1) OBJECTIVE OF THE STUDY:

To understand the Present Scenario of Life Insurance Sector in India. To learn about Life Insurance Corporation (LIC). To learn about the challenges faced by life insurance industry and reforms in the life insurance industry. To study about the Endowment policies of Life Insurance Company

RESEARCH METHODOLOGY:

Relevant information was obtained through following sources of data collection:

1)

Primary Data Collection: Primary data collection gives an opportunity to have practical experience on working in this project. It is done to understand the current scenario of the Life Insurance Industry.The data regarding Life

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Insurance in Indian Scenario was collected by conducting interview with the following people of LIC:

2)

Secondary Data Collection: The data had been collected by reading various books related to the Indian Insurance Industry. Detailed information was also collected from visiting relevant websites on the internet.

4) LIMITATIONS:

Life Insurance is a vast subject. It is not possible to provide information regarding all the different types of policies which provides different benefits. The project would have been much better if the comprehensive study of all the different types of policy provided by different companies is undertaken.

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EXECUTIVE SUMMARY 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. LIC crossed INR 1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross INR 2000.00 crore mark of new business. By 1985-86 LIC had crossed INR 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 online Kiosks and IVRS, Info Centers have been commissioned at Mumbai, Ahmadabad, 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

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to the customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many other conveniences in the future. The Indian government's decision to privatize the insurance industry broke the monopoly of LIC. With the advent of competition, LIC was forced to change its organizational outlook and its business processes. In January 2000, it adopted a three-pronged business strategy for business, which involved reduction in premiums, higher returns and introduction of new products. International consultants Booze Allen & Hamilton were hired in 2000, to advise LIC on the changes needed in the organization. In 2001, LIC tied up with two payment gateways - Billjunction.com and Timesofmoney.com to set up a facility for policyholders to pay premiums through the Internet. It also tied up with ICICI Bank, HDFC Bank, UTI Bank and Bank of Punjab to directly remit customers' policy premiums and debit their accounts after the transaction. LIC planned to enter into more alliances with banks and with leading educational institutes for training. It would also increase offshore activities and set up an exclusive technology company for sourcing software. Other priorities were the setting up of special cells and single-window facilitation centers for high-end customers, rapid introduction of innovative policies, and a renewed thrust on mass and group business. The corporation also decided to offer value-added services to high-end customers, besides special services. At a later stage, it planned to have separate dedicated branches for high-end

policyholders. The decision to have its own separate IT set-up was driven by the requirement of software for the sprawling network of LIC's branches and other offices.
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WHAT IS INSURANCE? Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium. An insurer is a company selling the insurance. The insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage. WHY ONE NEEDS INSURANCE? The business of insurance is related to protection of the economic values of the assets. Every asset is of some value and is expected to last for certain period of time during which it will deliver that value. In case the asset is destroyed it ceases to provide the value to the owner thus leading to an unpleasant situation. Insurance is a mechanism to reduce the affect of such unpleasant situation. Human life is considered to be a value generating asset and is also subject to risks. Assets are insured because there if a possibility that perhaps they might get destroyed, through accidental occurrences. Such possible occurrences are called perils. If such perils can cause damage to the asset we say that the asset is exposed to risk. To be more prcised Perils are the events and risks are the consequential losses or damages. The risk only means that there is a possibility of a loss or damage, the loss may or may not happen. Insurance is done against the contingency that it might happen. Insurance is relevant only if there are uncertainties. If there is no uncertainty about the occurrence of an event, it cannot

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be insured against. In case of human beings death is certain; however the time of death is uncertain. Insurance doesnt protect the asset. It doesnt prevent the loss due to its peril. The perils can sometime be avoided by ensuring better safety and damage control management. Insurance only tries to reduce the impact of the risk on the owner of the asset and those who depend on that asset. Only economic consequences can be insured.

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ORIGIN OF INSURANCE Insurance began as a way of reducing the risk of traders, as early as 5000 BC in China and 4500 BC in Babylon. Life insurance dates only to ancient Rome; "burial clubs" covered the cost of members' funeral expenses and helped survivors monetarily. Modern life insurance started in late 17th century England, originally as insurance for traders: merchants, ship owners and underwriters met to discuss deals at Lloyd's Coffee House, predecessor to the famous Lloyd's of London. The first insurance company in the United States was formed in Charleston, South Carolina in 1732, but it provided only fire insurance. The sale of life for Relief of Poor and insurance in the U.S. began in the late 1760s. The Presbyterian Synods in Philadelphia and New York created the Corporation Distressed Widows and Children of Presbyterian Ministers in 1759; Episcopalian priests organized a similar fund in 1769. Between 1787 and 1837 more than two dozen life insurance companies were started, but fewer than half a dozen survived. Prior to the American Civil War, many insurance companies in the United States insured the lives of slaves for their owners. In response to bills passed in California in 2001 and in Illinois in 2003, the companies have been required to search their records for such policies. New York Life for example reported that Nautilus sold 485 slaveholder life insurance policies during a twoyear period in the 1840s; they added that their trustees voted to end the sale of such policies 15 years before the Emancipation Proclamation.

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4 Is OF INSURANCE Insurance has four major characteristics:

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INTANGIBILITY Unlike products, services cannot be held, touched, or seen before the purchase decision thus, they should be made tangible to a certain extent. Marketers should tangibilize the intangible to communicate service nature and quality. This can be done through: Environment Uniforms Paperwork Brochures Insurance is a guarantee against risk and neither the risk nor the guarantee is tangible. Hence, insurance rightly come under services, which are intangible. Efforts have been made by the insurance companies to make insurance tangible to some extent by including letters and forms. INCONSISTENCY Service quality is often inconsistent. This is because service personnel have different capabilities, which vary in performance from day to day. This problem of inconsistency in service quality can be reduced through standardization, training and mechanization. In insurance sector, all agents should be trained to bring about consistency in providing service or, the insurance process should be mechanized to a certain extent. E.g.: the customers can be reminded about the payment of premium through e-mails and sms instead of agents
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INSEPARABILITY Services are produced and consumed simultaneously. Consumers cannot and do not separate the deliverer of the service from the service itself. Interaction between consumer and the service provider varies based on whether consumer must be physically present to receive the service. In insurance sector too, the service is produced when the agent convinces the consumer to buy the policy and it is said to be consumed when the claim is settled and the policyholder gets the money. In both the above cases, it is essential for the service provider (agent) and the consumer (policy holder) to be present. INVENTORY: No inventory can be maintained for services. Inventory carrying costs are more subjective and lead to idle production capacity. When the service is available but there is no demand, cost rises as, cost of paying the people and overhead remains constant even though the people are not required to provide services due to lack of demand. In the insurance sector however, commission is paid to the agents on each policy that they sell. Hence, not much inventory cost is wasted on idle inventory. As the cost of agents is directly proportionate to the policy sold.

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TYPES OF INSURANCE

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Home owners insurance rates vary widely based on geographic location. Areas prone to hurricanes, floods, hail, earthquakes, fires and other natural disasters will generally have higher rates.

Many factors go into determining the premiums for a home insurance policy: the age of your home, the materials used to build it, where its located, the square footage, and the numbers of rooms all play a role. An inventory of your possessions not only helps you determine how much homeowner's insurance you should carry, but it can also help you get your things replaced (or returned) if they should be stolen.

LIFE INSURANCE

Life Insurance is a contract that provides payment of the sum assured to the policy holder on the maturity of the Policy or to the nominee in the event of the insured's death. A Life Insurance contract has two basic elements; savings - i.e. the benefit payable in the event of survival, and risk cover - i.e. benefit payable in the event of death.

A Life Insurance Policy is adequate protection against sudden loss of income caused in the event of untimely death.

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Life insurance is an essential part of financial planning. One reason most people buy life insurance is to replace income that would be lost with the death of a wage earner.

When you buy Life insurance, you want a policy which fits your needs without costing too much. Your first step is to decide how much you need, how much you can afford to pay and the kind of policy you want. Then, find out what various companies charge for that kind of policy.

HISTORY In India, insurance has a deep-rooted history. It finds mention in the writings of Manu (Manusmrithi), Yagnavalkya (Dharmasastra) and Kautilya (Arthasastra). The writings talk in terms of pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor to modern day insurance. Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and carriers contracts. Insurance in India has evolved over time heavily drawing from other countries, England in particular.

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1818 saw the advent of life insurance business in India with the establishment of the Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency. This era, however, was dominated by foreign insurance offices which did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard competition from the foreign companies.

In 1914, the Government of India started publishing returns of Insurance Companies in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies. In 1938, with a view to protecting the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers.

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The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of insurance companies and the level of competition was high. There were also allegations of unfair trade practices. The Government of India, therefore, decided to nationalize insurance business.

An Ordinance was issued on 19th January, 1956 nationalizing the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies 245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector.

Important milestones in the life insurance business in India:

1818 Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning.

1870 Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business.

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1912 The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.

1928 The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses.

1938 Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public.

1956 245 Indian and foreign insurers and provident societies are taken over by the central government and nationalized. LIC formed by an Act of Parliament,

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viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.

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REGULATORY AND CONTROLLING BODIES OF INSURANCE

INSURANCE ACT, 1938 The Insurance Act, 1938 had provided for setting up of the Controller of Insurance to act as a strong and powerful supervisory and regulatory authority for insurance. Post nationalization, the role of Controller of Insurance diminished considerably in significance since the Government owned the insurance companies. But the scenario changed with the private and foreign companies foraying in to the insurance sector. This necessitated the need for a strong, independent and autonomous Insurance Regulatory Authority was felt. As the enacting of legislation would have taken time, the then Government constituted through a Government resolution an Interim Insurance Regulatory Authority pending the enactment of a comprehensive legislation.

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PRESENT SCENARIO OF INSURANCE Insurance happens to be a very big opportunity in India due to its large uninsured population. Today it stands as a business growing at the rate of 15-20 per cent annually. Together with banking services, it adds about 7% to the countrys GDP. (I) Total Assets of Life Insurance Companies 2002-2003 2,80,450Cr 2003-2004 3,52,608Cr 2004-2005 4,23,000 Cr

(II) Total Premium generated 2002-2003 57,708 Cr 2003-2004 66,278 Cr 2004-2005 79,000 Cr

(III) Benefits to Policy Holders 2002-2003 20,800 Cr 2003-2004 24,200 Cr 2004-2005 28,700 Cr

(IV) Industry is growing @ 19 p.a.

(V) At this growth rate, the future premium income generated will be

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2005-2006 94,000 Cr

2006-2007 1,12000 Cr

2007-2008 1,33,000 Cr

(VI) Life Insurance funds account for 15% of household savings.

(VII) The industry has the potential to increase the share to 20%. In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian population is without Life insurance cover and the Health insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation Malhotra Committee was constituted by the government in 1993 to examine the various aspects of the industry. The key element of the reform process was Participation of overseas insurance companies with 26% capital. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform. Almost 5

years after the recommendations of the Malhotra committee, the first license to start insurance business to the private sector was issued. Today there are about 20 private and 1(LIC) life insurance companies operating in India for a population of 1.1 billion. The liberalized life insurance industry is booming; and liberalization of the life insurance market has so far proved to be a great success. New Life business is

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growing at 35 per cent, and invested funds have grown dramatically by about Rs. 90,000 crore in 2003-04 to touch about Rs. 3,50,000 crore.

EMERGENCE OF

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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.
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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 non-Indian companies and 75 provident were operating in India at the time of nationalization. Nationalization was accomplished in two stages; initially the management of the companies was taken over by means of an Ordinance, and later, the ownership too by means of a comprehensive bill. The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the year 1956. Since life insurance contracts are long term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. Re-organization of LIC took place and large numbers
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of new branch offices were opened. As a result of re-organization 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-organization happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies.

NATIONALIZATION In 1955, parliamentarian Feroz Gandhi raised the matter of insurance fraud by owners of private insurance companies. In the ensuing investigations, one of India's wealthiest businessmen, Ram Kishan Dalmia, owner of the Times of India newspaper, was sent to prison for two months. Eventually, the Parliament of India passed the Life Insurance of India Act on 1956-06-19, and the Life Insurance Corporation of India was created on 1956-09-01, by consolidating the life insurance business of 245 private life insurers and other entities offering life insurance services. Nationalization of the life insurance business in India was a result of the Industrial Policy Resolution of 1956, which had created a policy framework for extending state control over at least seventeen sectors of the economy, including the life insurance. The company began operations with 5 zonal offices, 33 divisional offices and 212 branch offices. MISSION OF L.I.C

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"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."

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VISION OF L.I.C "A TRANS-NATIONALLY COMPETITIVE FINANCIAL CONGLOMERATE OF SIGNIFICANCE TO SOCIETIES AND PRIDE OF INDIA."

OBJECTIVES OF L.I.C

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.

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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.

7 Ps (MARKETING MIX) OF L.I.C LIC refers to the marketing of Insurance services with the aim to create customer and generate profit through customer satisfaction. Marketing of insurance requires due care in quality product and customer satisfaction. It is also pertinent to think about the innovative promotional measures. It is not sufficient to perform well but it is also important to let others know about the quality of your positive contributions.
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The creativity in the promotional measures is the need of the hour. The advertisement, public relations, word of mouth communication needs due care and personal selling requires intensive care. LIC is an insurance business and it deals in selling services and therefore due weightage in the formation of marketing mix for the LIC is needed. The marketing mix is the combination of marketing activities that an organization engages in so as to best meet the needs of its targeted market. The marketing mix includes sub-mixes of the 7 Ps of marketing i.e. the product, its price, place, promotion, people, process & physical attraction. The above mentioned 7 Ps can be used for marketing of Insurance products, in the following manner:

1)PRODUCT The best way to get and keep customers is to constantly figure out how to give them more for less.

A product means what we produce. If we produce goods, it means tangible product and when we produce or generate services, it means intangible service product. A product is both what a seller has to sell and a buyer has to buy. Thus, LIC offers and sells services and therefore services are their product. LIC also offer underwriting and consulting services.

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It is natural that the users expect a reasonable return for their investment and the insurance companies want to maximize their profitability. Hence, while deciding the product portfolio or the product-mix, the services or the schemes should be motivational. The Group Insurance scheme is required to be promoted, the Crop Insurance is required to be expanded and the new schemes and policies for the villagers or the rural population are to be included. The Life Insurance Corporation has intensified efforts to promote urban savings, but as far as rural savings are concerned, it is not that impressive. The introduction of Rural Career Agents Scheme has been found instrumental in inducing the rural prospects but the process is at infant stage and requires more professional excellence. The policy makers are required to activate the efforts. It would be prudent that the LIC is allowed to pursue a policy of direct investment for rural development. Different products offered by LIC are:

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ENDOWMENT ASSURANCE PLANS

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Endowment plans are advisable if the insured wants to purchase a product that provides both - insurance cover and savings. Many people prefer to buy such policies for terms that mature during their retirement period. Often, the maturity amount is utilized to supplement the pension income. However, there are other ways to create/supplement your retirement income. A substantial part of the premium paid for such plans is used by the insurance company to generate the bonus or profit paid to the insured or the nominee. If one chooses to impose self-discipline and invest regularly, other saving/investment avenues, such as mutual funds, offer higher returns. Click here to learn why your insurance plan is not a good investment avenue as well.

ENDOWMENT WITH PROFIT Suitability Suitability

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

Salient Features

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Moderate Premiums High bonus High liquidity Savings oriented

This policy not only makes provisions for the family of the Life Assured in event of his early death but also assures a lump sum at a desired age. The lump sum can be reinvested to provide an annuity during the remainder of his life or in any other way considered suitable at that time. Premiums are usually payable for the selected term of years or until death if it occurs during the term period Benefits Disability Benefit: In case policy holder becomes totally and permanently disabled due to an accident before reaching the age of 70 and the policy is in full force, he will not be required to pay further premiums, (the Disability Benefit is available in respect of the first Rs.20,000 sum assured on any one life) and the policy will continue to be in force.

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Accident Benefit: By paying a small extra premium of Rs.1 per Rs.1000/- sum assured per year he or his family are entitled to the following benefits on death or permanent disability caused by accident. Even students above the age of 18 years can avail of this benefit. Premium Stoppage: If payment of premiums ceases after at least THREE years' premiums have been paid , a free paid-up policy for a reduced sum assured will be automatically secured provided the reduced sum assured, exclusive of any attached bonus, is not less than Rs. 250/-. The reduced sum assured will become payable on the event as stipulated in the policy.. Bonus: Is there anything extra payable besides the sum assured at the time of claim settlement? Yes, but only if it is a with profits policy. Every year the Life Insurance Corporation distributes its surplus among policyholder to with profits polices in the form of bonuses. Substantial bonuses have been declared in the past after each valuation of policy liabilities. Death Benefits

Payment of full sum assured + Vested Bonus

Survival Benefits

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Payment of full Sum Assured + Vested Bonus + Final Additional bonus, if any.

Other Conditions

Minimum age at entry : 12 years Maximum age at entry : 65 years Maximum age at maturity : 75 years Minimum Sum Assured : Rs.00,000 Maximum Sum Assured : No Limit Policy Term : 5 to 55 Years Mode of Payment : Monthly, Quarterly, Half Yearly, Yearly, Salary Saving Scheme

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LIMITED PAYMENT ENDOWMENT Suitability

This is a modified version of Endowment Assurance plan with regard to payment of premium. It provides family protection as well as old age provision at an affordable premium. This policy is suitable for all categories of people.

Salient Features

Sum assured is payable either on survival till the end of the term or on death happening within the term. The policy is available for three terms : 15 , 20 and 25 years. Payment of premiums are limited to shorter terms. Both With-Profit and Without-Profit plans are available. Bonus for the full term is payable on the date of maturity or in the event of death, whichever is earlier. Premiums cease on death or on expiry of term whichever is earlier.

Premium Paying terms S.No 1 2 3 Benefits On Survival

Policy term (in yrs) 15 20 25

Premium paying term (in yrs) 5, 10 5,10,15 5,10,15,20

Basic Sum Assured + bonus under the With-profit plan

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Basic Sum Assured only under Without-Profit plan

On Death

Basic Sum Assured + bonus under the With-profit plan Basic Sum Assured only under Without-Profit plan

Other Conditions

Minimum Sum Assured :

o o o

Rs 30,000 for a with profit plan Rs 50,000 for a without profit plan Rs 50,000 for a single premium plan

Minimum premium must be Rs.800 per annum Minimum age at entry : 12 years Maximum age at entry :
o o o

15 year term - 55 yrs 20 year term - 50 yrs 25 year term - 45 yrs

Suitability

An Endowment Assurance policy with the facility to pay higher premiums initially and smaller amounts in later years. The plan has been designed to meet the needs of persons who have short span of earnings. For example, film artists and other such professionals whose incomes drop substantially may find this plan suitable.

Salient Features

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Sum assured is payable either on survival to the term or on death happening within the term. Higher premiums can be paid in the first five years of the policy, while smaller amounts can be paid in the later years till date of maturity. Premiums cease at death or on expiry of term whichever is earlier. Bonus for the full term is payable on the date of maturity or in the event of death, whichever is earlier.

Benefits On Survival

Basic Sum Assured + vested bonus

On Death

Basic Sum Assured + vested bonus

Other Conditions

Minimum sum assured: Rs 30,000 Minimum premium must be Rs.800 per annum Minimum Age : 15 years Maximum age at entry :
o o o

15 years term- 55 years 20 years term- 50 years 25 years term- 45 years

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NEW JANARAKSHA Suitability

This plan is similar to an Endowment Assurance plan except that it has a special additional feature of a 3 year free risk coverage, even if premiums are defaulted. It also comes with a built-in accident benefit. This policy is most suitable for persons who are not sure of a regular income every year and who expect their income position to improve after a short while. For example, farmers who experience crop failure at intervals would find this plan beneficial. The additional premium payable when compared to an ordinary Endowment Assurance plan is marginal. For example, under an Ordinary Endowment Assurance plan, for Age 30 and a term of 25 years, per Rs 1000 sum assured, the premium payable is 42.05 (inclusive of accident benefit). For the New Jana Raksha plan, premium for the same policy is Rs 42.90 i.e. only Rs. 0.85 more, for the additional benefits.

Salient Features

Sum assured is payable either on survival to the term or on death happening within the term. If two years premiums are paid under the policy, the policy will automatically extend for 3 more years even if further premiums are defaulted. This facility is available for any number of times. Built in accident benefit. Bonus for the full term is payable on the date of maturity or in the event of death, whichever is earlier.
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Premiums cease at death or on expiry of term whichever is earlier.

Benefits On Survival

Basic Sum Assured + vested bonus under the With-profit plan

On Death:

Basic Sum Assured + vested bonus under the With-profit plan

Additional Benefits

If 2 years premiums are paid under the policy, the policy is continued uninterrupted for 3 years even if premiums are defaulted. This facility is available for any number of times. The life assured can pay the defaulted instalments within three years with interest and thus get the cover extended. No evidence of health needs to be produced. The policy also comes with a built-in accident benefit.

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Other Conditions

Minimum Sum Assured : Rs.30,000 Maximum Sum Assured : Rs.5,00,000 Minimum premium must be Rs.800 per annum Maximum term : 30 yrs Minimum age at entry : 18 yrs Maximum age at entry : 50 yrs

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JEEVAN ANAND Suitability

This policy is a combination of a whole life plan and with profit endowment plan. It is suitable for people who wish to provide for their dependents, insured sums,limit the premium payment term to their earning period and at the same time provide for their old age.

Salient Features

The plan combines the virtues of both whole life plan and endowment plan Under the plan, premiums are limited to the term chosen and benefits are payable on the date of maturity. But the insurance cover on the life assured continues till death, like a whole life policy Bonus accrues during the premium paying term and is payable at the end of the premium paying term or on earlier death along with Final Additional Bonus. No Bonus is paid on death after the premium paying term. Double Accident Benefit is available during the premium paying term and thereafter up to age 70 wherein additional sum assured is payable on death due to an accident. This benefit is built in and no additional premiums needs to be paid. Maximum Accident Cover available under this plan will be Rs. 5 lakh ( this limit excludes accident benefit taken under other plans) Premium payment can be Monthly, Quarterly, Half yearly, Yearly and SSS

Benefits On Survival to maturity

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Full sum assured along with Bonus is payable. Policy does not cease and insurance cover continues till death.

On Death within the term:

Full sum assured along with the bonus is payable and policy ceases

On death after the term of the policy:

Full sum assured is payable

Other Conditions

Minimum Sum Assured : Rs.100,000 Minimum premium must be Rs.800 per annum Minimum age at entry :18 years Premium Paying term : 5-57 years Maximum age at entry : 65 years normally but 60 years for single premium policy

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JEEVAN MITRA (DOUBLE COVER) Suitability

Persons desirous of making provision for their dependants during their earning period may opt for this policy. For a very low additional cost, sufficient family benefit is secured. For example, for a person aged 30 selecting a 20 year insurance policy :
o

A person choosing Endowment Assurance has to pay 51.50 per 1000 per annum A person choosing Jeevan Mitra - double cover has to pay 55.20 per 1000 per annum

Salient Features

Sum assured is payable if the life assured survives the selected term, while double the sum assured is paid in the event of life assured dying within the term Bonus is payable on the date of maturity or in the event of death, whichever is earlier Premium payment ceases on death or on expiry of term whichever is earlier Accident benefit is available with this plan

Benefits On Survival

Basic sum assured + vested bonus is given to the life assured

On Death
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Double the sum assured is given to the nominee of the life assured in the event of death happening within the term + vested bonus

Other Conditions

Policies are issued only with terms from 15 to 30 years Ages between 18 and 50 years only will be considered Maximum premium ceasing age : 70 years Minimum sum assured Rs 30,000 Minimum premium must be Rs.800 per annum People following hazardous occupations are not eligible Accident benefit can be availed of for basic policy Bonus calculated on basic insurance

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JEEVAN MITRA (TRIPLE COVER) Suitability

Persons desirous of making provision for their dependants during their earning period should have this policy. For a very low additional cost, sufficient family benefit is secured. For example, for a person aged 30 years, selecting a 20 year insurance policy:
o

A person choosing Endowment Assurance has to pay 51.50 per 1000 per annum A person choosing Jeevan Mitra - triple cover has to pay 58.85 per 1000 per annum

Salient Features

Sum assured is payable if the life assured survives the selected term, while triple the sum assured is paid in the event of life assured dying within the term Bonus is payable on the date of maturity or in the event of death, whichever is earlier Premium payment cease on death or on expiry of term whichever is earlier Accident benefit is available with this plan

Benefits On Survival

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Basic sum assured + vested bonus is given to the life assured

On Death

Triple the sum assured is given to the nominee of the life assured in the event of death happening within the term + vested bonus

Other Conditions

Policies are issued only with term 15 to 30 years Ages between 18 and 50 years only will be considered Maximum premium ceasing age: 70 years Minimum sum assured Rs. 30,000 Minimum premium must be Rs.800 per annum Only standard male lives are eligible and sub standard category 1 and female lives category 1 and 2 People following hazardous occupations are not eligible Accident benefit can be availed for basic policy Bonus calculated on basic insurance

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FUTURE OUTLOOK LIC has planned to enter into more alliances with banks and with leading educational institutes for training. LIC would also increase offshore activities and set up an exclusive technology company for sourcing software. Other priorities are setting up of special cells and single-window facilitation centers for high-end customers, rapid introduction of innovative policies, and a renewed thrust on mass and group business. LIC has also decided to offer value-added services to high-end customers, besides special services. At a later stage, it planned to have separate dedicated branches for high-end policyholders. The decision to have its own separate IT set-up was driven by the requirement of software for the sprawling network of LIC's branches and other offices

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Conclusion LIC is currently facing a huge competition from other private players. To sustain itself it must promote its products through advertising and improve its selling techniques. Consumers must be aware of the new plans available at LIC. The medium of advertising used could be television since most of its competitors use this tool to promote their products. The size of the market has grown and the size of the insurable population in India is indeed vast and the existing player has managed to cover about one-fourth of it. The opportunities before the players are therefore a plenty in terms of target audience. The falling interest rates, the collapse of many small-time financial institutions, the scope for entering related areas like banking and pensions in a bid for synergy and the promise of e-commerce are some of the other opportunities knocking at the doors of the insurance majors like LIC. .

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BIBLIOGRAPHY

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