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What Is Life Insurance?

Life insurance is a contract that pledges payment of an amount to the person assured (or his nominee) on the happening of the event insured against. 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. Why We Need Insurance:
Life insurance is a contact by which you can protect yourself against specific uncertainties by paying a premium over a period. Since each one of us during our lives are faced with numerous risks-falling health, financial losses, accident and even fatalities.

Protection
You need life insurance to be there and protect the people you love, making sure that your family has a means to look after itself after you are gone. It is a thoughtful business concept designed to protect the economic value of a human life for the benefit of those financially dependent on him.

Retirement
Life insurance makes sure that you have regular income after you retire and helps you maintain your standard of living. It can ensure that your post-retirement years are spent in peace and comfort.

Savings and Investments


Insurance is a means to Save and Invest. Your periodic premiums are like Savings and you are assured of a lump sum amount on maturity. A policy can come in handy at the time of your childs education or marriage! Besides, it can be used as supplemental retirement income.

Tax Benefits
Life insurance is one of the best tax saving options today. Your tax can be saved twice on a life insurance policy-once when

HISTORY & BACKGROUND OF LIC

The story of insurance is probably as old as the story of mankind. The same instinct that prompts modern businessmen today to secure themselves against loss and disaster existed in primitive men also. They too sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is largely a development of the recent past, particularly after the industrial era past few centuries yet its beginnings date back almost 6000 years. Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and Indian natives were not being insured by these companies. However, later with the efforts of eminent people like Babu Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian lives were being treated as sub-standard lives and heavy extra premiums were being charged on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance companies. The United India in Madras, National Indian and National Insurance in Calcutta and the Co-operative Assurance at Lahore were established in 1906. In 1907, Hindustan Co-operative Insurance Company took its birth in one of the rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The

Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were some of the companies established during the same period. Prior to 1912 India had no legislation to regulate insurance business. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed. The Life Insurance Companies Act, 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary. But the Act discriminated between foreign and Indian companies on many accounts, putting the Indian companies at a disadvantage.

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

view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the year 1956. Since life insurance contracts are long term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. re-organization of LIC took place and large numbers of new branch offices were opened. As a result of re-organisation servicing functions were transferred to the branches, and branches were made accounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with re-organisation happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies. Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices, 7 zonal offices and the Corporate office. LICs Wide Area Network covers 100 divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer on-line premium collection facility in selected cities. LICs ECS and ATM premium payment facility is an addition to customer convenience. Apart from on-line Kiosks and IVRS, Info Centres have been commissioned at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access to its policyholders, LIC has launched its SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many other conveniences in the future.

LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its own past records. LIC has issued over one crore policies during the current year. It has crossed the milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the corresponding period of the previous year. From then to now, LIC has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business. The same motives which inspired our forefathers to bring insurance into existence in this country inspire us at LIC to take this message of protection to light the lamps of security in as many homes as possible and to help the people in providing security to their families.

OBJECTIVE OF LIC

Spread Life Insurance widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country and providing them adequate financial cover against death at a reasonable cost.

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; the funds to be deployed to the best advantage of the investors as well as the community as a whole, keeping in view national priorities and obligations of attractive return.

Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders.

Act as trustees of the insured public in their individual and collective capacities.

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.

Promote amongst all agents and employees of the Corporation a sense of participation, pride and job satisfaction through discharge of their duties with dedication towards achievement of Corporate Objective.

MISSON & VISION


Mission
"Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns, and by rendering resources for economic development."

Vision
"A trans-nationally competitive financial conglomerate of significance to societies and Pride of India."

LIC Operate All Over India

SERVICE LINES OF THE COMPNAY

INSURANCE PLANS
As individuals it is inherent to differ. Each individuals insurance needs and requirements are different from that of the others. LICs Insurance Plans are policies that talk to you individually and give you the most suitable options that can fit your requirement.

PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee financial stability during your old age. These policies are most suited for senior citizens and those planning a secure future, so that you never give up on the best things in life.

UNIT PLANS
Unit plans are investment plans for those who realise the worth of hard-earned money. These plans help you see your savings yield rich benefits and help you save tax even if you don't have consistent income.

SPECIAL PLANS LICs Special Plans are not plans but opportunities that knock on your door
once in a lifetime. These plans are a perfect blend of insurance, investment and a lifetime of happiness!

GROUP SCHEME
Group Insurance Scheme is life insurance protection to groups of people. This scheme is ideal for employers, associations, societies etc. and allows you to enjoy group benefits at really low costs.

WITHDRAWN PLAN

KEY EXECUTIVES
Members On The Board Of The Corporation

Shri T. S. VIJAYAN (Chairman) Shri. D.K. Mehrotra (Managing Director - LIC)

Shri. Thomas Mathew T. (Managing Director - LIC) Shri. A.K. Dasgupta (Managing Director - LIC) Shri. Ashok Chawla (Finance Secretary, Ministry of Finance, Govt. of India) Shri. G.C. Chaturvedi (Additional Secretary, Department of Financial Services, Ministry of Finance, Govt. of India.) Shri. Yogesh Lohiya (Chairman cum Managing Director, GIC of India) Shri. T.C. Venkat Subramanian (Chairman & Managing Director. Export Import Bank of India) Dr. Sooranad Rajashekhran Shri. Monis R. Kidwai

MAJOR PLAYERS OF THE INDUSTRY

Life Insurance Companies

Sl. No.
1.

Insurers

Foreign Partners

Regn. No.

Date of Registration
23.10.2000

Year of Operation
2000-01

HDFC Standard Life Insurance Co. Ltd.

Standard Life Assurance, UK New York Life, USA

101

2.

Max New York Life Insurance Co. Ltd.

104

15.11.2000

2000-01

3.

ICICI-Prudential Life Insurance Co. Ltd.

Prudential , UK

105

24.11.2000

2000-01

4.

Om Kotak Life Insurance Co. Ltd.

Old Mutual, South Africa Sun Life, Canada

107

10.01.2001

2001-02

5.

Birla Sun Life Insurance Co. Ltd.

109

31.01.2001

2000-01

6.

Tata-AIG Life Insurance Co. Ltd.

American International Assurance Co., USA BNP Paribas Assurance SA, France ING Insurance International B.V., Netherlands

110

12.02.2001

2000-01

7.

SBI Life Insurance Co. Ltd.

111

29.03.2001

2001-02

8.

ING Vysya Life Insurance Co. Ltd.

114

02.08.2001

2001-02

9.

Allianz Bajaj Life Insurance Co. Ltd.

Allianz, Germany

116

03.08.2001

2001-02

10.

Metlife India Insurance Co. Ltd.

Metlife International Holdings Ltd., USA ---

117

06.08.2001

2001-02

11.

Reliance Life Insurance Co. Ltd. (Earlier AMP Sanmar Life Insurance Company from 3.1.02 to

121

03.01.2002

2001-02

Sl. No.
29.9.05)

Insurers

Foreign Partners

Regn. No.

Date of Registration

Year of Operation

12.

AVIVA

Aviva International Holdings Ltd., UK

122

14.05.2002

2002-03

13.

Sahara Life Insurance Co. Ltd.

---

127

06.02.2004

2004-05

14.

Shriram Life Insurance Co. Ltd.

Sanlam, South Africa

128

17.11.2005

2005-06

15.

Bharti AXA Life Insurance Co. Ltd.

AXA Holdings, France

130

14.07.2006

2006-07

16.

Future Generali India Life Insurance Company Ltd.

Pantaloon Retail Ltd.; Sain Marketing Network Pvt. Ltd. (SMNPL), Generali, Italy

133

04.09.2007

2007-08

17.

IDBI Fortis Life Insurance Company Ltd.

Fortis, Netherlands

135

19.12.2007

2007-08

18.

Canara HSBC OBC Life Insurance Company Ltd.

HSBC, UK

136

08.05.2008

2008-09

19.

Aegon Religare Life Insurance Company Ltd.

Religare, Netherlands

138

27.06.2008

2008-09

20.

DLF Pramerica Life

Prudential of America,

140

27.06.2008

2008-09

Sl. No.

Insurers

Foreign Partners

Regn. No.

Date of Registration

Year of Operation

Insurance Co. Ltd. 21. Life Insurance Corporation of India

USA 512

NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE (As on 31st March)


Insurer Aviva Bajaj Allianz 2008 213 1007 2007 140 877 2006 110 567 2005 50 153 2004 22 49 2003 12 33 2002 3 17 2001 1

Bharti Axa Birla Sunlife Future Generali HDFC Std ICICI Pru IDBI Fortis ING Vysya Kotak Mahindra Max NewYork MetLife Reliance Life Sahara SBI Life Shriram Tata AIG Private Total LIC Industry Total

77 538 9 569 1958 2 265 151 194 94 745 33 200 53 283 6391 2522 8913

16 148

1 97

53

41

29

19

448 583

150 175

90 109

26 69

18 29

4 14

183 75 118 53 159 33 138 12 89 3072 2301 5373

68 46 84 43 157 18 46 11 72 1645 2220 3865

38 43 64 35 80 18 31 40 804 2197 3001

26 39 33 16 48 2 19 26 416 2196 2612

16 28 23 8 35 10 13 254 2191 2445

4 9 15 3 17 5 6 116 2190 2306

1 3 13 2186 2199

MAJOR COMPETITIORS

BAJAJ ALLIANZ

Bajaj Allianz Life Insurance is a union between Allianz SE, one of the largest Insurance Company and Bajaj Finserv. Allianz SE is a leading insurance conglomerate globally and one of the largest asset managers in the world, managing assets worth over a Trillion (Over INR. 55, 00,000 Crores). Allianz SE has over 115 years of financial experience and is present in over 70 countries around the world. At Bajaj Allianz Life Insurance, customer delight is our guiding principle. Our business philosophy is to ensure excellent insurance and investment solutions by offering customised products, supported by the best technology.

Accelerated Growth
Fiscal Year 2001-2002(6 mths) 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 No. of policies sold 21,37 1,15,965 1,86,443 2,88,189 7,81,685 20,79,217 37,44,742 New Business in FY Rs. 7 cr. Rs. 63.3 cr. Rs. 180 cr. Rs. 857 cr. Rs. 2,717 cr. Rs. 4,302 cr. Rs. 6,674 cr.

ICICI PRUDENTIAL
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank one of India's foremost financial services companies-and Prudential plc - a leading international financial services group headquartered in the United Kingdom. Total capital infusion stands at Rs. 47.80 billion, with ICICI Bank holding a stake of 74% and Prudential plc holding 26%. We began our operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). Today, our nation-wide team comprises of 2074 branches (inclusive of 1,116 micro-offices), over 225,000 advisors; and 7 bancassurance partners. ICICI Prudential is the first life insurer in India to receive a National Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. For three years in a row, ICICI Prudential has been voted as India's Most Trusted Private Life Insurer, by The Economic Times - AC Nielsen ORG Marg survey of 'Most Trusted Brands'. As we grow our distribution, product range and customer base, we continue to tirelessly uphold our commitment to deliver world-class financial solutions to customers all over India.

SWOT ANALYSIS OF THE COMPANY

The SWOT analysis involves an in depth study of the strength and weakness of the provided organization and it also provides information to the promoter, consultant, other agencies and helps in long term viability of the project.

Strength :
1. It is the oldest and most well experienced player having a Pan India presence. 2. LIC has a strong and very well developed distribution network. 3. It is having a huge consumer base and is evolved as one of the most powerful brands of the country. 4. It has a large product portfolio and claim settlement is easier to get. 5. It has the advantage of government guarantee is accompanied with it. 6. Largest insurance Company in the world in Customer Base (23 crore customers)

7. No.1 insurance company in the world in terms of agency (about 1.1 Million agents) 8. LIC is No.1 insurer in the world in Volume & Sold around 3.75 Cr.Policies in 2007-2008. 9. 2nd Biggest Real Estate Owner next to Indian Railways. 10.LIC is one of the Highest income tax playing Organization. For Financial Year 2007-08, LIC has paid advance Tax Rs.2627. 14 Cr. & Service Tax Rs.1292. 15 Cr. 11.Has Highest insurance Professionals ( Club Member agents ) 12.Only 4 countries in the world have more population that LIC`s policy holders.
13. No.1 insurance Company in the world in terms of claims paid. 14. LIC Settles 2.21 claims per second, LIC settled 139 lakhs claims during the year 2007-2008. 15. Prompt settlement of claims (97% maturity claim settled on or before due date) 16. One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim0.07%) Advanced Technology-For better Customer Service 1. Computerized and networked 2048 branch offices and 159 satellite offices throughout the country. 2. Use of High Tech-WAN,LAN,IVRS & EDMS 3. LIC is second largest PC user in the country. 4. EDMS to make LIC a paperless office- Enabling Policy servicing & payments through all branchs in the country. 5. Premium Payment Facility extended through networked 2048 branches, ECS, ATM's

through internet, online portals, collecting bank (Axis Bank), AP online, through SMS, through selected agents, Now LIC Premium can also be paid through. 6. "Suvidha info Serve KIOSKS" all over India. 7. Policy Holder's Portal allow on line access to policy status and other details. 8. Info centre set up in 12 cities for customers to interact easily. Dial-1251 for details.
9. 45 interactive Voice Response System (IVRS) centers all over the country to provide

information on policy servicing. Facility is available 24 7, Facility can be availed on following phone Nos. 1251 OR 020-25514248.

Social Strength
LIC - an institution builder promoting many financial and insurance institutes like NSE, NCDEX, LIC Mutual Fund, Stock Holding Corporation of India, National insurance Academy, insurance institute of India etc. LIC has foreign operations in Mauritius, Fiji and London and has joint venture operating in Sri lanka, Nepal, Bahrain & Saudi Arabia. New offices will be hortly oprned in Australia, USA&Canada. LIC is known as "Pension Provider" of the country. 1st Pension company in India is floated by LIC as "LIC Pension Fund Ltd" on 21st Nov 2007. First to create waves in micro insurance sector by insuring people below the poverty line. In year 2007-2008, 8.54 lac policies sold through "Jeevan Madhur"Plan. Widest range of plans (about 48) for every need of the customer of 0 to 79 years of

age. Biggest Portfolio of Group insurance schemes available. "Jeevan Saral" one of the product of LIC got "Best innovation product " award from I.R.D.A. LIC has covered lick Risk of 1.13 crore citizens through "AAM ADMI BIMA YOJANA" & " JANASHREE BIMA YOJANA". Very Unique Salary saving Portfolio. Highest Number of Corporate Clients in Group insurance Scheme. Expending Distribution Channel through Bancassurances, Corporate Agencies, Broker ship & Chief Life insurarance Advisor (CLIA). New East - Central Zonal Office opened at patina to caterto the needs of states of Bihar, Jharkhand and Orissa. 5 new Divisional offices were also opened in 2007-08. Pune D.O.was splited in 2 divisions, viz Pune Division (i) and Pune Division (ii).

"Golden Jubilee Foundations" established for undertaking charitable activities like education, health, relief of poverty etc.

People's Money for People's Welfare


LIC invested more than 11,630 crores, in infrastructure sector is Rs.56,691crores In socially oriented sector like water, drainage & housing etc, LIC has invested Rs.5,635 crores during 2007-08 & total investment in this sector is Rs.32,321 crores.

Total investment in Social Sector Rs.89,000 Crs. Different incentive schemes for villages, Schools and Banks under Bima Gram, Bima School and Bima Banks.

Total investment in Nation Building Activities is 5,76,000 Crs.

Financial Strengths
LIC's investment income in 2007-08 was Rs.40,655 crores. Out of Total income of Rs, 1,76,559.28 Crs. Total Assets of the corporation as on 31.3.07 were Rs. 6,74,514.78 Crs. Largest institutional investor in Share Market. On an average Rs.100 crore invested every day. During theyear 2007 LIC earned the profit Rs.10,000 Crs. from the Sale of Equity. Largest Financial institutional investor both Equity market & Term House.

Weakness :
Its employees and other staff are lethargic and least motivated to render prompt and sincerecustomer service. After sales customer grievance redressal mechanism is inefficient. Agents not taking into account the needs of people and promote policies having

high commissions only. Very slow decision making process and internal problems between top management and lower cadre staff. The top management or bosses are mediocre and there is large scale corruption in main office. The development officers and agents who are the foundation pillars of LIC are not provided with extra funds and powers to promote its products aggressively.

Opportunity :
Emergence of a huge middle income consumer market in the country. People becoming more aware and demanding so there is scope for a whole lot of innovativeproducts. Pension markets, health insurance and large real estate portfolio.

Todays human life becomes full uncertain, so they prefer protection against the risk. Therefore they prefer life insurance. This is the opportunity for the life insurance sector.

Easy accesses to development in the more advance market provide further opportunity to upgrade their working. Technological, financial or specific area based avenues of absorbing improved system are also now more easily available. So, that insurance companies working efficiently and fast service. Increased economic activities: increase in the economic activity has become the opportunity for the life insurance sector. The activity such as development in the automobile industry, development in the shipping industry. The growth in the GDP shows the opportunity for this industry. The growth rate expected this year 7-7.5%. So this is also one of the opportunities for the life insurance sector. Uncovered market: The Indian insurance market is the one of the least markets in the world. India has a population 1044.15 million out of which only 77.7 million have a life insurance policy. Almost 300 million people in the country can afford to buy life insurance but of this only 20 % have an insurance cover. Thus there lies a big opportunity for the life insurance industry. No doubt lots of marketing and promotional efforts have to be done for trapping the uncovered portion of the huge market. Indias insurance has long way to catch up with the rest of the world. According to the institute of charted financial analyst of India. India is the 23rd largest insurance market in the world.

India accounts for just 0.4% of the global insurance market which is very low. the ratios of premium to GDP for India stands at only 3% against 5.2% in US ,6.5%in UK. To enter into rural market where customer awareness about insurance is low by effective and efficient marketing strategies. To sell insurance products through electronic Medias. Natural calamities: natural calamities taking place now days have created a concern for life insurance among the public. Because of natural calamities like earthquake, flood, and cyclone people have become conscious about benefits and need of insurance. Thus through a calamity it has become a considerably big opportunity for the industry. Growing population: the growth in the population (approximately 1.7%) is very high. It is said that one Australia is added in our country every year. Thus potential customers for the life insurance industry. It has become an opportunity for the life insurance industry. The lack of comprehensive social security system combined with a willingness to save means that Indian people demand for pension products will be large. Thus, it has become an opportunity for the life insurance industry. India has traditionally been a highly savings oriented country. Needless to say, if the insurance market is properly tapped, it is possible to raise life insurance premium as a percentage of GDP from its existing level. Thus, it has become an

opportunity for the life insurance industry. To use Internet and e-commerce technologies to dramatically cut the costs and/or to pursue new sales-growth opportunities. With the help of technology it has become easy for the companies to reach the customer quickly, easily, efficiently and in a better way. Also the companies can cut down the cost of operation up to considerable level. Thus technology has thrown lots of opportunity for the company. Liberalized government policy toward insurance sector: the government has liberalized the government policy in the life insurance sector. Now a day role of government has changed. Due to liberalized policy of government the country is benefited in earning foreign inflows: the domestic company can also collaborate with foreign country and can create synergy. Thus there is great opportunity for those who can trap it. Exist the option of joint venture& alliance etc. for companies to create Synergy, value as well as competitive capabilities for the firms.

Threats:
Private entrants are naturally targeting the profitable and more lucrative segments, by providing better service, new products and flexibility. They are targeting the bigger corporate the other clients in the well established metropolitan center. These new entrants succeeded in eating share of the existing entities. This creates threat among rival firms itself.

Decreased in bank rate: the decreased bank rate is the biggest threat for the life insurance sector. Fluctuation in the bank rate makes big difference for the life insurance industry. It has become threats for the life insurance industry.

Interest rate of P.F and bank saving create threat to insurance sector. All other saving is obviously the threat for life insurance sector.

Increasing intensity of competition among industry rivals-may cause squeeze (fall) on profit margins. Consumers education- consumers are more and more confused because the market players are offering large number of product range. As at present the awareness level is not much, it is only because the education level is only 62 %( in which only 10% are well educated). Fraud in insurance sector: the major problem fraud, which affects the life insurance sector. The flight of talent to new entrants is already in evidence, and could be on the rise for some time to come. Retaining qualified and competent executives will be considerable challenges for existing companies. One very serious danger that the government on units is likely to face is that even if at some point of time, the government does decide to disinvest a portion of its equity; they may not be fully free from government interference. They could face a peculiar problem that although paper and in terms of legal definition they would

not be public sector units. In effects, their working could be no different from what it was before their ownership pattern change. This could be genuine threats since they would be competing with units which are free from such artificial and unnecessary restrictions. The new units, equipped with state of arts equipment and innovative procedure would have an in-built edge over the erstwhile public sector units, which until recently had no such opportunity and incentives. Due to possible negative impact on employment, there were no serious efforts at updating technology and equipment. The resultant inadequate investment in infrastructure could lead to their lagging behind in the race.

MARKET SEGMENT OF LIC

The policies of LIC covers the age group 0-70 can avail the services of LIC. It means LIC has very vast market segment, children, youngster, working, married, old people. INSURANCE PLANS As individuals it is inherent to differ. Each individuals insurance needs and requirements are different from that of the others. LICs Insurance Plans are policies that talk to you individually and give you the most suitable options that can fit your requirement.

Jeevan Anurag CDA Endowment Vesting At 21 CDA Endowment Vesting At 18 Jeevan Kishore Child Career Plan Child Fortune Plus

Komal Jeevan Marriage Endowment Or Educational Annuity Plan Jeevan Chhaya Child Future Plan

Jeevan Aadhar Jeevan Vishwas

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

Jeevan Shree-I Jeevan Pramukh

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

Jeevan Bharati - I

The Whole Life Policy The Whole Life Policy- Limited Payment The Whole Life Policy- Single Premium Jeevan Anand Jeevan Tarang

Two Year Temporary Assurance Policy The Convertible Term Assurance Policy Anmol Jeevan-I Amulya Jeevan-I

Jeevan Saathi Plus Jeevan Saathi

PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee financial stability during your old age. These policies are most suited for senior citizens and those planning a secure future, so that you never give up on the best things in life.

Jeevan Nidhi Jeevan Akshay-VI New Jeevan Dhara-I New Jeevan Suraksha-I

USP OF THE COMPANY

FUTURE OF THE COMPANY

FINDINGS AND CONCLUSIONS

FINDINGS & CONCLUSIONS:


LIC is the giant of the insurance sector. The overall size of LIC is much more than that of all private insurance companies. Private insurers are in expansion mode and

are increasing their size but are still much behind LIC. Total premium deposits in LIC is much higher than the private insurance companies. Total premium of LIC in FY 07-08 was 149789 crores which three times more than that of private insurance companies. Income of LIC is much greater than private insurance companies. Last year total income from investments of LIC was 48244.14 crores which was nearly equal to the total income of the all private insurance companies. By this we can imagine how big the LIC is. Size of balance sheet of private insurance companies are lagging much behind LIC. Balance sheet of LIC is seven times bigger than that of private insurance companies. If we see the total number of policies issued by LIC and private insurance companies, we find that there is a huge gap between them. No doubt that LIC is a well established player in the field of insurance and many private companies have just started their business. Hence it is obvious that LIC is having large number of policyholders. Number of branches of private insurance companies is increasing as the new players are entering in this market. Also the established players are in expansion phase and hence are expanding there business. There are many private insurance companies and hence there total number of branches has gone past LIC in the last financial year. But offices of private insurance companies are mostly in urban areas and still it is LIC which covers most of the area. Hence we see that LIC is leading when it comes to size. It is giant in insurance sector having huge network and customer base.

We see that due to excellent service quality and attractive offers private insurance companies have started getting a number of customers. They are growing rapidly. Though LIC is also increasing its customer base but private insurance companies are moving at a fast pace. Though the income of private insurance companies is negligible when compared with LIC but then also the pace with which they are increasing their income is tremendous. Private insurance companies are expanding their business and will certainly going to give a tough competition to LIC in the coming days. LIC is certainly having a large customer base. Private insurance companies are not having that much number of customer base but they are increasing it rapidly. They have registered a decent growth of 104.64 % in number of new policies in the year 2006-07. Last year also their growth rate was 67.4 %.
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LIC, being the oldest player in the existing insurance market, has the biggest market share of 73.9 % which was 87.3% five years earlier. We see that private insurance companies are penetrating in the customer base of LIC. Overall we can see that private insurance companies are giving a tough competition to the LIC and will certainly create a good business for themselves in the coming days. There are many new entrants in this sector. There are many private insurance companies who have reported loss in this and previous years. This is the main reason why private insurance companies lag behind LIC in case of business per branch.

There is a big difference between them. Same is the case when it comes to income per branch. LIC is much ahead of private insurance companies in this field. They are undoubted champions in insurance when it comes to profit earning. New business is increasingly going towards private insurance companies but still the customer base of LIC is very strong. In issuing new policies per branch also, they are ahead of private insurance companies though not by very large margin. Customer base of LIC is very strong and still business per branch, profit per branch or premium per branch, they are leading much ahead of private insurance companies. LIC has not shown their good concern when the matter of grievance handling comes. Private insurance companies are far ahead in this matter. LIC has just resolved 25% cases in the last five years while private insurance companies have resolved nearly 70% cases. This is a matter from where customer shift starts. We have seen the rapid increase in customer base of private insurance companies which can be very much affected by this factor. Overall we have seen that still LIC is very famous but private insurance companies are growing at exceptionally fast pace. Private companies show due concern in grievance management and brings innovative schemes to attract the customers. Right now they are giving good competition to LIC and very soon they will give very tough competition to Life Corporation of India.

GLOSSERY
Accident An event or occurrence causing damage/injury to an entity, and is unforeseen and unintended. Accident Benefit Provides for payment of an additional benefit equal to the sum sum assured in instalments on permanent total disability and waiver of subsequent premiums payable under the policy. Age Limits Stipulated minimum and maximum ages below and above which the company will not accept applications or may not renew policies.

Agent An insurance company representative licensed by the state who solicits, negotiates or effects contracts of insurance, and provides service to the policyholder for the insurer. Annuity Plans These plans provide for a "pension" ( or a mix of a lumpsum amount and a pension ) to be paid to the policy holder or his spouse. In the event of death of both of them during the policy period, a lumpsum amount is provided for the next of kin. Application Form Supplied by the insurance company, usually filled in by the agent and medical examiner (if applicable) on the basis of information received from the applicant. It is signed by the applicant and is part of the insurance policy if it is issued. Assignment Assignment means legal transference. A method by which the policy holder can person on his interest to another person. An assignment can be made by an endorsement on the policy document or as a seperate deed. Assignment can be of two types Conditional absolute

Beneficiary The person(s) or entity(ies) (e.g. corporation, trust, etc.) named in the policy as the recipient of insurance proceeds upon the death of the insured. Business Insurance A policy which primarily provides coverage of benefits to a business as contrasted to an individual. It is issued to indemnify a business for the loss of services of a key employee or a partner who becomes disabled.

Cancelable A contract of health insurance that may be cancelled during the policy term by the insurer or insured. Coinsurance 1) A provision under which an insured who carries less than the stipulated percentage of insurance to value, will receive a loss payment that is limited to the same ratio which the amount of insurance bears to the amount required; 2) a policy provision frequently found in medical insurance, by which the insured person and the insurer share the covered losses under a policy in a specified ratio, i.e., 80 per cent by the insurer and 20 per cent by the insured. Convertible Whole Life Policy A mix of "whole life policy" and "endowment policy", it provides for very low insurance premiums with maximum risk cover while the life assured is just beginning his working career, and the possibiliy of converting the policy to an "endowment" policy after five years of commencement. Coverage The scope of protection provided under a contract of insurance; any of several risks covered by a policy.

Days Of Grace Policy holders are expected to apy premium on due dates. a period is 15-30 days is allowed as grace to make payment of premium; such period is days of grace. Deferment Period Period between the date of subscription to an insurance-cum-pension policy and the time at which the first instalment of pension is received. Such policies generally prescribe a minimum and maximum limit on the deferment period.

Depreciation A decrease in the value of property over a period of time due to wear and tear or obsolescence. Depreciation is used to determine the actual cash value of property at time of loss. Double/Triple Cover Plans These offer to the beneficiaries double/triple the sum assured on death of life assured during the term of the policy. On survival to the date of maturity, the basic sum assured is paid to the assured. These are low-premium plans, most useful for situations such as housing.

Embezzlement Fraudulent use or taking of another's property or money which has been entrusted to one's care. Endowment Policy The assured has to pay an annual premium which is determined on the basis of the assured's age at entry and the term of the policy. The insured amount is payable either at the end of specified number of years or upon the death of the insured person, whichever is earlier. Excess And Surplus Insurance 1) Insurance to cover losses above a certain amount, with losses below that amount usually covered by a regular policy. (2) Insurance to cover an unusual or one-time risk, e.g., damage to a musician's hands or the multiple perils of a convention, for which coverage is unavailable in the normal market. Exclusions Specific conditions or circumstances for which the policy will not provide benefits.

Facultative Reinsurance A type of reinsurance in which the reinsurer can accept or reject any risk presented by

an insurance company seeking reinsurance. Family Insurance. A life insurance policy providing insurance on all or several family members in one contract, generally whole life insurance on the principal breadwinner and small amounts of term insurance on the other spouse and children, including those born after the policy is issued Fiduciary A person who holds something in trust for another. Fire Insurance Coverage for losses caused by fire and lightning, plus resultant damage caused by smoke and water. Flood insurance Coverage against loss resulting from the flood peril, available at low cost under a programme developed by the Central government. Franchise Insurance A form of insurance in which individual policies are issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premium and remit them to the insurer.

Guaranteed Insurance Sum (GIS) A lump sum purchase price is given to purchase future pensions under the Jeevan Akshay Plan of Life Insurance Corporation of India. This amount is referred to as GIS. The monthly pension that is payable one month after payment of first premium is calculated on the basis of the age at entry. Gross Insurance Value Element (GIVE) The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance Corporation of India. An annutiy of 1% of the GIVE is payable per month after the deferment period. And the entire GIVE is payable on death after deferment period. Group Life Insurance Life insurance usually without medical examination, on a group of people under a master policy. It is typically issued to an employer for the benefit of employees, or to members of an association, for example a professional membership group. The

individual members of the group hold certificates as evidence of their insurance Guaranteed Policies These are policies where the payment stays fixed.

Indemnity Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss. Insurable Interest A condition in which the person applying for insurance and the person who is to receive the policy benefit will suffer an emotional or financial loss, if any untouched event occurs. Without insurable interest, an insurance contract is invalid. Insurability All conditions pertaining to individuals that affect their health, susceptibility to injury and life expectancy; an individual's risk profile. Insurance Social device for minimizing risk of uncertainty regarding loss by spreading the risk over a large enough number of similar exposures to predict the individual chance of loss. Insured The person whose life is covered by a policy of insurance.

Joint Life Endowment Assurance Plans The sum assured ( plus any accrued bonuses) under this type of policy is payable on the end of the endowment term or on the first death of the two lives assured, whichever is earlier. Typically (though not a necessity) taken out by a couple, a variation is available for couples only. In this case, the sum assured will be payable on first death and then again on the second death (along with all vested bonuses) if both deaths occur during the term of the policy. If one or both lives survive to the maturity

date, the sum assured along with all vested bonuses will be payable on maturity date. Premiums during this plan cease on the first death or the expiry of the selected term, whichever is earlier. Another variation provides for annuity to both/surviving spouse, or a lumpsum amount to the legal heirs.

Keyman Insurance Policy A life insurance policy taken by a person on the life of another person who is or was his employee/connected to his business in any manner whatsoever.

Lapsed Policy A policy which has terminated and is no longer in force due to non-payment of the premium due Limited Payment Life Policy Premiums need to be paid only for a certain number of years or until death if it occurs within this period. Proceeds of the policy are granted to the beneficiaries whenever death of the policy holder occurs. Again, this policy can also be of the "with profits " or "without profits" type. Loyalty Additions The loyalty addition is given upon the maturity of the policy, and not before. It's a small percentage of the sum assured. Broadly speaking, loyalty addition is the difference between the performance, of the insurance company and the guaranteed additions. It is LICs effort to further share its surplus after valuation with the policy holders, as LIC is a non-profit organization. Life Assured The person whose life is insured by an individual life policy is called life assured.

Maturity The date upon which the face amount of a life insurance policy , if not previously invoked due to the contingency covered (death), is paid to the policyholder. Maturity Claim The Payment to the policy holder at the end of the stipulated term of the policy is called maturity claim. Misrepresentation Act of making, issuing, circulating or causing to be issued or circulated an estimate, an illustration, a circular or a statement of any kind that does not represent the correct policy terms, dividends or share of surplus or the name or title for any policy or class of policies that does not in fact reflect its true nature. Money Back Policy Unlike endowment plans, in money back policies, the policy holder gets periodic "survivance payments" during the term of the policy and a lumpsum amount on surviving its term. In the event of death during the term of the policy, the beneficiary gets the full sum assured, without any deductions for the amounts paid till date, and no further premiums are required to be paid.These type of policies are very popular, since they can be tailored to get large amounts at specific periods as per the needs of the policy holder. Moral Hazard Risk depends on the need for insurance, state of health, personal habits standard of living and income of insured peson. Moral hazard is the risk factors that affects the decesion of the insurance company to accept the risk.

Nomination An act by which the policy holders authorises another person to receive the policy moneys. The person so authorised is called Nominee. Non-cancelable policies Such policies stay in effect regardless of whatever that might happen and as long as the premium is paid from time to time

Premium The payment, or one of the regular periodic payments, that a policy holder makes to an insurer in exchange for the insurer's obligation to pay benefits upon the occurrence of the contractually-specified contingency (e.g., death). Premium Back Term Insurance Plans These provide for refund of all the premiums paid, in the event of th life assured surviving to the end of the policy term. The total sum assured is paid to the beneficiaries in the event death occurs during the policy term.

Reinstatement The restoration of a lapsed policy to in-force status. Reinstatement can only occur after the expiration of the grace period. The company may require evidence of insurability (and, if health status has changed, deny reinstatement), and will always require payment of the total amount of past due premium. Risk The obligation assumed by the insurer when it issues a policy. The spreading of risk across a broad base of the population, adjusted for statistical probability, and the protection against catastrophic loss, is the entire purpose of insurance. For risk assumption purposes, death is viewed as a contingency. That is, although death is certain, its timing is unknown. The process of evaluating and selecting risk is known as underwriting.

Salary Saving Scheme This scheme provides for payment of premiums by money deduction from the salary of the employees by one employer.

Sub Standard Risk Person who is considered an under-average or impaired insurance risk because of physical condition, family or personal history of disease, occupation, residence in unhealthy climate or dangerous habits. Surrender Value The value payable to the policy holder in the event of his deciding to terminate the policy before the maturity of the policy. Survival Benefit The payment of sum assured to the incured person which has become due by instalments under a money back policy.

Vesting Age The age at which the receipt of pension starts in an insurance-cum-pension plan.

Whole Life Policy Premiums are paid throughout the life time of life assured . This can be with profits or without profits ( A "with profit" policy is eligible for various bonuses declared by LIC every year, while a "without profits" policy does not have this privilege ) With-Profit policy Policies entitled to bonus, which is paid at the time of claim-death or maturity one with-profit policies. Without-Profit policy These policies are not entitled to particiapte in bonuses.

REFRENCES
Data on Indian Insurance from http://www.irdaindia.org Different statistics from http://www.rbi.org.in Journals published by Insurance Regulatory & Development Authority. Management of financial institutions by R.M. Srivastava http://www.businesstoday.com http://www.businessworld.com http://www.economictimes.com Different Survey on Insurance sector conducted by IIRC. Profile of Indian Insurance Companies by IRDA. www.licindia.co.in www.sbilife.co.in/ www.tata-aig-life.com www.bharti-axalife.com/ www.hdfcinsurance.com/ www.reliancelife.co.in/ www.bajajallianz.com/ www.metlife.co.in/ www.birlasunlife.com/

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