SUMMER TRAINING REPORT

ON

UNDERSTANDING AND MARKETING OF LIFE INSURANCE

PRODUCTS

FOR
SUNDARAM FINANCE LTD.

By

ASHISH KUMAR
B-11
In Partial Fulfillment for the award of the degree
Post Graduate Diploma in Management
(2012-14)

New Delhi Institution of Management

F-13, Okhla Industrial Area Phase-I New Delhi-110020
E-mail: info@ndimedu.com Website: www.ndimedu

SUMMER TRAINING REPORT

ON
UNDERSTANDING AND MARKETING OF LIFE INSURANCE
PRODUCTS
FOR
SUNDARAM FINANCE LTD.

(Session 2012-1014)
Submitted by:
ASHISH KUMAR
MBA+PGDBM
Roll No. B-11

Corporate Guide
Mr. Anupam Sharma

Academic Guide:
Prof. Chand Tandon

ACKNOWLEDGEMENT

The making of any project requires contribution from many people, right from
inception till its completion. In my case also, there had been a few people who have
made this happen. It was not only learning but also an enriching experience.
I am deeply indebted to Prof. Chand Tandon, NEW DELHI INSTITUTION OF
MANAGEMENT Studies for having allowed me to carry out the project successfully.
I specially thank my guide Mr. Anupam Sharma for his constant guidance,
professional help and support during the course of the project.
I thank my colleagues and friends for providing constant encouragement and help. I
am indebted to them for their timely help & the enthusiasm they expressed in helping
me bring this project to the fruitful end. Finally, I am grateful to my family for their
moral support and understanding.

Teachers open the door, but you must enter by yourself

Signature:

DECLARATION

I ASHISH KUMAR student of New Delhi Institution of Management

(2012-14) declare that every part of the Project Report Undersatanding and
Marketing of LIC products that I have submitted is my original work.

I was in regular contact with the nominated faculty guide and contacted many times
for discussing the project.

Signature of Faculty guide:

Signature of Student:

SUMMER PROJECT CERTIFICATE

This is to certify that Mr. ASHISH KUMAR (roll.no.B-11/2012). Student of

PGDBM has worked on the Summer Project titled. UNDERSTANDING AND
MARKETING OF LIFE INSURANCE PRODUCTS. For the sixty days of the
Training in partial fulfillment of the requirement for the programme. This is her
original work to the best of my knowledge.

Date:

Signature:
(Prof.Chand Tandon)

TABLE OF CONTENTS

Topic

Page

Number
1. Executive Summary. 7
2. Introduction...8
3. Company Profile..20
4. LIC Introduction. 25
5. History of LIC...36
6. Types of Insurance..37
7. Research Objective & Methodology..67
8. Findings....69
9. Conclusion....76
10. Recomendations.78
11. Bibliography..79

EXECUTIVE SUMMARY

Someone has greatly said that practical knowledge is far better tha
n classroom teaching. During this project I fully realized this and come to know about
the present real world of Insurance sector.
It includes all the activities involved in providing insurance products to the final
customers.I a m p l e a s e d t o k n o w a b o u t t h e c o n s u m e r s w a n t s a n d c o m p
e t i t o r s activities in the real world of Insurance. The subject of my study is to analyze
the present insurance sector and products offered by LIC by applying various
tools like cold calling and through direct interaction with customers. I have also done
research on the growth of private life insurance companies in the last five years.
The report contains first of all brief introduction about the company. Then it contains
the current status of private insurance companies and foreign insurance companies in
India.

I also put forward recommendations of the consumers and conclusions

t h a t w i l l h e l p L I C t o p r ov i d e c o n s u m e r s a t i s f a c t o r y s e r v i c e s i n t
h e insurance sector.

SUNDARAM FINANCE LTD.

HISTORY...
The Company was incorporated in 1954, with the object of financing the purchase of
commercial vehicles and passenger cars.
The company was started with a paid-up capital of Rs.2.00 Lakhs and later went
public in 1972.
The Company's shares were listed in the Madras Stock Exchange in 1972 and in the
National Stock Exchange in January 1998.
Subsequently, the equity shares of the Company have been delisted from Madras Stock
Exchange Limited (MSE) with effect from January 27, 2004, in accordance with SEBI
(Delisting of Securities) Guidelines, 2003, for voluntary delisting.
OUR FOUNDER...
For him it was a lifetime involvement in automobiles, finance and philanthropy
Born on November 8, 1912, Mr.Santhanam had his education in Madurai. In 1930, he
joined his father in business, and thus began a life-time involvement in automobile and
finance.
He moved to Chennai in 1936, and served parent company T.V. Sundaram Iyengar &
Sons, in various capacities, gaining rich experience in road transport, marketing of
automobiles, manufacture of automobile components, general insurance, banking and
finance. In 1954, he founded Sundaram Finance, which together with its subsidiaries,
now has an asset base of about Rs.6000 crore.
He played a crucial role in the establishment of several auto component units in the
TVS Group, prominent among which were Wheels India, Brakes India, Sundaram
8

Clayton and Lucas-TVS. He also promoted Madras Motor General Insurance

Company, which later merged into the United India Insurance Company. He was
Managing Director of the T.V.Sundaram Iyengar & Sons for nearly a decade before
becoming its vice-chairman, position he held till his death.
He was not only deeply involved in negotiations with foreign collaborators for the
manufacture of quality auto components, but also in financial planning and project
financing. His financial acumen was always regarded highly, not just in the TVS
group, but outside as well. He served on the Government's Direct Taxes Advisory
Committee, and the study Group on Road Transport Financing among others.
For Mr.Santhanam, quality was paramount. He ensured that his auto component
distribution companies provided transport operators genuine and quality products at
fair prices.
He was also the founder chairman of trade associations such as the Federation of
Automobile Dealers' Association and the South India Hire Purchase Association.
He was an ardent supporter of sports, especially football, cricket and tennis. In the late
1940s he promoted TVS Greens, which had several leading national football players.
A keen tennis player himself, he sponsored several leading players during the early
stages of their career. He was often spotted at Wimbledon during the tennis fortnight
cheering on India's maestro, Ramanathan Krishnan.
He championed educational, religious and charitable causes and was instrumental in
donating large sums of money from the companies with which he was associated.
T S Surendran, Vice-Chairman of Sankara Nethralaya, said Mr.Santhanam had
contributed liberally to "the cause of our foundation." He was associated with the
foundation for over 25 years. The Sundaram Medical Foundation and the hospital
managed by it stand testimony of his keen interest in charitable causes.

"Work was worship for him," according to officials in the TVS Group. "His number
sense was incredible," said a ranking official of Sundaram Finance, who had worked
with him closely. He knew his principal employees by name and qualification. He kept
himself updated on the happenings in the group companies and attended meetings of
the Sundaram Finance Board.
Mr.Santhanam, according to TT Srinivasaraghavan, Managing Director of Sundaram
Finance, was a "visionary."
Even in early 1950s, he had understood the need for a good road infrastructure. "He
tirelessly worked for the uplift of transport operators," Mr.Srinivasaraghavan said, and
pointed to the travels Mr.Santhanam had undertaken across the country often sipping
tea with the drivers.
Mr.Santhanam brought to bear such involvement in the non-banking finance business,
encouraging small players to become corporate entities. "He never saw anyone as a
competitor," he said.

FACT THAT SPEAK

10

IN RECOGNITION OF SERVICE TO INVESTORS..

A Certificate of honour was given by the Institute of Chartered Financial Analyst, in

recognition of the Company's efforts to set a trail blazing record of investor rewards,
fostering the equity cult on ethical lines among the top hundred investor rewarding
companies in India for the period 1990-95.
Birth of Sundaram Finance
First finance company to be listed on the Madras Stock Exchange.
Started Leasing operations.
Formation of Lakshmi General Finance
Receivables crossed Rs. 1000 crore (Rs. 10 billion)
Deposits crossed Rs. 500 crore (Rs. 5 billion)
Formed Sundaram Newton Asset Management Company Ltd. in collaboration
with Newton Management Ltd., UK.
Received Best Tax Payer Award
Received Best Tax Payer Award
Receivables crossed Rs. 2000 crore (RS. 20 billion)
Promoted Fiat Sundaram Auto Finance Limited, a joint venture with Fidis
S.p.A., Italy
Promoted Sundaram Home Finance Limited with equity participation from
International Finance Corporation (IFC), Washington, and FMO Netherlands
Promoted Royal Sundaram Alliance Insurance Company Limited, a joint
venture with Royal & Sun Alliance Plc, for Non-Life Insurance
11

Promoted Sundaram Infotech Solutions - Infotech division of Sundaram

Finance
Promoted Sundaram Business Services - BPO arm of Sundaram Finance
Merger with LGF making SF Billion dollar Balance sheet NBFC
BNP Paribas Asset Management Group, France acquires 49.90 % stake in
Sundaram Asset Management Company Ltd from SFL.
Union de Credit pour le Batiment SA (UCB), a wholly owned subsidiary of
BNP Paribas SA, France acquires 49.90% stake in Sundaram Home Finance
Ltd from SFL.

AWARDS RECEIVED:.

Second Best Tax Payer:- In the category of Private Sector Company for
Assessment Year 1994-95 in Tamil Nadu Region, from the Income Tax
Department, Tamil Nadu.

Rolling Trophy: - By Rotary Club of Madras South West for Best EmployerEmployee Relationship for the year 1995-96.

Best Tax Payer:- in the category of Private Sector Company for Assessment
Year 1995-96 in Tamil Nadu Region, from the Income Tax Department, Tamil
Nadu.

Automan Award: - to Shri T S Santhanam, Chairman, from Motor India in

1998.

Pioneering Service Award: - to Shri T S Santhanam Chairman, from Chennai

Good Transport Association.
12

Sarige Ratna Award: - to Shri T S Santhanam, Chairman, from the Bangalore

City Lorry Transporting Agents Association (Regd).

13

BOARD OF DIRECTORS:-

Chairman:Sri S Viji
Directors:Sri S Ram
Sri N Venkataramani
Sri P N Venkatachalam
Sri S Prasad
Sri S Ravindran
Sri Srinivas Acharya
Sri Aroon Raman
Managing Director:Sri T T Srinivasaraghavan
Director (Strategy & Planning)
14

Sri Harsha Viji

Chief Financial Officer
Sri. M Ramaswamy, Chief Financial Officer
Company Secretary
Sri. P Viswanathan, Secretary & Compliance Officer

FAIR PRACTICES CODE

FAIR PRACTICES CODE (as amended on 25th March 2013)

No.80/03.10.042/2005-06 dated 28th September 2006, Sundaram Finance Limited
(referred to as the Company) has formulated this Fair Practices Code to lay down
the following procedures/practices in dealing with the business transactions and also
amended the same from time to time. This Code shall come into effect on 1st
November 2006.
I)Applications for loans and their processing:(a) All communications to the borrower shall be in the vernacular language or a
language as understood by the borrower.
(b) Loan Application Forms include necessary information, which affects the interest
of the borrower, so that a meaningful comparison with the terms and conditions
15

offered by other NBFCs can be made and informed decision can be taken by the
borrower. The loan application form indicates the documents required to be submitted
with the application form.
(c) The Company would give acknowledgement for receipt of all loan applications.
The time frame within which loan applications shall be disposed of is also indicated in
the acknowledgement.
(ii)Loan appraisal and terms/conditions:The Company shall convey in writing to the borrower by means of sanction letter, the
amount of loan sanctioned along with the terms and conditions including annualised
rate of interest and method of application thereof. The Company shall keep the
acceptance of these terms and conditions by the borrower on its record. The Company
shall also communicate to the borrower if the loan is rejected. The Company should
mention the penal interest charged for late repayment in bold in the loan agreement.
The Company should furnish a copy of the loan agreement preferably in the
vernacular language or a language as understood by the borrower along with a copy
each of all enclosures quoted in the loan agreement to all the borrowers at the time of
sanction / disbursement of loans.
iii)Disbursement of loans including changes in terms and conditions:(a) The Company shall give notice to the Borrower of any change in the terms and
conditions including disbursement schedule, interest rates, service charges,
prepayment charges etc. The Company shall ensure that changes in interest rates and
charges are effected only prospectively. A suitable condition in this regard be
incorporated in the loan agreement.
(b) Decision to recall / accelerate payment or performance under the agreement shall
be in consonance with the loan agreement.
(c) The Company shall release all securities on repayment of all dues or on realisation
of the outstanding amount of loan, subject to any legitimate right or lien for any other
claim the Company may have against the borrower. If such right of set off is to be
exercised, the borrower shall be given notice about the same with full particulars about
16

the remaining claims and the conditions under which the Company is entitled to retain
the securities till the relevant claim is settled/paid.
(iv) General:(a) The Company shall refrain from interference in the affairs of the borrower except
for the purposes provided in the terms and conditions of the loan agreement (unless
new information, not earlier disclosed by the borrower, has come to the notice of the
Company).
(b) In case of receipt of request from the borrower for transfer of borrowal account,
the consent or otherwise i.e. the Companys objection, if any, shall be conveyed within
21 days from the date of receipt of request. Such transfer shall be as per transparent
contractual terms in consonance with law.
(c) In the matter of recovery of loans, consistent with its policy over the years, the
company shall not resort to undue harassment viz. persistently bothering the borrowers
at odd hours, use of muscle power for recovery of loans, etc. The Companys staff are
adequately trained (including not to behave rudely with the customers) to deal with the
customers in an appropriate manner. The contract / loan agreement with the borrower
shall contain the repossession clauses in line with RBI Circular No.RBI/2008-09/454
DNBS (PD) CC. No.139/03.10.001/2008-09 dated 24th April 2009.
(v) Grievances:Sri P Viswanathan, Secretary & Compliance Officer, Sundaram Finance Limited, 21,
Patullos Road, Chennai 600 002, Tamil Nadu, Tel: 044 28881207, Mobile: 94443
99168 and / or Sri V Srinivasan, Deputy General Manager (Legal), Sundaram Finance
Limited,

21,

Patullos

Road,

Chennai

600

002,

Tamil

Nadu,

Tel:04428881260,Mobile:9444066133
Emailaddress: customervoice@sundaramfinance.in are the Grievance Redressal
Officers under the Fair Practices Code who can be approached by the public for
resolution of complaints against the Company. If the complaint / dispute is not
redressed within a period of one month, the customer may appeal to the Officer-in17

Charge of the Regional Office of Department of Non-Banking Supervision (DNBS),

Reserve Bank of India, Fort Glacis, Rajaji Salai, Chennai 600 001, Tamil Nadu, Tel:
044 25393406, under whose jurisdiction the registered office of the Company falls.
For the benefit of our customers, the above information on grievances be displayed
at our branches / places where business is transacted.
Gradation of Risks:The rate of interest specified for each loan is at monthly rests, with the corresponding
annualized rate being arrived at through Sundaram Finance's interest rate model which
takes

into account relevant factors such as cost of funds, margin and risk premium. We

take a comprehensive approach to the gradation of risk that does not discriminate between
borrowers in the same class, but rather tailors the interest rate to each loan. The decision to
give a loan and the rate of interest thereon are carefully assessed on a case by case basis
based on multiple factors which may include the borrower's cash flows (past, current and
projected), borrower's other financial commitments, the borrower's credit record, the
security for the loan as represented by underlying assets or other financial guarantees etc.
Such information is gathered based on information provided by the borrower, credit
reports, market intelligence and information gathered by field inspection.
Interest Rate Policy:The rate of interest charged to our customers is linked to the Average Base Rate (ABR) of
our consortium of banks. The mark up over the ABR varies from 200 bps to 800 bps
depending on the risk profile of the customer, asset class (commercial vehicle, car, tractors,
construction equipment, machinery etc.), asset type (new / used), and prevalent liquidity
conditions. Accordingly, the present rate of interest charged to our customers is in the
range of 12% to 18% p.a. payable monthly.

18

SUNDARAM WAY

19

INVESTMENTS

DEPOSITS: Over 2 lakh Depositors.

Total deposits aggregating over Rs 1192.03 Cr. (Rs 11.92 Billion).
Renewal rate for deposits is more than 76%.
Our Deposit schemes are rated MAAA/Stable by ICRA.
'State-of-the-Art' Information Technology.
20

 One of the largest bases of deposits amongst NBFCs in India.

Industry Bench Mark for Depositor Servicing.

RETAIL BUSINESS:-

Sundaram Finance is one of the largest and a leading player in the area of car
finance. We extend finance on all makes and models of cars.
Our vast network of 564 branches and experienced field force help our customers
choose the vehicles and the finance package to suit their budget.
The approval is fast and with minimum documentation. In fact customers can drive
away with their dream car in 48 hours flat.
Our car finance schemes are easy to understand and without any hidden costs. You
will deal only with our employees who are of high integrity and extremely customer
friendly.

BUSINESS FINANCE:COMMERCIAL VEHICLE FINANCE:-

21

Sundaram Finance is one of the oldest and largest providers of finance for the
acquisition of commercial vehicles of all makes.
The Commercial vehicle finance provided by us helps the small operators to acquire
vehicles with minimum hassle and documentation. We provide customized financing
options to suit your needs.
The strength of our Group lies in the quick completion of transactions, long
association with transporters for generations and the intimate knowledge of the market
and its nuances.
Large fleet operators also find it easy to expand their fleet through the finance
provided by us.
We have a vast network of 564 branches to cater to the financing needs of our
customers.
We also offer special schemes, supported by the manufacturers, where the rates are
highly competitive.
Our finance schemes are easy to understand and without any hidden costs. You will
deal only with our employees who are of high integrity and extremely customer
friendly.

CONSTRUCTION EQUIPMENT FINANCE:-

22

Sundaram Finance Limited provides finance for excavators, loaders, dumpers, tippers,
compacters, compressors etc. We provide finance even to the small operators with
affordable finance charges.
5 Irresistible reasons to avail equipment finance from us:
Huge network of over 538 branches across India.
Convenience of remitting installments in any of our branches.
Flexible re-payment options to help operators acquire infrastructure
vehicles/equipments.
Hassle-free documentation and quick processing - within two working days.
Dealings are transparent.
Finance can be availed for new as well as second hand construction equipments.
Sundaram Finance Limited gives up to a maximum of 75% (Negotiable).

SERVICES OF SUNDARAM FINANCE:-

23

 MUTUAL FUNDS.
INSURANCE.

Royal Sundaram brings to you the golden heritage and reliability of Sundaram
Finance (AAA), one of the most respected non-banking financial institution in India,
and RSA(formerly Royal & Sun Alliance), one of the oldest and the second largest
general insurer in the UK.
The coming together of these two financial giants allows us to offer you the best
global practices in insurance industry, innovation in terms of products and services,
and unmatched, personalized customer service.
At Royal Sundaram, we believe in going that Extra Mile to provide you that Extra
Care. With more than two million happy customers, we have introduced new online
services InstaBuy and InstaRenew - for instant buying and renewing policies.

24

Life

Insurance

Corporation

group and investment

where Government

of

of

India (LIC)

company in

India.

India has

100%stake.

It's
It

is

the

largest insurance

state-owned

has

assets

company

estimated

of

1,325,000 crore (US$220 billion).[1] It was founded in 1956 with the merger of 245
insurance companies and provident societies (154 life insurance companies, 16 foreign
companies & 75 provident companies).
Headquartered in Mumbai, financial and commercial capital of India, the Life
Insurance Corporation of India currently has 8 zonal 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 slogan of
LIC is "Yogakshemam Vahamyaham" which translates from Sanskrit to "Your welfare
is responsibility".

25

HISTORY:The Oriental Life Insurance Company, the first company in India offering life
insurance coverage, was established in Calcutta in 1818 by Bipin Behari Dasgupta and
others. Europeans in India were its primary target market, and it charged Indians
heftier premiums. The Bombay Mutual Life Assurance Society, formed in 1870, was
the first native insurance provider. Other insurance companies established in the preindependence era included

Bharat Insurance Company (1896)

United India (1906)

National Indian (1906)

National Insurance (1906)

Co-operative Assurance (1906)

Hindustan Co-operatives (1907)

Indian Mercantile

General Assurance

Swadeshi Life (later Bombay Life)

Sahyadri Insurance (Merged into LIC, 1986)

The first 150 years were marked mostly by turbulent economic conditions. It
witnessed, India's First War of Independence, adverse effects of the World War
I and World War II on the economy of India, and in between them the period of world
wide economic crises triggered by the Great depression. The first half of the 20th
century also saw a heightened struggle for India's independence. The aggregate effect
of these events led to a high rate of bankruptcies and liquidation of life insurance

26

companies in India. This had adversely affected the faith of the general public in the
utility of obtaining life cover.

Principles:Insurance involves pooling funds from many insured entities (known as exposures) to
pay for the losses that some may incur. The insured entities are therefore protected
from risk for a fee, with the fee being dependent upon the frequency and severity of
the event occurring. In order to be an insurable risk, the risk insured against must meet
certain characteristics. Insurance as a financial intermediary is a commercial enterprise
and a major part of the financial services industry, but individual entities can also selfinsure through saving money for possible future losses

Insurability:
Risk which can be insured by private companies typically shares seven common
characteristic
Large number of similar exposure units:From a known cause. The classic example is death of an insured person on a life
insurance policy. Fire, automobile accidents, and worker injuries may all easily meet
this criterion. Other types of losses may only be definite in theory. Occupational
disease, for instance, may involve prolonged exposure to injurious conditions where
no specific time, place, or cause is identifiable. Ideally, the time, place, and cause of a
loss should be clear enough that a reasonable person, with sufficient information,
could objectively verify all three elements.
27

 Definite loss:The event that constitutes the trigger of a claim should be fortuitous, or at least outside
the control of the beneficiary of the insurance. The loss should be pure, in the sense
that it results from an event for which there is only the opportunity for cost. Events
that contain speculative elements, such as ordinary business risks or even purchasing a
lottery ticket, are generally not considered insurable.
Accidental loss:The size of the loss must be meaningful from the perspective of the insured. Insurance
premiums need to cover both the expected cost of losses, plus the cost of issuing and
administering the policy, adjusting losses, and supplying the capital needed to
reasonably assure that the insurer will be able to pay claims. For small losses, these
latter costs may be several times the size of the expected cost of losses. There is hardly
any point in paying such costs unless the protection offered has real value to a buyer.
Large loss:If the likelihood of an insured event is so high, or the cost of the event so large, that
the resulting premium is large relative to the amount of protection offered, then it is
not likely that the insurance will be purchased, even if on offer. Furthermore, as the
accounting profession formally recognizes in financial accounting standards, the
premium cannot be so large that there is not a reasonable chance of a significant loss
to the insurer. If there is no such chance of loss, then the transaction may have the
form of insurance, but not the substance.

28

 Calculable loss:There are two elements that must be at least estimable, if not formally calculable: the
probability of loss, and the attendant cost. Probability of loss is generally an empirical
exercise, while cost has more to do with the ability of a reasonable person in
possession of a copy of the insurance policy and a proof of loss associated with a
claim presented under that policy to make a reasonably definite and objective
evaluation of the amount of the loss recoverable as a result of the claim.
Limited risk of catastrophically large losses:Insurable losses are ideally independent and non-catastrophic, meaning that the losses
do not happen all at once and individual losses are not severe enough to bankrupt the
insurer; insurers may prefer to limit their exposure to a loss from a single event to
some small portion of their capital base. Capital constrains insurers' ability to sell
earthquake insurance as well as wind insurance in hurricane zones. In the US, flood
risk is insured by the federal government. In commercial fire insurance, it is possible
to find single properties whose total exposed value is well in excess of any individual
insurer's capital constraint. Such properties are generally shared among several
insurers, or are insured by a single insurer who syndicates the risk into the reinsurance
market.
Legal:When a company insures an individual entity, there are basic legal requirements.
Several commonly cited legal principles of insurance include
1. Indemnity the insurance company indemnifies, or compensates, the insured in
the case of certain losses only up to the insured's interest.

29

2. Insurable interest the insured typically must directly suffer from the loss.
Insurable interest must exist whether property insurance or insurance on a
person is involved. The concept requires that the insured have a "stake" in the
loss or damage to the life or property insured. What that "stake" is will be
determined by the kind of insurance involved and the nature of the property
ownership or relationship between the persons. The requirement of an insurable
interest is what distinguishes insurance from gambling.
3. Utmost good faith (Uberrima fides) the insured and the insurer are bound by a
good faith bond of honesty and fairness. Material facts must be disclosed.
4. Contribution insurers which have similar obligations to the insured contribute
in the indemnification, according to some method.
5. Subrogation the insurance company acquires legal rights to pursue recoveries
on behalf of the insured; for example, the insurer may sue those liable for the
insured's loss.
6. Causa proxima, or proximate cause the cause of loss (the peril) must be
covered under the insuring agreement of the policy, and the dominant cause
must not be excluded
7. Mitigation - In case of any loss or casualty, the asset owner must attempt to
keep loss to a minimum, as if the asset was not insured.
Indemnification:To "indemnify" means to make whole again, or to be reinstated to the position that one
was in, to the extent possible, prior to the happening of a specified event or peril.
Accordingly, life insurance is generally not considered to be indemnity insurance, but
rather "contingent" insurance (i.e., a claim arises on the occurrence of a specified
event). There are generally three types of insurance contracts that seek to indemnify an
insured:
30

1. a "reimbursement" policy, and

2.

a "pay on behalf" or "on behalf of"[4] policy, and

3.

An "indemnification" policy.

From an insured's standpoint, the result is usually the same: the insurer pays the loss
and claims expenses.
If the Insured has a "reimbursement" policy, the insured can be required to pay for a
loss and then be "reimbursed" by the insurance carrier for the loss and out of pocket
costs including, with the permission of the insurer, claim expenses.[4][5]
Under a "pay on behalf" policy, the insurance carrier would defend and pay a claim on
behalf of the insured that would not be out of pocket for anything. Most modern
liability insurance is written on the basis of "pay on behalf" language which enables
the insurance carrier to manage and control the claim.
Under an "indemnification" policy, the insurance carrier can generally either
"reimburse" or "pay on behalf of"; whichever is more beneficial to it and the insured
in the claim handling process.
An entity seeking to transfer risk (an individual, corporation, or association of any
type, etc.) becomes the 'insured' party once risk is assumed by an 'insurer', the insuring
party, by means of a contract, called an insurance policy. Generally, an insurance
contract includes, at a minimum, the following elements: identification of participating
parties (the insurer, the insured, the beneficiaries), the premium, the period of
coverage, the particular loss event covered, the amount of coverage (i.e., the amount to
be paid to the insured or beneficiary in the event of a loss), and exclusions (events not
covered). An insured is thus said to be "indemnified" against the loss covered in the
policy.

31

When insured parties experience a loss for a specified peril, the coverage entitles the
policyholder to make a claim against the insurer for the covered amount of loss as
specified by the policy. The fee paid by the insured to the insurer for assuming the risk
is called the premium. Insurance premiums from many insureds are used to fund
accounts reserved for later payment of claims in theory for a relatively few
claimants and for overhead costs. So long as an insurer maintains adequate funds
set aside for anticipated losses (called reserves), the remaining margin is an insurer's
profit.
Societal effects:Insurance can have various effects on society through the way that it changes who
bears the cost of losses and damage. On one hand it can increase fraud; on the other it
can help societies and individuals prepare for catastrophes and mitigate the effects of
catastrophes on both households and societies.
Insurance can influence the probability of losses through moral hazard, insurance
fraud, and preventive steps by the insurance company. Insurance scholars have
typically used morale hazard to refer to the increased loss due to unintentional
carelessness and moral hazard to refer to increased risk due to intentional carelessness
or indifference. Insurers attempt to address carelessness through inspections, policy
provisions requiring certain types of maintenance, and possible discounts for loss
mitigation efforts. While in theory insurers could encourage investment in loss
reduction, some commentators have argued that in practice insurers had historically
not aggressively pursued loss control measuresparticularly to prevent disaster losses
such as hurricanesbecause of concerns over rate reductions and legal battles.
However, since about 1996 insurers have begun to take a more active role in loss
mitigation, such as through building codes

32

Underwriting and investing:The business model is to collect more in premium and investment income than is paid
out in losses, and to also offer a competitive price which consumers will accept. Profit
can be reduced to a simple equation:
Profit = earned premium + investment income - incurred loss - underwriting
expenses.
Insurers make money in two ways:
1. Through underwriting, the process by which insurers select the risks to insure
and decide how much in premiums to charge for accepting those risks;
2. By investing the premiums they collect from insured parties.
The most complicated aspect of the insurance business is the actuarial science of
ratemaking (price-setting) of policies, which uses statistics and probability to
approximate the rate of future claims based on a given risk. After producing rates, the
insurer will use discretion to reject or accept risks through the underwriting process.
At the most basic level, initial ratemaking involves looking at the frequency and
severity of insured perils and the expected average payout resulting from these perils.
Thereafter an insurance company will collect historical loss data, bring the loss data to
present value, and compare these prior losses to the premium collected in order to
assess rate adequacy. Loss ratios and expense loads are also used. Rating for different
risk characteristics involves at the most basic level comparing the losses with "loss
relativities" - a policy with twice as many losses would therefore be charged twice as
much. More complex multivariate analyses are sometimes used when multiple
characteristics are involved and a univariate analysis could produce confounded
results.

33

Claims:Claims and loss handling is the materialized utility of insurance; it is the actual
"product" paid for. Claims may be filed by insureds directly with the insurer or
through brokers or agents. The insurer may require that the claim be filed on its own
proprietary forms, or may accept claims on a standard industry form, such as those
produced by ACORD.
Insurance company claims departments employ a large number of claims adjusters
supported by a staff of records management and data entry clerks. Incoming claims are
classified based on severity and are assigned to adjusters whose settlement authority
varies with their knowledge and experience. The adjuster undertakes an investigation
of each claim, usually in close cooperation with the insured, determines if coverage is
available under the terms of the insurance contract, and if so, the reasonable monetary
value of the claim, and authorizes payment.
The policyholder may hire their own public adjuster to negotiate the settlement with
the insurance company on their behalf. For policies that are complicated, where claims
may be complex, the insured may take out a separate insurance policy add on, called
loss recovery insurance, which covers the cost of a public adjuster in the case of a
claim.
Adjusting liability insurance claims is particularly difficult because there is a third
party involved, the plaintiff, who is under no contractual obligation to cooperate with
the insurer and may in fact regard the insurer as a deep pocket. The adjuster must
obtain legal counsel for the insured (either inside "house" counsel or outside "panel"
counsel), monitor litigation that may take years to complete, and appear in person or
over the telephone with settlement authority at a mandatory settlement conference
when requested by the judge.

34

If a claims adjuster suspects under-insurance, the condition of average may come into
play to limit the insurance company's exposure.
In managing the claims handling function, insurers seek to balance the elements of
customer satisfaction, administrative handling expenses, and claims overpayment
leakages. As part of this balancing act, fraudulent insurance practices are a major
business risk that must be managed and overcome. Disputes between insurers and
insureds over the validity of claims or claims handling practices occasionally escalate
into litigation.
Marketing:Insurers will often use insurance agents to initially market or underwrite their
customers. Agents can be captive, meaning they write only for one company, or
independent, meaning that they can issue policies from several companies. The
existence and success of companies using insurance agents is likely due to improved
and personalized service

35

History of insurance
In some sense we can say that insurance appears simultaneously with the appearance
of human society. We know of two types of economies in human societies: natural or
non-monetary economies (using barter and trade with no centralized or standardized
set of financial instruments) and more modern monetary economies (with markets,
currency, financial instruments and so on). The former is more primitive and the
insurance in such economies entails agreements of mutual aid. If one family's house is
destroyed the neighbours are committed to help rebuild. Granaries housed another
primitive form of insurance to indemnify against famines. Often informal or formally
intrinsic to local religious customs, this type of insurance has survived to the present
day in some countries where a modern money economy with its financial instruments
is not widespread

The subscription room at Lloyd's of London in the early 19th century.

36

Types of insurance:Any risk that can be quantified can potentially be insured. Specific kinds of risk that
may give rise to claims are known as perils. An insurance policy will set out in details
which perils are covered by the policy and which are not. Below are non-exhaustive
lists of the many different types of insurance that exist. A single policy may cover
risks in one or more of the categories set out below. For example, vehicle insurance
would typically cover both the property risk (theft or damage to the vehicle) and the
liability risk (legal claims arising from an accident). A home insurance policy in the
US typically includes coverage for damage to the home and the owner's belongings,
certain legal claims against the owner, and even a small amount of coverage for
medical expenses of guests who are injured on the owner's property.
Auto insurance:There were over 10-million traffic accidents in the U.S. in 2009 (latest available data)
and 33,808 people died in motor vehicle crashes in those accidents, according to data
released by the Fatality Analysis Reporting System (FARS). The number one cause of
death for American's between the ages of 5 and 34 were auto accidents. Over 2.3
million drivers and passengers received treatment in emergency rooms in 2009, and
the costs of those accidents including deaths and disabling injuries was around $70
billion.
While all states do not require drivers to have auto insurance, most do have
requirements regarding financial responsibility in the event of an accident. Many
states do periodic random checks of drivers for proof of insurance. If you do not have
coverage, the fines can vary by state and can range from the suspension of your
license, to points on your driving record, to fines from $500 to $1,000.
If you drive without auto insurance and have an accident, the fines will probably be
37

the least of your financial burden. Your car, like your home is a valuable asset you use
every day. If your car is damaged in an accident and you have no auto insurance, you
will have no way to replace that vehicle unless you have a large savings account, and
you don't really want to tap into that savings when auto insurance could cover the
cost.
If you, a passenger or the other driver is injured in the accident, your auto insurance
will pay those expenses, and help guard you against any litigation that might result
from the accident. Auto insurance also protects your vehicle against theft, vandalism
or a natural disaster such as a tornado or other weather related incidents.
Again, as with all insurances, your individual circumstances will determine the price
of your auto insurance. The best advice is to seek out several rate quotes, read the
coverage provided carefully and check periodically to see if you qualify for lower
rates based on age, driving record or the area where you live.
Health insurance:Health insurance policies cover the cost of medical treatments. Dental insurance, like
medical insurance protects policyholders for dental costs. In the US and Canada,
dental insurance is often part of an employer's benefits package, along with health
insurance.
Accident, sickness and unemployment insurance:

Disability insurance policies provide financial support in the event of the

policyholder becoming unable to work because of disabling illness or injury. It
provides monthly support to help pay such obligations as mortgage loans and
credit cards. Short-term and long-term disability policies are available to
individuals, but considering the expense, long-term policies are generally
obtained only by those with at least six-figure incomes, such as doctors,
38

lawyers, etc. Short-term disability insurance covers a person for a period

typically up to six months, paying a stipend each month to cover medical bills
and other necessities.

Long-term disability insurance covers an individual's expenses for the long

term, up until such time as they are considered permanently disabled and
thereafter. Insurance companies will often try to encourage the person back into
employment in preference to and before declaring those unable to work at all
and therefore totally disabled.

Disability overhead insurance allows business owners to cover the overhead

expenses of their business while they are unable to work.

Total permanent disability insurance provides benefits when a person is

permanently disabled and can no longer work in their profession, often taken as
an adjunct to life insurance.

Workers' compensation insurance replaces all or part of a worker's wages lost

and accompanying medical expenses incurred because of a job-related injury.

Workers' compensation, or employers' liability insurance, is compulsory in some

countries

39

LIFE INSURANCE
Property:Property insurance provides protection against risks to property, such as fire, theft or
weather damage. This may include specialized forms of insurance such as fire
insurance, flood insurance, earthquake insurance, home insurance, inland marine
insurance or boiler insurance. The term property insurance may, like casualty
insurance, be used as a broad category of various subtypes of insurance, some of
which are listed below:

US Airways Flight 1549 was written off after ditching into the Hudson River

Aviation insurance protects aircraft hulls and spares, and associated liability
risks, such as passenger and third-party liability. Airports may also appear under
this subcategory, including air traffic control and refuelling operations for
international airports through to smaller domestic exposures.

Boiler insurance (also known as boiler and machinery insurance, or equipment

breakdown insurance) insures against accidental physical damage to boilers,
equipment or machinery.

40

Builder's risk insurance insures against the risk of physical loss or damage to
property during construction. Builder's risk insurance is typically written on an
"all risk" basis covering damage arising from any cause (including the
negligence of the insured) not otherwise expressly excluded. Builder's risk
insurance is coverage that protects a person's or organization's insurable interest
in materials, fixtures and/or equipment being used in the construction or
renovation of a building or structure should those items sustain physical loss or
damage from an insured peril.

Crop insurance may be purchased by farmers to reduce or manage various risks

associated with growing crops. Such risks include crop loss or damage caused
by weather, hail, drought, frost damage, insects, or disease.

Earthquake insurance is a form of property insurance that pays the policyholder

in the event of an earthquake that causes damage to the property. Most ordinary
home insurance policies do not cover earthquake damage. Earthquake insurance
policies generally feature a high deductible. Rates depend on location and hence
the likelihood of an earthquake, as well as the construction of the home.

Fidelity bond is a form of casualty insurance that covers policyholders for losses
incurred as a result of fraudulent acts by specified individuals. It usually insures
a business for losses caused by the dishonest acts of its employees.

Hurricane Katrina caused over $80 billion of storm and flood damage

41

Flood insurance protects against property loss due to flooding. Many insurers in
the US do not provide flood insurance in some parts of the country. In response
to this, the federal government created the National Flood Insurance Program
which serves as the insurer of last resort.

Home insurance, also commonly called hazard insurance or homeowners

insurance (often abbreviated in the real estate industry as HOI), and provides
coverage for damage or destruction of the policyholder's home. In some
geographical areas, the policy may exclude certain types of risks, such as flood
or earthquake that require additional coverage. Maintenance-related issues are
typically the homeowner's responsibility. The policy may include inventory, or
this can be bought as a separate policy, especially for people who rent housing.
In some countries, insurers offer a package which may include liability and
legal responsibility for injuries and property damage caused by members of the
household, including pets.

Landlord insurance covers residential and commercial properties which are

rented to others. Most homeowners' insurance covers only owner-occupied
homes.

Marine insurance and marine cargo insurance cover the loss or damage of
vessels at sea or on inland waterways, and of cargo in transit, regardless of the
method of transit. When the owner of the cargo and the carrier are separate
corporations, marine cargo insurance typically compensates the owner of cargo
for losses sustained from fire, shipwreck, etc., but excludes losses that can be
recovered from the carrier or the carrier's insurance. Many marine insurance
underwriters will include "time element" coverage in such policies, which

42

extends the indemnity to cover loss of profit and other business expenses
attributable to the delay caused by a covered loss.

Supplemental natural disaster insurance covers specified expenses after a

natural disaster renders the policyholder's home uninhabitable. Periodic
payments are made directly to the insured until the home is rebuilt or a specified
time period has elapsed.

Surety bond insurance is a three-party insurance guaranteeing the performance

of the principal.

The demand for terrorism insurance surged after 9/11

Terrorism insurance provides protection against any loss or damage caused by

terrorist activities. In the US in the wake of 9/11, the Terrorism Risk Insurance
Act 2002 (TRIA) set up a federal Program providing a transparent system of
shared public and private compensation for insured losses resulting from acts of
terrorism. The program was extended until the end of 2014 by the Terrorism
Risk Insurance Program Reauthorization Act 2007 (TRIPRA).

Volcano insurance is a specialized insurance protecting against damage arising

specifically from volcanic eruptions.
43

Windstorm insurance is an insurance covering the damage that can be caused by

wind events such as hurricanes.

Liability:Liability insurance is a very broad superset that covers legal claims against the
insured. Many types of insurance include an aspect of liability coverage. For example,
a homeowner's insurance policy will normally include liability coverage which
protects the insured in the event of a claim brought by someone who slips and falls on
the property; automobile insurance also includes an aspect of liability insurance that
indemnifies against the harm that a crashing car can cause to others' lives, health, or
property. The protection offered by a liability insurance policy is twofold: a legal
defense in the event of a lawsuit commenced against the policyholder and
indemnification (payment on behalf of the insured) with respect to a settlement or
court verdict. Liability policies typically cover only the negligence of the insured, and
will not apply to results of willful or intentional acts by the insured.

The subprime mortgage crisis was the source of many liability insurance losses.

Public liability insurance covers a business or organization against claims

should its operations injure a member of the public or damage their property in
some way.

44

Directors and officers liability insurance (D&O) protects an organization

(usually a corporation) from costs associated with litigation resulting from
errors made by directors and officers for which they are liable.

Environmental liability insurance protects the insured from bodily injury,

property damage and cleanup costs as a result of the dispersal, release or escape
of pollutants.

Errors and omissions insurance (E&O) is business liability insurance for

professionals such as insurance agents, real estate agents and brokers, architects,
third-party administrators (TPAs) and other business professionals.

Prize indemnity insurance protects the insured from giving away a large prize at
a specific event. Examples would include offering prizes to contestants who can
make a half-court shot at a basketball game, or a hole-in-one at a golf
tournament.

Professional liability insurance, also called professional indemnity insurance

(PI), protects insured professionals such as architectural corporations and
medical practitioners against potential negligence claims made by their
patients/clients. Professional liability insurance may take on different names
depending on the profession. For example, professional liability insurance in
reference to the medical profession may be called medical malpractice
insurance.

Credit:Credit insurance repays some or all of a loan when certain circumstances arise to the
borrower such as unemployment, disability, or death.

45

Mortgage insurance insures the lender against default by the borrower.

Mortgage insurance is a form of credit insurance, although the name "credit
insurance" more often is used to refer to policies that cover other kinds of debt.

Many credit cards offer payment protection plans which are a form of credit
insurance.

Trade credit insurance is business insurance over the accounts receivable of the
insured. The policy pays the policy holder for covered accounts receivable if the
debtor defaults on payment.

Different type of conflict. Because agents work directly for the insurance company, if
there is a claim the agent may advise the client to the benefit of the insurance
company. Agents generally cannot offer as broad a range of selection compared to an
insurance broker.
An independent insurance consultant advises insureds on a fee-for-service retainer,
similar to an attorney, and thus offers completely independent advice, free of the
financial conflict of interest of brokers and/or agents. However, such a consultant must
still work.

46

TRADITIONAL PLANS OF LIC...

JEEVAN ANAND:LIC Jeevan Anand is an endowment cum whole life policy along with Bonus facility.
This is a Double Death Benefit Plan if the life insured survives till the end of the
policy term. This plan has average premium, high bonus rate and great liquidity
features.
In this plan, the Life Insured receives the Sum Assured + Bonus as Maturity Benefit
but the life cover chosen continues till his death. Again an additional Sum Assured is
paid whenever the Life Insured dies. Thus this plan is both an endowment plan and a
whole life plan.

Eligibility conditions and other restrictions in LIC Jeevan Anand Plan

47

Sum Assured (in Rs.)

Policy Term (in years)
Premium Payment Term (in
years)
Entry Age of Policyholder
Age at Maturity
Single Premium (in Rs.)
Payment modes

Minimum

Maximum

1,00,000

No Limit

57

57

18

65

75

NA

NA

Yearly, Half-yearly, Quarterly, Monthly and SSS

Key Features of LIC Jeevan Anand Plan:-

This plan is an endowment cum whole life plan

Maturity Benefit is Sum Assured + accrued Bonus and the Life Cover
continues till death
Death Benefit after Policy Maturity is only Sum Assured
Death Benefit before Policy Maturity is Sum Assured + accrued Bonus
Simple Reversionary Bonus is payable on maturity or earlier death.
Accidental Death and Disability Benefit is an inbuilt feature in this plan
Optional higher cover through 1 additional rider of Critical Illness Benefit.
This plan can be provided to people with hazardous occupation with additional
premium.

BENEFITS FROM LIC JEEVAN ANAND:Death Benefit In case of death of the Life Insured
before the end of the Policy Term, the Sum Assured + accrued Bonus is paid
After the Policy Term, Sum Assured is paid as Death Benefit whenever the Life
Insured dies.
48

Maturity Benefit At the maturity of the policy, the insured will get Sum Assured +
accrued Bonus + Final Addition Bonus
Income Tax Benefit Premiums paid under life insurance policy are exempted from
tax under Section 80 C and maturity proceeds are exempted from tax under Section 10
(10D)
EXAMPLE...
Premium Amounts:

Payment Mode

Premium

Quarterly

Rs.2,830 /-

Half-yearly

Rs.5,575 /-

Yearly

Rs.10,980 /-

What you pay for 20 years

What you get after 20 years

Mode

Amount

Yearly

Rs.2,19,600

Half-Yearly

Rs.2,23,000

(Estimated @ Rs.45 per thousand SA

Quarterly

Rs.2,26,400

for 20 years)

Rs.2,00,00 + Rs.1,80,000 Bonus

LIC Jeevan Tarang Policy TABLE NO. 178:49

LIC Jeevan Tarang Plan is a Whole Life Plan with Bonus facility. In this plan, the
premium is paid for the Accumulation Period that is chosen by the policyholder of 10,
15 or 20 years. When the Accumulation Period ends, i.e. the Premium Paying Term is
over, the vested Bonus is paid in a Lumpsum and the policy continues.

KEY FEATURES OF LIC JEEVAN TARANG:

This plan is a Whole Life Plan with regular annual returns post maturity.
Premium is paid till the Accumulation Period only and not after that.
Death Benefit is Sum Assured + accrued Bonus + Loyalty Additions, if any.
5 and % of the Sum Assured is paid as Survival Benefit every year post

Accumulation Period.
Simple Reversionary Bonus is payable on maturity or earlier death.
BENEFITS FROM LIC JEEVAN TARANG POLICY:Death Benefit In case of death of the Life Insured

During the Accumulation Period- Sum Assured + vested Bonus is paid and
the policy is terminated.

After the Accumulation Period- Sum Assured + Loyalty Addition is paid and
the policy is terminated.

Survival Benefit When the Life Insured survives after the Accumulation Period,
5 and % of the Sum Assured is paid as Survival Benefit every year post that
till the Life Insured is 100 years old.
Maturity Benefit Being a Whole Life Plan, it matures when the Life Insured is 100
years old. Thus, if the Life Insured survives till 100 years, then the entire Sum Assured
+ Loyalty Bonus is paid and the policy is terminated
50

ELIGIBILITY AND RESTRICTION IN JEEVAN TARANG:-

Sum Assured (in Rs.)

Minimum

Maximum

1,00,000

No Limit

Policy Term (in years)

Whole Life

Age for completion of

Premium Payment Term

70

18

Entry Age of Policyholder

60

Age at Maturity (in years)

100

(in years)
Age at the end of the
Accumulation Period (in
years)

Single, Yearly, Half-yearly, Quarterly, Monthly and

Payment modes

SSS

Premium paying term

10, 15, 20 years

ADDITIONAL BENEFITS:Riders There 4 additional Riders available during the Accumulation Phase:

Accidental Death Benefit Rider.

Term Rider.
Critical Illness rider and,
Premium Waiver Benefit for Critical Illness.

51

SAMPLE ILLUSTRATION OF PREMIUM OF LIC JEEVAN TARANG:Age = 0 yrs, Sum Assured (Insurance) = Rs 1 crore, Term = 20yrs, Premium p.a. =Rs
495904 or Single premium Rs5355000.
After 20 yrs the insured person will get Rs 1 crore (approx.) as the total bonus and
Rs550000 p.a. life time till 100yrs of age and he will also be covered for insurance of
Rs 1 crore life time. Mean when the insured person will die his nominee or heirs will
also get Rs 1 crore as the claim.
So in total for a baby of 0 yrs who lives till 80yrs of age he will be benefited for Rs 5.3
crores in his life time.

52

CHILDS PLANS OF LIC:LIC Komal Jeevan Policy:-

LICs Komal Jeevan Plan is a childrens moneyback policy in which the premium is
returned on the policy anniversary after the child attains 18 years, 20 years, 22 years
and 24 years. If the child dies within the policy tenure after risk commencement, then
the Sum Assured along with Guaranteed Additions are paid and the policy is
terminated.

KEY FEATURES OF LIC KOMAL JEEVAN:

This plan can be taken by the childs parents or grandparents for a child

between 0 to 10 years
Premium needs to be paid till the child is 17 years old.
Risk starts to commence after 2 policy years or the child is at least 7 years

old, whichever is later.

No medical examination is required under this plan.
Loyalty or Terminal Bonus is payable on death or maturity.
An Additional Premium Waiver Benefit rider can be taken along with this

plan.
There is a Guaranteed Addition of Rs. 75 per thousand Sum Assured for
each completed year.

BENEFITS IN LIC KOMAL JEEVAN PLAN:53

Death Benefit Sum Assured + Bonuses after commencement of risk. Otherwise, the
sums of basic premiums are paid back.

Maturity Benefit Guaranteed Additions along with Loyalty additions is payable in

a lumpsum.

Survival Benefit
When child is 18 years of age - 20% of the Sum Assured
When child is 20 years of age - 20% of the Sum Assured
When child is 22 years of age - 30% of the Sum Assured
When child is 24 years of age - 30% of the Sum Assured

Income Tax Benefit Premiums paid under life insurance policy are exempted from
tax under Section 80 C and maturity proceeds are exempted from tax under Section 10
(10D).

ADDITIONAL FEATURES OF LIC KOMAL JEEVAN PLAN:-

54

Riders- There are riders available with this plan

Premium Waiver Benefit Rider.
Term Rider.

ELIGIBILITY AND RESTRICTION IN KOMAL JEEVAN PLAN:-

Sum Assured (in Rs.)

Policy Term (in years)
Premium Payment Term (in

Minimum
Maximum
1,00,000
25,00,000
18 years Childs Age at Entry

years)
Entry Age of Life Insured
(Child)
Age at Maturity
Single premium (in Rs.)
Payment modes

18

10

26

NA
Single, Yearly, Half-yearly, Quarterly,
Monthly or SSS

EXAMPLE OF LIC KOMAL JEEVAV PLAN:-

Proposer

: Mr. X

Policy Holder: Mr.Y

Age: 32 Years
Age: 0 Year.
55

Policy Amount: Rs.2, 00,000/Policy Term: 18 yrs.

Premium Amounts:Payment Mode

Premium

Yearly

Rs.15044 /-

Half Yearly

Rs.7602/-

Quarterly

Rs.3840 /-

AT MATURITY TIME:At the

18

20

22

24

26

end of
Age
Returns Rs.40,000/- Rs.40,000/- Rs.60,000/- Rs.60,000/-

Rs.3,90,000/+
LA, if any
(GA+LA, if any)

What is paid for 18 years

Yearly

What your child gets

Rs.2,70,792/-

SA 2,00,000 (On Regular Returns)+

GA 3, 90,000 (@ Rs. 75 per 1000 SA

T.B for 18 years

for 26 years.)+

56

Rs.2,73,672/Half Yearly

T.B for 18 years

LA, if any
=

Rs.2,76,480/Quarterly

Rs.5, 90,000 + LA, if any.

T.B for 18 years

57

Endowment PLAN OF LIC TABLE NO. 14:It is one of the oldest and popular LIC plan. Endowment plan (Table 14) provides
financial assistance to the family of the life assured in the event of policy holders
early death or a lumsum amount on policy holders survival upto the selected term.
Hence, Endowment plan (Table 14) provides for family income in the event of
unfortunate death of the life assured or makes provision for retirement in case of living
too long. Endowment Plan is best for every reason, for all long and short term
financial needs.
BENEFITS OF ENDOWMENT PLAN:Natural Death:Sum Assured + Bonus for number of years premium paid + Terminal Bonus if any,
Accidental Death:Double Sum Assured + Bonus for number of years premium paid + Terminal Bonus if
any,
Maturity:Sum Assured + Bonus + Terminal Bonus.
Accident and Permanent Disability Benefit:Accident benefit is maximum Rs.50 lakh.
Tax Benefit:Tax beneift on your premium u/s 80C and Maturity/Death Claim u/s 10 (10D).
Loan:Loan Facility is available on this policy after 3 years; you can also use it as Housing
Loan collateral.
Premium Payment:You can pay premium Yearly, Half-yearly, Quarterly, Monthly or Single premium.

58

EXAMPLE OF ENDOWMENT PLAN:Proposer: Mr. X

Age: 25
Policy Amount: 1 lac.
Policy duration: 15 years.

What you pay

Years

Premium

Yearly

Half-Yearly

Quarterly

6805

3455

1815

102075

103650

108900

15

59

What you get

Sum Assured

Sum

100000

Bonus At the rate of *

42

63000

Final Additional Benefit. At the rate of *

250

25000

Total

188000

NEW BIMA GOLD PLAN OF LIC TABLE NO. 179:Gold never loses its value, just like New Bima Gold policy. LICs New Bima Gold
(plan no.179) is a special with profit money back plan that offers 50% of the life
covers during extended term even after maturity.
FEATURES OF NEW BIMA GOLD PLAN:-

60

AUTO-COVER FACILITY: - If atleast two full years premiums have been paid in
respect of this policy, any subsequent premium be not duly paid, full death cover shall
continue for a period of two years from the date of First Unpaid Premium (FUP) or till
the end of policy term, whichever is earlier.
BENEFITS OF NEW BIMA GOLD PLAN:SURVIVAL BENEFITS:- Payable in case of life assured surviving to the end of the
specified durations provided the policy is in full force as given below:
Policy

% of Sapayable at the end of policy year

Term

4th

8th

12th

16th

12

15%

15%

16

15%

15%

15%

20

10%

10%

10%

10%

For policy term 12 years:15% of the Sum Assured under Basic Plan at the end of each 4th & 8th policy year.
For policy term 16 years: 15% of the Sum Assured under Basic Plan at the end of each 4th, 8th &12th policy
year.
For policy term 20 years:10% of the Sum Assured under Basic Plan at the end of each 4th, 8th, 12th & 16th
policy year.
On expiry of policy term: - Total amount of premiums (excluding extra/optional rider
premiums, if any) paid plus Loyalty Additions, if any, less the amount of survival
benefits paid earlier.

61

DEATH BENEFITS:During the policy term:- Payment of an amount equal to Sum Assured under the
Basic Plan on death of the Life Assured during the policy term provided the life cover
is in force.
During the extended term:- Payment of an amount equal to 50% of Sum Assured
under the Basic Plan on death of the Life Assured during the extended term provided
all the premiums under the policy have been paid
Extended Term: - The extended term shall be half of the policy term after the expiry
of the policy term.

62

ELIGIBILITY AND RESTRICTIONS FOR LIC NEW BIMA GOLD

PLAN:FOR BASIC PLAN:1. Minimum age at entry: - 14 years (completed)
2. Maximum age at entry: - 57 years (nearest birthday) for Term 12 years
ii. Maximum age at entry: - 51 years (nearest birthday) for Term 16 years
iii.Maximum age at entry: - 45 years (nearest birthday) for Term 20 years
Age at expiry of extended term: - Maximum 75 years (nearest birthday)
Policy Term: - 12, 16 and 20 years.
Minimum Sum Assured: - Rs. 50,000 /Maximum Sum assured: - No limit
Sum Assured will be in multiples of Rs.5, 000 /- only.
FOR THE ACCIDENT BENEFIT RIDER OPTION:
1. Minimum age at entry: - 18 years (completed)
2. Maximum age at entry: - 57 years (nearest birthday) for Term 12 years
ii.Maximum age at entry: - 51 years (nearest birthday) for Term 16 years
iii.Maximum age at entry: - 45 years (nearest birthday) for Term 20 years
Minimum Sum Assured: - Rs. 50,000 /Sum Assured will be in multiples of Rs.5, 000 /- only.

63

Example of New Bima Gold Plan:Age at entry (Life Assured): 35 years

Policy Term: 16 years
Mode of premium payment: Yearly
Sum Assured: Rs.1,00,000/Annual Premium : Rs. 5,615 /

Death Benefits :
Year

Total
premium

Benefit payable on death during the year

Guaranteed

Variable

Total

paid
Scenario Scenario Scenario Scenario
1

5615

100,000

100,000

100,000

11,230

100,000

100,000

100,000
64

16,845

100,000

100,000

100,000

22,460

100,000

100,000

100,000

28,075

100,000

100,000

100,000

33,690

100,000

100,000

100,000

39,305

100,000

100,000

100,000

44,920

100,000

100,000

100,000

50,535

100,000

100,000

100,000

10

56,150

100,000

100,000

100,000

11

61,765

100,000

100,000

100,000

12

67,380

100,000

100,000

100,000

13

72,995

100,000

100,000

100,000

14

78,610

100,000

100,000

100,000

15

84,225

100,000

100,000

100,000

16

89,840

100,000

100,000

100,000

17

50,000

50,000

50,000

18

50,000

50,000

50,000

19

50,000

50,000

50,000

20

50,000

50,000

50,000

21

50,000

50,000

50,000

22

50,000

50,000

50,000

23

50,000

50,000

50,000

24

50,000

50,000

50,000

65

Survival Benefits :
End

Total

of

premium

Year

paid

Benefit payable on survival at the end of specified year

Guaranteed
Variable
Total
Scenario Scenario Scenario Scenario
1

22,460

15,000

15,000

15,000

44,920

15,000

15,000

15,000

12

67,380

15,000

15,000

15,000

16

89,840

44,840

5,000

26,000

49,840

70,840

66

RESEARCH OBJECTIVE

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 sector are enumerated.
3. The report also tries to identify the market potential for insurance products and
the strategy that can be employed to exploit the same.
4. The stress is also given on knowing the awareness level of general public.

RESEARCH METHODOLOGY:
To conduct the market research first of all it is 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 types of data needed.
3. Locating the source of data.
4. Choosing a method of data.

67

RESEARCH DESIGN:
Basically there are 3 types of approaches used during any research:
1. Exploratory
2. Descriptive
3. Experimental.
During this research Descriptive and Exploratory approach is taken into
consideration because of the availability of relevant information to describe the
relationships between the marketing problem and the available information.

TYPES OF DATA USED:

Both primary and secondary data is used in the research.
Data Collection Methods:
To conduct the market research the data is collected by two sources.

SECONDARY DATA:
Secondary data is one which already exists and is collected from the published
sources. The sources from which secondary data was collected are:
Newspapers and Magazines like Economic Times, Insurance Times, and
Insurance Post.
Internet.
68

PRIMARY DATA:
The primary sources of data refer to the first hand Information. Primary data is
collected during the survey with the help of Questionnaires

FINDING

QUESTIONNAIRE ANALYSIS
Respondents =80
Respondents Responded =60
Response Rate =75%
Respondents are taken from private, government and business sectors.

1. According to you who have played a major role in the field

of life insurance companies?

69

INSURANCE

PVT.

GOVT.

BUSINESS

EMLOYEES

EMPLOYEES

MAN

LIC

10

13

10

HDFC

ICICI

OTHERS

2. Which insurance companies have been successful to make strong

public base by advertisement?

70

INSURANCE

PVT.

GOVT.

BUSINESS

EMLOYEES

EMPLOYEES

MAN

LIC

12

14

12

HDFC

ICICI

OTHERS

3. Which insurance company has gained massive public support in the

current fiscal year?

INSURANCE

PVT.

GOVT.

BUSINESS

71

EMLOYEES

EMPLOYEES

MAN

LIC

12

14

10

HDFC

ICICI

OTHERS

4. Do you think insurance policy is in the direction of public welfare?

PVT. SECTOR

GOVT.

BUSINESS

SECTOR

MAN

YES

13

16

12

NO

72

5. Is retirement bond or pension policy launched by the number of

private player as well as public sector Company in the direction
of secured old age?

PVT. SECTOR

GOVT.

BUSINESS

SECTOR

MAN

YES

15

18

13

NO

6.

Do you think that risk coverage factor included in Insurance

policy attracts general public towards the policy?

PVT. SECTOR

GOVT.

BUSINESS

SECTOR

MAN

YES

12

16

11

NO

73

7. What according to you, the term plan that only covers risk
and doesnt cover maturity benefit on survival at the end of the
term provides security cover over policy holders or a smart
way of accumulative money from policy holders?

PVT. SECTOR

GOVT.

BUSINESS

SECTOR

MAN

YES

11

15

12

NO

8. Do you think that the arrival of so many private

companies in this insurance sector envisage a lot of choice to
policy holder?

PVT. SECTOR

GOVT.

BUSINESS

SECTOR

MAN

YES

16

18

16

NO

74

9. Do you agree that customer-centricity and transparency are the

buzzwords for success in this evolving industry?
PVT. SECTOR

GOVT.

BUSINESS

SECTOR

MAN

YES

18

20

19

NO

CONCLUSION

After overhauling the all situation that boosted a number of Pvt. Companies
associated with multinational in the Insurance Sector to give befitting competition
to the established behemoth LIC in public sector, we come at the conclusion that :
1) There is very tough competition among the private insurance companies on the
level of new trend of advertising to lull a major part of Customers.
2) LIC is not left behind in the present race of advertisement.
75

3) The entry of the Pvt. Players in the Insurance Sector has expanded the product
segment to meet the different level of the requirement of the customers. It has
brought about greater choice to the customers.
4) Private insurers have restricted reach to the customers.
5) LIC has vast market and very firm grip on its traditional customers and
monopoly of life insurance products.
6) Bank assurance - that allows life insurers to leverage on the risk product through
bank network, was adopted by private players. But LIC was also not left behind as
picking up majority stake in the corporation Bank and large equity stake in the
Oriental Bank of Commerce.
IRDA is also playing very comprehensive role by regulating norms mandating
to private players in this sector, that increases the confidence level of the customers
to the private players

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w.licindia.com/children_need_002_features.htmhttp://www.licindia.
com/children_need_006_features.htmhttp://www.licindia.com/childr
en_need_005_features.htmhttp://www.licindia.com/children_need_
005_features.htmhttp://www.licindia.com/children_need_006_featu
res.htmhttp://www.licindia.com/children_need_003_features.htmhtt
p://www.licindia.com/children_need_004_features.htmhttp://www.li
cindia.com/children_need_007_features.htmhttp://www.licindia.co
m/children_need_008_features.htmhttp://www.licindia.com/handica
pped_001_features.htmhttp://www.licindia.com/handicapped_002_f
76

eatures.htmhttp://www.licindia.com/endowment_001_features.htm
http://www.licindia.com/endowment_002_features.htm http://www.li
cindia.com/endowment_003_features.htmhttp://www.licindia.com/
endowment_004_features.htmhttp://www.licindia.com/endowment
_005_features.htmhttp://www.licindia.com/endowment_006_featur
es.htmhttp://www.licindia.com/endowment_007_features.htmhttp:/
/www.licindia.com/high_worth_001_features.htmhttp://www.licindia
.com/high_worth_002_benefits.htm

RECOMMENDATIONS

In the modernized well advanced hi-tech approach to the customer every possible
facilities and effort to build up the confidence of the rising policy holders towards.
Insurance companies, to complete one another nothing is left to recommend. But
some recommendations that are intensely felt and highly required for insures to
sustain in the market.

77

These are as follows:

a) More and more transparency should be ascertained between insurers and policy
holders.
b) Particularly, in the emerging boom in the insurance company, every insurance
company should be customer centered, and well versed in the handling of problem
and grievances of the policy holders.
c) Each and Every product launched by the Insurance Company should be in favor
of increasing need of policy holders.
IRDA should be more and more responsible to the insurance sector by determining
some standard. It should be mandatory to every insurer to make more and more
responsible and responsive to the policy holders so that comprehensive
understanding may be developed among policy holders. It may be beneficial on
both sides

BIBLIOGRAPHY

1.www.licindia.com
2.www.sundaramfinance.com
3.www.slideshare.com

78

4.www.irda.com

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