Life Insurance 2.docx

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.

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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

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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

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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

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1.4.1 RESEARCH PROBLEM

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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

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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.

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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.

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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.

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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.

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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

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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.

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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

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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.

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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.

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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.

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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.

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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.

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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

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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.

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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

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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

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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

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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

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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 200405. 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

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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.

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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 insurancelinked 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.

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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

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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

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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.

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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.

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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.

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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.

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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.

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 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

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 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.

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3.9.8 Best LIC Policy - Plans Details

LIC Policies

Plan Type

Maxi Entr mum y Matu Age rity Age

Immed iate 30 – LIC Annuit 85 JeevanA y years kshay Pensio n Plan

LIC eterm Ins urance

LIC New Childre n’s Money Back Plan

Pure Term Plan

N/A

Minim Pol Minimum Medic um icy Premium/ al Sum Te Purchase Exami Assure rm Price nation d

Status

Rs.100000/ Rs. -, Not N/ 7190/require Active Rs. A (annual d 150000/ly (online)

10 18 – – Rs. 75 Requir 60 35 Rs. 4600/- 25,00,0 years ed years yea 00/rs

Active

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

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Partici pating 15 Traditi 18 – LIC 75 50 35 JeevanA onal years Endow years yea nand ment rs Plan

LIC Jeevan Saral

10 – Endow 12 – 70 ment 60 35 years Plan years yea rs

N/A

Rs.250/(for age below 50years) Rs. 400/(for age above 50years)

Rs.1,00 ,000/Requir Discon (on ed tinued maturit y)

250 times monthl y premiu m

N/A

Discon tinued

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3.9.8 Best LIC Policy - Plans Details

LIC Policies

Maxi Entr mum Plan y Matu Type Age rity Age

Imme diate 30 – LIC Annui 85 Jeevan ty year Akshay Pensio s n Plan

N/A

Po Mini Minimum Medic lic mum Premium/ al y Sum Status Purchase Exami Te Assur Price nation rm ed Rs.100000 Rs. /- , Not 7190/N/ require Active Rs. A (annua d 150000/lly (online)

Pure Term Plan

10 18 – – Rs. 60 75 Requir 35 Rs. 4600/- 25,00, Active year years ed ye 000/s ars

Tradit LIC ional New Childre Mone y n’s Back Money Child Back Plan Plan

0– 12 year s(for 25 child ) Not 25 ent Rs.24,000/ Rs.1,0 18 – require Active years ry 0,000/55 d ag year e s (for prop oser)

LIC eterm In surance

LIC Jeevan Anand

Partici 18 – 15 pating 50 75 Tradit year years 35 ional s ye Endo

N/A

Rs.1,0 Disco 0,000/- Requir ntinue ed (on d maturi 40

wmen t Plan

LIC Jeevan Anand

ars

Partici pating 15 18 – Tradit 50 75 ional 35 year years Endo ye s wmen ars t Plan

ty)

N/A

Rs.1,0 0,000/Disco Requir (on ntinue ed maturi d ty)

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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

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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

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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

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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.

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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.

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CHAPTER 4 .DATA ANALYSIS

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INTERPRETATION

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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.

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BIBLIOGRPAHY

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