CHAPTER1

1.1 INTRODUCTION
“The Business of Insurance is related to the protection of the economic
values of the assets”. Every human being has the tendency to save to
protect him from risks or events of future. Insurance is one form of savings
where in people try to assure themselves against risks or uncertainties of
future. It is assurance against risks or events or losses. People can save
their earnings either in the form gold, fixed assets like property or in
banking and insurances. All the savings of people of a country account for
gross domestic savings. In India, although savings rate is high but people
prefer to invest either in gold or fixed assets so that they can make money
out of it. Hence insurance sector is still untapped in India
Uncertainty is the fundamental fact of life. This uncertainty leads to fear of
risk in our life. Fear of risk can be satisfied by taking all precautions to
avoid risk. Inspite of all precautions, accident occurs. So, Insurance is one
of the best techniques to face this uncertainty. It is important to understand
that risk is the part of any person’s life. So, Life Insurance is a tool which
safeguards an individual’s life with benefits. There are many life insurance
companies in India, but LIC plays a major role in this field. So, the
researchers have chosen this topic to study the growth pattern and to
observe the role of LIC in Life Insurance Industry.
The paper is based on secondary data which is analyzed by statistical tools
like percentage & growth rate. The findings reveals that LIC should
strived to increase its business by adopting new marketing strategies & by
issuing more & more policies in order to retain its market share in the
competitive scenario as well as it should make advertisement to promote &
aware about its policies to the consumers
Life insurance (or life assurance, especially in the Commonwealth of
Nations) is a contract between an insurance policy holder and an insurer or
assurer, where the insurer promises to pay a designated beneficiary a sum
of money (the benefit) in exchange for a premium, upon the death of an
insured person (often the policy holder). Depending on the contract, other
events such as terminal illness or critical illness can also trigger payment.

1
The policy holder typically pays a premium, either regularly or as one
lump sum. Other expenses, such as funeral expenses, can also be included
in the benefits.
Life policies are legal contracts and the terms of the contract describe the
limitations of the insured events. Specific exclusions are often written into
the contract to limit the liability of the insurer; common examples are
claims relating to suicide, fraud, war, riot, and civil commotion.
Modern life insurance bears some similarity to the asset
management industry and life insurers have diversified their products into
retirement products such as annuities.
Life-based contracts tend to fall into two major categories:

 Protection policies – designed to provide a benefit, typically a lump

sum payment, in the event of a specified occurrence. A common
form—more common in years past—of a protection policy design is
term insurance.
 Investment policies – the main objective of these policies is to facilitate
the growth of capital by regular or single premiums. Common forms (in
the U.S.) are whole life, universal life, and variable life policies.

2
1.2 OBJECTIVE OF STUDY
1. The report gives the brief background of the sector and proceeds to
highlight the short comings of the existing setup and players

2. The benefits of liberalized sectors are enumerated.

3. The report also tried to identify the market potential for insurance
products and strategy that can be employed to exploit the same

4. The stress is also given on knowing the awareness level of general

public

3
1.3 SCOPE OF STUDY
1. The result of this research would help the company to have a better
understanding about the consumer’s perception towards life insurance
products offered by LIC of India.

2. The study helps the LIC of India to focus the consumer’s preferences
and expectations on the product which they offer

4
1.4 RESEARCH METHODOLOGY
To conduct the market research first of all it necessary to create a research
design
A research design is basically a blue print of how a research is to be
conducted, it may include;
1. Choosing the approach

2. Determining the type of data needed

3. Locating the source of data

4. Choosing a method of data

5
1.4.1 RESEARCH PROBLEM

6
1.4.2 COLLECTION OF DATA
Data Collection Method:
To conduct the market research the data is collected by two sources.
PRIMARY DATA

SECONDARY DATA:
Secondary data is one which already exists and is collected from the
published sources. The sources from which the secondary data was
collected are:

 Newspaper and Magazines like Economic Times, Insurance Times,

and
 Internet

7
1.4.3 RESEARCH LIMITATION
1. Money constraint
2. Time constraint
3. The researchers could cover only the position of LIC of India in Life
Insurance Industry.
4. The study does not contain the comparison of LIC of India with
other insurance company.
5. The area of the study is kept limited due to the short time and
financial position.
6. Since the study is based upon secondary data, hence the result will
depend on these data.

8
CHAPTER 2
2.1 DEFINATION OF LIFE INSURANCE
Insurance has been defined to be that in, which a sum of money as a
premium is paid by the insured in consideration of the insurer’s bearings
the risk of paying a large sum upon a given contingency. The insurance
thus is a contract whereby:

a. Certain sum, termed as premium, is charged in consideration,

b. Against the said consideration, a large amount is guaranteed to be paid

by the insurer who received the premium,

c. The compensation will be made in certain definite sum, i.e., the loss or
the policy amount which ever may be, and.

9
2.2 CONCEPT OF LIFE INSURANCE

Life has always been an uncertain thing. To be secure against unpleasant

possibilities, always requires the utmost resourcefulness and foresight on
the part of man. To pray or to pay for protection is the spirit of the
humanity. Man has been accustomed to pray God for protection and
security from time immemorial. In modern days Insurance Companies
want him to pay for protection and security. The insurance man says "God
helps those who help themselves"; probably he is correct. Too many
people in this country are not in employment; and work for too many no
longer guarantees income security. Several millions are part-time, self
employed and low-earning workers living under pitiable circumstances
where there is no security cover against risk. Further the inherent changing
employment risks, the prospect of continual change in the work place with
its attendant threats of unemployment and low pay especially after the
adoption of New Economic Policy and the imminent lifecycle risks - a
new source of insecurity which includes the changing demands of family
life, separation, divorce and elderly dependents are
It is within this background life insurance policy has been introduced by
the insurance companies covering risks at various levels. Life insurance
coverage is against disablement or in the event of death of the insured,
economic support for the dependents. It is a measure of social security to
livelihood for the insured or 3 dependents. This is to make the right to life
meaningful, worth living and right to livelihood a means for sustenance.
Therefore, it goes without saying that an appropriate life insurance policy
within the paying capacity and means of the insured to pay premium is one
of the social security measures envisaged under the Indian Constitution.
Hence, right to social security, protection of the family, economic
empowerment to the poor and disadvantaged are integral part of the right
to life and dignity of the person guaranteed in the constitution. Man finds
his security in income (money) which enables him to buy food, clothing,
shelter and other necessities of life. A person has to earn income not only
for himself but also for his dependents, viz., wife and children.

10
He has to provide legally for his family needs, and so he has to keep aside
something regularly for a rainy day and for his old age. This fundamental
need for security for self and dependents proved to be the mother of
invention of the institution of life insurance.

11
2.2 NATURE OF LIFE INSURANCE
1. Risk sharing and risk transfer: Insurance is used to share the financial
losses that might occur to an individual or is family on the happening of
specified events.
2. The loss arising from such events are shared by all the insured in the
form of premium.
3. Risk assessment in advance: Insurance companies are risk bearers.
They assess the risk before insuring to charge the amount of premium.
4. It’s not gambling or charity:
5. The uncertainty is changed to certainty by

12
2.3 OVERVIEW OF CURRENT INSURANCE INDUSTRY WHAT
IS INSURANCE?
Insurance is a tool by which fatalities of a small number are compensated
out of funds (premium payment) collected from plenteous. Insurance is a
safeguard against uncertain events that may occur in the future. It is an
arrangement where the losses experienced by a few are extended over
several who are exposed to similar risks. It is a protection against financial
loss arising on the happening of an unexpected event. Insurance companies
collect premium to provide security for the purpose. Loss is paid out of the
premium collected from people and the insurance companies act as
trustees to the amount so collected. These companies have proposal forms
which are filled to give details of insurance required. Depending upon the
answers in the proposal from insurance companies assess the risk and
decide on the premium. Insurance companies are risk bearers.
They underwrite the risk in return for an insurance premium. the function
of insurance is to provide protection, prevent losses, capital formation etc.
hence 4 insurance can be defined as a tool in which a sum of money as a
premium is paid by the insured in consideration of the insurer’s bearing
the risk of paying a large sum .it may also be defined as a contract wherein
one party (insurer) agrees to pay the other party (insured) or his
beneficiary, a certain sum upon a given contingency against which
insurance is required. Insurance industry commands massive funds
through sales of insurance products to large number of clients. Insurers
also create liabilities and commit themselves to compensate for losses
occurring to the policyholders on future date. It also plays an important
role in process of capital formation.

13
insuring property and life because the insurer promises to pay a definite
sum at damage or death. Insurance is antithesis of gambling
d) Huge number of insured people: It is essential to insure larger number
of people or property to make cost of insurance less consequently premium
would also be less.
e) Assists in capital formation: Insurance provides capital to society.
Accumulative funds are invested in productive channels

14
2.4 THE IMPORTANCE OF INSURANC E

Insurance benefits society by allowing individuals to share the risks faced

by many people. But it also serves many other important economic and
societal functions. Because insurance is available and affordable, banks
can make loans with the assurance that the loan’s collateral (property that
can be taken as payment if a loan goes unpaid) is covered against damage.
This increased availability of credit helps people buy homes and cars.
Insurance also provides the capital that communities need to quickly
rebuild and recover economically from natural disasters, such as tornadoes
or hurricanes. Insurance itself has become a significant economic force in
most industrialized countries. Employers buy insurance to cover their
employees against work-related injuries and health problems. Because it
makes business operations safer, insurance encourages businesses to make
economic transactions, which benefits the economies of countries. In
addition, millions of people work for insurance companies and related
businesses.

In 1996 more than 2.4 million people worked in the insurance industry in
the United States and Canada. Insurance as an investment that offers a lot
more in terms of returns, risk cover & as also that tax concessions &
added bonuses Not all effects of insurance are positive ones. The
possibility of earning insurance payments motivates some people to
attempt to cause damage or losses. Without the possibility of collecting
insurance benefits, for instance, no one would think of arson, the will ful
destruction of property by fire, as a potential source of money.

15
2.5 ADVANTAGES OF LIFE INSURANCE
1. In the event of death, the settlement is easy. The heirs can collect the
moneys quicker, because of the facility of nomination and assignment. The
facility of nomination is now available for some bank accounts.
2. There is a certain amount of compulsion to go though the plan of
savings. In other forms, if one changes the original plan of savings, there is
no loss. In insurance, there is a loss.
3. Certain cannot claim the life insurance moneys. They can be protected
against attachments by courts.
4. There are tax benefits, both in income tax and in capital gains.
5. Marketability and liquidity are better. A life insurance policy is
property and can be transferred or mortgaged. Loans can be raised against
the policy.
6. Life insurance is not only the best possible way for family protection.
There is no other way.
7. Insurance is the only way to safeguard against the unpredictable risks of
the future. It is unavoidable.
8. The terms of life are hard. The terms of insurance are easy.
9. The value of human life is far greater than the value of property. Only
insurance can preserve it.
10. Life insurance is not surpassed by many other savings or investment
instrument, in terms of security, marketability, stability of value or
liquidity.
11. Insurance, including life insurance, is essential for the conservation of
many businesses, just as it is in the preservation of homes.

16
2.6 Principles of Life Insurance?
Life insurance is based on a number of principles that are tailored to meet
market conditions and ensure insurance companies make profits, while
offering security policies to insured individuals.
There are broadly four major insurance principles applied in India,
these being:

 Insurable Interest – This principle pertains to the level of interest

an individual is expected to have in a particular policy. The interest
could be a family bond, a personal relationship and so on. Based on
the interest level, an insurance company can choose to accept or
reject an application in order to protect the misuse of a policy.

 Law of large numbers – This is a theory that ensures long-term

stability and minimises losses in the long run when experiments are
done with large numbers.

 Good faith – Purchasing an insurance is entering into a contract

between company and individual. This should be done in good faith
by providing all relevant details with honesty. Covering any
information from the insurance company may result in serious
consequences for the individual in the future. This being said, the
insurer must explain all aspects of a policy and ensure that there are
no unexplained or hidden clauses and that the applicant is made
aware of all terms and conditions.

 Risk & Minimal loss – Insurance is a risky and companies have to

do business and make profits keeping in mind the risk factor. The
principle of minimal risk states that the insured individual is
expected to take necessary action to limit him/her self from any
hazards. This includes following a healthy lifestyle, getting a regular
health check-up and more

17
2.7 SEMANTIC
1. Risk: It is defined as an uncertainty of a financial loss. It is the
unintentional decline in or disappearance of value arising from
contingency.
2. Policy: It is the document which embodies the insurance contract.
3. Whole life policy: It is the policy under which the amount of policy will
be paid only on death of the insured. Premiums may be payable throughout
the life or for a limited period.
4. Endowment policy: Endowment policies entitle the insured to receive
the amount of the policy on his reaching a certain age and premiums also
stops. If death occurs earlier, amount of the policy will be paid at that time
and payment of premium will also stop at that time.
5. Claim: It is the amount which an insurer has to pay against a policy.
6. Reinsurance: It refers to placing a part of the risk by an insurer with
another insurer. The object is to reduce the possible loss to be borne by the
original insurer, who pays premiums at the ordinary rates to the reinsurer.
Reinsure must pay commission to the original insurer.
7. Premium: A periodic payment made on an insurance policy.
8. Insurance penetration: It is defined as insurance premium as a share of
gross domestic product.
9. Insurance density: Insurance density is defined as per capita expenditure
on insurance premium i.e. premium per capita.

18
2.8 BACKGROUND OF LIFE INSURANCE
“Life Insurance is a contract for payment of a sum of money to the person
assured on the happening of the event insured against”. Usually the
insurance contract provides for the Payment of an amount on the date of
maturity or at specified dates at periodic intervals or at unfortunate death if
it occurs earlier. Obviously, there is a price to be paid for this Benefit.
Among other things the contracts also provides for the payment of
premiums, by the assured.

Life Insurance is universally acknowledged as a tool to eliminate risk,

substitute certainty for uncertainty and ensure timely aid for the family in
the unfortunate event of the death of the breadwinner. In other words, it is
the civilized world’s partial solution to the problems caused by death. Life
insurance helps in two ways dealing with premature death, which leaves
dependent families to fend for themselves and old age without visible
means of support. The most common types of life insurance are whole life
insurance and term life insurance.

Whole life insurance provides a lifetime of protection as long as you

pay the premiums to keep the policy active. They also accrue a cash value
and thus offer a savings component. Term life insurance provides
protection only during the term of the policy and the policies are usually
renewable at the end of the term

19
CHAPTER 3
3.1 INTRODUCTION TO LIC Life Insurance Corporation of India
(LIC) (Hindi: भारतीय जीवन बीमा ि नगम)

Is the largest state-owned insurance group in India, and also the country's
largest investor? It is fully owned by the Government of India. It also
funds close to 24.6% of the Indian Government's expenses. It has assets
estimated of 13.25 trillion (US$264.34 billion). It was founded in 1956
with the merger of 243 insurance companies and provident societies.
Headquartered in Mumbai, financial and commercial capital of India, the
Life Insurance Corporation of India currently has 8 tonal Offices and 113
divisional offices located in different parts of India, around 3500 servicing
offices including 2048 branches, 54 Customer Zones, 25 Metro Area
Service Hubs and a number of Satellite Offices located in different cities
and towns of India and has a network of 13,37,064 individual agents, 242
Corporate Agents, 79 Referral Agents, 98 Brokers and 42 Banks (as on
31.3.2011) for soliciting life insurance business from the public.
The contract is valid for payment of the insured amount during:
The date of maturity, or

 Specified dates at periodic intervals, or

 Unfortunate death, if it occurs earlier.

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

20
3.2 NATIONALIZATION THE LIFE INSURANCE
CORPORATION OF INDIA 1956
This was the first step taken towards the nationalization of life insurance
business in India. On 20th January, 1956 all life insurance companies were
taken over by 43 nominated custodians. The custodians were experienced
senior executives of private insurance companies, reporting directly to the
Finance Ministry. From the word go, the complex task of running the
industry on a permanent basis and continuing the services to policy holders
without interruption were their major concerns. The actual work of
integration had to await legislation. The custodians managed the insurance
companies till 1-09-1956, when Life Insurance Corporation was
established under the general direction and control of the Ministry of
Finance.
The Ordinance provided for the transfer of the control of 154 Indian
insurers, 16 non Indian insurers and 75 provident societies. These
arrangements were designed to ensure that no inconvenience whatsoever
was caused to the policy holders. With the Government take over the
management aimed towards the evolution of a common uniform premium
rate, policy conditions and service and working procedures and above all
to help promote team spirit.
The corporation, a body corporate shall consist of not more than 15
members appointed by the Central Government, one of them being
appointed by the government as chairman. The capital of the corporation
was at Rs 5 crore provided by the central government

21
3.3 PROGRESS IN LIFE INSURANCE COMPANY

The growth of Life Insurance in concrete terms could be said to being

during the first two decades of twentieth century when most of the major
companies were founded. They grew in terms of rise in the number of
companies, in terms of number of policies and sum assured as well as total
life fund. Indian Insurance Year Book, published for the first time in 1914,
gives the figure of the total business-in -force as 22.44 crore which grew to
Rs. 298 crore in 1938.In 1914, there were only 44companies transacting
insurance business in India, and during the next 25 years their number rose
to 176. The total progress on all the primary heads, viz. life fund (Rs.
50.50 crore), premium income (Rs. 10.50 crore) and new business (Rs.
43.30 crore) indicate that Indian Insurance Business had been making a
definite headway during this years.
The inter-war - years thus saw rapid growth life insurance in India. The
promotion of new life insurance companies continued to be almost a craze
and insurance companies mushroomed. In this period, 176 insurance
companies were formed and many of them failed. Thus unhealthy growth
was harmful to the interest of the policy holders and insurance business in
India. Feeling concerned about it, the All India Life Assurance Offices
'Association urged upon the Government in 1932 to undertake the
insurance legislation to Compulsorily register all Life Insurance
companies.

 Secure a deposit of Rs.2 lakh from all Life Insurance companies.

 Compel foreign companies doing business in India to keep sufficient

funds in India securities

 to meet their liabilities under all policies issued in India

22
3.5 Financial Performance of LIC
LIC registered first Premium Income of Rs.15, 840.67 crores in the year
2004-05 as against the first premium income of Rs.12179 cr. during the
year 2003-04, accounting for a growth rate of 30 % during the year 2004-
05. Out of the premium mentioned above, Rs. 12174.11 cr. came from the
Individual Business, posting a growth rate of 42.1% as against the targeted
growth rate of 35 % through the sale of more than 2.39 cr. policies during
the year 2004-05. An amount of Rs.3666.56 crores is contributed by the
Corporation’s Pension & Group Business during the year 2004-05. In the
month of March 2005 the company has recorded a historic new business
first premium income of Rs.6282.35 cr (Individual Business of Rs.4655.87
cr. showing a growth rate of 60.54 % and Pension & Group Business of
Rs.1626.48 posting a growth rate of 19 %). The major contributors to the
First Premium income are the market preferred unit linked plans of LIC –
Bima Plus and Future Plus.
During the year, Bima Plus brought in Rs.2183.5 354 crores income by
means of first premium through 7.19 lakh policies. LIC has sold more than
10 lakh policies of Future Plus , the unit linked pension plan of LIC
launched during the month of March- 2005 , bringing in premiums to the
tune of Rs. 2107.75 crores (first premium). 35.25 % of the First Premium
business of LIC has come from these two plans alone. The segment of
Individual Pension Plans also posted a growth rate of 462 % in First
Premium Income and 337 % in policies. The Single premium plans and
Bima Nivesh have posted a growth rate of 132 %.
In the segment of Pension and Group Business LIC has achieved a growth
rate of 42 % in the number of lives covered. In spite of the intensifying
competition, the market share of LIC’s Pension and Group Business has
shown an increasing trend as on 28th Feb, 2005 and is expected to go up
further as on 31st March, 2005. Some schemes were finalized during the
year with corporates companies like BEML, Infosys, TCS, Grasim and
Ultra tech Cements Ltd

23
3.6 CRM Initiatives at LIC
LIC has launched a series of CRM initiatives, in order to protect its
customer base from competitors. The entry of private sector players has
changed the market scenario for LIC, which enjoyed the status of
monopoly prior to liberalization. The measures taken by the corporation in
the area of CRM include structural changes in the organization set up like
the creation of CRM department at central, zonal and divisional office
levels, setting up of Customer Relations Group at the branch level, launch
of customer contact campaigns etc. LIC has also leveraged on
telecommunications and information technology, to set up call centers,
internet enabled services, information kiosks etc. With an intention of
providing quicker and better services to the policyholders, approximately
97% of the total branches of LIC have front end computerization for
giving on-line service to policyholders. In addition to this, New Delhi,
Chennai, Bangalore and Mumbai have installed Metro Area Network
(MAN) and interactive Voice Response System (IVRS). The company
wants to achieve the following objectives with the help of CRM position.
They are mentioned as follows:
1. To delight the customers with steadfast loyalty to the organization.
2. To reduce the number of customer grievances and service delivery
failures. 3. To impart customer centric culture across the organization.
4. To increase the customer base.

24
3.7 OBJECTIVES OF LIC

 Spread Life Insurance widely and in particular to the rural areas and
to the socially and economically backward classes

 Maximize mobilization of people's savings by making insurance-

linked savings adequately attractive.

 Bear in mind, in the investment of funds, the primary obligation to

its policyholders, whose money it holds in trust, without losing sight
of the interest of the community as a whole

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

Involve all people working in the Corporation to the best of their

capability in furthering the interests of the insured public by providing
efficient service with courtesy.

25
3.8 The function of Life Insurance Corporation of India:

 to carry on capital redemption business, annuity certain business or

reinsurance business in so far as such reinsurance business relating to
life insurance business

 to invest the funds of the Corporation in such manner as the

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

 .to acquire, hold and dispose of any property for the purpose of its
business;

 to transfer the whole or any part of the life insurance business

carried on outside India to any other person or persons, if in the
interest of the Corporation it is expedient so to do;

 .to advance or lend money upon the security of any movable or

immovable property or otherwise

 to borrow or raise any money in such manner and upon such

security, as the Corporation may think fit;
 to carry on either by itself or through any subsidiary any other
business in any case where such other business was being carried on
by a subsidiary of an insurer whose controlled business has been
transferred to and vested in the Corporation by this act;

 to carry on any other business which may seem to the Corporation to

be capable of being conveniently carried on in connection with its
business and calculated directly or indirectly to render profitable the
business of the Corporation; and

 to do all such things as may be incidental or conducive to the proper

exercise of any of the powers of the Corporation.

26
3,9.1 POLICY OFFERED BY LIC
As individuals it is inherent to differ. Each individual's insurance needs
and requirements are different from that of the others. LIC's Insurance
Plans are policies that talk to you individually and give you the most
suitable options that can fit your requirement.
Jeevan Arogya Plan
Bima Account Plans

 Bima Account 1
 Bima Account 2
Endowment Plan

 Endowment Plus
Children Plans

 Jeevan Anurag
 CDA Endowment Vesting At 21
 CDA Endowment Vesting At 18
 Jeevan Kishor
 Child Career Plan
 Child Fortune Plan
 Komal Jeevan
 Marriage Endowment or Education Annuity Plan
 Jeevan Chhaya
 Child Future Plan

Plans for Handicapped dependents

 Jeevan Aadhar
 Jeevan Vishwas

27
 Endowment Assurance Plan

 The Endowment Assurance Policy

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

Money Back Plans

 The Money Back Policy-20 Years

 The Money Back Policy-25 Years
 Jeevan Surabhi-15 Years
 Jeevan Surabhi-20 Years
 Jeevan Surabhi-25 Years
 Bima Bachat

Whole Life Plans

 The Whole Life Policy- Limited Payment

 The Whole Life Policy- Single Premium
 Jeevan Anand
 Jeevan Tarang
 Term Assurance Plan
 Two Year Temporary Assurance Policy
 The Convertible Term Assurance Policy
 Anmol Jeevan-I,
 Amulya Jeevan-I

Joint Life Plan

 Jeevan Saathi Plus

 Jeevan Saathi

28
Plans for high worth individual
 Jeevan Shree-1
 Jeevan Pumukh

29
3.9.2Term Insurance Policy
This policy is pure risk cover with the insured amount will be paid only if
the policy holder dies in the period of policy time. The intention of this
policy is to protect the policy holder’s family in case of death. For
example, a person who takes term policy of Rs.500000 for 20 years, if he
dies before 20 82 years then his family will get the insured amount. If he
survive after 20 years then he will not get any amount from the insurance
company.
It is the reason why term policies are very low cost. So, this type of policy
is not suitable for savings or investment.

30
3.9.3 Annuities and Pension
An annuity is a series of periodic payments. An annuity contract is an
insurance policy, under which the annuity provider (insurer) agrees to pay
the purchaser of annuity (annuitant) a series of regular periodical payments
for a fixed period or during someone's life time. In an annuity, the insurer
agrees to pay the insured a stipulated sum of money periodically. The
purpose of an annuity is to protect against risk as well as provide money in
the form of pension at regular intervals. Over the years, insurers have
added various features to basic insurance policies in order to address
specific needs of a cross section of people.

31
3.9.4 Whole life with Profit Plan -002
Features:
This plan is mainly devised to create an estate for the heirs of the
policyholder as the plan basically provides for payment of sum assured
plus bonuses the policyholder. However, considering the increased
longevity of the Indian population, the corporation has amended the above
provision, thereby proving for payment of sum assured plus bonuses in the
form of maturity claim on completion of age 80 years or on expiry of term
of40years from date o.
The premiums under the policy are payable up to age 80 years of the
policyholder or for a term of 35 years whichever is later.

If the payment of premium ceases after 3 years, a paid-up policy for such
reduced sum assured will be automatically secured provided the reduced
sum assured exclusive of any attached bonus is not less than Rs.250/-.
Such reduced paid-up policy is not entitled to participate in the bonus
declared thereafter but the bonuses already declared on the policy will
remain attach, provided the policy is converted in to a paid-up policy after
the premiums are paid for 5 yrs

Suitable For:
This policy is suitable for people of all ages who wish to protect their
families from financial crises that may occur owing to the policyholder’s
premature death.
BENEFITS
SURVIVAL BENEFIT:
Sum assured plus accrued bonuses and the terminal bonuses, if any; on
the policyholder attaining age 80 years or on expiry of term of 40 years
from the date of commencement of the policy whichever is later.

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

32
3.9.5 LIMITED PAYMENT WHOLE LIFE - PLAN 005 (WITH
PROFITS)

Features:

This is the best form of life assurance for family provision since it enables
the Life Assured to pay all the premiums during the ordinarily vigorous
and most productive years of life. He need not pay any premium in the
later stages of life if and when his conditions might become adverse. With
Profits Limited Payments Policies do not cease to participate in profits
after completion of the premium paying period but continue to share in the
periodical Bonus Distribution until the death of the Life Assured. The
Without-Profit option is available under Table no. 3. If the policyholder
pays at least 3 years' premiums and then discontinues paying any more
premiums, a reduced paid-up assurance policy comes into force. Such a
reduced paid-up Policy will not been titled to participate in the profits
declared. Thereafter, but such Bonus as has already been declared on the
Policy will remain attached thereto. The premium paying 14 term under
this plan is five years minimum and 55 years maximum

BENEFITS

Survival benefits

If the Life Assured survives the premium paying period and the policy
continues in full force, provided all premiums have been paid, but no
further premiums are required to be paid.

Death Benefits:

Sum Assured plus Bonuses accrued and vested in the policy.

33
3.9..6 ENDOWMENT WITH PROFIT PLAN - 014

 FEATURES:
 Moderate Premiums
 High bonus
 High liquidity
 Savings oriented This policy not only makes provisions for the family
of the Life Assured in event of his early death but also assures a lump
sum at a desired age. The lump sum can be reinvested to provide an
annuity during the remainder of his life or in any other way considered
suitable at that time. Premiums are usually payable for the selected term
of years or until death if it occurs during the term period.

 Suitable For:

 Being an endowment assurance policy, this plan is apt for people of all
ages and social groups who wish to protect their families from a
financial setback that may occur owing to their demise. The amount
assured if not paid by reason of his death earlier will payable at the end
of the endowment term where it can be invested in an annuity provision
for the rest of the policyholder's life or in any other way he may think
most suitable at that time.16

BENEFITS

 Disability Benefit:
 In case policy holder becomes totally and permanently disabled due to
an accident before reaching the age of 70 and the policy is in full force,
he will not be required to pay further premiums, (the Disability Benefit
is available in respect of the firstRs.20000 sum assured on anyone life)
and the policy will continue to be in force.

 Accident Benefit:
 By paying a small extra premium of Rs. l per Rs. 1000/- sum assured
per year he or his family are entitled to the following benefits on death
or permanent disability caused by accident. Even students above the
age of 18 years can avail of this benefit.

34
 Premium Stoppage:
 If payment of premiums ceases after at least THREE years' premiums
have been paid , a free paid-up policy for a reduced sum assured will be
automatically secured provided the reduced sum assured, exclusive of
any attached bonus, is not less than Rs. 250/-

 The reduced sum assured will become payable on the event as

stipulated in the policy.

 Bonus:
 Is there anything extra payable besides the sum assured at the time of
claim settlement? Yes, but only if it is a 'with profits' policy. Every year
the Life Insurance Corporation distributes its surplus among
policyholder to 'with profits' polices in the form of bonuses. Substantial
bonuses have been declared in the past after each valuation of policy
liabilities.

 BENEFITS
 Survival benefits:
 Payment of full Sum' Assured + Vested Bonus + Final Additional
bonus, if any.
 Death Benefits:
 Payment of full sum assured + Vested Bonus

35
 3.9.7 ANMOL JEEVAN - I (WITHOUT PROFITS)BENEFITS
Mode of premium payment: Yearly, half-yearly and single premium

Rebates:

 Sum Assured Rebate:

 NIL in case of regular premium policies and Re. 1 Sum Assured for
policies of Rs.25 lakh and above in case of single premium policies.
 Half-Yearly mode.

 UNDERWRITING, AGE PROOF AND MEDICAL

REQUIREMENTS:

The plan is available to Standard and Sub-standard lives (up to Class VI

EMR). This plan is also available to female lives (category I and II lives
only) and to physically handicapped persons subject to certain conditions.
Standard age proof will have to be submitted along with the Proposal
Form

 PAID-UP AND SURRENDER VALUE:

 The policy will not acquire any paid-up value.

 No Surrender Value will be available under this plan.

 GRACE PERIOD FOR NON-FORFEITURE PROVISIONS:

 A grace period of 15 days will be allowed for payment of yearly or
half-yearly premiums. If death occurs within this period and before the
payment of the premium then due, the policy will still be valid and the
Sum Assured paid after deduction of the said premium as also unpaid
premiums falling due before the next policy anniversary of the Policy.
If the premium is not paid before the expiry of the days of grace, the
Policy gets lapsed.20

 REVIVAL
 If the Policy has lapsed, it may be revived during the life time of the
Life Assured, but before the date of expiry of policy term, on
submission of proof of continued insurability to the satisfaction of the
Corporation and the payment of all the arrears of premium together
with interest at such rate as may be prevailing at the time of
the payment.
36
 PAYMENT OF CLAIMS

 No Claims concession will be applicable to this Policy.

 BACK-DATING INTEREST

 The policy can be back dated within the financial year. No dating back
interest shall be charged.

BENEFITS Survival benefits:

 If one or both the lives survive to the maturity date, the sum assured,
along with the accumulated bonus, is payable.

37
 3.9.8 Best LIC Policy - Plans Details

Maxi Minim
Pol Minimum Medic
Entr mum um
LIC Plan icy Premium/ al
y Matu Sum Status
Policies Type Te Purchase Exami
Age rity Assure
rm Price nation
Age d

Immed Rs.100000/
iate Rs.
LIC 30 – -, Not
Annuit N/ 7190/-
JeevanA 85 N/A Rs. require Active
y A (annual
kshay years 150000/- d
Pensio ly
n Plan (online)

10
LIC e- Pure 18 – – Rs.
75 Requir
term Ins Term 60 35 Rs. 4600/- 25,00,0 Active
years ed
urance Plan years yea 00/-
rs

0–
12
years
LIC
Traditi (for
New 25
onal child
Childre - Not
Money ) 25 Rs.1,00
n’s ent Rs.24,000/- require Active
Back 18 – years ,000/-
Money ry d
Child 55
Back age
Plan years
Plan
(for
prop
oser)

38
 Partici
pating 15 Rs.1,00
LIC Traditi 18 – - ,000/-
75 Requir Discon
JeevanA onal 50 35 N/A (on
years ed tinued
nand Endow years yea maturit
ment rs y)
Plan

Rs.250/-
(for age 250
10
below times
LIC Endow 12 – –
70 50years) monthl Discon
Jeevan ment 60 35 N/A
years Rs. 400/- y tinued
Saral Plan years yea
(for age premiu
rs
above m
50years)

39
3.9.8 Best LIC Policy - Plans Details

Maxi Po Mini
Minimum Medic
Entr mum lic mum
LIC Plan Premium/ al
y Matu y Sum Status
Policies Type Purchase Exami
Age rity Te Assur
Price nation
Age rm ed

Imme Rs.100000
diate 30 – /- , Rs.
LIC Not
Annui 85 N/ 7190/-
Jeevan N/A Rs. require Active
ty year A (annua
Akshay 150000/- d
Pensio s lly
n Plan (online)

10
18 –
LIC e- Pure – Rs.
60 75 Requir
term In Term 35 Rs. 4600/- 25,00, Active
year years ed
surance Plan ye 000/-
s
ars

0–
12
year
LIC Tradit s(for
25
New ional child
-
Childre Mone ) Not
25 ent Rs.24,000/ Rs.1,0
n’s y 18 – require Active
years ry - 0,000/-
Money Back 55 d
ag
Back Child year
e
Plan Plan s
(for
prop
oser)

Partici 18 –
LIC 15 Rs.1,0 Disco
pating 50 75
Jeevan - N/A 0,000/- Requir ntinue
Tradit year years ed
Anand 35 (on d
ional s ye maturi
Endo

40
 wmen ars ty)
t Plan

Partici
pating 15 Rs.1,0
18 –
LIC Tradit - 0,000/- Disco
50 75 Requir
Jeevan ional 35 N/A (on ntinue
year years ed
Anand Endo ye maturi d
s
wmen ars ty)
t Plan

41
3.10 Kano Model of Customer Satisfaction related with LIC
The Kano et al. (1996)1 model of customer satisfaction classifies product
attributes based on how they are perceived by customers and their effect
on customer satisfaction (Kano, Seraku et al., 1996). According to the
model, there are three types of product attributes that fulfill customer
satisfaction to a different degree
1) Basic or expected attributes,
2) Performance or spoken attributes,
3) Surprise and delight attributes. A competitive product meets basic
expected attributes, maximizes performances attributes, and includes as
many “excitement” attributes as financially feasible.
4) In the model, the customer strives to move away from having
unfulfilled requirements and being dissatisfied

42
3.11 Loan Facility to Customers
At present loans are granted on unexpired policies up to 90 percent of the
surrender value under policies which are in force for the full sum assured
and up to 85 percent of the Surrender Value on policies which are paid-up
for a reduced sum assured. The minimum amount for which a loan can
now be granted under a policy is Rs.150/-. The rate of interest charged at
present is 100.5 percent or 12 percent per annum payable, payable half
yearly, depending on plan per annum payable half-yearly. Loans are not
granted for a period shorter than six months, or on the security of lost
policies (duplicate policies must be got issued for loan) or on policies
issued under certain plans. The Branch Office servicing the policy will
quote the loan value on request from the policyholder. Certain types of
policies are, however, without loan facility. The terms and conditions
printed on the policy bond reveal whether a particular policy is with or
without loan facility

43
3.12 ROLE OF LIFE INSURANCE COMPANY IN ECONOMIC
DEVELOPMENT
For economic development, investment are necessary, investments are
made out of savings. Life Insurance Company is a major instrument for the
mobilization of savings of people particularly from the middle and lower
income groups. These savings are channel investment for economic
growth .The insurance act has strict provisions to ensure that insurance
funds are invested in safe avenues, like government bonds, companies
with record of profit and so on. As on 31.3.2006, the total investment of
L.I.C exceeded Rs 5, 20,000 crores of which nearly Rs 300000 crores were
directly in government (both state and centre) related securities, nearly Rs
16000 crores in the state electricity Boards nearly Rs 22000 crores in
housing loans, Rs 19000 crores in the power generation (private) sector
and Rs 10000 crores in water supply and sewage system.
The L.I.C is not an exception .All good life insurance companies have
huge funds accumulated through the payments of small amounts of
premium of individuals. These funds are invested in ways that contribute
substantially for the economic development of the countries in which they
do business. Apart from insurance business and trade benefits through
insurance. Without insurance, business and trade and commerce will find
difficult to face the impact of major perils like fire, earthquake, and floods
etc .Financiers like banks would collapse if the factory financed by it is
reduced to ashes by a terrible fire. Financiers like, banks would collapse if
the factory financed by it, is reduced to ashes by a terrible fire. Insurers
cover also the loss to financiers, if their debtors default. ZENITH
International Journal of Business Economics & MINDIAN LIFE
INSURANCE Life insurance companies in India have their history dating
back to 1818.The first life insurance company in India was oriental life
insurance company in Kolkata .It was started by the Europeans to provide
insurance cover to the Europeans. Most of the present day Life Insurance
Companies in India are joint ventures between Indian groups and

44
conglomerates and global insurance companies’ .The terms of the joint
ventures include a majority stake holding of Indian partner in the JV.

The life insurance companies work in close association with the life
insurance agents and brokers. Special training and education is provided to
each insurance agent or broker about of Life Insurance, how it works,
industry info, insurance leads, types of Insurance leads, types of insurance
policies on offer, claims settlements, Life Insurance laws in India,
knowledge about the return of premium procedure of the life insurance
company and the tax savings the insurance policy would provide.

45
3.13 Relief to Policy Holders
The Corporation allows concessions on payment of premiums, settlement
of claims, issue of duplicate policies etc. when the policyholders are
affected by natural calamities such as droughts, cyclones, floods,
earthquakes etc.

Claims by Maturity
The Corporation strives to settle maturity claims and make periodic
payments, as in the case of Claims Money Back Policies, on the due date
itself. The branch office concerned which services the policy sends out an
intimation regarding the payment along with the necessary discharge
voucher for execution by the assured, approximately two months before
the due date of such payment. In case the policyholder does not receive
any information from the concerned branch office in this connection,
he/she may contact them by quoting the policy number. 370

Review Committee
The Corporation settles a large number of death claims every year. Only
in case of fraud or suppression of material information a claim is rejected.
The number of death claims rejected is, however, very small. Even in these
cases, an opportunity is given to the claimant to make a representation for
consideration by the Review Committees at the zonal office and the central
office. As a result of such reviews, depending on the merits of each case,
appropriate sanctions are made.

46
CHAPTER 4
.DATA ANALYSIS

47
INTERPRETATION

48
CHAPTER5
CONCLUSION

 LIC gets achievement in various fields.

 We can see that LIC gets success in new business. Numbers of
policies are increased.
 We can see LIC's income from various fields.
 Overall LIC has doing profitable business.
 But it is only LIC's own business. But it is not compared with other's
insurance institute. So it is not completed.

49
BIBLIOGRPAHY

50