CHAPTER 1.

LIFE INSURANCE OF INDIA

MEANING OF LIFE INSURANCE

CONCEPT OF LIFE INSURANCE Life insurance is a contract under which the insurer (Insurance Company) in consideration of a premium paid undertakes to pay a fixed sum of money on the death of the insured or on the expiry of a specified period of time whichever is earlier. In case of life insurance, the payment for life insurance policy is certain. The event insured against is sure to happen only the time of its happening is not known. So life insurance is known as Life Assurance. The subject matter of insurance is life of human being. Life insurance provides risk coverage to the life of a person. On death of the person insurance offers protection against loss of income and compensate the titleholders of the policy.

BASIC PRINCIPLES OF LIFE INSURANCE CONTRACT

1. Insurable interest: The insured must have insurable interest in the life assured. In absence of insurable interest, Contract of insurance is void. Insurable interest must be present at the time of entering into contract with insurance company for life insurance. It is not necessary that the assured should have insurable interest at the time of maturity also. Insurable interest exists in the following cases: (a) A person has an unlimited insurable interest in his/her own life.
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(b) A person has an insurable interest in the life of his/her spouse. (c) A father has an insurable interest in the life of his son or daughter on whom he is dependent. Likewise a son may have insurable interest in life of his parents. (d) A creditor has an insurable interest in the life of the debtor, to the extent of the debt. (e) A servant employed for a specified period has insurable interest in the life of his employer.

2. Utmost good faith : The contract of life insurance is a contract of utmost good faith. The insured should be open and truthful and should not conceal any material fact in giving information to the insurance company, while entering into a contract with insurance company. Misrepresentation or concealment of any fact will entitle the insurer to repudiate the contract if he wishes to do so.

3. Not a contract of indemnity : A Contract of life insurance is not a contract of indemnity. The loss of life cannot be compensated and only a fixed sum of money is paid in the event of death of the insured. So, the life insurance contract is not a contract of indemnity. The loss resulting from the death of life assured cannot be calculated in terms of money.

 NEED OF LIFE INSURANCE The business of life insurance is related to protection of the economic values of the assets. Every asset is of some value and is expected to last for a certain period of time during which it will deliver that value. In case the asset is destroyed it ceases to provide the value to the owner thus leading to an unpleasant situation. Life insurance is a mechanism to reduce the affect of such unpleasant situation. Human life is considered to be a value generating asset and is also subject to risks.

Assets are insured because there if a possibility that perhaps they might get destroyed, through accidental occurrences. Such possible occurrences are called perils. If such perils can cause damage to the asset we say that the asset is exposed to risk. To be more prcised Perils are the events and risks are the consequential losses or damages. The risk only means that there is a possibility of a loss or damage, the loss may or may not happen. Life insurance is done against the contingency that it might happen. Life insurance is relevant only if there are uncertainties. If there is no uncertainty about the occurrence of an event, it cannot be insured against. In case of human beings death is certain; however the time of death is uncertain.

Moreover life insurance is backed up with many economic benefits which can be enlisted as follows.

Life insurance provides financial security to the family in case of untimely or premature death. Life insurance is also a potent instrument for saving. Life insurance provides financial independence in old age. Organizations or individuals, who are in credit business, can ensure for themselves recovery of loan in case their debtor dies. A partnership firm can insure partners to the extent of capital invested by each in the business. Under key man life insurance, an organization can insure the lives of their executives, whose expertise greatly contributes to their profits. Organizations can purchase group life insurance policies as a part of their employee- welfare program. Life insurance also provides tax benefits to the holder. Life insurance policies create an estate. Life insurance policies also create thrift. I.e. a compulsory saving. A policy of life insurance can b used as a collateral security for procuring loans from the market.

LIFE INSURANCE COMPANIES IN INDIA

PRIVATE LIFE INSURANCE COMPANIES AND THEIR

PROMOTER Sr. no. 1 Name of the Insurer HDFC Standard Life Insurance Co. Ltd. 2 Max New York Life Insurance Co. Ltd. 3 ICICI Prudential Life Insurance Co. Ltd. 4 ICICI Prudential Life Insurance Co. Ltd. 5 6 Birla Sun Life Insurance Co. Ltd. TATA AIG Life Insurance Co. Ltd. 7 SBI Life Insurance Co. Ltd. 30/03/2001 State Bank Of India 8 ING Vysya Life Insurance Co. Ltd. 9 Bajaj Allianz Life Insurance Co. Ltd. 10 11 Met Life India Insurance Co. Ltd. Reliance Life Insurance Co. Ltd. 06/08/2001 03/01/2002 J & K Bank Reliance Capital 12 Sahara India Life Insurance Co. Ltd. 13 Aviva Life Insurance Co. Ltd.
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Date of Registration 23/10/2000

Indian Promoter HDFC Ltd.

15/11/2000

MAX India

24/11/2000

ICICI Bank

10/01/2001

Kotak Mahindra Bank

31/01/2001 12/02/2001

Birla Group TATA Group

02/08/2001

VYSYA Bank

03/08/2001

Bajaj Auto

06/02/2004

Sahara Group

14/05/2002

Dabour Group

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Shriram Life Insurance Co. Ltd Bharti Axa Life Insurance Co. Ltd.

17/11/2005 14/07/2006

Shriram Group Bharti Group

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Future Generali India Life Insurance Co. Ltd.

04/09/2007

Future Group

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IDBI Fortis Life Insurance Co. Ltd.

19/12/2007

IDBI Bank

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Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd.

08/05/2008

Canara Bank

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Aegon Religare Life Insurance Co. Ltd.

27/06/2008

Religare Enterprises Limited

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DLF Pramerica Life Insurance Co. Ltd

27/06/2008

DLF Group

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Star Union Dai-ichi Life Insurance Co. Ltd.

26/12/2008

Bank of India

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India First Life Insurance Co. Ltd

05/11/2009

Bank of Baroda

PUBLIC LIFE INSURANCE COMPANIES IN INDIA

Life Insurance Corporation of India

ROLES OF LIFE INSURANCE

Life Insurance is of great importance to individuals, groups, business community and general public. Risks and uncertainties are part of life's great adventure -- accident, illness, theft, natural disaster - they're all built into the working of the Universe, waiting to happen.

1) Protection Against Untimely Death: Life insurance provides protection to the dependents of the life insured and the family of the assured in case of his untimely death. The dependents or family members get a fixed sum of money in case of death of the assured.

2) Saving For Old Age: After retirement the earning capacity of a person reduces. Life insurance enables a person to enjoy peace of mind and a sense of security in his/her old age.

3) Promotion Of Savings: Life insurance encourages people to save money compulsorily. When a life policy is taken, the assured is to pay premiums regularly to keep the policy in force and he cannot get back the premiums, only surrender value can be returned to him. In case of surrender of policy, the policyholder gets the surrendered value only after the expiry of duration of the policy.

4) Credit Worthiness Life insurance policy can be used as a security to raise loans. It improves the credit worthiness of business.

5) Initiates Investments: Life Insurance Corporation encourages and mobilizes the public savings and channelizes the same in various investments for the economic development of the country. Life insurance is an important tool for the mobilization and investment of small savings.

6) Social Security Life insurance is important for the society as a whole also. Life insurance enables a person to provide for education and marriage of children and for construction of house. It helps a person to make financial base for future.

7) Tax Benefit Insurance serves as an excellent tax saving mechanism too. The Government of India has offered tax incentives to life insurance products in order to facilitate the flow of funds into productive assets. Buying a life insurance plan entitles you tax benefits on:

Your premiums under Section 80C. Maturity or death claim proceeds under Section 10 (10D). Tax benefits under the policy will be as per the prevailing income tax laws

and are subject to change in the tax laws.

8) Life Insurance as "Investment" Insurance. While most people recognize the risk hedging and tax saving potential of insurance, many are not aware of its advantages as an investment option as well. Insurance products yield more compared to regular investment options, and this is besides the added incentives (read bonuses) offered by insurers. You cannot compare an insurance product with other investment schemes for the simple reason that it offers financial protection from risks, something that is missing in non-insurance products. In fact, the premium you pay for an insurance policy is an investment against risk. Thus, before comparing with other schemes, you must accept that a part of the total amount invested in life insurance goes towards providing for the risk cover, while the rest is used for savings. In life insurance, unlike non-life products, you get maturity benefits on survival at the end of the term. In other words, if you take a life insurance policy for 20 years and survive the term, the amount invested as premium in the policy will come back to you with added returns. In the unfortunate event of death within the tenure of the policy, the family of the deceased will receive the sum assured. Thus, insurance is a unique investment avenue that delivers sound returns in addition to protection.

9) Retirement Supplement Some life insurance policies can be converted into an annuity that will pay dividends to the holder after retirement. These usually are more expensive policies, and many financial planners urge buyers to make their investment programs separate from their insurance.

GROWTH OF LIFE INSURANCE SECTOR IN INDIA

With the entry of private insurers in life insurance business, it is obvious that some proportion of new business will go in the hands of private life insurers. An attempt, therefore, has been made to study the growth of new business in terms of policies and premium income of Indian life insurance industry. Further, the share of private insurers and LIC in total new business has also been studied. Table reveals that total new business policies of life insurance industry increased from Rs. 253.71 lac in 2002-03 to Rs. 353.74 lac in 2010-11, registering a growth rate of 16.1 per cent during the period of study. Similarly, total new business premium of life insurance industry increased from Rs. 9707.45 crore in 2000-01 to Rs. 92988.71 crore in 2007-08, which showed a growth rate of 35.1 per cent during the period of study. On the other hand, LICs new business policies increased from Rs. 245.46 lac in 2002 -03 to Rs. 376.13 lac in 2007-08, showing a growth rate of just 10.4 per cent during the same period. Similarly, LICs new business premium increased from Rs. 9700.98 crore in 2000-01 to Rs. 59182.20 crore in 2007-08, which has grown at the rate of 26.7 per cent during the period of study. However, new business policies of private life insurers increased from Rs. 25 lac in 2002-03 to Rs. 132.61 lac in 2007-08, registering a high growth rate of 72.7 per cent during the period of study. Similarly, new business premium of private life insurers increased from Rs. 6.45 crore in 2000-01 to Rs. 33806.51 crore in 2007-08, registering a significantly high growth rate of 189.6 per cent during the same period. Further, the share of LIC decreased from 96.75 per cent in 2002-03 to 73.93 per cent in 2007-08 in terms of policies and from 99.92 per cent in 200203 to 63.64 per cent in 2007-08 in terms of premium. It is worth noting that the percentage share of private life insurers was higher (36.36%) in case of new business premium as compared to new business policies (26.07%), which meant that per policy premium income of private life insurers was higher than LIC
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during the above period. Coefficient of variation stood at 20.85 per cent and 96.36 per cent in terms of policies for LIC and private life insurers respectively. Similarly, coefficient of variation stood at 66.37 per cent and 131.59 per cent in terms of premium for LIC and private life insurers respectively. This shows that growth was more consistent for LIC as compared to private life insurers both in terms of policies and premium Table : Growth of Life Insurance New Business in India

Note: N.A. stands for not available Note: The figures in parenthesis denote percentage share to total business.

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 Growth in Number of Individual Agents working in Life Insurance Industry: Individual agents are the major source for getting new business in life insurance industry. It is evident from the fact that LIC and private life insurers got 88.66 per cent and 66.3 per cent of their total new business respectively through individual agents during the year 2006-07. Table reveals that total number of individual agents increased from 1423839 in 2005-06 to 1993199 in 2006-07, registering an increase of 39.99 per cent during the year 2006-07. While the number of individual agents of LIC increased from 1052993 to 1103047 showing an increase of 4.75 per cent during the year 2006-07, the number of individual agents of private life insurers increased from 370846 to 891052 registering an increase of 140.3 per cent during the same period. Further, the turnover ratio was 14.05 per cent and 39.72 per cent respectively for LIC and private life insurers. This ratio was 20.75 per cent for the life insurance industry as a whole. The high turnover ratio for private life insurers may be due to wrong recruitment policies or lesser job satisfaction Table: Individual Agents of Life Insurers Operating in India

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 Growth of Premium Income in Indian Life Insurance Industry Premium income is the second major source of income of life insurance industry. Table 7 reveals that total premium earned by life insurance industry increased from Rs. 34898.47 crore in 2000-01 to Rs. 156041.79 crore in 200607, registering a growth rate of 37.6 per cent during the period of study. Similarly, total premium earned by LIC increased from Rs. 34890.02 crore in 2000-01 to Rs. 127822.84 crore in 2006-07 which showed a lesser growth rate of 21.3 per cent during the same period. Similarly, total premium earned by private life insurers increased from Rs. 6.45 crore in 2000-01 to Rs. 28218.95 crore in 2006-07, registering a very high growth rate of 250.4 per cent during the period of study. As a result, the share of private life insurers in total premium increased from 0.02 per cent in 2000-01 to 18.08 per cent in 2006-07. Coefficient of variation stood at 43.5 per cent and 131.54 per cent for LIC and private life insurers respectively which shows that growth was more consistent in case of LIC as compared to private life insurers Table: Growth of Total Premium Earned by Life Insurance Industry

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CHAPTER 2. MARKETING MIX

The marketing mix is a business tool used in marketing and by marketing professionals. The marketing mix is often crucial when determining a product or brand's offer, and is often synonymous with the four

Ps: price, product, promotion, and place; in service marketing, however, the four Ps have been expanded to the Seven Ps or eight Ps to address the different nature of services. In recent times, the concept of four Cs has been introduced as a more customer-driven replacement of four Ps. And there are two four Cs theories today. One is Lauterborn's four Cs (consumer, cost, communication, convenience); another is Shimizu's four Cs (commodity, cost, communication, and channel).

DEFIMITIONS OF MARKETING MIX: According to William Stanton, Marketing mix is the term used to describe the combination of the four inputs which constitute the core of the companys marketing system: the Product, the Price structure, the Promotional activities and the Distribution system. According to Philip Kotler, marketing mix is the mixture of controllable marketing variable that the firm uses to pursue the sought level of sales in target market.

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FEATURE OF MARKETING MIX 1) Marketing mix is the combination of four basic marketing variables namely, product, price, promotion, and place. 2) Marketing mix aims at achieving marketing targets in term of sales, profit and consumer satisfaction. Marketing mix is the marketing managers instrument for attainment of marketing objectives. 3) Marketing mix is a flexible combination of variables. It is necessary to adjust the variable in the marketing mix from time to time as per the charges in the marketing environment. 4) A marketing manages has to function as a mixes of marketing ingredients and has to achieve desired results through skillful combination of four Ps. He needs maturity, imagination and intelligence for appropriate blending of the variables. 5) The main focus of marketing mix is the customer. His satisfaction and support are important. 6) Marketing mix variable are interrelated. Decisions in one area affect the action in the other areas. An integrated approach is needed while making changes in the marketing mix variables. 7) The concept of marketing mix is applicable to business as well as to nonprofit making organizations such as clubs and associations. 8) Marketing mix is a consumer-oriented activity as its purpose is the satisfactions and pleasure of the consumers.

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HISTORY
Borden (1965) claims to be the first to have used the term marketing mix and that it was suggested to him by Cullitons (1948) description of a business executive as mixer of ingredients. An executive is a mixer of ingredients, who sometimes follows a recipe as he goes along, sometimes adapts a recipe to the ingredients immediately available, and sometimes experiments with or invents ingredients no one else has tried (Culliton, 1948). The early marketing concept in a similar way to the notion of the marketing mix, based on the idea of action parameters presented in 1930s by Stackelberg (1939). Rasmussen (1955) then developed what became known as parameter theory. He proposes that the four determinants of competition and sales are price, quality, service and advertising. Mickwitz (1959) applies this theory to the Product Life Cycle Concept. Bordens original marketing mix had a set of 12 elements namely: product planning; pricing; branding; channels of distribution; personal selling; advertising; promotions; packaging; display; servicing; physical handling; and fact finding and analysis. Frey (1961) suggests that marketing variables should be divided into two parts: the offering (product, packaging, brand, price and service) and the methods and tools (distribution channels, personal selling, advertising, sales promotion and publicity). On the other hand, Lazer and Kelly (1962) and Lazer, Culley and Staudt (1973) suggested three elements of marketing mix: the goods and services mix, the distribution mix and the communication mix. McCarthy (1964) refined Bordens (1965) idea further and defined the marketing mix as a combination of all of the factors at a marketing mangers command to satisfy the target market. He regrouped Bordens12 elements to four elements or 4Ps, namely product, price, promotion and place at a marketing mangers command to satisfy the target market.

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Especially in 1980s onward, number of researchers proposes new P into the marketing mix. Judd (1987) proposes a fifth P (people). Booms and Bitner (1980) add 3 Ps (participants, physical evidence and process) to the original 4 Ps to apply the marketing mix concept to service. Kotler (1986) adds political power and public opinion formation to the Ps concept. Baumgartner (1991) suggests the concept of 15 Ps. MaGrath (1986) suggests the addition of 3 Ps (personnel, physical facilities and process management). Vignalis and Davis (1994) suggest the addition of S (service) to the marketing mix. Goldsmith (1999) suggests that there should be 8 Ps (product, price, place, promotion, participants, physical evidence, process and personalization). Moller (2006) presents an up-to-date picture of the current standing in the debate around the Mix as marketing paradigm and predominant marketing management tool by reviewing academic views from five marketing management sub-disciplines (consumer marketing, relationship marketing, services marketing, retail marketing and industrial marketing) and an emerging marketing (E-Commerce) (Table 1-6). Most of researchers and writers reviewed in these domains express serious doubts as to the role of the Mix as marketing management tool in its original form, proposing alternative approaches, which is adding new parameters to the original Mix or replacing it with alternative frameworks altogether.

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MCCARTHYS 4 PS
McCarthys 4 Ps are especially relevant in the marketing of consumer goods (B2C), such as supermarket products or durable goods like white goods and cars. Nevertheless, the 4 Ps are also used for B2B. For example, stationery supplies for companies, in which the 4 Ps are used in the best possible way. However, it is a fact that the 4 Ps mainly target the sales of products and apply to the sales of services to a lesser extent. As the terms product, price, place and promotion also start with the letter P in many languages, the 4 Ps are known all over the world and they are therefore a much-used marketing mix model. 1) PRODUCT This P is called the product mix. This applies to both physical products and services. Sometimes the product is split up into: Physical product; the basic product. It is purely about the functional and aesthetical characteristics such as dimensions, function and life. Extensive product; the physical product with added qualities such as packaging, brand name, service and guarantee. Total product; the extensive product plus emotional, instrumental and expressive qualities and/or values that the consumers attach to this. The product is final for the short term. Changing the product by changing the packaging or new innovations, however, takes time. 2) PRICE The price is an important factor for both the supplier and the consumer and is mainly determined by the proportional relationship between supply and demand. The price can be adjusted quickly, as a result of which this marketing instrument is frequently used. This involves costs. In micro-economics they are referred to as menu costs; whenever a price increase has to be implemented this has to be changed on the menu card.

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3) PLACE It refers to how the product gets to the customer, for example, point-of-sale placement or retailing. This third P has also sometimes been called Place, referring to the channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc. also referring to how the environment in which the product is sold in can affect sales. 4) PROMOTION All communication of a company that is aimed at stimulating sales comes under promotion. Promotion is a broad concept and can therefore be divided into different sub-categories (promotion-mix): Public relations: Is aimed at a good relation with public groups such as customers, competitors, suppliers and financiers. Free publicity: This creates familiarity for instance by press releases and/or by publishing favorable user reviews. Unfortunately, complaints made in public also come under free publicity. Advertising: This is commercial non-personal communication aimed at large groups of consumers. Its main objective is to generate sales (e.g. advertising leaflets, radio and television commercials and bus shelter advertising). Personal sales: An effective but expensive sales tool. During interactions with the customer any objection or preconception can be responded to. Personal sales bring about customer relations; a bond of trust is created with the customer. Sales promotion: Here the emphasis is on price reduction such as 3 for 2, promotional price or a sale. The price reduction itself comes under the P of price. Cold calling: This is about approaching random or selected individuals or companies by telephone with the objective to sell products.
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LAUTERBORN'S FOUR CS
Traditionally the marketing mix has been thought of in terms of McCarthys 4Ps: Price, Product, Promotion and Place. However, this approach originated in the 1960s when homogeneous mass marketing was effective. Customers are now very savvy, post-consumerism consumers with many demands on their time and limited tolerance for interruption. The 4Cs model, proposed by Prof. Robert Lauterborn, recognises that a shift in emphasis is needed and places the focus firmly on the customers perspective rather than your business. The 4 C's of marketing mix include: 1) CONSUMER: The 'Product' of 4P is replaced by 'Consumer' in the 4C concept that lays more emphasis on the satisfying the consumer needs and more inclined towards understanding the consumer needs more specifically and provide services accordingly. Thus it believes in providing custom solution to the consumers rather than a generic solution. 2) COST: Price is replaced by "Cost" that follows the principle of total cost ownership. A lot of factors affect the cost of the product or services, which is not limited to the customer's cost only. Price is only a part of the total cost to satisfy a want or a need. The total cost will consider for example the cost of time in acquiring a good or a service, a cost of conscience by consuming that or even a cost of guilt "for not treating the kids. It reflects the total cost of ownership. Many factors affect Cost, including but not limited to the customer's cost to change or implement the new product or service and the customer's cost for not selecting a competitor's product or service

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3) COMMUNICATION: Promotion is replaced by "Communication" which suggests a broader sense of promotional activities. While promotion is "manipulative" and from the seller, communication is "cooperative" and from the buyer with the aim to create a dialogue with the potential customers based on their needs and lifestyles. It represents a broader focus. Communication involves advertising, public relations, personal selling, viral advertising, and any form of communication between the organization and the consumer. 4) CONVENIENCE: Place is replaced by "convenience", that not only represents the retailers but has a broader sense. This indicates providing the customers with ease of getting the services through various possible means of purchasing. In the era of Internet, catalogs, credit cards and phones people neither need to go anyplace to satisfy a want or a need nor are limited to a few places to satisfy them. Marketers should know how the target market prefers to buy, how to be there and be ubiquitous, in order to guarantee convenience to buy. With the rise of Internet and hybrid models of purchasing, Place is becoming less relevant. Convenience takes into account the ease of buying the product, finding the product, finding information about the product, and several other factors

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SEVEN CS COMPASS MODEL

After Koichi Shimizu proposed a four Cs classification in 1973, this was expanded to the 7Cs Compass Model to provide a more complete picture of the nature of marketing in 1981. It attempts to explain the success or failure of a firm within a market and is somewhat analogous to Michael Porter's diamond model, which tries to explain the success and failure of different countries economically. The 7Cs Compass Models are:1) CORPORATION :The core of four Cs is corporation (company and nonprofit organization). CO-S (Organization, Competitor, Stakeholder) within the Corporation. The company has to think of compliance and accountability as important. The competition in the areas in which the company competes with other firms in its industry. 2) COMMODITY:It is not "product out". The goods and services for the consumers or citizens. Steve Jobs has been making the goods with which people are pleased. It will not become commoditization if a commodity is built starting. 3) COST:There is not only producing cost and selling cost but purchasing cost and social cost. 4) COMMUNICATION:Not only promotion but communication is important. Communications can include advertising, sales promotion, public relations, publicity, personal selling, corporate identity, internal communication, SNS, MIS.

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5) CHANNEL:It not only says for place or distribution channel but it profess to set distribution channel according to convenience of consumers.

6) CONSUMER:Consumers are those people encircling the companies. Instead of just the customers of 4P marketing model, they are the ordinary citizens nurtured by the motto of the consumerism. However of course they are also including the customers and the potential customers. We can then divide the consumers into two categories. The first one is the perspective customers and the second one is the other citizens who have the social relationships with the companies. The factors related to consumers can be explained by the first character of four directions marked on the compass model. These can be remembered by the cardinal directions, hence the name compass model: N = Needs, W = Wants, S = Security and E = Education.

7) CIRCUMSTANCES :Besides the customers, there are also various uncontrollable external environmental factors encircling the companies. The same as the factors of the consumers, they can also be explained the first character of the four directions marked on the compass:N = National and International W=Weather, S = Social and Cultural, E = Economic
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SEVEN PS
1. Product 2. Place 3. Price 4. Promotion 5. Physical evolution 6. Process 7. People 1) PRODUCT:According to Philip Kotler, a product is anything that can be offered to market for attention, acquisition use or consumption that satisfy a want or need. It include physical object like product, service, person, place, organization and idea. Usually the services offered are intangible in nature, but the products that may be offered by it may be tangible. The service marketing concentrates on product in the terms of benefits offered by the product. The product may not be the core offering, but the service is through which we are able to get the product or use the product. 2) PLACE:The place plays an important role in the marketing. The place where the goods and services are made available, the location, the ambience, has positive impact on the goods and services use. 3) PRICE:The price of the goods and services is of importance. The consumer or customer should not feel at any point of time that the money paid by them is more than the benefits of the goods and services.

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4) PROMOTION:The benefits communicated by the goods and services provider should be easily understood and are promoted so that people are interested in it. The promotion of the product should carry all the values imparted by product, benefits of product availability of product. The promotion is needed to influence people or prospects. 5) PROCESS:The processes required to carry out the service availability is one of the 7 Ps. The process is such that the offerings of the service are more utilized and impart more value to the service. With current competition the process of delivering the service can create the competitive difference. According to C. Lovelock there are 7 operational issues, which have to be considered while designing the service quality process. 1) In order to achieve economies of scale and perform consistently the operation people would prefer to process in a batch while the marketing would prefer to cater to individuals so that the customer feels as being treated specially. 2) The decisions on designs and facility layout should satisfy the objective of both. 3) Operational people are interested to improve the productivity as the cost of production per unit will reduce. 4) Operational people want a standardized service since it keeps the cost lower and is easy for implementation. 5) Mange the queues in such a way that it is possible to use the available space. 6) Operational employees feel that the job design should minimize error and standardize tasks, making efficient use of approach.
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6) PEOPLE:People are the customers who use the services made available to them, so that people are interested in using the services. Every effort is made to increase the benefits offered by the services so that people have interest in using the services. People look for vale-for-money i.e. the sacrifice they make in terms of money to avail the service should not be more than the value or benefits offered by the service. Front stage people play a very important role as they are involved in direct contact with the customers. 7) PHYSICAL EVOLUTION:Generally a service transaction involves the interaction of the service provider with the customer in a service environment. Physical environment is termed as the social environment along with the tangible cues. Zeithaml & Bitner define physical evidence as the environment in which the services are delivered and where the firm and customer interact; and any tangible commodities that facilitate performance communication of the service. Physical Eidanve include all the efforts taken by the service provider to tangibilise their services, they include: a) Physical facilities. b) Physical environment, and c) Social settings.

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CHAPTER 3. MARKETING MIX OF LIFE INSURANCE

Marketing mix is one of the fundamental concepts in marketing management, in order to attract customer and for promoting sales every business organization has to concentrate on the basic element, they are Product mix, Price mix, Place mix, Promotion mix, People mix, Processes mix, Physical evidence mix. The life insurance marketing Emphasizes on the importance of consumer needs and hence a life insurance first analyses the nature of the customer needs. The entire life insurance marketing efforts focus attention around, the customers needs. According to Philip kotler marketing mix is the mixture of controllable marketing variable that the firm uses to pursue the sought level of sales in target market.

THE LIFE INSURANCE MIX Product mix Price mix Place mix Promotion mix People mix Processes mix Physical evidence mix

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PRODUCT MIX
A product is what the seller has to sell and the buyer has to buy. An insurance company sells service and the policies are their product. Thus, the product is also called a bundle of utilities consisting of various product features and accompanying service. When a person or an organization buys an insurance police from the insurance company, he not only buys a policy, but along with it the assistance and advise of the agent, the prestige of the insurance company and the facilities of claims and compensation. Managing the product component involves product planning and development. The life insurance marketers must define their market in terms of product functions. It may offer a single product or several products. The product mix consists of the following: Product development, product range, individual scheme, group scheme, pension scheme, risk covered, product service, housing schemes, mutual fund scheme, investment on securities etc. Life insurance as product has to be designed keeping in view the expectations of the customers. In case of life insurance, the needs are in the form of two broad economic contingencies namely death of the breadwinner and the subsequent financial insecurity of his dependents and secondly, longer life insurance is sold as plan of life insurance companies. Life insurance companies several products specially suited for children, exclusive for woman, the handicapped, senior citizens to cover occurrence of terminal diseases, term assurance and pension plans.

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TYPES OF LIFE INSURANCE PRDUCT 1. Term Insurance This type of life insurance policy is a contract between the insured and the life insurance company to pay the persons/s he has given entitlement to receive the money, in the case of his/her death, after a certain period of time. These policies can be taken for 5, 10, 15, 20 or 30 years. 2. Endowment Policy In an endowment policy, periodic premiums are received by the insured person and a lump sum is received either on the death of the insured or once the policy period expires. 3. Money Back Life Insurance Policy This policy offers the payment of partial survival benefits (money back), as is determined in the insurance contract, while the insured is still alive. In case the insured dies during the period of the policy, the beneficiary gets the full sum insured without the deduction of the money back amount given so far. 4. Group Life Insurance This is when a group of people have been named under a single life insurance policy. It is popular for an employer or a company to add employees under the same policy. Each member of the group has a certificate as legal evidence of insurance. 5. Unit Linked Insurance Plan ULIPs (Unit Linked Insurance Plan) offer the insured the double benefit of protection from risk and investment opportunities. ULIPs are linked to the market where the insureds money is invested to help earn additional monetary benefits.

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PRICE MIX (PREMIUM CHARGE)

In life insurance price means the premium. It is another powerful element in life insurance marketing mix and vitally affects the volume of sales. Price is a valuation placed upon the product of the offerer. The various variable of price mix are insure sum, interest on loan, investment return, mode of payment, underwriting, commission, tax benefit, incentive etc. The Tariff advisory committee fixes the price for each policy. Hence all life insurance companies have to charge approximately similar premium on similar policies. However, different elements affect the rate of premium to be charged on each policy. The price for the same policy is different for different companies. There are various steps, which are followed in order to fix the price. They are as follows:

STEP 1 In the first step, the company decides where it wants to position its market offering. The clearer the firms objective, easier it is to set the p rice.

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STEP 2 Each price will lead to a different level of demand therefore has a different impact on companys marketing strategy. In case of life insurance sector too, before fixing a price for a particular policy, the field officers are asked to find out the demand for various policies and on the basis of this demand, the price is fixed. STEP 3 Demand sets the ceiling whereas costs set the floor on the price the company can charge for its product/service. In case of life insurance sector, it comprises of costs of recruiting, training, motivating agents along with other fixed and variable costs. STEP 4 Within the range of possible prices determined by the market demand and company costs, the firm must take the competitors costs, prices and possible price reaction into account. In order to win the market share, such products/ services, which have not yet been created by the competitors, should be created by the company. LIC (India) offers a differentiated product in the form of Life insurance Policies especially for landless laborers and rickshawallas. STEP 5 In selecting the price in life insurance sector, the company must consider life expectancy of the person as well as his financial position. In case of Life Insurance, if the person while taking the policy is at a high risk of some terminal disease then he is charged a higher premium. At the same time, if a person who does not enjoy good financial condition cannot take a high price life insurance policy. Thus, every customer taking a policy should disclose all his medical as well as financial details in utmost good faith to the life insurance agent. In case of Non Life Insurance, correct financial evaluation of the cost of the goods which have been insured should be done by the life insurance agency because the customer may get the goods insured for a higher cost than they actually are and if the goods are damaged, then the life insurance company will have to pay a higher price than the actual cost of goods destroyed.
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LIFE INSURANCE PRICING: The pricing in case of life insurance is done on the basis of: LIFE EXPECTANCY: In case of life insurance, the premium amount tends to be different for different customers. This differentiation is on the basis of age, medical history of a person. 1) Age E.g.: Low premium is charged for children and youngsters as it is assumed that they are at a lesser risk of death as compared to the aged people. 2) Medical History The medical history should be revealed to the life insurance company by the customer in Utmost Good Faith i.e. the insured must provide to the insurer complete, correct and clear information of the subject matter of life insurance. E.g.: If in the medical history it is mentioned that the person has suffered from heart attack in the past or if he is suffering from any terminal disease like cancer or AIDS then, he is at a higher risk of death and hence higher premium is charged. However, if the insured doesnt reveal that he is suffering from terminal disease or has suffered a heart attack previously and he dies due to the disease or heart attack then, the life insurance company does not pay the claim for the same. Case: The pricing of the policies in LIC (India) is done by the Actuarial Department, which is at the corporate level. The prices of the policies are fixed depending on the following conditions: Rate of return on investment in the present market scenario Life expectancy of the customer

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 DISCOUNT PRICING: In life insurance sector, discount is offered if group life insurance is opted for. Group Life insurance Scheme is meant to provide life insurance protection to groups of people. Administration of the scheme is on group basis and cost is very low. Under Group Life insurance Scheme, life insurance cover is allowed to all the members of a group subject to some simple insurability conditions without insisting upon any medical evidence. The restrictions under a Group Term Life insurance Scheme mainly relate to size of the group, amount of cover allowable, minimum and maximum age limit for eligibility of cover (18 & 60), participation of minimum percentage (75%) of eligible members of the group at inception and compulsory participation of all new members. Discount is given on group life insurance scheme because the life insurance company gets a large number of customers at a time and hence it saves expenses on promotion and advertisement, which are to be incurred to attract new customers. Thus, discount is given in order to attract more customers at a time by this group life insurance scheme. The cost incurred on giving discount is much less as compared to the cost spend and advertising and promotion. Hence discounting is much more profitable for the company.

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PLACE MIX (DISTRIBUTION CHANNELS)

Place mix can be defined as the Physical distribution i.e. the delivery of goods/ services at the right time at the rig ht place to the customers . In case of life insurance it is the combination of decisions regarding channels of distribution in, agent, development officer, retail finance service distributors, alliances with banks, tie-ups with non-governmental organization, corporation channel comprises of over 6.10 lakhs active agents and cover 19000 development officers. This is a great advantage in order to cover the vast Indian population which is diverse in nature and spread, for which a strong marketing network is necessary. In case of life insurance sector, the following channel of distribution is followed according to the target market:

CHANNELS
Agents Direct selling Financial advisors Call centers Bancassurance Partner selling Postal department Selling through corporate Life insurance on internet Electronic channels Information kiosks SMS

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1) Direct Selling: Agents: The agents are selected and recruited by the development officer of the life insurance company. These agents inform the customers about the various life insurance policies offered by the company and convince them to buy these policies. Financial Advisors: The financial advisors are also consulted by the customers regarding their financial matters. These advisors suggest their clients to get their goods insured against any calamity or risk. Hence they act as a channel in distribution of life insurance. Call centers: The people who require life insurance call up the call centers. These call centers send their direct marketing agents who go to the customers place and sell the life insurance policy. 2) Partner selling: Bancassurance: With the evolution of interconnected financial services, banks are converting themselves into one stop financial supermarkets. This has promoted two big classes of financial institutions: banks and insurance companies to combine and deliver an innovative product i.e. Bancassurance. In Bancassurance, the life insurance products are sold through the banks network of branches. Postal Department: India has an extremely well developed postal network, which is even stronger than the network of banks in the country. Life insurance companies can tie up with the postal department to sell and distribute various insurance covers. This would certainly require upfront training costs, as the postal employees in turn need to educate and sell the concept and benefits of insurance to the people in rural areas. Such a tie up with the postal department would open up Indias rural areas, which are largely untapped for insurance sector. This can prove to be a sustainable source of growing revenues

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 Selling Through Corporate: Insurance can be sold through corporate too. Electronic Channels: In the last decade, numbers of technological advances have taken place due to immense use of EDI (Electronic Data Interchange).

3) Electronic Channels: In the last decade, numbers of technological advances have taken place due to immense use of EDI (Electronic Data Interchange) LIC on Internet: They have their own site, which is very informative. They display information about them and its subsidiaries, the product they offer. The addresses/e-mail Ids of their zonal offices, zonal training centers, management development centers, overseas branches, Divisional offices and also all Branch offices with a view to speed up the communication process. Information kiosks: LIC have set up 150 interactive Touch screen multimedia KIOSKS in prime locations in metros and some major cities for dissemination information to general public on our products and services. These KIOSKS are enabling to provide policy details and accept premium payments. SMS: Sims through mobile phone is recently new technology introduced by the LIC to promote their product.

LOCATION: In insurance, location, the place where office situated is not so

important as mostly the agents of the insurance company goes to the place of the customers for doing most of that customers work. However they situate their office branches at important location, which is convenient for the customer to visit.

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PROMOTION MIX (MARKETING STRATEGY)

The promotion mix of life insurance consists of personnel selling, advertising, publicity, sale promotion, social contact and public relations. The promotional activities are carried out by agent, development officers and branch offices. Calendars, diaries and bags etc are also given to policy holders as taken of gift. All such activity increases the volume of sales by expanding as well as retaining the market share for the insurance product. Growing a life insurance brokerage is a challenge faced by many agents. In order to do so, one must capture quality leads, run effective marketing campaigns, remain top of mind with existing customers and engage prospective clientele. This seemingly endless list of tasks could keep you working around the clock. This is why we have developed the four tips to effectively growing your life insurance brokerage. STEP 1: Identification of Target Market: The target market is the focus of deciding the promotion mix. The total number of groups is analyzed and decision is taken regarding which segment is to be targeted. In case of insurance sector, mass marketing is favorable however, different policies are targeted towards customers from different income groups. E.g.: LIC (India) has introduced a new life insurance policy especially for rickshawallas and landless laborers. STEP 2: Determination and Setting Objectives: Service marketers employ a range of promotional methods, so it is essential to What the promotion has to achieve. It is necessary to define marketing objectives clearly so that most effective type of promotion is designed and utilized.

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In case of insurance sector, the main objectives of a promotion campaign will be: 1) To make all or maximum population aware of the various insurance

policies of the company. 2) To promote the advantages of all the insurance policies. 3) To make the people aware of the risks involved and the importance of

taking insurance. E.g.: LIC (India) conducts seminars and mass marketing campaigns in order to make the customers aware of insurance and why it is needed. STEP 3: Message development for right communication effect: The message is an instrument for converting a suspect into a prospect. To obtain an effective response from the target market, there is always need to plan an effective message such that promotional efforts cause: Building of brand image Service awareness The promotional message should aim: To provide knowledge for service/product To ensure that customer will have a positive perception for service/ goods promoted To build up preference for service/ goods offered In the insurance sector, LIC (India) and MetLife Insurance are examples of companies who have used promotion mix to promote insurance. E.g.: LIC (India) promotes its life insurance policies using the slogan Zindagi ke saath bhi, zindagi ke baad bhi This creates awareness of risk of death as well as the importance of insurance. The slogan creates a positive perception about life insurance in the minds of people.

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STEP 4: Selection of communication mix: There should be a careful blend of promotion mix with the marketing strategy of the firm and each situation should be examined for its merits and demerits. The following are promotional techniques: Overall marketing objectives Nature of the service Activities of the competitors Characteristic of target customer Cost effectiveness Integration with other marketing elements Management Issues Legal and ethical considerations There are various methods and media through which the message can be communicated to the consumer. In case of life insurance, following media is used for promotion purposes: 1) Advertising: It is a paid form of non-personal communication. It is used to develop attitudes, create awareness and transmit information in order to gain a response from the target market. Various media channels can be used for advertisement such as print media, electronic media etc. E.g.: MetLife India insurance has aired a television advertisement with the caption line have you MetLife today? The advertisement shows that people are falling from high places but instead of falling on the ground and getting hurt, they are falling on a bed called MetLife. 2) Personal Selling: It is the most widely used method of promotion by all

life insurance companies. They recruit, train and motivate the insurance agents to convince the customers to buy insurance policies of that particular company. The agent also collects the monthly premium and settles the claims of the customers.
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PEOPLE MIX (CRM AND HRM POLICY)

CUSTOMER RELATIONSHIP MANAGEMENT Customer Relationship Management focuses on acquiring, developing and creating satisfied loyal customer; achieving profitable growth; and creating economic value in companys brand. Customer Relationship Management strives to improve the customers experience of how they interact with the company and produce high customer equity .the more loyal customer, the higher are the customer equity. Recently CRM has taken a center stage in the business world with businesses concentrating on saving money and increasing profits by redefining internal processes and procedures. It costs a company dramatically less to retain and grow an existing client, than it does to court new ones. It is said that It is seven times more expensive to acquire a new customer than to keep an existing one , therefore the value of customer information and management should never be underestimated CRM (Customer Relationship Management) is something that is not restricted to any country or culture. Wherever customers are there, business cannot afford to keep them unhappy; and that is where CRM comes in as a strong requirement. The concept of CRM is relatively simple and familiar to insurers. The two points of the concept are: Understand your customers' unique requirements. Offer them the services and products over their life time that will maintain or increase their profitability and retain them as your customers. Life Insurance Company provides following facilities to keep the customers happy and satisfied. 1. The birth dates of the policyholders are recorded and on the day of the birth day, the policy holder is given a happy birth day call by the company. 2. The customers are reminded to pay their premium on time through SMS.
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Relationship between CRM and customer loyalty in life insurance: An organization must give some advantages to loyal customers in order to keep relationship with customers, like reduction in policy cost when a new one is being issued, or reduction in executive costs. Empirical researches have proved that only one unit of increase in CRM in life insurance organizations can increase customer loyalty up to 94.5%. Insurance company must make sure that CRM and high-quality service will increase customer loyalty. Insurance measures and other services delivered to customers must be according to commitments. Insurance companies must train their employees because even one confrontation with customer must be accurate. The first confrontation of an employee. With customers will stick in customer's mind. Therefore, employees who have the first face-to-face confrontation must form the first positive impression in their minds. This is the best method to attract loyal customers. Structural policies of a system within an organization can distribute information and contact with customers and remove intra-organizational defects. Unfortunately, in some organizations do not treat their customers well or ignore them. In such conditions, organizations must contact their customers secretly and explain the reason for their mistreatments. Insurance companies can make customers loyal to them because they have a database of their customers. Insurance companies must fulfill their commitments in order to finally increase productivity and profit-making and competitiveness

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HUMAN RESOURCE MANAGEMENT Human resource development is mainly concerned with developing the skills, knowledge and competencies of people and it is a people oriented concept. HRD can be applied both at the national level and organizational level. Human resources of life insurance sector: Employees are the backbone to an organization. Employees efforts turn corporate goals into realities. Employees with right skill for right jobs are real assets to an organization, keeping these facts in mind, the employees of the corporation are divided into four classes. Class I Covers branch managers and above cadres Class II Development officers Class III category covers supervisor and clerical staff Class IV Subordinate staff. Training programmers of life insurance sector: The life insurance companies has well establish training infrastructure to cater to the training needs of employees consisting of Managements Development Center for senior officials, Seven zonal Training Centers of Supervisors, line managers and for top salesmen. There are also provide Training Center to provide training to field sales personnel. The training programs are broadly divided into two categories1. In house training programs 2. External training programs

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PROCESS MIX (CLAIMS SETTLEMENT PROCEDURES) In case of insurance sector, the process mix includes the various interactions that take place between the insurance agent and the customer in the process of selling the policy to the customer till the settlement of claims.
Claim settling Process: (Life Insurance) 1) Claim by maturity/ Installment Payment: The Company strives to settle maturity claims and make periodic payments, as in case of Money Back Policies, on date itself. The office which services the policy sends out an intimation regarding the payment along with the necessary discharge voucher for the execution by the assured approximately two months before the due date of such payment. 2) Death Claim: Intimation of Death: In the event of the death of the policy holder, the claimant or the nominee should immediately intimate the branch office where the policy is serviced, the fact of such death, along with the following particulars: (a) Policy number, (c) Date of death and (b) name of the life assured, (d) claimants relationship with the assured.

Claim Forms: Soon after the receipt of the intimation of death, the branch office will send the necessary claim forms for completion along with instructions regarding the procedure to be followed by the claimant. Evidence of Title: The claim is usually payable to the nominee as the case may be. However, if the deceased policy holder has not nominated or hasnt made a suitable provision regarding the policy money by the way of will, the claim is payable to the holder of a succession certificate or some such evidence of title from a court of law. Payment of Claim: The Company then makes payment to the rightful recipient.
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PHYSICAL EVIDENCE
Companies try to demonstrate their service quality through physical evidence and presentation. However, in case of life insurance sector, the customer rarely visits the life insurance company. The customer comes mostly only in contact with the service provider hence the service provider (Life insurance agent) should. Look presentable. Have a pleasant personality. Have good communication skills. The physical evidence factor is directly proportional to the level of faith of customers as well as the employees in the organization. Physical evidence goes way beyond an individual. It includes the companys advertisements, public relation, employee, and branches.

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CHAPTER 4. MARKETING MIX OF LIFE INSURANCE CORPORATION OF INDIA

Life Insurance Corporation of India (LIC)

(Hindi:bbbbbbbbbbsssssssfvfdvfddrbfdssshjjhjjjj BaartIya jaIvana baImaa inagama)

is an Indian state-owned insurance group and

investment company headquartered in Mumbai. It is the largest insurance company in India with an estimated asset value of 1560481.84 crore

(US$250 billion). As of 2013 it had total life fund of Rs.1433103.14 crore with total value of policies sold of 367.82 lakh that year. The company was founded in 1956 when the Parliament of India passed the Life Insurance of India Act that nationalized the private insurance industry in India. Over 245 insurance companies and provident societies were merged to create the state owned Life Insurance Corporation.

LIC LOGO

ABOUT LIC LOGO Think about life insurance once and the image youre most likely to conjure up is that of Life Insurance Corporations (LIC) logo. For decades now, The
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two hands gently circling the lamp has been the most enduring image of the life insurance business in India. The logo of Life Insurance Corporation is a traditional Indian symbol that stands for light, literally and figuratively. The lamp symbolizes light-light that sheds for light, literally and figuratively. The lamp symbolizes to secure / to protect. The purpose of LIC is indeed to bring light of hope into the lives of many people.

Sanskrit sentence written below the logo (slogan of LIC): The Sanskrit sentence written below the logo is

yaaogaxaomaM
(yogakshemam which is drive from

vahamyahma
Vahamyaham)

Bhagavadgita (22nd Verse of 9th chapter). Which means I shall ensure the safety and well-being of my devotees (actually told by lord Shri Krishna about his devotees) we can interpret it as we take care of health needs / we are responsible for your welfare. This slogan covers the actual intention of LIC.)

VISION A trans-nationally competitive financial conglomerate of significance to societies and pride of India.

MISSION Explore and enhance the quality of life of people through finance security by providing product and services of aspired attributes with competitive returns, and by and rendering resource for economic development.

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OBJECTIVE OF LIC:1) 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. 2) Maximize mobilization of people's savings by making insurance-linked savings adequately attractive. 3) 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. 4) Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders. 5) Act as trustees of the insured public in their individual and collective capacities. 6) Meet the various life insurance needs of the community that would arise in the changing social and economic environment. 7) 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.

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8) 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.

PRODUCT MIX (MARTKETING OF PRODUCTS/PLANS)

A product is a physical unit or a service or some combination of a physical unit and a service. A product is to satisfy the needs of its target customers. Life Insurance is a service-oriented product offered to people to satisfy the need to cover risk on human lives. A product, which satisfies todays needs of people and become popular, is likely to get faded in popularity over a period of time due to a number of reasons. Therefore, the life cycle of a product is estimated, essentially to plan for its replacement with a new product before it is withdrawn from the market. New products are planned to suit the customers changing needs and requirements and to appeal to the prospective customers of new target markets. Life Insurance Corporation of India introduced various new products or plans from time to time to suit the varied needs of people and to appeal to the prospective customers. It has also withdrawn a number of insurance plans, which faded in popularity. The life insurance products can be classified into two types namely participating and non-participating (Also known as with profit and without profit plans). Participating policies or with profit plans are like equity stocks. 1) Insurance plan As individuals it is inherent to differ. Each individual's insurance needs and requirements are different from that of the others. LIC's Insurance Plans are policies that talk to you individually and give you the most suitable options that can fit your requirement. 2) Pension Plans
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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.

3) Unit plans Unit plans are investment plans for those who realize the worth of hardearned money. These plans help you see your savings yield rich benefits and help you save tax even if you don't have consistent income.

4) Special plan LICs 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!

5) Micro Insurance Plans LICs Micro Insurance 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.

6) Group Insurance 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.

7) Classification Of Plans The LIC offers a basket of plans to meet the various needs of an individual and his family. The plans marketed by LIC can also be classified as basic life

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plans, term assurance plans, plans for children, plans for handicapped, unit linked plans, money back plan and a number other product or plans.

8) Health Plans LIC's JEEVAN AROGYA

PRICE MIX (PREMIUM CHARGE)

The price is the key element of the marketing mix. It must be acceptable to target customer and it must reflect the other components of mix accurately. the price of the service provider and it must correspond with the customers

perception of value. Many service providers offer a range of service at various price level to meet the need of different target segment who may have different levels of spending power. For example, LIC offers its products or plans at different premiums or prices depending upon the amount of sum assured as well as the age of the potential policyholder. Pricing decisions are highly complex for service organizations especially for LIC due to the fact that various factors have to be considered by the appointed actuary. IT department will have to satisfy the needs of the other department for system support. However the LIC considers the following factors before fixing the premium or price:

(A) (B) (C)

Rate of mortality Rate of interest Operational expenses

(A) RATE OF MORTALITY:

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Life insurance is an institution that eliminates risk or that substitutes certainty for uncertainty. It is not possible for human beings to prevent the occurrence of the events insured against life. But the uncertainty of financial loss suffered by a few due to the happening of events can be eliminated by their distribution over a large number of people. Thus the loss, instead of being borne by one, can be distributed equally among all people facing the risk and everyone makes a contribution to the fund is called premium or price. In life insurance it is not death. It is necessary to work out scientifically some methods of measuring the risk. This measurement of risk is possible through the application of mathematical and statistical tools. By applying tools like Law of Probability ands Law of Large numbers, the LIC measure the risk factors with reference to mortality. it also correlates the relationship between the rate of mortality and premium. However for conceptual clarity regarding tools as mentioned above, the link between the mortality rate and premium is highlighted.

(B) RATE OF INTEREST: Another factor, which affects premium rates, is interest. As mentioned earlier, under the various system premiums collected will be higher during the early years than what is actually required in respect of term assurance plan. In an endowment type of policy, the premium collected will be much higher because apart from covering risk during the period of insurance, the corporation required to pay the face value of the policy at the end of the term, if the policy owner survives the period of insurance. The excess premium collected will be invested by the corporation in various investments and will earn income out of these investments. All this income belongs to the policyholders and so it will have to be passed on to them. This is done by discounting the premiums at a rate of interest. Further, the LIC assumes a certain rate of interest based on its

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experience, while computing the rates of premium. It has to be very prudent in this assumption because life insurance contracts are long-term and the investment made by them will be long term in nature.

(C) OPERATIONAL EXPENSES: The third important factor which goes into the computation of premium is the expense factor. It is also necessary to load the premium for contingency and profit margin loadings are done, the premium so arrived at is called the gross or office premium. The premium payment during the first year is known as First year premium and premiums payable during the subsequent year are called renewal premiums. The first and subsequent years of policy, it is customary to divide the expenses during a financial year for the purpose of analysis into two groups viz. first year expenses and renewal expenses. Expenses that vary with the premium come under the first category. For example, commission payable to the agent falls under the first category. The second group of expenses is related to the size of the policy. For example, the medical fee payable to the doctor is related to the size of the policy. Administrative expenses depend on the number of policies serviced by the office and not on their sizes.

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PLACE MIX (CHANNELS OF DISTRIBUTION IN LIC)

It has taken LIC 47 years to build a vast network consisting of 2,048 branches, 100 divisional offices, and 7 zonal offices and a corporate office. The most prudent manner to ensure faster access to the different regions in the country is to create a mix of direct sales force and alternative distribution channels like bank. LICs Wide Area Network covers 100 divisional offices and all 2048 branches that fall under these divisions. The policyholders can tender premium at any branch nearer to his residence or office. In short distances are now eliminated at all these places. The channels are used not only to distribute the products or plans but also used to promote the products or plans of LIC. The Indian insurance industry relied heavily on the traditional distribution channel, with a large number of varying levels of professionalism and productivity until 1999. For instance LIC, the monopoly of yester years in the insurance market had developed a huge agency force of more than 9 lakhs. The various distribution channels in the insurance sector are agents, brokers, third parties, bancassurance, internet and direct marketing. In view of this distribution channels adopted by the insurance sector in general and the LIC in particular is highlighted in the following:

AGENTS Agents are the lifeline of LIC. The Corporation has a huge agency force of 9,02,199 during 2002-03. These agents are dispersed throughout the country working under the 2,048 branches of the corporation. The agents are highly qualitative in view of their productivity or efficiency. For instance the productivity or average business per agent stands at Rs. 19,51,767. This shows that the major strength of LIC is its agents.

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BROKERS
Brokers are like agent, but with a difference. While agents get the license to marketing policies of only one life insurance company and one non-life insurance company at a time, a broker market policies of several life and nonlife insurance companies at the same time. Brokers are like a consultant who analyzes a clients needs and provide solutions. There are around 165 brokers in the country and they earn as much as 12 percent commission. It is to be worth mentioned that provisions of section41 of the insurance Act, 1938. The LIC has been availing the service of 73 brokers in India. INTERNET As a distribution channel, the internet facilitates information flow, negotiation flow, service flow, transaction flow and promotion flow. Compared to the traditional channels, the internet is definitely better for conducting research on consumer information seeking and a short period of time, and for creating the communication online. Having realized the importance of internet as a distribution channel, LIC put all the information in the internet. Its address www.licindia.com carries information on the various plans and service offered by LIC. BANCASSURANCE Another important distribution channel that gained lot of importance in India in the recent past is bancassurance. Bancassurance symbolizes the convergence of banking and insurance. The term involves distribution of insurance products through a banks branch network. While bancassurance has become a success story in Europe. Insurers found that direct relationships with customers gave them greater control of their business at a low cost. Further, expenses ratios in insurance activities through bancassurance are very low. Having realized the threat from new entrants into the insurance business, LIC started channelizing sales through
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bancassurance partners such as Corporation Bank, Central Bank, Oriental Bank of Commerce, among a host of others. These banks sell not only insurance products to potential customers but also collect premiums in selected cities. The LIC intends to extend this facility to all cities and towns under its network. THIRD PARTIES Distribution through third parties means that it is those companies rather than the insurers who often reap the benefits of customer loyalty. It is a fact that private insurance companied are relying heavily on third parties like post offices, supermarkets, travel agencies including sugar co- operatives, trade unions, microfinance agencies and even welfare organizations like Help Age. The LIC has also tied up with Help Age and few other third party organizations to distribute its plans. DIRECT MARKETING CHANNEL Direct marketing channel or zero-level channel consist of a company selling directly to the final customer. LIC has adopted the direct marketing approach to market its grope assurance plans such as group gratuity scheme, group insurance scheme in lieu of employee deposit linked insurance scheme, group saving linked insurance scheme and group superannuation scheme. As such, it has succeeded in keeping in keeping the cost ratios under group policies at very low levels.

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PROMOTION MIX (MARKETING STRATEGY) The corporate bodies carry life insurance business in India. Corporate body, being a legal body, cannot by itself act to undertake and develop the insurance business. It requires the insurance business. The insurance business is the business with people. As people spread over in different places, it is not possible foe any organization to have a direct contact with the people interested in insurance business and insurance activity. The promotion mix used by companies consists of major modes of communication namely Advertising, Sales promotion, media, Public relation, Personal selling and Direct and Interactive marketing etc.
ADVERTISING After the entry of private players, several changes took place in the insurance sector. There was increased focus on the customer, and private companies focused a lot of attention in promoting their products. The new players were successful in creating their mind share through aggressive campaigns and promotional activities. The effective promotion skills of private companies led to their brands coming across successfully to customers. To keep the new entrants at bay, LIC has gone on the offensive on advertising front. For instance, it has enhanced the promotional budget year after year. Its advertising covers media such as Television, Radio, Print media and Outdoor media such as Hoarding, Wall paintings, Neon sign displays etc. Besides this the Corporation with its advertising slogan Zindagike saath Be, Zindagike Baad Be .They tries to promote its brands vigorously and also to create a place in the mind of people.

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MEDIA The LIC uses different media to promote its plans. The Corporation uses media like Television, Radio, Newspapers, Magazines and Outdoor media. In fact, LIC started following the fast moving consumer goods (FMCG) route to sell its plans. In other words, LIC is on a twin track, like many FMCG majors one for the rural folk and another for the city bred. In the rural areas along the dusty roads, LIC is painting the walls, adopting the folklores and merchandising to communicate and sell insurance to rural customers like never before. In urban areas, LIC is experimenting with every kind of mobile advertising like buses, trains etc. Above all, people in urban areas cannot escape from the hoardings of LIC. In short, LIC uses different media to promote its business LICs advertising in different Media Between 1999-2000 and 2000-01 Year TV advertising (In hours) Radio advertising (In hours) 1999-00 2000-01 79 88 408 350 73 83 Campaigns (In numbers)

CONSUMER PROMOTION Consumer promotion is directed at consumers, the end purchasers of goods and services and is designed to induce them to purchase the marketers brand. Consumer-oriented promotions are the part of the promotional pull strategy. They work along with advertising to encourage customer to buy a particulate brand and thus create demand for it. The consumer promotion measures of LIC include tax benefits, higher bonus, accident and disability benefits, higher nonmedical limits, customer service and personal loans.
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PUBLIE RELATION The LIC has a wide network for effective public relations for internal and external customers, press or general public. The corporation has reached out to the people through its nation building activities, donations to health care institution and publishing the health booklets. As a conscious corporation citizen, it has helped upkeep of parks and published pamphlets on natures wonders. As a parts of public relations, the corporation donated

Ambulances/mobile health vans to 5 prominent hospitals across the country. Its diary and calendar distribution is also a practical and comprehensive tool kit of public relations. The corporations uses the following methods and techniques in public relations. They are: Press Releases, Features, Letters to the editor, Clarifications and rejoinders, Press Conferences, Press reception, Press briefings, Informal press get-together, Individual press interviews.

TAX BENEFIT
Tax benefit is one of the mega weapons in the arsenal of strategies at the disposal of the corporation to promote sales. The corporation is successful in convincing the government to exempt payments made to the corporation for purview of income Tax act either fully or partly. The exemption strategy is the greatest mobilizer of business for the corporation. Under wealth tax act section 5(1) (vi) insurance policies are exempted from inclusion in the total wealth for wealth tax computation. INTERNET INITIATIVES World Wide Web has revolutionized information technology by facilitating free flow of video images, tax and sound across the globe. Keeping pace with these developments, LICs website address: www.licindia.com carries information on the organization including products and service offered.

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SALES PROMOTIONS Sales promotions are being increasingly used to influence the purchase behavior of consumers in a desired way. The major reasons for the phenomenal use of sales promotional measures can be attributed to increased competition, declining brand loyalty, consumer's sensitivity to promotional deals, and increased advertising clutter. In view of its importance in the highly competitive life insurance market, an attempt is made in this article to examine the sales promotional measures of LIC. Sales promotion is generally broken into three major categories, such as consumer-oriented, trade-oriented and sales force- oriented activities. Having realized the significance of sales promotion, LIC has vigorously undertaken it and made a significant benefit out of it. The consumer-oriented promotions in fact, are a part of the promotional pull strategy. These promotions include tax benefits, payment of bonus, provision of accidental benefits and higher nonmedical limits. CUSTOMER SERVICE Improvement in the quality of customer service is a consumer-oriented promotional strategy. As mentioned earlier, the customer services of the corporation include settlement of maturity claims, death claims, helping the policyholders to get loan without hassles, renewal of lapsed policies, changes of nomination, changes of address, premium due reminders, surrender of policies etc. Every policy ends up either in death claim or Maturity claim and the corporation is known for the prompt and timely settlement of claims. DIRECT MARKETING Direct marketing is the use of consumer-direct channels to reach and deliver goods and services to customers without using marketing middlemen. The corporation uses the following direct marketing methods like Internet, Inter active Voice Response System and Kiosks.
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PEOPLE MIX (HRM POLICY)

HUMAN RESOURCE MANAGEMENT Human resource development is mainly concerned with developing the skills, knowledge and competencies of people and it is a people oriented concept. HRD can be applied both at the national level and organizational level.

The concept of HRM basically depends on those learning experiences, which are organized, for a specific time, and designed to bring about the possibility of behavioral change. HRM practices of LIC in term of HRD programmes conducted and training programmes undertaken for the various officers, employees and agents of the corporation. Training Programmes of LIC The LIC has a well-established training infrastructure to cater to the training needs of employees consisting of a Management Development center for Supervisors, line managers and for top salesmen. There are also 25 Sales Training Centers to provide training to field sales personnel. These centers are located in various zones. The training programmes of LIC are broadly divided into two categories In house training programs, External training programmes. The in-house training programs are conducted at LICs Management Development Center, Bombay, National Insurance Academy, Pune and its Zonal Training centers. The corporation deputes its employees to various external training institutes such as IIMs, IITs, and Xavier Labor Research Institute and Administrative staff college of India.

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HRD Programmes of LIC: The LIC has developed HRD programs in consonance with the personnel policy of the Corporation. As such, the main thrust of the HRD initiative has been to foster a spirit of innovation and creativity among employees and increasing their level of achievement and motivation. To achieve the above stated objectives, the Corporation is committed to various ongoing program of HRD: 1) The corporation introduced Work plan review system, which enhanced the organizational effectiveness and also enable the officers to put in their best performance resulting in selfdevelopment. 2) In 1991-92, the Corporation designed Development Oriented Appraisal System for class I officers. 3) In 1993-94, HRD programs were redesigned with a focus on developing capabilities. 4) The Corporation also introduced Managerial Effectiveness Programme (MEP) during 1995-96 to enhance the leadership skills and efficiency of branch managers. 5) The corporation is conducting Organizational Transformation Workshops for its officers at the grass root level. managerial effectiveness and organizational

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PROCESS MIX (CLAIM SETTLEMENT PROCESS)

Selection of a proper life insurance policy is a basic requirement of individuals risk management policy. At the same time proper claim settlement is also an important part of the risk management system. A claim is the payment made by the insurer to the insured or claimant on the occurrence of the event specified in the contract, in return for the premiums paid for the insured. The easy and timely settlement of a valid claim is an important function of an insurance company. CLAIM SETTLEMENT PROCESS: DEATH CLAIM / ENDOWMENT PLAN CLAIM Step One: Intimation of Claim The claimant must submit the written intimation as soon as possible to enable the insurance company to initiate the claim processing. The claim intimation should consist of basic information such as policy number, name of the insured, date of death, cause of death, place of death, name of the claimant etc .Claim intimation form can be availed from nearest branch of the insurance company or/and by downloading it from the company website. Step Two: Death Claim Documentation The claimant will be required to provide the following documents along with a claimant's statement: 1. 2. 3. 4. Certificate of Death Proof of age of the life assured (if not already given) Deeds of assignment / reassignments (if required) IV. Policy document Any other document as per requirement of the insurer

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For early death Claim, (If the claim has accrued within three years from the beginning of the policy), the following additional requirements may be called for: I. Statement from the hospital if the deceased had been admitted to hospital II. Certificate of medical attendant of the deceased giving details of his/her last illness III. Certificate of cremation or burial to be given by a person of known

character and responsibility present at the cremation or burial of the body of the deceased IV. Certificate by employer if the deceased was an employee

In special cases as per following the poof of death will be different from the standard specification In case of an air crash the certificate from the airline authorities would be necessary certifying that the assured was a passenger on the plane. In case of ship accident a certified extract from the logbook of the ship is required. In case of death from medical causes, the doctors certificate and/or treatment records may be required. If the life assured had a death due to accident, murder, suicide or unknown cause the police inquest report, panchanama, post mortem report, etc would be required. Endowment Policy Claim Documents The normal documents which the claimant shall submit while lodging the claim in case of death of the Life Assured shall be claim forms, as prescribed by the Corporation, accompanied with original policy document, NEFT mandate from the claimant for direct credit of the claim amount to the bank account, proof of title, proof of death, proof of accident/disability (as mentioned in the rider circular), medical treatment prior to the death, School/College/employer's
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certificate, whichever is applicable, to the satisfaction of the Corporation. If the age is not admitted under the policy, the proof of age of the Life assured shall also be submitted. Where the policy results into a maturity claim or in case of surrender of a policy, the Life Assured shall submit the discharge form along with the original policy document, NEFT mandate from the claimant for direct credit of the claim amount to the bank account besides proof of age, if the age is not admitted earlier. Step Three: Submission of required Documents for Claim Processing For faster claim processing, it is essential that the claimant submits complete documentation as early as possible. Step Four: Settlement of Claim As per the regulation 8 of the IRDA (Policy holder's Interest) Regulations, 2002, the insurer is required to settle a claim within 30 days of receipt of all documents including clarification sought by the insurer. If the claim requires further investigation, the insurer has to complete its procedures within six months from receiving the written intimation of claim.

After receiving the required documents the company calculates the amount payable under the policy. For this purpose, a form is filled in which the particulars of the policy, bonus, nomination, assignment etc. should be entered by reference to the Policy Ledger Sheet. If a loan exists under the policy, then the section dealing with loan is contacted to give the details of outstanding loan and interest amount, which is deducted from the gross policy amount to calculate net payable claim amount. Generally all claim payments would be made through the electronic fund transfer.

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PHYSICAL EVIDENCE
The physical evidence factor is directly proportional to the level of faith of customers as well as the employees in the organization. Physical evidence goes way beyond an individual. It includes the companys advertisements, public relation, employee, and branches

Internet/Web Pages Brochures Business Cards Building & Offices Signage Financial Reports Punch Lines Employees Dress Code

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QUESTIONNAIRE

1.

What are Buying Motives of customers for selecting Insurance policy?

2.

What is the importance of a proposal and the disclosures made therein?

3.

What are special medical reports required to be submitted in life insurance?

4.

How is the Loan on Policy calculated under Conventional Life Insurance Policies?

5. 6.

What is meant by settlement options? What documents are generally required to be submitted in case of death of life assured while the policy is in force?

7. 8. 9.

What is the benefit payable on the maturity of the policy? What should one verify before signing the proposal? What is the benefit payable in the event of risk occurring during the term of the policy?

10.

Is it possible to invest additional contribution above the regular premium?

11. 12.

Which category of consumers prefers to buy life insurance policy? Whether insurance product satisfies customers by just giving information through any website or by personally explaining the policy?

13.

Which type of marketing skill appeals customer on an agent?

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FINDING & SUGGESTION

FINDING: You must check and see whether or not there is availability of guarantee of return, what the lock in period is, details of premium what the

to be paid, what would be implications of premium default, revival conditions are what the

policy terms are, what are the charges

that would be deducted, would loan be available etc. The disclosures made in a proposal are the basis for underwriting a policy and therefore any wrong statements or disclosures can lead to denial of a claim. In case of certain proposals, depending upon the age of entry, age at maturity, sum assured, family history and personal history, special medical reports may be necessary for consideration of a risk. E.g. if the proposer is overweight, special reports like Electro Cardiogram, Glucose Tolerance test etc could be required, while for underweight proposers, X-ray of the chest and lungs with reports could be required. If the policy conditions permit grant of loan, loan is sanctioned as a percentage of the Surrender Value. Settlement option means the facility made available to the policy holder to receive the maturity proceeds in a defined manner (the terms and conditions are specified in advance at the inception of the contract). The basic documents that are generally required are death certificate, claim form and policy bond, Other documents such as medical attendants certificate, hospital certificate, employers certificate, police inquest report, post mortem report etc could be called for, as applicable. The claim requirements are usually disclosed in the policy bond. The value of the fund units with bonuses, if any is payable on maturity of the policy.
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 One has to verify the approved sales brochure for

All the charges deductible under the policy Payment on premature surrender Features and benefits Limitations and exclusions Causation and its consequences Other disclosures Illustration projecting benefits payable in two scenarios of 6% and 10%

returns as prescribed by the life insurance council. The Sum Assured and/or value of the fund units is normally payable to the beneficiaries in the event of risk to the life assured during the term as per the policy conditions. One can invest additional contribution over and above the regular premiums as per their choice subject to the feature being available in the product. This facility is known as TOP UP facility. Peoples who have regular income from his job they mostly prefer to buy not only life insurance but also other various insurance product, peoples who work on wage or commission they avoid to taking in because those peoples income is not regular but it is uncertain. Todays world must customer are like to buy consumer product through internet because sellers are provide detail information about product via internet but in case of insurance product most people ready to buy insurance through but there are chances of Froude and wrong information. Therefore customer prefers personal explanation through agent before buying insurance product. Customer now require professional skill while buy insurance policy they require basic skill like they have to confirm from agent about policy i. e.

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which type of policy they buy, it premium rate, claim amount, claim date or which risk are covered in that policy etc.

SUGGETION

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CONCLUTION
The life insurance sector which is the most promising sectors in India has become a very attractive destination for global insurance players. Increased dynamism in the external environment in the form of growth in competition has made its imperative to bring about transformation in the life insurance market. A key issue for the insurance players is to recognize the relevant marketing dimensions reaching out both new and existing customers. Due to the privatization process initiated by the central Government several life insurance players have come into the fray. The life insurance companies vie with each other to capture a significant share in the life insurance markets. An effective marketing mix comprised of innovative products, pricing strategies, attractive promotional tools, well designed distribution strategies, people-oriented quality service mechanisms and physical evidence practices providing better infrastructure facilities has been facilitated by the companies. In this context, an attempt has been made by the researcher to analyze the marketing mix of three major life insurance companies namely the Life Insurance Corporation of India, Bajaj Allianz Life Insurance Company and ICICI Prudential Life Insurance Company. The attributes of each component of the marketing mix were identified and analysed by obtaining the opinion of the respondents about each attribute. The socio-economic profile of the respondents was analysed and, it was found that majority of customers falling under the age group of 41-60 gave preference for purchasing the life insurance policies; in most of the families purchase of life insurance policy was the joint decision of the husband and wife; customers earning a monthly income of ranging from Rs. 5,000 to Rs. 15,000/- had purchased the life insurance policies. Respondents belonged to the three major religions namely, Christianity, Hinduism and Islam. Two important factors were identified during the study. Brand image was the prime criteria adopted by
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majority of the respondents for the selection of the company. Agents played a pivotal role in providing information about the policies and were also the major intermediaries in the life insurance market. Their commendable service was highly appreciated by majority of the respondents. Of all the three companies namely, Life Insurance Corporation, Bajaj Allianz Life Insurance Corporation of India and ICICI Prudential Life Insurance Company, Bajaj was sweeping high in respect of four major components of marketing mix followed by LIC which occupied the dominant position in respect of two components. As per the result of the study, ICICI had to improve in almost all the elements. In most aspects of the marketing mix Bajaj has been dominating, perhaps indicating Bajaj stands for the best.

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BIBLIOGRAPHY

BIBLIOGRAPHY

1) Marking In Banking and Insurance (B&I Semester V, Dipak Abhyankar). 2) Marketing of Life Insurance Business.(P. K. Biswasroy,

Bh.Venkateswara Rao).

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WEBLIOGRAPHY

WEBLIOGRAPHY

1) www.licindia.com 2) www.icici.com 3) www.google.com 4) www.wiki.com 5) www.scribd.com 6) www.irda.com

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