finance have offered some add-ons with their loans such as life insurance, credit cards and consumer loans. Some of the players have offered tailor made loan schemes for repair, renovation, extension, conversion, improvement, painting, plumbing etc.

1.4 HOUSING FINANCE COMPANIES THAT PROVIDE HOME LOANS AS WELL AS HOME INSURANCE IN INDIA
1. ABN-Amro 2. Bank of India 3. Canara Bank 4. Federal Bank 5. GIC Housing Finance 6. HDFC Bank 7. HSBC 8. IDBI 9. ICICI 10. Indian Bank

11. Kotak Mahindra Bank 12. LIC Housing Finance 13. Punjab National Bank 14. Standard Chartered Bank 15. State Bank of India 16. State Bank of Travencore 17. Sundaram Home Finance

1.5 New entrants

Despite the gloom in the real estate market, big corporate houses such as the Tatas and Anil Ambanis Reliance group are planning to enter in to the housing finance segment. Both the groups are already present in the segment through Tata Housing and Reliance Capital and are in the process of setting up separate housing finance companies (HFCs) to expand their operations. While Reliance Home Finance have received an approval from the National Housing Bank (NHB) last week on the other hand Tatas application to register Tata Capital Housing Finance is being scrutinised by the NHB. Religare, the financial services group of the former Ranbaxy promoters, is another national player that has shown interest for entering into the housing finance segment. The company has recently bid to acquire the home finance division of IDBI Bank. The growing interest among the companies to tap the housing finance market is an indication of its potential, S Sridhar, chairman and managing director, NHB. The governments recent financial stimulus package, which classified loans granted by banks to HFCs for lending to individuals for purchase or construction under the priority sector, is considered to be one of the major factors which has raised corporate interest in this segment. The refinancing window offered by the regulator to HFCs has made fundraising easier and cheaper for such companies.

1.6 HOME LOAN TYPES

There are many home loans provider in India. But before anyone opts for any home loan provider, we need to consider certain factors related to property that we are interested in buying and also about the salient features offered by a home loan provider and also study some Home Loans and Home Insurance FAQs which help in applying for a Home Loan in India. The most important thing is that we should know about each and every term related with Home Loans before applying for a Loan. It is advisable that we consult a home loan expert or consultant before applying for a home loan or purchasing a new property. We can take different types of home loans like Bridge Loans, Home construction Loans, Home Equity Loans, Home Extension Loans, Home Improvement Loans, Land Purchase Loans etc different schemes are available in the market for each of these types of loans. There are different types of home loans tailored to meet a customers needs. These are:

Home Purchase Loans: These are the most basic forms of loans used for purchasing of a new home.

Home Improvement Loans: These loans are given for implementing repair works, and renovations in a home that is already owned by the loan takers.

Home Construction Loans: These are the loans which are available for the construction of a new home.

Home Extension Loans: These are the loans which are given for expanding or extending an existing home i.e. adding a new room.

Home Conversion Loans: These loans are available for those who have financed the present home with a home loan and wish to purchase and move to another home for which some extra funds are required. Through home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need of pre-payment of the previous loan.

Land Purchase Loans: These are the loans are available for purchasing land for both construction and investment purposes.

Bridge Loans: Bridge loans are designed for people who wish to sell the existing home and purchase another one. The bridge loans help finance new home, until a buyer is found for the existing home.

1.7 DOCUMENTATION REQUIRED WHILE APPLYING FOR A HOMELOAN

While submitting the application form for a home loan, lenders ask for documents to establish the applicants income. This is backed up by a proof like copies of last three years INCOME TAX returns (along with the copies of computation of income/annual accounts, if any), Form 16 or Form 16A, last three month's salary slips of the applicant, copies of the last 6 month's statements of all active bank accounts in which applicants salary or business income details are reflected, etc.

For self-employed people, if the income has increased dramatically in the past year, it is advisable that the applicant should have his/her explanation ready as to why they think this is a permanent increase in their income, rather than just a one-time aberration which may decrease in near future. The reason for this is that if the lender is convinced with the applicants explanation, then the loan eligibility can be considered in relation to the latest income rather than considering the much lower average income. For salaried employees, if the income has increased since the last financial year as shown in their latest salary slips, such increased salary is taken into account for loan eligibility purposes.

APPLICANTS BANK STATEMENTS ARE SCRUTINISED FOR THEFOLLOWING:

Level of activity: In case of self employed people, this gives a good idea about the extent of his or her business activities. Average bank balance: A look at the average bank balances maintained in a savings bank account speaks a lot about the spending or saving habits of an individual.

Cheque returns: A small charge debited by the applicants bank in the statement indicates that a cheque issued by him or her was returned by the bank. Too many of such returns can have a negative impact on a loan sanction. Cheque bounces: If cheques deposited by the applicants are returned by the issuer's bank, they will be visible in the bank statement. All Banks have specific norms as to how many such returns are acceptable in a period of 1 year. Periodic payments: The existence of periodic payments to other finance companies or bank etc indicates an existing liability and the applicant will needs to provide full details of these liabilities to the lender. Age proof: Applicants age proof have to be submitted such as school leaving certificate/driving license/passport/ration card/PAN card/election commission's card/etc. Address proof: Similar documents. Identification proof: Same as above, but with photographs. Sometimes, the same document, if it contains a photograph, the current residential address and the correct age can be proof for all 3 things. Applicants employment details: If the applicants employer is not well-known, then a short summary about the nature of the company, its business lines, its main customers, its competitors, number of offices, number of employees, turnover, profit, etc is needed. Usually, the company profile that is available on the standard website of the company is enough. Applicants investments: This helps the bank to estimate the applicants ability to pay the down payment as well as his or her saving habits.

1.8 EMI
It is a short form used for Equated Monthly Installment. This is an amount which is paid by the borrower to the lender every month.

HOW IS IT CALCULATED

EMI includes two components principal and interest. During the initial period of a loan, the EMI has a larger component of interest as compared to the principal. But during later stages of the loan repayment period, the EMI has a large portion of principal as compared to the interest. Each EMI that an applicant pays consists of two components i.e. Interest on the outstanding amount of the loan taken, and repayment of principal. With each EMI payment, the applicant pays back some of the loan in the form of repayment of principal amount. As a result, with each EMI payment, the interest component in the subsequent EMI decreases and the principal repayment component increases. At the beginning of the repayment schedule, the interest component is much higher than the principal repayment component in an EMI. Over the years, as the applicant repays some principal with each EMI, the interest component decreases, and the principal repayment component increases. Towards the end of the home loan repayment schedule, the principal repayment component is far higher than the interest component in the EMI.

LIFE INSURANCE CORPORATION LIMITED

2.1 History of LIC
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 sub-standard lives and heavy extra premiums were being charged 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 into 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 Co-operative Assurance at Lahore were established in 1906. In 1907, Hindustan Co-operative Insurance Company took its birth in one of the rooms of the Jorasanko, 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 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 Act on the 19th of June 1956, and the Life Insurance Corporation of India was created on 1st 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. 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-organisation 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-organisation 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, 109 divisional offices, 8 zonal offices, 992 satellite offices and the Corporate office. LICs Wide Area Network covers 109 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-line premium collection facility in selected cities. LICs 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 15th 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.

JEEVAN SARAL

Product Summary:
This is an Endowment Assurance plan where the proposer has simply to choose the amount and mode of premium payment. The plan provides financial protection against death throughout the term of the plan. The death benefit is directly related to the premiums paid. The Maturity Sum Assured depends on the age at entry of the life to be assured and is payable on survival to the end of the policy term. It also offers the flexibility of term and a lot of liquidity.

Premiums:
Premiums are payable yearly, half-yearly, quarterly, or monthly through salary deductions as opted by you throughout the term of the policy or till earlier death.

Loyalty Additions:
This is a with-profits plan and participates in the profits of the Corporations life insurance business. It gets a share of the profits in the form of loyalty additions which are terminal bonuses payable along with death benefit or maturity benefit. Loyalty Additions may be payable from the 10th year onwards depending upon the experience of the Corporation.

BENEFITS
Death Benefit: 250 times the monthly premium together with loyalty additions, if any, and return of premiums excluding first year premiums and extra/rider premium, if any, is payable in lump sum on death of the life assured during the term of the policy. Maturity Benefit: The Maturity Sum Assured plus Loyalty additions, if any, is payable in a lump sum. 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 values are available on earlier termination of the contract. The surrender value will be the greater of the guaranteed surrender value and special surrender. The plan also allows for partial surrenders. Guaranteed Surrender Value: The policy can be surrendered after it has been in force for at least 3 full years. The Guaranteed Surrender value will be equal to 30% of the total amount of premiums paid excluding the premiums for the first year and all the extra premiums and premiums for accident benefit / term rider.

Special Surrender Value: 80% of Maturity Sum Assured if 3 or more years but less than 4 years premiums have been paid; 90% of the Maturity Sum Assured, if 4 or more years but less than 5 years premiums have been paid and 100% of the Maturity Sum Assured, if 5 or more years premiums have been paid. The Maturity Sum Assured for this para will be the Maturity Sum Assured corresponding to the term for which premiums have been paid under the policy.

Corporations policy on surrenders:

In practice, the Corporation will pay a Special Surrender Value which is usually higher than the Guaranteed Surrender Value. 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. The Corporation reviews the surrender value payable under its plans from time to time depending on the economic environment, experience and other factors.
JEEVAN TARANG

Introduction: This is a with-profits whole of life plan which provides for annual survival benefit at a rate of 5 % of the Sum Assured after the chosen Accumulation Period. The vested bonuses in a lump sum are payable on survival to the end of the Accumulation Period or on earlier death. Further, the Sum Assured, along with Loyalty Additions, if any, is payable on survival to age 100 years or on earlier death. Accumulation Period : The plan offers three Accumulation periods 10, 15 and 20 years. A proposer may choose any of them.

Payment of Premium: Premiums can be paid regularly at yearly, half-yearly, quarterly or monthly intervals or through salary deductions over the Accumulation Period. Alternatively, a Single Premium can be paid on commencement of a policy. Sample Premium Rates: The tables below provide tabular premiums for various age-term combinations for Rs. 1000/- Sum Assured. Regular premiums Accumulation period Age Up to 40 years 41 to 45 years 46 to 50 years 51 to 55 years 56 to 60 years 10 years 109.10 109.10 109.10 111.80 116.60 15 years 71.40 71.40 73.80 77.90 20 years 51.50 53.40 56.60 -

Single premiums Accumulation period Age Up to 46 years 47 years 48 years 49 years 50 years 51 to 55 years 56 to 60 years 10 years 756.00 756.00 756.00 756.00 756.00 756.00 756.00 15 years 644.00 644.00 644.00 644.00 644.00 644.00 20 years 548.00 549.00 552.00 555.20 558.90 -

Participation in Profits: Policies under this plan shall participate in profits of the Corporation. During the accumulation period policies shall be entitled to receive simple reversionary bonuses which will be payable on survival to the end of the accumulation period or on earlier death. After the accumulation period, policies will be entitled to receive a Loyalty Addition payable on maturity or earlier death. The amount of simple reversionary bonus and Loyalty Addition will depend on the experience of the Corporation.

Benefits Survival Benefits:

On survival to the end of the selected accumulation period: Vested reversionary bonuses in a lump sum will be payable.

On survival to the end of each year after the accumulation period: 5% of the Sum Assured will be payable. The first survival benefit will be payable on survival to one year after the end of the accumulation period.

Maturity Benefit: On survival to the policy anniversary coinciding with or immediately following the completion of age 100 years, the Sum Assured along with Loyalty Addition, if any, will be payable. Death Benefit: In case of death of the Life Assured during the Accumulation Period, the Sum Assured along with vested reversionary bonuses is payable.

In case of death of the Life Assured any time after the Accumulation Period, the Sum Assured along with Loyalty Addition, if any is payable.

OPTIONAL RIDERS AVAILABLE DURING THE ACCUMULATION PERIOD: Accident Benefit Rider Option (Allowed for Regular Premium policies only): Accident Benefit Option will be available under the plan by the payment of additional premium. Accident Benefit Rider shall be available for an amount not exceeding the Sum Assured under the basic plan subject to overall limit of Rs.50 lakh taking all existing policies of the life assured under individual as well as group schemes taken with Life Insurance Corporation of India and other insurance companies and the Accident Benefit Rider Sum Assured under the new proposal into consideration.

This benefit is available under Regular Premium policies only and it is not available under single 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 monthly instalments spread over 10 years or upto death or maturity, if earlier, and all future premiums under the policy will be waived. The disability due to accident should be total and such that the life assured is unable to carry out any work to earn the living. Following disabilities due to accidents are covered: i) ii) iii) iv) irrevocable loss of the entire sight of both eyes or amputation of both hands at or above the wrists or amputation of both feet at or above ankles or amputation of one hand at or above the wrist and one foot at or above the ankle. No benefit will be paid if accidental death or disability arises due to accident in case of: i) intentional self-injury, attempted suicide, insanity or immorality of the life assured is under the influence of intoxicating liquor, drug or narcotic ii) engagement in aviation or aeronautics other than that of a passenger in any aircraft iii) injuries resulting from riots, civil commotion, rebellion, war, invasion, hunting, mountaineering, steeple chasing or racing of any kind. iv) accident resulting from committing any breach of law

v)

accident arising from employment in armed forces or military services or police organisation.

Other riders available under this plan are: Term Assurance Rider Option Critical Illness Rider Option

All three optional rider benefits mentioned above shall be available during accumulation period only. PAID-UP VALUE: If after at least three full years' premiums have been paid and any subsequent premium be not duly paid, this policy shall not be wholly void, but shall subsist as a paid-up policy for an amount equal to the paid-up value. The paid-up value as shall bear the same ratio to the full Sum Assured as the number of premiums actually paid shall bear to the total number of premiums originally stipulated in the policy. The policy so reduced shall thereafter be free from all liabilities for payment of the within mentioned premium, but shall not be entitled to the future bonuses. The existing vested reversionary bonuses, if any, shall remain attached to a paid-up policy. This paid up value along with the vested reversionary bonuses shall be payable on the survival of the Life Assured to the end of the Accumulation Period or on his/her prior death. No survival benefit shall be payable under paid up policies. These provisions do not apply to the Accident Benefit, Term Assurance and Critical Illness rider options, as these riders do not acquire any paid-up value. GUARANTEED SURRENDER VALUE: During Accumulation Period:

For Single Premium policies After completion of at least one policy year, 90% of the Single Premium received, excluding premiums for optional riders and extras, if any, will be payable. The cash value of any vested reversionary bonuses, if any, will also be payable This is irrespective of the age of the Life Assured. For Regular Premium policies After completion of at least three policy years and at least three full years premiums have been paid, 30% of the total amount of premiums paid excluding the premiums for the first year and all premiums in respect of optional benefits and extras will be payable. However, if the age at entry of the Life Assured is less than or equal to 12 years, the guaranteed surrender value will be equal to Before commencement of risk: 90% of the total amount of premiums (excluding premiums paid for the first year and any extras) paid. After commencement of risk: 90% of the total premiums (excluding premium for the first year and any extras) paid before commencement of risk and 30% of premiums paid (excluding any extras) after the commencement of risk. Premiums for Accident Benefit rider cover, Term Assurance rider cover and Critical Illness rider cover will be excluded. The cash value of any vested reversionary bonuses, if any, will also be payable. After Accumulation Period: This will be 85% of the Basic Sum Assured.

OTHER BENEFITS: Loan: Loan facility is available under this plan. However, the rate of interest would be determined from time to time by the Corporation. Presently the rate of interest is 9 % pa payable half-yearly.

Grace period: A grace period of one month but not less than 30 days will be allowed for payment of yearly, half-yearly or quarterly premiums and 15 days for monthly premiums.

Cooling-off period: If you are not satisfied with the terms and conditions of the policy, you may return the policy to us within 15 days.

Revival: Subject to satisfactory evidence of continued insurability, a lapsed policy can be revived during the lifetime of the Life Assured but before the expiry of the Accumulation Period within a period of five years from the due date of first unpaid premium by paying arrears of premium together with interest. The rate of interest applicable will be as fixed by the Corporation from time to time.

ELIGIBILITY CONDITIONS FOR THIS PLAN: Ages at entry: 0 to 60 years nearest birthday Accumulation periods available: 10, 15 and 20 years Maximum age at which premium payment ceases: 70 years nearest birthday Age up to which life cover available: 100 years Minimum age at end of Accumulation Period: 18 years last birthday Premium paying terms: Single Premium and, in case of regular premiums, equal to the accumulation period, i.e. 10, 15 and 20 years. Modes of premium payment: Yearly, Half Yearly, Quarterly, Monthly, SSS and Single Premium Sum Assured: Rs.1 lakh and over in multiples of Rs.5,000/-. ELIGIBILITY CONDITIONS FOR ACCIDENT BENEFIT RIDER (Allowed under Regular Premium policies only):

Ages at entry:18 to 60 years nearest birthday Maximum age at which premium payment ceases: 70 years nearest birthday Age up to which life cover available: 70 years Minimum age at end of Accumulation Period: 18 years last birthday Premium paying terms: Equal to the accumulation period, i.e. 10, 15 and 20 years Modes of premium payment: Yearly, Half Yearly, Quarterly, Monthly, SSS and Single premium Sum Assured: Rs.25,000 to Rs.50 lakh, considering all Accident Benefit Sums Assured under individual and group policies and Accident Benefit Rider Sum Assured under new proposals into consideration. The Sum Assured can be in multiples of Rs.5,000/-. Availability of Rider: During the chosen Accumulation Period. REBATES/EXTRA FOR MODE OF PREMIUM PAYMENT AND HIGH SUM ASSURED: Mode Rebate:

Yearly mode: 2% of tabular Premium Half-yearly mode: 1% of the tabular premium Quarterly: NIL

In case of monthly mode other than SSS, an additional amount of 5% of tabular premium will be charged. High Sum Assured Rebates:

For Annual premium Rs.1.25%o Sum Assured for Sum Assured Rs 2 lakh and over; Rs. 2.25%o Sum Assured for Sum Assured Rs 5 lakh and over. For Single premium Rs.7.50%o Sum Assured for Sum Assured Rs 2 lakh and over; Rs.12.50%o Sum Assured for Sum Assured Rs 5 lakh and over. EXCLUSIONS: This policy shall be void if the Life Assured commits suicide (whether sane or insane at the time) at any time on or after the date on which the risk under the policy has commenced but before the expiry of one year from the date of commencement of risk under the policy and the Corporation will not entertain any claim by virtue of this Policy except to the extent of a third party's bonafide beneficial interest acquired in the policy for valuable consideration of which notice has been given in writing to the office to which premiums under this policy were paid last, at least one calendar month prior to death.

JEEVAN ANURAG

LICs Jeevan ANURAG is a with profits plan specifically designed to take care of the educational needs of children. The plan can be taken by a parent on his or her own life. Benefits under the plan are payable at prespecified durations irrespective of whether the Life Assured survives to the end of the policy term or dies during the term of the policy. In addition, this plan also provides for an immediate payment of Basic Sum Assured amount on death of the Life Assured during the term of the policy. Assured Benefit Payment of 20% of the Basic Sum Assured at the start of every year during last 3 policy years before maturity. At maturity, 40% of the Basic Sum Assured along with reversionary bonuses declared from time to time on full Sum Assured for the full term and the Terminal bonus, if any shall be payable. For example, if term of the policy is 20 years, 20% of the Sum assured will be payable at the end of the 17th,18th, 19th year and 40% of the Sum Assured along with the reversionary bonuses and the terminal bonus, if any, at the end of the 20th year. Death Benefit Payment of an amount equal to Sum Assured under the basic plan immediately on the death of the life assured.

JEEVAN ANAND

Product Summary: This plan is a combination of Endowment Assurance and Whole Life plans. It provides financial protection against death throughout the lifetime of the life assured with the provision of payment of a lump sum at the end of the selected term in case of his survival. Premium: Premiums are payable yearly, half-yearly, quarterly, monthly or through salary deductions as opted by you throughout the selected term of the policy or till earlier death. Bonuses: This is a with-profit plan and participates in the profits of the Corporations life insurance business. It gets a share of the profits in the form of bonuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year. Once declared, they form part of the guaranteed benefits of the plan. Bonuses will be added during the selected term or till death, if it occurs earlier. Final (Additional) Bonus may also be payable provided the policy has run for certain minimum period.

2.2 Products Offered by LIC Individual Plans

2.3 INCOME-TAX AND TAX BENEFITS FROM LIFE INSURANCE A] INCOME-TAX RATES FOR ASSESSMENT YEAR 2011-2012 (FINANCIAL YEAR 2010-2011) Tax Income Slabs Individual & HUF Woman below age of Individual above age below age of 65 65 years years Income Rs.1,60,000 Rs.1,60,001 Rs.5,00,000 Rs.5,00,001 Rs.8,00,000 Above Rs.8,00,001 to upto Income Rs.1,90,000 to Rs.1,90,001 Rs.5,00,000 Rs.5,00,001 Rs.8,00,000 Above Rs.8,00,001 to upto Income Rs.2,40,000 to Rs.2,40,001 Rs.5,00,000 Rs.5,00,001 Rs.8,00,000 Above Rs.8,00,001 30% to 20% to 10% upto NIL of 65 years Rates

Education Cess : An additional surcharge called as Education Cess is levied at the rate of 2% on the amount of Income tax and surcharge (if any) in all cases shall be levied.

Secondary and Higher : An additional surcharge, called the "Secondary and Higher Education Cess on income- at the rate of 1% of income-tax and surcharge (not including the Education Cess on Income-tax) in all cases shall be levied.

B] SOME IMPORTANT INCOME TAX BENEFITS AVAILABLE UNDER VARIOUS PLANS OF LIFE INSURANCE ARE HIGHLIGHTED BELOW: 1) Deduction allowable from Income for payment of Life Insurance Premium (Sec. 80C). (a) Life Insurance premium paid in order to effect or to keep in force an insurance on the life of the assessee or on the life of the spouse or any child of assessee & in the case of HUF, premium paid on the life of any member thereof, deduction allowed upto 20% of capital sum assured during any financial year. (b) Contribution to deferred annuity Plans in order to effect or to keep in force a contract for deferred annuity, on his own life or the life of his spouse or any child of such individual, 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 - New Jeevan Dhara-I & Jeevan Akshaya - VI 2) Jeevan Nidhi Plan & New Jeevan Suraksha - I Plan (U/s. 80CCC) A deduction to an individual for any amount paid or deposited by him from his taxable income in the above annuity plans for receiving pension (from the fund set up by the Corporation under the Pension Scheme) is allowed. NOTE: The premium can be paid upto Rs.1,00,000/- to avail deduction u/s.80C, 80CCC & 80CCD (80CCD- Deduction in respect of contribution to pension scheme of Central Government.). However, there is no sectoral cap i.e. the limit of Rs.1,00,000/- can be exhausted by paying premium under any of the said sections. 3) Investment under long-term infrastructure bonds notified by the Central Government. (Sec. 80CCF)

A deduction up to Rs. 20000/- is available to individuals and HUF for amount paid or deposited as subscription to long-term infrastructure bonds notified by the Central Government. This is in addition to Rs. ! lakh deduction available under section 80C. 3) Deduction under section 80D 1. Deduction allowable upto Rs.15,000/- if an amount is paid to keep in force an insurance on health of assessee or his family (i.e. Spouse & children) 2. Additional deduction upto Rs.15,000/- if an amount is paid to keep in force an insurance on health of parents 3. In case of HUF, deduction allowable upto Rs.15,000/- if an amount is paid to keep in force an insurance on health of any member of that HUF Note: If the sum specified in (a) or (b) or (c) is paid to effect or keep in force an insurance on the health of any person specified therein who is a senior citizen, then the deduction available will be upto Rs.20,000/-. provided that such insurance is in accordance with the scheme framed by a) the General Insurance Corporation of India as approved by the Central Government in this behalf or; b) Any other insurer and approved by the Insurance Regulatory and Development Authority. 4) Jeevan Aadhar Plan (Sec.80DD) :

Deduction from total income upto Rs.50000/- allowable on amount deposited with LIC under Jeevan Aadhar Plan for maintenance of an handicapped dependent (Rs.1,00,000/where handicapped dependent is suffering from severe disability)

5)

Exemption in respect of commutation of pension under Jeevan Suraksha & Jeevan Nidhi Plans:

Under Section 10(10A) (iii) of the Income-tax Act, any payment received by way of commutations of pension out of the Jeevan Suraksha & Jeevan Nidhi Annuity plans is exempt from tax under clause (23AAB). 6) Income tax exemption on Maturity/Death Claims proceeds under Section 10(10D) Under the provisions of section 10(10D) of the Income-tax Act, 1961, Maturity/Death claims proceeds of life insurance policy, including the sum allocated by way of bonus on such policy (other than amount to be refunded under Jeevan Aadhar Insurance Plan in case of handicapped dependent predeceases the individual or amount received under a Keyman Insurance Plan) is exempted from income-tax. However any sum (not including the premium paid by the assessee) received under an insurance policy issued on or after the 1st day of April, 2003 in respect of which the premium payable for any of the years during the term of the policy exceeds 20% of the actual capital sum assured will no longer be exempted under this section.