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ACKNOWLEDGEMENT:

First and foremost I am greatly indebted to my faculty Mr. Anirvan Banerjee,

FDDI, Kolkata for giving me the opportunity to prepare a project report on

LIC. Mr. Anirvan Banerjee‘s classroom session always acted as a source of

inspiration, motivation and encouragement. His invaluable guidance,

supervision and support helped me a lot to make this report. His rich

experience, insight and intellect have steered my project to the present stage

of completion.

I am also indebted to Mr. Abhisek who has found time from his busy

schedule and taught me basics of investments, technical terms associated with

insurance, fundamentals of market research, preparation of questionnaire.

I would like to thanks many of my friends, batch mates, research respondents

and many acquaintances that have always provided words of encouragement

and motivation.

I am forever thankful to my parents Mr. Rajeev Jain and Mrs. Meera Jain for

their emotional supporting fuel which kept me cruising all through the project

in – spite of the hurdles and hardship encountered during journey.

Last but not the least; I would like to thank the almighty for everything.

(Aanchal Jain)

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ABSTRACT

My project for LIC is to do market research of different LIC policies and

underlying details about the same company.

During the project, I used secondary data only to do the analysis. With the

help of this project the company can create awareness of insurance products in

people by analyzing their needs, handling their objections regarding insurance

and then offering right product to. So company can make customer

understand that how company s insurance policies can help in there need of

investment planning as a part of their overall financial planning. This project

will also help the company to strengthen its base in the city and enhance

customer satisfaction by providing better service. It will also help to generate

more sales and profit. Thus, it helps in increasing the turnover of the

company. It will also help the life advisors of the company in promoting

product of the company.

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OBJECTIVE:

Look at the marketing of various insurance plans of LIC as and when

the opportunities arise.

After comparing the risk and returns the result of the project will

help the company in creating awareness of insurance products in

people by analyzing their needs and handling their objections

regarding insurance.

The project help us to apply theoretical knowledge gained during our

first year of studies in real life situation, i.e. knowledge of Financial

Management concepts like Risk and Returns etc.

The project help us to develop analytical thinking skills, processing and

decision making even in case of insufficient data and uncertain

conditions.

The project will lead to increase the turnover of the company and

thereby it would lead to increase the market share of the company as a

broking house.

The project will help us to analyze the need of customers regarding

insurance and then pitching the products to them as per their need.

This project will also help the company to strengthen its base in

the city and enhance customer satisfaction by providing better service.

This will work as a distinct feature of company as no company

uses this kind of tool to make customer understand the risk and

returns associated with their insurance product.

To find out the better investment option available to an individual

according to him/her needs and financial health.

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STATEMENT OF PROBLEM:

Indian market has been seen a change in the perception of the people towards

the safety and health measures. With the increase in the people‘s disposable

income and education level, insurance is no longer regarded as a waste of

money or rich man‘s play. It is seen as a more serious tool in the hands of the

people in order to build a safe side for themselves in case of any miss

happenings. With the advent of Foreign Direct Investment (FDI) and

privatization in the Indian insurance sector, there is a hub of companies

offering the insurance services.

With the hub of private insurance companies entering the Indian market, a

prospective customer is open to all companies to choose from. In this

scenario, to sustain market growth and market share is a difficult task in front

of the company. Though insurance is a vast field to study, its also very much

tough to consolidate it with customer satisfaction because you can never

measure the satisfaction they have achieved with the product or services you

had provided. The problem with the company lies in the manner of retaining

the customers and forming new customers for itself. As insurance is not such

a product which can be consumed over and over again, a marketer needs to

devise effective strategies in order to mould the perception of the customers

positively towards its company and to get maximum business out of the

customer.

The study has been conducted in order to analyze the general business

accumen of LIC.

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LIMITATIONS OF THE STUDY:

Time Constraints.

Financial Constraints.

Area of research.

Presence of government investment options.

People do not feel the need of insurance.

Educational focus.

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PROPOSED METHODOLOGY:

The information regarding different LIC plan options obtained from the

various sources like organizational data, internet, research papers and

journals, and some books.

Most of the data collection are secondary data and collected from individual,

LIC agent, LIC company and from the internet.

The project accomplished in four phases. The phases are mentioned below.

1) Setting up the objectives: Well stated problem is half solved, thus this

the most important step, which is complete.

2) Data collection

Secondary Data: The secondary data collected from internet, LIC

agent and from company itself.

3) Data analysis and interpretation: The data collected has been

analyzed. As the data have been organized it is easy to interpret and to

reach to the last but not the least phase which is mentioned below.

4) Result, Conclusion and Findings: The final step of the project where

we get the results and findings from the project which can be

Implemented by organization.

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INTRODUCTION:

INSURANCE:

Insurance is a pool of fund created by a group of people exposed to a similar

amount of risk which is used to compensate financial losses caused due to

happening of uncertain event insured. In India, insurance is governed by

Contract Act and Insurance Act (1930).

Basically there are two principles:

(1) Utmost good faith.

(2) Insurable interest. It exists when one person tends to lose something or

tends to have a financial loss on happening of an event.

LIFE INSURANCE INDUSTRY IN INDIA:

Not many of us are aware of the fact that the life insurance industry of India

is as old as it is in any other part of the world. Oriental Life Insurance

Company was the first Indian life insurance company, which was started in

1818 at Kolkata. And within a span of 100 to 150 years, the number grew

more than 350 (over 250 in life and about 100 in non-life), mainly with

regional focus, flourished all across the country. However, the Government

of India, concerned by the unethical standards adopted by some players

against the consumers, nationalized the industry in two phases in 1956 (life)

and in 1972 (non-life). The insurance business of the country was then

brought under two public sector companies, Life Insurance Corporation of

India (LIC) and General Insurance Corporation of India (GIC).

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Subsequently with the economic reforms that were ushered in India in early

nineties, the Government set up a Committee on Reforms (the Malhotra

Committee) in April 1993 to suggest reforms in the insurance sector.

The Committee recommended throwing open the sector to private players to

usher in competition and bring more choice to the consumer. The objective

was to improve the penetration of insurance as a percentage of GDP, which

remains low in India even compared to some developing countries in Asia.

Reforms were initiated with the passage of Insurance Regulatory and

Development Authority (IRDA) Bill in 1999. IRDA was set up as an

independent regulatory authority, which has put in place regulations in line

with global norms. So far in the private sector, 12 life insurance companies

and 9 general insurance companies have been registered. Till then insurance

was kind of privilege or necessity ought to be meant for the high salaried and

riches of this country. As also a necessity only for some in case they needed

to ensure tax savings, tax manipulations etc.

But with the coming of private players, rules of the game have changed.

Never were common men so rigorously targeted. It is today an industry

which is growing at the rate more than 25%. “In the last five years, the

growth (of the Indian insurance industry) has been of the order of 25%

plus.”1And the remarkable point yet is that the penetration level is only 2%.

Imagine the kind of potential it has for the years to come! May be this is one

of the major reasons why almost all global players are too keen to be in India.

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Table-1:

Insurance Penetration- A Comparison

Insurance

Penetration% of GDP

2004

Life Non-Life

North America

USA

Canada

4.28

2.97

5.16

4.05

Europe

Germany

UK

France

3.11

8.92

6.73

3.86

3.68

5.02

Asia-Pacific

Japan

Taiwan

South Korea

Australia

China

India

8.26

11.06

6.75

4.17

1.94

2.53

2.25

3.07

2.77

3.85

1.58

0.65

It is evident from the Table-1 that compared to other developed and

developing countries, India have the low percentage and per capita

penetration of Insurance Industry. Moreover, with the kind of GDP growth

rate which is expected to be in the range of 8 to 10% for the next decade.

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The increasing level of education among the general public regarding

insurance and related products, the insurance market can only head upwards.

The current market size of non-life insurance industry is US $ 2 billion and is

expected to reach US $ 10 billion. Similarly, in the life insurance sector, it is

expected to grow from nearly US $ 3 billion to US $ 15 billion.

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The changes those have been brought in by privatization in the insurance

sector can be categorized into followings;

1. New Market Development

2. New Product Development

3. Customer Centric Approach

4. New Channel Development

New Market Development: It a logical step to look for new and newer

markets when competition grows. Naturally, with as many as 16 players,

latest being Bharti-AXA and six still in the offing, the competition has never

been so intense. Advertising campaigns, awareness campaigns and other

promotional tools players are ensuring that they make dent into right markets

by educating prospects. The strategy to hunt for new markets has been aptly

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New Product Development: There has been a plethora of new and

innovative products offered by the new players, mainly from the stable of

their international partners. The main concept underlying new product

development has been of two kinds, Need-Based positioning development

and Variety –Based development. Now, the customers have tremendous

choice from a large variety of products from pure term (risk) insurance to

unit-linked investment products. Customers are offered unbundled products

with a variety of benefits as riders from which they can choose. More

customers are buying products and services based on their true needs and not

just traditional money-back policies, which is not considered very appropriate

for long-term protection and savings.

Customer Centric Approach: CRM is a buzz word so is the customer

satisfaction. People are courteous, processes are being made simple.

Customer is treated as king in true sense. Service, be it pre-selling or be it

post-selling, is readily available at a click away! International best practices

in service and operational efficiency has started to make an inward way

giving away the bureaucratic, cumbersome difficulties. Albeit, the use of

latest technologies have complimented the process even further. Trained and

technically qualified sales force and advisors are now concentrating on sound

financial consultancy and need based selling. Prompt and accurate response

and turnaround times in specific areas such as delivery of first policy receipt,

policy document, premium notice, final maturity payment, settlement of

claims etc. are some of the sea changes that this industry is experiencing.

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New Channel Development: Sales and distributions channels also have gone

a paradigm shift. Till recently, Agents were the only mode of distribution of

life insurance products. But today a number of innovative alternative

channels are being utilized by insurance marketers such as banc assurance,

brokers, the internet and direct marketing. It is predicted that the wide spread

of bank branch network in India could lead to banc assurance emerging as a

significant distribution mechanism. However, as of today, agents still

continue to be the main distribution channel. Some life insurance companies

focusing on rural markets have gone one step further in adopting new

innovative means of distributions.

A BRIEF HISTORY OF INSURANCE IN INDIA:

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. These

are listed below:

1818

The advent of life insurance business in India with the establishment of the

Oriental Life Insurance Company in Calcutta.

1834

Oriental Life Insurance Failure

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1850

The advent of General Insurance in India with the establishment of Triton

Insurance Company Ltd in Calcutta

1870

The enactment of the British Insurance Act

1907

In 1907, the Indian Mercantile Insurance Ltd was set up

1912

The Indian Life Assurance Companies Act, 1912 was the first statutory

measure to regulate life business.

1928

The Indian Insurance Companies Act was enacted.

1956

Nationalization of Life Insurance Sector and Life Insurance Corporation

came into existence in 1956.The LIC absorbed 154 Indian, 16 non-Indian

insurers as also 75 provident societies.

1971

The General Insurance Corporation of India was incorporated as a company

1973

General insurance business was nationalized with effect from 1st January.

107 insurers were amalgamated and grouped into four companies namely

1). National Insurance Company Ltd.,

2). The New India Assurance Company Ltd.,

3). The Oriental Insurance Company Ltd

4). The United India Insurance Company Ltd.

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2000

The IRDA was incorporated as a statutory body in April 2000.

Foreign companies were allowed ownership of up to 26%.

2000 – 2001

Insurance Industry had 10 new entrants in Life Namely:

Life Insurers:

S.No. Registration

Number

Date of Reg. Name of the Company

1 101 23.10.2000 HDFC Standard Life Insurance

Company Ltd.

2 104 15.11.2000 Max New York Life Insurance Co. Ltd.

3 105 24.11.2000 ICICI Prudential Life Insurance

Company Ltd.

4 107 10.01.2001 Kotak Mahindra Old Mutual Life

Insurance Limited

5 109 31.01.2001 Birla Sun Life Insurance Company Ltd.

6 110 12.02.2001 Tata AIG Life Insurance Company Ltd.

7 111 30.03.2001 SBI Life Insurance Company Limited .

8 114 02.08.2001 ING Vysya Life Insurance Company

Private Limited

9 116 03.08.2001 Bajaj Allianz Life Insurance Company

10 117 06.08.2001 Metlife India Insurance Company Pvt.

Ltd.

11 133 04.09.2007 Future Generali India Life Insurance

12 135 19.12.2007 IDBI Fortis Life Insurance Company

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2002

Insurance Industry had 2 new entrants in Life insurance

Life Insurers:

S.No

.

Registratio

n

Number

Date of Reg. Name of the Company

1 121 03.01.2002 AMP Sanmar Life Insurance Company

Limited.

2 122 14.05.2002 Aviva Life Insurance Co. India Pvt. Ltd.

1 130 December,2006 Bharti Axa Life Insurance Company

Ltd.

THE INSURANCE REGULATORY AND DEVELOPMENT

AUTHORITY:

Reforms in the Insurance sector were initiated with the passage of the

IRDA Bill in Parliament in December 1999. The IRDA since its incorporation

as a statutory body in April 2000 has fastidiously stuck to its schedule of

framing regulations and registering the private sector insurance companies.

The other decisions taken simultaneously to provide the supporting

systems to the insurance sector and in particular the life insurance

companies were the launch of the IRDA s online service for issue and

Renewal of licenses to agents. The approval of institutions for imparting

training to agents has also ensured that the insurance companies would have a

trained workforce of insurance agents in place to sell their products, which are

expected to be introduced by early next year. Since being set up as an

independent statutory body the IRDA has put in a framework of globally

compatible regulations.

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Insurance as an Investment Option:

Life is full of uncertainties- accident, illness, and theft, natural disaster might

happen anytime. Human beings do not have much control over life‘s risks

and uncertainties however they can at least be prepared for them and their

aftermath. Life insurance can be a big support to a family in troubled times,

to meet their financial needs, to fulfill their dreams of -another child, a bigger

home, a new business, college education, travel, retirement… Life insurance

is all about making sure your family has adequate financial resources to make

their future plans and dreams come true.

Insurance provides you with that unique sense of security that no other form

of investment provides. By buying life insurance, you buy peace of mind and

are prepared to face any financial demand that would hit the family in case of

an untimely demise. Insurance also provides a safeguard in the case of

accidents or a drop in income after retirement. An insurance policy can lend

timely support to the family in case of an accident or disability. It also comes

as a great help when you retire, in case no untoward incident happens during

the term of the policy.

Insurance can be an attractive option for investment too. A lot of Insurance

products yield more compared to regular investment options, with the added

advantages of providing incentives. No other investment schemes can offer

financial protection from risks.

The premium you pay for an insurance policy is an investment against risk.

Before comparing it with other schemes, one must remember that a part of

the total amount invested in life insurance goes towards providing for the risk

cover, while the rest is used for savings.

Also life insurance provides you get maturity benefits on survival at the end

of the term. Now, let us compare insurance as an investment options. If you

invest Rs. 10,000 in other investment options like PPF or Bonds, your money

might give better returns but you cannot access your funds.

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One can withdraw 50 per cent of the initial deposit only after 4 years. The

same amount can give you an insurance cover of up to approximately Rs 5-10

lakh (depending upon the plan, age health, etc) and this amount would be

immediately available to the nominee of the policyholder on death.Thus

insurance provides sound returns in addition to risk cover.Insurance can be

used for tax planning too. Under Section 88 of Income Tax Act, an individual

is entitled to a rebate of unto 20 per cent on the annual premium payable on

his/her life , life of spouse and life of his/her children. This benefit is

available to an individual or a Hindu Undivided Family.If the gross income

per annum is less than Rs. 1.5 lakhs per annum maximum benefit available is

20% of the eligible amount i.e. Rs. 14,000.

Different types of Life Insurance Policy:

Term plans:

Term life insurance provides for life insurance coverage for specified

term of years for specified premium. If policyholder survives the term,

risk cover comes to end. The policy does not accumulate cash value.

Term is generally considered "pure" insurance, where premium buys

protection in the event of death and nothing else. Term life policies are

primarily designed to meet needs of those people who are initially

unable to pay larger premium required for a whole life or an

endowment assurance policy. Term insurance premiums are low

because both insurer and policy owner agree that death of insured is

unlikely during the term of coverage. Three key factors to be

considered in term insurance are: face amount (protection or death

benefit), premium to be paid (cost to the insured), and length of

coverage (term). Various insurance companies sell term insurance with

many different combinations of these three parameters. Face amount

can remain constant or decline. Term can be for one or more years. No

surrender, loan or paid-up values are granted under term life policies

because reserves are not accumulated.

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Endowment Policies:

An endowment policy covers risk for a specified period, at end of which sum

assured is paid back to policyholder, along with bonus accumulated during

term of policy. An endowment life insurance policy is designed primarily to

provide a living benefit and only secondarily to provide life insurance

protection. Therefore, it is more of investment than whole life policy.

Endowment plan pays face value of policy either at insured's death or at

certain age or after number of years of premium payment. Endowment policy

is an instrument of accumulating capital for specific purpose and protecting

this savings program against saver's premature death. Cash value built up

inside the policy, equals death benefit (face amount) at certain age, called

endowment age. Endowments are considerably more expensive (in terms of

annual premiums) than other policies because premium paying period is

shortened and endowment date is earlier.

Various types of Endowment policies are:

@ Pure Endowment Policy

@ Ordinary Endowment Assurance policy

@ Double Endowment Policy

@ Joint Life Endowment Plan

@ Marriage Endowment Plan

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Money Back Policies:

Money back policy provides for periodic payments of partial survival

benefits during term of policy, as long as policyholder is alive. They differ

from endowment policy in sense that in endowment policy survival benefits

are payable only at end of endowment period. Important feature of money

back policies is that in event of death at any time within policy term, death

claim comprises full sum assured without deducting any of survival benefit

amounts, which may have already been paid as money-back components.

Bonus is also calculated on full sum assured.

Unit linked insurance plans (ULIPs):

The advent of unit linked insurance policies has created new issues with

regard to policy conditions and privileges of the policyholder apart from

issues on disclosures. To overcome these issues, IRDA came out with its

guidelines in Dec 2005 which mandate, among others, that the following be

mentioned prominently on a policy bond:

The minimum and maximum percentage

of the investments in different types (like equities, debt etc)

The definition of all applicable charges, method of appropriation of these

charges and the quantum of charges that are levied

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The maximum limit up to which the insurer reserves the right to increase

the charges subject to prior clearance of the Authority

On top of the policy document, wherever applicable, the statement 'In this

policy, the investment risk in investment portfolio is borne by the

policyholder'. At present as many as sixteen life insurance companies are

operating in India and each one is issuing policy formats with different

variations. As there is no uniformity, it is difficult for the market as well as

policyholders to comprehend and make reasonable comparisons of terms

and conditions, privileges and benefits offered by different insurers.

Hence, it is worthwhile that a serious attempt is made at the earliest to

reduce the complexities of the policy bond with a judicial standardization

which provides much needed solution without compromising the

competitive spirit of the market.

The developments in technological front enabled financial sector to move

from paper based documentation to digitalization of documentation. The

trend which was initiated in securities market has revolutionized the

services and reduced the transaction costs to individual investors. The

pace of services has also improved with the time.

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Digitalization of documents along with the availability of techno-driven

banking services like ECS (Electronic Clearing Services) enabled financial

sector to settle financial transactions on a real time basis, thus increasing

the expectations of investing public for a similar service in other spheres

of financial sectors like 'insurance'.Drawing a cue from the success stories

of these sectors there is a growing demand from various sections of

society that insurance companies shall also usher in digitalization of policy

documents, thus converting them to a dematerialized (demat) form.

However, unlike other financial transactions, in the case of insurance

contracts, they are either annual contracts as in the case of general

insurance or long term contracts as in the case of life insurance contracts.

Further, there is not much movement in these contracts, except at the time

of renewal or final payments.

Permanent life insurance:

Permanent life insurance is one that remains in force until policy matures.

The policy cannot be canceled by insurer for any reason except fraud in

application, and that cancellation must occur within a period of time defined

by law. Permanent insurance builds a cash value that reduces amount at risk

to insurance company and thus insurance expense over time.

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Whole life coverage:

A whole life policy runs as long as policyholder is alive. Simple whole life

policy requires insurer to pay regular premiums throughout life. In a whole

life policy, insured amount and bonus is payable only to nominee of

beneficiary upon death of policyholder. There is no survival benefit as

policyholder is not entitled to any money during his / her own lifetime.

Primary advantages of whole life are guaranteed death benefit; guaranteed

cash values, fixed and known annual premiums, and mortality and expense

charges will not reduce cash value shown in policy. Riders are available that

can allow one to increase death benefit by paying additional premium. Cash

value can be accessed at any time through policy "loans".

Various Whole life policies available in India are:

@ Whole Life policy (with profits)

@ Whole Life limited payment plan

@ Whole life single premium plan

@ Convertible whole life plan

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Accidental death:Accidental death is limited life insurance that is

designed to cover insured when they pass away due to accident.

Accidents include anything from injury, but do not typically cover any

deaths resulting from health problems or suicide. Because they only

cover accidents, these policies are much less expensive than other life

insurances. It is very commonly offered as "ACCIDENTAL DEATH

AND DISMEMBERMENT INSURANCE", also known as AD&D

policy. In AD&D policy, benefits are available not only for accidental

death, but also for loss of limbs or bodily functions such as sight and

hearing, etc. Accidental death and AD&D policies very rarely pay

benefit; either cause of death is not covered, or coverage is not

maintained after accident until death occurs. To be aware of what

coverage they have, insured should always review their policy for what

it covers and what it excludes. Accidental death benefits can also be

added to standard life insurance policy as rider. If this rider is

purchased, policy will generally pay double the face amount if insured

dies due to accident.

Joint Life Insurance Policy:

Joint life insurance policies are similar to endowment policies as they too

offer maturity benefits to policyholders, apart from covering risks like all life

insurance policies. Joint life policies are categorized separately as they cover

two lives simultaneously, thus offering a unique advantage in some cases,

notably, for married couple or for partners in a business firm. Under a joint

life policy sum assured is payable on first death and again on death of the

survivor during term of policy.

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Annuities / Children's policies:

Nominee receives a guaranteed amount of money at pre-determined time and

not immediately on death of insured. On survival insured receives money at

same pre-determined time. These policies are best suited for planning

children's future education and marriage costs.

Pension Plan:

Pension plan is investment that is made either in single lump sum payment or

through installments paid over certain number of years, in return for specific

sum that is received every year, every half-year or every month, either for life

or for a fixed number of years. If insured dies during term of policy, his

nominee would receive benefits either as lump sum or as pension every

month. Annuities differ from all other forms of life insurance in way that an

annuity does not provide any life insurance cover but, instead, offer a

guaranteed income either for life or certain period. Typically annuities are

bought to generate income during one's retired life, which is why they are

also called pension plans. By buying annuity or a pension plan annuitant

receives guaranteed income throughout life.

Page | 26

Group Insurance:

Group insurance offers life insurance protection under group policies to

various groups such as employers-employees, professionals, co-operatives,

weaker sections of society, etc. It also provides insurance coverage for people

in certain approved occupations at lowest possible premium cost. Group

insurance plans have low premiums. Such plans are particularly beneficial to

those for whom other regular policies are costlier proposition. Group

insurance plans extend cover to large segments of population including those

who cannot afford individual insurance. Number of group insurance schemes

has been designed for various groups.

Loan Cover Term Assurance Policy:

Loan cover term assurance policy is insurance policy, which covers home

loan. Such policy covers individual's home loan amount in case of

eventuality. Cover on such policy keeps reducing with passage of time as

individuals keep paying their EMIs (equated monthly installments) regularly,

which reduces loan amount. This plan provides lump sum in case of death of

life assured during term of plan. The lump sum will be decreasing percentage

of initial sum assured as per policy schedule. Since this is non-participating

(without profits) pure risk cover plan, no benefits are payable on survival.

Page | 27

LIFE INSURANCE CORPORATION OF INDIA:

On 1st of September 1956, the Life Insurance Corporation of India (LIC)

embarked upon its momentous journey in true spirit of serving the people and

nation as a whole. Since then it has spearheaded the financial and

infrastructure development of the nation. The performance of LIC has been

exemplary and it has been growing from strength to strength be it customer

base, agency network, branch office network, and the like. LIC has played a

significant role in spreading life insurance among the masses and

mobilization of people‘s money for people‘s welfare. Even after the entry of

private insurers for almost a decade now, LIC continues to be the frontrunner

in the industry in terms of market share.

AARJSH VOLUME 1 ISSUE

5 (NOVEMBER 2278 – 859X137

LIC today services its customers through 8 Zonal offices, 113 Divisional

Offices, 2048 Branches, 1202 Satellite Offices, more than 1.19 lakh

employees and 12.78 lakh agents. Besides life insurance, through its various

subsidiaries, it is involved in providing various financial services viz. Pension

(LIC Pension Fund Ltd.), Housing Finance (LIC HFL Ltd), Mutual Fund

(LIC Nomura MF), Credit cards (LIC Card Services Ltd), Financial Products

distribution (LIC HFL Financial Services Ltd) and LIC HFL Care Homes

Ltd. It also provides insurance services in several countries abroad through

branch offices, Joint Ventures (JVs) and a wholly owned subsidiary. As a

result of product innovation by private players, LIC‘s market share has

gradually reduced in the post-liberalization period. Despite that, the Life

Insurance Corporation of India continues to remain the largest player in the

Indian Life Insurance market with a market share of 71.30% in FY 2011-12.

The Life Insurance Corporation of India also transacts business abroad and

has offices in Fiji, Mauritius and United Kingdom. With its multinational

presence, it is associated with joint venture abroad in field of insurance

namely, Ken India Assurance Company Limited, Nairobi, United Oriental

Assurance Company Limited, Kualalumpur and LIC (international)

E.C.Bahrain.

Page | 28

LIC OPERATES ALL OVER INDIA:

Mission:

Explore and enhance the quality of life of people through financial

security by providing products and services of aspired attributes with

competitive return, and by rendering resources for economic

development.

Vision:

A trans-nationally competitive financial conglomerate of significance to

societies and pride of India.

Page | 29

MARKET SHARE (2009 - 2010) OF LIFE INSURERS:

Premium Mode LIC Other than LIC

Regular Premium 43.13% 56.87%

Single Premium 92.19% 07.81%

1st year Premium 65.08% 34.92%

Renewal Premium 73.64% 26.36%

Overall Average 70.10% 29.90%

MARKET SHARE (2010 - 2011) OF LIFE INSURERS:

Premium Mode LIC Other than LIC

Regular Premium 56.73% 43.27%

Single Premium 81.26% 18.74%

1st year Premium 68.85% 31.15%

Renewal Premium 70.49% 29.51%

Overall Average 69.78% 30.22%

Source: IRDA Annual Report AARJ

Page | 30

ORGANISATION STRUCTURE OF LIC:

Chairman

Managing Director

Executives Directors

Chiefs

Zonal Managers

Regional Managers

Divisional Managers

Seniors Divisional Managers

Marketing Managers

Sales Managers

Senior Branch Managers (Head of the Branch)

Assistant Branch Managers Sells

Development Officers

Different Corporate and Retail Agent

Page | 31

PUBLIC RELATION DEPARTMENT:

The Public Relation Department in LIC is divided into three major

categories. Namely:

1. Communication Department

2. Crisis Management Department

3. Publicity Department

Chief Public Relation Officer

PRO (Communication Dept.)

PRO (Crisis Management Dept.)

PRO (Publicity Dept.)

Page | 32

CHAIRMAN OF LIC

PUBLIC RELATIONS

COMMUNICATION DEPARMENT

PUBLICITY DEPARMENT

CRISIS MANAGEMENT DEPATMENT

Page | 33

LIC's logo:

SH V

LIC's slogan:

LIC's slogan is sanskrit "yogakshemam vahamyaham" which translates in

english as "Your welfare is our responsibility". This is derived from the

Ancient Hindu text, the Bhagavad Gita's 9th Chapter, 22nd verse. The slogan

can be seen in the logo, written in Devanagiri script.LUME 1 ISSUE 5

(NOVEMBER

Page | 34

Product line of LIC:

LIC‘s insurance product majorly categorized into seven segments. They are

the following:

Insurance plans

Pension plans

Unit plans

Special plans

Micro insurance plans

Withdrawn plans

Health plans

Now, we will discuss something brief about different plans:

Insurance plans:

As individuals it is inherent to differ. Each individual's insurance needs

and requirements are different from that of the others. LIC's Insurance

Plans are policies that talk to everybody individually and give almost

everyone the most suitable options that can fit anybody‘s requirement.

Under this plans there are some following products:

Bima account plans:

Under this plan there are further two subcategories:

Bima account 1

Bima account 1

Endowment plus:

Children plans:

Under children plans there are further ten subcategories:

Jeevan anurag

Komal jeevan

CDA endowment vesting at 21

CDA endowment vesting at 18

Marriage endowment or Educational annuity plan

Jeevan Kishore

Jeevan chhaya

Child career plan

Child future plan

Jeevan Ankur

Page | 35

Plans for handicapped dependents:

Under this policy there are further two subcategories:

Jeevan aadhar

Jeevan Vishwas

Endowment assurance plans:

There are seven different plans under this option:

The endowment assurance policy

The endowment assurance policy with limited premium

term

Jeevan mitra (Double cover Endowment plan)

Jeevan mitra (Triple cover Endowment plan)

Jeevan Anand

New janaraksha plan

Jeevan amrit

Plans for HNI client:

There are two different plans:

Jeevan shree – I

Jeevan pramukh

Money back plans:

There are some plans under this:

The money back policy – 20 years

The money back policy – 25 years

Jeevan Surabhi – 20 years

Jeevan Surabhi – 25 years

Jeevan Surabhi – 15years

Bima bachat

Special money back plan for woman – Jeevan Bharati I

Whole life plans:

There are five different plans under this:

The whole life policy

The whole life policy – limited payment

The whole life policy – single payment

Jeevan anand

Jeevan tarang

Term assurance plans:

Two year temporary assurance policy

The convertible term assurance policy

Page | 36

Joint life policy – Jeevan Sathi

Pension plans:

LIC has two different pension plan options:

Jeevan akshay – VI

New jeevan nidhi

Unit plans:

LIC has two different pension plan options:

Endowment plus

Flexi plus

Special plans:

LIC has some plans under this:

Golden jubilee plan – New bima gold

Special plan:

LIC has two different options under this:

Bima nivesh 2005

Jivan saral

Micro insurance plans:

LIC‘s Micro Insurance Plans are not plans but opportunities that knock

on door once in a lifetime. These plans are a perfect blend of insurance,

investment and a lifetime of happiness.

LIC has three different plan options:

Jeevan madhur

Jeevan mangal

Jeevan deep

Page | 37

Withdrawn plans:

There are altogether nineteen products under this banner:

Jeevan nischay

Wealth plus

Jeevan aastha

Jeevan varsha

Fortune plus

Health plus

Pension plus

New jeevan dhara – I

Jeevan vriddhi

Jeevan sugam

Market plus I

Profit plus

Money plus – I

Child fortune plus

Jeevan saathi plus

Samridhi plus

Jeevan nidhi

New jeevan suraksha – I

Jeevan Vaibhav

Health plans:

LIC has some plans under this:

Health protection plus

Jeevan arogya

Page | 38

SWOT ANALYSIS:

The SWOT analysis involves an in depth study of the strength and weakness of

the provided organization and it also provides information to the promoter,

consultant, other agencies and helps in long term viability of the project.

Strength :

1. It is the oldest and most well experienced player having a Pan India

presence.

2. LIC has a strong and very well developed distribution network.

3. It is having a huge consumer base and is evolved as one of the most

powerful brands of the country.

4. It has a large product portfolio and claim settlement is easier to get.

5. It has the advantage of government guarantee is accompanied with it.

6. Largest insurance Company in the world in Customer Base (23 crore

customers)

7. No.1 insurance company in the world in terms of agency (about 1.1

Million agents)

8. LIC is No.1 insurer in the world in Volume & Sold around 3.75

Cr.Policies in 2007-2008.

9. 2nd Biggest Real Estate Owner next to Indian Railways.

10. LIC is one of the Highest income tax playing Organization. For Financial

Year 2007-08, LIC has paid advance Tax Rs.2627. 14 Cr. & Service Tax

Rs.1292. 15 Cr.

11. Has Highest insurance Professionals ( Club Member agents )

Page | 39

12. Only 4 countries in the world have more population that LIC`s policy

holders.

13. No.1 insurance Company in the world in terms of claims paid.

14. LIC Settles 2.21 claims per second, LIC settled 139 lakhs claims during

the year 2007-2008.

15. Prompt settlement of claims (97% maturity claim settled on or before

due date)

16. One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B

Claim-0.07%)

17. Advanced Technology-For better Customer Service

18. Computerized and networked 2048 branch offices and 159 satellite

offices throughout the country.

19. Use of High Tech-WAN,LAN,IVRS & EDMS

20. LIC is second largest PC user in the country.

21. EDMS to make LIC a paperless office- Enabling Policy servicing &

payments through all branchs in the country.

22. Premium Payment Facility extended through networked 2048 branches,

ECS, ATM's through internet, online portals, collecting bank (Axis

Bank), AP online, through SMS, through selected agents, Now LIC

Premium can also be paid through.

23. "Suvidha info Serve KIOSKS" all over India.

24. Policy Holder's Portal allow on line access to policy status and other

details.

25. Info centre set up in 12 cities for customers to interact easily.

Page | 40

26. 45 interactive Voice Response System (IVRS) centers all over the

country to provide information on policy servicing. Facility is available

24 7, Facility can be availed on following phone Nos. 1251 OR 020-

25514248.

27. LIC - an institution builder promoting many financial and insurance

institutes like NSE, NCDEX, LIC Mutual Fund, Stock Holding

Corporation of India, National insurance Academy, insurance institute of

India etc.

28. LIC has foreign operations in Mauritius, Fiji and London and has joint

venture operating in Sri lanka, Nepal, Bahrain & Saudi Arabia. New

offices will be shortly oprned in Australia, USA&Canada.

29. LIC is known as "Pension Provider" of the country.

30. 1st Pension company in India is floated by LIC as "LIC Pension Fund

Ltd" on 21st Nov 2007.

31. First to create waves in micro insurance sector by insuring people below

the poverty line. In year 2007-2008, 8.54 lac policies sold through

"Jeevan Madhur"Plan.

32. Widest range of plans (about 48) for every need of the customer of 0 to

79 years of age.

33. Biggest Portfolio of Group insurance schemes available.

34. "Jeevan Saral" one of the product of LIC got "Best innovation product "

award from I.R.D.A.

35. LIC has covered life Risk of 1.13 crore citizens through "AAM ADMI

BIMA YOJANA" & " JANASHREE BIMA YOJANA".

Page | 41

Very Unique Salary saving Portfolio.

Highest Number of Corporate Clients in Group insurance Scheme.

Expending Distribution Channel through Bancassurances, Corporate

Agencies, Broker ship & Chief Life insurarance Advisor (CLIA).

New East - Central Zonal Office opened at patina to caterto the needs of

states of Bihar, Jharkhand and Orissa. 5 new Divisional offices were also

opened in 2007-08. Pune D.O.was splited in 2 divisions, viz Pune

Division (i) and Pune Division (ii).

"Golden Jubilee Foundations" established for undertaking charitable

activities like education, health, relief of poverty etc.

LIC invested more than 11,630 crores, in infrastructure sector is

Rs.56,691crores.

In socially oriented sector like water, drainage & housing etc, LIC has

invested Rs.5,635 crores during 2007-08 & total investment in this sector

is Rs.32,321 crores.

Page | 42

Total investment in Social Sector Rs.89,000 Crs.

Different incentive schemes for villages, Schools and Banks under Bima

Gram, Bima School and Bima Banks.

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

LIC's investment income in 2007-08 was Rs.40,655 crores. Out of Total

income of Rs, 1,76,559.28 Crs.

Total Assets of the corporation as on 31.3.07 were Rs. 6,74,514.78 Crs.

Largest institutional investor in Share Market. On an average Rs.100

crore invested every day. During theyear 2007 LIC earned the profit

Rs.10,000 Crs. from the Sale of Equity.

Largest Financial institutional investor both Equity market & Term

House.

Page | 43

Weakness :

prompt and sincerecustomer service.

having high commissions only.

al problems between top

management and lower cadre staff.

corruption in main office.

are not provided with extra funds and powers to promote its products

aggressively.

Page | 44

Opportunity :

lot of innovativeproducts.

on markets, health insurance and large real estate portfolio. Today‘s

human life becomes full uncertain, so they prefer protection against the

risk. Therefore they prefer life insurance. This is the opportunity for the life

insurance sector.

� Easy accesses to development in the more advance market provide further

opportunity to upgrade their working. Technological, financial or specific area

based avenues of absorbing improved system are also now more easily

available. So, that insurance companies working efficiently and fast service.

� Increased economic activities: increase in the economic activity has become

the opportunity for the life insurance sector. The activity such as development

in the automobile industry, development in the shipping industry. The growth in

the GDP shows the opportunity for this industry. The growth rate expected this

year 7-7.5%. So this is also one of the opportunities for the life insurance sector.

Page | 45

The Indian insurance market is the one of the least markets in the world. India

has a population 1044.15 million out of which only 77.7 million have a life

insurance policy. Almost 300 million people in the country can afford to buy

life insurance but of this only 20 % have an insurance cover. Thus there lies a

big opportunity for the life insurance industry. No doubt lots of marketing and

promotional efforts have to be done for trapping the uncovered portion of the

huge market. India‘s insurance has long way to catch up with the rest of the

world. According to the institute of charted financial analyst of India. India is

the 23rd largest insurance market in the world. India accounts for just 0.4% of

the global insurance market which is very low. the ratio‘s of premium to GDP

for India stands at only 3% against 5.2% in US ,6.5%in UK.

� To enter into rural market where customer awareness about insurance is low

by effective and efficient marketing strategies.

� To sell insurance products through electronic Medias.

� Natural calamities: natural calamities taking place now days have created a

concern for life insurance among the public. Because of natural calamities like

earthquake, flood, and cyclone people have become conscious about benefits

and need of insurance. Thus through a calamity it has become a considerably

big opportunity for the industry.

Page | 46

� Growing population: the growth in the population (approximately 1.7%) is

very high. It is said that one Australia is added in our country every year. Thus

potential customers for the life insurance industry. It has become an opportunity

for the life insurance industry.

� The lack of comprehensive social security system combined with a

willingness to save means that Indian people demand for pension products will

be large. Thus, it has become an opportunity for the life insurance industry.

� India has traditionally been a highly savings oriented country. Needless to

say, if the insurance market is properly tapped, it is possible to raise life

insurance premium as a percentage of GDP from its existing level. Thus, it has

become an opportunity for the life insurance industry.

� To use Internet and e-commerce technologies to dramatically cut the costs

and/or to pursue new sales-growth opportunities. With the help of technology it

has become easy for the companies to reach the customer quickly, easily,

efficiently and in a better way. Also the companies can cut down the cost of

operation up to considerable level. Thus technology has thrown lots of

opportunity for the company.

� Liberalized government policy toward insurance sector: the government has

liberalized the government policy in the life insurance sector. Now a day role of

government has changed. Due to liberalized policy of government the country is

benefited in earning foreign inflows: the domestic company can also collaborate

with foreign country and can create synergy. Thus there is great opportunity for

those who can trap it. Exist the option of joint venture& alliance etc for

companies to make Synergy, value as well as competitive capabilities for firms.

Page | 47

Threats:

� Private entrants are naturally targeting the profitable and more lucrative

segments, by providing better service, new products and flexibility. They are

targeting the bigger corporate the other clients in the well established

metropolitan center. These new entrants succeeded in eating share of the

existing entities. This creates threat among rival firms itself.

� Decreased in bank rate: the decreased bank rate is the biggest threat for the

life insurance sector. Fluctuation in the bank rate makes big difference for the

life insurance industry. It has become threats for the life insurance industry.

� Interest rate of P.F and bank saving create threat to insurance sector. All

other saving is obviously the threat for life insurance sector.

� Increasing intensity of competition among industry rivals-may cause squeeze

(fall) on profit margins. Consumer‘s education- consumers are more and more

confused because the market players are offering large number of product

range. As at present the awareness level is not much, it is only because the

education level is only 62 %( in which only 10% are well educated).

� Fraud in insurance sector: the major problem fraud, which affects the life

insurance sector.

Page | 48

� The flight of talent to new entrants is already in evidence, and could be on the

rise for some time to come. Retaining qualified and competent executives will

be considerable challenges for existing companies.

� One very serious danger that the government on units is likely to face is that

even if at some point of time, the government does decide to disinvest a portion

of its equity; they may not be fully free from government interference. They

could face a peculiar problem that although paper and in terms of legal

definition they would not be public sector units. In effects, their working could

be no different from what it was before their ownership pattern change. This

could be genuine threats since they would be competing with units which are

free from such artificial and unnecessary restrictions.

� The new units, equipped with state of arts equipment and innovative

procedure would have an in-built edge over the erstwhile public sector units,

which until recently had no such opportunity and incentives. Due to possible

negative impact on employment, there were no serious efforts at updating

technology and equipment. The resultant inadequate investment in

infrastructure could lead to their lagging behind in the race.

Page | 49

USP of LIC:

LIC have been taken following steps to increase its market competitiveness

and retains its dominant position in the insurance market.

1. PRODUCT DEVELOPMENT:

In a competitive market, there is a greater need to provide insurance products

that meet the needs of our customers. LIC therefore offers a wide variety of

products, which fulfills the needs of different segments of the society. As at

the end of the financial year 2010-11, the Corporation had 52 products

available for sale. During the Year Corporation introduced 5 new plans viz.

LIC‘s Pension Plus, LIC‘s Endowment Plus, LIC‘s Bima Account –I, LIC‘s

Bima Account –II and LIC‘s Samridhi Plus. As a result of product innovation

by private players, LIC‘s market share has gradually reduced in the

postliberalisation period. Despite that, the Life Insurance Corporation of

India continues to remain the largest player in the Indian Life Insurance

market with a market share of 71.30% in FY 2011-12.H VOLUME 1 ISSUE

5 (NOVEMBER 2012

2. COMPETITION:

Private and foreign entrants in the insurance industry have made others

difficult to retain their market. Higher customer aspirations lead to new

expectations and forced him or her to move towards the insurer who provides

him the best service in time. It becomes less viable for them even to maintain

the functional networks or competitive standards and services. To survive in

the industry they analyze the emerging requirements of the policyholders

/insurers and they are in the forefront in providing essential services and

introducing novel products. Thereby they become niche specialists, who

provide the right service to the right person in the right time. Today, a public

giant LIC is facing direct competition with the rest 23 private life insurers.

Page | 50

3. INFORMATION TECHNOLOGY:LIC has been a pioneer in using

information technology for enhancing the quality of its service to customers.

Being the largest insurer in India, LIC has always explored all the avenues

that technology offers to provide the best of services to its valued customers

and other stakeholders. Today, LIC customers can pay their premium not

only in any one of its offices, but also through LIC‘s Premium Payment

Gateway on our website through partner Banks like Corporation Bank, Axis

Bank or through associate agencies like APOnline, MPOnline, etc.

Customers can also use their Net Banking accounts, Debit Cards and Credit

Cards to pay premiums online. LIC reaches out to its customers through

IVRS, Call Centres, Customer Zones, SMS, e-mail, website and now even

the Social Networking sites. LIC has also undertaken many other customer-

centric initiatives like Enterprise Document Management System, Portal for

Customers, Agents, Development officers and Employees, etc. All LIC

offices and Training Centres have been connected to a Wide Area Network

for more than 10 years now. Last year Central Office, Zonal Offices, Zonal

Training Centres and the 113 Divisional Offices are connected through high

definition Video-Conferencing. In order to safeguard its IT infrastructure

from external threats, LIC has also installed the latest IT Security products in

its setup. To keep pace with changes in the business environment and the

technology platforms, LIC migrated our Core Insurance Application to web

based architecture.

4. CHIEF LIFE INSURANCE ADVISORS (CLIAs):LIC introduced the

above Scheme on 12.04.2008 with an objective of increasing its market

presence through more agents by utilizing capabilities of existing high

performing agents for organizational growth. In order to increase market

presence, more number of agents should be in the field. Understanding this

well, the Corporation decided to utilize the capabilities of existing senior

agents for organizational growth by incentivizing them for identifying,

training and mentoring new agents. Retired employees and Financial Service

Executives (FSE) are also allowed to become Chief Life Insurance Advisors

under certain conditions.

Page | 51

5. MICRO INSURANCE (MI):The huge untapped market for insurance is

the rural and social sector. Microinsurance is defined as the protection of low

income households against specific perils in exchange for premium payments

proportionate to the likelihood and cost of the risk involved. It provides an

opportunity to the insurance companies to meet their social responsibility as

well as secure a strong footing in the rural market. The active distribution

channels for micro insurance in India are NGOs, MFIs, and SHGs (self-help

groups), Micro agents, Cooperative Banks and RRBs (regional rural banks),

and Post Offices. The MFIs/NGOs have been identified as main delivery

channels by most of the insurance companies. These have a large network,

catering to huge number of clients. The year 2011-12 has been another

successful year for the Micro Insurance vertical of LIC. The vertical

exceeded the budget of 32 lacs Policies by a hefty margin of more than 6 lacs

policies with 119.59 % A2B.The total number of Policies stood at 38.27 lacs

with a growth rate of 29.67%. As many as 7 Zones crossed their budget with

good margin. Similarly 80 MI Units have achieved their budget. 7 MI Units

have procured more than 1 lac policies during the year. During this financial

year MI vertical crossed magical figure of 1crore policies and completed 1.12

crore policies as on 31.03.2012 since inception. The table 4 shows the new

business of Micro Insurance.

6. DIRECT MARKETING:In its 3 years of operations, Direct Marketing

has successfully established itself as a Value Pioneer. Through the years, it

had striven to take a fresh view of the environment, capture changes, identify

new business opportunities and orchestrate appropriate response. Direct

Marketing has achieved reasonable success in creating a professional and

disciplined work force comfortable with approaching and tapping emerging

segments in the market. The channel, through the effective use of LMS has

been able to ensure fast response to queries to successfully position the

Corporation as a responsive organization sensitive to changing customers‘

expectations. The table 6 shows the direct marketing channel wise new

business of LIC.

Page | 52

7. BANCASSURANCE AND ALTERNATIVE CHANNELS (B&AC):

Under Bancassurance, at present LIC have tie-ups with 8 PSU Banks, 4

Private Banks and 33 UCBs / RRBs / CO-OP Banks under Corporate Agency

agreement. These Banks procure New Business for LIC through their Branch

Outlets. At present, approximately 19,000 Outlets under these Banks. The

share of Banks in the total business of B&AC in the year 2011-12 was 91%

in FPI and 77% in Policies.

8. HEALTH INSURANCE:

During 2010-11, 67,668 Health Insurance Policies were sold for a Premium

Income of Rs.58.02 crore. LIC settled an amount of Rs. 8.38 crore towards

health insurance claims under 5,096 lives. Incidence of claims under Health

Policies is 1.39%, of which 51% are settled. As at 31.03.2011 LIC covering

7,23,752 lives under Health Insurance Policies. LIC started Health Insurance

Division in 2007-08, to tap the vast potential for Health Insurance Business

and to devise Health Products and Services. The first product ‗Health Plus‘

was launched in February, 2008 and the second product ‗Health Protection

Plus‘ in April, 2009. Both are Unit Linked Health Insurance policies

providing for hospitalization and major surgery cover for 49 specified

surgeries. The plans also have a facility of withdrawal, linked to domiciliary

treatment. Following IRDA regulations on cap of charges, Health plus Plan

was withdrawn from 01.01.2010. After LIC of India introduced to Health

product of Jeevan Arockya plan.

9. INDEPENDENT FINANCIAL ADVISORS (IFAs):IFAs are authorised

agents of insurance companies having tie-ups with more than one insurance

company. They are qualified persons or institution who can provide advice

on financial products. Independent financial advisors are commissioned

agents whose primary business is the sale of property and casualty insurance

for several insurers. IFA assembles different financial products in accordance

to customer needs and provide value added product by creating customized

financial product. Today, IFA show their significant presence as distribution

channel in both life and non-life insurance business.

Page | 53

10) INTERNATIONAL OPERATIONS:

Life Insurance Corporation of India operates in 13 countries abroad through

its various branches and Joint Venture Companies/ Wholly Owned

Subsidiaries. Branch Offices in the U.K., Mauritius & Fiji and operate

through Joint Venture Companies in Bahrain, Qatar, Kuwait, U.A.E., Oman,

Kenya, Saudi Arabia, Nepal & Sri Lanka. A wholly owned subsidiary – Life

Insurance Corporation (Singapore) Pte. Ltd. has been incorporated in

Singapore and we are in the process of applying for an operating license.

1. Foreign Units collectively procured a First Premium Income (FPI) of

around Rs. 349 Crores in the 12 months‘ period of each unit ended during

2011-12, thereby registering a growth of 15.69%.

2. The Total Net Premium Income (TPI) of our units was around Rs. 1,247

Crores during the same period in 2011-12 registering a growth of 28.2%. LIC

(International) B.S.C. (c), Bahrain and LIC Fiji are market leaders in their

respective geographies.

11) RECOGNIZED ALL AROUND:14

6

LIC has been reorganizing itself in order to perform better than the new

players. LIC offers a wide variety of products, which fulfills the needs of

different segments of the society. As at the end of the financial year 2010-11,

the Corporation had 52 products available for sale. The performance of LIC

has been exemplary and it has been growing from strength to strength be it

customer base, agency network and branch office network. LIC continues to

remain the largest player in the Indian insurance market.

Page | 54

Marketing Mix (4Ps):

Product: LIC is the leading company offering Life insurance services to the

users.

Apart from offering life insurance policies, they also offer underwriting

and consulting services.

All Life insurances have been divided into different plans based on the

financial technicality. Eg: ENDOWMENT, ULIP, TERM,

TRADITIONAL.

Price:

In the insurance business the pricing decisions of LIC are concerned with:

The premium charged against the policies,

Interest charged for defaulting the payment of premium and credit

facility,

Commission charged for underwriting and consultancy activities.

In India where the disposable income in the hands of prospects is low,

the pricing decision also governs the transformation of potential

policyholders into actual policyholders.

Promotion:

The insurance service depend on effective promotional measures.

In India, the rate of illiteracy is very high and the rural economy has

dominance in the national economy. They have both personal and

impersonal promotion strategies.

In promoting insurance business, the agents and the rural career agents

play an important role here in LIC. Due attention have been given in

selecting the promotional tools for agents and rural career agents and

even for the branch managers and front line staff.

Place (Physical distribution):

The insurer is willing to take advantage of India‗s large population and

reach a profitable mass of customers and for that new distribution

avenues and alliances have necessarily been made.

They have the most attractive distribution channel in India majorly

works through the individual agency model.

Household Agent Assistant Development Officer (ADO) DO Sr.

DO Marketing manager Branch Manager AM ZM.

Page | 55

Target market of LIC:

Faced with stiff competition from private insurers, India‘s largest public

sector insurance company, the Life Insurance Corp. of India (LIC), is

planning to make the most of its reach in rural India.

It has lined up ambitious plans to aggressively tap the rural sector in the

current fiscal through micro insurance plans, while its private sector rivals

primarily target high net worth individuals in urban India. In the current

financial year alone, LIC plans to sell five million new microinsurance

policies to the rural and unorganized sector, although it has manged to sell

only 80,000 policies so far. The state-owned insurance firm is looking at

villages with a population of less than 5,000, 75% of whom are engaged in

agricultural activities. LIC has 2,048 branches and 1.1 million agents across

the country. Out of the total of 38.2 million new policies sold in 2006-07,

23%, or 8.85 million policies, were sold to rural clients. This is, however,

independent of the microinsurance category. This year, LIC plans to sell 10

million policies to its rural clients, which would approximately work out to

25% of their premium income. LIC managing director Thomas Mathew T. is

enthusiastic about the microinsurance targets. ―Private insurers have a limited

reach,‖ he says. ―There is a huge demand for insurance in the rural and

unorganized sector. We are ideally placed to provide theseservices to this

segment with our network of branches and agents.‖ India opened up the

insurance sector early this century and since then more than a dozen private

players have entered into the sector, picking up a substantial chunk of the

incremental business even though LIC continues to have the largest share of

the market. LIC is launching about 10 new products, targeting agricultural

labourers, landless labourers and small land owners. These policies offer up

to Rs30,000 life cover and Rs75,000 accident cover. The premium structures

have been tailor-made for people without a regular income. For example, a

landless labourer signing up for the recently-launched Aam Admi Bima

Yojna can pay as little as Rs25 a week to avail a cover of Rs5,000. In 2006-

07, LIC reported premium income of Rs39,541 crore, registering a growth of

118% over 2005-06, compared with an industry average of 110% growth.

LIC is also looking at innovative channels for collection of the premia from

such schemes. It has tied up with a number of non-governmental

organizations and other grass-roots groups, such as microfinance institutions

and self-help groups. The rural customer paid an average annual premium of

Rs3, 000-4,000.

Page | 56

Webpage of LIC:

Page | 57

Sales growth of LIC:

LIC has notched up a total premium of R73,122 crore as against R54,320

crore reported during the same period in the previous financial year,

recording a growth of 35%. On the other hand, private sector companies

together recorded a meagre growth of 4% during the same period with a total

premium of R30,756 crore. The insurance major notched a total premium of

R5,986 crore in February 2011 and holds a total market share of 70.39%,

according to a latest data.

However, the ticket size (calculated on individual non-single premium basis)

of LIC stood at R7,597 for the period ended February, the data said.

Private sector companies together hold a market share of 29.61%. For the

month of February 2011 alone the total premium notched up by the 22

companies was estimated to be around R2.891.50 crore, the data maintained.

In total, life insurance companies together as an industry, reported a healthy

growth of 24% for the 11-month period of the current financial year to

R103,878 crore when compared with R83,891 crore achieved during the

same period in the previous financial year.

As per the LIC annual report of fiscal year 2011 – 2012, the direct marketing

Channel procured a New Business of ` 264.14 crore FP with 87578 policies

showing a growth of 83% in FPI over previous year. LIC Direct is ahead of

five private companies in New Business as on 31.03.2012. The Channel is

shaping up as a highly productive channel as revealed by the higher

productivity of DSEs and higher ticket size of policies.

The other 5 clubs which were formed to recognize Agents who perform

consistently year after year, viz. Chairman, Zonal Manager, Divisional

Manager, Branch Manager and Distinguished Agents, have also shown good

growth as business volumes generated by the agents have been increased.

Gross Revenue from Estate Portfolio of the Corporation for the current year as

on 31.03.2012 is Rs. 217.95 crore as against Rs. 199.00 crore of previous year

ending 31.03.2011. This reflects a growth of 9.52% over the previous year.

Page | 58

Branding of LIC:

Brand LIC has become synonymous with the service keeping its lead

Think life insurance and the image you are most likely to conjure up is that of

Life Insurance Corporation‘s (LIC) logo. For decades now, ‗the two hands

gently circling the lamp‘ has been the most enduring image of the life

insurance business in India. Yet, just eight years ago, when the insurance

business was thrown open to private players, many believed things would

change irrevocably for LIC. After all, the multinational giants with their deep

pockets and smart marketing strategies would inevitably eat into the

humongous customer base of the public sector giant.

But much to the chagrin of the private insurers and their backers, LIC has

been able to leverage two of the more crucial attributes — trust and its

generic brand image to its advantage. Even as market conditions were hardly

anything to talk about in 2008, Brand LIC has demonstrated that trust can

also translate into business opportunity. While its performance in Brand

Equity‘s Most Trusted Brands survey has been stellar (LIC has been the Most

Trusted Service Brand in India for five consecutive years in the study), LIC

has delivered on the numbers front as well. Even as most Indian businesses

have struggled to find their feet on the profitability street, Brand LIC

continued to grow stronger in 2008.

The brand has also been able to leverage its positive aura beyond life

insurance to its other group businesses like housing finance, asset

management and so on. In its mutual fund business, for example, LIC

witnessed a growth of almost 4% in the assets under management (AUM) in

2008, a remarkable feat if one considers the timing and the context.

Most players from the mutual fund industry in India saw a decline in their

AUMs, while only three other players — Escorts Mutual Fund, Canara

Robeco Mutual Fund and Birla Sun Life Mutual Fund were able to

demonstrate growth. Just to put this in context, the Indian mutual fund

business has 35 players.

Page | 59

Even in housing finance, LICHF also performed impressively. The

company‘s net profit moved up by 16% to Rs 135 crore in the second quarter

of the current financial year, against Rs 116 crore in the same period last

year. Analysts believe that the reluctance of banks to lend to the housing

sector would provide further opportunity for growth to housing finance

players like LICHF. The company currently has a market share of 7% in the

housing loan segment.The flagship life insurance business continued to

thrive, of course. As per the latest first year premium figures issued by

market regulator Insurance Regulatory Authority of India (IRDA), the total

premium collected in the month of November by LIC is more than 145% of

the total premium collected by all the private insurers put together. In

segments like individual single premium and group single premium, private

companies account for merely 11% and 8% of the premium that LIC

collected in November 2008. Branding experts attribute the performance of

Brand LIC to its ability to connect with the customer base. The more you

change, the more you remain the same. By reinventing itself, LIC showed

maturity and responsibility which has helped the brand to go to the next level.

The strong element of availability and accessibility, on the other hand,

ensured that it continues to enjoy proximity to the customers. As consumers

took a flight to safety in the ups and downs of the market in 2008, LIC‘s

credibility was further enhanced. Life Insurance Corporation caters to every

segment of society by addressing individual needs, group needs and needs of

special segments. This, in turn, has built trust. The brand loyalty and the

customer trust have been built over the years. Underlining the real challenge

— time and heritage — that the private insurance players are up against.

Others feel that the being generic to the segment has worked for LIC. LIC has

become synonymous with the service. One reason why customers still have

LIC at the top of their consideration set is because ―a brand is not a process, a

brand is a promise‖. LIC, being fully-owned by the Government of India,

delivers a comfort value to its policy holders. Even if things go wrong in the

future, LIC‘s customers think that the Government will bail it out.

Page | 60

Following the US financial system crisis, the customers are a bit reluctant to

turn to private companies for services as they feel government-owned bodies

at least carry sovereign guarantee.

Insurance is something that LIC has made a business out of, but the second

largest public sector company in India is already insuring its own growth

story. Soon the LIC brand plans to foray into venture fund management

which will be a dedicated real estate fund. In the long run, this is expected to

give a further boost to Brand LIC.

The country's largest financial institution, Life Insurance Corporation of

India, has decided to appoint a brand consultant to ensure that it appears as a

tech-savvy institution to the public.

LIC has invited expressions of interest from consultancy firms to 'create

further value for the strong LIC Brand'. Among other things, the corporation

is seeking advice on brand strategy and support on brand tracking and media

audit.

Although LIC has one of the largest in-house technology teams with over 140

programmers, it does not have the image of a tech-savvy company. The brand

consultant would change that.

When it comes to number of customers, LIC is the largest life insurance

company in the world and makes extensive use of technology to manage such

a huge customer database. With assets under management of over Rs

11,00,000 crore, LIC is the largest financial institution in the country.

Page | 61

Consumer Behavior and Customer Satisfaction:

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Seven steps customer satisfaction in LIC:

1. Encourage Face-to-Face Dealings:

This is the most daunting and downright scary part of interacting with a

customer. If you're not used to this sort of thing it can be a pretty nerve-

wracking experience. Rest assured, though, it does get easier over time. It's

important to meet your customers face to face at least once or even twice

during the course of a project.

My experience has shown that a client finds it easier to relate to and work

with someone they've actually met in person, rather than a voice on the phone

or someone typing into an email or messenger program. When you do meet

them, be calm, confident and above all, take time to ask them what they need.

I believe that if a potential client spends over half the meeting doing the

talking, you're well on your way to a sale.

1. Encourage Face-to-

Face Dealings

2. Respond to Messages Promptly & Keep Your

Clients Informed

3. Be Friendly and

Approachable

4. Have a Clearly-Defined

Customer Service Policy

5. Attention to Detail

(also known as 'The Little

Niceties')

6. 6.Anticipate

Your Client's

Needs & Go Out Of Your

Way to Help Them

Out

7. Honour Your

Promises

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2. Respond to Messages Promptly & Keep Your Clients Informed:

This goes without saying really. We all know how annoying it is to wait days

for a response to an email or phone call. It might not always be practical to

deal with all customers' queries within the space of a few hours, but at least

email or call them back and let them know you've received their message and

you'll contact them about it as soon as possible. Even if you're not able to

solve a problem right away, let the customer know you're working on it.

A good example of this is my Web host. They've had some trouble with

server hardware which has caused a fair bit of downtime lately. At every step

along the way I was emailed and told exactly what was going on, why things

were going wrong, and how long it would be before they were working again.

They also apologised repeatedly, which was nice. Now if they server had just

gone down with no explanation I think I'd have been pretty annoyed and may

have moved my business elsewhere. But because they took time to keep me

informed, it didn't seem so bad, and I at least knew they were doing

something about the problems. That to me is a prime example of customer

service.

3. Be Friendly and Approachable:

A fellow SitePointer once told me that you can hear a smile through the

phone. This is very true. It's very important to be friendly, courteous and to

make your clients feel like you're their friend and you're there to help them

out. There will be times when you want to beat your clients over the head

repeatedly with a blunt object - it happens to all of us. It's vital that you keep

a clear head, respond to your clients' wishes as best you can, and at all times

remain polite and courteous.

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4. Have a Clearly-Defined Customer Service Policy:

This may not be too important when you're just starting out, but a clearly

defined customer service policy is going to save you a lot of time and effort

in the long run. If a customer has a problem, what should they do? If the first

option doesn't work, then what? Should they contact different people for

billing and technical enquiries? If they're not satisfied with any aspect of your

customer service, who should they tell?

There's nothing more annoying for a client than being passed from person to

person, or not knowing who to turn to. Making sure they know exactly what

to do at each stage of their enquiry should be of utmost importance. So make

sure your customer service policy is present on your site -- and anywhere else

it may be useful.

5. Attention to Detail (also known as 'The Little Niceties'):

Have you ever received a Happy Birthday email or card from a company you

were a client of? Have you ever had a personalised sign-up confirmation

email for a service that you could tell was typed from scratch? These little

niceties can be time consuming and aren't always cost effective, but

remember to do them.

Even if it's as small as sending a Happy Holidays email to all your customers,

it's something. It shows you care; it shows there are real people on the other

end of that screen or telephone; and most importantly, it makes the customer

feel welcomed, wanted and valued.

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6. Anticipate Your Client's Needs & Go Out Of Your Way to Help Them

Out:

Sometimes this is easier said than done! However, achieving this supreme

level of understanding with your clients will do wonders for your working

relationship.

Take this as an example: you're working on the front-end for your client's

exciting new ecommerce endeavour. You have all the images, originals and

files backed up on your desktop computer and the site is going really well.

During a meeting with your client he/she happens to mention a hard-copy

brochure their internal marketing people are developing. As if by magic, a

couple of weeks later a CD-ROM arrives on their doorstep complete with

high resolution versions of all the images you've used on the site. A note

accompanies it which reads: "Hi, you mentioned a hard-copy brochure you

were working on and I wanted to provide you with large-scale copies of the

graphics I've used on the site. Hopefully you'll be able to make use of some

in your brochure."

Your client is heartily impressed, and remarks to his colleagues and friends

how very helpful and considerate his Web designers are. Meanwhile, in your

office, you lay back in your chair drinking your 7th cup of coffee that

morning, safe in the knowledge this happy customer will send several

referrals your way.

7. Honor Your Promises:

It's possible this is the most important point in this article. The simple

message: when you promise something, deliver. The most common example

here is project delivery dates.Clients don't like to be disappointed.

Sometimes, something may not get done, or you might miss a deadline

through no fault of your own. Projects can be late, technology can fail and

sub-contractors don't always deliver on time. In this case a quick apology and

assurance it'll be ready ASAP wouldn't go amiss.

Page | 66

Conclusion on customer satisfaction by LIC:

Customer service, like any aspect of business, is a practiced art that takes

time and effort to master. All you need to do to achieve this is to stop and

switch roles with the customer. What would you want from your business if

you were the client? How would you want to be treated? Treat your

customers like your friends and they'll always come back.

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Promotional activities of LIC:

Sales promotions are being increasingly used to influence the purchase

behavior of consumers in a desired way. The major reasons for the

phenomenal use of sales promotional measures can be attributed to increased

competition, declining brand loyalty, consumer's sensitivity to promotional

deals, and increased advertising clutter. LIC, having realized its importance

has undertaken sales promotion in all its three forms, such as consumer-

oriented promotion, trade-oriented promotion and salesforce promotion. In

view of its importance in the highly competitive life insurance market, an

attempt is made in this article to examine the sales promotional measures of

LIC.

Sales promotion, a key ingredient in marketing campaigns, consists of a

diverse collection of incentive tools, mostly short-term, designed to stimulate

a quicker or greater purchase of a particular product or service by the

consumers or the traders. Sales promotion is generally defined as those

marketing activities that provide extra value or incentives to the sales force,

the distributors, or the ultimate consumer and can stimulate immediate sales.1

Sales promotions add value, provide a `competitive edge', boost sales during

periods when demand would otherwise be weak, hasten the introduction and

acceptance of new services, and generally get customers to act quicker than

they would in the absence of any promotional incentive.2 A decade ago, the

advertising to sales promotion ratio was about 60:40. Today, in many

consumer goods companies, sales promotion accounts for 65% to 75% of the

combined budget.

Sales promotion is generally broken into three major categories, such as

consumer-oriented, trade-oriented and salesforce- oriented activities. Having

realized the significance of sales promotion, LIC has vigorously undertaken it

and made a significant benefit out of it. The consumer-oriented promotions in

fact, are a part of the promotional pull strategy. These promotions include tax

benefits, payment of bonus, provision of accidental benefits and higher non-

medical limits.

Page | 68

Tax benefit is one of the major weapons in the arsenal of strategies at the

disposal of the corporation to promote sales. The corporation was successful

in convincing the government to exempt payments made to the corporation

from the purview of Income Tax Act, subject to certain limits.

In addition to tax benefits, LIC allots bonus as a uniform percentage in

addition to the sum assured, or sum assured plus prevailing bonus addition.

The former case is known as simple reversionary bonus, and the latter is

known as compound reversionary bonus. The former is simple, popular and

flexible as every time a bonus is distributed as some addition to the policy

payment. The compound reversionary bonus becomes more equitable, but it

is hard to calculate

Life Insurance is conceptual and intangible in its nature and it is not

understood by majority of the Indian population. Even though every insurer

knows that it is not bought and it has to be sold, there is a lot of gap among

promotional activities and advisors (agents). Hence it caused complications

in marketing its products. Making the uneducated, rural and economically

backward people to understand the insurance concept is a challenging task.

Insurers may succeed if they develop separate strategies for each segment.

Promotional activities and agents of life insurance companies is all about to

inform, bringing awareness, develop belief, to reinforce trust etc. in the minds

of the consumers by using tools such as advertising, public relations,

displays, word of mouth, sales promotion, personal selling etc. Promotion

bring positive attitude or may cause negative attitude so knowing the feelings

of respondents found essential. Today customers are more informed with

number of options, even still majority of the customers trusts only LIC.

Therefore it is the duty of all insurers to study the attitudes of customers on

their agents and promotional activities to reinforce trust in the customers.

Page | 69

Some Promotional Materials Of LIC:

Page | 70

Market Survey Sample analysis and Interpretation:

Analysis on Consumer preferences on LIC’s Various Plan:

Endowment 6

Term 7

Ulip 4

Pension 2

Moneyback 8

Result:

So, the analysis itself says people mostly prefer the moneyback policy

followed by term, endowment and rest other plan. The likings behind

choosing the term plan hopefully is because of incoming cash flow at a

regular interval which mainly starts after certain periods of time which is

generally known as the premium payment periods.

0

2

4

6

8

endowmentterm

ulippension

moneyback

Page | 71

Interpretation based on the profession of people:

Service 9

Business 1

Preference of Insurance companies :

LIC 8

Other 2

0

1

2

3

4

5

6

7

8

9

10

Service Business

LIC

Other

Page | 72

Why people choose Life Insurance:

Death benefit 7

Living benefit 8

Income replacement 8

Self-insured 10

Retirement 2

Tax benefit 10

0

1

2

3

4

5

6

7

8

9

10

Page | 73

Consumer preferences on various plan:

Jeevan anand 2

Money back 1

Children plan 1

Marriage Endowment plan 1

Empower pension plan by birla sunlife 1

Maxlife 20 yrs endowment by maxlife 1

Money back plan 20 yrs 1

Jeevan pramukh 1

Jeevan shree 1

Jeevan mitra 1

Bima bachat 1

Money back plan 25 yrs 1

Jeevan anand

Money back

Children plan

Marriage Endowment

plan

Empower pension plan

by birla sunlife

Maxlife 20 yrs

endowment by maxlife

Money back plan 20

yrs

Jeevan pramukh

Page | 74

Why LIC is trusted brand of India?

1. As a Govt of India owned Company, LIC is 51 + years old in the field of

life insurance and money management. LIC's Life Fund size as on day is

more than Rs 5 Lakh Thousand Crores !

2. Any LIC policyholder or the nominee will vouch for the best claims

settlement from LIC. Perhaps, this is the only institution where you as a

policyholder are virtually chased till such time your claim cheques is handed

over to you !

3. LIC has won `NDTV Profit Leadership Award 2007 under Life Insurance

Category', `Outlook Money Award 2007 as the best Life Insurer', `CNBC

Awaaz Consumer Award 2007 as the best Life Insurance Company', `Golden

Peacock Award for excellence in Corporate Governence 2007', `Web 18

Genius of the Web Award 2007 and many more'.

4. LIC adjudged No.1 Trusted Service Brand for the 4th successive year by

ET Brand Equity Survey.

5. LIC has been adjudged Superbrand India for 2004-06 and Reader's Digest

`Trusted Brand' Asia 2007.

6. This is the only corporation that is catering to more than 190 million

satisfied policyholders in India and abroad.

7. This is one of the very few institutions that pays ex-gratia interest on

pending maturity claims !

8. More than 2050 LIC branches all over India are connected together to

serve you. You can pay your premium anywhere in the country.

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9. During its long existence, LIC has kept on updating its portfolio by

bringing in new plans depending on public requirement. More than 50 of

them are most popular and can be customized to meet any of your

requirements. LIC ULIPs have become extremely popular due to the returns

they offer. Money Pluslatest LIC Unit Linked Plan is a case in point.

10. All LIC Plans come with Sovereign Guarantee i.e., Govt of India

Guarantee regarding repayment. Infact, as of now, only LIC plans enjoy this

Govt Guarantee.

11. All LIC plans are characterized by low premium, high life insurance

coverage and a vast package of benefits offered by them. Add to this

package, section 80C benefit and section 10(10D) benefit on the maturity

proceeds, you will find investment on LIC plans one of the most coveted

investment options available to you.

12. Premium paid under Key-Man Insurance plan is a recognized business

expense under section 37(I) of the Income-Tax Act. For companies making

profits, this is a very good incentive indeed.

13. Through Employer-Employee Insurance scheme, you can recognize the

worth of your most valuable employees whose absence you can ill afford to

loose.

14. Entire contribution to LIC Group Gratuity Scheme is a recognized

business expense in the hands of the employer. In addition, through this

scheme, the employer can transfer his gratuity liability to the corporation and

fund the same under cash accumulation scheme. The most popular among all

the companies.

Page | 76

15. LIC is declaring quite an impressive bonus (profits) on all its with-profits

policies every year. Extra attraction under LIC Bonus is (a) it is calculated

every year on the insured amount and not on the premium paid and (b) entire

bonus received along with insured amount either by you on maturity of your

policy(ies) or by your nominee in your absence during the currency of your

policy(ies) is free from income-tax under section 10(10D) of the Income-tax

Act.

16. On most of the LIC plans, you can borrow to take care of your immediate

monetary requirements. None of the policy benefits get affected as a result of

borrowal. Infact, policy loans offer one of the most attractive investment

opportunities.

17. You can pay your premium 3 years in advance at 5% discount. Chief

attractions of this advance payment of premium are (a) there is no possibility

of your overlooking your premium payment and getting your policy(ies)

lapsed wherever you are in the world and (b) you will be earning 5% tax-free

interest on the unutilized portion of the amount left with LIC after

apportioning the regular installment.

18. Most of the LIC plans come with Riders to take care of Total and

Permanent Disablement due to Accident and some of the most dread diseases

that may result in loss of income.

19. LIC pension plans that guarantee you life pension are extremely popular.

Due to these reasons and lot more, LIC should be your obvious choice for all

your life insurance requirements.

Page | 77

LIC is India‘s most trusted brand, INSURING LIVES AND

ENSURING SMILES from more than 50 Years.

SUPER BRAND & MOST TRUSTED SERVICE BRAND OF INDIA.

BEST IT USER IN INDIA (NASSCOM – 2003).

Largest Institutional Investor in India and Second largest in Asia

among insurers. (Source: Asian Investor)

LIC - An Institution Builder promoting many financial and insurance

institutes like NSE, NCDEX, LIC Mutual Fund, Stock Holding

Corporation of India, National Insurance Academy, Insurance Institute

of India etc.

LIC is the largest life insurer of India

Asset value as on 31.3.2004: 3,673,598.4 mn (INR).

Offers over 45 plans to cover your life at various stages.

Over 160 million customers and 1.1 million agents. It has underwritten

more than 160 million policies.

2,048 branch offices (all computerized) of which 2019 are networked

Page | 78

Recent News About LIC:

LIC to outdo first premium collection target for FY14 comapring

the current FY13, which has shown a little dipressed over the

FY12.

Source: Zee News; November 27, 2013

LIC has said it has asked the regulator for extending the deadline

for withdrawing existing products.

Source: Business Line, September 29, 2013

LIC cuts stake in Infosys to 4.95%; sells shares worth Rs 3,400 cr.

Source: Zee News; Octoberber 20, 2013

LIC reduces stake in Britannia to 3.26%.

Source: Zee News; Octoberber 01, 2013

LIC has decided to stop selling as many as 14 policies, including

two top selling products; Jeevan Mitra and Anmol Jeevan.

Source: NDTV; November 22, 2013

LIC has open special offices in Uttarakhand to settle claims which

occurred due to the natural calamity.

Source: One India; June 25, 2013

LIC is going to launch different innovative insurance policies by

FY14.

Source: Business Today; September 25, 2013

LIC is India’s the no. 1 BFSI brand ahead of all its competitors

across India.

Source: One India; June 25, 2013

The Indore division of LIC may claim itself to be at No 1, when it

comes to number of branches it has got on its fold. LIC’s

competitors have much less number.

Source: Times Of India; November 28, 2013

LIC has started levying service tax of around 3 per cent on all non-

unit-linked products from October 2013 which made the policy a

little bit costlier

Source: India; October 08, 2013

Page | 79

Accolades received during 2011-2012 by LIC:

Page | 80

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Challenges faced by LIC:

1. The Administrative staff in LIC is in deep slumber. Try writing a

complaint to them and they wont even bother to reply back. If you ask the

Branch Manager for the complaints book, he probably wont have it in place.

If an Agent complains against any staff, then the Agent is black listed and

next time onwards his work is not done.

2. In order to show a better performance & achieve branch Targets, Agents

are motivated by the Managers to split the policies. This not only adds to the

inconvinience of the policyholders but it also increases the expenses of LIC.

Competitions for Agents are held with Prizes being offered on the number of

policies sold and not on the number of lives insured. Therefore many Agents

are tempted to split the policies in order to get better prizes. However if an

agent wants the forms or sales literature, most of the time its out of stock. But

surprisingly just a week before any scheme is about to close, the office is

flooded with forms & sales literature. This is very disturbing.

3, As I earlier said, LIC is lacking in Effective Leadership in recent times.

Managers having designations like Marketing Manager or Sales Manager

donot have the capability to motivate an audience at a meeting. Yes this is

true even in a city like Mumbai. Even the Senior level managers cannot make

effective presentations or design a sales strategy. Their only mantra at an

Agents meeting is "Friends, bring more policies!‘. If you ask them how to

bring more policies, they wont know. Its a pity !

Page | 84

4. Though LIC has more than 2000 branches, they are not systematically

located. In Mumbai‘s Fort area, LIC has more than 20 branches within a

radius of 1.5kms. Whats the use ? In the suburbs where most of the people

reside, there are no branches at all. LIC has no branches in Bandra East, Khar

East & West, Santacruz East, Vile Parle East, Andheri West, Jogeshwari

West, Mahim, Matunga, etc. If LIC gives a thought to systematic relocation

of its offices, it will immensly help the policyholders.

5. Even though LIC claims to have taken several initiatives in the IT sector,

policyholders still face problems in revival of their policies, payment of

premium in several branches, change of mode, change of address, etc. The

After-sales policy services department needs to be revamped. Policyholders

feel that LIC agents are humble while selling a policy and thereafter they fail

to provide any service to the client. The truth is that LIC is so weak in policy

services department, that even a good agent finds it difficult to get the work

done from the administrative staff. To sum up, i would say that LIC will

never cheat a Policyholder in payment of claim, but at the same time

everyone will agree that LIC is not responsive to the needs of the customer. If

you have purchased an LIC policies then dont forget to pay the premium on

time, and when your policy gets matured LIC will honestly pay your Maturity

amount on time. The employees are sometimes rude in their behaviour with

the Policyholder. If a claim cheques is handed over by a courteous and

smiling employee of LIC, it will enhance the image of LIC in the mind of the

policyholder. Today LIC is not just an Insurance Company, LIC is a

Movement, LIC is a Cult, LIC is a Religion. Imagine 10 lac agents and 1 lac

employees serving 16 crore policyholders in India.

Page | 85

6. Daily you can hear someone or the other talking of LIC in local trains, at

fish markets, at restaurants, on News Channels, in your own offices, etc. As i

earlier said, LIC has started lacking in effective leadership. If a company like

LIC starts sponsoring irrelevant awards like Zee Cine awards which it had

done 2 years ago, then it will send the wrong message in the minds of the

policyholders. Imagine India‘s most famous institution sponsoring a Cine

Awards function stating that it was done to increase the brand awareness of

LIC. That sounded like a big joke. It is time that the top level officials of LIC

come out of their air-conditioned cabins and travel by public transport for

sometime in order to feel the pulse of the common man.

Page | 86

Recommendations:

Unit Linked Policies of Insurance Company should be bought for a

long term horizon. Insurance is a business of credibility. As we know in

service marketing proper care of the customers after and before buying the

product is an important criterion of competing in the market. So proper

Customer Relationship Management program should be adopted by the

company.

Term Plan Insurance policy should be bought if wants to Invest in Insurance.

The company should use proper Customer Relationship Programs. This is

because in the insurance sector proper care of the customer is necessary.

Since the company has its bases in urban areas only, it should think of

launching its policies in urban area as well as rural areas.

Implementation of proper technology should be done. It can adopt VSAT

technology or can implement payment of premium through ATM and they

should be revealed about due premium through SMS.

Proper advertising, sales promotion tools and public relation tools should be

implemented.

Page | 87

Conclusion:

After Finding‘s we can see about LIC features and his The tendency to take

the expedient approach and focus on the far right of the LIC spectrum,

Peacetime Contingency Operations and conduct training as usual, while

briefing that the LIC block has been checked, will lead us to a possibly fatal

false sense of security. Instinctive behavior and ingrained training must be

adjusted to fit new circumstances. STXs must be developed locally or

borrowed from units who have already been through the training. The

probability of becoming involved in a LIC operation is high. The potential to

attract international attention, even with limited forces, is also great. Units

have demonstrated that with a balanced training focus and proper preparation,

many pitfalls outlined above can be avoided LIC is not conventional warfare.

This is critical for the counterinsurgent to understand. The insurgent‘s violent

and coercive strategy is applied so as to achieve political, civil, military and

psychological results. Hence, the counterinsurgent must counter all of these

strategic elements individually. In addition, the target of the insurgent‘s

violence and coercion is the population. This is because the population is the

centre of gravity in LIC. Therefore the counterinsurgent must also focus on

the population to be successful. In terms of military principles in

counterinsurgency, doctrinal precision, professionalism, independence,

initiative, force precision, restraint, combined arms, precision engagement,

joint force, effective population based intelligence, integrated

communications, a civil affairs approach and high levels of training are

critical. So all policies and plan toally satisfied the customers.

Page | 88

Improvement of QDC:

Page | 89

Appendix – 1: SAMPLE QUESTIONNAIRE

NAME: GENDER:

PROFESSION: AGE:

Which Life Insurance Company‘s product do you buy / prefer most?

( ) LIC.

( )Other than LIC.

(1) In which plan do you want to buy or already bought?

( ) Endowment.

( ) Term.

( ) ULIP.

( ) Pension.

( ) Money back.

(2) What is your basic objective behind the life insurance coverage? Please tick the

appropriate box.

( ) Death benefit

( ) Living benefit/cash flow

( ) Income replacement

( ) Self insured

( ) Retirement supplement

( ) Tax benefit

(3) Mention any one LIC policy‘s name that you have currently?

(5) What is the current amount of premium that you are paying per annum?

(6)What according to you is Life Insurance?

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?

( ) 5-10 years.

( ) 10-15 years.

( ) Longer than 15 years.

Page | 90

Appendix – 2 : Respondent answers 01

NAME:Rajeev Jain GENDER: M

PROFESSION: Service AGE: 48

(1) Which Life Insurance Company‘s product do you buy / prefer most?

( Y ) LIC.

( )Other than LIC.

(2) In which plan do you want to buy or already bought?

( Y ) Endowment.

( ) Term.

( ) ULIP.

( ) Pension.

( Y ) Money back.

(3) What is your basic objective behind the life insurance coverage? Please tick the

appropriate box.

( Y ) Death benefit

( Y ) Living benefit/cash flow

( Y ) Income replacement

( Y ) Self insured

( ) Retirement supplement

( Y ) Tax benefit

(4) Mention any one LICpolicy‘s name that you have currently?

Children plan,Marriage endowment plan

(5) What is the current amount of premium that you are paying per annum?

5 Lakh

(6)What according to you is Life Insurance?

Secured child future

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?

( ) 5-10 years.

( ) 10-15 years.

( Y ) Longer than 15 years.

Page | 91

Respondent answers 02:

NAME: Abhisek Banerjee GENDER: M

PROFESSION: Service AGE: 27

(1) Which Life Insurance Company‘s product do you buy / prefer most?

( Y ) LIC.

( )Other than LIC.

(2) In which plan do you want to buy or already bought?

( Y ) Endowment.

( Y ) Term.

( ) ULIP.

( Y ) Pension.

( Y ) Money back.

(3) What is your basic objective behind the life insurance coverage? Please tick the

appropriate box.

( Y ) Death benefit

( Y ) Living benefit/cash flow

( Y ) Income replacement

( Y ) Self insured

( ) Retirement supplement

( Y ) Tax benefit

(4) Mention any one LICpolicy‘s name that you have currently?

Insurance is an investment which gives us the benefit ―Zindegi ke sath v…. zindegi ke

bad v‖

(5) What is the current amount of premium that you are paying per annum?

1 Lakh

(6)What according to you is Life Insurance?

Secured future

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?

( ) 5-10 years.

( ) 10-15 years.

( Y ) Longer than 15 years.

Page | 92

Respondent answers 03:

NAME:Vaibhav Gupta GENDER: M

PROFESSION: Service AGE: 29

(1) Which Life Insurance Company‘s product do you buy / prefer most?

( ) LIC.

( Y )Other than LIC.

(2) In which plan do you want to buy or already bought?

( ) Endowment.

( ) Term.

( Y ) ULIP.

( Y ) Pension.

( ) Money back.

(3) What is your basic objective behind the life insurance coverage? Please tick the

appropriate box.

( ) Death benefit

( Y ) Living benefit/cash flow

( Y ) Income replacement

( Y ) Self insured

( Y ) Retirement supplement

( Y ) Tax benefit

(4) Mention any one LICpolicy‘s name that you have currently?

Empower pension plan by birla sun life insurance

(5) What is the current amount of premium that you are paying per annum?

1 Lakh

(6)What according to you is Life Insurance?

It‘s a combination of different advantage like life cover and tax benefit

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?

( ) 5-10 years.

( ) 10-15 years.

( Y ) Longer than 15 years.

Page | 93

Respondent answers 04:

NAME:Sandeep Goyal GENDER: M

PROFESSION: Service AGE: 34

(1) Which Life Insurance Company‘s product do you buy / prefer most?

( ) LIC.

( Y )Other than LIC.

(2) In which plan do you want to buy or already bought?

( Y ) Endowment.

( ) Term.

( ) ULIP.

( Y ) Pension.

( Y ) Money back.

(3) What is your basic objective behind the life insurance coverage? Please tick the

appropriate box.

( Y ) Death benefit

( Y ) Living benefit/cash flow

( Y ) Income replacement

( Y ) Self insured

( ) Retirement supplement

( Y ) Tax benefit

(4) Mention any one LIC policy‘s name that you have currently?

Max life 20 year endowment by max life insurance

(5) What is the current amount of premium that you are paying per annum?

3 Lakh

(6)What according to you is Life Insurance?

Substitute of regular income after certain period of time

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?

( ) 5-10 years.

( ) 10-15 years.

( Y ) Longer than 15 years.

Page | 94

Respondent answers 05:

NAME:Raman Gupta GENDER: M

PROFESSION: Service AGE: 40

(1) Which Life Insurance Company‘s product do you buy / prefer most?

( Y ) LIC.

( )Other than LIC.

(2) In which plan do you want to buy or already bought?

( ) Endowment.

( Y ) Term.

( ) ULIP.

( ) Pension.

( Y ) Money back.

(3) What is your basic objective behind the life insurance coverage? Please tick the

appropriate box.

( ) Death benefit

( Y ) Living benefit/cash flow

( ) Income replacement

( Y ) Self insured

( Y ) Retirement supplement

( Y ) Tax benefit

(4) Mention any one LIC policy‘s name that you have currently?

Money back plan 20 years

(5) What is the current amount of premium that you are paying per annum?

Two lakh

(6)What according to you is Life Insurance?

Lfe insurance is something which gives you monetary benefits after certain period of

time

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?

( ) 5-10 years.

( Y ) 10-15 years.

( Y ) Longer than 15 years.

Page | 95

Respondent answers 06:

NAME:Durgesh Kumar GENDER: M

PROFESSION: Service AGE: 42

(1) Which Life Insurance Company‘s product do you buy / prefer most?

( Y ) LIC.

( )Other than LIC.

(2) In which plan do you want to buy or already bought?

( Y ) Endowment.

( Y ) Term.

( Y ) ULIP.

( ) Pension.

( Y ) Money back.

(3) What is your basic objective behind the life insurance coverage? Please tick the

appropriate box.

( Y ) Death benefit

( ) Living benefit/cash flow

( Y ) Income replacement

( Y ) Self insured

( ) Retirement supplement

( Y ) Tax benefit

(4) Mention any one LIC policy‘s name that you have currently?

Jeevan pramukh

(5) What is the current amount of premium that you are paying per annum?

15 lakh

(6)What according to you is Life Insurance?

Investment of extra income to financial secure of future

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?

( ) 5-10 years.

( ) 10-15 years.

( Y ) Longer than 15 years.

Page | 96

Respondent answers 07:

NAME:Amit Jain GENDER: M

PROFESSION: Bussiness AGE: 47

(1) Which Life Insurance Company‘s product do you buy / prefer most?

( Y ) LIC.

( )Other than LIC.

(2) In which plan do you want to buy or already bought?

( Y ) Endowment.

( Y ) Term.

( Y ) ULIP.

( ) Pension.

( Y ) Money back.

(3) What is your basic objective behind the life insurance coverage? Please tick the

appropriate box.

( Y ) Death benefit

( Y ) Living benefit/cash flow

( Y ) Income replacement

( Y ) Self insured

( ) Retirement supplement

( Y ) Tax benefit

(4) Mention any one LIC policy‘s name that you have currently?

Jeevan Shree-I

(5) What is the current amount of premium that you are paying per annum?

18 lakh

(6)What according to you is Life Insurance?

Life insurance is something which gives the financial security to the entire family.

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?

( ) 5-10 years.

( ) 10-15 years.

( Y ) Longer than 15 years.

Page | 97

Respondent answers 08:

NAME:Swatantra Sharma GENDER: M

PROFESSION: Service AGE: 54

(1) Which Life Insurance Company‘s product do you buy / prefer most?

( Y ) LIC.

( )Other than LIC.

(2) In which plan do you want to buy or already bought?

( ) Endowment.

( Y ) Term.

( ) ULIP.

( ) Pension.

( Y ) Money back.

(3) What is your basic objective behind the life insurance coverage? Please tick the

appropriate box.

( ) Death benefit

( Y ) Living benefit/cash flow

( Y ) Income replacement

( Y ) Self insured

( ) Retirement supplement

( Y ) Tax benefit

(4) Mention any one LIC policy‘s name that you have currently?

Jeevan anand,Jeevan mitra

(5) What is the current amount of premium that you are paying per annum?

Four lakh

(6)What according to you is Life Insurance?

Life insurance is a particular mechanism which gives the financial security to the family.

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?

( ) 5-10 years.

( ) 10-15 years.

( Y ) Longer than 15 years.

Page | 98

Respondent answers 09:

NAME:Somnath Banerjee GENDER: M

PROFESSION: Service AGE: 25

(1) Which Life Insurance Company‘s product do you buy / prefer most?

( Y ) LIC.

( )Other than LIC.

(2) In which plan do you want to buy or already bought?

( Y ) Endowment.

( Y ) Term.

( ) ULIP.

( ) Pension.

( ) Money back.

(3) What is your basic objective behind the life insurance coverage? Please tick the

appropriate box.

( Y ) Death benefit

( Y ) Living benefit/cash flow

( Y ) Income replacement

( Y ) Self insured

( ) Retirement supplement

( Y ) Tax benefit

(4) Mention any one LIC policy‘s name that you have currently?

Bima bachat

(5) What is the current amount of premium that you are paying per annum?

Three lakh

(6)What according to you is Life Insurance?

Life insurance policy is more important during the financial crises

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?

( ) 5-10 years.

( ) 10-15 years.

( Y ) Longer than 15 years.

Page | 99

Respondent answers 10:

NAME:Ritesh goyal GENDER: M

PROFESSION: Service AGE: 25

(1) Which Life Insurance Company‘s product do you buy / prefer most?

( Y ) LIC.

( )Other than LIC.

(2) In which plan do you want to buy or already bought?

( ) Endowment.

( Y ) Term.

( ) ULIP.

( ) Pension.

( Y ) Money back.

(3) What is your basic objective behind the life insurance coverage? Please tick the

appropriate box.

( Y ) Death benefit

( Y ) Living benefit/cash flow

( ) Income replacement

( Y ) Self insured

( ) Retirement supplement

( Y ) Tax benefit

(4) Mention any one LIC policy‘s name that you have currently?

MONEY BACK PLAN -25 years

(5) What is the current amount of premium that you are paying per annum?

One lakh

(6)What according to you is Life Insurance?

An investment –jiska fayada milta hai zindagi ke sath bhi zindagi ke bad bhi

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?

( ) 5-10 years.

( ) 10-15 years.

( Y ) Longer than 15 years.

Page | 100

Appendix - 3: GLOSSARY:

A

Accident

A sudden and unintentional happening leading to a loss. In the context of

life insurance, it is a sudden and unforeseen happening that causes disability

or death of the policyholder.

Accumulation account

It is a virtual account to keep the track of what all is paid and deducted till

date.

Agent (Life Advisor)

A representative of an insurance company authorized to sell insurance

policies.

Age Limits

The maximum and minimum ages above or below which an insurance

company will not accept applications for insurance from or will not renew a

policy with a person.

Annuitant

The person who will receive annuity benefits at stipulated intervals of time

like yearly / half yearly/ quarterly / monthly intervals.

Annuity

The amount paid under an annuity scheme at stipulated intervals like

yearly/half yearly/quarterly/monthly intervals.

Page | 101

Authority

The Insurance Regulatory and Development authority established under

sub-section (1) of section 3 of the Insurance Regulatory and Development

Authority Act, 1999.

Automatic cover maintenance

In case when the insure is unable to pay his/her for a fixed time period the

policy does not get lapsed and it is continued due to automatic cover

maintenance.

B

Beneficiary

The person who receives the benefit of a policy in case of death

during the term or the policyholder who receives the benefit on maturity.

Bonus

It is the total growth a person gets for the amount of money he paid till date

to the insurance company. It is paid on compound reversionary basis.

C

Claim

A request for payment of the contractual benefits by the insurer that is made

by the insured or the beneficiary.

Company’s expenses

It is the amount of money a company charges to manage its functioning and

the fund of the people.

Page | 102

D

Death Benefit

The benefit received by the beneficiary (ies) on the death of the insured

E

Endowment Plan

A plan in which the amount is paid to a policyholder if he outlives the

tenure of the contract or to the beneficiary if the insured person dies before

the date on which the policy matures.

F

Free look period

A free look period gives the client an option to review the terms and

conditions of the policy within 15 days from the date of receipt of the

policy document. Where he disagrees with the terms and conditions

stated in the policy, he has the option to return the policy, stating the

reasons for objection. In such a case the Policy would then be cancelled

and the premium paid by the client would be refunded to him, after

deducting: proportionate risk premium for the period on cover, expenses

incurred by the Insurance Company on medical examination of the client

and stamp duty charges.

Page | 103

H

Human Life Value

The present value of the family's share of the breadwinner's future earnings is

considered as Human Life Value, for purposes of life insurance.

I

IRDA

The acronym for the Insurance Regulatory and Development Authority of

India, it is the apex body overseeing the insurance business in India. It

protects the interests of the policyholders, regulates, promotes and ensures

orderly growth of the insurance industry and for matters connected therewith

or incidental thereto.

Investible portion

It is that part of the premium which is invested by the company and provides

growth to the amount accumulated.

L

Lapse

The termination of an insurance policy due to non-payment of premium.

License

Permission granted by IRDA to the applicant for commend cement and

operation of the insurance business in India.

Life Insurance

A contract provided for the payment of a sum of money to the person assured

or failing him, to the person entitled to receive the same, on the happening of

certain event for the consider ation. Here, sum of money refers to sum

assured/benefits; certain event refers to contingent event; consideration refers

to premium.

Page | 104

M

Maturity Date

The date on which the policy term expires.

Money Back Plan

A plan in which par t of the sum assured is paid back to the

policyholder at regular intervals.

Mortality

It is the amount of money a company charges in order to provide the risk

cover to a person‘s life.

N

Nomination

A provision by which a policyholder can designate any person to

receive the policy money in the event of his death.

Nominee

A person selected by the policyholder to receive the benefit in case of death of

the life insured.

P

Policyholder

The person who owns the policy, in this case, a life insurance policy.

Premium

It is the amount of policy money an insured person has to pay as per his/her

mode of payment.

Page | 105

R

Reinsurance

The transfer of part or whole of the risk by the original insurance

company to one or more reinsurers.

Riders

These are additional benefits provided to the life insured for a minimal

charge. It gives an additional risk covers like disability cover, illness due to

some major diseases, accidental loses, etc.

S

Surrender Value

A value payable if you want to surrender the plan before a claim arises.

T

Term

The tenure of the policy.

Term Cover

A type of life insurance where the sum assured is payable only in the

event of death of insurer during the specified term. In the case of survival,

the contract expires and the premium is not paid back to the insured.

Page | 106

W

Waiver of premium

when the life insured is different from proposer, in that case if due to some

uneven circumstances like death of proposer, the policy gets continued

without any payment for the premium.

Whole Life Insurance

A life insurance policy where benefits are payable to a beneficiary on

death of the insured, whenever that occurs. The premium payment can

happen for a specified number of years or throughout life.

Page | 107

BIBLIOGRAPHY:

Websites:-

www.licindia.in

www.wikipedia.org

www.icallinsurance.com

www.aom.com

www.bimaonline.com

www.irdaindia.org

http://www.religareinsurance.com

www.censusofindia.org

Books:-

Insurance Fundamentals, Environment and Procedures by B S Bodla,

M C Garg, K P Singh.

Life insurance and General Insurance from ICMR.

News Paper:-

Business standard

Times of India

Economic times

Hindustan times

Page | 108

Others:-

T.S. Ramakrishna Rau, Insurance Chronicle, January 2009

Endowment plans now , Business India [march 2009]

Niraj Bajaj , ‗insuring a bright future‘ ,business India , [April2008]

T s Rama Krishna Rao ‗Unit-linked insurance Products the Big

leap‘,insurance chronicle [march2009]

Naryan Krishnamurthy , ‗in the long run‘ outlook money [march2009]

Articles related to insurance from various news papers like The

Times of India, The Hindu, Economic Times, Business Standard etc

ICMR books on Financial Management and Business Research

Methods.

IRDA Journal

Dr. Ranjan Das and Prof. Ravindra C, Faculty Member, IIM – Kolkata

Prof. Rajarshi Ghosh, Faculty Member, IBS – Kolkata

Mr.Abhisek Banerjee, Manager – corporate solutions,BMT.

Page | 109

Business magazine:-

Yogkshem – LIC Magazine

Outlook Express

Business Today

Finance & Banking

Money Outlook

Blogs:-

http://insureguru.blog.com

http://www.firstpost.com/tag/lic

http://ourlic.blogspot.in

http://www.licindiainfo.com/blog