SUBMITTED TO

UNIVERSITY OF MUMBAI

PROJECT – LIFE INSURANCE IN INDIAN MARKET

SHREE SHANKAR NARAYAN COLLEGE

OF ARTS AND COMMERCE

NAVGHARROAD, BHAYANDAR (E), THANE- 401105

ACADEMIC YEAR – 2015-2016

T.Y.B.COM (BANKING AND INSURANCE)
SEMESTER VI

SUBMITTED BY

TAWDE NIRAJ MILIND

GUIDED BY

PROF. VIVEK WANKHEDE

 SHREE SHANKAR NARAYAN COLLEGE

OF ARTS AND COMMERCE

NAVGAHAR ROAD, BHAYANDAR (E), THANE- 401105.

BACHELOR OF COMMERCE & BANKING AND

INSURANCE - VITH SEM.

ACADEMIC YEAR. 2015 – 2016.

PROJECT – LIFE INSURANCE IN INDIAN MARKET

SUBMITTED BY

TAWDE NIRAJ MILIND

GUIDED BY

PROF. VIVEK WANKHEDE

 ACKNOWLEDGEMENT

I would like to take this opportunity to thank everybody who helped

through the successful completion of this project. Many people have
contributed to my achievements during the project and take this
opportunity to thank each one of them at the end of the project
durations.

First I would like to thank the UNIVERSITY OF MUMBAI to include this

project in the curriculum which brings out our observed analyzing and
interpreting skills to the maximum.

I extend my sincere gratitude to the honorable principle MR. V.N. Yadav

for the work that I am; able to present would just not have been
possible without her guidelines.

I would also like to thank the coordinator and the project guide PROF.
VIVEK WANKHEDE for their constant encouragement, intellectual
solution and valuable suggestions throughout the making of this
project. I thank him for spending his valuable time and efforts towards
my cause.

I would like to thank to my friends and colleagues, librarians for

providing some valuable tips. I would also like to thank all those whose
name may not have appeared here but whose contribution has not
gone unnoticed.

Last but not the least; I would like to thanks my parents for helping me
in the completion of this project.
 Declaration:

My self Tawde Niraj Milind Student of T.Y.B.Com.

BANKING AND INSURANCE semester 6th (2015-16),
Roll No. 44 hereby declare that I have completed this
project on “LIFE INSURANCE IN INDIAN MARKET”.
All the information submitted is true and original to the
best of my knowledge.
 INDEX

NO. CHAPTERS PAGES

01 INTRODUCTION 1-3
02 COMPANY PROFILE LIC Of India 4-11
LTD
03 Comparison of products 12-14
04 Code of conduct for Agents & 15-19
Actuary
05 MARKETING STRATEGIES IN LIFE 20-26
INSURANCE BUSINESS
06 FDI in Insurance & Market share 27-31
07 Data Analysis & Interpretation 32-40
08 QUESTIONNAIRE 41-42
09 CONCLUSION 43
10 BIBLIOGRAPHY 44
CHAPTER 1
INTRODUCTION

WHAT IS INSURANCE?
Insurance is defined as a co-operative device to spread the loss caused
by a particular risk over a number of persons who are exposed to it and who
agree to ensure themselves against that risk. Risk is uncertainty of a
financial loss. Insurance is a policy from large financial institutions that offers a
person, company, or other entity reimbursement or financial protection
against possible future losses or damages.

MEANING OF INSURANCE:-
The meaning of insurance is important to understand for anybody that is
considering buying an insurance policy simply understanding the basics of
finance. Insurance is important to understand for anybody that is considering
buying an insurance policy simply understanding the basics of finance. Insurance
is a hedging instrument used as a precautionary measure against future
contingent losses. This instrument is used for managing the possible risks of the
future. Insurance is bought in order to hedge the possible risks of the future
which may or may not take place. This is a mode of financially insuring that if
such an incident happens then the loss does not affect the present well-being of
the person or the property insured. Thus, through insurance, a person buys
security and protection. A simple example will make the meaning of
insurance easy to understand. A biker is always subjected to the risk of head
injury. But it is not certain that the accident causing him the head injury would
definitely occur. Still, people riding bikes cover their heads with helmets. This
helmet in such cases acts as insurance by protecting him/her from
any possible danger...

1
TYPES OF INSURANCE:-
WHAT IS LIFE INSURANCE?
Life insurance may be defined as a contract in which the insurer
inconsideration of a certain premium either in lump sum or other
periodical payments, agrees to pay to the assured or to the person for
whose benefits the policy is taken, a stated sum of money on the happening of
a particular event contingent on the duration
of human life. Thus, under awhile-life assurance, the policy is payable at the
of the assured and under an endowment policy, the money is payable on
the assureds surviving a stated period of years.
InsuranceNon-LifeInsuranceGeneralInsuranceMiscellaneousInsuranceLife
Insurance

2
MEANING OF LIFE INSURANCE:-
According to sec (2) (11) of the Insurance Act, Life insurance business
Means ―the business effecting contracts upon human life‖. It includes:
A.
Any contracts whereby the payment of money is assured upon death (except
death by accident only) or the happening of any contingency dependent
on human life.
B.
Any contract which is subject to the payment of premium for a term dependent
on human lives.
Any contract which include the granting of disability and double or triple
indemnity, accident benefits, the granting of annuities upon human life, and the
granting of super-annotation allowances.

3
CHAPTER 2

Part A : COMPANY PROFILE LIC of India Ltd.

The Life Insurance Corporation of India has been a national-builder since its
formation in1956. The performance of LIC has been exemplary and has been
growing from strength be it customer base, agency network, branch office
network, new business premium and the like. It has played a significant
role in spreading life insurance widely across the country. True to objectives of
nationalization, the LIC has invested the funds mobilized from policyholders for
the benefit of the community at large. The other subsidiary companies under LIC
are:
Life Insurance Corporation (LIC) of India International –
A joint venture offshore company promoted by LIC which commenced its
operations in July, 1989 with the objective of offering policies denominated in US
$ to NRIs residing in the Gulf.

LIC Nepal4 –
Formed in 2001 in joint venture with Vishal Group of Industries, Nepal.

LIC Lanka –
Formed in 2003 in joint venture with Bartlett Group of Companies, Sri Lanka

LIC Housing Finance –

Established in 19th June, 1989 in Dubai with the objective of providing long term
finance for construction of houses or apartments.

LIC Housing Finance Limited Care Homes –

A wholly owned subsidiary of LIC Housing Finance which builds
―Assisted Community Living Canters‖ for senior citizens
4
Channels of Distribution

 Individual Agent: The individual agent has been the bedrock and the
lynchpin in the marketing of insurance, especially life insurance. The
professional agent has been the strongest link between the life
insurer and the customer. The professional agent has the onerous
role of explaining the concepts, terms and conditions, benefits and
privileges of the insurance contract. He has to analyze the financial
requirements and risks faced by the customers and market insurance
plans suited to the needs and means of the customers. All insurance
companies and life insurance companies in particular, have recognized
the paramount importance of this channel. The number of agents
has grown at spectacular rate. The total number of agents on
them rolls is11, 03,047 as on 31.03.2007 as against 10,52,283 as on
31.03.2006.
 Corporate Agents: The number of corporate agents has grown in recent
years. Corporate agent is a concept introduced with a view to taking
advantage of the presence of a large number of entities with a
sizeable client base, contacts and good will already operating in the
market. With multi locations and a network of people assisting them,
these entities have a different structure and purpose. Hence their
existing network could be utilized to market insurance. The
corporate agent could thus be defined as a person –meaning a firm or
company formed under the Companies Act, 1956 or a banking company
or a Bank/RRB or a co-operative society registered under the Co-operative
societies Act, 1912 or a panchayat or a NGO/MFI covered under the
Coop Societies Act oar NBFC registered with RBI or any other institution.
They assist greatly in the spread of insurance through the greater
reach of the institutions.
 Brokers: Brokers are permitted to sell products of more than one
insurer. Brokers have been very predominant in the non-life
5
 arena. Large risks require quite sophisticated expertise. Brokers
have played a very key role in this area both in selling products
and in servicing of Insurance claims. Brokers have now also entered the
Life Insurance market.
 Bancassurance: Bancassurance is developing as an important
channel in India. This is due to the large reach and customer base
of banks in both urban and rural areas in India. The persistency
rate in Bancassurance, due to the continuous contact with the clients
better than in other channels. The ease of payment of premium
and the facility of maturity/claim payments through the bank account
make it a customer friendly channel.
 Referrals: This is a new concept very similar to getting
a prospecting list and leads to affect sales with customers. It is
evident that in addition to banks, there could be various other entities
which could act as a referral provider due to the large database of
members/clients, like credit cardholders association members,
society members etc. In short, such institutions could share or market
their database to provide leads to the intermediaries to sell insurance
products. The referral provider is not a licensed intermediary, but can
be regulated by the insurance Regulator, through approval of the
terms of the agreement, between the insurer and the
referral provider.
 Direct Marketing: In the new technological environment, new innovative
marketing systems have evolved. The use of inter-net, web based sales,
e- marketing, telecalling, mobile SMS have made giant strides in
reaching out to customers. This is an emerging channel which in future
may grow in size and proportion of sales. This channel requires
active regulation which should be on issues of transparency,
disclosure, privacy, contract, TRAI guidelines etc. It would be
necessary to give full complete information through soft copies of
proposal forms, schedules, policies etc.100divisional offices and connects
6
 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.
 LIC‘s ECS and ATM premium payment facility is an addition to
customer convenience. Apart from on-line kiosks nadirs, Info Centres have
been commissioned at Mumbai, Ahmadabad, Bangalore, Chennai,
Hyderabad, Kolkata, New Delhi,Pune and many other cities. With a vision
of providing easy access to its policy holders, LIC has launched
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.

Awards Won
Some of the recent awards received by LIC are --
 LIC has been ranked :‖ Number One Trusted Service Brand‖ in the
Economic Times Brand Equity Survey for the year 2008 for the5th
consecutive year, with overall ranking across all categories going up from
27th to 12th.
 Readers Digest ―Trusted Brand‖2008 in the platinum category.
 SKOCH Challengers Award 2008 for our Micro Insurance ProductJeevan
Madhur.
 Customer & Brand Loyalty Award 2008 in the Life Insurance category
from India times Mindscape.
 Rated as the ―Most Preferred Life Insurance Company of the
year‖ at the CNBC Awaaz Consumer Awards 2007 third time in
a roll
 Conferred Peacock Award ― for Excellence in Corporate
Governance
 Conferred Outlook Money NDTV profit-
―Best Life Insurer Award2007‖
―Web 18
7
- Genius of the Web award -
2007 ―For the best website in Insurance Category.
 Adjusted the‖ Best Life Insurance Company of the year‖
- at the Second NDTV Profit Business Leadership Awards-2007.

Part B : Reliance Life Insurance. Ltd.

Reliance Capital Limited announced the launch of its life
insurance business on February 1, 2006. This was after obtaining the re
quired regulatory approvals from the Registrar Of Companies and the Insurance
Regulatory and Development Authority. It was in August 2005 that the ball
was set rolling when Reliance Capital Limited, the financial arm of

Reliance –
Anil Dhirubhai Ambani Group(ADAG) –
Announced the requisition of 100% shareholding in AMPSanmar Life Insurance
Company Limited; and the formal transfer of shares took place in October 2005.
The company will issue all policy contracts under the Reliance Life
Insurance Company limited name. Althea existing policy contracts also stand
transferred to the Reliance Life Insurance entity with all the original contractual
terms and commitments intact. They have so many branches and substations in
the India. They have around 160 branches in the India. And they have planned to
open more branches across the country in the coming months.

8
Key Events
 Anil Dhirubhai Ambani Group (ADAG) announces the acquisition of 100
per cent shareholding in AMP Samar Life Insurance Co Ltd.
 Mr. Nandgopal participates in a one-day conference on
‗optimizing growth opportunities through Distribution
Matrix:‗Emerging Bancassurance‘ organized by the Asia Insurance
Post at the Taj President, Mumbai.
 Reliance Life Insurance officially launched.

Channels of distribution
Reliance Life Insurance Company Limited is using five types of
distribution channel, which are as follows:

 Agency: -
Independent insurance agents represent a number of companies
and can research these companies‘ products to find the right
combination for their clients. Independent agents & insurance producer
groups are growing in prevalence. Although producer groups are in
their infancy, their emergence may potentially be realignment in the
distribution of financial services. Independent shops realized that by pooling
production and funding a central support office, they had increased buying
power. The one type of distribution channel, which Reliance
Life Insurance Co. Ltd issuing, is an agency.

 Bank Assurance: -
While a lot of bank relationships with insurance companies have been
established, life insurance sales have been slower than one would
expect he primary bank insurance activities have been the distribution of
annuities, credit life, and direct marketing insurance. Banks are failing to
incorporate successful sales tactics used to sell other financial services
like investments. Another type of distribution channel is bank assurance.
9
 This channel is tie up with banks. In this channel the advisors using or
targeting the bank customers to make a business with them i.e., to sell the
policy of the company.

 Corporate:-
To gain a better understanding of the demand amongst independent
advisors for trust services and to gain a better feel for how
independent advisors handle trust services, a research was
performed with independent advisors across several broker/dealers
and custodians. The interviews revealed that demand is greatest for
living trusts among independent advisors, followed by demand for corporate
trustee services. Another type of distribution channel incorporate, which
are for employee benefits. This channel is tie up with corporate or small
enterprises. Through these small enterprises, the advisors will sell the
products/policy to customers of the small enterprises.

Rural Benefits:-
Brokerage firms have gained much of the institutional and personal trust
business lost by the banks. These firms have steadily captured assets,
primarily at the expense of the banks. The number of non-bank trust
companies has increased in recent years as independent trust companies
have emerged and more broker/dealers are integrated services. Insurance
companies view full-service brokers as a potentially new distribution channel as
well. Another type of distribution channel is rural benefits. This channel works
as a dealership. In this channel, the dealers will sell the policy to the target
customers.

Web World:-
Direct sales of life insurance are growing rapidly, but many of the traditional
full-serve players seem to be letting it go. Across all financial services,
consumers are expressing a willingness to deal with a variety of
10
providers on the web. Web sites are starting to pop up offering
consumer insurance products especially designed for distribution over the
web. Another type of distribution channels web world. This channel is tie up
with customer database. In this channel, the advisors will sell the policy
to the target customers, which are taken from the customer database, are
listed in the website

11
CHAPTER 3
Comparison of products

Life insurance products are designed to suit the requirements of customers.

Fundamentally the product provide for:
Risk cover --
Investment
Health cover
Group plans In every product, to a certain degree, risk cover is imperative for it to
fall under the category of insurance. Based on the coverage of the product, the
premiums are calculated and the customer pays accordingly. In order to
suggest the right product, it is essential for an agent to understand the
requirements of the customer well. Reliance Life Insurance Company
Limited & LIC has offering different products which, but for the study
some of the insurance are taken for comparison basically they are
traditional plans Traditional plans of Reliance life insurance & LIC of India
which are listed as follows for comparison:

RELIANCE LIFE INSURANCE LIC OF INDIA

Reliance Term Plan LIC An mol Jevons -1
Reliance Whole Life Plan LIC whole Life Policy
Reliance Child Plan LIC Jevons Inshore
Reliance Endowment Plan LIC Endowment Policy
Reliance Special Endowment Plan LIC Jevons An and
Reliance Cash Flow Plan LIC Jevons Surabhi7
Reliance Group Term Assurance Plan LIC Group Term Insurance Scheme

12
C Anmol Jeevan-1 Table 164 Reliance Term Plan
This is the chipset pure risk plan. This plan is also allowed to physically
handicapped persons with standard extra rates. Proposals are considered on
the basis of medical report & special report. On maturity no amount will be
paid to the policyholder. On the event of death of the policyholder during
policy term sum assured will be paid to nominee. This insurance policy is
designed for those who only want life cover for the protection of their family,
and do not wish to save for themselves. It can also be useful to business
firms that wish to provide financial security to their business against the
sudden loss of partners or valuable manpower. Since there is no saving
element or bonus provision, the premiums very low. Hence, this is a high-
risk plan with a low premium.

Features: -
a) Purely a term plan b) Entry age minimum 18 years and maximum 55 year)
Maximum premium paying term is 25 year) Loan facility Name) Maturity
amount = Sum assured

Features: -
a) Purely a term plan b) Entry age minimum 18 years and maximum 65
year) Maximum premium paying term is 30 year) Loan facility Name)
Maturity amount = Sum assured

Modes allowed:-
Premiums can be paid regularly at yearly, half-yearly, quarterly or monthly
intervals (through ECSonly or through salary deductions)over the Policy Term.
However, a grace period of one calendar month but not less than30 days will
be allowed for payment of yearly or half-yearly or quarterly premiums and
15 days for monthly premiums.

13
Modes allowed:-
Premiums can be paid regularly at yearly, half-yearly, quarterly or monthly
intervals (through ECS only or through salary deductions)over the Policy Term.
However, a grace period of one calendar month but not less than30 days
will be allowed for payment of yearly or half-yearly or quarterly premiums
and 15days for monthly premiums.

14
CHAPTER 4
Code of conduct for Agents & Actruty1.

1 Agent
Insurance Regulatory and Development Authority(Licensing of
Insurance Agents) Regulations, 2000 Code of Conduct

(1) Every person holding a license, shall adhere to the code of conduct specified
below:-
A.
Every insurance agent shall, (a) identify himself and the insurance company of
whom he is an insurance agent;(b) disclose his license to the prospect on
demand; (c) disseminate the requisite information in respect of
insurance products offered for sale by his insurer and take into account
the needs of the prospect while recommending a specific
insurance plan; (d) disclose the scales of commission in respect of the
insurance product offered for sale, if asked by the prospect;(e) indicate
the premium to be charged by the insurer for the insurance product offered for
sale; (f) explain to the prospect the nature of information required in
the proposal form by the insurer, and also the importance of disclosure
of material information in the purchase of an insurance contract;(g)
bring to the notice of the insurer any adverse habits or income inconsistency of
the prospect, in the form of a report (called ―Insurance Agent‘s Confidential
Report‖) along with every proposal submitted to the insurer,
and any material fact that may adversely affect the underwriting decision of
the insurer as regards acceptance of the proposal, by making all
reasonable enquiries about the prospect; (h) inform promptly the
prospect about the acceptance or rejection of the proposal by the insurer;
(i) obtain the requisite documents at the time of filing the proposal form with the
insurer; and other documents subsequently asked for by the insurer for
completion of the proposal;(j) render necessary assistance to the
15
 policyholders or claimants or beneficiaries in complying with the
requirements for settlement of claims by the insurer;(k) advise every
individual policyholder to effect nomination or assignment or change of
address or exercise of options, as the case may be, and offer necessary
assistance in this behalf, wherever necessary;

B.
No insurance agent shall, (a) solicit or procure insurance business without
holding a validlicence; (b) induce the prospect to omit any material information
in the proposal form; (c) induce the prospect to submit wrong information in
the proposal form or documents submitted to the insurer for acceptance of
the proposal; (d) behave in a discourteous manner with the prospect;
(e) interfere with any proposal introduced by any other insuranceagent; (f) offer
different rates, advantages, terms and conditions other thanthose offered by his
insurer; (g) demand or receive a share of proceeds from the beneficiary
under an insurance contract; (h) force a policyholder to terminate the
existing policy and to effect a new proposal from him within three years from the
date of such termination; (i) have, in case of a corporate agent, a portfolio of
insurance business under which the premium is in excess of fifty
percent of total premium procured, in any year, from one person (who is not
an individual) or one organization or one group of organizations; (j) apply for
fresh license to act as an insurance agent, if his license was earlier
cancelled by the designated person, and a period of five years has not
elapsed from the date of such cancellation; (k) become or remain
a director of any insurance company;(iii) Every insurance agent shall, with a
view to conserve the insurance business already procured through him, make
every attempt to ensure remittance of the premiums by the
policyholders within the stipulated time, by giving notice to the policyholder
orally and in writing;

16
2. Actuaries

Legislation or Authority:
1. The Insurance Act 1938 (hereinafter referred to as the Act) and
amendments thereto including the Insurance Regulatory and Development
Authority Act, 1999.
2. The Insurance Rules 1939 (hereinafter referred to as the Rules).3. Insurance
Regulatory and Development Authority (Appointed Actuary)Regulations 2000
- (hereinafter referred to as AA Regulations).

3. Application :
This APS is applicable to an Appointed Actuary, appointed in accordance with
provisions contained under AA Regulations, who is appointed by an Insurer
carrying on the business of Life Insurance as defined under Section 2(11) of the
Insurance Act 1938, and shall constitute ‗Professional Standard‘ within the
meaning of Regulation 2(e) of the AA Regulations. This is also applicable
to all other actuaries who as a matter of course get associated with a
life insurer and have to relate directly or indirectly to the Appointed Actuary
of such life insurer.

Legal Framework:
1.1. The following regulations and amendments thereto formed under the
Insurance Regulatory and Development Authority Act, 1999 define the role of
the Appointed Actuary in the management of life insurance
companies:1.1.1. Appointed Actuary,1.1.2. Registration of Indian Insurance
Companies,1.1.3. Actuarial Report and Abstract,1.1.4. Assets, Liabilities and
Solvency Margin of Insurers,1.1.5. Investment, 1.1.6. Preparation of Financial
Statements and Auditor‘s Report. Directors as to the capital requirements
associated with writing the required volume of business.6.2 The Appointed
Actuary should be satisfied that, if new business strain is likely to be a
problem, the company will beagle to meet the necessary reserves and
17
solvency margin requirements from capital within the shareholders‘
funds. 6.3 The Appointed Actuary should as far as possible assess the capital
requirements by using a cash flow approach.7.

Insolvency:
7.1 Where an Appointed Actuary has to use judgenment, this can be based
in some circumstances on his/her estimates of the most probable outco
me. If, however, the solvency of the company is involved, then the
Appointed Actuary must apply much more rigorous standards. The Appointed
Actuary shall also ensure that the ratio of the available solvency margin to the
required solvency margin is reasonable taking into consideration the risk profile
of the assets and liabilities.
7.2 Insolvency - or intervention on the part of the IRDA - can arise either from
factors within the control of a company or from factors which are outside its
control. Where the factors are within the control of the company, the
Appointed Actuary must advise it of the limits within which it must act and why.
Where the factors are outside the company's control, the Appointed Actuary
must take whatever action he/she considers necessary, including that of
communicating to IRDA after due deliberation with the Board of Directors
.
Guidance to Actuaries who are Directors and Employees of a Life Insurance
Company --
1. An actuary should make suitable enquiries and satisfy himself or herself about
the affairs of a company before and after joining its board, as the public
and the other directors will assume that he/shies satisfied with the way
the company is being run;2. Where the Appointed Actuary is also a member
of the Board of Directors or the senior management, he/she needs to
take all reasonable steps to ensure that other members of the Board
of Directors or other senior managers know the capacity in which
he/she is expressing any views.3. Any other actuary who is on the Board of
Directors owes especial responsibility to the Appointed Actuary and should
18
 take care to respect the status of the Appointed Actuary.4. The
requirement of paragraph (3) above also applies to another actuary
holding a managerial or other position of authority in the company.5. As
regards guidance to actuaries - external to a particular company - who
are asked either by the company or someone with legitimate interest in it
to comment on either a valuation carried out by the Appointed
Actuary or a report he/she has made to the company, the guidance
for such actuaries is that, although there is room for differences of
opinion with regard to actuarial advice and judgenment, they should
always take care to respect the status of the Appointed Actuary. This
does not though stop them from making properly reasoned comments
on the work of the Appointed Actuary, if need be.

Guidance to Independent Actuaries:

1. From time to time, an actuary may be called upon to act in an
independent capacity (for example, to function as an independent actuary in
accordance with Section 35(3)(d) of the Act)..
2. Such an actuary should exercise an independent judgenment in the matters
he/she has been asked to work upon. He/she should discuss the matters,
where appropriate, with the Appointed Actuary, bearing in mind that there is
always a room for differences of opinion with regard to actuarial matters and
judgenment.
3. Subject to paragraph B (5), the independent actuary should provide advice
which in his/her opinion is appropriate.

19
CHAPTER 5

MARKETING STRATEGIES IN LIFE INSURANCE BUSINESS

Concept of Marketing --
There are many definitions of marketing. The better definitions are focused upon
customer orientation and satisfaction of customer needs:-

According to Philip Kotler -

Marketing is the social process by which individuals and groups obtain what they
need and want through creating and exchanging products and value with others.

According to P.F Ducker -

Marketing is not only much broader than selling, it is not a specialized
activity at all It encompasses the entire business. It is the whole business
seen from the point of view of the final result, that is, from the customer's point
of view. Concern and responsibility for marketing must therefore permeate all
areas of the enterprise.

The Sales Concept of Marketing

By the early 1930's however, mass production had become commonplace,
competition had increased, and there was little unfulfilled demand.
Around this time, firms began to practice the
sales concept
(or
selling concept),
under which companies not only would produce the products, but also would
try to convince customers to buy them through advertising and personal
selling. Before producing a product, the key questionswere.3The sales concept
paid little attention to whether the product actually was needed; the goal
simply was to beat the competition to the sale with little regard to
20
customer satisfaction. Marketing was a function that was performed after the
product was developed and produced, and many people came to
associate marketing with hard selling. Even today, many people use the
word "marketing" when they really mean sales.

Modern Concept of Marketing

Old concept New concept

Product /serviceSalesProfit maximization throughsalesIdentify customers

needsProduct/ServiceSaleProfit through customersatisfactionCustomer
welfare

4P’s Of Marketing
Figure1. Represents 4 P‘s
4 P’s:
Product planning.
Pricing policies.
Physical distribution
Promotion policies
Customer Product planning Pricing policies Promotion Policies Physical
distribution

21
MARKETING MIX FOR INSURANCE COMPANIES
The marketing mix is the combination of marketing activities that anorganization
engages in so as to best meet the needs of its targetedmarket. The Insurance
business deals in selling services and therefore dueweight age in the
formation of marketing mix for the Insurance businessis needed. The marketing
mix includes sub- mixes of the 7 P‗s of
marketing i.e. the product, its price, place, promotion, people, process &
physical attraction. The above mentioned 7 P‗s can be used for
marketing of Insurance products, in the following manner:
22
 1. PRODUCT
A product means what we produce. If we produce goods, it means
tangible product and when we produce or generate services, it means intangible
service product. A product is both what a seller has to sell and a buyer has to buy.
Thus, an Insurance company sells services and therefore services are their
product. In India, the Life Insurance Corporation of India (LIC) and the General
Insurance Corporation (GIC) are the two leading companies offering insurance
services to the users. Apart from offering life insurance policies, they also offer
underwriting and consulting services. When a person or an organization buys an
Insurance policy from the insurance company, he not only buys a policy,
but along with it the assistance and advice of the agent, the prestige of
the insurance company and the facilities of claims and compensation. It is
natural that the users expect a reasonable return for their investment and
the insurance companies want to maximize their profitability. Hence, while
deciding the product portfolio or the product-mix, the services or the
schemes should be motivational. The Group Insurance scheme is required
to be promoted, the Crop Insurance is required to be expanded
and the new schemes and policies for the villagers or the rural population are
to be included. The Life Insurance Corporation has intensified efforts to promote
urban savings, but as far as rural savings are concerned, it is not that impressive.
The introduction of Rural Career Agents Scheme has been found instrumental in
inducing the rural prospects but the process are at infant stage and require
more professional excellence. The policy makers are required to
activate the efforts. It would be prudent that the LIC is allowed to pursue
a policy of direct investment for rural development. Investment in
Government securities should be stopped and the investment should be
channelized in private sector for maximizing profits. In short, the formulation of
product-mix should be in the face of innovative product strategy. While initiating
the innovative process it is necessary to take into consideration the strategies
adopted by private and foreign insurance companies.

23
 2. PRICING
In the insurance business the pricing decisions are concerned with:
The premium charged against the policies,
Interest charged for defaulting the payment of premium and credit facility, and
Commission charged for underwriting and consultancy activities. With a view of
influencing the target market or prospects the formulation of pricing strategy
becomes significant. In a developing country like India where the disposable
income in the hands of prospects is low, the pricing decision also governs the
transformation of potential policyholders into actual policyholders. The
strategies may be high or low pricing keeping in view the level or standard of
customers or the policyholders. The pricing in insurance is in the form of
premium rates. The three main factors used for determining the premium rates
under a life insurance plan are mortality, expense and interest. The
premium rates are revised if there are any significant changes in any of
these factors.

Mortality(deaths in a particular area):When deciding upon the pricing

strategy the average rate of mortality is one of the main considerations. In a
country like South Africa the threat to life is very important as it is played
by host of diseases.

Expenses: The cost of processing, commission to agents, reinsurance companies

as well as registration are all incorporated into the cost of instalment sand
premium sum and forms the integral part of the pricing strategy.

Interest: The rate of interest is one of the major factors which

determines peoples willingness to invest in insurance. People would
not be willing to put their funds to invest in insurance business if the
interestrates provided by the banks or other financial instruments are
muchgreater than the perceived returns from the insurance premiums.

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 3. PROMOTION
The insurance services depend on effective promotional measures.In a country
like India, the rate of illiteracy is very high and therural economy has
dominance in the national economy. It isessential to have both personal and
impersonal promotionstrategies. In promoting insurance business, the agents
and the ruralcareer agents play an important role. Due attention should be
givenin selecting the promotional tools for agents and rural career agentsand
even for the branch managers and front line staff. They alsohave to be
given proper training in order to create impulse buying.Advertising and
Publicity, organization of conferences andseminars, incentive to policyholders
are impersonalcommunication. Arranging Kittens, exhibitions, participation
infairs and festivals, rural wall paintings and publicity drive throughthe mobile
publicity van units would be effective in creating theimpulse buying and the rural
prospects would be easily transformedinto actual policyholders.

4. PHYSICAL DISTRIBUTION
Distribution is a key determinant of success for all insurancecompanies.
Today, the nationalized insurers have a large reach and presence in
India. Building a distribution network is very expensiveand time
consuming. If the insurers are willing to take advantage of India‗s large
population and reach a profitable mass of customers, then new
distribution avenues and alliances will be necessary.Initially insurance was
looked upon as a complex product with ahigh advice and service component.
Buyers prefer a face-to-faceinteraction and they place a high premium on brand
names andreliability. As the awareness increases, the product
becomessimpler and they become off-the-shelf commodity products. Today,
various intermediaries, not necessarily insurance companies, are selling
insurance. For example, in UK, retailer like Marks &Spencer sells insurance
products. The financial services industrieshave successfully used remote
distribution channels such astelephone or internet so as to reach more
customers, avoidintermediaries, bring down overheads and increase
25
profitability. Agood example is UK insurer Direct Line. It relied on telephonesales
and low pricing. Today, it is one of the largest motorinsurance operators.
Technology will not replace a distributionnetwork though it will offer advantages
like better customerservice. Finance companies and banks can emerge as
an attractivedistribution channel for insurance in India. In Netherlands,financial
services firms provide an entire range of productsincluding bank accounts,
motor, home and life insurance and pensions. In France, half of the life
insurance sales are made through banks. In India also, banks hope to
maximize expensive existing networks by selling a range of products. It is
anticipated that rather than formal ownership arrangements, a loose network of
alliance between insurers and banks will emerge, popularly known as banc
assurance. Another innovative distribution channel that could be used is
the non-financial organizations. For an example, insurance for consumer items
like fridge and TV can be offered at the point of sale. This increases the
likelihood of insurance sales. Alliances with manufacturers or retailers of
consumer goods will be possible and insurance can be one of the various
incentives offered.

26
CHAPTER 6
FDI in Insurance & Market share

Life Insurance is the fastest growing sector in India since 2000 as Government
allowed Private players and FDI up to 26% and recently Cabinet approved a
proposal to increase it to 49%. Life Insurance in India was nationalized by
incorporating Life Insurance Corporation (LIC) in1956. All private life
insurance companies at that time were taken over byLIC.In 1993, the
Government of India appointed RN Malhotra Committee tolay down a road map
for privatization of the life insurance sector.While the committee submitted its
report in 1994, it took another sixyears before the enabling legislation was
passed in the year 2000,legislation amending the Insurance Act of 1938
and legislatingthe Insurance Regulatory and Development Authority Act
of 2000. Thesame year the newly appointed insurance regulator - Insurance
Regulatoryand Development Authority IRDA started issuing licenses to private
lifeinsurers.

Foreign Direct Investment (FDI) Policy in Insurance Sector

as per the current (March 2006) FDI norms, foreign participation in anIndian
insurance company is restricted to 26.0% of its equity / ordinaryshare capital.
The Insurance Regulator has stipulated that foreigninvestment in Indian
Insurance companies be limited to 26% of totalequity issued (FDI limit) with the
balance being funded by Indian promoter entities. The limit to foreign
investment includes both direct andindirect investment and has been a
cause of significant lobbying byforeign insurance companies for a change in
regulations to increase theFDI limit to 49% of equity issued.The Indian
government has supportedan increase in the FDI limit, which requires a
change in the Insurance Act.The Union Budget for fiscal 2005 had
recommended that the ceiling onforeign holding be increased to 49.0%.A
change in the Insurance Act requires a passage of the bill in bothhouses of
Parliament. The Indian government has tabled the bill in theUpper House of
Parliament in August 2010.
27
Initial Public Offer (IPO) rules for Indian Life Insurance Companies
A key piece of legislation impacting on the Life Insurance industriescapital raising
abilities is the lock-n period of 10 years for investment to be limited to promoter
group equity investments. Under the InsuranceGuidelines, Indian Life
Insurance companies can opt for a public issue ofequity through an Initial Public
Offer (IPO) after 10 years of operations.In October 2010, the securities market
regulator, Securities and ExchangeBoard of India (SEBI), issued disclosure norms
for Indian Life InsuranceCompanies seeking to make an initial public offer for sale
of equityshares to the public

Birla Sun Life Insurance Company: -

Birla Sun Life Insurance Company is a 74:26 joint venture between Birla group
and Sun Life Financial. It is a privatesector company. The company was
registered on 31/1/2001.The market share for FY 2012-13 was 1.72%.

HDFC Standard: -
HDFC standard is a 74:26 joint venture between HDFC andStandard Life. It is a
private sector company. The companywas registered on 23/10/2000. The
market share for FY2012-13 was 1.66%.

ICICI Prudential Life Insurance: -

ICICI Prudential Life is a 74:26 joint venture between ICICIand Prudential. It is a
private sector company. The companywas registered on 24/11/2000. The
market share for FY2012-13 was 6.91%.

Life Insurance Corporation of India (LIC): -

Life Insurance Corporation of India is a 100% governmentheld Public Sector
Company. Being the first to be establishedLIC is the forerunner in the Life
Insurance sector. Themarket share for FY 2012-13 was 76.07%.

28
29
30
31
CHAPTER 7
Data Analysis & Interpretation

1)DATA GIVES INFORMATION OF THE INSURED RESPONDENTS OF INSURER

COMPANY SECTOR NO. OF RESPONDENTS SHARE(%)PUBLIC SECTORLIFE
INSURER14 70PRIVATE SECTORLIFE INSURER6 30 Sector
Public sectorPrivate sector

32
Interpretation:-
In this study 70% of respondents like take insurance from publiclife insurer &
only 30% of respondents take insurer from private lifeinsurer. This shows
respondents are more prone to take life insurancefrom public life insurer. It
indicates that public life insurer has bettergoodwill than private life insurer.

2)DATA GIVES INFORMATION OF THE INSUREDRESPONDENTS ABOUT

PREFRENCE OF INSURERPREFRENCE NO. OFRESPONDENTSSHARE(%)
REPUTATION 8 40 PRICE OF PREMIUM 4 20 BENEFIT 315 FLEXIBLE PREMIUM
PAYMENT5 25

33
Interpretation:-
This study shows that respondents prefer to take insurance depends
on individual‘s preference. Respondents prefer reputation than any
other factors. Reputation has 40% share & Flexible premium payment has
25%share. These are the two measure factors that are taken into
consideration.

3) DATA GIVES INFORMATION OF THE INSUREDRESPONDENTS ABOUT

PREMIUMPREMIUM NO. OFRESPONDENTSSHARE(%)YES 11 55NO 9 45
Preference
ReputationPrice of PremiumBenefitsFlexible Premium Payment

34
Interpretation:-
This study gives information of the insured respondents about premium. 11
respondents have 55% share in payment of premium which is considered as yes.
Remaining 9 out of 20 respondents have 45 % of share in non payment of
premium.

4) DATA GIVES INFORMATION OF THE INSURRED RESPONDENTS ABOUT

PERIOD SELECTION FOR PAYMENT OF PREMIUM

35
Interpretation:-
This diagram shows study of mode of selection made by the
respondents for payment of premium. Premium period starts from 0-10
years where 3 respondents our of 20 are ready for payment of
premium which has 15% share out of total percentage. Which goes on
increasing as per above diagram shown.
5) DATA ABOUT INSURED RESPONDENTS ON MODE OF PREMIUM
PAID.

36
Interpretation:-
This diagram helps us in study of mode of payment of premium
available for insurred. Single mode(i.e one time premium) is mainly
taken by 3 respondents out of total respondents which has market
share of 15%. Regular premium mode is taken by 17 respondents which
has market share of 85% for payment of premium.

37
6) DATA GIVES INFORMATION ABOUT BEST INVESTMENT
ALTERNATIVES AVAILABLE FOR RESPONDENTS.

38
Interpretation:-
This diagram helps us in study of best investment avenues available in
market. With the help of number of respondents investing in particular
avenues and having specific market share. The very 1stoption is post
office schemes were 3 respondents invest in these out of total 20
peoples having market share of 15%. In life insurance option 4
respondents invest having market share of 20%. The highest
investment made by the respondents is in bank deposit with 6
respondents having market share of 30%.
7) DATA GIVES INFORMATION ABOUT THE PROMOTIONAL MEDIA OF
INSURER.

39
Interpretation:-
These diagram helps us in study of insurer affected by media for taking
the insurance policy of specific company. The no. of people influence to
take insurance with the help of TV advertisement is 6 respondents
having market share of 30%. With the help of hoarding 2 respondents
having market share of 10% and so on. The highest no. of respondents
are influenced by agents to take policy with 8 no. of respondents having
market share of 40%.

40
CHAPTER 8
QUESTIONNAIRE

A study of Life Insurance plan as a part of financial planning

Please fill the following
details.Name:Age:Gender:Qualification:Designation:Phone No.:Email ID:
1. In which company you have Life Insurance Policy?
a) Public Life Insurance [ ]
b) Private Life Insurance [ ]

2. Among various insurance companies why did you chose the above
mentioned company?
a) Due to reputation of the company [ ]
b) Due to Price of premium of policy [ ]
c) Due to benefit of the policy [ ]
d) Flexible premium payment options [ ]

3. Is the premium within your budget?

a) Yes [ ]
b) No [ ]

4. Period of plans selected?

a) 0-10 years [ ]
b) 10-15 years [ ]
c) 15-20 years [ ]
d) 20 or more [ ]

5. Mode of premium?
a) Single premium [ ]
b) Regular premium [ ]

41
6. What is the best option of investment?
a) Post Office schemes [ ]
b) Life Insurance [ ]
c) Mutual Fund [ ]
d) Share Market [ ]

7. Which promotional media do you think is the best one to make people
educate about an insurance policy
a) TV advertisement [ ]
b) Hoardings [ ]
c) Paper advertisement [ ]
d) Banners [ ]
e) Agents [ ]

8. Did you suggest your colleagues, relatives or any of your friends about
which is the best company to opt for an insurance policy
a) Yes [ ]
b) No [ ]

42
CHAPTER 9

CONCLUSION
Any contracts whereby the payment of money is assured upon death
(except death by accident only) or the happening of any contingency
dependent on human life. Any contract which is subject to the payment of
premium for a term dependent on human lives. Any contract which include the
granting of disability and double or triple indemnity, accident benefits, the
granting of annuities upon human life, and the granting of super-annotation
allowances. These project has taught me various unknown facts with regard to
insurance. In India LIFE INSURANCE CORPORATION OF INDIA plays a major role
in insurance sector. It is on of the largest public sector company in India selling
insurance. It has the market share of 74.4% of selling life insurance products in
India. Once again I am thanking to my project guide who gave me opportunity
for making the project on such a big topic. These project has boosted my
knowledge regarding these major sector of financial market.

43
CHAPTER 10
BIBLIOGRAPHY

1. BOOKS/MAGAZINES REFFERED:

STUDY GUIDE- PRINCILES & PRACTICES OF LIFE /GENERALINSURANCE,

by AIMA.

Books published by INSURANCE INSTITUTE OF INDIA

LIFE-INSURANCE, by Mc GILL
INSURANCEWATCH.
MONEYOUTLOOK.

2. WEBSITES REFFERED:

WWW.RELIANCELIFE.COM
WWW.CIFAINSURANCE.COM
WWW.MONEYOUTLOOK.COM
WWW.INSURANCE.IND.COM
www.licindia.in

3. REPORTS/ARTICLES REFFERED:

REPORT: ISSUES & CHALLENGES FACING THE

INSURANCE INDUSTRY…. Dec2009
.BRIE
F PROFILE OF LIC, INDIA…Dec 2012
.REPORT:
COPING WITH COMPETITION…Jan2012
44