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MAJOR RESEARCH PROJECT
On
“A STUDY OF AWARENESS OF LIFE INSURANCE PRODUCTS: WITH
SPECIAL REFERENCE TO RURAL AREAS NEAR INDORE”
For partial !lill"#nt o t$# r#%!ir#"#nt or t$# 'r## o
Ma(t#r o )!(in#(( A&"ini(tration *F!ll+Ti"#,
)at-$ ./01+./02
S!3"itt#& to: S!3"itt#& 34:
Pro5 A"it 6!"ar Arpita 7ai89a&
I)MR IPS ACADEMY
Ra;#n&ra Na'ar A5)5 Roa& In&or#+1
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PREFACE
The bookish knowledge of any program, which we get from educational institutions, is
not enough to be used in our day-to-day life. The more practical knowledge we have, the
more beneficial it is for our learning.
To make the students aware of the working of the business world every student of
MASTE !" #$S%&ESS A'M%&%STAT%!& () th Semester* has to undergo a ma+or
research pro+ect where heshe eperiences many aspects of business under the
supervision of rofessional Managers.
% strongly believe that the knowledge gained from this eperience is more than the
knowledge gained from the theories in the book.
/A0E1 %&'!E
&ame1 Arpita 2aikwad
'ate1
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CERTIFICATE
This is to certify that M(5 Arpita 7ai89a& student of %nstitute of #usiness Management
and esearch, %S Academy, %ndore of M#A ("ull time* program has prepared Ma+or
research pro+ect report on topic “A STUDY OF AWARENESS OF LIFE INSURANCE
PRODUCTS: WITH SPECIAL REFERENCE TO RURAL AREAS NEAR
INDORE” under my guidance.
%nternal Eaminer (2uide* Eternal Eaminer
'irector
%#M, %S Academy
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STUDENT DECLARATION
% Arpita 2aikwad, student of %nstitute of #usiness Management and esearch, %S
Academy, %ndore of M#A ("ull time* program has prepared Ma+or research ro+ect report
on topic “A STUDY OF AWARENESS OF LIFE INSURANCE PRODUCTS: WITH
SPECIAL REFERENCE TO RURAL AREAS NEAR INDORE”.
The esearch as per my knowledge is original and genuine and not published in any
research +ournal previously.
St!nt Na"# = Si'nat!r#
Arpita 7ai89a&
M)A *1t$ S#",
./01+./02
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AC6NOWLED7EMENT
% often wondered why the pro+ect reports always began with acknowledgement. &ow
when % have undertaken pro+ect myself, % did reali3e that pro+ect report involves not +ust
the researcher but so many people that help in making the research possible. Therefore, %
take pleasure in beginning the most beautiful part of the report.
% fall short of words to epress my gratitude to my guide Pro5 A"it 6!"ar who despite
their busy schedule were able to find some time to guide me through trouble and solve
my problems to the best of abilities. 4ithout their unfailing guidance, encouragement and
patience this pro+ect would not have been possible. %t has been a great learning
eperience under him.
% am thankful to my faculty guide Pro5 A"it 6!"ar who gave me detailed instructions
during M.
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INDE>
Parti-!lar( Pa'# No5
%ntroduction
ationale of Study!b+ective of Study
/iterature eview
esearch Methodology
'ata Analysis 5 %nterpretation
Summary of "indings 5 'iscussion
%mplications 5 Scope
Suggestions 5 /imitations
0onclusion
#ibliography
6uestionnaire
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CHAPTER ONE
INTRODUCTION
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050 INTRODUCTION OF INSURANCE:
%nsurance occupies an important place in the comple modern world since risk, which
can be insured, has increased enormously in every walk of life. This has led to growth
in the insurance business and evolution of various types of insurance covers. The
insurance sector acts as a mobili3er of savings and a financial intermediary and is also
a promoter of investment activities. %t can play a significant role in the economic
development of a country, while economic development itself can facilitate the
growth of the insurance sector. This chapter provides an overview of the insurance
sector in %ndia, its origin and growth. %t begins by defining insurance as a concept,
followed by a discussion on the importance of insurance for individuals, households,
and the economy. The penetration of the insurance business and insurance density in
%ndia are compared with those in other countries. The need to create and enhance the
level of awareness about different aspects of insurance is also discussed.
05. CONCEPT OF INSURANCE:
%nsurance is a form of risk management which is used primarily to hedge against the
risk of a contingent, uncertain loss. %nsurance is defined as the e7uitable transfer of
the risk of loss, from one entity to another, in echange for payment. %nsurance is
essentially an arrangement where the losses eperienced by a few are etended among
many who are eposed to similar risks. %t is a protection against financial loss that
may occur due to an unepected event. The transaction involves the insured assuming
a guaranteed and known, relatively small, loss in the form of payment to the insurer in
echange for the insurer8s promise to compensate or indemnify the insured in the case
of a large, possibly devastating loss. The insured receives a contract called an
insurance policy which details the conditions and circumstances under which the
insured will be compensated.
%nsurance can be classified broadly into1 (a* life insurance, and (b* general or non-life
insurance.
(a* /ife insurance or life assurance is a contract between the policy owner and the
insurer, where the insurer agrees to pay the designated beneficiary a sum of money
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upon the occurrence of the insured individual9s death or other event, such as
terminal or critical illness. %n return, the policy owner agrees to pay a stipulated
amount at regular intervals or in lump sums. /ife-based contracts tend to fall into
two ma+or categories1
• rotection policies1 designed to provide a benefit in case of a specified event,
typically against lump sum payment. A common form of this policy is term
insurance.
• %nvestment policies1 the main ob+ective is to facilitate the growth of capital by
single or regular premiums. The common forms in this category include whole
life, universal life and variable life policies.(b* 2eneral insurance or non-life insurance policies, including automobile and
homeowners9 policies, provide payments depending on the loss from a particular
financial event. 2eneral insurance typically comprises any insurance cover that is
not deemed to be life insurance. Some categories of general insurance policies are1
vehicle, home, health, property, accident, sickness and unemployment, casualty,
liability, and credit. The terms of insurance generally depend on the company
providing the cover.
05? IMPORTANCE OF INSURANCE:
/ife insurance is generally considered a means of protecting one9s family against the
unforeseen circumstance of the death of an earning member. :owever, there are a
number of other benefits that are not apparent. Some benefits accrue to the individuals
and their families, while others assist economic development. "or instance, an
insurance company takes the risk of large and uncertain losses in echange for small
premiums. This gives a sense of confidence and security to the insured individual
through the protection of insurance in the event of an unfortunate incident. %n large
si3ed commercial and industrial organi3ations, it facilitates operations as many of the
risks are transferred to the insurer. %nsurance, particularly life insurance, is one of the
ways of providing for the future. A life insurance policy which gives an annuity is a
combination of protection and investment. %t increases the creditworthiness of the
assured person because it can provide funds for repayment in the event of death. %t
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also reduces losses owing to theft, robbery, fire accidents, etc. %n addition, it serves as
a solution to social problems. "or instance, while compensation is available to victims
of industrial in+uries and road accidents, financial difficulties on account of old age,
disability or death is minimi3ed.
%nvestment of accumulated resources by the insurer facilitates the overalldevelopment of the country. 0apital is usually risk averse, but if insurers provide
protection against risks, then several investors would come forward to invest their
funds.
%n many developed countries, citi3ens are to a certain etent protected by social
security schemes provided by the government. These schemes offer financial aid to
citi3ens who are eligible on grounds of unemployment, old age, sickness, disability,
etc. The social security scenario in %ndia is 7uite different, having traditionally been
the responsibility of the family or community. :owever, with industriali3ation,
urbani3ation, breakup of the +oint family system and weakening of family bondage, it
has become necessary to provide social security arrangements that are
institutionali3ed and regulated by the state rather than the society.
%ssues relating to social security are listed in the directive principles of state policy.
4hile social security and insurance, employment and unemployment form %tem ;< of
the concurrent list, the welfare of labour including conditions of work, provident fund,
employee9s liability, workmen9s compensation, invalidity and old age pension and
maternity benefits form %tem ;), also of the concurrent list. 'uring the initial years of
development planning, it was believed that with the process of development, a greater
number of workers would +oin the organi3ed sector and eventually get covered by
formal social security arrangements. :owever, the actual eperience has proved
otherwise. There is now almost a stagnation of employment in the organi3ed sector
with increase in the inflow of workers into the informal sector. The unorgani3ed
workforce is characteri3ed by scattered and fragmented areas of employment,
seasonality, lack of +ob security and low legislative protection. 0urrently, out of an
estimated workforce of nearly )== million, only less than >= per cent have the
benefits of formal social security protection. Although the government has a few
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centrally funded social assistance programmes like &ational !ld Age Schemes and
&ational "amily #enefit Schemes, the number of people covered as well as the
benefits is very meager. "urthermore, in a country like %ndia, where there is no
provision for unemployment benefits, the concept of insurance becomes etremely
important.
051 ORI7IN OF INSURANCE:
Maritime insurance is the oldest form of insurance and is followed by life insurance
and fire insurance. %nsurance was prevalent in ancient 2reece and among the maritime
peoples with whom the 2reeks traded. %t developed first as a means of spreading the
huge risks involved in early maritime enterprises, evolving much later during the
fourteenth century in the commercial cities of %taly. This practice of marine insurance
gradually spread to /ondon during the siteenth century. The history of marine
insurance is closely associated with the origin and rise of /loyd9s group of ship-
owners. Today, /loyd9s is considered the largest underwriter in the world. %n the $SA,
the first insurance company was established by #en+amin "ranklin in >?@;. Since the
mid nineteenth century, insurance has developed significantly to cover other kinds of
risks.
%n %ndia, the history of life insurance can be traced to >> when Anita #havsar
started the !riental /ife %nsurance 0ompany in Bolkata. This organi3ation was
basically founded to serve European clients and hence %ndians who opted for an
insurance cover were charged a much higher premium. The reason given was that
%ndians had a lower life epectancy on account of their lifestyle, while in fact this was
a planned effort to keep %ndians out of any kind of progress The 0ompany failed in
>?= the #ritish %nsurance Act was passed and the last three decades of
nineteenth century saw the emergence of the #ombay Mutual /ife Assurance Society
(>?>*, which became the first organi3ation to charge the same premium from all
residents of %ndia irrespective of their origin or nationality. The !riental (>?)* and
Empire of %ndia (>C?* insurance companies began their activities in the #ombay
esidency in the late nineteenth century. This period, however, was dominated by
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foreign insurance offices such as Albert /ife Assurance, oyal %nsurance, and
/iverpool and /ondon 2lobe %nsurance, which did good business in %ndia.
The history of general insurance can be traced to the %ndustrial evolution in the 4est
and the conse7uent growth of sea-faring trade and commerce. A legacy of #ritish rule,
2eneral %nsurance in %ndia has its roots in the establishment of Triton %nsurance0ompany /td in >@= in 0alcutta. %t9s first %ndian counterpart, the %ndian Mercantile
%nsurance /td, which launched its operation in #ombay in >C=?, was the first
company of its type to transact all general insurance business.
05< O@ER@IEW OF THE INDIAN INSURANCE SECTOR:
%nsurance business has been traditionally classified into life insurance and non-life
insurance (also known as general insurance*. The insurance industry of %ndia consists
of @; insurance companies of which ;) are in life insurance business and ; are non-
life insurers. Among the life insurers, /ife %nsurance 0orporation (/%0* is the sole
public sector company. !ut of ; non-life insurance companies, there are si public
sector insurers, which include two speciali3ed insurers namely Agriculture %nsurance
0ompany /td for 0rop %nsurance and Eport 0redit 2uarantee 0orporation of %ndia
for 0redit %nsurance. Moreover, there are @ private sector insurers are registered to
underwrite policies eclusively in :ealth, ersonal Accident and Travel insurance
segments. They are Star :ealth and Allied %nsurance 0ompany /td, Apollo Munich
:ealth %nsurance 0ompany /td, Ma #upa :ealth %nsurance 0ompany /td, eligare
:ealth %nsurance 0ompany /td and 0igna TTB :ealth %nsurance 0ompany /td.
%n addition to @; insurance companies, there is sole national re-insurer, namely,
2eneral %nsurance 0orporation of %ndia. !ther stakeholders in %ndian %nsurance
market include approved insurance agents, licensed 0orporate Agents, #rokers,0ommon Service 0entres, 4eb-Aggregators, Surveyors and Third arty
Administrators servicing :ealth %nsurance claims.
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%nsurance /aws (Amendment* Act, ;=>@ provides for enhancement of the "oreign
%nvestment 0ap in an %ndian %nsurance 0ompany from ;D to an Eplicitly
0omposite /imit of )C with the safeguard of %ndian !wnership and 0ontrol.
%nsurance penetration of %ndia i.e. remium collected by %ndian insurers is @*
T4p# o )!(in#(( P!3li- S#-tor Priat# S#-tor Total
/ife %nsurance > ;< ;)
&on-/ife
%nsurance
HD HH;; ;
e-insurance > = >
Total B 1<
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concerned. 4hile the density of life insurance in %ndia grew from $SG C.> in ;==> to
$SG )?.? in ;==C, the density in the non-life insurance industry for the same period
grew from $SG ;.) to $SG D.?. Similarly, penetration in the life insurance sector
increased from ;.>@ per cent in ;==> to ).D= per cent in ;==C and very marginally in
the non-life insurance sector from =.@D per cent in ;==> to =.D= per cent in ;==C.Thus, penetration in the non-life insurance sector has remained virtually constant over
the years. %ndia9s insurance penetration is lower than the world average which in ;==C
was ?.= percent, while for %ndia it was @.; per cent. Although, the penetration of
%ndian insurance is higher than that of some South Asian countries like akistan
(=.?*, #angladesh (=.C* and Sri /anka (>.)*, it lags behind other Asian countries
like Japan (C.C*, South Borea (>=.)* and Singapore (D.*.
Several factors are responsible for the low levels of insurance penetration in the
country. These include low consumer preference, untapped rural markets and
constrained distribution channels. %n urban areas, life insurance penetration in the
market is approimately D@ per cent, and is considerably lesser in the low-income
unbanked segment. %n rural areas, life insurance penetration in the banked segment is
estimated to be approimately )= per cent, and at best is marginal in the unbanked
segment. #efore opening the sector to private insurers, it was felt that low levels of
insurance penetration were due to ineffective market strategies adopted by /%0. #eing
a monopoly, the company had no strategic market plan. Advertising initiatives were
limited to the print and electronic media, which mainly promoted /%09s products as
being ta saving tools for salaried individuals. Although the level of penetration has
increased after the entry of other players, it is still low compared to other countries.
According to consumer feedback, the problem has been eacerbated due to1
• Agents9 inability to clearly eplain the features of the productsI
• /engthy documents that are not user friendlyI and• The perception that agents are only concerned with their commissions.
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CHAPTER TWO
RURAL INSURANCE
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.50 INTRODUCTION:
%ndia lives in villages. !ut of the total of >;>=.; million people in the country, the si3e
of rural population is >. 'uring ;==>-;=>> the rural population increased by
C=.) million, and the number of villages increased by ;,;?C. The ma+ority of world9s
rural population lives in rural %ndia. 4ith its vast si3e and widespread array of
consumers, the marketers of financial products such as life insurance have been
eploring the opportunities to understand and penetrate into rural markets.
The life insurers in %ndia had underwritten >>.< million policies in the rural sector, out
of )).> million new policies underwritten by them in ;=>;->)*. Approimately one-fourth of %ndia9s population
lives in D
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%nsurance can truly be a direct link between macroeconomic needs of the country for
productive resources by capital accumulation and micro need for better and secure life
of the individual.
/%0 claims that over @> of its new policies are sold in rural areas. KThe impetus on
rural thrust can be further visuali3ed from the fact that nearly half of /%09s agents arefrom rural areas and over half of its branches are in no facility areas.L#ut the well
known but not admitted fact is that, in /%0 the classification of business secured is on
the basis of residency of the Agent than the residency of the insured population in
rural areas. %t is only rural ostal /ife %nsurance that really covers rural population.
Li# In(!ran-# in R!ral C$ann#l( o In&ia:
At present ->= rural households are covered under life insurance schemes and
remaining C= can be targeted for new innovative insurance schemes. About ;==
million rural populations out of ?== million have the surplus money to save money to
their available option post offices and a few limited commercial banks rural etension
counters. 4ith the ma+ority of the population still residing in rural areas, the
development of rural insurance will be critical in driving overall insurance market
development over the longer term. There is a need to create a broader awareness about
life insurance in all geographic areas in %ndia through specific collective campaigns.
This is an important precondition to developing insurance and increasing penetration.
Awareness is lacking not only in rural areas, small towns and among the less educated
persons. Even in urban areas, vast segments of population seem to have erroneous
perception or impression which needs to be corrected. #efore proceeding to rural
channels we try to give concepts of perception.
R!ral C!(to"#r P#r-#ption o Li# In(!ran-#
0ustomer awareness or perception as a concept is of universal concern for all
economies of the world. %n the contet of a booming %ndian economy and
unprecedented growth being witnessed by %nsurance industry - especially life
insurance -, it would be interesting to eamine this concept in depth. erception is
defined as the process by which an individual receives, selects, organi3es, and
interprets information to create a meaningful picture of the world. erception is the
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process by which an individual selects, organi3es and interprets information to create
a meaningful picture of the world. %ndividuals act and react on the basis of their
perceptions, not on the basis of ob+ective reality. :ence, for a marketer to know the
customers9 perception is more important than their knowledge of ob+ective reality.
4hat consumers think about a product, and what it actually is affects their actions.%ndividuals make decisions and take actions based on what they perceive to be reality
is very important to marketers to understand the whole notion of perception and is
related concepts, so they can more readily determine what factors influence
consumers to buy. The companies are trying to trigger growth in rural areas. They are
identifying the fact that rural people are now in the better position with disposable
income. The low rate finance availability has also increased the affordability of
purchasing the insurance products by the rural people. Marketer should understand the
price sensitivity of a consumer in a rural area. The buying behavior of the rural
consumers in %ndia is influenced by several factors, such as socio-economic
conditions, cultural environment, literacy level, occupation, geographical location,
etensive efforts on the part of sellers, eposure to the media, etc.
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CHAPTER THREE
COMPANY PROFILE
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?50 INTRODUCTION TO LIFE INCORPORATION OF INDIA *LIC,:
/ife %nsurance 0orporation is an %ndian state-owned insurance
group and investment company head7uartered in Mumbai. %t is the largest
insurance company in %ndia with an estimated asset value
of >@D=);₹ crore ($SG;< it had total life fund of
₹>)>.
!riental /ife %nsurance 0ompany started by Europeans in 0alcutta was the first
life insurance company on %ndian Soil. All the insurance companies established
during that period were brought up with the purpose of looking after the needs of
European community and %ndian natives were not being insured by these
companies. :owever, later with the efforts of eminent people like #abu Muttylal
Seal, the foreign life insurance companies started insuring %ndian lives. #ut %ndian
lives were being treated as sub-standard lives and heavy etra premiums were
being charged on them. #ombay Mutual /ife Assurance Society heralded the birth
of first %ndian life insurance company in the year >?=, and covered %ndian lives at
normal rates. Starting as %ndian enterprise with highly patriotic motives, insurance
companies came into eistence to carry the message of insurance and social
security through insurance to various sectors of society. #harat %nsurance
0ompany (>CD* was also one of such companies inspired by nationalism. TheSwadeshi movement of >C=@->C=? gave rise to more insurance companies. The
$nited %ndia in Madras, &ational %ndian and &ational %nsurance in 0alcutta and
the 0o-operative Assurance at /ahore were established in >C=D. %n >C=?,
:industan 0o-operative %nsurance 0ompany took its birth in one of the rooms of
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https://en.wikipedia.org/wiki/State_ownedhttps://en.wikipedia.org/wiki/Insurance_grouphttps://en.wikipedia.org/wiki/Insurance_grouphttps://en.wikipedia.org/wiki/Investment_companyhttps://en.wikipedia.org/wiki/Investment_companyhttps://en.wikipedia.org/wiki/Mumbaihttps://en.wikipedia.org/wiki/Crorehttps://en.wikipedia.org/wiki/Parliament_of_Indiahttps://en.wikipedia.org/wiki/Parliament_of_Indiahttps://en.wikipedia.org/wiki/Insurance_grouphttps://en.wikipedia.org/wiki/Insurance_grouphttps://en.wikipedia.org/wiki/Investment_companyhttps://en.wikipedia.org/wiki/Mumbaihttps://en.wikipedia.org/wiki/Crorehttps://en.wikipedia.org/wiki/Parliament_of_Indiahttps://en.wikipedia.org/wiki/Parliament_of_Indiahttps://en.wikipedia.org/wiki/State_owned
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the Jorasanko, house of the great poet abindranath Tagore, in 0alcutta. The
%ndian Mercantile, 2eneral Assurance and Swadeshi /ife (later #ombay /ife*
were some of the companies established during the same period. rior to >C>;
%ndia had no legislation to regulate insurance business. %n the year >C>;, the /ife
%nsurance 0ompanies Act, and the rovident "und Act were passed. The /ife%nsurance 0ompanies Act, >C>; made it necessary that the premium rate tables
and periodical valuations of companies should be certified by an actuary. #ut the
Act discriminated between foreign and %ndian companies on many accounts,
putting the %ndian companies at a disadvantage.
The first two decades of the twentieth century saw lot of growth in insurance
business. "rom )) companies with total business-in-force as s.;;.)) crore, it rose
to >?D companies with total business-in-force as s.;C crore in >C
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?5? OR7ANIATIONAL SETUP OF LIC:
/%0 had @ 3onal offices, ; branch offices, apart from
its corporate office in the year >C@D. Since life insurance contracts are long term
contracts and during the currency of the policy it re7uires a variety of services
need was felt in the later years to epand the operations and place a branch officeat each district head7uarter. e-organi3ation of /%0 took place and large numbers
of new branch offices were opened. As a result of re-organi3ation servicing
functions were transferred to the branches, and branches were made accounting
units. %t worked wonders with the performance of the corporation. %t may be seen
that from about ;==.== crores of &ew #usiness in >C@? the corporation crossed
>===.== crores only in the year >CDC-?=, and it took another >= years for /%0 to
cross ;===.== crore mark of new business. #ut with re-organi3ation happening in
the early eighties, by >C@-D /%0 had already crossed ?===.== crore Sum
Assured on new policies.
Today /%0 functions with ;=) fully computeri3ed branch offices, >>< divisional
offices, Nonal offices, > Satellite offices and the corporate office. /%08s 4ide
Area &etwork covers >>< 'ivisional offices and connects all the branches through
a Metro Area &etwork. /%0 has tied up with some #anks and Service providers to
offer on-line premium collection facility in selected cities. /%09s E0S and ATM
premium payment facility is an addition to customer convenience. Apart from on-
line Biosks and %OS, %nfo 0entres have been commissioned at Mumbai,
Ahmedabad, #angalore, 0hennai, :yderabad, Bolkata, &ew 'elhi, une and
many other cities. 4ith a vision of providing easy access to its policyholders, /%0
has launched its SATE//%TE SAMAB offices. The satellite offices are smaller,
leaner and closer to the customer. The digitali3ed records of the satellite offices
will facilitate anywhere servicing and many other conveniences in the future.
?51 O)JECTI@ES OF LIC:
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Spread /ife %nsurance 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 ade7uate financial
cover against death at a reasonable cost.
Maimi3e mobili3ation of people8s savings by making insurance-linked
savings ade7uately attractive.
#ear 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 wholeI 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.
0onduct business with utmost economy and with the full reali3ation 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.
%nvolve all people working in the 0orporation to the best of their capability
in furthering the interests of the insured public by providing efficient
service with courtesy.
romote amongst all agents and employees of the 0orporation a sense of
participation, pride and +ob satisfaction through discharge of their duties
with dedication towards achievement of 0orporate !b+ective.
?5< MISSION AND @ISION:
Mi((ion: Ensure and enhance the 7uality of life of people through financial
security by providing products and services of aspired attributes with
competitive returns, and by rendering resources for economic development.
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@i(ion1 A trans-nationally competitive financial conglomerate of
significance to societies and ride of %ndia.
?52 )OARD OF DIRECTORS:
Members on the #oard of the corporation-• Shri S.B. oy (0hairman, /%0 of %ndia*
• Shri O B Sharma (Managing 'irector, /%0 of %ndia*
• Smt $sha Sangwan (Managing 'irector, /%0 of %ndia*
• Shri Shantikanta 'as
• Smt Snehlata 'as
•
Shri Ashwani Bumar (0M', 'ena #ank*• Shri San+ay Ballapur (&on- !fficial Member*
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CHAPTER FOUR
LITERATURE RE@IEW
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105 RI@IEW OF LITERATURE:
There are various studies related to %nsurance Sector in %ndia and abroad. %t was found
that the numerous numbers of literatures is available on insurance industry and its
various aspects. "ew relevant reviews are putting here in the contet, they are as
follows1
T$# Mal$otra Co""itt## *0?, + :ighlights the importance of the rural branch
postmasters who en+oy a position of trust in the community. They have the capacity to
canvass life insurance business within their respective areas. Accordingly, the
2overnment of %ndia accepted the recommendation and permitted ostal /ife
%nsurance to etend its coverage to the rural areas to transact life insurance business
with effect from ;).CC@, mainly because of the vast network of post offices in therural areas and low cost of operations. The 'epartment of osts within a short span of
time, made a very positive impact on the rural populace. As on st March ;=>@, there
are more than ;million ural ostal /ife %nsurance policies in %ndia (/%*.
Ran&$#4 an& A$!;a *0, + Says that need for private sector entry has been
+ustified on the basis of enhancing the efficiency of operations, achieving a greater density and penetration of life insurance in the country, and for grater mobili3ation of
long-term savings for long gestation infrastructure pro+ects.
Rao Tripti D *.///, + Stated that rivati3ation of insurance industry is based on the
view that competition would enhance efficiency through increased resource
utili3ation. %t would spill over as benefits to the consumers in terms of reduction in
premium costs with proper pricing policy and wider choice. /iberali3ation may also
increase the scope of operation of insurance business from limited area to untapped
areas like health, crop and unemployment.
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Ma-$ira;! Apparao *.//., + Argues that it is an undisputed fact that about ?@ to
= of the insurance population is yet to be covered in %ndia. %t is estimated that in
terms of lives, the figure could be around ;= crores. Those who are insured also are
not ade7uately insured. %nsurance policies are sold, but not insuring the people based
on needs.
Ra;! Sat4a R5 *.//1, + "ound that the insurance agents, development officers9
employees, eecutives at different levels should work together to achieve the
ob+ectives and mission and also to face the present and future competition as a
challenge. The insurance product and services should be designed and offered as per
the customer re7uirements.
Palan et al *.//, + "ound that the %nsurance industry is going to witness sea
changes in its marketing strategies. The eisting and the new insurers will devise
different strategies to retain and enhance their market share. %t would be done by
various methods by bringing in new practices, settings new service standards and
creating new benchmarks.
M-8in(#4 = Co"pan4 *.//, + #y ;=>; about >=.< million household with income
greater than s ; lakh will control more than ;; percent of rural consumption.
"urthermore rural %ndia will not be one market. ockets of attractive rural market will
emerge in certain parts of %ndia. layers will need to understand their needs, design
products to match them and create distribution models to reach a highly fragmented
consumer base cost effectively.
Ran;an Da( = Ra##n&ra *.//B, + The rural market for life insurance is different
from the urban market in terms of needs, income levels and distribution (seasonality
for eample*, penetration of media, awareness and so on. Ecept /%0 of %ndia, no
other player has paid much attention to the rural sector in spite of their fully meeting
the %'A obligations.
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C#l#nt *.//B, + The report published says that %ndia9s life insurance market is
booming and the market has grown at a healthy 0A2 of ;) over the past @ years.
Most of this growth is from the urban areas. The increase in competition is forcing
insurance providers to look beyond urban centers and take their trade to the more
challenging rural hinterlands of the country, where only
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S#la8!"ar= Pri4an *./0/, + "ound that insurance companies are increasingly
taping the semi-urban and rural areas to take across the message of protection of life
through insurance cover. :igher level of protection implies that customers are more
conscious of the need for risk mitigation, grater security, and about the future of their
dependents. %nsurance sector has been evolving and improving its underwriting andrisk management abilities.
74an#n&ra Sin'$ L an& J4oti 6!"ar N@R *./0?, + %n their study points out that in
Mi3oram, the rural and urban ratio of /%0 policyholders during ;==C->= was >)1D,
and in the first half yearly report from April to September, ;=>= the ratio was ;=1=
indicating that only >?.;> per cent of the total &!s during the period was from rural
policyholders of Mi3oram, much below the national average of ;
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CHAPTER FI@E
RATIONALE OF STUDY
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