CHAPTER-I

INTRODUCTION

1.1 MEANING OF INSURANCE:

Insurance is an agreement under which people facing common threats come together and make
their small benefactions to the common fund. While it may not be possible to say in advance,
which person will suffer the losses, it’s possible to work out how numerous persons on an
average out of the group, may suffer losses.

When threat occurs, the loss is made good out of the common fund. In this way, each and every
one shares the threat. In fact, they share the loss by payment of premium which is calculated on
the liability of loss.

1.2 DEFINITION OF INSURANCE:

According to E.W.Patterson “Insurance is a contract by which one party, for a consideration

called premium, assumes particular risk of the other party and promises to pay him or his
nominee a certain or ascertainable sum of money on specified contingency.”

1.3 ESSENTIAL PRINCIPLES OF INSURANCE:

The essential rudiments that are needed for creation of a valid contract similar as offer and
acceptance, capability of the parties to contract, free concurrence of the equivalence, legal
object and legal consideration, are applicable to life insurance contract should be grounded upon
two important principles viz., utmost good faith and insurable interest.
1. Offer and Acceptance: Offer is an of proposer’s intention to buy life assurance. The offer
in life insurance is called offer and has generally the following forms
• Offer for assurances
• Agents reports
• Medical reports
Offer form gives information about the moral hazard involved, while medical report
reveals the physical fitness of the life to be assured. The agent s report brings out moral
hazard in the offer as also Bonafede’s of the proposal. However, the insurer is prepared to
issue a policy, it sends a letter of acceptance is also called counter offer which is accepted
by the proposed by paying the first decoration, If after assessing the offer for assurance. In
some cases, insurer may modify the terms of offer. So, there’s revised terms and pays of
the acceptance unless proposer accepts the revised terns and pays the premium.

2. Capacity of parties: Minors, person of unsound mind and adversary, aliens can not affect
assurance. Also, only those insurers can grant programs, which are certified by the IRDA
1. A minor isn’t competent to contract, but a natural guardian (parent) can enter into a
valid contract on behalf of a minor.
2. Under the children remitted assurance, the parent or guardian proposes for assurance on
the life of the child. Till the child attains the age of maturity (18 times) the policy
remains the property of the proposer.
3. After the policy has invested in the child automatically, on attainment of the age of
maturity, proposer (parent) has no control over the policy.
4. Children Endowment policy is affected on the life of the parent for the benefit of the
child. Premium are charged according to the age of the parent or guardian. Premium
may cease at the death of the parent but benefits are outstanding at the end of the term.
Therefore, minor child isn’t a party to the contract.
5. Person of Unsound Mind A person of unsound mind is can not enter into any contract.
• When a person of supposedly sound mind enters into a contract of his
assurance which is bonafided and duly completed duly completed, it’s a
valid contract.
 • When an firstly valid contract has been entered into a contract, it’ll not
be affected if one of the equivalence becomes insane latterly. It means
that if life assured becomes lunatic after taking the insurance policy the
contract will remain valid.

3. Free consent: When parties to the contract agree upon the terms and condition of the
agreement in the same sense, they’re said to have acceded. Concurrence is considered free
when it isn’t attained by compulsion overdue influence, fraud, misrepresentation or
mistake.
Significance of Free Consent and Agent: Where a person subscribe a offer, he gives his
concurrence. But when he signs in conversational or a language different from that of form,
he must declare his own hand that he contents of offer were explained to him and he was
inked the offer after full understanding them. The substantiation to the offer should also
certify that he explained the contents of the 1orm to the proposer, only also the
concurrence is considered free. Agent are advised to the careful that offer for assurance is
given by the proposer with a free concurrence and agent shouldn’t borrow illegal practices.

4. Legitimacy of Object: The main condition to satisfy this demand is that the contract
shouldn’t be grounded on a bare gambling instinct and the object of insurance and
decoration( consideration) isn’t fraudulent, immoral and interdicted by law.

5. Consideration: Consideration or decoration grounded on the rate of mortality, interest

yield and office charges are worked out scientifically on actuarial principles and the
soundness of these principles are insinuated to the IRDA by the company. Thus, liability
of decoration is established.
6. Utmost Good Faith (Principle of Uberrima fidei): The proposer, one of the parties to
the contract of life assurance, is in a position to conceal important information from the
insurer. Non-disclosure of his once affections, former insurance history and his life style
may lead to insurer to make a wrong decision about the offer for assurance. This type of
information as ensured is also anticipated to give a fair deal to the life assured. It is, thus,
veritably essential that both the parties display utmost good faith in each other. This
 principle of telling all material fact is called uberrima fidei and is unique to the contract of
life assurance.
7. Insurable Interest: The ensured at the time of taking insurance most have insurable
interest and the life to be ensured if the policy is to be valid. The person who have an
insurable interest must stand in such a relation to the event ensured against that he’d suffer
a financial or financial loss if the event actually happens. Thus anyone who has a financial
claim against another or a legal right to support and conservation from him has an
insurable interest in the life of that other person. In considering the question of insurable
interest the polices is may be divided into two classes:
a) policy on own life Anybody can ensure his life and he’s said to have insurable interest
on his own life. This requires no evidence.
b) policy on the life on others when an insurance policy is taken on the life of another
person, the assuring party should prove his insurable interest on the life assured (another
person). The following person have the insurable interest and so no evidence is needed
i. A man is the life of his woman
ii. A woman in the life of her hubby
iii. A father in the life of his son, if he dependent on his son
iv. A son in the life of his father, who supports him
v. A creditor in the life of debtor to the extent of his debt.
Thus, insurable interest may arise as a result of marketable deals as well as family relations
which give rise to financial claim.

1.4 TYPES OF INSURANCE:

 Life Insurance
 Non-life Insurance

1.5 MEANING OF LIFE INSURANCE:

Life insurance is a contract whereby the ensured pledges to pay a invariant rate of decoration
at fixed intervals of time against which the insurer agrees to pay a fixed quantum on the passing
of the event which may be the death of the assured or the expiry of certain number of times.
Still, the ensured may nominate a person to admit the quantum, If the payment is to be made on
the death of theinsured.However, also the ensured may himself admit it if he’s alive on the
expiry date else his designee will admit it, If the quantum is to be paid on the expiry of a
certain number of times.

1.6 DEFINITION OF LIFE INSURANCE:

According to Section 2(11) of INSURANCE ACT 1938, “Life Insurance is the business of
effecting contracts of insurance upon human life, including any contract whereby the payment of
money is assured on death (except death by accident) or the happening of any contingency
dependent on human life any contract which is subject to the payment of premiums or a term
dependent on human life and shall be deemed to include:

 The granting of disability or double or triple indemnity accident benefits if so provided in

the contract of insurance;
 The granting of annuities of human life; and
 The granting of super annutaion allowance and annuities payable out of any fund
applicable solely to the relief and maintenance of persons engaged or who have been
engaged in any particular profession, trade or employment or the dependents of such
persons”

1.7 TYPES OF LIFE INSURANCE:

 Whole life Policy
 Endowment Insurance policy
 Term Insurance policy
 Money-Back Policy
 Joint Life Policy
 Annuity Policy
 Pension Plan Policy
 ULIP (Unit Linked Insurance Policy)
A. WHOLE LIFE POLICY: As it's clear from the name, these policies are issued for
whole life. The sum assured Payable only on the death of the life assured. The premiums
under these schemes are smallest of all other plans and it's outstanding till death. These
are suitable for youthful people with bare income whose family and growing children
need maximum fiscal security. These schemes are further divided into three types. They
are:
 Limited payment whole life policy: Under this policy, premiums are outstanding
for a limited a limited no. Of times, chosen by the life assured. still, sum assured
is outstanding on death only.
 Limited payment life policy with Single premium: Under this policy, premiums
are outstanding one time only. However, the policy continue in full force and full
sum assured (with or without perk) will be paid on death, If the life assured
survives the quested term of the policy.
 Convertible whole life policy: This policy begins as a whole life one but the life
assured has the option to convert it into an talent plan, after a lapse say 5 or 6
years.

B. ENDOWMENT POLICY: The Endowment policy are taken for a specified period
in which sum assured is outstanding on expiry of the specified period (maturity) or earlier
death. decorations are typically outstanding throughout the term of the policy or till
previous death of the life assured. These programs give Security of family in case of
death and accumulates saving as succour for old age. Some of the variant of talent
schemes are as follows:
 Limited payment Endowment Policy: It differs from the usual talent in one
respect that decorations are outstanding for a shorter duration that the maturity
period. The threat remains covered upto the maturity date of the policy.
 Jeevan Mithra PlanNo. 88 (Double cover) This policy secures
(a) introductory sum assured if life assured dies during the term of the policy and
(b) Double the sum assured on maturity of policy.
 Jeevan Mitra Triple Coverno.l53: This policy provides
 (a) Thrice of the introductory sum assured in the event of death before maturity.
(b) Sum assured on maturity. This policy can be used as contributory security for
getting casing plans.

C. MONEY BACK POLICY: The money back plan is useful for those who, besides a
desire to save for their own old age and family, feel the need for lumpsum benefits at
periodic intervals. The following are some of the important money back policies:
 Jeevan Samridhi PlanNo. 155: Under this policy, 25 of sum assured is
outstanding at the end of l0 times and the balance 50 is outstanding at the end of
15 times.
 Jeevan Rekha Plan.152: This policy is combination of the whole life policy and
the plutocrat back plan. Under this policy, 10 of the introductory sum assured will
be outstanding to the life assured will be outstanding to the life assured on
survival after every 5 times from the date of inception.
 Jeevan Bharathi Plan 160: This plutocrat back plan is designed simply for
women. Under this plan, 20 of the sum assured are outstanding at the end of 20
times. On the death of the life assured, full sum assured is outstanding, along with
Guaranteed additions plus perk, if any, irrespective of survival benefits paid
formerly.

1.8 NEED OF LIFE INSURANCE:

A life insurance policy is a contract with an insurance company. In exchange for decoration
payments, the insurance company provides a lump- sum payment, known as a death benefit, to
heirs upon the insured's death. generally, life insurance is chosen grounded on the requirements
and pretensions of the proprietor. Term life generally provides protection for a set period of
time while endless insurance similar as whole and universal life, provides continuance content.
It’s important to note that death benefits from all types of life insurance are generally income
duty-free. The following are the requirements of the life insurance:
 1) To give Security and Safety: The Life Insurance provides security against unseasonable
death and payment in old age to lead the comfortable life. also in general Insurance, the property
can be ensured against any contingency i.e. fire, earthquakes.

2) To give Peace of Mind: The query due to fire, accident, death, illness, disability in the mortal
life, it's beyond the control of the mortal beings. By way of Insurance, he may be compensated
financially but not emotionally. The fiscal compensation provides not only peace of mind but
also motivates to work more and more.

3) To exclude reliance: On the death of the breadwinner, the consequences need not be
explained. analogous to the destruction of property and goods the family would suffer a lot. It
could lead to reduction in the standard of living or soliciting from cousins, musketeers or
neighbours. The profitable independence of the family is reduced. The Insurance is the only way
to help and provider them acceptable at the time of suffering.

4) To Encourage Savings: LIC insurance provides protection and investment while general
Insurance provides only protection to the mortal life and property independently. Life Insurance
provides methodical saving because once the policy is taken also the decoration is to be
regularly paid else the quantum will be ropped.

5) To fulfil the requirements of a person:

• Family needs
• Old age needs
• Re-adjustment needs
• Special needs Education, Marriage, health
• The requirements After death, ritual observances, payment of wealth duty and income
levies are certain conditions, which decreases the quantum of finances of the family
members.

6) To Reduce the Business Losses: In business the huge quantum is invested in the parcels i.e.
Building and Plant and Machinery. These parcels may be destroyed due to any negligence, if it
isn't ensured no body would like to invest a huge quantum in the business and assiduity. The
insurance reduced the query of business losses due to fire or accidents.
7) To Identify the keyman: Keyman is a particular man whose capital, moxie, energy and
dutifulness make him the most precious asset in the business and whose absence well reduce the
income of the employer extensively and upto that time when similar hand isn't substituted. The
death or disability of similar precious lives will prove a more serious loss than that fire or any
hazard. The implicit loss to be suffered and the compensation to the dependents of similar hand
bear an acceptable provision, which is met by copping an acceptable life programs.

8) To Enhance the Limit: The business can gain loan but pledging the policy as collateral for
the loan. The insured persons are getting further loan due to certainty of payment at their death.

1.9 BENEFITS OF BUYING LIFE INSURANCE AT EARLY AGE:

People who started earning early and especially single substantially they believe that life
insurance isn't commodity need right down. But in Life Insurance decorations, age is one of the
most critical factors, and it makes a strong case for buying life insurance as early in life as
possible.

I. Premium increases with age: Generally youngish policyholders are free of medical
conditions can get a plan for a many thousands rupees a time without threat of increase in
decoration down. A person is at a lesser threat of reaching critical illness similar as
diabetes, cancer in his old age.
II. Dependants need the protection: Whether policyholder is a man or a woman, if he's
contributing to the ménage’s income, his absence can beget a huge fiscal strain to his
family. Policyholders dependants- be it his parents, partner, or children- will have to bear
the mass of paying off his home or education loans, and indeed managing day- to- day
charges without his donation. So taking a life insurance policy at youngish age helps the
policy holders family to have a better life in his absence.
III. To live stress free: As a 25 or indeed a 30- time-old, it’s insolvable to prognosticate
individual fiscal requirements after existent have gotten wedded, had children, bought
a auto or house, or reached some other or corner in his life. Term plans are therefore
ideal because they let existent to increase and drop at important stages similar as
marriage and parturition. also existent's children have grown up and come independent,
 individual should have the option of reducing the cover he's getting, and his decoration.
In this way term plans avoid the uncomfortable feeling that accompanies being over-
insured or under- ensured and gives you the right quantum of cover at all times.

1.10 HISTORY OF LIFE INSURANCE CORPORATION OF INDIA:

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

Life Insurance in its modern form came to India from England in the year 1818. Oriental Life
Insurance Company started by Europeans in Calcutta was the first life insurance company on
Indian Soil. All the insurance companies established during that period were brought up with the
purpose of looking after the needs of European community and Indian natives were not being
insured by these companies. However, later with the efforts of eminent people like Babu
Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian lives
were being treated as sub-standard lives and heavy extra premiums were being charged on them.
Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company
in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with
highly patriotic motives, insurance companies came into existence to carry the message of
insurance and social security through insurance to various sectors of society. Bharat Insurance
Company (1896) was also one of such companies inspired by nationalism. The Swadeshi
movement of 1905-1907 gave rise to more insurance companies. The United India in Madras,
National Indian and National Insurance in Calcutta and the Co-operative Assurance at Lahore
were established in 1906. In 1907, Hindustan Co-operative Insurance Company took its birth in
one of the rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The
Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were some of the
companies established during the same period. Prior to 1912 India had no legislation to regulate
insurance business. In the year 1912, the Life Insurance Companies Act, and the Provident Fund
Act were passed. The Life Insurance Companies Act, 1912 made it necessary that the premium
rate tables and periodical valuations of companies should be certified by an actuary. But the Act
discriminated between foreign and Indian companies on many accounts, putting the Indian
companies at a disadvantage.

The first two decades of the twentieth century saw lot of growth in insurance business. From 44
companies with total business-in-force as Rs.22.44 crore, it rose to 176 companies with total
business-in-force as Rs.298 crore in 1938. During the mushrooming of insurance companies
many financially unsound concerns were also floated which failed miserably. The Insurance Act
1938 was the first legislation governing not only life insurance but also non-life insurance to
provide strict state control over insurance business. The demand for nationalization of life
insurance industry was made repeatedly in the past but it gathered momentum in 1944 when a
bill to amend the Life Insurance Act 1938 was introduced in the Legislative Assembly. However,
it was much later on the 19 th of January, 1956, that life insurance in India was nationalized.
About 154 Indian insurance companies, 16 non-Indian companies and 75 provident were
operating in India at the time of nationalization. Nationalization was accomplished in two stages;
initially the management of the companies was taken over by means of an Ordinance, and later,
the ownership too by means of a comprehensive bill. The Parliament of India passed the Life
Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India
was created on 1st September, 1956, with the objective of spreading life insurance much more
widely and in particular to the rural areas with a view to reach all insurable persons in the
country, providing them adequate financial cover at a reasonable cost.

LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate
office in the year 1956. Since life insurance contracts are long term contracts and during the
currency of the policy it requires a variety of services need was felt in the later years to expand
the operations and place a branch office at each district headquarter. Re-organization of LIC took
place and large numbers of new branch offices were opened. As a result of re-organisation
servicing functions were transferred to the branches, and branches were made accounting units.
It worked wonders with the performance of the corporation. It may be seen that from about
200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores only in the year
1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But
with re-organisation happening in the early eighties, by 1985-86 LIC had already crossed
7000.00 crore Sum Assured on new policies.

Today LIC functions with 2048 fully computerized branch offices, 113 divisional offices, 8
zonal offices, 1381 satellite offices and the Corporate office. LIC’s Wide Area Network covers
113divisional offices and connects all the branches through a Metro Area Network. LIC has tied
up with some Banks and Service providers to offer on-line premium collection facility in
selected cities. LIC’s ECS and ATM premium payment facility is an addition to customer
convenience. Apart from on-line Kiosks and IVRS, Info Centres have been commissioned at
Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many
other cities. With a vision of providing easy access to its policyholders, LIC has launched its
SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the
customer. The digitalized records of the satellite offices will facilitate anywhere servicing and
many other conveniences in the future.

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

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

1.11 IMPORTANT MILESTONES IN THE LIFE INSURANCE

CORPORATION BUSINESS IN INDIA ARE AS FOLLOWS:
 Year Description of New Development and Important
Events

1818 Europeans started the Oriental Life Insurance

Company in Calcutta.

1870 Bombay Mutual Life Assurance Society, the first

Indian life insurance company started its business.

1912 The Indian Life Assurance Companies Act enacted as

the first statue to regulate the life business.

1928 The Indian Insurance Companies Act enacted to enable

the government to collect statistical information about
both life and non-life insurance businesses.

1956 245 Indian and foreign insurers and provident societies

are taken over by the central government and
nationalised. LIC formed by an Act of Parliament, viz.
LIC Act, 1956, with a capital contribution of Rs. 5
crore from the Government of India.

1.12 TAX BENEFITS ON VARIOUS LIC INSURANCE POLICIES:

LIC has a host of different insurance programs that are suitable for different types of guests.
Listed below are each applicable duty benefits that you get to mileage if you enjoy an
insurance policy from the most premiere insurance providers of the country. All duty impunity
for payment of LIC decorations are offered as per Section 80C of the Income Tax Act, 1961. Let
us look into the duty benefits that are entered by guests if they buy a life insurance policy from
LIC.

1. Tax benefits on Life Insurance programs from LIC (under section 80C)
• Premium paid towards life insurance policy (profited on or before 31 st March
2012) in the name of tone / partner/ child is eligible for deduction up to 20 of the
factual capital sum assured.
 • Premium paid towards life insurance policy (profited after 1 st April 2012) in the
name of tone / partner/ child is eligible for deduction up to 10 of the factual
capital sum assured.
• Donation towards remitted subvention plans to keep a remitted subvention plan
for tone ‘ partner/ child is eligible for deduction but only if the contract doesn’t
offer cash payment to client in lieu of subvention payment made by him or her.
2. Duty benefits on LIC insurance programs under section 80CCC:
Section 8OCCC comes under the marquee of section 80C and offers duty impunity to
guests who are paying insurance decoration from their taxable income towards any
subvention plan that promises them payment of pension in the after time.
• Duty benefits under section 80D which are applicable to LIC insurance programs.
• Nearly all health insurance related duty benefits come under the exercise of
section 80D of the Income Tax Act. Let us look into each of these deductions in
detail.
• Upto Rs. 25000 is allowed as deduction for guests who have paid plutocrat
towards government health insurance scheme or health insurance for tone or
family or on account of health check- up of either the policyholder or his/ her
family.
• Fresh Rs. 25000 worth of deduction is allowed in case you have paid ultra-
expensive towards keeping up the health insurance or health check- up of parents
whether dependent or not.
• In case for the below two points of impunity, any of the members Is over 60 times
of age also the deduction will go up by Rs. 5000 and the allowed limit changes to
Rs.30,000.
• In case any of the health check- ups made over are preventative in nature also the
maximum limit allowed is Rs. 5000.
• For HUFs, deduction allowed is over toRs.,000 if the quantum is paid towards
serving Health insurance Tor any member of the HUF.
3. Duty benefits on LIC insurance programs under section 80DD:
Section 80DD of the Income Tax Act comes under section 80D and deals with duty
impunity for any person who’s depositing a certain quantum with LIC for conservation
 of a hindered person. The limit for this deduction isRs.50,000. In case, the disability
suffered by the hindered person is severe, also the limit is increased to Rs.1,00,000
Jeevan Aadhar plan from LIC is aimed towards meeting this particular insurance need of
customers.
4. Duty benefits on LIC insurance programs under section 10 (10D):
Any death claims or maturity benefits entered by a policyholder are eligible for duty
impunity under section 10( 10D) of the Income Tax Act. Then are a many possibilities
that are included under this:
• First and foremost point about operation of this duty benefit is that the main
insurance policy shouldn’t have been issued under section 80DD or as a keyman
policy.
• Upto 20 of the factual sum assured is pure from duty for programs issued on or
alter 1st April 2013.
• Upto 10 of the factual sum assured is pure from duty for programs issued on or
after 1st April 2012.
• These Insurance programs should be issued for life protection of a person
suffering from severe disability as appertained in section 80U or suffering from a
disease listed in section 80DDB.
Listed over are the various duty immunity that are applicable to insurance programs
offered by LIC to guests in India.

1.13 LIFE INSURANCE BEING CONSIDERED FOR PROTECTION

FURTHER THAN JUST AS A TAX- SAVING TOOL:

For times, life insurance has been seen as further of a tax saving tool which borders of people
would invest in at the time of filing their levies. There was little mindfulness regarding the true
purpose of insurance and a maturity of people have made hasty opinions regarding the purchase
of a life insurance policy. Still, effects have changed in the once many times, thanks to increased
mindfulness about the significance of having life insurance as a protection tool. As per statistics,
there was an overall fall in the number of life insurance programs which were vended during
2016- 17. Still, the overall cover value increased by nearly 14 which principally indicates that the
Indian insurance assiduity is now evolving to be perceived as not just a tax saving tool, but
basically as a life protection instrument. As per the most recent periodic report submitted by
IRDAI, the collaborative number of programs which have been vended dropped to 264.56 lakh
as opposed to 267.38 lakh programs which were vended a time ago. Still, the quantum of total
cover that was handed went up from Rs.3,66,943.23 Crore to a aggregate of Rs.4,18,476.62
Crore. Out of the total 264.65 lakh new life insurance programs That given during the time,
nearly201.32 lakh had been issued by LIC, whose share dropped by2.02 points over the once
time. Speaking of total ultra expensive income, LIC reported a drop in request share which stood
at the72.61 in 2015- 16 but fell to71.81 in 2016- 17. Still, private insurers witnessed a rise in
their request share which went up from27.39 to28.19. By March 2017, the Indian insurance
corporation comprised of a aggregate of 62 insurers, out of which 24 were life insurance
companies, 23 were general insurance companies, and 6 stage-alone health insurance companies
and 9 reinsurance companies, which also included foreign reinsurers ’ branches and Lloyd’s
India.

1.14 FINANCIAL PERFORMANCE OF LIC:

 When it comes to the aliment of the insurance sector in 2018, there are multiple factors
which will pay a vital part. These include the possibility of dislocations, client
mindfulness and perception or life insurance, and certain macro-economic factors. At
present, the penetration of and mindfulness about the significance of having life
insurance is veritably low in India. The life insurance assiduity in India has one of the
smallest perimeters in terms of New Business perimeters. The protection gap too, is
relatively low. All these factors have given rise to multiple challenges for companies
which are looking to expand their footmark in a financially feasible manner.
 The effective result to these challenges lies in increased digitisation of fiscal services and
creating a deeper digital footmark which guests leave before. Speaking of the
macroeconomic front, the larger frugality is likely to gain instigation. The impact left
behind by the perpetration of demonetisation, and GST( Goods and Services Tax) has
been absorbed by the assiduity. Financialisation of savings is anticipated to continue to
prop the growth of the life insurance Industry.
 As of now, India has 24 insurance companies who are working in a largely competitive
and capital- ferocious request. In a script where the top 5 insurance companies hold
nearly 75 of the assiduity share, whereas the remaining players are floundering to sustain
themselves, connection is ineluctable and will only help the assiduity, and the guests as
well.
 Driven by a wave in trade or its Single- premium policy and falling interest rates, Life
Insurance Corporation( LIC) has registered a27.22 per cent growth in first time Premium(
FYP) in FY17.
 Total FYP rose to Rs.1,24,396.27 Crore in FY17 from Rs.97,777.47 crore in the former
time. It redounded in the insurance mammoth adding its request share to71.07 percent
from the last time’s70.6 l per cent, the state- run pot said in a statement.
 LIC’s request share in terms of number of programs stood at76.09 percent, over
from74.72 percent last time. It vended over 20 million new programs in FY17.
 Group and Pension Scheme Department entered Rs crore in new business decoration,
securing80.96 per cent of the request share in the member, over from80.75 percent last
time, it added.
 Still, the Corporation witnessed-growth in number programs vended during the time
under review. LIC vended2.01 crore programs during the financial 2017, down from2.05
Crore in the former fiscal time, a elderly functionary had told PTI before. The
corporation’s single- premium policy under pension member, Jeevan Akshay, accounts
for around 60 per cent of its total ultra-expensive income. The policy provides assured
subvention in the range of7.1-7.2 per cent, he said.
 LIC has a network of eight zonal offices covering the entire country.
 CHAPTER – II

REVIEW OF LLITERATURE:

1. Rao B.S.R and Appa Ra0 Machiraju (1988) were aimed to evaluate Life insurance and
Emerging Trends in Financial Service Market and examined the attitude of the agent
towards the policyholders. The researcher found that the agents of the life insurance
should improve their service to the level of experts. The Author suggested that the change
in the economie Scenario would help the corporation in better service field.

2. The Insurance Institute of India (1990) prepared a project on Marketing of life

insurance and examined the factor that influenced the policy holders to invest in LIC. The
researcher found that the majority of policy holders have invested in LIC due to brand
name. The study concluded that the LIC should maintain their brand with the people to
get more achievements in the market.

3. Patki.v.v (1990) conducted a study on Rural marketing of LIC and examined the
Problem of selling LIC products in Rural areas. The Researcher found that the rural
peoples are not aware of the LIC products, hence there is a problem in selling the
products in rural areas. The study suggested the life insurance corporation of India should
 participate in village fair, and use audio-video methods & explain the merits of the life
insurance to the villagers to expand their market in rural areas.

4. Dar.A.A (1990) studied the Awareness of Life Insurance and examined the awareness
level of the people towards life Insurance. The Researcher found that majority (64%) of
the people. The study concluded that the Government should come out with policy,
where the public can make a contribution to the life insurance scheme and make better
utilization of life Insurance facilities.

5. Kirubashini.B (1991) stated in their article about Life Insurance policy Holdings- A
study on Influencing factors and investigated the awareness level of the policy holdings.
The researcher found that the majority of the respondents are aware of the Endowment
Assurance policy and considered to rank it as number one. The study suggested that there
is a significant relationship between personal factors and policy holdings.

6. Dr.R.Venkataramani, Dr.R.Mohan kumar, Dr.G.Brinda (2000), conducted A Study

on the Attitude of consumer and insurance agents towards the proposed increase Foreign
direct investment in Insurances sector. The researcher found that the consumer welcome
the government decision to increase the foreign direct investment capital in insurance.
The study concluded that better service and more options in the product portfolios are the
general expectation from the insurer.

7. S.Vijayalakshmi and Dr.D.Geetha (2009) were aimed to evaluate the Study in

perception towards LIC Micro Insurance policies among policy holders and measure the
perception towards the LIC Micro Insurance policies. The researcher found that the
respondents have poor perception over the premium paying channel, and it is not flexible
and convenient to the policy holders. The researcher suggests opening premium counters
in the public places where the LIC Micro insurance holders are located and helps the
policy holders to pay the premium convenient.
8. Ashok S.Banne (2010) stated in the article about the Customer opinion on LIC as a
Government company and examined the opinion of sample on bonding relationship with
LIC owing to Government Company. The researcher found the sampler showed
their complete agreement to the statement dealing in LIC is safer than private sector
insurance company. The researcher concluded that the LIC should make use of its vast
network of branches to tap the uninsured and under insured market and reach the remote
area along with rural and urban areas.

9. Dr.D.T.Chavare (2012) conducted A Study on brand loyalty with special reference to

Life Insurance Corporation of India and examined to study the brand loyalty of LIC. The
researcher found that the brand name of LIC attracts new customer and reduces the
market cost of LIC. The study concludes that the LIC track record and trust are major
parameters that are considered by the investor while selecting the insurance company,
therefore LIC should maintain trust and improve effective track record.

10. Prof. Sanjaykumar Jagnnath patil (2012) conducted A Study on consumer satisfaction
towards Life Insurance Corporation of India and analysed the Consumer satisfaction
towards Life Insurance Corporation of India. The Researcher found that respondents to
the other Plans of Life Insurance Corporation of India was low as compared with
insurance plan. It is necessary to promote the Whole life plan, Pension plan and ULIP.

11. Rajavardhan and Jahangir (2015), study found that the socio demographic and
economic variables that have impact on decision of consumer perception in Nalgonda
district. They found that gender and marital status people residing in urban areas invest
more in LIC.

12. Bath (2016) studied the impact of demographic variables on behaviour of the insurance
buyers of Moga district, Punjab and got a result that there is no impact of age, sex,
income level or education over buying behaviour . It has also been found that most of the
respondents are unaware about life insurance or of policy details.
13. Chaudhury (2016) observed that most of the life insurance investors are Fully aware of
their plans. Their satisfaction varies due to Perceived high level of premium. It was also
found that Investors satisfaction level varies significantly from public to Private
companies.

14. Reddy and Jahangir (2015) observed a great impact of different demographic factors
like age, gender, marital status, household income and over customers’ perception of the
subjects of Nalgonda District, AP. This research also suggested the method of
improvement of market share by the insurance companies through customer loyalty.

15. Joshi and Shah (2015) found an association between gender of policy holder and health
insurance coverage plans for the respondents of Ahmedabad. But they did not receive any
association between gender of Health Insurance policy holder and Term of policy;
Occupation of Health Insurance policy holder and Health insurance coverage plan;
occupation of Health Insurance policy holder and Term of policy; income of Health
Insurance policy holder and Health insurance coverage plan; income of Health Insurance
policy holder and Term of policy.

16. Gaikwad and Vibhute (2013) observed that marital status has a significant impact on
the buying behaviour of the customers. Middle level income group is more inclined
towards purchase of life insurance products in comparison to both higher and lower level
income groups. Further respondents choose life insurance mostly as an option of pure
protection, and a very few as an option of savings. The buying behaviour of the
customers are grossly influenced by advisors, who are either their friends or relatives.

17. Mahajan (2013) studied the purchase decision behaviour of the customer from the
concept of marketing and came to the conclusion that the decision process of purchasing
life insurance policies are as good as other consumer durables.
18. Yadav and Tiwari (2012) found out the highest preference of money Back plans over
the other plans as it yields multiple benefits. Customers believe most on LICI in
comparison to other private Companies.

19. Lenin (2012) identified That majority of the investors are aware of both the profile
Before repurchase decision. But the same is not available when They purchase first Life
insurance products. He also received a High impact of gender and marital status over the
purchase Decision of these products.

20. Dash (2012) worked on the behavioural dimensions of both the customers and executives
of life insurance companies of India. His study threw light on an important fact that the
pricing Policy or product’s features are not according to customers ‘Expectation.

21. Kumar & Patil, (2012) found that customers are satisfied with the services of life
insurance companies and Are purchasing regularly the products from the same company.
But the mode of payment varies from customer to customer Depending on age, income
range and service profile. Even Impact of agents has also been found important towards
Generating customer satisfaction.

22. Pushpender (2011) indicated that customer satisfaction is too low in comparison to their
expectation. This dissatisfaction stemmed from the services provided by the agents in
specific and the companies in general.

23. Singh and Lalli (2011) surveyed on the customers of Uttar Pradesh to see correlation
between demographic variables and customer’s awareness. They also identified that
middle age group people, service holders and mediocre income range has more
awareness about LI products. But the prime reason came out from the study is tax saving
and family safety.

24. Sahu, Jaiswal And Pandey (2011) studied the buying behaviour of the Consumers of
life insurance policies and acknowledged that The major factors playing the role in
 developing consumer’s Perception towards Life Insurance Policies are Consumer
Loyalty, Service Quality, Ease of Procedures, Satisfaction Level, Company Image, and
Company-Client Relationship. But They could not differentiate the buying behaviour of
male and Female.

25. Jani (2015) investigated on the factors affecting consumer Satisfaction at Bhavnagar,
Gujarat. His study was confined to Health insurance only. This research identified key
areas of Success to generate customers satisfaction by the public-sector Health insurance
companies are- better branch office location; Good reputation in market; sound financial
strength; regular Correspondence with agents by meetings; accurate presentation Of
product line. Whereas strength of the Private sector health Insurance companies is better
physical layout for business Purposes; error free information; quick service; availability
of Employees on time; settlement of claims on time; individual Attention to customers;
effective investment advice and Guidance.

26. Shukla (2011) studied the perception of the customers of LICI of Delhi and identified
that the company is not focusing on those aspects which are important to customers. On
the other, they are focusing on those issues which are not important for the customers.
Hence, they concluded that this perception gap between the company and its customers
should be minimized.

27. K. Uma (2011) found that insurance agents are the primary source of information
followed by pamphlets and bulletins, newspapers, hoardings. The other sources like
radio, friends, and television played very minor role in creating awareness about life
insurance.

28. Seranmadevi R. Et. (2011) evaluated investors’ inclination on ULIP and found that the
respondents came to know about ULIP mainly through advertisements. Comparison of
these two studies shows that according to K. Uma et.al. (2011) the main source of
information is insurance agent followed by pamphlets and bulletins, newspapers,
 hoardings, on the other hand, according to Seranmadevi R. Et. Al. (2011) advertisements
are the main source for getting information about life insurance.

29. Patil S. J. (2012) observed that 97% respondents are familiar with the products of LIC of
India and same proportion of the respondents feel insurance is essential for life.
Therefore, for the present study, awareness has been taken as both i.e. sources of getting
knowledge about life insurance and knowledge about need of life insurance.

30. Paul Clifford et. Al. (2010) found that 72% of the respondents are aware about policies
and schemes offered by insurance agencies. As the education level and age increases
from the uneducated to the post graduate, there is an increase in awareness of the policies
offered by the insurance companies. Moreover, the researcher observed that as the total
income increases, the purpose for buying policy for tax increases. The study concluded
that that 73% of the respondents have taken insurance policy for the purpose of risk,
followed by saving and tax purpose only.

31. Sing Silender and Satpal (2009) found that respondents from both states i.e. Haryana
and Delhi favoured risk coverage and least favoured liquidity while respondents from
Delhi favoured surrender value, period of surrender, period of policy and least favoured
riders and procedure for claim settlement. Respondents from Haryana have least favoured
riders. Thus it can be stated that the awareness about risk coverage is more in both states.

32. Rajeswari K. And Karttheeswari S.(2012) revealed that different people have different
insurance needs and yield/return is the most important reason for making investments in
the policies of LIC of India. The study further reveals that the security comes first, tax
rebate second and bonus third amongst the determinants for buying insurance policy from
LIC of India.

33. Mustapha A. O. And Oludare T. A. (2008) found that most of the Nigerian students
regardless from which ethnic groups they belong are very concerned and aware of the
importance of having life insurance policy. The study further indicates that the University
 students were actually aware on the risk of life uncertainty and perceived taking
insurance as one way to address this risk. The major sources of getting information are
their parents, family members (44 percent) and life insurance agents (more than 22
percent).

34. G. Raju and S. Mohan (2011) observed that now days customers are getting educated
by media and are always in search of the best product, brand name, quality, operation and
service support. The researchers further found that awareness has improved consumer
awareness aspects pertaining to life insurance product.

35. Panchnathan et. Al. (2008) found that 43% policyholders are aware about the policies
through advisors/agents. 63% of the policyholders select the billboard and hoardings as a
suitable media.

36. S. Hasanbanu and R. S. Nagajothi (2007) suggested that LIC of India should avoid
technical jargon, terms and conditions should be completely transparent to the people.
The researchers further suggested that LIC of India should arrange some meetings so as
to popularize the schemes.

37. Joseph Vijayakumari (2010) believed that life insurance is not growing substantially in
spite of enormous market potential. In her view the major challenge before insurance
industry is product unawareness. The author traced that the insurance company should
create, implement and sustain appropriate marketing programmes to create awareness
among the people about insurance and effort should be made to satisfy them by providing
the products suiting their financial needs.

38. Mishra and Simita Mishra (2000) states that the position of insurance compared with
European countries, where life insurance accounts for 58% of global direct premium and
non-life 42% during the year 1997. The study states that the need for insurance arises
when economic activity increases, family becomes nuclear and individual become more
dependent on employment.
39. Anabil Battacharya (2000), infers that the “Indian Banks – Entry into Insurance Sector”
has stated that the banking industry is perpetrating into the insurance industry. The
researcher suggested that the eligibility criteria (Framed by the IRDA – Minimum net
worth to the extent of Rs.500 Crores, reasonable level of nonperforming assets of the
bank, continuous profit for the first three years) might be relaxed (10% of the net worth
Rs.50 Crores as Minimum net worth).

40. Liyamoorthy and Suresh (2003) study the changes in the key factors like
demographic, social, economic, political factors and strategic choices that are responsible
for the growth of the service sector comparison of insurance contribution in the
developed and developing countries. It clearly states the terms of saving mobilization.
The study states that with the entry of private companies, competition has brought in
changes but Company started offering some of the service which even the private
insurance companies have not yet begun. It is necessary to keep a close watch on the
trends of the industry to analyse its future development.

41. Punithavathi Pandian and Malliga R (2003) states that the impact of liberalization on
the marketing performance by Life Insurance Company stressed that the marketing
performance of the Life Insurance Company has increased over the last few years. The
products are sold in abundance and still insurance penetration towards the mass has to be
increased enormously over the forthcoming years.

42. Agarwal (2004) concluded that the various channels of distribution and new avenue
being explored by the new players in the insurance sector. He states that a customer may
have expectations like value added services, development of new products, technology
insurance, solvency, financial security, quality trained staff etc. Though customer
satisfaction may be provided by maintaining high professional standards and rationalized
procedures etc., yet it requires new paradigms. In short, customer care is an approach of
non-stop caring where only those companies will survive, which can respond to the
customers’ needs faster and better than others.
43. Anand H. Lengti (2009) state that “Insurance Disputes in India” revealed that the
insurance consumers have the option to select the appropriate authority and forum. It may
be the insurance ombudsman or the consumer councils, to settle their disputes.

44. Praveen Sanu, Gaurav Jaiswal and Vijay Kumar Panday (2009) state that, “A Study
of Buying Behaviour of Consumers towards Life Insurance Company”, Prestige institute
of Management and Research, Gwalior, revealed that in present Indian market, the
investment habits of Indian consumers are changing very frequently. The individuals
have their own perception towards various types of investment plans.

45. Selvavinayagam, K. And Mathivanan, R. (2010) revealed that the competitive climate
in the Indian insurance market has changed dramatically over the last few years. At the
same time, changes have been taking place in the government regulations and
technology. The expectations of policyholders are also changing. The existing insurance
companies have to introduce many new products in the market, which have competitive
advantage over the products of life insurance.

46. Dhanasekaran (2013) concluded that he decision process is found to be the most
important factor which helps in the growth of an future benefit , the decision making
process are satisfied with the service provided by HDFC standard life insurance company
limited Coimbatore, So the company is able withstand in its position as a market leader
and serving as India’s No 2 Private insurance company field in recent days and also it
holds new strategy to Implement the new schemes and services to arrive as a successful
company in long time.

47. Kulvinder Kaur Baath (2016) revealed that in India a large part of insurance related
opportunities are untapped. Therefore, rendering an ocean of opportunities existing in this
area. Only 28% of the total respondent opting for insurance provide a wonderful avenue
for the insurance companies in India and abroad to tap this untapped market. The market
seems very opportunities for the insurance companies to cover the rest 72% of the
 market. Also in future the government’s easy access of international insurance companies
through the FDIs will create more options to explore.

48. Dr. Nayak Sudhansu Sekhar & Dr. Sahu Anil, (2016), conducted a study on “An
awareness of Indian life insurance customers: A study.” The main objective of this study
is to measure the awareness of customers about life insurance products and services.
Primary data were collected through questionnaire from 85 customers to complete the
study. ANOVA test is used to test the hypothesis. The study outcome reveals that neither
the urban nor rural people are aware about life insurance. Respondents were unaware
about pure life insurance plan and term plan. Study results also reveals that socio
economic factors like income, occupation, education has greater impact on creating
awareness amongst respondents.

49. Chaudhary Sandeep, (2016), conducted a study on “Consumer Perception Regarding

Life Insurance Policies: A Factor Analytical Approach.” The study objective was to
determine the awareness level, satisfaction level and to identify the factors that
consumers prefer while purchasing life insurance policy. Primary data were collected
through structures questionnaire from 100 respondents from Amritsar, Ludhiana and
Chandigarh city. KMO and Bartlett’s test was used to arrive at conclusion of study. The
study outcome shows that major reason for investment in LIC is saving purpose and
majority investors prefer Traditional LIC plans over ULIPs. Study has also extracted six
factors affecting buying decision viz., Customized and Timely Services, Better Company
Reputations, Effective Service Quality, Customer Convenience, Tangible Benefits and
Healthy Customer – Client Relationship.

50. Balaji C., (2015) conducted a study to measure “Customer awareness and satisfaction of
life insurance policy holders with reference to Mayiladuthurai town.” The study aimed at
creating awareness about insurance and finding level of awareness about life insurance
policies. Sample sizes of 100 respondents were selected. The study outcome shows that
majority of respondents are aware about life insurance policies and their source of
awareness majorly comes from agents.
51. Dr. Bhargava Monu & Lulla Reenu (2015) conducted a study on “Changing perception
of consumers towards insurance products.” The objective of the study to analyse the
changing perception of consumers for different types of insurance product offered by
companies and to analyse the customers’ perception towards insurance products. Primary
data were collected through structured questionnaire by analysing 500 respondents. The
study reveals that young population are more interested in private sector, while the aged
people are more interested in LIC because of feeling of safety and security. Study also
shows that respondents perceive insurance products as an instrument of good risk
coverage and a good form of investment.

52. Dr. Adgaonkar Ganesh (2015) conducted a study to know “Insurance awareness in
India.” The study is aimed at exploring scenario of insurance in India and to find out why
insurance awareness is necessary. The study outcome reveals that majority people have
heard about life insurance, the awareness is very low as many people relates insurance
with death only. The study outcome also reveals that there is a lack of knowledge about
the various aspects of insurance even within policy holders. A high percentage of
households know about their ‘duty’ rather than their ‘rights’.
 CHAPTER – III

RESEARCH METHODOLOGY:

3.1 OBJECTIVES OF THE STUDY:

 To study the awareness level of policyholders about life insurance services of LIC.
 To ascertain the policy holder’s level of satisfaction relating to service of Life Insurance
Corporation of India.
 To analyse the factors that influenced the policyholders to take LIC’s policy.
 To know customer perception on the facilities of LIC.

3.2 SAMPLING METHOD:

Area sampling method was used to select the sample area from Chennai population and then
simple random sampling was used to select the samples.

3.3 METHOD OF DATA COLLECTION:

 The data was collected using primary and secondary sources.

 Secondary data helped in designing the questionnaire.
 Primary data was collected using structured Questionnaire.
 The information pertaining to this study was collected from 100 respondents.
 The data was collected by Questionnaire through Google forms and printed forms.

3.4 LIMITATION OF STUDY:

 The researchers could cover only the position of LIC of India in Life Insurance Industry.
 The study does not contain the comparison of LIC of India with other insurance
company.
 The data has been collected from the respondents of Chennai city, and therefore the
conclusion drawn may not be applicable to the other districts of Tamil Nadu.
 The sample size may not represent the entire population of LIC policy holders.
 The validity and reliability of the data depends on the truthfulness of the respondents
 The results are based on 100 samples only.

3.5 SAMPLING SIZE:

The sample size is 100 taken for this research.