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LIFE INSURANCE CORPORATION OF INDIA
SERVICE MARKETING ndash REPORT
12102009
Presented To Submitted By
Prof KINGSHUK BHADURY MIHIR DHAKRAS ndash 18 NEERAJ SHARMA-20
SNEHA MISHRA-31 MANPREET SONI-45
CHETAN BOTHARA- 11 PARVEZ ALI- 22
DEEPIKA GARG-47 ANKIT BANNETT-04
RAJESH KUMAR- 42
PGPCS Batch - IV
DECLARATION
Hereby declare that the project report entitled ldquoINDIGO AIRLINESrdquo submitted for
the SERVICE MARKETING of POST GRADUATE PROGRAM IN
CORPORATE STUDIES is our original work and the project report has not
formed the basis for the award of any diploma degree associate ship fellowship
or similar other titles It has not been submitted to any other university or
institution for the award of any degree or diploma
Place ISCOM PUNE
Date 04-10-2009 MIHIR DHAKRAS ndash 18 NEERAJ SHARMA-20
SNEHA MISHRA-31 MANPREET SONI-45
CHETAN BOTHARA- 11 PARVEZ ALI- 22
DEEPIKA GARG-47 ANKIT BANNETT-04
RAJESH KUMAR
ACKNOWLEDGEMENT
Without a proper combination of inspection and perspiration itrsquos not easy to
achieve anything There is always a sense of gratitude which we express to others
for the help and the needy services they render during the different phases of our
lives We too would like to do it as we really wish to express my gratitude toward
all those who have been helpful to me directly or indirectly during the development
of this project
We would like to thank my professor Prof Kingshuk Bhadury who was always
there to help and guide us when we needed help His perceptive criticism kept us
working to make this project more full proof We are thankful to his for his
encouraging and valuable support Working under him was an extremely
knowledgeable and enriching experience for us We are very thankful to him for all
the value addition and enhancement done to us
MIHIR DHAKRAS ndash 18 NEERAJ SHARMA-20
SNEHA MISHRA-31 MANPREET SONI-45
CHETAN BOTHARA- 11 PARVEZ ALI- 22
DEEPIKA GARG-47 ANKIT BANNETT-04
RAJESH KUMAR- 42
What Is Life Insurance
Life insurance is a contract that pledges payment of an amount to the person assured (or his
nominee) on the happening of the event insured against
The contract is valid for payment of the insured amount during
The date of maturity or
Specified dates at periodic intervals or
Unfortunate death if it occurs earlier
Why We Need Insurance
Life insurance is a contact by which you can protect yourself against specific uncertainties by
paying a premium over a period Since each one of us during our lives are faced with numerous
risks-falling health financial losses accident and even fatalities
Protection
You need life insurance to be there and protect the people you love making sure that your family
has a means to look after itself after you are gone It is a thoughtful business concept designed to
protect the economic value of a human life for the benefit of those financially dependent on him
Retirement
Life insurance makes sure that you have regular income after you retire and helps you maintain
your standard of living It can ensure that your post-retirement years are spent in peace and
comfort
Savings and Investments
Insurance is a means to Save and Invest Your periodic premiums are like Savings and you are
assured of a lump sum amount on maturity A policy can come in handy at the time of your
childrsquos education or marriage Besides it can be used as supplemental retirement income
Tax Benefits
Life insurance is one of the best tax saving options today Your tax can be saved twice on a life
insurance policy-once when
HISTORY amp
BACKGROUND
OF LIC
The story of insurance is probably as old as the story of mankind The same instinct
that prompts modern businessmen today to secure themselves against loss and disaster
existed in primitive men also They too sought to avert the evil consequences of fire
and flood and loss of life and were willing to make some sort of sacrifice in order to
achieve security Though the concept of insurance is largely a development of the
recent past particularly after the industrial era ndash past few centuries ndash yet its
beginnings date back almost 6000 years
Life Insurance in its modern form came to India from England in the year 1818
Oriental Life Insurance Company started by Europeans in Calcutta was the first life
insurance company on Indian Soil All the insurance companies established during
that period were brought up with the purpose of looking after the needs of European
community and Indian natives were not being insured by these companies However
later with the efforts of eminent people like Babu Muttylal Seal the foreign life
insurance companies started insuring Indian lives But Indian lives were being treated
as sub-standard lives and heavy extra premiums were being charged on them Bombay
Mutual Life Assurance Society heralded the birth of first Indian life insurance
company in the year 1870 and covered Indian lives at normal rates Starting as Indian
enterprise with highly patriotic motives insurance companies came into existence to
carry the message of insurance and social security through insurance to various
sectors of society Bharat Insurance Company (1896) was also one of such companies
inspired by nationalism The Swadeshi movement of 1905-1907 gave rise to more
insurance companies The United India in Madras National Indian and National
Insurance in Calcutta and the Co-operative Assurance at Lahore were established in
1906 In 1907 Hindustan Co-operative Insurance Company took its birth in one of the
rooms of the Jorasanko house of the great poet Rabindranath Tagore in Calcutta The
Indian Mercantile General Assurance and Swadeshi Life (later Bombay Life) were
some of the companies established during the same period Prior to 1912 India had no
legislation to regulate insurance business In the year 1912 the Life Insurance
Companies Act and the Provident Fund Act were passed The Life Insurance
Companies Act 1912 made it necessary that the premium rate tables and periodical
valuations of companies should be certified by an actuary But the Act discriminated
between foreign and Indian companies on many accounts putting the Indian
companies at a disadvantage
The first two decades of the twentieth century saw lot of growth in insurance business
From 44 companies with total business-in-force as Rs2244 crore it rose to 176
companies with total business-in-force as Rs298 crore in 1938 During the
mushrooming of insurance companies many financially unsound concerns were also
floated which failed miserably The Insurance Act 1938 was the first legislation
governing not only life insurance but also non-life insurance to provide strict state
control over insurance business The demand for nationalization of life insurance
industry was made repeatedly in the past but it gathered momentum in 1944 when a
bill to amend the Life Insurance Act 1938 was introduced in the Legislative
Assembly However it was much later on the 19th of January 1956 that life
insurance in India was nationalized About 154 Indian insurance companies 16 non-
Indian companies and 75 provident were operating in India at the time of
nationalization Nationalization was accomplished in two stages initially the
management of the companies was taken over by means of an Ordinance and later
the ownership too by means of a comprehensive bill The Parliament of India passed
the Life Insurance Corporation Act on the 19th of June 1956 and the Life Insurance
Corporation of India was created on 1st September 1956 with the objective of
spreading life insurance much more widely and in particular to the rural areas with a
view to reach all insurable persons in the country providing them adequate financial
cover at a reasonable cost
LIC had 5 zonal offices 33 divisional offices and 212 branch offices apart from its
corporate office in the year 1956 Since life insurance contracts are long term
contracts and during the currency of the policy it requires a variety of services need
was felt in the later years to expand the operations and place a branch office at each
district headquarter re-organization of LIC took place and large numbers of new
branch offices were opened As a result of re-organisation servicing functions were
transferred to the branches and branches were made accounting units It worked
wonders with the performance of the corporation It may be seen that from about
20000 crores of New Business in 1957 the corporation crossed 100000 crores only in
the year 1969-70 and it took another 10 years for LIC to cross 200000 crore mark of
new business But with re-organisation happening in the early eighties by 1985-86
LIC had already crossed 700000 crore Sum Assured on new policies
Today LIC functions with 2048 fully computerized branch offices 100 divisional
offices 7 zonal offices and the Corporate office LICrsquos Wide Area Network covers
100 divisional offices and connects all the branches through a Metro Area Network
LIC has tied up with some Banks and Service providers to offer on-line premium
collection facility in selected cities LICrsquos ECS and ATM premium payment facility is
an addition to customer convenience Apart from on-line Kiosks and IVRS Info
Centres have been commissioned at Mumbai Ahmedabad Bangalore Chennai
Hyderabad Kolkata New Delhi Pune and many other cities With a vision of
providing easy access to its policyholders LIC has launched its SATELLITE
SAMPARK offices The satellite offices are smaller leaner and closer to the
customer The digitalized records of the satellite offices will facilitate anywhere
servicing and many other conveniences in the future
LIC continues to be the dominant life insurer even in the liberalized scenario of Indian
insurance and is moving fast on a new growth trajectory surpassing its own past
records LIC has issued over one crore policies during the current year It has crossed
the milestone of issuing 10132955 new policies by 15th Oct 2005 posting a healthy
growth rate of 1667 over the corresponding period of the previous year
From then to now LIC has crossed many milestones and has set unprecedented
performance records in various aspects of life insurance business The same motives
which inspired our forefathers to bring insurance into existence in this country inspire
us at LIC to take this message of protection to light the lamps of security in as many
homes as possible and to help the people in providing security to their families
OBJECTIVE OF LIC
Spread Life Insurance widely and in particular to the rural areas and to the
socially and economically backward classes with a view to reaching all
insurable persons in the country and providing them adequate financial cover
against death at a reasonable cost
Maximize mobilization of peoples savings by making insurance-linked savings
adequately attractive
Bear in mind in the investment of funds the primary obligation to its
policyholders whose money it holds in trust without losing sight of the interest
of the community as a whole the funds to be deployed to the best advantage of
the investors as well as the community as a whole keeping in view national
priorities and obligations of attractive return
Conduct business with utmost economy and with the full realization that the
moneys belong to the policyholders
Act as trustees of the insured public in their individual and collective
capacities
Meet the various life insurance needs of the community that would arise in the
changing social and economic environment
Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy
Promote amongst all agents and employees of the Corporation a sense of
participation pride and job satisfaction through discharge of their duties with
dedication towards achievement of Corporate Objective
MISSON amp VISION
Mission
Explore and enhance the quality of life of people through financial
security by providing products and services of aspired attributes with
competitive returns and by rendering resources for economic
development
Vision
A trans-nationally competitive financial conglomerate of significance
to societies and Pride of India
LIC Operate All Over India
SERVICE LINES OF
THE COMPNAY
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
UNIT PLANS
Unit plans are investment plans for those who realise the worth of hard-earned
money These plans help you see your savings yield rich benefits and help you
save tax even if you dont have consistent income
SPECIAL PLANS
LICrsquos Special Plans are not plans but opportunities that knock on your door
once in a lifetime These plans are a perfect blend of insurance investment and a
lifetime of happiness
GROUP SCHEME
Group Insurance Scheme is life insurance protection to groups of people This
scheme is ideal for employers associations societies etc and allows you to enjoy
group benefits at really low costs
WITHDRAWN PLAN
KEY EXECUTIVESMembers On The Board Of The Corporation
Shri T S VIJAYAN (Chairman)
Shri DK Mehrotra (Managing Director - LIC)
Shri Thomas Mathew T (Managing Director - LIC)
Shri AK Dasgupta (Managing Director - LIC)
Shri Ashok Chawla (Finance Secretary Ministry of Finance Govt of India)
Shri GC Chaturvedi (Additional Secretary Department of Financial Services
Ministry of Finance Govt of India)
Shri Yogesh Lohiya (Chairman cum Managing Director GIC of India)
Shri TC Venkat Subramanian (Chairman amp Managing Director Export Import
Bank of India)
Dr Sooranad Rajashekhran
Shri Monis R Kidwai
MAJOR PLAYERS
OF THE INDUSTRY
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
PGPCS Batch - IV
DECLARATION
Hereby declare that the project report entitled ldquoINDIGO AIRLINESrdquo submitted for
the SERVICE MARKETING of POST GRADUATE PROGRAM IN
CORPORATE STUDIES is our original work and the project report has not
formed the basis for the award of any diploma degree associate ship fellowship
or similar other titles It has not been submitted to any other university or
institution for the award of any degree or diploma
Place ISCOM PUNE
Date 04-10-2009 MIHIR DHAKRAS ndash 18 NEERAJ SHARMA-20
SNEHA MISHRA-31 MANPREET SONI-45
CHETAN BOTHARA- 11 PARVEZ ALI- 22
DEEPIKA GARG-47 ANKIT BANNETT-04
RAJESH KUMAR
ACKNOWLEDGEMENT
Without a proper combination of inspection and perspiration itrsquos not easy to
achieve anything There is always a sense of gratitude which we express to others
for the help and the needy services they render during the different phases of our
lives We too would like to do it as we really wish to express my gratitude toward
all those who have been helpful to me directly or indirectly during the development
of this project
We would like to thank my professor Prof Kingshuk Bhadury who was always
there to help and guide us when we needed help His perceptive criticism kept us
working to make this project more full proof We are thankful to his for his
encouraging and valuable support Working under him was an extremely
knowledgeable and enriching experience for us We are very thankful to him for all
the value addition and enhancement done to us
MIHIR DHAKRAS ndash 18 NEERAJ SHARMA-20
SNEHA MISHRA-31 MANPREET SONI-45
CHETAN BOTHARA- 11 PARVEZ ALI- 22
DEEPIKA GARG-47 ANKIT BANNETT-04
RAJESH KUMAR- 42
What Is Life Insurance
Life insurance is a contract that pledges payment of an amount to the person assured (or his
nominee) on the happening of the event insured against
The contract is valid for payment of the insured amount during
The date of maturity or
Specified dates at periodic intervals or
Unfortunate death if it occurs earlier
Why We Need Insurance
Life insurance is a contact by which you can protect yourself against specific uncertainties by
paying a premium over a period Since each one of us during our lives are faced with numerous
risks-falling health financial losses accident and even fatalities
Protection
You need life insurance to be there and protect the people you love making sure that your family
has a means to look after itself after you are gone It is a thoughtful business concept designed to
protect the economic value of a human life for the benefit of those financially dependent on him
Retirement
Life insurance makes sure that you have regular income after you retire and helps you maintain
your standard of living It can ensure that your post-retirement years are spent in peace and
comfort
Savings and Investments
Insurance is a means to Save and Invest Your periodic premiums are like Savings and you are
assured of a lump sum amount on maturity A policy can come in handy at the time of your
childrsquos education or marriage Besides it can be used as supplemental retirement income
Tax Benefits
Life insurance is one of the best tax saving options today Your tax can be saved twice on a life
insurance policy-once when
HISTORY amp
BACKGROUND
OF LIC
The story of insurance is probably as old as the story of mankind The same instinct
that prompts modern businessmen today to secure themselves against loss and disaster
existed in primitive men also They too sought to avert the evil consequences of fire
and flood and loss of life and were willing to make some sort of sacrifice in order to
achieve security Though the concept of insurance is largely a development of the
recent past particularly after the industrial era ndash past few centuries ndash yet its
beginnings date back almost 6000 years
Life Insurance in its modern form came to India from England in the year 1818
Oriental Life Insurance Company started by Europeans in Calcutta was the first life
insurance company on Indian Soil All the insurance companies established during
that period were brought up with the purpose of looking after the needs of European
community and Indian natives were not being insured by these companies However
later with the efforts of eminent people like Babu Muttylal Seal the foreign life
insurance companies started insuring Indian lives But Indian lives were being treated
as sub-standard lives and heavy extra premiums were being charged on them Bombay
Mutual Life Assurance Society heralded the birth of first Indian life insurance
company in the year 1870 and covered Indian lives at normal rates Starting as Indian
enterprise with highly patriotic motives insurance companies came into existence to
carry the message of insurance and social security through insurance to various
sectors of society Bharat Insurance Company (1896) was also one of such companies
inspired by nationalism The Swadeshi movement of 1905-1907 gave rise to more
insurance companies The United India in Madras National Indian and National
Insurance in Calcutta and the Co-operative Assurance at Lahore were established in
1906 In 1907 Hindustan Co-operative Insurance Company took its birth in one of the
rooms of the Jorasanko house of the great poet Rabindranath Tagore in Calcutta The
Indian Mercantile General Assurance and Swadeshi Life (later Bombay Life) were
some of the companies established during the same period Prior to 1912 India had no
legislation to regulate insurance business In the year 1912 the Life Insurance
Companies Act and the Provident Fund Act were passed The Life Insurance
Companies Act 1912 made it necessary that the premium rate tables and periodical
valuations of companies should be certified by an actuary But the Act discriminated
between foreign and Indian companies on many accounts putting the Indian
companies at a disadvantage
The first two decades of the twentieth century saw lot of growth in insurance business
From 44 companies with total business-in-force as Rs2244 crore it rose to 176
companies with total business-in-force as Rs298 crore in 1938 During the
mushrooming of insurance companies many financially unsound concerns were also
floated which failed miserably The Insurance Act 1938 was the first legislation
governing not only life insurance but also non-life insurance to provide strict state
control over insurance business The demand for nationalization of life insurance
industry was made repeatedly in the past but it gathered momentum in 1944 when a
bill to amend the Life Insurance Act 1938 was introduced in the Legislative
Assembly However it was much later on the 19th of January 1956 that life
insurance in India was nationalized About 154 Indian insurance companies 16 non-
Indian companies and 75 provident were operating in India at the time of
nationalization Nationalization was accomplished in two stages initially the
management of the companies was taken over by means of an Ordinance and later
the ownership too by means of a comprehensive bill The Parliament of India passed
the Life Insurance Corporation Act on the 19th of June 1956 and the Life Insurance
Corporation of India was created on 1st September 1956 with the objective of
spreading life insurance much more widely and in particular to the rural areas with a
view to reach all insurable persons in the country providing them adequate financial
cover at a reasonable cost
LIC had 5 zonal offices 33 divisional offices and 212 branch offices apart from its
corporate office in the year 1956 Since life insurance contracts are long term
contracts and during the currency of the policy it requires a variety of services need
was felt in the later years to expand the operations and place a branch office at each
district headquarter re-organization of LIC took place and large numbers of new
branch offices were opened As a result of re-organisation servicing functions were
transferred to the branches and branches were made accounting units It worked
wonders with the performance of the corporation It may be seen that from about
20000 crores of New Business in 1957 the corporation crossed 100000 crores only in
the year 1969-70 and it took another 10 years for LIC to cross 200000 crore mark of
new business But with re-organisation happening in the early eighties by 1985-86
LIC had already crossed 700000 crore Sum Assured on new policies
Today LIC functions with 2048 fully computerized branch offices 100 divisional
offices 7 zonal offices and the Corporate office LICrsquos Wide Area Network covers
100 divisional offices and connects all the branches through a Metro Area Network
LIC has tied up with some Banks and Service providers to offer on-line premium
collection facility in selected cities LICrsquos ECS and ATM premium payment facility is
an addition to customer convenience Apart from on-line Kiosks and IVRS Info
Centres have been commissioned at Mumbai Ahmedabad Bangalore Chennai
Hyderabad Kolkata New Delhi Pune and many other cities With a vision of
providing easy access to its policyholders LIC has launched its SATELLITE
SAMPARK offices The satellite offices are smaller leaner and closer to the
customer The digitalized records of the satellite offices will facilitate anywhere
servicing and many other conveniences in the future
LIC continues to be the dominant life insurer even in the liberalized scenario of Indian
insurance and is moving fast on a new growth trajectory surpassing its own past
records LIC has issued over one crore policies during the current year It has crossed
the milestone of issuing 10132955 new policies by 15th Oct 2005 posting a healthy
growth rate of 1667 over the corresponding period of the previous year
From then to now LIC has crossed many milestones and has set unprecedented
performance records in various aspects of life insurance business The same motives
which inspired our forefathers to bring insurance into existence in this country inspire
us at LIC to take this message of protection to light the lamps of security in as many
homes as possible and to help the people in providing security to their families
OBJECTIVE OF LIC
Spread Life Insurance widely and in particular to the rural areas and to the
socially and economically backward classes with a view to reaching all
insurable persons in the country and providing them adequate financial cover
against death at a reasonable cost
Maximize mobilization of peoples savings by making insurance-linked savings
adequately attractive
Bear in mind in the investment of funds the primary obligation to its
policyholders whose money it holds in trust without losing sight of the interest
of the community as a whole the funds to be deployed to the best advantage of
the investors as well as the community as a whole keeping in view national
priorities and obligations of attractive return
Conduct business with utmost economy and with the full realization that the
moneys belong to the policyholders
Act as trustees of the insured public in their individual and collective
capacities
Meet the various life insurance needs of the community that would arise in the
changing social and economic environment
Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy
Promote amongst all agents and employees of the Corporation a sense of
participation pride and job satisfaction through discharge of their duties with
dedication towards achievement of Corporate Objective
MISSON amp VISION
Mission
Explore and enhance the quality of life of people through financial
security by providing products and services of aspired attributes with
competitive returns and by rendering resources for economic
development
Vision
A trans-nationally competitive financial conglomerate of significance
to societies and Pride of India
LIC Operate All Over India
SERVICE LINES OF
THE COMPNAY
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
UNIT PLANS
Unit plans are investment plans for those who realise the worth of hard-earned
money These plans help you see your savings yield rich benefits and help you
save tax even if you dont have consistent income
SPECIAL PLANS
LICrsquos Special Plans are not plans but opportunities that knock on your door
once in a lifetime These plans are a perfect blend of insurance investment and a
lifetime of happiness
GROUP SCHEME
Group Insurance Scheme is life insurance protection to groups of people This
scheme is ideal for employers associations societies etc and allows you to enjoy
group benefits at really low costs
WITHDRAWN PLAN
KEY EXECUTIVESMembers On The Board Of The Corporation
Shri T S VIJAYAN (Chairman)
Shri DK Mehrotra (Managing Director - LIC)
Shri Thomas Mathew T (Managing Director - LIC)
Shri AK Dasgupta (Managing Director - LIC)
Shri Ashok Chawla (Finance Secretary Ministry of Finance Govt of India)
Shri GC Chaturvedi (Additional Secretary Department of Financial Services
Ministry of Finance Govt of India)
Shri Yogesh Lohiya (Chairman cum Managing Director GIC of India)
Shri TC Venkat Subramanian (Chairman amp Managing Director Export Import
Bank of India)
Dr Sooranad Rajashekhran
Shri Monis R Kidwai
MAJOR PLAYERS
OF THE INDUSTRY
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
RAJESH KUMAR
ACKNOWLEDGEMENT
Without a proper combination of inspection and perspiration itrsquos not easy to
achieve anything There is always a sense of gratitude which we express to others
for the help and the needy services they render during the different phases of our
lives We too would like to do it as we really wish to express my gratitude toward
all those who have been helpful to me directly or indirectly during the development
of this project
We would like to thank my professor Prof Kingshuk Bhadury who was always
there to help and guide us when we needed help His perceptive criticism kept us
working to make this project more full proof We are thankful to his for his
encouraging and valuable support Working under him was an extremely
knowledgeable and enriching experience for us We are very thankful to him for all
the value addition and enhancement done to us
MIHIR DHAKRAS ndash 18 NEERAJ SHARMA-20
SNEHA MISHRA-31 MANPREET SONI-45
CHETAN BOTHARA- 11 PARVEZ ALI- 22
DEEPIKA GARG-47 ANKIT BANNETT-04
RAJESH KUMAR- 42
What Is Life Insurance
Life insurance is a contract that pledges payment of an amount to the person assured (or his
nominee) on the happening of the event insured against
The contract is valid for payment of the insured amount during
The date of maturity or
Specified dates at periodic intervals or
Unfortunate death if it occurs earlier
Why We Need Insurance
Life insurance is a contact by which you can protect yourself against specific uncertainties by
paying a premium over a period Since each one of us during our lives are faced with numerous
risks-falling health financial losses accident and even fatalities
Protection
You need life insurance to be there and protect the people you love making sure that your family
has a means to look after itself after you are gone It is a thoughtful business concept designed to
protect the economic value of a human life for the benefit of those financially dependent on him
Retirement
Life insurance makes sure that you have regular income after you retire and helps you maintain
your standard of living It can ensure that your post-retirement years are spent in peace and
comfort
Savings and Investments
Insurance is a means to Save and Invest Your periodic premiums are like Savings and you are
assured of a lump sum amount on maturity A policy can come in handy at the time of your
childrsquos education or marriage Besides it can be used as supplemental retirement income
Tax Benefits
Life insurance is one of the best tax saving options today Your tax can be saved twice on a life
insurance policy-once when
HISTORY amp
BACKGROUND
OF LIC
The story of insurance is probably as old as the story of mankind The same instinct
that prompts modern businessmen today to secure themselves against loss and disaster
existed in primitive men also They too sought to avert the evil consequences of fire
and flood and loss of life and were willing to make some sort of sacrifice in order to
achieve security Though the concept of insurance is largely a development of the
recent past particularly after the industrial era ndash past few centuries ndash yet its
beginnings date back almost 6000 years
Life Insurance in its modern form came to India from England in the year 1818
Oriental Life Insurance Company started by Europeans in Calcutta was the first life
insurance company on Indian Soil All the insurance companies established during
that period were brought up with the purpose of looking after the needs of European
community and Indian natives were not being insured by these companies However
later with the efforts of eminent people like Babu Muttylal Seal the foreign life
insurance companies started insuring Indian lives But Indian lives were being treated
as sub-standard lives and heavy extra premiums were being charged on them Bombay
Mutual Life Assurance Society heralded the birth of first Indian life insurance
company in the year 1870 and covered Indian lives at normal rates Starting as Indian
enterprise with highly patriotic motives insurance companies came into existence to
carry the message of insurance and social security through insurance to various
sectors of society Bharat Insurance Company (1896) was also one of such companies
inspired by nationalism The Swadeshi movement of 1905-1907 gave rise to more
insurance companies The United India in Madras National Indian and National
Insurance in Calcutta and the Co-operative Assurance at Lahore were established in
1906 In 1907 Hindustan Co-operative Insurance Company took its birth in one of the
rooms of the Jorasanko house of the great poet Rabindranath Tagore in Calcutta The
Indian Mercantile General Assurance and Swadeshi Life (later Bombay Life) were
some of the companies established during the same period Prior to 1912 India had no
legislation to regulate insurance business In the year 1912 the Life Insurance
Companies Act and the Provident Fund Act were passed The Life Insurance
Companies Act 1912 made it necessary that the premium rate tables and periodical
valuations of companies should be certified by an actuary But the Act discriminated
between foreign and Indian companies on many accounts putting the Indian
companies at a disadvantage
The first two decades of the twentieth century saw lot of growth in insurance business
From 44 companies with total business-in-force as Rs2244 crore it rose to 176
companies with total business-in-force as Rs298 crore in 1938 During the
mushrooming of insurance companies many financially unsound concerns were also
floated which failed miserably The Insurance Act 1938 was the first legislation
governing not only life insurance but also non-life insurance to provide strict state
control over insurance business The demand for nationalization of life insurance
industry was made repeatedly in the past but it gathered momentum in 1944 when a
bill to amend the Life Insurance Act 1938 was introduced in the Legislative
Assembly However it was much later on the 19th of January 1956 that life
insurance in India was nationalized About 154 Indian insurance companies 16 non-
Indian companies and 75 provident were operating in India at the time of
nationalization Nationalization was accomplished in two stages initially the
management of the companies was taken over by means of an Ordinance and later
the ownership too by means of a comprehensive bill The Parliament of India passed
the Life Insurance Corporation Act on the 19th of June 1956 and the Life Insurance
Corporation of India was created on 1st September 1956 with the objective of
spreading life insurance much more widely and in particular to the rural areas with a
view to reach all insurable persons in the country providing them adequate financial
cover at a reasonable cost
LIC had 5 zonal offices 33 divisional offices and 212 branch offices apart from its
corporate office in the year 1956 Since life insurance contracts are long term
contracts and during the currency of the policy it requires a variety of services need
was felt in the later years to expand the operations and place a branch office at each
district headquarter re-organization of LIC took place and large numbers of new
branch offices were opened As a result of re-organisation servicing functions were
transferred to the branches and branches were made accounting units It worked
wonders with the performance of the corporation It may be seen that from about
20000 crores of New Business in 1957 the corporation crossed 100000 crores only in
the year 1969-70 and it took another 10 years for LIC to cross 200000 crore mark of
new business But with re-organisation happening in the early eighties by 1985-86
LIC had already crossed 700000 crore Sum Assured on new policies
Today LIC functions with 2048 fully computerized branch offices 100 divisional
offices 7 zonal offices and the Corporate office LICrsquos Wide Area Network covers
100 divisional offices and connects all the branches through a Metro Area Network
LIC has tied up with some Banks and Service providers to offer on-line premium
collection facility in selected cities LICrsquos ECS and ATM premium payment facility is
an addition to customer convenience Apart from on-line Kiosks and IVRS Info
Centres have been commissioned at Mumbai Ahmedabad Bangalore Chennai
Hyderabad Kolkata New Delhi Pune and many other cities With a vision of
providing easy access to its policyholders LIC has launched its SATELLITE
SAMPARK offices The satellite offices are smaller leaner and closer to the
customer The digitalized records of the satellite offices will facilitate anywhere
servicing and many other conveniences in the future
LIC continues to be the dominant life insurer even in the liberalized scenario of Indian
insurance and is moving fast on a new growth trajectory surpassing its own past
records LIC has issued over one crore policies during the current year It has crossed
the milestone of issuing 10132955 new policies by 15th Oct 2005 posting a healthy
growth rate of 1667 over the corresponding period of the previous year
From then to now LIC has crossed many milestones and has set unprecedented
performance records in various aspects of life insurance business The same motives
which inspired our forefathers to bring insurance into existence in this country inspire
us at LIC to take this message of protection to light the lamps of security in as many
homes as possible and to help the people in providing security to their families
OBJECTIVE OF LIC
Spread Life Insurance widely and in particular to the rural areas and to the
socially and economically backward classes with a view to reaching all
insurable persons in the country and providing them adequate financial cover
against death at a reasonable cost
Maximize mobilization of peoples savings by making insurance-linked savings
adequately attractive
Bear in mind in the investment of funds the primary obligation to its
policyholders whose money it holds in trust without losing sight of the interest
of the community as a whole the funds to be deployed to the best advantage of
the investors as well as the community as a whole keeping in view national
priorities and obligations of attractive return
Conduct business with utmost economy and with the full realization that the
moneys belong to the policyholders
Act as trustees of the insured public in their individual and collective
capacities
Meet the various life insurance needs of the community that would arise in the
changing social and economic environment
Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy
Promote amongst all agents and employees of the Corporation a sense of
participation pride and job satisfaction through discharge of their duties with
dedication towards achievement of Corporate Objective
MISSON amp VISION
Mission
Explore and enhance the quality of life of people through financial
security by providing products and services of aspired attributes with
competitive returns and by rendering resources for economic
development
Vision
A trans-nationally competitive financial conglomerate of significance
to societies and Pride of India
LIC Operate All Over India
SERVICE LINES OF
THE COMPNAY
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
UNIT PLANS
Unit plans are investment plans for those who realise the worth of hard-earned
money These plans help you see your savings yield rich benefits and help you
save tax even if you dont have consistent income
SPECIAL PLANS
LICrsquos Special Plans are not plans but opportunities that knock on your door
once in a lifetime These plans are a perfect blend of insurance investment and a
lifetime of happiness
GROUP SCHEME
Group Insurance Scheme is life insurance protection to groups of people This
scheme is ideal for employers associations societies etc and allows you to enjoy
group benefits at really low costs
WITHDRAWN PLAN
KEY EXECUTIVESMembers On The Board Of The Corporation
Shri T S VIJAYAN (Chairman)
Shri DK Mehrotra (Managing Director - LIC)
Shri Thomas Mathew T (Managing Director - LIC)
Shri AK Dasgupta (Managing Director - LIC)
Shri Ashok Chawla (Finance Secretary Ministry of Finance Govt of India)
Shri GC Chaturvedi (Additional Secretary Department of Financial Services
Ministry of Finance Govt of India)
Shri Yogesh Lohiya (Chairman cum Managing Director GIC of India)
Shri TC Venkat Subramanian (Chairman amp Managing Director Export Import
Bank of India)
Dr Sooranad Rajashekhran
Shri Monis R Kidwai
MAJOR PLAYERS
OF THE INDUSTRY
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
What Is Life Insurance
Life insurance is a contract that pledges payment of an amount to the person assured (or his
nominee) on the happening of the event insured against
The contract is valid for payment of the insured amount during
The date of maturity or
Specified dates at periodic intervals or
Unfortunate death if it occurs earlier
Why We Need Insurance
Life insurance is a contact by which you can protect yourself against specific uncertainties by
paying a premium over a period Since each one of us during our lives are faced with numerous
risks-falling health financial losses accident and even fatalities
Protection
You need life insurance to be there and protect the people you love making sure that your family
has a means to look after itself after you are gone It is a thoughtful business concept designed to
protect the economic value of a human life for the benefit of those financially dependent on him
Retirement
Life insurance makes sure that you have regular income after you retire and helps you maintain
your standard of living It can ensure that your post-retirement years are spent in peace and
comfort
Savings and Investments
Insurance is a means to Save and Invest Your periodic premiums are like Savings and you are
assured of a lump sum amount on maturity A policy can come in handy at the time of your
childrsquos education or marriage Besides it can be used as supplemental retirement income
Tax Benefits
Life insurance is one of the best tax saving options today Your tax can be saved twice on a life
insurance policy-once when
HISTORY amp
BACKGROUND
OF LIC
The story of insurance is probably as old as the story of mankind The same instinct
that prompts modern businessmen today to secure themselves against loss and disaster
existed in primitive men also They too sought to avert the evil consequences of fire
and flood and loss of life and were willing to make some sort of sacrifice in order to
achieve security Though the concept of insurance is largely a development of the
recent past particularly after the industrial era ndash past few centuries ndash yet its
beginnings date back almost 6000 years
Life Insurance in its modern form came to India from England in the year 1818
Oriental Life Insurance Company started by Europeans in Calcutta was the first life
insurance company on Indian Soil All the insurance companies established during
that period were brought up with the purpose of looking after the needs of European
community and Indian natives were not being insured by these companies However
later with the efforts of eminent people like Babu Muttylal Seal the foreign life
insurance companies started insuring Indian lives But Indian lives were being treated
as sub-standard lives and heavy extra premiums were being charged on them Bombay
Mutual Life Assurance Society heralded the birth of first Indian life insurance
company in the year 1870 and covered Indian lives at normal rates Starting as Indian
enterprise with highly patriotic motives insurance companies came into existence to
carry the message of insurance and social security through insurance to various
sectors of society Bharat Insurance Company (1896) was also one of such companies
inspired by nationalism The Swadeshi movement of 1905-1907 gave rise to more
insurance companies The United India in Madras National Indian and National
Insurance in Calcutta and the Co-operative Assurance at Lahore were established in
1906 In 1907 Hindustan Co-operative Insurance Company took its birth in one of the
rooms of the Jorasanko house of the great poet Rabindranath Tagore in Calcutta The
Indian Mercantile General Assurance and Swadeshi Life (later Bombay Life) were
some of the companies established during the same period Prior to 1912 India had no
legislation to regulate insurance business In the year 1912 the Life Insurance
Companies Act and the Provident Fund Act were passed The Life Insurance
Companies Act 1912 made it necessary that the premium rate tables and periodical
valuations of companies should be certified by an actuary But the Act discriminated
between foreign and Indian companies on many accounts putting the Indian
companies at a disadvantage
The first two decades of the twentieth century saw lot of growth in insurance business
From 44 companies with total business-in-force as Rs2244 crore it rose to 176
companies with total business-in-force as Rs298 crore in 1938 During the
mushrooming of insurance companies many financially unsound concerns were also
floated which failed miserably The Insurance Act 1938 was the first legislation
governing not only life insurance but also non-life insurance to provide strict state
control over insurance business The demand for nationalization of life insurance
industry was made repeatedly in the past but it gathered momentum in 1944 when a
bill to amend the Life Insurance Act 1938 was introduced in the Legislative
Assembly However it was much later on the 19th of January 1956 that life
insurance in India was nationalized About 154 Indian insurance companies 16 non-
Indian companies and 75 provident were operating in India at the time of
nationalization Nationalization was accomplished in two stages initially the
management of the companies was taken over by means of an Ordinance and later
the ownership too by means of a comprehensive bill The Parliament of India passed
the Life Insurance Corporation Act on the 19th of June 1956 and the Life Insurance
Corporation of India was created on 1st September 1956 with the objective of
spreading life insurance much more widely and in particular to the rural areas with a
view to reach all insurable persons in the country providing them adequate financial
cover at a reasonable cost
LIC had 5 zonal offices 33 divisional offices and 212 branch offices apart from its
corporate office in the year 1956 Since life insurance contracts are long term
contracts and during the currency of the policy it requires a variety of services need
was felt in the later years to expand the operations and place a branch office at each
district headquarter re-organization of LIC took place and large numbers of new
branch offices were opened As a result of re-organisation servicing functions were
transferred to the branches and branches were made accounting units It worked
wonders with the performance of the corporation It may be seen that from about
20000 crores of New Business in 1957 the corporation crossed 100000 crores only in
the year 1969-70 and it took another 10 years for LIC to cross 200000 crore mark of
new business But with re-organisation happening in the early eighties by 1985-86
LIC had already crossed 700000 crore Sum Assured on new policies
Today LIC functions with 2048 fully computerized branch offices 100 divisional
offices 7 zonal offices and the Corporate office LICrsquos Wide Area Network covers
100 divisional offices and connects all the branches through a Metro Area Network
LIC has tied up with some Banks and Service providers to offer on-line premium
collection facility in selected cities LICrsquos ECS and ATM premium payment facility is
an addition to customer convenience Apart from on-line Kiosks and IVRS Info
Centres have been commissioned at Mumbai Ahmedabad Bangalore Chennai
Hyderabad Kolkata New Delhi Pune and many other cities With a vision of
providing easy access to its policyholders LIC has launched its SATELLITE
SAMPARK offices The satellite offices are smaller leaner and closer to the
customer The digitalized records of the satellite offices will facilitate anywhere
servicing and many other conveniences in the future
LIC continues to be the dominant life insurer even in the liberalized scenario of Indian
insurance and is moving fast on a new growth trajectory surpassing its own past
records LIC has issued over one crore policies during the current year It has crossed
the milestone of issuing 10132955 new policies by 15th Oct 2005 posting a healthy
growth rate of 1667 over the corresponding period of the previous year
From then to now LIC has crossed many milestones and has set unprecedented
performance records in various aspects of life insurance business The same motives
which inspired our forefathers to bring insurance into existence in this country inspire
us at LIC to take this message of protection to light the lamps of security in as many
homes as possible and to help the people in providing security to their families
OBJECTIVE OF LIC
Spread Life Insurance widely and in particular to the rural areas and to the
socially and economically backward classes with a view to reaching all
insurable persons in the country and providing them adequate financial cover
against death at a reasonable cost
Maximize mobilization of peoples savings by making insurance-linked savings
adequately attractive
Bear in mind in the investment of funds the primary obligation to its
policyholders whose money it holds in trust without losing sight of the interest
of the community as a whole the funds to be deployed to the best advantage of
the investors as well as the community as a whole keeping in view national
priorities and obligations of attractive return
Conduct business with utmost economy and with the full realization that the
moneys belong to the policyholders
Act as trustees of the insured public in their individual and collective
capacities
Meet the various life insurance needs of the community that would arise in the
changing social and economic environment
Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy
Promote amongst all agents and employees of the Corporation a sense of
participation pride and job satisfaction through discharge of their duties with
dedication towards achievement of Corporate Objective
MISSON amp VISION
Mission
Explore and enhance the quality of life of people through financial
security by providing products and services of aspired attributes with
competitive returns and by rendering resources for economic
development
Vision
A trans-nationally competitive financial conglomerate of significance
to societies and Pride of India
LIC Operate All Over India
SERVICE LINES OF
THE COMPNAY
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
UNIT PLANS
Unit plans are investment plans for those who realise the worth of hard-earned
money These plans help you see your savings yield rich benefits and help you
save tax even if you dont have consistent income
SPECIAL PLANS
LICrsquos Special Plans are not plans but opportunities that knock on your door
once in a lifetime These plans are a perfect blend of insurance investment and a
lifetime of happiness
GROUP SCHEME
Group Insurance Scheme is life insurance protection to groups of people This
scheme is ideal for employers associations societies etc and allows you to enjoy
group benefits at really low costs
WITHDRAWN PLAN
KEY EXECUTIVESMembers On The Board Of The Corporation
Shri T S VIJAYAN (Chairman)
Shri DK Mehrotra (Managing Director - LIC)
Shri Thomas Mathew T (Managing Director - LIC)
Shri AK Dasgupta (Managing Director - LIC)
Shri Ashok Chawla (Finance Secretary Ministry of Finance Govt of India)
Shri GC Chaturvedi (Additional Secretary Department of Financial Services
Ministry of Finance Govt of India)
Shri Yogesh Lohiya (Chairman cum Managing Director GIC of India)
Shri TC Venkat Subramanian (Chairman amp Managing Director Export Import
Bank of India)
Dr Sooranad Rajashekhran
Shri Monis R Kidwai
MAJOR PLAYERS
OF THE INDUSTRY
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
Savings and Investments
Insurance is a means to Save and Invest Your periodic premiums are like Savings and you are
assured of a lump sum amount on maturity A policy can come in handy at the time of your
childrsquos education or marriage Besides it can be used as supplemental retirement income
Tax Benefits
Life insurance is one of the best tax saving options today Your tax can be saved twice on a life
insurance policy-once when
HISTORY amp
BACKGROUND
OF LIC
The story of insurance is probably as old as the story of mankind The same instinct
that prompts modern businessmen today to secure themselves against loss and disaster
existed in primitive men also They too sought to avert the evil consequences of fire
and flood and loss of life and were willing to make some sort of sacrifice in order to
achieve security Though the concept of insurance is largely a development of the
recent past particularly after the industrial era ndash past few centuries ndash yet its
beginnings date back almost 6000 years
Life Insurance in its modern form came to India from England in the year 1818
Oriental Life Insurance Company started by Europeans in Calcutta was the first life
insurance company on Indian Soil All the insurance companies established during
that period were brought up with the purpose of looking after the needs of European
community and Indian natives were not being insured by these companies However
later with the efforts of eminent people like Babu Muttylal Seal the foreign life
insurance companies started insuring Indian lives But Indian lives were being treated
as sub-standard lives and heavy extra premiums were being charged on them Bombay
Mutual Life Assurance Society heralded the birth of first Indian life insurance
company in the year 1870 and covered Indian lives at normal rates Starting as Indian
enterprise with highly patriotic motives insurance companies came into existence to
carry the message of insurance and social security through insurance to various
sectors of society Bharat Insurance Company (1896) was also one of such companies
inspired by nationalism The Swadeshi movement of 1905-1907 gave rise to more
insurance companies The United India in Madras National Indian and National
Insurance in Calcutta and the Co-operative Assurance at Lahore were established in
1906 In 1907 Hindustan Co-operative Insurance Company took its birth in one of the
rooms of the Jorasanko house of the great poet Rabindranath Tagore in Calcutta The
Indian Mercantile General Assurance and Swadeshi Life (later Bombay Life) were
some of the companies established during the same period Prior to 1912 India had no
legislation to regulate insurance business In the year 1912 the Life Insurance
Companies Act and the Provident Fund Act were passed The Life Insurance
Companies Act 1912 made it necessary that the premium rate tables and periodical
valuations of companies should be certified by an actuary But the Act discriminated
between foreign and Indian companies on many accounts putting the Indian
companies at a disadvantage
The first two decades of the twentieth century saw lot of growth in insurance business
From 44 companies with total business-in-force as Rs2244 crore it rose to 176
companies with total business-in-force as Rs298 crore in 1938 During the
mushrooming of insurance companies many financially unsound concerns were also
floated which failed miserably The Insurance Act 1938 was the first legislation
governing not only life insurance but also non-life insurance to provide strict state
control over insurance business The demand for nationalization of life insurance
industry was made repeatedly in the past but it gathered momentum in 1944 when a
bill to amend the Life Insurance Act 1938 was introduced in the Legislative
Assembly However it was much later on the 19th of January 1956 that life
insurance in India was nationalized About 154 Indian insurance companies 16 non-
Indian companies and 75 provident were operating in India at the time of
nationalization Nationalization was accomplished in two stages initially the
management of the companies was taken over by means of an Ordinance and later
the ownership too by means of a comprehensive bill The Parliament of India passed
the Life Insurance Corporation Act on the 19th of June 1956 and the Life Insurance
Corporation of India was created on 1st September 1956 with the objective of
spreading life insurance much more widely and in particular to the rural areas with a
view to reach all insurable persons in the country providing them adequate financial
cover at a reasonable cost
LIC had 5 zonal offices 33 divisional offices and 212 branch offices apart from its
corporate office in the year 1956 Since life insurance contracts are long term
contracts and during the currency of the policy it requires a variety of services need
was felt in the later years to expand the operations and place a branch office at each
district headquarter re-organization of LIC took place and large numbers of new
branch offices were opened As a result of re-organisation servicing functions were
transferred to the branches and branches were made accounting units It worked
wonders with the performance of the corporation It may be seen that from about
20000 crores of New Business in 1957 the corporation crossed 100000 crores only in
the year 1969-70 and it took another 10 years for LIC to cross 200000 crore mark of
new business But with re-organisation happening in the early eighties by 1985-86
LIC had already crossed 700000 crore Sum Assured on new policies
Today LIC functions with 2048 fully computerized branch offices 100 divisional
offices 7 zonal offices and the Corporate office LICrsquos Wide Area Network covers
100 divisional offices and connects all the branches through a Metro Area Network
LIC has tied up with some Banks and Service providers to offer on-line premium
collection facility in selected cities LICrsquos ECS and ATM premium payment facility is
an addition to customer convenience Apart from on-line Kiosks and IVRS Info
Centres have been commissioned at Mumbai Ahmedabad Bangalore Chennai
Hyderabad Kolkata New Delhi Pune and many other cities With a vision of
providing easy access to its policyholders LIC has launched its SATELLITE
SAMPARK offices The satellite offices are smaller leaner and closer to the
customer The digitalized records of the satellite offices will facilitate anywhere
servicing and many other conveniences in the future
LIC continues to be the dominant life insurer even in the liberalized scenario of Indian
insurance and is moving fast on a new growth trajectory surpassing its own past
records LIC has issued over one crore policies during the current year It has crossed
the milestone of issuing 10132955 new policies by 15th Oct 2005 posting a healthy
growth rate of 1667 over the corresponding period of the previous year
From then to now LIC has crossed many milestones and has set unprecedented
performance records in various aspects of life insurance business The same motives
which inspired our forefathers to bring insurance into existence in this country inspire
us at LIC to take this message of protection to light the lamps of security in as many
homes as possible and to help the people in providing security to their families
OBJECTIVE OF LIC
Spread Life Insurance widely and in particular to the rural areas and to the
socially and economically backward classes with a view to reaching all
insurable persons in the country and providing them adequate financial cover
against death at a reasonable cost
Maximize mobilization of peoples savings by making insurance-linked savings
adequately attractive
Bear in mind in the investment of funds the primary obligation to its
policyholders whose money it holds in trust without losing sight of the interest
of the community as a whole the funds to be deployed to the best advantage of
the investors as well as the community as a whole keeping in view national
priorities and obligations of attractive return
Conduct business with utmost economy and with the full realization that the
moneys belong to the policyholders
Act as trustees of the insured public in their individual and collective
capacities
Meet the various life insurance needs of the community that would arise in the
changing social and economic environment
Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy
Promote amongst all agents and employees of the Corporation a sense of
participation pride and job satisfaction through discharge of their duties with
dedication towards achievement of Corporate Objective
MISSON amp VISION
Mission
Explore and enhance the quality of life of people through financial
security by providing products and services of aspired attributes with
competitive returns and by rendering resources for economic
development
Vision
A trans-nationally competitive financial conglomerate of significance
to societies and Pride of India
LIC Operate All Over India
SERVICE LINES OF
THE COMPNAY
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
UNIT PLANS
Unit plans are investment plans for those who realise the worth of hard-earned
money These plans help you see your savings yield rich benefits and help you
save tax even if you dont have consistent income
SPECIAL PLANS
LICrsquos Special Plans are not plans but opportunities that knock on your door
once in a lifetime These plans are a perfect blend of insurance investment and a
lifetime of happiness
GROUP SCHEME
Group Insurance Scheme is life insurance protection to groups of people This
scheme is ideal for employers associations societies etc and allows you to enjoy
group benefits at really low costs
WITHDRAWN PLAN
KEY EXECUTIVESMembers On The Board Of The Corporation
Shri T S VIJAYAN (Chairman)
Shri DK Mehrotra (Managing Director - LIC)
Shri Thomas Mathew T (Managing Director - LIC)
Shri AK Dasgupta (Managing Director - LIC)
Shri Ashok Chawla (Finance Secretary Ministry of Finance Govt of India)
Shri GC Chaturvedi (Additional Secretary Department of Financial Services
Ministry of Finance Govt of India)
Shri Yogesh Lohiya (Chairman cum Managing Director GIC of India)
Shri TC Venkat Subramanian (Chairman amp Managing Director Export Import
Bank of India)
Dr Sooranad Rajashekhran
Shri Monis R Kidwai
MAJOR PLAYERS
OF THE INDUSTRY
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
The story of insurance is probably as old as the story of mankind The same instinct
that prompts modern businessmen today to secure themselves against loss and disaster
existed in primitive men also They too sought to avert the evil consequences of fire
and flood and loss of life and were willing to make some sort of sacrifice in order to
achieve security Though the concept of insurance is largely a development of the
recent past particularly after the industrial era ndash past few centuries ndash yet its
beginnings date back almost 6000 years
Life Insurance in its modern form came to India from England in the year 1818
Oriental Life Insurance Company started by Europeans in Calcutta was the first life
insurance company on Indian Soil All the insurance companies established during
that period were brought up with the purpose of looking after the needs of European
community and Indian natives were not being insured by these companies However
later with the efforts of eminent people like Babu Muttylal Seal the foreign life
insurance companies started insuring Indian lives But Indian lives were being treated
as sub-standard lives and heavy extra premiums were being charged on them Bombay
Mutual Life Assurance Society heralded the birth of first Indian life insurance
company in the year 1870 and covered Indian lives at normal rates Starting as Indian
enterprise with highly patriotic motives insurance companies came into existence to
carry the message of insurance and social security through insurance to various
sectors of society Bharat Insurance Company (1896) was also one of such companies
inspired by nationalism The Swadeshi movement of 1905-1907 gave rise to more
insurance companies The United India in Madras National Indian and National
Insurance in Calcutta and the Co-operative Assurance at Lahore were established in
1906 In 1907 Hindustan Co-operative Insurance Company took its birth in one of the
rooms of the Jorasanko house of the great poet Rabindranath Tagore in Calcutta The
Indian Mercantile General Assurance and Swadeshi Life (later Bombay Life) were
some of the companies established during the same period Prior to 1912 India had no
legislation to regulate insurance business In the year 1912 the Life Insurance
Companies Act and the Provident Fund Act were passed The Life Insurance
Companies Act 1912 made it necessary that the premium rate tables and periodical
valuations of companies should be certified by an actuary But the Act discriminated
between foreign and Indian companies on many accounts putting the Indian
companies at a disadvantage
The first two decades of the twentieth century saw lot of growth in insurance business
From 44 companies with total business-in-force as Rs2244 crore it rose to 176
companies with total business-in-force as Rs298 crore in 1938 During the
mushrooming of insurance companies many financially unsound concerns were also
floated which failed miserably The Insurance Act 1938 was the first legislation
governing not only life insurance but also non-life insurance to provide strict state
control over insurance business The demand for nationalization of life insurance
industry was made repeatedly in the past but it gathered momentum in 1944 when a
bill to amend the Life Insurance Act 1938 was introduced in the Legislative
Assembly However it was much later on the 19th of January 1956 that life
insurance in India was nationalized About 154 Indian insurance companies 16 non-
Indian companies and 75 provident were operating in India at the time of
nationalization Nationalization was accomplished in two stages initially the
management of the companies was taken over by means of an Ordinance and later
the ownership too by means of a comprehensive bill The Parliament of India passed
the Life Insurance Corporation Act on the 19th of June 1956 and the Life Insurance
Corporation of India was created on 1st September 1956 with the objective of
spreading life insurance much more widely and in particular to the rural areas with a
view to reach all insurable persons in the country providing them adequate financial
cover at a reasonable cost
LIC had 5 zonal offices 33 divisional offices and 212 branch offices apart from its
corporate office in the year 1956 Since life insurance contracts are long term
contracts and during the currency of the policy it requires a variety of services need
was felt in the later years to expand the operations and place a branch office at each
district headquarter re-organization of LIC took place and large numbers of new
branch offices were opened As a result of re-organisation servicing functions were
transferred to the branches and branches were made accounting units It worked
wonders with the performance of the corporation It may be seen that from about
20000 crores of New Business in 1957 the corporation crossed 100000 crores only in
the year 1969-70 and it took another 10 years for LIC to cross 200000 crore mark of
new business But with re-organisation happening in the early eighties by 1985-86
LIC had already crossed 700000 crore Sum Assured on new policies
Today LIC functions with 2048 fully computerized branch offices 100 divisional
offices 7 zonal offices and the Corporate office LICrsquos Wide Area Network covers
100 divisional offices and connects all the branches through a Metro Area Network
LIC has tied up with some Banks and Service providers to offer on-line premium
collection facility in selected cities LICrsquos ECS and ATM premium payment facility is
an addition to customer convenience Apart from on-line Kiosks and IVRS Info
Centres have been commissioned at Mumbai Ahmedabad Bangalore Chennai
Hyderabad Kolkata New Delhi Pune and many other cities With a vision of
providing easy access to its policyholders LIC has launched its SATELLITE
SAMPARK offices The satellite offices are smaller leaner and closer to the
customer The digitalized records of the satellite offices will facilitate anywhere
servicing and many other conveniences in the future
LIC continues to be the dominant life insurer even in the liberalized scenario of Indian
insurance and is moving fast on a new growth trajectory surpassing its own past
records LIC has issued over one crore policies during the current year It has crossed
the milestone of issuing 10132955 new policies by 15th Oct 2005 posting a healthy
growth rate of 1667 over the corresponding period of the previous year
From then to now LIC has crossed many milestones and has set unprecedented
performance records in various aspects of life insurance business The same motives
which inspired our forefathers to bring insurance into existence in this country inspire
us at LIC to take this message of protection to light the lamps of security in as many
homes as possible and to help the people in providing security to their families
OBJECTIVE OF LIC
Spread Life Insurance widely and in particular to the rural areas and to the
socially and economically backward classes with a view to reaching all
insurable persons in the country and providing them adequate financial cover
against death at a reasonable cost
Maximize mobilization of peoples savings by making insurance-linked savings
adequately attractive
Bear in mind in the investment of funds the primary obligation to its
policyholders whose money it holds in trust without losing sight of the interest
of the community as a whole the funds to be deployed to the best advantage of
the investors as well as the community as a whole keeping in view national
priorities and obligations of attractive return
Conduct business with utmost economy and with the full realization that the
moneys belong to the policyholders
Act as trustees of the insured public in their individual and collective
capacities
Meet the various life insurance needs of the community that would arise in the
changing social and economic environment
Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy
Promote amongst all agents and employees of the Corporation a sense of
participation pride and job satisfaction through discharge of their duties with
dedication towards achievement of Corporate Objective
MISSON amp VISION
Mission
Explore and enhance the quality of life of people through financial
security by providing products and services of aspired attributes with
competitive returns and by rendering resources for economic
development
Vision
A trans-nationally competitive financial conglomerate of significance
to societies and Pride of India
LIC Operate All Over India
SERVICE LINES OF
THE COMPNAY
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
UNIT PLANS
Unit plans are investment plans for those who realise the worth of hard-earned
money These plans help you see your savings yield rich benefits and help you
save tax even if you dont have consistent income
SPECIAL PLANS
LICrsquos Special Plans are not plans but opportunities that knock on your door
once in a lifetime These plans are a perfect blend of insurance investment and a
lifetime of happiness
GROUP SCHEME
Group Insurance Scheme is life insurance protection to groups of people This
scheme is ideal for employers associations societies etc and allows you to enjoy
group benefits at really low costs
WITHDRAWN PLAN
KEY EXECUTIVESMembers On The Board Of The Corporation
Shri T S VIJAYAN (Chairman)
Shri DK Mehrotra (Managing Director - LIC)
Shri Thomas Mathew T (Managing Director - LIC)
Shri AK Dasgupta (Managing Director - LIC)
Shri Ashok Chawla (Finance Secretary Ministry of Finance Govt of India)
Shri GC Chaturvedi (Additional Secretary Department of Financial Services
Ministry of Finance Govt of India)
Shri Yogesh Lohiya (Chairman cum Managing Director GIC of India)
Shri TC Venkat Subramanian (Chairman amp Managing Director Export Import
Bank of India)
Dr Sooranad Rajashekhran
Shri Monis R Kidwai
MAJOR PLAYERS
OF THE INDUSTRY
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
sectors of society Bharat Insurance Company (1896) was also one of such companies
inspired by nationalism The Swadeshi movement of 1905-1907 gave rise to more
insurance companies The United India in Madras National Indian and National
Insurance in Calcutta and the Co-operative Assurance at Lahore were established in
1906 In 1907 Hindustan Co-operative Insurance Company took its birth in one of the
rooms of the Jorasanko house of the great poet Rabindranath Tagore in Calcutta The
Indian Mercantile General Assurance and Swadeshi Life (later Bombay Life) were
some of the companies established during the same period Prior to 1912 India had no
legislation to regulate insurance business In the year 1912 the Life Insurance
Companies Act and the Provident Fund Act were passed The Life Insurance
Companies Act 1912 made it necessary that the premium rate tables and periodical
valuations of companies should be certified by an actuary But the Act discriminated
between foreign and Indian companies on many accounts putting the Indian
companies at a disadvantage
The first two decades of the twentieth century saw lot of growth in insurance business
From 44 companies with total business-in-force as Rs2244 crore it rose to 176
companies with total business-in-force as Rs298 crore in 1938 During the
mushrooming of insurance companies many financially unsound concerns were also
floated which failed miserably The Insurance Act 1938 was the first legislation
governing not only life insurance but also non-life insurance to provide strict state
control over insurance business The demand for nationalization of life insurance
industry was made repeatedly in the past but it gathered momentum in 1944 when a
bill to amend the Life Insurance Act 1938 was introduced in the Legislative
Assembly However it was much later on the 19th of January 1956 that life
insurance in India was nationalized About 154 Indian insurance companies 16 non-
Indian companies and 75 provident were operating in India at the time of
nationalization Nationalization was accomplished in two stages initially the
management of the companies was taken over by means of an Ordinance and later
the ownership too by means of a comprehensive bill The Parliament of India passed
the Life Insurance Corporation Act on the 19th of June 1956 and the Life Insurance
Corporation of India was created on 1st September 1956 with the objective of
spreading life insurance much more widely and in particular to the rural areas with a
view to reach all insurable persons in the country providing them adequate financial
cover at a reasonable cost
LIC had 5 zonal offices 33 divisional offices and 212 branch offices apart from its
corporate office in the year 1956 Since life insurance contracts are long term
contracts and during the currency of the policy it requires a variety of services need
was felt in the later years to expand the operations and place a branch office at each
district headquarter re-organization of LIC took place and large numbers of new
branch offices were opened As a result of re-organisation servicing functions were
transferred to the branches and branches were made accounting units It worked
wonders with the performance of the corporation It may be seen that from about
20000 crores of New Business in 1957 the corporation crossed 100000 crores only in
the year 1969-70 and it took another 10 years for LIC to cross 200000 crore mark of
new business But with re-organisation happening in the early eighties by 1985-86
LIC had already crossed 700000 crore Sum Assured on new policies
Today LIC functions with 2048 fully computerized branch offices 100 divisional
offices 7 zonal offices and the Corporate office LICrsquos Wide Area Network covers
100 divisional offices and connects all the branches through a Metro Area Network
LIC has tied up with some Banks and Service providers to offer on-line premium
collection facility in selected cities LICrsquos ECS and ATM premium payment facility is
an addition to customer convenience Apart from on-line Kiosks and IVRS Info
Centres have been commissioned at Mumbai Ahmedabad Bangalore Chennai
Hyderabad Kolkata New Delhi Pune and many other cities With a vision of
providing easy access to its policyholders LIC has launched its SATELLITE
SAMPARK offices The satellite offices are smaller leaner and closer to the
customer The digitalized records of the satellite offices will facilitate anywhere
servicing and many other conveniences in the future
LIC continues to be the dominant life insurer even in the liberalized scenario of Indian
insurance and is moving fast on a new growth trajectory surpassing its own past
records LIC has issued over one crore policies during the current year It has crossed
the milestone of issuing 10132955 new policies by 15th Oct 2005 posting a healthy
growth rate of 1667 over the corresponding period of the previous year
From then to now LIC has crossed many milestones and has set unprecedented
performance records in various aspects of life insurance business The same motives
which inspired our forefathers to bring insurance into existence in this country inspire
us at LIC to take this message of protection to light the lamps of security in as many
homes as possible and to help the people in providing security to their families
OBJECTIVE OF LIC
Spread Life Insurance widely and in particular to the rural areas and to the
socially and economically backward classes with a view to reaching all
insurable persons in the country and providing them adequate financial cover
against death at a reasonable cost
Maximize mobilization of peoples savings by making insurance-linked savings
adequately attractive
Bear in mind in the investment of funds the primary obligation to its
policyholders whose money it holds in trust without losing sight of the interest
of the community as a whole the funds to be deployed to the best advantage of
the investors as well as the community as a whole keeping in view national
priorities and obligations of attractive return
Conduct business with utmost economy and with the full realization that the
moneys belong to the policyholders
Act as trustees of the insured public in their individual and collective
capacities
Meet the various life insurance needs of the community that would arise in the
changing social and economic environment
Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy
Promote amongst all agents and employees of the Corporation a sense of
participation pride and job satisfaction through discharge of their duties with
dedication towards achievement of Corporate Objective
MISSON amp VISION
Mission
Explore and enhance the quality of life of people through financial
security by providing products and services of aspired attributes with
competitive returns and by rendering resources for economic
development
Vision
A trans-nationally competitive financial conglomerate of significance
to societies and Pride of India
LIC Operate All Over India
SERVICE LINES OF
THE COMPNAY
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
UNIT PLANS
Unit plans are investment plans for those who realise the worth of hard-earned
money These plans help you see your savings yield rich benefits and help you
save tax even if you dont have consistent income
SPECIAL PLANS
LICrsquos Special Plans are not plans but opportunities that knock on your door
once in a lifetime These plans are a perfect blend of insurance investment and a
lifetime of happiness
GROUP SCHEME
Group Insurance Scheme is life insurance protection to groups of people This
scheme is ideal for employers associations societies etc and allows you to enjoy
group benefits at really low costs
WITHDRAWN PLAN
KEY EXECUTIVESMembers On The Board Of The Corporation
Shri T S VIJAYAN (Chairman)
Shri DK Mehrotra (Managing Director - LIC)
Shri Thomas Mathew T (Managing Director - LIC)
Shri AK Dasgupta (Managing Director - LIC)
Shri Ashok Chawla (Finance Secretary Ministry of Finance Govt of India)
Shri GC Chaturvedi (Additional Secretary Department of Financial Services
Ministry of Finance Govt of India)
Shri Yogesh Lohiya (Chairman cum Managing Director GIC of India)
Shri TC Venkat Subramanian (Chairman amp Managing Director Export Import
Bank of India)
Dr Sooranad Rajashekhran
Shri Monis R Kidwai
MAJOR PLAYERS
OF THE INDUSTRY
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
management of the companies was taken over by means of an Ordinance and later
the ownership too by means of a comprehensive bill The Parliament of India passed
the Life Insurance Corporation Act on the 19th of June 1956 and the Life Insurance
Corporation of India was created on 1st September 1956 with the objective of
spreading life insurance much more widely and in particular to the rural areas with a
view to reach all insurable persons in the country providing them adequate financial
cover at a reasonable cost
LIC had 5 zonal offices 33 divisional offices and 212 branch offices apart from its
corporate office in the year 1956 Since life insurance contracts are long term
contracts and during the currency of the policy it requires a variety of services need
was felt in the later years to expand the operations and place a branch office at each
district headquarter re-organization of LIC took place and large numbers of new
branch offices were opened As a result of re-organisation servicing functions were
transferred to the branches and branches were made accounting units It worked
wonders with the performance of the corporation It may be seen that from about
20000 crores of New Business in 1957 the corporation crossed 100000 crores only in
the year 1969-70 and it took another 10 years for LIC to cross 200000 crore mark of
new business But with re-organisation happening in the early eighties by 1985-86
LIC had already crossed 700000 crore Sum Assured on new policies
Today LIC functions with 2048 fully computerized branch offices 100 divisional
offices 7 zonal offices and the Corporate office LICrsquos Wide Area Network covers
100 divisional offices and connects all the branches through a Metro Area Network
LIC has tied up with some Banks and Service providers to offer on-line premium
collection facility in selected cities LICrsquos ECS and ATM premium payment facility is
an addition to customer convenience Apart from on-line Kiosks and IVRS Info
Centres have been commissioned at Mumbai Ahmedabad Bangalore Chennai
Hyderabad Kolkata New Delhi Pune and many other cities With a vision of
providing easy access to its policyholders LIC has launched its SATELLITE
SAMPARK offices The satellite offices are smaller leaner and closer to the
customer The digitalized records of the satellite offices will facilitate anywhere
servicing and many other conveniences in the future
LIC continues to be the dominant life insurer even in the liberalized scenario of Indian
insurance and is moving fast on a new growth trajectory surpassing its own past
records LIC has issued over one crore policies during the current year It has crossed
the milestone of issuing 10132955 new policies by 15th Oct 2005 posting a healthy
growth rate of 1667 over the corresponding period of the previous year
From then to now LIC has crossed many milestones and has set unprecedented
performance records in various aspects of life insurance business The same motives
which inspired our forefathers to bring insurance into existence in this country inspire
us at LIC to take this message of protection to light the lamps of security in as many
homes as possible and to help the people in providing security to their families
OBJECTIVE OF LIC
Spread Life Insurance widely and in particular to the rural areas and to the
socially and economically backward classes with a view to reaching all
insurable persons in the country and providing them adequate financial cover
against death at a reasonable cost
Maximize mobilization of peoples savings by making insurance-linked savings
adequately attractive
Bear in mind in the investment of funds the primary obligation to its
policyholders whose money it holds in trust without losing sight of the interest
of the community as a whole the funds to be deployed to the best advantage of
the investors as well as the community as a whole keeping in view national
priorities and obligations of attractive return
Conduct business with utmost economy and with the full realization that the
moneys belong to the policyholders
Act as trustees of the insured public in their individual and collective
capacities
Meet the various life insurance needs of the community that would arise in the
changing social and economic environment
Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy
Promote amongst all agents and employees of the Corporation a sense of
participation pride and job satisfaction through discharge of their duties with
dedication towards achievement of Corporate Objective
MISSON amp VISION
Mission
Explore and enhance the quality of life of people through financial
security by providing products and services of aspired attributes with
competitive returns and by rendering resources for economic
development
Vision
A trans-nationally competitive financial conglomerate of significance
to societies and Pride of India
LIC Operate All Over India
SERVICE LINES OF
THE COMPNAY
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
UNIT PLANS
Unit plans are investment plans for those who realise the worth of hard-earned
money These plans help you see your savings yield rich benefits and help you
save tax even if you dont have consistent income
SPECIAL PLANS
LICrsquos Special Plans are not plans but opportunities that knock on your door
once in a lifetime These plans are a perfect blend of insurance investment and a
lifetime of happiness
GROUP SCHEME
Group Insurance Scheme is life insurance protection to groups of people This
scheme is ideal for employers associations societies etc and allows you to enjoy
group benefits at really low costs
WITHDRAWN PLAN
KEY EXECUTIVESMembers On The Board Of The Corporation
Shri T S VIJAYAN (Chairman)
Shri DK Mehrotra (Managing Director - LIC)
Shri Thomas Mathew T (Managing Director - LIC)
Shri AK Dasgupta (Managing Director - LIC)
Shri Ashok Chawla (Finance Secretary Ministry of Finance Govt of India)
Shri GC Chaturvedi (Additional Secretary Department of Financial Services
Ministry of Finance Govt of India)
Shri Yogesh Lohiya (Chairman cum Managing Director GIC of India)
Shri TC Venkat Subramanian (Chairman amp Managing Director Export Import
Bank of India)
Dr Sooranad Rajashekhran
Shri Monis R Kidwai
MAJOR PLAYERS
OF THE INDUSTRY
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
Hyderabad Kolkata New Delhi Pune and many other cities With a vision of
providing easy access to its policyholders LIC has launched its SATELLITE
SAMPARK offices The satellite offices are smaller leaner and closer to the
customer The digitalized records of the satellite offices will facilitate anywhere
servicing and many other conveniences in the future
LIC continues to be the dominant life insurer even in the liberalized scenario of Indian
insurance and is moving fast on a new growth trajectory surpassing its own past
records LIC has issued over one crore policies during the current year It has crossed
the milestone of issuing 10132955 new policies by 15th Oct 2005 posting a healthy
growth rate of 1667 over the corresponding period of the previous year
From then to now LIC has crossed many milestones and has set unprecedented
performance records in various aspects of life insurance business The same motives
which inspired our forefathers to bring insurance into existence in this country inspire
us at LIC to take this message of protection to light the lamps of security in as many
homes as possible and to help the people in providing security to their families
OBJECTIVE OF LIC
Spread Life Insurance widely and in particular to the rural areas and to the
socially and economically backward classes with a view to reaching all
insurable persons in the country and providing them adequate financial cover
against death at a reasonable cost
Maximize mobilization of peoples savings by making insurance-linked savings
adequately attractive
Bear in mind in the investment of funds the primary obligation to its
policyholders whose money it holds in trust without losing sight of the interest
of the community as a whole the funds to be deployed to the best advantage of
the investors as well as the community as a whole keeping in view national
priorities and obligations of attractive return
Conduct business with utmost economy and with the full realization that the
moneys belong to the policyholders
Act as trustees of the insured public in their individual and collective
capacities
Meet the various life insurance needs of the community that would arise in the
changing social and economic environment
Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy
Promote amongst all agents and employees of the Corporation a sense of
participation pride and job satisfaction through discharge of their duties with
dedication towards achievement of Corporate Objective
MISSON amp VISION
Mission
Explore and enhance the quality of life of people through financial
security by providing products and services of aspired attributes with
competitive returns and by rendering resources for economic
development
Vision
A trans-nationally competitive financial conglomerate of significance
to societies and Pride of India
LIC Operate All Over India
SERVICE LINES OF
THE COMPNAY
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
UNIT PLANS
Unit plans are investment plans for those who realise the worth of hard-earned
money These plans help you see your savings yield rich benefits and help you
save tax even if you dont have consistent income
SPECIAL PLANS
LICrsquos Special Plans are not plans but opportunities that knock on your door
once in a lifetime These plans are a perfect blend of insurance investment and a
lifetime of happiness
GROUP SCHEME
Group Insurance Scheme is life insurance protection to groups of people This
scheme is ideal for employers associations societies etc and allows you to enjoy
group benefits at really low costs
WITHDRAWN PLAN
KEY EXECUTIVESMembers On The Board Of The Corporation
Shri T S VIJAYAN (Chairman)
Shri DK Mehrotra (Managing Director - LIC)
Shri Thomas Mathew T (Managing Director - LIC)
Shri AK Dasgupta (Managing Director - LIC)
Shri Ashok Chawla (Finance Secretary Ministry of Finance Govt of India)
Shri GC Chaturvedi (Additional Secretary Department of Financial Services
Ministry of Finance Govt of India)
Shri Yogesh Lohiya (Chairman cum Managing Director GIC of India)
Shri TC Venkat Subramanian (Chairman amp Managing Director Export Import
Bank of India)
Dr Sooranad Rajashekhran
Shri Monis R Kidwai
MAJOR PLAYERS
OF THE INDUSTRY
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
Bear in mind in the investment of funds the primary obligation to its
policyholders whose money it holds in trust without losing sight of the interest
of the community as a whole the funds to be deployed to the best advantage of
the investors as well as the community as a whole keeping in view national
priorities and obligations of attractive return
Conduct business with utmost economy and with the full realization that the
moneys belong to the policyholders
Act as trustees of the insured public in their individual and collective
capacities
Meet the various life insurance needs of the community that would arise in the
changing social and economic environment
Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy
Promote amongst all agents and employees of the Corporation a sense of
participation pride and job satisfaction through discharge of their duties with
dedication towards achievement of Corporate Objective
MISSON amp VISION
Mission
Explore and enhance the quality of life of people through financial
security by providing products and services of aspired attributes with
competitive returns and by rendering resources for economic
development
Vision
A trans-nationally competitive financial conglomerate of significance
to societies and Pride of India
LIC Operate All Over India
SERVICE LINES OF
THE COMPNAY
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
UNIT PLANS
Unit plans are investment plans for those who realise the worth of hard-earned
money These plans help you see your savings yield rich benefits and help you
save tax even if you dont have consistent income
SPECIAL PLANS
LICrsquos Special Plans are not plans but opportunities that knock on your door
once in a lifetime These plans are a perfect blend of insurance investment and a
lifetime of happiness
GROUP SCHEME
Group Insurance Scheme is life insurance protection to groups of people This
scheme is ideal for employers associations societies etc and allows you to enjoy
group benefits at really low costs
WITHDRAWN PLAN
KEY EXECUTIVESMembers On The Board Of The Corporation
Shri T S VIJAYAN (Chairman)
Shri DK Mehrotra (Managing Director - LIC)
Shri Thomas Mathew T (Managing Director - LIC)
Shri AK Dasgupta (Managing Director - LIC)
Shri Ashok Chawla (Finance Secretary Ministry of Finance Govt of India)
Shri GC Chaturvedi (Additional Secretary Department of Financial Services
Ministry of Finance Govt of India)
Shri Yogesh Lohiya (Chairman cum Managing Director GIC of India)
Shri TC Venkat Subramanian (Chairman amp Managing Director Export Import
Bank of India)
Dr Sooranad Rajashekhran
Shri Monis R Kidwai
MAJOR PLAYERS
OF THE INDUSTRY
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
A trans-nationally competitive financial conglomerate of significance
to societies and Pride of India
LIC Operate All Over India
SERVICE LINES OF
THE COMPNAY
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
UNIT PLANS
Unit plans are investment plans for those who realise the worth of hard-earned
money These plans help you see your savings yield rich benefits and help you
save tax even if you dont have consistent income
SPECIAL PLANS
LICrsquos Special Plans are not plans but opportunities that knock on your door
once in a lifetime These plans are a perfect blend of insurance investment and a
lifetime of happiness
GROUP SCHEME
Group Insurance Scheme is life insurance protection to groups of people This
scheme is ideal for employers associations societies etc and allows you to enjoy
group benefits at really low costs
WITHDRAWN PLAN
KEY EXECUTIVESMembers On The Board Of The Corporation
Shri T S VIJAYAN (Chairman)
Shri DK Mehrotra (Managing Director - LIC)
Shri Thomas Mathew T (Managing Director - LIC)
Shri AK Dasgupta (Managing Director - LIC)
Shri Ashok Chawla (Finance Secretary Ministry of Finance Govt of India)
Shri GC Chaturvedi (Additional Secretary Department of Financial Services
Ministry of Finance Govt of India)
Shri Yogesh Lohiya (Chairman cum Managing Director GIC of India)
Shri TC Venkat Subramanian (Chairman amp Managing Director Export Import
Bank of India)
Dr Sooranad Rajashekhran
Shri Monis R Kidwai
MAJOR PLAYERS
OF THE INDUSTRY
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
LIC Operate All Over India
SERVICE LINES OF
THE COMPNAY
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
UNIT PLANS
Unit plans are investment plans for those who realise the worth of hard-earned
money These plans help you see your savings yield rich benefits and help you
save tax even if you dont have consistent income
SPECIAL PLANS
LICrsquos Special Plans are not plans but opportunities that knock on your door
once in a lifetime These plans are a perfect blend of insurance investment and a
lifetime of happiness
GROUP SCHEME
Group Insurance Scheme is life insurance protection to groups of people This
scheme is ideal for employers associations societies etc and allows you to enjoy
group benefits at really low costs
WITHDRAWN PLAN
KEY EXECUTIVESMembers On The Board Of The Corporation
Shri T S VIJAYAN (Chairman)
Shri DK Mehrotra (Managing Director - LIC)
Shri Thomas Mathew T (Managing Director - LIC)
Shri AK Dasgupta (Managing Director - LIC)
Shri Ashok Chawla (Finance Secretary Ministry of Finance Govt of India)
Shri GC Chaturvedi (Additional Secretary Department of Financial Services
Ministry of Finance Govt of India)
Shri Yogesh Lohiya (Chairman cum Managing Director GIC of India)
Shri TC Venkat Subramanian (Chairman amp Managing Director Export Import
Bank of India)
Dr Sooranad Rajashekhran
Shri Monis R Kidwai
MAJOR PLAYERS
OF THE INDUSTRY
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
SERVICE LINES OF
THE COMPNAY
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
UNIT PLANS
Unit plans are investment plans for those who realise the worth of hard-earned
money These plans help you see your savings yield rich benefits and help you
save tax even if you dont have consistent income
SPECIAL PLANS
LICrsquos Special Plans are not plans but opportunities that knock on your door
once in a lifetime These plans are a perfect blend of insurance investment and a
lifetime of happiness
GROUP SCHEME
Group Insurance Scheme is life insurance protection to groups of people This
scheme is ideal for employers associations societies etc and allows you to enjoy
group benefits at really low costs
WITHDRAWN PLAN
KEY EXECUTIVESMembers On The Board Of The Corporation
Shri T S VIJAYAN (Chairman)
Shri DK Mehrotra (Managing Director - LIC)
Shri Thomas Mathew T (Managing Director - LIC)
Shri AK Dasgupta (Managing Director - LIC)
Shri Ashok Chawla (Finance Secretary Ministry of Finance Govt of India)
Shri GC Chaturvedi (Additional Secretary Department of Financial Services
Ministry of Finance Govt of India)
Shri Yogesh Lohiya (Chairman cum Managing Director GIC of India)
Shri TC Venkat Subramanian (Chairman amp Managing Director Export Import
Bank of India)
Dr Sooranad Rajashekhran
Shri Monis R Kidwai
MAJOR PLAYERS
OF THE INDUSTRY
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
UNIT PLANS
Unit plans are investment plans for those who realise the worth of hard-earned
money These plans help you see your savings yield rich benefits and help you
save tax even if you dont have consistent income
SPECIAL PLANS
LICrsquos Special Plans are not plans but opportunities that knock on your door
once in a lifetime These plans are a perfect blend of insurance investment and a
lifetime of happiness
GROUP SCHEME
Group Insurance Scheme is life insurance protection to groups of people This
scheme is ideal for employers associations societies etc and allows you to enjoy
group benefits at really low costs
WITHDRAWN PLAN
KEY EXECUTIVESMembers On The Board Of The Corporation
Shri T S VIJAYAN (Chairman)
Shri DK Mehrotra (Managing Director - LIC)
Shri Thomas Mathew T (Managing Director - LIC)
Shri AK Dasgupta (Managing Director - LIC)
Shri Ashok Chawla (Finance Secretary Ministry of Finance Govt of India)
Shri GC Chaturvedi (Additional Secretary Department of Financial Services
Ministry of Finance Govt of India)
Shri Yogesh Lohiya (Chairman cum Managing Director GIC of India)
Shri TC Venkat Subramanian (Chairman amp Managing Director Export Import
Bank of India)
Dr Sooranad Rajashekhran
Shri Monis R Kidwai
MAJOR PLAYERS
OF THE INDUSTRY
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
SPECIAL PLANS
LICrsquos Special Plans are not plans but opportunities that knock on your door
once in a lifetime These plans are a perfect blend of insurance investment and a
lifetime of happiness
GROUP SCHEME
Group Insurance Scheme is life insurance protection to groups of people This
scheme is ideal for employers associations societies etc and allows you to enjoy
group benefits at really low costs
WITHDRAWN PLAN
KEY EXECUTIVESMembers On The Board Of The Corporation
Shri T S VIJAYAN (Chairman)
Shri DK Mehrotra (Managing Director - LIC)
Shri Thomas Mathew T (Managing Director - LIC)
Shri AK Dasgupta (Managing Director - LIC)
Shri Ashok Chawla (Finance Secretary Ministry of Finance Govt of India)
Shri GC Chaturvedi (Additional Secretary Department of Financial Services
Ministry of Finance Govt of India)
Shri Yogesh Lohiya (Chairman cum Managing Director GIC of India)
Shri TC Venkat Subramanian (Chairman amp Managing Director Export Import
Bank of India)
Dr Sooranad Rajashekhran
Shri Monis R Kidwai
MAJOR PLAYERS
OF THE INDUSTRY
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
KEY EXECUTIVESMembers On The Board Of The Corporation
Shri T S VIJAYAN (Chairman)
Shri DK Mehrotra (Managing Director - LIC)
Shri Thomas Mathew T (Managing Director - LIC)
Shri AK Dasgupta (Managing Director - LIC)
Shri Ashok Chawla (Finance Secretary Ministry of Finance Govt of India)
Shri GC Chaturvedi (Additional Secretary Department of Financial Services
Ministry of Finance Govt of India)
Shri Yogesh Lohiya (Chairman cum Managing Director GIC of India)
Shri TC Venkat Subramanian (Chairman amp Managing Director Export Import
Bank of India)
Dr Sooranad Rajashekhran
Shri Monis R Kidwai
MAJOR PLAYERS
OF THE INDUSTRY
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
Shri Monis R Kidwai
MAJOR PLAYERS
OF THE INDUSTRY
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
Life Insurance Companies
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
1 HDFC Standard Life
Insurance Co Ltd
Standard Life
Assurance UK
101 23102000 2000-01
2 Max New York Life
Insurance Co Ltd
New York Life USA 104 15112000 2000-01
3 ICICI-Prudential Life
Insurance Co Ltd
Prudential UK 105 24112000 2000-01
4 Om Kotak Life Insurance
Co Ltd
Old Mutual South
Africa
107 10012001 2001-02
5 Birla Sun Life Insurance
Co Ltd
Sun Life Canada 109 31012001 2000-01
6 Tata-AIG Life Insurance
Co Ltd
American International
Assurance Co USA
110 12022001 2000-01
7 SBI Life Insurance Co
Ltd
BNP Paribas
Assurance SA France
111 29032001 2001-02
8 ING Vysya Life Insurance
Co Ltd
ING Insurance
International BV
Netherlands
114 02082001 2001-02
9 Allianz Bajaj Life
Insurance Co Ltd
Allianz Germany 116 03082001 2001-02
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
10 Metlife India Insurance Co
Ltd
Metlife International
Holdings Ltd USA
117 06082001 2001-02
11 Reliance Life Insurance
Co Ltd (Earlier AMP
Sanmar Life Insurance
Company from 3102 to
29905)
--- 121 03012002 2001-02
12 AVIVA Aviva International
Holdings Ltd UK
122 14052002 2002-03
13 Sahara Life Insurance Co
Ltd
--- 127 06022004 2004-05
14 Shriram Life Insurance Co
Ltd
Sanlam South Africa 128 17112005 2005-06
15 Bharti AXA Life Insurance
Co Ltd
AXA Holdings France 130 14072006 2006-07
16 Future Generali India Life
Insurance Company Ltd
Pantaloon Retail Ltd
Sain Marketing
Network Pvt Ltd
(SMNPL) Generali
133 04092007 2007-08
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
Sl
No
Insurers Foreign Partners Regn
No
Date of
Registration
Year of
Operation
Italy
17 IDBI Fortis Life Insurance
Company Ltd
Fortis Netherlands 135 19122007 2007-08
18 Canara HSBC OBC Life
Insurance Company Ltd
HSBC UK 136 08052008 2008-09
19 Aegon Religare Life
Insurance Company Ltd
Religare Netherlands 138 27062008 2008-09
20 DLF Pramerica Life
Insurance Co Ltd
Prudential of America
USA
140 27062008 2008-09
21 Life Insurance Corporation
of India
512
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
Kotak Mahindra 151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
MAJOR
COMPETITIORS
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
BAJAJ ALLIANZBajaj Allianz Life Insurance is a union between Allianz SE one of the largest
Insurance Company and Bajaj Finserv
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world managing assets worth over a Trillion (Over INR 55 00000
Crores) Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world
At Bajaj Allianz Life Insurance customer delight is our guiding principle Our business philosophy is to
ensure excellent insurance and investment solutions by offering customised products supported by the
best technology
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
Accelerated Growth
Fiscal Year No of policies sold New Business in FY
2001-2002(6 mths) 2137 Rs 7 cr
2002-2003 115965 Rs 633 cr
2003-2004 186443 Rs 180 cr
2004-2005 288189 Rs 857 cr
2005-2006 781685 Rs 2717 cr
2006-2007 2079217 Rs 4302 cr
2007-2008 3744742 Rs 6674 cr
ICICI PRUDENTIALICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of Indias foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
international financial services group headquartered in the United Kingdom Total
capital infusion stands at Rs 4780 billion with ICICI Bank holding a stake of
74 and Prudential plc holding 26
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA) Today our nation-wide
team comprises of 2074 branches (inclusive of 1116 micro-offices) over 225000
advisors and 7 bancassurance partners
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings For three years in a
row ICICI Prudential has been voted as Indias Most Trusted Private Life Insurer
by The Economic Times - AC Nielsen ORG Marg survey of Most Trusted
Brands As we grow our distribution product range and customer base we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
SWOT ANALYSIS
OF
THE COMPANY
The SWOT analysis involves an in depth study of the strength and weakness of the
provided
organization and it also provides information to the promoter consultant other
agencies and helps in long
term viability of the project
Strength 1 It is the oldest and most well experienced player having a Pan India presence
2 LIC has a strong and very well developed distribution network
3 It is having a huge consumer base and is evolved as one of the most powerful
brands of the country
4 It has a large product portfolio and claim settlement is easier to get
5 It has the advantage of government guarantee is accompanied with it
6 Largest insurance Company in the world in Customer Base (23 crore
customers)
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
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 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
7 No1 insurance company in the world in terms of agency (about 11 Million
agents)
8 LIC is No1 insurer in the world in Volume amp Sold around 375 CrPolicies in
2007-2008
9 2nd Biggest Real Estate Owner next to Indian Railways
10LIC is one of the Highest income tax playing Organization For Financial
Year 2007-08 LIC has paid advance Tax Rs2627 14 Cr amp Service Tax
Rs1292 15 Cr
11Has Highest insurance Professionals ( Club Member agents )
12Only 4 countries in the world have more population that LIC`s policy holders
13No1 insurance Company in the world in terms of claims paid
14LIC Settles 221 claims per second LIC settled 139 lakhs claims during the year
2007-2008
15Prompt settlement of claims (97 maturity claim settled on or before due date)
16One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim-
007)
Advanced Technology-For better Customer Service
1 Computerized and networked 2048 branch offices and 159 satellite offices
throughout the country
2 Use of High Tech-WANLANIVRS amp EDMS
3 LIC is second largest PC user in the country
4 EDMS to make LIC a paperless office- Enabling Policy servicing amp payments
through all branchs in the country
5 Premium Payment Facility extended through networked 2048 branches ECS
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
ATMs through internet online portals collecting bank (Axis Bank) AP online
through SMS through selected agents Now LIC Premium can also be paid
through
6 Suvidha info Serve KIOSKS all over India
7 Policy Holders Portal allow on line access to policy status and other details
8 Info centre set up in 12 cities for customers to interact easily Dial-1251 for details
9 45 interactive Voice Response System (IVRS) centers all over the country to
provide information on policy servicing Facility is available 24 7 Facility can be
availed on following phone Nos 1251 OR 020-25514248
Social Strength
LIC - an institution builder promoting many financial and insurance institutes like
NSE NCDEX LIC Mutual Fund Stock Holding Corporation of India National
insurance Academy insurance institute of India etc
LIC has foreign operations in Mauritius Fiji and London and has joint
venture operating in Sri lanka Nepal Bahrain amp Saudi Arabia New offices will be
hortly oprned in Australia USAampCanada
LIC is known as Pension Provider of the country
1st Pension company in India is floated by LIC as LIC Pension Fund Ltd on 21st
Nov 2007
First to create waves in micro insurance sector by insuring people below the poverty
line In year 2007-2008 854 lac policies sold through Jeevan MadhurPlan
Widest range of plans (about 48) for every need of the customer of 0 to 79 years of
age
Biggest Portfolio of Group insurance schemes available
Jeevan Saral one of the product of LIC got Best innovation product award from
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
IRDA
LIC has covered lick Risk of 113 crore citizens through AAM ADMI BIMA
YOJANA amp JANASHREE BIMA YOJANA
Very Unique Salary saving Portfolio
Highest Number of Corporate Clients in Group insurance Scheme
Expending Distribution Channel through Bancassurances Corporate Agencies
Broker ship amp 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 DOwas 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
Peoples Money for Peoples Welfare
LIC invested more than 11630 crores in infrastructure sector is Rs56691crores
In socially oriented sector like water drainage amp housing etc LIC has invested
Rs5635 crores during 2007-08 amp total investment in this sector is Rs32321
crores
Total investment in Social Sector Rs89000 Crs
Different incentive schemes for villages Schools and Banks under Bima Gram
Bima School and Bima Banks
Total investment in Nation Building Activities is 576000 Crs
Financial Strengths
LICs investment income in 2007-08 was Rs40655 crores Out of Total income of
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
Rs 17655928 Crs
Total Assets of the corporation as on 31307 were Rs 67451478 Crs
Largest institutional investor in Share Market On an average Rs100 crore invested
every day During theyear 2007 LIC earned the profit Rs10000 Crs from the Sale
of Equity
Largest Financial institutional investor both Equity market amp Term House
Weakness
Its employees and other staff are lethargic and least motivated to render prompt
and sincerecustomer service
After sales customer grievance redressal mechanism is inefficient
Agents not taking into account the needs of people and promote policies having
high commissions only
Very slow decision making process and internal problems between top
management and lower cadre staff
The top management or bosses are mediocre and there is large scale corruption in
main office
The development officers and agents who are the foundation pillars of LIC are
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
not provided with extra funds and powers to promote its products aggressively
Opportunity Emergence of a huge middle income consumer market in the country
People becoming more aware and demanding so there is scope for a whole lot of
innovativeproducts
Pension markets health insurance and large real estate portfolio
Todayrsquos 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
1048766 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
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
So that insurance companies working efficiently and fast service
1048766 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
7-75 So this is also one of the opportunities for the life insurance sector
1048766 Uncovered market
The Indian insurance market is the one of the least markets in the world India
has a population 104415 million out of which only 777 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 Indiarsquos 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 04 of the global insurance market which is very low the
ratiorsquos of premium to GDP for India stands at only 3 against 52 in US 65in
UK
1048766 To enter into rural market where customer awareness about insurance is low by
effective and efficient marketing strategies
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
1048766 To sell insurance products through electronic Medias
1048766 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
1048766 Growing population the growth in the population (approximately 17) 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
1048766 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
1048766 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
1048766 To use Internet and e-commerce technologies to dramatically cut the costs
andor 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
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
opportunity for the company
1048766 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 ventureamp alliance etc for
companies to create Synergy value as well as competitive capabilities for the
firms
Threats
1048766 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
1048766 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
1048766 Interest rate of PF and bank saving create threat to insurance sector All other
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
saving is obviously the threat for life insurance sector
1048766 Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins Consumerrsquos 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)
1048766 Fraud in insurance sector the major problem fraud which affects the life
insurance sector
1048766 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
1048766 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
1048766 The new units equipped with state of arts equipment and innovative procedure
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
would have an in-built edge over the erstwhile public sector units which until
recently had no such opportunity and incentives Due to possible negative impact
on employment there were no serious efforts at updating technology and
equipment The resultant inadequate investment in infrastructure could lead to
their lagging behind in the race
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
MARKET SEGMENT OF
LIC
The policies of LIC covers the age group 0-70 can avail the services of LIC It
means LIC has very vast market segment children youngster working
married old people
INSURANCE PLANS
As individuals it is inherent to differ Each individuals insurance needs and
requirements are different from that of the others LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
Jeevan Anurag Komal Jeevan
CDA Endowment Vesting At 21 Marriage Endowment Or
Educational Annuity Plan CDA Endowment Vesting At 18
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan Shree-I
Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy
The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy
The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
Jeevan Saathi Plus
Jeevan Saathi
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age These policies are most suited for senior
citizens and those planning a secure future so that you never give up on the best
things in life
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
USP OF THE
COMPANY
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
FUTURE OF THE
COMPANY
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
FINDINGS AND
CONCLUSIONS
FINDINGS amp CONCLUSIONS
LIC is the giant of the insurance sector The overall size of LIC is much more than
that of all private insurance companies Private insurers are in expansion mode and
are increasing their size but are still much behind LIC Total premium deposits in
LIC is much higher than the private insurance companies Total premium of LIC in
FY 07-08 was 149789 crores which three times more than that of private insurance
companies
Income of LIC is much greater than private insurance companies Last year total
income from investments of LIC was 4824414 crores which was nearly equal to the
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
total income of the all private insurance companies By this we can imagine how big
the LIC is
Size of balance sheet of private insurance companies are lagging much behind LIC
Balance sheet of LIC is seven times bigger than that of private insurance companies
If we see the total number of policies issued by LIC and private insurance companies
we find that there is a huge gap between them No doubt that LIC is a well established
player in the field of insurance and many private companies have just started their
business Hence it is obvious that LIC is having large number of policyholders
Number of branches of private insurance companies is increasing as the new players
are entering in this market Also the established players are in expansion phase and
hence are expanding there business There are many private insurance companies and
hence there total number of branches has gone past LIC in the last financial year But
offices of private insurance companies are mostly in urban areas and still it is LIC
which covers most of the area
Hence we see that LIC is leading when it comes to size It is giant in insurance
sector having huge network and customer base
We see that due to excellent service quality and attractive offers private insurance
companies have started getting a number of customers They are growing rapidly
Though LIC is also increasing its customer base but private insurance companies are
moving at a fast pace
Though the income of private insurance companies is negligible when compared with
LIC but then also the pace with which they are increasing their income is tremendous
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
Private insurance companies are expanding their business and will certainly going to
give a tough competition to LIC in the coming days
LIC is certainly having a large customer base Private insurance companies are not
having that much number of customer base but they are increasing it rapidly They
have registered a decent growth of 10464 in number of new policies in the year
2006-07 Last year also their growth rate was 674
64
LIC being the oldest player in the existing insurance market has the biggest market
share of 739 which was 873 five years earlier We see that private insurance
companies are penetrating in the customer base of LIC
Overall we can see that private insurance companies are giving a tough
competition to the LIC and will certainly create a good business for themselves
in the coming days
There are many new entrants in this sector There are many private insurance
companies who have reported loss in this and previous years This is the main reason
why private insurance companies lag behind LIC in case of business per branch
There is a big difference between them
Same is the case when it comes to income per branch LIC is much ahead of private
insurance companies in this field They are undoubted champions in insurance when it
comes to profit earning
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong In issuing new policies per branch also they are
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
ahead of private insurance companies though not by very large margin
Customer base of LIC is very strong and still business per branch profit per
branch or premium per branch they are leading much ahead of private
insurance companies
LIC has not shown their good concern when the matter of grievance handling comes
Private insurance companies are far ahead in this matter LIC has just resolved 25
cases in the last five years while private insurance companies have resolved nearly
70 cases This is a matter from where customer shift starts We have seen the rapid
increase in customer base of private insurance companies which can be very much
affected by this factor
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace Private companies show due concern in grievance
management and brings innovative schemes to attract the customers Right now they
are giving good competition to LIC and very soon they will give very tough competition
to Life Corporation of India
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
GLOSSERY
Accident
An event or occurrence causing damageinjury to an entity and is unforeseen and
unintended
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in
instalments on permanent total disability and waiver of subsequent premiums payable
under the policy
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies
Agent
An insurance company representative licensed by the state who solicits negotiates or
effects contracts of insurance and provides service to the policyholder for the insurer
Annuity Plans
These plans provide for a pension ( or a mix of a lumpsum amount and a pension )
to be paid to the policy holder or his spouse In the event of death of both of them
during the policy period a lumpsum amount is provided for the next of kin
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
Application Form
Supplied by the insurance company usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant It is
signed by the applicant and is part of the insurance policy if it is issued
Assignment
Assignment means legal transference A method by which the policy holder can
person on his interest to another person An assignment can be made by an
endorsement on the policy document or as a seperate deed Assignment can be of two
types
Conditional
absolute
Beneficiary
The person(s) or entity(ies) (eg corporation trust etc) named in the policy as the
recipient of insurance proceeds upon the death of the insured
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to
an individual It is issued to indemnify a business for the loss of services of a key
employee or a partner who becomes disabled
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
Cancelable
A contract of health insurance that may be cancelled during the policy term by the
insurer or insured
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage
of insurance to value will receive a loss payment that is limited to the same ratio
which the amount of insurance bears to the amount required
2) a policy provision frequently found in medical insurance by which the insured
person and the insurer share the covered losses under a policy in a specified ratio ie
80 per cent by the insurer and 20 per cent by the insured
Convertible Whole Life Policy
A mix of whole life policy and endowment policy it provides for very low
insurance premiums with maximum risk cover while the life assured is just beginning
his working career and the possibiliy of converting the policy to an endowment
policy after five years of commencement
Coverage
The scope of protection provided under a contract of insurance any of several risks
covered by a policy
Days Of Grace
Policy holders are expected to apy premium on due dates a period is 15-30 days is
allowed as grace to make payment of premium such period is days of grace
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the
time at which the first instalment of pension is received Such policies generally
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
prescribe a minimum and maximum limit on the deferment period
Depreciation
A decrease in the value of property over a period of time due to wear and tear or
obsolescence Depreciation is used to determine the actual cash value of property at
time of loss
DoubleTriple Cover Plans
These offer to the beneficiaries doubletriple the sum assured on death of life assured
during the term of the policy On survival to the date of maturity the basic sum
assured is paid to the assured These are low-premium plans most useful for
situations such as housing
Embezzlement
Fraudulent use or taking of anothers property or money which has been entrusted to
ones care
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the
assureds age at entry and the term of the policy The insured amount is payable either
at the end of specified number of years or upon the death of the insured person
whichever is earlier
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount with losses below that amount
usually covered by a regular policy
(2) Insurance to cover an unusual or one-time risk eg damage to a musicians hands
or the multiple perils of a convention for which coverage is unavailable in the normal
market
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
Specific conditions or circumstances for which the policy will not provide benefits
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by
an insurance company seeking reinsurance
Family Insurance
A life insurance policy providing insurance on all or several family members in one
contract generally whole life insurance on the principal breadwinner and small
amounts of term insurance on the other spouse and children including those born after
the policy is issued
Fiduciary
A person who holds something in trust for another
Fire Insurance
Coverage for losses caused by fire and lightning plus resultant damage caused by
smoke and water Flood insurance Coverage against loss resulting from the flood
peril available at low cost under a programme developed by the Central government
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a
common employer or the members of an association under an arrangement by which
the employer or association agrees to collect the premium and remit them to the
insurer
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
A lump sum purchase price is given to purchase future pensions under the Jeevan
Akshay Plan of Life Insurance Corporation of India This amount is referred to as
GIS The monthly pension that is payable one month after payment of first premium is
calculated on the basis of the age at entry
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance
Corporation of India An annutiy of 1 of the GIVE is payable per month after the
deferment period And the entire GIVE is payable on death after deferment period
Group Life Insurance
Life insurance usually without medical examination on a group of people under a
master policy It is typically issued to an employer for the benefit of employees or to
members of an association for example a professional membership group The
individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss
Insurable Interest
A condition in which the person applying for insurance and the person who is to
receive the policy benefit will suffer an emotional or financial loss if any untouched
event occurs Without insurable interest an insurance contract is invalid
Insurability
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
All conditions pertaining to individuals that affect their health susceptibility to injury
and life expectancy an individuals risk profile
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk
over a large enough number of similar exposures to predict the individual chance of
loss
Insured
The person whose life is covered by a policy of insurance
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on
the end of the endowment term or on the first death of the two lives assured
whichever is earlier Typically (though not a necessity) taken out by a couple a
variation is available for couples only In this case the sum assured will be payable on
first death and then again on the second death (along with all vested bonuses) if both
deaths occur during the term of the policy If one or both lives survive to the maturity
date the sum assured along with all vested bonuses will be payable on maturity date
Premiums during this plan cease on the first death or the expiry of the selected term
whichever is earlier Another variation provides for annuity to bothsurviving spouse
or a lumpsum amount to the legal heirs
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
his employeeconnected to his business in any manner whatsoever
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the
premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs
within this period Proceeds of the policy are granted to the beneficiaries whenever
death of the policy holder occurs Again this policy can also be of the with profits
or without profits type
Loyalty Additions
The loyalty addition is given upon the maturity of the policy and not before Its a
small percentage of the sum assured Broadly speaking loyalty addition is the
difference between the performance of the insurance company and the guaranteed
additions It is LICs effort to further share its surplus after valuation with the policy
holders as LIC is a non-profit organization
Life Assured
The person whose life is insured by an individual life policy is called life assured
Maturity
The date upon which the face amount of a life insurance policy if not previously
invoked due to the contingency covered (death) is paid to the policyholder
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
The Payment to the policy holder at the end of the stipulated term of the policy is
called maturity claim
Misrepresentation
Act of making issuing circulating or causing to be issued or circulated an estimate
an illustration a circular or a statement of any kind that does not represent the correct
policy terms dividends or share of surplus or the name or title for any policy or class
of policies that does not in fact reflect its true nature
Money Back Policy
Unlike endowment plans in money back policies the policy holder gets periodic
survivance payments during the term of the policy and a lumpsum amount on
surviving its term In the event of death during the term of the policy the beneficiary
gets the full sum assured without any deductions for the amounts paid till date and
no further premiums are required to be paidThese type of policies are very popular
since they can be tailored to get large amounts at specific periods as per the needs of
the policy holder
Moral Hazard
Risk depends on the need for insurance state of health personal habits standard of
living and income of insured peson Moral hazard is the risk factors that affects the
decesion of the insurance company to accept the risk
Nomination
An act by which the policy holders authorises another person to receive the policy
moneys The person so authorised is called Nominee
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
the premium is paid from time to time
Premium
The payment or one of the regular periodic payments that a policy holder makes to
an insurer in exchange for the insurers obligation to pay benefits upon the occurrence
of the contractually-specified contingency (eg death)
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid in the event of th life assured
surviving to the end of the policy term The total sum assured is paid to the
beneficiaries in the event death occurs during the policy term
Reinstatement
The restoration of a lapsed policy to in-force status Reinstatement can only occur
after the expiration of the grace period The company may require evidence of
insurability (and if health status has changed deny reinstatement) and will always
require payment of the total amount of past due premium
Risk
The obligation assumed by the insurer when it issues a policy The spreading of risk
across a broad base of the population adjusted for statistical probability and the
protection against catastrophic loss is the entire purpose of insurance For risk
assumption purposes death is viewed as a contingency That is although death is
certain its timing is unknown The process of evaluating and selecting risk is known
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
as underwriting
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary
of the employees by one employer
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of
physical condition family or personal history of disease occupation residence in
unhealthy climate or dangerous habits
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the
policy before the maturity of the policy
Survival Benefit
The payment of sum assured to the incured person which has become due by
instalments under a money back policy
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan
Whole Life Policy
Premiums are paid throughout the life time of life assured This can be with profits or
without profits ( A with profit policy is eligible for various bonuses declared by LIC
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
every year while a without profits policy does not have this privilege )
With-Profit policy
Policies entitled to bonus which is paid at the time of claim-death or maturity one
with-profit policies
Without-Profit policy
These policies are not entitled to particiapte in bonuses
REFRENCES Data on Indian Insurance from httpwwwirdaindiaorg
Different statistics from httpwwwrbiorgin
Journals published by Insurance Regulatory amp Development Authority
Management of financial institutions by RM Srivastava
httpwwwbusinesstodaycom
httpwwwbusinessworldcom
httpwwweconomictimescom
Different Survey on Insurance sector conducted by IIRC
Profile of Indian Insurance Companies by IRDA
wwwlicindiacoin
wwwsbilifecoin
wwwtata-aig-lifecom
wwwbharti-axalifecom
wwwhdfcinsurancecom
wwwreliancelifecoin
wwwbajajallianzcom
wwwmetlifecoin
wwwbirlasunlifecom
httpwwwfinanceindiamartcom
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