INTRODUCTION TO

INDUSTRY

INTRODUCTION TO INDUSTRY
Insurance in India started without any regulation in the Nineteenth Century. It was a
typical story of a colonial era. A few British insurance companies dominating the
market serving mostly large urban centres. After the independence, it took a dramatic
turn. Insurance was nationalized. First, the life insurance companies were
nationalized in 1956, and then the general insurance business was nationalized in
1972. Only in 1999 private insurance companies have been allowed back into the
business of insurance with a maximum of 26% of foreign holding. In what follows,
we describe how and why of regulation and deregulation. The entry of the State Bank
of India with its proposal of bank assurance brings a new dynamics in the game. We
study the collective experience of the other countries in Asia already deregulated their
markets and have allowed foreign companies to participate. If the experience of the
other countries is any guide, the dominance of the Life Insurance Corporation and the
General Insurance Corporation is not going to disappear any time soon.

Insurance under the British Raj

Life insurance in the modern form was first set up in India through a British company
called the Oriental Life Insurance Company in 1818 followed by the Bombay
Assurance Company in 1823 and the Madras Equitable Life Insurance Society in
1829. All of these companies operated in India but did not insure the lives of Indians.
They were there insuring the lives of Europeans living in India. Some of the
companies that started later did provide insurance for Indians. But, they were treated
as "substandard" and therefore had to pay an extra premium of 20% or more. The first
company that had policies that could be bought by Indians with "fair value" was the
Bombay Mutual Life Assurance Society starting in 1871.
The first general insurance company, Triton Insurance Company Ltd., was established
in 1850. It was owned and operated by the British. The first indigenous general
insurance company was the Indian Mercantile Insurance Company Limited set up in
Bombay in 1907. By 1938, the insurance market in India was buzzing with 176
companies (both life and non-life). However, the industry was plagued by fraud.
Hence, a comprehensive set of regulations was put in place to stem this problem (see
Table 1). By 1956, there were 154 Indian insurance companies, 16 non-Indian
insurance companies and 75 provident societies that were issuing life insurance
2

policies. Most of these policies were cantered in the cities (especially around big
cities like Bombay, Calcutta, Delhi and
Madras). In 1956, the then finance minister S. D. Deshmukh announced
nationalization of the life insurance business.

Monopoly Raj
The nationalization of life insurance was justified mainly on three counts.
(1) It was perceived that private companies would not promote insurance in rural
areas. (2) The Government would be in a better position to channel resources for
saving and investment by taking over the business of life insurance.
(3) Bankruptcies of life insurance companies had become a big problem (at the time
of takeover, 25 insurance companies were already bankrupt and another 25 were on
the verge of bankruptcy). The experience of the next four decades would temper these
views.

Insurance Market- Present

The insurance sector was opened up for private participation four years ago. For years
now, the private players are active in the liberalized environment. The insurance
market have witnessed dynamic changes which includes presence of a fairly large
number of insurers both life and non-life segment. Most of the private insurance
companies have formed joint venture partnering well recognized foreign players
across the globe.
There are now 29 insurance companies operating in the Indian market 14 private
life insurers, nine private non-life insurers and six public sector companies. With
many more joint ventures in the offing, the insurance industry in India today stands at
a crossroads as competition intensifies and companies prepare survival strategies in a
detariffed scenario.
There is pressure from both within the country and outside on the Government to
increase the Foreign Direct Investment (FDI) limit from the current 26% to 49%,
which would help JV partners to bring in funds for expansion.
There are opportunities in the pensions sector where regulations are being framed.
Less than 10 % of Indians above the age of 60 receive pensions. The IRDA has issued
the first licence for a standalone health company in the country as many more players
wait to enter. The health insurance sector has tremendous growth potential, and as it

matures and new players enter, product innovation and enhancement will increase.
The deepening of the health database over time will also allow players to develop and
price products for larger segments of society.

State Insurers Continue To Dominate

There may be room for many more players in a large underinsured market
like India with a population of over one billion. But the reality is that the intense
competition in the last five years has made it difficult for new entrants to keep pace
with the leaders and thereby failing to make any impact in the market.
Also as the private sector controls over 26.18% of the life insurance market and over
26.53% of the non-life market, the public sector companies still call the shots.
The countrys largest life insurer, Life Insurance Corporation of India (LIC), had a
share of 74.82% in new business premium income in November 2009.
Similarly, the four public-sector non-life insurers New India Assurance, National
Insurance, Oriental Insurance and United India Insurance had a combined market
share of 73.47% as of October 2009. ICICI Prudential Life Insurance Company
continues to lead the private sector with a 7.26% market share in terms of fresh
premium, whereas ICICI Lombard General Insurance Company is the leader among
the private non-life players with a 8.11% market share. ICICI Lombard has focused
on growing the market for general insurance products and increasing penetration
within existing customers through product innovation and distribution.

INSURANCE COMPANIES IN INDIA

Following is the list of all LIFE & GENERAL INSURANCE
COMPANIES granted permission by IRDA.
LIFE INSURERS

Websites
Public Sector

Life Insurance Corporation of India

www.licindia.com

Private Sector
Allianz Bajaj Life Insurance Company

www.allianzbajaj.co.in

Limited

Birla Sun-Life Insurance Company Limited www.birlasunlife.com

HDFC Standard Life Insurance Co. Limited www.hdfcinsurance.com
ICICI Prudential Life Insurance Co.

www.iciciprulife.com

Limited
ING Vysya Life Insurance Company

www.ingvysayalife.com

Limited

Max New York Life Insurance Co. Limited www.maxnewyorklife.com

MetLife Insurance Company Limited

www.metlife.com

Om Kotak Mahindra Life Insurance Co.

Ltd.
SBI Life Insurance Company Limited

www.omkotakmahnidra.com
www.sbilife.co.in

TATA AIG Life Insurance Company

www.tata-aig.com

Limited

AMP Sanmar Assurance Company Limited www.ampsanmar.com

Dabur CGU Life Insurance Co. Pvt.

www.avivaindia.com

Limited

Reliance Life Insurance Company

www.reliancelife.com

Limited.

Aviva Life Insurance Co. India Pvt. Ltd. www.avivaindia.com

Sahara India Life Insurance Co, Ltd.

www.saharalife.com

Shriram Life Insurance Co, Ltd.

www.shriramlife.com

Bharti AXA Life Insurance Company

Ltd
Future Generali Life Insurance

www.bharti-axalife.com

www.futuregenerli.in

Company Ltd.
IDBI Fortis Life Insurance Company
Ltd.

www.idbifortis.com

Canara HSBC Oriental Bank of

www.canarahsbclife.com

Commerce Life Insurance Co. Ltd

AEGON Religare Life Insurance

www.aegonreligare.com

Company Limited
Star Union Dai-ichi Life Insurance

www.sudlife.in

Comp. Ltd.
DLF Pramerica Life Insurance Co. Ltd

www.dlfpramerica.com

GENERAL INSURERS
Public Sector
National Insurance Company Limited

www.nationalinsuranceindia.com

New India Assurance Company Limited

www.niacl.com

Oriental Insurance Company Limited

www.orientalinsurance.nic.in

United India Insurance Company Limited

www.uiic.co.in

Private Sector
Bajaj Allianz General Insurance Co.

www.bajajallianz.co.in

Limited

ICICI Lombard General Insurance Co. Ltd. www.icicilombard.com

IFFCO-Tokio General Insurance Co. Ltd.

www.itgi.co.in

Reliance General Insurance Co. Limited

www.ril.com

Royal Sundaram Alliance Insurance Co.

Ltd.
TATA AIG General Insurance Co. Limited

www.royalsun.com
www.tata-aig.com

Cholamandalam General Insurance Co. Ltd. www.cholainsurance.com

Export Credit Guarantee Corporation

www.ecgcindia.com
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HDFC Chubb General Insurance Co. Ltd.

REINSURER
General Insurance Corporation of India

www.gicindia.com

RECENT TRENDS IN INSURANCE SECTOR

It wasnt too long back when the good old endowment plan was the preferred way to
insure oneself against an eventuality and to set aside some savings to meet ones
financial objectives. The traditional endowment policies were investing funds mainly
in fixed interest Government securities and other safe investments to ensure the safety
of capital. Thus the traditional emphasis was always on security of capital rather than
yield. However, with the inflationary trend witnessed all over the world, it was
observed that savings through life insurance were becoming unattractive and not
meeting the aspirations of the policyholders.
The policyholder found that the sum assured guaranteed on maturity had really
depreciated in real value because of the depreciation in the value of money. The
investor was no longer content with the so called security of capital provided under a
policy of life insurance and started showing a preference for higher rate of return on
his investments as also for capital appreciation. It was, therefore found necessary for
the insurance companies to think of a method whereby the expectation of the
policyholders could be satisfied. The object was to provide a hedge against the
inflation through a contract of insurance. Decline of assured return endowment plans
and opening of the insurance sector saw the advent of ULIPs on the domestic
insurance horizon. Today, the Indian life insurance market is riding high on the unit
linked insurance plans.

ASSOCIATION OF INSURANCE COMPANIES IN INDIA

To protect the interests of holder of insurance policy and to regulate, promote and
ensure orderly growth of the insurance industry Insurance Regulatory and
Development Authority (IRDA) was established. Under the new dispensation Indian
insurance companies in private sector were permitted to operate in India with the
following conditions:
Company is formed and registered under the Companies Act, 1956
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The aggregate holdings of equity shares by a foreign company, either by itself or

through its subsidiary companies or its nominees, do not exceed 26%, paid up equity
capital of such Indian insurance company
The company's sole purpose is to carry on life insurance business or general insurance
business or reinsurance business.
The minimum paid up equity capital for life or general insurance business is
100crores
The minimum paid up equity capital for carrying on reinsurance business has been
prescribed as 200crores

ROLE & FUNCTIONS OF IRDA:

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA..
(1) Subject to the provisions of this Act and any other law for the time being in force,
the Authority shall have the duty to regulate, promote and ensure orderly growth of
the insurance business and re-insurance business.
(2) Without prejudice to the generality of the provisions contained in sub-section (1),
the powers and functions of the Authority shall include,
(A) Issue to the applicant a certificate of registration, renews, modify, withdraw,
suspend or cancel such registration
(B) Protection of the interests of the policy holders in matters concerning assigning of
policy, nomination by policy holders, insurable interest, settlement of insurance
claim, surrender value of policy and other terms and conditions of contracts of
insurance
(C) Specifying requisite qualifications, code of conduct and practical training for
intermediary or insurance intermediaries and agents
(D) Specifying the code of conduct for surveyors and loss assessors
(E) Promoting efficiency in the conduct of insurance business
(F) Promoting and regulating professional organizations connected with the insurance
and re-insurance business
(G) Levying fees and other charges for carrying out the purposes of this Act
(H) Calling for information from, undertaking inspection of, conducting enquiries and
investigations including audit of the insurers, intermediaries, insurance intermediaries
and other organizations connected with the insurance business;

(I) Control and regulation of the rates, advantages, terms and conditions that may be
offered by insurers in respect of general insurance business not so controlled and
regulated by the Tariff Advisory Committee under section 64U of the Insurance Act,
1938 (4 of 1938)
(J) Specifying the form and manner in which books of account shall be maintained
and statement of accounts shall be rendered by insurers and other insurance
intermediaries
(K) Regulating investment of funds by insurance companies;
(L) Regulating maintenance of margin of solvency;
(M) Adjudication of disputes between insurers and intermediaries or insurance
intermediaries
(N) Supervising the functioning of the Tariff Advisory Committee
(O) Specifying the percentage of premium income of the insurer to finance schemes
for promoting and regulating professional organizations referred to in clause (f)
(P) Specifying the percentage of life insurance business and general insurance
business to be undertaken by the insurer in the rural or social sector
(Q) Exercising such other powers as may be prescribed.

REGULATORY ACTS:
A number of acts govern the insurance sector The Insurance Act, 1938
The Insurance Act, 1938 was the first legislation governing all forms of insurance to
provide strict state control over insurance business.
Life Insurance Corporation Act, 1956
Even though the first legislation was enacted in 1938, it was only in 19 January 1956,
that life insurance in India was completely nationalized, through a Government
ordinance. The Life Insurance Corporation Act, 1956 effective from 1.9.1956 was
enacted in the same year to, form Life Insurance Corporation after nationalization of
the 245 companies (both Indian and foreign origin) into one entity.
General Insurance Business (Nationalization) Act, 1972
The General Insurance Business (Nationalization) Act 1972 was enacted to
nationalize the 100 odd general insurance companies and subsequently merging them
into four companies. All the companies were amalgamated into National Insurance,
New India Assurance, Oriental Insurance, United India Insurance.

Insurance Regulatory and Development Authority Act, 1999

Till 1999, there were not any private insurance companies in Indian insurance sector.
The Govt. of India, then introduced the Insurance Regulatory and Development
Authority Act in 1999, thereby de-regulating the insurance sector and allowing
private companies into the insurance. Further, foreign investment was also allowed
and capped at 26% holding in the Indian insurance companies.

10

COMPANY PROFILE

11

COMPANY PROFILE

In 1955, parliamentarian Feroze Gandhi raised the matter of insurance fraud by

owner's of private insurance companies. In the ensuing investigations, one of India's
wealthiest businessmen, Ram Kishan Dalmia, owner of the Times of India newspaper,
was sent to prison for two months. Eventually, the Parliament of India passed the Life
Insurance of India Act on 1956-06-19, and the Life Insurance Corporation of India
was created on 1956-09-01

History of LIC of India

The first 150 years of the British Rule in India were characterized by turbulent
economic conditions. The first war of independence in 1857, the World Wars 1 and 2
(1914-1918 and 1939-45) and India's national struggle for freedom in between had
adverse effect on the economy. In addition to this the period of world wide economic
crisis in between the two World Wars termed as the period of Great Depression led to
the high rate of bankruptcies and liquidation of most Life Insurance Companies in
India that existed during that time. These occurrences led to loss of faith in insurance
of the people of India.

INTRODUCTION
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 IN 459 million, has grown to 2,048 offices servicing around
180 million policies and a corpus of over INR 3.4 trillion.

12

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.

NETWORK OF LIC:
All Life Insurance Corporation branches in the country would be interconnected
under Metro Area Network (MAN) .
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.

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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.
LIC Co-ordinating Office in India

ASSOCIATES
LIC Housing Finance Ltd.
LICHLF Care Homes Ltd.
LIC Mutual Fund AMC Ltd.

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PRODUCTS AND SERVICES OF LIC

Whole Life with Profits Plan - 002
FEATURES:
This plan is mainly devised to create an estate for the heirs of the policyholder as the
plan basically provides for payment of sum assured plus bonuses on the death of the
policyholder. However, considering the increased longevity of the Indian population,
the Corporation has amended the above provision, thereby proving for payment of
sum assured plus bonuses in the form of maturity claim on completion of age 80 years
or on expiry of term of 40 years from date of commencement of the policy whichever
is later.
The premiums under the policy are payable up to age 80 years of the policyholder or
for a term of 35 years whichever is later. If the payment of premium ceases after 3
years, a paid-up policy for such reduced sum assured will be automatically secured
provided the reduced sum assured exclusive of any attached bonus is not less than
Rs.250/-. Such reduced paid-up policy is not entitled to participate in the bonus
declared thereafter but the bonuses already declared on the policy will remain attach,
provided the policy is converted in to a paid-up policy after the premiums are paid for
5 years.

Suitable For:
This policy is suitable for people of all ages who wish to protect their families from
financial crises that may occur owing to the policy holder's premature death.

BENEFITS
Survival benefit:
Sum assured plus accrued bonuses and the terminal bonuses, if any; on the
policyholder attaining age 80 years or on expiry of term of 40 years from the date of
commencement of the policy whichever is later.

Death benefit:
Sum assured plus accrued bonuses and the terminal bonuses, if any, on the death of
the policyholder are paid to his/her nominees/heirs.

LIMITED PAYMENT WHOLE LIFE - PLAN 005 (WITH

PROFITS)
FEATURES:
15

This is the best form of life assurance for family provision since it enables the Life
Assured to pay all the premiums during the ordinarily vigorous and most productive
years of life. He need not pay any premium in the later stages of life if and when his
conditions might become adverse.
With Profits Limited Payments Policies do not cease to participate in profits after
completion of the premium paying period but continue to share in the periodical Bonus
Distribution until the death of the Life Assured.
The Without-Profit option is available under Table no. 3. If the policyholder pays at
least 3 years' premiums and then discontinues paying any more premiums, a reduced
paid-up assurance policy comes into force. Such a reduced paid-up Policy will not be
entitled to participate in the profits declared. Thereafter, but such Bonus as has already
been declared on the Policy will remain attached thereto. The premium paying
term under this plan is five years minimum and 55 years maximum.

BENEFITS
Survival benefits:
If the Life Assured survives the premium paying period and the policy continues in full
force, provided all premiums have been paid, but no further premiums are required to
be paid.
Death Benefits:
Sum Assured plus Bonuses accrued and vested in the policy.
Plan Parameters:
Entry age
Sum assured (Rs.)
Term (years)
Mode of Payment

Minimum
12 (nearer birthday)
50000
5
Maximum premium

Maximum
60
NO LIMIT
55 (max. Prem ceasing age
is 70)
Policy loan available

Yearly, half yearly,

paying period
80 yrs. of age or 40 yrs. of Yes

quarterly, monthly, salary

premium paying term from

saving scheme

the date of commencement

whichever is later.

ENDOWMENT WITH PROFIT PLAN - 014

FEATURES:

16

Moderate Premiums

High bonus

High liquidity

Savings oriented

This policy not only makes provisions for the family of the Life Assured in event of
his early death but also assures a lump sum at a desired age. The lump sum can be
reinvested to provide an annuity during the remainder of his life or in any other way
considered suitable at that time.
Premiums are usually payable for the selected term of years or until death if it occurs
during the term period.
SUITABLE FOR:
Being an endowment assurance policy, this plan is apt for people of all ages and
social groups who wish to protect their families from a financial setback that may
occur owing to their demise.
The amount assured if not paid by reason of his death earlier will payable at the end
of the endowment term where it can be invested in an annuity provision for the rest of
the policyholder's life or in any other way he may think most suitable at that time.
BENEFITS
Disability Benefit:
In case policy holder becomes totally and permanently disabled due to an accident
before reaching the age of 70 and the policy is in full force, he will not be required to
pay further premiums, (the Disability Benefit is available in respect of the first
Rs.20000 sum assured on anyone life) and the policy will continue to be in force.
Accident Benefit:
By paying a small extra premium of Rs. 1 per Rs. 10007- sum assured per year he or
his family are entitled to the following benefits on death or permanent disability
caused by accident. Even students above the age of 18 years can avail of this benefit.
Premium Stoppage:
If payment of premiums ceases after at least THREE years' premiums have been paid,
a free paid-up policy for a reduced sum assured will be automatically secured
provided the reduced sum assured, exclusive of any attached bonus, is not less than
Rs. 250/-. The reduced sum assured will become payable on the event as stipulated in
the policy.
Bonus:
17

Is there anything extra payable besides the sum assured at the time of claim
settlement? Yes, but only if it is a 'with profits' policy. Every year the Life Insurance
Corporation distributes its surplus among policyholder to 'with profits' polices in the
form of bonuses. Substantial bonuses have been declared in the past after each
valuation of policy liabilities.
Survival benefits:
Payment of full Sum Assured + Vested Bonus + Final additional bonus, if any.
Death Benefits:
Payment of full sum assured + Vested Bonus.
Plan Parameters:
Minimum
Entry age
Sum assured (Rs.)
Term (years)
Mode of Payment
Monthly, Quarterly, Half

Maximum

12
50000

65
NO LIMIT
55

5
Maximum premium
paying period
75 years.

Policy loan available

Yes

Yearly, Yearly, Salary

Saving Scheme.

ANMOL JEEVAN -1 (WITHOUT PROFITS)

BENEFITS
On Death during the Term of the Policy: Sum Assured
On Maturity

: Nil

RESTRICTIONS
(A) Minimum age at entry

18 years (completed)

(B) Maximum age at entry

55 years (nearer birthday)

(C) Maximum age at maturity

65 years

(D) Minimum Term

5 years

(E) Maximum Term

25 years

(F) Minimum Sum Assured

Rs. Five Lakh

(G)Maximum Sum Assured

Rs. Three Crore (Inclusive of all

term Assurance plans)

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Note: The policy would be issued in multiples ofRs. one lakh for Sum Assured
above Rs. five lacs..
(H)

Mode of Premium Payment: Yearly, Half- Yearly and Single premium.

(G)

Rebates:

Sum Assured Rebate: NIL in case of regular premium policies and Re. 1
Sum Assured for policies ofRs.25 lakh and above in case of single
premium policies.

Mode Rebate: 1% of Annual premium for yearly mode and nil for Half-Yearly
mode.

UNDERWRITING,

AGE

PROOF

AND

MEDICAL

REQUIREMENTS:
The plan is available to Standard and Sub-standard fives (upto Class VIEMR). This
plan is also available to female lives (category I and II lives only) and to physically
handicapped persons subject to certain conditions. Standard age proof will have to be
submitted along with the Proposal Form.

PAID-UP AND SURRENDER VALUE:

The policy will not acquire any paid-up value.

No Surrender Value will be available under this plan.

GRACE PERIOD FOR NON-FORFEITURE PROVISIONS:

A grace period of 15 days will be allowed for payment of yearly or half-yearly
premiums. If death occurs within this period and before the payment of the premium
then due, the policy will still be valid and the Sum Assured paid after deduction of the
said premium as also unpaid premiums falling due before the next policy anniversary
of the Policy. If the premium is not paid before the expiry of the days of grace, the
Policy gets lapsed.

REVIVAL
If the Policy has lapsed, it may be revived during the life time of the Life Assured, but
before the date of expiry of policy term, on submission of proof of continued
insurability to the satisfaction of the Corporation and the payment of all the arrears of
premium together with interest at such rate as may be prevailing at the time of the
payment. The corporation reserves the right to accept or decline the revival of
discontinued policy. The revival of the discontinued policy shall take effect only after

19

the same is approved by the Corporation and is specifically communicated to the Life
Assured.

PAYMENT OF CLAIMS
No Claims concession will be applicable to this Policy.

BACK-DATING INTEREST
The policy can be back dated within the financial year. No dating back interest shall be
charged.

BENEFITS
Survival benefits:
If one or both the lives survive to the maturity date, the sum assured, along with the
accumulated bonus, is payable.
Death Benefits:
In case either of the couple dies during the policy's term, two things happen. One, LIC
pays to the surviving spouse the full sum assured. And, two, the policy continues on
the life of the surviving partner without him/her having to pay any further premiums,
i.e. the life cover on the survivor continues free of cost.
The sum assured is again be payable on the death of the other partner hi case both the
husband and wife were to die during the term of the policy. Vested bonus would also
be paid along with the sum assured on the second death.

NEW INSURANCE SCHEMES

Universal Health Insurance Scheme:
The Universal Health Insurance policy is available to groups of 100 or more families.
The policy provides for reimbursement of medical expenses upto Rs.30000/- towards
hospitalization floated amongst the members of the family, death cover due to an
accident for Rs.25000 to the earning head of the family and compensation due to loss
of earning head of the family @ Rs.50/- per day upto a maximum of 15 days, after a
waiting period of three days, when the earning head of the family is hospitalized. The
premium under the policy is Rs. 1! - Per day (Le. Rs.365/-per annum) for an
individual, Rs. 1.50 per day for a family of five limited to spouse and children (i.e.
Rs.548 per annum), and Rs.2/- per day (i.e. Rs. 730 per annum) for covering
dependent parents within the overall family size of seven. A subsidy of Rs. 100 per
year towards annual premium for "Below Poverty Life" families is also provided
under the Scheme.
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For purpose of this policy HOSPITAL means:

Any Hospital/Nursing home registered with the local authorities and under the
supervision of a registered and qualified Medical practitioner.

Hospital, Nursing Home runs by Government.

Enlisted hospitals run by NGOs/ Trusts/ selected private hospitals with fixed
schedule of charges.

Hospitalization should be for a minimum period of 24 hours.

However, this time limit is not applied to some specific treatments and also where due
to technological advancement hospitalization for 24 hours may not be required.

Main Exclusions:

All pre-existing diseases.

Corrective, cosmetic or aesthetic dental surgery or treatment,

Cost of spectacles, contact lens and hearing aid.

Primarily diagnostic expenses not related to sickness/injury.

Treatment for Pregnancy, Childbirth, Miscarriage, abortions etc.

Age Limitations:
This policy covers people between the age of 3 months to 65 years.

Floater Basis:
The benefit of family' will operate on floater basis i.e. the total reimbursement of Rs.
30,000/- can be availed of individually or collectively by members of the family.

INSURANCE PLANS
As individuals it is inherent to differ. Each individual's insurance needs and
requirements are different from that of the others. LIC's Insurance Plans are a policy
that talk to you individually and gives the most suitable options that can fit ones'
requirement.
Children Plans

Jeevan Anurag

CDA Endowment Vesting

Komal Jeevan
Marriage Endowment

At 21
CDA Endowment Vesting

Or
Educational

21

Annuity

At 18
Jeevan Kishore
Child Career Plan

Plan
Jeevan Chhaya
Child Future Plan

Plans for Handicapped Dependents

Jeevan Aadhar
Jeevan Vishwas

Endowment Assurance Plans

The Endowment Assurance Policy

The Endowment Assurance Policy- Limited Payment
Jeevan Mitra (Double Cover Endowment Plan)
Jeevan Mitra (Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan

Jeevan Amrit

Plans for high worth individuals

Jeevan Shree-I
Jeevan Pramukh

Money Back Plans

The Money Back Policy-20 Years

The Money Back Policy 25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Jeevan Rekha (closed for sale)
Bima Bachat

Special Money Back Plan for Women

Jeevan Bharati

Whole Life Plans

The Whole Life Policy

The Whole Life Policy Limited Payment
The Whole Life Policy Single Premium
Jeevan Rekha (closed for sale)
Jeevan Anand

22

Jeevan Tarang

Term Assurance Plans

Two Year Temporary Assurance Policy

The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan
Jeevan sathi

Unit plans:
Unit plans are investment plans for those who realize the worth of hard-earned money.
These plans help you see your savings yield rich benefits and help you save tax .

Jeevan plus

Future plus

Bima plus

Market plus

Money plus

Profit plus

Fortune plus

MARKET PLUS
"IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS
BORNE BY THE POLICYHOLDER"

LIC's MARKET PLUS:

This is a unit linked deferred pension plan. You can take the plan with or without risk
cover. You can also choose the level of cover within the limits, which will depend on
whether the policy is a Single premium or Regular premium contract and on the level
of premium you agree to pay.
The allocated premiums will be applied to purchase units as per the Fund type chosen.
Your Unit Account will be subject to deduction of charges as specified in the Policy
Conditions. The value of the units in the Unit Fund may increase or decrease,
depending on the investment return of the assets representing the chosen Fund.
i.

Payment of Premiums: You may pay premiums regularly at yearly, halfyearly or quarterly intervals over the term of the policy. The minimum annual

23

premium will be Rs.5, OOO/- increasing thereafter in multiples of Rs. 1, OOO/-.

Alternatively, a Single premium can be paid subject to a minimum of Rs.
10,000 and thereafter in multiples of Rs.l, 000.
ii.

Benefits:
A) Death Benefit:
If the Life cover is opted for, the Sum Assured under the Basic Plan together
with the Fund Value of units either as a lump sum or as pension. In case the
policy is taken without life cover, then the Fund Value of the units held in the
Policyholder's Unit Account shall be payable either as a lump sum or as a
pension.
The amount of pension will depend on the then prevailing immediate annuity
rates under the annuity option chosen.

On your surviving to the date of vesting, the Fund Value of the units held in your Unit
Account will compulsorily be utilized to provide a pension based on the then
prevailing immediate annuity rates under the relevant annuity option. However, you
may opt to commute up to one-third of the Benefit to be paid as a lump sum. Further,
you may choose to purchase pension from LIC or other life insurance company.

Accident Benefit Option: If you have opted for life cover, you may opt for
Accident Benefit equal to life cover subject to minimum Rs. 25,000 and maximum
Rs. 50 lakh (taken all policies with LIC of India and other insurers). In case of death by
Accident, an additional sum equal to Accident benefit will be payable.

Eligibility Conditions And Other Restrictions:

Basic Plan
Minimum Age at entry
Maximum Age at entry

:
:

18 years completed
70 years (age nearer birthday). However if life

Minimum Age at vesting

Maximum Vesting Age
Minimum Deferment Term
Minimum Sum Assured

:
:
:
:

cover is opted for, then 65 years

40 years (age last birthday)
75 years (age last birthday)
5 years
Rs. 25,000 for Single premium

Rs. 50,000 for Regular premium

Single Premium Equal to single premium

Maximum Sum Assured

Regular Premium 20 times of the annualized

24

premium

i.

Investment of Funds: The premiums allocated to purchase units will be

strictly invested according to the investment pattern committed in various fund
types. Various types of fund and their investment pattern will be as under:

Fund Type

Short-term

Investment

investments such as Listed

money

in
Equity

market Shares

instruments

Bond Fund
Secured Fund

Not less than 80%

Not less than 65%

(including

Govt.

Securities

&

Corporate Debt)
100%
Not more than 85%

Nil
Not less than 15%
& not more than

Balanced Fund

Not less than 50%

Not more than 70%

35%
Not less than 30%
& not more than

Growth Fund

Not less than 20%

Not more than 40%

50%
Not less than 60%
& not more than
80%

ii.

The Policyholder has the option to choose any ONE of the above 4 funds. In
case no fund has been opted for, the allocated premiums shall, by default, be
invested in the SECURED FUND.

iii.

Method of Calculation of Unit price: Units will be allotted based on the

Net Asset Value (NAV) of the respective fund as on the date of allotment There
is no Bid-Offer spread (the Bid price and Offer price of units will both be equal
to the NAV). The NAV will be computed on daily basis and will be based on
investment in Government / Government Guaranteed Securities /

25

Corporate Debtnt performance, Fund Management Charge and whether fund is

expanding or contracting under each fund type.

iv.

Charges under the Plan: Units will be allotted based on the Net Asset Value
(NAV) of the respective fund as on the date of allotment. There is no Bid-Offer
spread (the Bid price and Offer price of units will both be equal to the NAV). The
NAV will be computed on daily basis and will be based on investment
performance, Fund Management Charge and whether fund is expanding or
contracting under each fund type.
(A) Premium Allocation Charge: This is the percentage of the
premium appropriated towards charges from the premium received. The
balance known as allocation rate constitutes that part of the premium which
is utilized to purchase (Investment) units for the policy. The allocation
charges are as below:

For Single premium policies: 3.3%

For Regular premium policies:
Premium Band (per annum)

Allocation charge
First Year
Thereafter
5,000 to 75,000
16.50%
2.50%
75,001 to 1,50,000
15.75%
2.50%
1,50,001 to 3,00,000
15.00%
2.50%
3,00,001 to 5,00,000
14.25%
2.50%
5,00,001 and above
13.50%
2.50%
Allocation charge for Top-up: 1.25% (B) Charges
for Risk Covers:
Mortality Charge: This is the cost of insurance cover. These are age specific
and will be taken every month.
Accident Benefit charge: This is the cost of Accident Benefit rider and will be
levied every month at the rate of Rs. 0.50 per thousand Accident Benefit Sum
Assured per policy year.
vi.

(C) Other Charges:

Policy Administration charge: Rs. 60/- per month during the first policy year
and Rs. 207- per month thereafter, throughout the term of the policy.
Fund Management Charge: This is the charge levied as a percentage of the
value of units and shall be appropriated by adjusting NAV at following rates:
26

0.75% p.a. of Unit Fund for Bond Fund 1.00% p.a. of Unit Fund for ?Secured?
Fund 1.25% p.a. of Unit Fund for Balanced Fund 1.50% p.a. of Unit Fund for
Growth Fund.
Switching Charge: This is the charge levied on switching of monies from one
fund to another. Within a given policy year 4 switches will be allowed free of
charge. Subsequent switches in that year shall be subject to a switching charge
ofRs. 100 per switch.
Bid/Offer

Spread:

Nil.

Surrender Charge: Nil

Service Tax Charge: A service tax charge shall be levied on the Mortality and
Accident Benefit rider charge, if any, on a monthly basis. The level of this
charge will be as per the rate of service tax as applicable from time to time.
Presently, the rate of Service Tax is 12% with an educational cess at the rate of
2% thereon and hence effective rate is 12.24%.
Miscellaneous Charge: This is a charge levied for an alteration within the
contract, such as reduction in policy term, change in premium mode, etc. An
alteration may be allowed subject to a charge of Rs. 50/-.
(D) Right to revise charges: The Corporation reserves the right to revise all or
any of the above charges except the premium allocation charge and charges for
risk covers, with the prior approval of IRDA.
vii.

Although the charges are reviewable, they will be subject to a cap for which
please refer to the policy document.

viii.

Surrender: The surrender value, if any, is payable only after the completion of
the third policy anniversary both under Single and Regular premium Contract.
No partial withdrawal of units will be allowed under this plan.

ix.

Other Features:
i) Top-up (Additional Premium): The policyholder can pay additional
premium in multiples of Rs.l, 000 without any limit at anytime during the
term of the policy. In case of yearly, half-yearly or quarterly mode of premium
payment such Top-up can be paid only if all premiums have been paid under
the policy.
ii)Switching: You can switch between any fund types during the policy term
subject to switching charges, if any.

27

iii) Discontinuance of premiums and revival: If premiums are payable

yearly, half-yearly or quarterly and the same have not been duly paid within the
days of grace under the Policy, the Policy will lapse. A lapsed policy can be
revived during the period of two years from the due date of first unpaid
premium.
If you have opted for life cover, under Regular premium policies where at least
3 years' premiums have been paid, and the subsequent premiums are not paid,
the life cover and accident benefit cover, if any, will be compulsorily available
under the policy and the charges for the same if any, shall be taken, in addition
to other charges, by canceling an appropriate number of units out of the
Policyholder's Unit Account every month subject to the following :
two years from the due date of first unpaid premium, or
two years from the due date of first unpaid premium, or
till such period that the Policyholder's Unit Account reduces to one annualized
premium, whichever is earlier.
iv) Increase / decrease of benefits: No increase (except to the extent of Top-up
stated above) or decrease of benefits will be allowed under the plan.
iiv) Conversion to annuity at vesting date: The rate at which the amount at
vesting date will be converted to an annuity is not guaranteed and will be
based on the prevailing immediate annuity rates under the relevant annuity
option at the vesting date.
x.

Reinstatement: A policy once surrendered cannot be reinstated,

xi.

Risks borne by the Policyholder:

i)

Unit Linked Life Insurance products are different from the traditional
insurance products and are subject to the risk factors.

ii)

The premium paid in Unit Linked Life Insurance policies are subject to
investment risks associated with capital markets and the NAVs of the
units may go up or down based on the performance of fund and factors
influencing the capital market and the insured is responsible for his/her
decisions.

iii)

Life Insurance Corporation of India is only the name of the Insurance

Company and LIC's Market Plus is only the name of the unit linked life
insurance contract and does not in any way indicate the quality of the
contract, its future prospects or returns.
28

iv)

Please know the associated risks and the applicable charges, from your
Insurance agent or the Intermediary or policy document of the insurer.

v)

The various funds offered under this contract are the names of the funds
and do not in any way indicate the quality of these plans, their future
prospects and returns.

vi)

All benefits under the policy are also subject to the Tax Laws and other
financial enactments as they exist from time to time.

xii.

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.

xiii.

Loan: No loan will be available under this plan.

xiv.

Assignment: Assignment will not be allowed under this plan.

xv.

Exclusions: In case the Life Assured commits suicide at any time, the
Corporation will not entertain any claim by virtue of the policy except to the
extent of the Fund Value of the units held in the Policyholder's Unit Account
on death.

Benefit Illustration
Statutory warning some benefits are guaranteed and some benefits are variable with
returns based on the future performance of your life insurance company. If your policy
offers guaranteed returns then these will be clearly marked guaranteed in the
illustration table on this page. If your policy offers variable returns then the
illustrations on this page will show two different rates of assumed investment returns.
These assumed rates of return are not guaranteed and they are not upper or lower
limits of what you might get back as the value of your policy is dependant on a
number of factors including future investment performance.

BASIC PLAN WITH LIFE COVER

Frequency
Premium Payment
Age at Entry

of

Annual

Premium

10000

Premium
35 years

Sum

Assured 200000

under Basic plan

Term
Type of Fund

20 years
Secured Fund

29

Death Benefit Payable at end of year of Death

End

Total

Guarante

Variabl

Variabl

Total

of

Premiu

ed

Polic

m Paid

Scenar

Scenar

Scenar

io 1
7624

io 2
7932
18569

Surrender /
Total

Maturity Value
Variabl Variabl
e

Scenar

Scenar

Scenari

io 1
20762

io 2
20793

io 1
0

o2
0

4
21756

2
21856

y
Year

1.
2

10000
20000

20000
20000

17560

PLAN WITH LIFE COVER

Frequency

of

Premium Payment
Age at Entry

Annual

Premium

10000

Premium
35 years

Sum

Assured 200000

under Basic plan

Term
Type of Fund

20 years
Secured Fund

Death Benefit Payable at end of year of Death

Surrender /
Maturity Value

End

Total

Guarante

of

Premiu

ed

Polic

m Paid

Variable

Variable

Total

Total

Variable

Variabl
e

y
Year
Scenari Scenari Scenari Scenari Scenario Scena
1.
2
3
4

100000
100000
100000
100000

0
0
0
0

o1
100743
102015
106813
111848

o2
104557
110022
119569

o1
100743
102015
106813

129965 111848

o2
104557
110022
119569

1
0
0
10681

rio 2
0
0
119569

3
129965 11184

129965

30

100000

117132

141287 11713

141287

100000

2
122678 153617 122678 153617 12267

153617

8
128498 167045 128498 167045 12849

167045
181669

100000

141287 117132

100000

8
134605 181669 134605 181669 13460

100000

5
141015 197595 141015 197595 14101

197595

10

100000

5
147742 214940 147742 214940 14774

214940

2
154801 233829 154801 233829 15480

233829
254400

11

100000

12

100000

1
162209 254400 162209 254400 16220

13

100000

9
169984 276803 169984 276803 16998

276803

14

100000

4
178143 301201 178143 301201 17814

301201

3
186705 327771 186705 327771 18670

327771
356708

15

100000

16

100000

5
195691 356708 195691 356708 19569

17

100000

1
205121 388222 205121 388222 20512

388222

18

100000

1
215018 422541 215018 422541 21501

422541

8
225404 459917 225404 459917 22540

459917

4
236303 500622 236303 500622 23630

500622

19
20

100000
100000

3
i.

This illustration is applicable to a non-smoker male/female standard (from

medical, life style and occupation point of view) life.

ii.

The non-guaranteed benefits (1) and (2) in above illustration are calculated so
that they are consistent with the Projected Investment Rate of Return
assumption of 6% p.a.(Scenario 1) and 10% p.a. (Scenario 2) respectively. In

31

other words, in preparing this benefit illustration, it is assumed that the

Projected Investment Rate of Return that LICI will be able to earn throughout
the term of the policy will be 6% p.a. or 10% p.a., as the case may be. The
Projected Investment Rate of Return is not guaranteed
iii.

The main objective of the illustration is that the client is able to appreciate the
features of the product and the flow of benefits in different circumstances with
some level of quantification

SECTION 41 OF INSURANCE ACT 1938

i.

No person shall allow or offer to allow, either directly or indirectly, as an

inducement to any person to take out or renew or continue an insurance in
respect of any kind of risk relating to lives or property in India, any rebate of
the whole or part of the commission payable or any rebate of the premium
shown on the policy, nor shall any person taking out or renewing or
continuing a policy accept any rebate, except such rebate as may be allowed in
accordance with the published prospectuses or tables of the insurer: provided
that acceptance by an insurance agent of commission in connection with a
policy of life insurance taken out by himself on his own life shall not be
deemed to be acceptance of a rebate of premium within the meaning of this
sub-section if at the time of such acceotance the insurance agent satisfies the
prescribed conditions establishing that he is a bona fide insurance agent
employed by the insurer.
ii.

Any person making default in complying with the provisions of this section
shall be punishable with fine which may extend to five hundred rupees.

SPECIAL PLANS
LIC's Special Plans are not plans but opportunities that knock on your door once in a
lifetime. These plans are a perfect blend of insurance, investment and a lifetime of
happiness.
Golden Jubilee Plan

Bima Gold (closed for sale)

32

New Bima Gold

Special Plan

Bima Nivesh 2005

Jeevan Saral

Jeevan Madhur

SERVICE QUALITY

Your Policy Bond And Its Safety

Your Policy Number
Policy Conditions
Alterations In Policy
If Your Policy Is Lost
Your Contact Address Keep Us Posted Without Fail
Admission Of Age
Nomination
Assignment
When To Pay The Premiums
Grace Period For Premium Payment
How And Where To Pay The Premiums
Policy Status Where Available
Revival Of Lapsed Policies
Availing Loans On Policies
Surrender Value
Maturity, Survival Benefits, Disability And Death Claims

33

Policies Under Salary Savings Scheme

Helpline

WHY LIC 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 Governence 2007',
`Web 18 Genius of the Web Award 2007 and many more'.
LIC adjudged No.1 Trusted Service Brand for the 4th successive year by ET
Brand Equity Survey.
4. LIC has been adjudged Superbrand India for 2008-09 and Reader's Digest
`Trusted Brand' Asia 2009.
5. This is the only corporation that is catering to more than 190 million satisfied
policyholders in India and abroad.
34

6. This is one of the very few institutions that pays ex-gratia interest on
pending maturity claims !
7. More than 2050 LIC branches all over India are connected together to serve
you. You can pay your premium anywhere in the country.
8. 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 Pluslatest LIC Unit Linked Plan is a case in point.
9. 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.
10. 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.
11. 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.
12. Through Employer-Employee Insurance scheme, you can recognize the worth
of your most valuable employees whose absence you can ill afford to loose.
13. 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.

35

14. 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.
15. 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.
16. 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 installment.
17. 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.
18. LIC pension plans that guarantee you 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.
LIC is Indias most trusted brand, INSURING LIVES AND ENSURING SMILES
from more than 50 Years.
SUPER BRAND & MOST TRUSTED SERVICE BRAND OF INDIA. BEST IT
USER IN INDIA (NASSCOM 2003).
Largest Institutional Investor in India and Second largest in Asia among insurers.
(Source: Asian Investor)
36

LIC - An Institution Builder promoting many financial and insurance institutes like
NSE, NCDEX, LIC Mutual Fund, Stock Holding Corporation of India, National
Insurance Academy, Insurance Institute of India etc.
LIC is the largest life insurer of India Asset value as on 31.3.2009: 3,673,598.4 mn
(INR).
Offers

over

45

plans

to

cover

your

life

at

various

stages

Over 160 million customers and 1.1 million agents. It has underwritten more than 160
million policies.
2,048 branch offices (all computerized) of which 2019 are networked.

INTRODUCTION TO THE INSURANCE

Insurance is a social device where uncertain risks of individuals may be combined in a
group and thus made more certain - small periodic contributions by the individuals
provide a found out of which those who suffer losses may be reimbursed. In addition
to being a means to protect oneself, the insurance Industry is an efficient conduit for
the saving of people to be channeled towards economic growth. In India, the
Insurance Industry? is more than 150 years old. Today, it is monopolized by two
PSU's in their respective fields of life and General Insurance. However, with the
successful passage IRDA Bill through both houses of parliament in December 1999
the sector has been opened up to private players. This will provided much. Needed
37

impetus to the Industry and will improve the quality of service and products and will
also increase employment opportunities. There are still some issues their need to be
sorted out, particularly with regard to the status of intermediaries as envisaged by the
Insurance Regulatory Authority

INSURANCE POLICIES : WHY ?

Professional management

High risk cover

Low costs

Transparency

Choice of schemes

Tax benefits

regulation

The advantages of insurance policies are:

Professional Management

Insurance policies hire full-time, high-level investment professionals. Policies

can afford to do so as they manage large pools of money. The managers have
real-time access to crucial market information and are able to execute trades on
the largest and most cost-effective scale.

High risk cover

Insurance policies invest in a broad range of risk covers. This covers risk of the
effect of an uncertain event. A person can purchase policy against such
unforeseen factors.

Low Costs

An insurance policy lets you participate in a diversified policies for as little as

Rs.250/- (p.m.), and sometimes less. And with a no-load fund, you pay little sales
charges to purchase them.

Transparency

38

You get regular information on the value of your investment in addition to

disclosure on the specific policy.

Personal Service

One call puts you in touch with a specialist who can provide you with
information you can use to make your own investment choices. They will provide
you personal assistance in buying the suitable policy and provide information
and answer questions about your policy status. Our Customer service centers are
at your service and our Marketing team would be eager to hear your comments
on our schemes.

INSURANCE POLICIES :WHAT IS IT ?

Insurance may be described as a social device to reduce or eliminate risks of loss
to life and property. It is a provision which a prudent man makes against
inevitable contingencies, loss or misfortune.
Insurance is the modern method by which men make the uncertain, certain and
unequal , equal. It is the means by which success is almost guaranteed. Through
its operation, the strong contribute to the support of the week and week secure,
not by favour sent by right duly purchased or made for, the support of the strong.
Under the insurance policies, a large number of people associate themselves by
sharing risks attached to individuals. As in private life, in business also there are
dangers and risks of different kinds. The aim of all types of insurance is to make
provision against such dangsea (marine insurance), death(life insurance) and
accidents and burglary. Any risk contigent upon these, may be insured against at a
premium a commensurate with the risk involved.

INSURANCE POLICIES : WHAT IT IS MADE OF ?

39

 INSURED
INSURER
BENEFICIARY
POLICY
PREMIUM
INSURED PREMIUM
PERIL
HAZARD
EXPOSURE
CHANCE OF LOSS

40

Wherever there is uncertainty there is risk. We do not have any control over
uncertainties which involves financial losses. The risks may be certain events like
death, pension, retirement or uncertain events like theft, fire, accident, etc.
Insurance is a financial service for collecting the savings of the public and
providing them with risk coverage. The main function of Insurance is to provide
protection against the possible chances of generating losses. It eliminates worries
and miseries of losses by destruction of property and death. It also provides capital
to the society as the funds accumulated were invested in productive
heads. Insurance comes under the service sector and while marketing this service,
due care is to be taken in quality product and customer satisfaction. While
marketing the services, it is also pertinent that they think about the innovative
promotional measures. It is not sufficient that you perform well but it is also
important that you let others know about the quality of your positive
contributions. The creativity in the promotional measures is the need of the hour.
The advertisement, public relations, word of mouth communication needs due care
and personal selling requires intensive care.

DIFFERENT TYPES OF INSURANCE POLICIES

WHOLE LIFE PLANS

CHILDREN PLANS

HEALTH PLANS

UNIT LINKED PLANS

ENDOWMENT POLICIES

GROUP INSURANCE POLICIES

41

42

RESEARCH
METHODOLOGY

43

RESEARCH METHODOLOGY
Research: - is a process of collecting, analyzing, interpreting and summarizing in a significant
manner for the purpose of framing out necessary conclusion and findings of data perceived
and formulated for deriving out the meaningful information. To carry our research necessary
telephonic calls needed to be done, suitable appointments were to be fixed and therefore
market survey is to be followed.

Title of the Study

CUSTOMER ATTITUDE TOWARDS LIC PRODUCTS

Duration of the Project

45 Days 1st May, 2011 to 15th June, 2011

Objective of Study
The main aim of undertaking this study is to accomplish the following objective:

Conducting a market survey and understanding the customer perception.

Analyzing the market survey and thereby finding out the investment pattern of
the customer.

Proper understanding and evaluation of LIC

Analysis customer awareness about insurance policies.

Proper understanding and analysis of the perspective investor about this

financial product .

The main motive of my job the training is to brand building of LIC of India
and creating awareness & sales, that is its an brand building & sales
orientated.

The objective of the LIC is to create awareness of the policies among the
general public and to know the perception of the general public regarding the
insurance policies and try to fulfill their requirement.

Analyzing the market survey and thereby finding out the investment pattern of
the customer.

To conduct the market research first of all it is necessary to create a research design. A
research design is basically a blue print of how a research is to be conducted, it may
include;
1. Choosing the approach
2. Determining the types of data needed.
44

3. Locating the source of data.

4. Choosing a method of data.

TYPE OF RESEARCH
Basically there are 3 types of approaches used during the any research:
1. Exploratory
2. Descriptive
3. Experimental.
YPES OF DATA USED:
Both primary and secondary data is used in the research.
Data Collection Methods
To conduct the market research the data is collected by two sources.
SECONDARY DATA
Secondary data is one which already exists and is collected from the published
sources.
The sources from which secondary data was collected are:

Newspapers and Magazines like Economic Times, Insurance Times, and Insurance
Post.

Internet

PRIMARY DATA
The primary sources of data refer to the first hand information Primary data is
collected during the survey with the help of Questionnaires.

SAMPLE SIZE

Sampling unit: The customers will be stratified and segmented according to

their age, income, cultural background, gender, education, etc.

Sampling size: A survey was conducted for two hundred respondents

Analyze the collected information:

This involves converting raw material in to useful information. It involves tabulation
of data and using statically measures on them for developing frequency distribution
and calculating the averages and dispersions.

45

This phase will mark the culmination of the marketing research efforts. The
report with the research finding is a formal written document.
To achieve our target we adopted the following strategies:

Our company divided us in two groups consisting of 2 members each.

In a group we have gone to different places like govt.offices, Markets,

Corporats, Trusts, NGOs .

We prepared a list of investors, contact them later for purchase of policy

in our company. If we found any customer interested in our products we
meet to the customer and give the details of the our product and collect
the form and cheque or cash.

Scope of The Study

Pre-production
marketing

Create
awareness

Production

Induce Trial
Word of mouth
communication

Post-production marketing

Consumption

Demonstrate Benefits

Build Brand
Preference

strong influence

weak influence
46

LIMITATIONS
Though the present study aimed to achieve the above-mentioned objectives in full
earnest and accuracy, it was hampered due to certain limitations. Some of the
limitations of this study may be summarized as follows :

Getting accurate responses from the respondents due to their inherent

problems was difficult. They were partial, and refused to cooperate.

Very few people are interested in knowing about insurance policies.

Locating the target respondents was very time consuming.

Sample size was limited due to the limited period of 50 days allocated for the
survey.

The selection of respondents to cover the various strata of the society was
tedious and time consuming.

Time Consuming:
Contacting each and every customer utilizes most of the

time.

Lack of Knowledge:
Very few people have knowledge about Policies which are newly launched.

Co-ordination:
Poor feed back from the customers
Lack of information from the customers due to time constraints

Many competitors in the market.

47

DATA ANALYSIS &

INTERPRETATION

48

DATA ANALYSIS & INTERPRETATION

ABOUT THE SURVEY
Knowing the awareness and perception of the customers is very important in any
industry. This provides insight into the customer behavior and his expectation from the
industry player.
It examines some interesting choices of the retail investor including the reasons behind
investing in unit linked plans and the risk tolerance levels of the investors. the investor
knowledge about the ulips and what according to him are the best policies is also
analyzed. This Jaipur city survey was conducted to know the retail investor awareness
and perception about insyrance policies. It is hoped that this survey in Jaipur city would
go a long way in benefiting for LIC of India.
The total sample for the study was 200 across Jaipur city.

I. AN OVERVIEW :
This section shows an simple overview of respondents like their age ,gender,
income profile, saving habits and qualification
(a) Age-profile:
Table No. showing age profile of respondents:
S. No

Age

No .of

Percentage

respondent
1.
2.
3.
4.
5.
6.
7.
8.
9.

s
13
23
13
10
6
5
4
2
4
80

20-25
25-30
30-35
35-40
40-45
45-50
50-55
55-60
60 Above
Total

49

16%
29%
16%
13%
8%
6%
5%
2%
5%
100%

1. According to you, which have played a major role in the field of lifeinsurance companies?
Insurance
LIC
HDFC
ICICI
Others

Pvt. Employees
10
5
3
2

Govt. Employees
13
3
3
1

Business Man
10
5
4
1

INTERPRETATION:
After analyzing this data it is found that from the given three respective level of Pvt.
Govt. and Business 10 out of 20 (30%), 13 out of 20 (39%) and 10 out of 20 (30%)
are in favour of LIC, while 5 out of 20 (15%), 3 out of 20 (9%) and 5 out of 20 (6%), 1
out of 20 (30%) and I out of 20 (30%) are in favour of other Pvt. Companies.

50

2. Which insurance company has gained massive public support in the current fiscal
year?
Insurance

LIC

HDFC

ICICI

Others

Pvt. Employees
12
3
3
2

Govt. Employees
14
2
2
2

Business Man
10
5
4
1

INTERPRETATION:
From the above table, it is found that from the given three sector Private, Govt. and
Business 12 out of 20 (36%), 14 out of 20 (42%), 10 out of 20 (30%), are in the favour of
LIC 3 out of 20 (9%), 2 out of 20 (6%) and 4 out of 20 (12%) are in favour of ICICI,
whereas only 2 out of 20 (6%), 2 out of 20 (6%) 1 and out of 20 (3%) favour others
company.

51

4. Do you think insurance policy is in the direction of public welfare?

5.

Yes
No

Pvt. Sector

Govt. Sector

Business Man

13

16
4

12
8

INTERPRETATION:
The above table shows that from private sector 13 out of 20 (30%) agree and 7 out of
20 (21%) disagree, from govt. sector 16 out of 20 (48%) think it right but 4 out of 20
(12%) don't thick it so and from business man 12 out of 20 (36%) are in favour of the
above statement but 8 out of 20 (24%) don't favour it.

52

4.

Yes

No

Is retirement bond or pension policy launched by the number of private

Pvt. Sector
15
5

Govt. Sector

18

Business Man
13
7

INTERPRETATION:
It is obvious from the above table that 15 out of 20 (45%), 18 out of 20 (54%) and 13
out of 20 (39%) from the given three think retirement bend or pension policy a
legitimate step in the direction of secure old age but 5 out 20 (15%), 2 out of 20 (6%)
and 7 out 20 (21%) don't agree with the opinion of the majority class.

53

5.

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

No

Pvt. Sector
12
8

Govt. Sector
16
4

Business Man
11
9

INTERPRETATION:
From the above table it is found that 12 out of 20 (36%) from Private sector 16 out of 20
(48%). From Govt. sector and 11 out of 20 (33%) thinks risk coverage factor attractive
but rest 8 out of 20 (24%), 4 out of 20 (12%) and 9 out 20 (27%) from the above them
sector don't think it so encouraging towards saving trend whereas 3 out of 20 (9%), 2 out
of 20 (6%) and 4 out of 20 (12%) don't think it so.

54

6.

What according to you, the term plan that only covers risk and doesn't cover
maturity benefit on survival at the end of the term provides security cover over
policy holders or a smart way of accumulative money from policy holders?

Security Cover
Accumulative Money

Pvt. Sector
11
9

Govt. Sector

15
5

Business Man
12
8

INTERPRETATION:
It is obvious from the above data that 11 out of 20 (33%), from the Pvt. Sector, 15 out of
20 (45%) from Govt. sector and 12 out of 20 (36%) think term plan as a security cover
but 9 out of 20 (27%), 5 out of 20 (15%) and 8 out of 20 (24%) from the three respective
group think it as a way of accumulating money insurance company.

55

7.

Do you think that the arrival of so many private companies in this field will
provide Lots of choices to policy holder?

Yes
No

Pvt. Sector

Govt. Sector

Business Man

16

18

16
4

INTERPRETATION:
From analyzing the above data it is found that 16 out of 20 (48%) from Pvt.
Sector, 18 out of 20 (54%) from Govt. sector and 16 out of 20 (48%) think that
the arrival of private players envisage a lot of choice to policy holder. But 4 out
of 20 (12%), 2 out of 20 (6%) and 4 out of 20 (12%) don't think it so.

56

8.

Do you agree that customer-centricity and transparency are the buzzwords for
success in this evolving industry?
Pvt. Sector
Yes
No

Govt. Sector
20
-

18
2

Business Man

19
1

INTERPRETATION:
From the above data, it is found the 18 out of 20 (54%) from Pvt. Sector and 20 out of 20
(60%) from Govt. Sector 19 out of 20 (57%) from Business men agree with this statement
whereas only 2 out of 20 (6%) from Pvt. Sector and 1 out of 20 (3%) from Business men
do not agree with this statement.

57

FINDINGS

58

FINDINGS
CURRENT STANDING OF PRIVATE 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 a
range 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 conies 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.
GROWTH OF PRIVATE LIFE INSURANCE COMPANIES IN THE LAST 5
YEARS
The insurance industry recorded a booming growth of 35% in premium income during
2008-09 with the 21 private sector players walking away with. An impressive 129%
while the Life Insurance Corporation of India recorded a 21% growth.
Thus the market share of state behemoths dropped to 78% in 2010- 11 from 87% a
year ago.
According to ASSOCHAM Eco Pulse (AEP) Study, the industry premium increased
to Rs253.42bn in 2010-11 from Rsl87.1bn in 2009-10. The LIC total premium for the
year 2009-10 amounted to Rsl97.85bn as against the Rsl62.84bn during previous
year.
The figures for the first two months of the fiscal 2010-11 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" said Mahendra K. Sanghi, ASSOCHAM
President. During April-June 2010, the largest private company ICICI Prudential has
increased its share from 6.25% in 2010-11 to 7.68% in current fiscal.The opening up
of the sector has given some of the most innovative products like thecustomized

59

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, said Sanghi.
MAX NEWYORK 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's share has dropped from 2.45% during FY'05 to 1.76% in first two
months of FY'06. SBI life comes next with 1. 72% share and has infact 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 during FY'05, Others like ING, AMP Sanmar, 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 2006-07 to, 12% in
2007-08 and close to 22% in 2008-09.
ROLE OF FOREIGN COMPANIES IN INDIA
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 Ibn people. But the
fact remains that they:
Can not appoint majority directors on the company board;
Can not 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 counter part 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 the
question 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
60

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.

61

SWOT ANALYSIS

62

CONCLUSION

63

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.
1RDA 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.

64

SUGGESTIONS

65

SUGGESTIONS

In the modernized well advanced hi-tech approach to the customer every possible
facilities and effort to build up the confidence of the rising policy holders towards.
Insurance companies, to complete one another nothing is left to recommend. But
some recommendations that are intensely felt and highly required for insures to
sustain in the market. These are as follows:

a) More and more transparency should be ascertained between insurers and

policy holders.
b) Particularly, in the emerging boom in the insurance company, every insurance
company should be customer centered, and well versed in the handling of
problem and grievances of the policy holders.
c) Each and Every product launched by the Insurance company should be in
favour of increasing need of policy holders.
IRDA should be more and more responsible to the insurance sector by determining
some standard. It should be mandatory to every insurers to make more and more
responsible and responsive to the policy holders so that comprehensive understanding
may be developed among policy holders. It may be beneficial on both sides.

66

APPENDIX

67

BIBLOGRAPHY
Books:

Philip Kotler, Marketing management prentice Hall of India Pvt. Ltd. New Dehli.

C. R. Kothari Research methodology, vishwa publication, New Delhi.

Saxena Rajan Marketing management Tata Mcgraw-hill publicating Co. Ltd. New
Delhi.

H. V. Verma Marketing of services Global business press, New Delhi.

JOURANLS:
Business today magazine of February issue,2011.

Web Resources:

www.licofindia.com

www.sebi.gov.in

www.rbi.org.in

68

QUESTIONNAIRE
Age profile

Gender

Income profile

Saving habits

Qualification

1.

According to you, which have played a major role in the field of lifeinsurance companies?
LIC
HDFC
ICICI
OTHERS

o
o
o
o
2.

Which insurance companies have been successful to make strong public base by
advertisement?

o
o
o
o
3.

LIC
HDFC
ICICI
OTHERS
Which insurance company has gained massive public support in the current
fiscal year?

o
o
o
o

4.

LIC
HDFC
ICICI
OTHERS

Do you think insurance policy is in the direction of public welfare?

o YES
o NO
5.

Is retirement bond or pension policy launched by the number of private

69

companies?

o YES
o NO
6.

Do you think that risk coverage factor included in Insurance policy attracts
general public towards the policy?
o YES
o NO

7.

What according to you, the term plan that only covers risk and doesn't cover
maturity benefit on survival at the end of the term provides security cover over
policy holders or a smart way of accumulative money from policy holders?

o SECURITY COVER
o ACCUMULATIVE MONEY
8.

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

o YES
o NO

70