ACKNOWLEDGEMENT:

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

FDDI, Kolkata for giving me the opportunity to prepare a project report on
LIC. Mr. Anirvan Banerjees classroom session always acted as a source of
inspiration, motivation and encouragement. His invaluable guidance,
supervision and support helped me a lot to make this report. His rich
experience, insight and intellect have steered my project to the present stage
of completion.

I am also indebted to Mr. Abhisek who has found time from his busy
schedule and taught me basics of investments, technical terms associated with
insurance, fundamentals of market research, preparation of questionnaire.

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

and many acquaintances that have always provided words of encouragement
and motivation.

I am forever thankful to my parents Mr. Rajeev Jain and Mrs. Meera Jain for
their emotional supporting fuel which kept me cruising all through the project
in spite of the hurdles and hardship encountered during journey.

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

(Aanchal Jain)

Page | 1

ABSTRACT

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

underlying details about the same company.

During the project, I used secondary data only to do the analysis. With the
help of this project the company can create awareness of insurance products in
people by analyzing their needs, handling their objections regarding insurance
and then offering right product to. So company can make customer
understand that how company s insurance policies can help in there need of
investment planning as a part of their overall financial planning. This project
will also help the company to strengthen its base in the city and enhance
customer satisfaction by providing better service. It will also help to generate
more sales and profit. Thus, it helps in increasing the turnover of the
company. It will also help the life advisors of the company in promoting
product of the company.

Page | 2

OBJECTIVE:

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

the opportunities arise.

After comparing the risk and returns the result of the project will
help the company in creating awareness of insurance products in
people by analyzing their needs and handling their objections
regarding insurance.

The project help us to apply theoretical knowledge gained during our

first year of studies in real life situation, i.e. knowledge of Financial
Management concepts like Risk and Returns etc.

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

decision making even in case of insufficient data and uncertain
conditions.

The project will lead to increase the turnover of the company and
thereby it would lead to increase the market share of the company as a
broking house.

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

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

This project will also help the company to strengthen its base in
the city and enhance customer satisfaction by providing better service.
This will work as a distinct feature of company as no company
uses this kind of tool to make customer understand the risk and
returns associated with their insurance product.

To find out the better investment option available to an individual

according to him/her needs and financial health.

Page | 3

STATEMENT OF PROBLEM:

Indian market has been seen a change in the perception of the people towards
the safety and health measures. With the increase in the peoples disposable
income and education level, insurance is no longer regarded as a waste of
money or rich mans play. It is seen as a more serious tool in the hands of the
people in order to build a safe side for themselves in case of any miss
happenings. With the advent of Foreign Direct Investment (FDI) and
privatization in the Indian insurance sector, there is a hub of companies
offering the insurance services.

With the hub of private insurance companies entering the Indian market, a
prospective customer is open to all companies to choose from. In this
scenario, to sustain market growth and market share is a difficult task in front
of the company. Though insurance is a vast field to study, its also very much
tough to consolidate it with customer satisfaction because you can never
measure the satisfaction they have achieved with the product or services you
had provided. The problem with the company lies in the manner of retaining
the customers and forming new customers for itself. As insurance is not such
a product which can be consumed over and over again, a marketer needs to
devise effective strategies in order to mould the perception of the customers
positively towards its company and to get maximum business out of the
customer.

The study has been conducted in order to analyze the general business
accumen of LIC.

Page | 4

LIMITATIONS OF THE STUDY:

Time Constraints.
Financial Constraints.

Area of research.

Presence of government investment options.

People do not feel the need of insurance.

Educational focus.

Page | 5

PROPOSED METHODOLOGY:

The information regarding different LIC plan options obtained from the
various sources like organizational data, internet, research papers and
journals, and some books.

Most of the data collection are secondary data and collected from individual,
LIC agent, LIC company and from the internet.

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

1) Setting up the objectives: Well stated problem is half solved, thus this
the most important step, which is complete.
2) Data collection

Secondary Data: The secondary data collected from internet, LIC

agent and from company itself.

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

analyzed. As the data have been organized it is easy to interpret and to
reach to the last but not the least phase which is mentioned below.
4) Result, Conclusion and Findings: The final step of the project where
we get the results and findings from the project which can be
Implemented by organization.

Page | 6

INTRODUCTION:

INSURANCE:
Insurance is a pool of fund created by a group of people exposed to a similar
amount of risk which is used to compensate financial losses caused due to
happening of uncertain event insured. In India, insurance is governed by
Contract Act and Insurance Act (1930).
Basically there are two principles:
(1) Utmost good faith.
(2) Insurable interest. It exists when one person tends to lose something or
tends to have a financial loss on happening of an event.

LIFE INSURANCE INDUSTRY IN INDIA:

Not many of us are aware of the fact that the life insurance industry of India
is as old as it is in any other part of the world. Oriental Life Insurance
Company was the first Indian life insurance company, which was started in
1818 at Kolkata. And within a span of 100 to 150 years, the number grew
more than 350 (over 250 in life and about 100 in non-life), mainly with
regional focus, flourished all across the country. However, the Government
of India, concerned by the unethical standards adopted by some players
against the consumers, nationalized the industry in two phases in 1956 (life)
and in 1972 (non-life). The insurance business of the country was then
brought under two public sector companies, Life Insurance Corporation of
India (LIC) and General Insurance Corporation of India (GIC).

Page | 7

Subsequently with the economic reforms that were ushered in India in early
nineties, the Government set up a Committee on Reforms (the Malhotra
Committee) in April 1993 to suggest reforms in the insurance sector.

The Committee recommended throwing open the sector to private players to

usher in competition and bring more choice to the consumer. The objective
was to improve the penetration of insurance as a percentage of GDP, which
remains low in India even compared to some developing countries in Asia.
Reforms were initiated with the passage of Insurance Regulatory and
Development Authority (IRDA) Bill in 1999. IRDA was set up as an
independent regulatory authority, which has put in place regulations in line
with global norms. So far in the private sector, 12 life insurance companies
and 9 general insurance companies have been registered. Till then insurance
was kind of privilege or necessity ought to be meant for the high salaried and
riches of this country. As also a necessity only for some in case they needed
to ensure tax savings, tax manipulations etc.
But with the coming of private players, rules of the game have changed.
Never were common men so rigorously targeted. It is today an industry
which is growing at the rate more than 25%. In the last five years, the
growth (of the Indian insurance industry) has been of the order of 25%
plus.1And the remarkable point yet is that the penetration level is only 2%.
Imagine the kind of potential it has for the years to come! May be this is one
of the major reasons why almost all global players are too keen to be in India.

Page | 8

Table-1:
Insurance Penetration- A Comparison
Insurance
Life
Penetration% of GDP
2004
North America

Non-Life

USA

4.28

5.16

Canada
Europe

2.97

4.05

Germany

3.11

3.86

UK

8.92

3.68

France
Asia-Pacific

6.73

5.02

Japan

8.26

2.25

Taiwan

11.06

3.07

South Korea

6.75

2.77

Australia

4.17

3.85

China

1.94

1.58

India
2.53
0.65
It is evident from the Table-1 that compared to other developed and
developing countries, India have the low percentage and per capita
penetration of Insurance Industry. Moreover, with the kind of GDP growth
rate which is expected to be in the range of 8 to 10% for the next decade.
Page | 9

The increasing level of education among the general public regarding

insurance and related products, the insurance market can only head upwards.
The current market size of non-life insurance industry is US $ 2 billion and is
expected to reach US $ 10 billion. Similarly, in the life insurance sector, it is
expected to grow from nearly US $ 3 billion to US $ 15 billion.

Page | 10

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

sector can be categorized into followings;
1. New Market Development
2. New Product Development
3. Customer Centric Approach
4. New Channel Development
New Market Development: It a logical step to look for new and newer
markets when competition grows. Naturally, with as many as 16 players,
latest being Bharti-AXA and six still in the offing, the competition has never
been so intense. Advertising campaigns, awareness campaigns and other
promotional tools players are ensuring that they make dent into right markets
by educating prospects. The strategy to hunt for new markets has been aptly

Page | 11

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

innovative products offered by the new players, mainly from the stable of
their international partners. The main concept underlying new product
development has been of two kinds, Need-Based positioning development
and Variety Based development. Now, the customers have tremendous
choice from a large variety of products from pure term (risk) insurance to
unit-linked investment products. Customers are offered unbundled products
with a variety of benefits as riders from which they can choose. More
customers are buying products and services based on their true needs and not
just traditional money-back policies, which is not considered very appropriate
for long-term protection and savings.

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

satisfaction. People are courteous, processes are being made simple.
Customer is treated as king in true sense. Service, be it pre-selling or be it
post-selling, is readily available at a click away! International best practices
in service and operational efficiency has started to make an inward way
giving away the bureaucratic, cumbersome difficulties. Albeit, the use of
latest technologies have complimented the process even further. Trained and
technically qualified sales force and advisors are now concentrating on sound
financial consultancy and need based selling. Prompt and accurate response
and turnaround times in specific areas such as delivery of first policy receipt,
policy document, premium notice, final maturity payment, settlement of
claims etc. are some of the sea changes that this industry is experiencing.

Page | 12

New Channel Development: Sales and distributions channels also have gone
a paradigm shift. Till recently, Agents were the only mode of distribution of
life insurance products. But today a number of innovative alternative
channels are being utilized by insurance marketers such as banc assurance,
brokers, the internet and direct marketing. It is predicted that the wide spread
of bank branch network in India could lead to banc assurance emerging as a
significant distribution mechanism. However, as of today, agents still
continue to be the main distribution channel. Some life insurance companies
focusing on rural markets have gone one step further in adopting new
innovative means of distributions.
A BRIEF HISTORY OF INSURANCE IN INDIA:
In India, insurance has a deep-rooted history. It finds mention in the writings
of Manu (Manusmrithi), Yagnavalkya (Dharmasastra) and Kautilya
(Arthasastra ). The writings talk in terms of pooling of resources that could
be re-distributed in times of calamities such as fire, floods, epidemics and
famine. This was probably a pre-cursor to modern day insurance. Ancient
Indian history has preserved the earliest traces of insurance in the form of
marine trade loans and carriers contracts. Insurance in India has evolved
over time heavily drawing from other countries, England in particular. These
are listed below:
1818
The advent of life insurance business in India with the establishment of the
Oriental Life Insurance Company in Calcutta.
1834
Oriental Life Insurance Failure
Page | 13

 1850
The advent of General Insurance in India with the establishment of Triton
Insurance Company Ltd in Calcutta
1870
The enactment of the British Insurance Act
1907
In 1907, the Indian Mercantile Insurance Ltd was set up
1912
The Indian Life Assurance Companies Act, 1912 was the first statutory
measure to regulate life business.
1928
The Indian Insurance Companies Act was enacted.
1956
Nationalization of Life Insurance Sector and Life Insurance Corporation
came into existence in 1956.The LIC absorbed 154 Indian, 16 non-Indian
insurers as also 75 provident societies.
1971
The General Insurance Corporation of India was incorporated as a company
1973
General insurance business was nationalized with effect from 1st January.
107 insurers were amalgamated and grouped into four companies namely
1). National Insurance Company Ltd.,
2). The New India Assurance Company Ltd.,
3). The Oriental Insurance Company Ltd
4). The United India Insurance Company Ltd.
Page | 14

 2000
The IRDA was incorporated as a statutory body in April 2000.
Foreign companies were allowed ownership of up to 26%.
2000 2001
Insurance Industry had 10 new entrants in Life Namely:
Life Insurers:
S.No. Registration
Number

Date of Reg. Name of the Company

101

23.10.2000

HDFC Standard
Company Ltd.

104

15.11.2000

Max New York Life Insurance Co. Ltd.

105

24.11.2000

ICICI Prudential
Company Ltd.

107

10.01.2001

Kotak Mahindra Old Mutual Life

Insurance Limited

109

31.01.2001

Birla Sun Life Insurance Company Ltd.

110

12.02.2001

Tata AIG Life Insurance Company Ltd.

111

30.03.2001

SBI Life Insurance Company Limited .

114

02.08.2001

ING Vysya Life Insurance Company

Private Limited

116

03.08.2001

Bajaj Allianz Life Insurance Company

10

117

06.08.2001

Metlife India Insurance Company Pvt.

Ltd.

11

133

04.09.2007

Future Generali India Life Insurance

12

135

19.12.2007

IDBI Fortis Life Insurance Company

Life

Life

Insurance

Insurance

Page | 15

 2002
Insurance Industry had 2 new entrants in Life insurance
Life Insurers:
S.No Registratio Date of Reg.
.
n
Number

Name of the Company

121

03.01.2002

AMP Sanmar Life Insurance Company

Limited.

122

14.05.2002

Aviva Life Insurance Co. India Pvt. Ltd.

130

December,2006 Bharti Axa Life Insurance Company

Ltd.

THE
INSURANCE
AUTHORITY:

REGULATORY

AND

DEVELOPMENT

Reforms in the Insurance sector were initiated with the passage of the
IRDA Bill in Parliament in December 1999. The IRDA since its incorporation
as a statutory body in April 2000 has fastidiously stuck to its schedule of
framing regulations and registering the private sector insurance companies.
The other decisions taken simultaneously to provide the supporting
systems to the insurance sector and in particular the life insurance
companies were the launch of the IRDA s online service for issue and
Renewal of licenses to agents. The approval of institutions for imparting
training to agents has also ensured that the insurance companies would have a
trained workforce of insurance agents in place to sell their products, which are
expected to be introduced by early next year. Since being set up as an
independent statutory body the IRDA has put in a framework of globally
compatible regulations.
Page | 16

Insurance as an Investment Option:

Life is full of uncertainties- accident, illness, and theft, natural disaster might
happen anytime. Human beings do not have much control over lifes risks
and uncertainties however they can at least be prepared for them and their
aftermath. Life insurance can be a big support to a family in troubled times,
to meet their financial needs, to fulfill their dreams of -another child, a bigger
home, a new business, college education, travel, retirement Life insurance
is all about making sure your family has adequate financial resources to make
their future plans and dreams come true.
Insurance provides you with that unique sense of security that no other form
of investment provides. By buying life insurance, you buy peace of mind and
are prepared to face any financial demand that would hit the family in case of
an untimely demise. Insurance also provides a safeguard in the case of
accidents or a drop in income after retirement. An insurance policy can lend
timely support to the family in case of an accident or disability. It also comes
as a great help when you retire, in case no untoward incident happens during
the term of the policy.
Insurance can be an attractive option for investment too. A lot of Insurance
products yield more compared to regular investment options, with the added
advantages of providing incentives. No other investment schemes can offer
financial protection from risks.
The premium you pay for an insurance policy is an investment against risk.
Before comparing it with other schemes, one must remember that a part of
the total amount invested in life insurance goes towards providing for the risk
cover, while the rest is used for savings.
Also life insurance provides you get maturity benefits on survival at the end
of the term. Now, let us compare insurance as an investment options. If you
invest Rs. 10,000 in other investment options like PPF or Bonds, your money
might give better returns but you cannot access your funds.
Page | 17

One can withdraw 50 per cent of the initial deposit only after 4 years. The
same amount can give you an insurance cover of up to approximately Rs 5-10
lakh (depending upon the plan, age health, etc) and this amount would be
immediately available to the nominee of the policyholder on death.Thus
insurance provides sound returns in addition to risk cover.Insurance can be
used for tax planning too. Under Section 88 of Income Tax Act, an individual
is entitled to a rebate of unto 20 per cent on the annual premium payable on
his/her life , life of spouse and life of his/her children. This benefit is
available to an individual or a Hindu Undivided Family.If the gross income
per annum is less than Rs. 1.5 lakhs per annum maximum benefit available is
20% of the eligible amount i.e. Rs. 14,000.
Different types of Life Insurance Policy:

Term plans:
Term life insurance provides for life insurance coverage for specified
term of years for specified premium. If policyholder survives the term,
risk cover comes to end. The policy does not accumulate cash value.
Term is generally considered "pure" insurance, where premium buys
protection in the event of death and nothing else. Term life policies are
primarily designed to meet needs of those people who are initially
unable to pay larger premium required for a whole life or an
endowment assurance policy. Term insurance premiums are low
because both insurer and policy owner agree that death of insured is
unlikely during the term of coverage. Three key factors to be
considered in term insurance are: face amount (protection or death
benefit), premium to be paid (cost to the insured), and length of
coverage (term). Various insurance companies sell term insurance with
many different combinations of these three parameters. Face amount
can remain constant or decline. Term can be for one or more years. No
surrender, loan or paid-up values are granted under term life policies
because reserves are not accumulated.
Page | 18

Endowment Policies:

An endowment policy covers risk for a specified period, at end of which sum
assured is paid back to policyholder, along with bonus accumulated during
term of policy. An endowment life insurance policy is designed primarily to
provide a living benefit and only secondarily to provide life insurance
protection. Therefore, it is more of investment than whole life policy.
Endowment plan pays face value of policy either at insured's death or at
certain age or after number of years of premium payment. Endowment policy
is an instrument of accumulating capital for specific purpose and protecting
this savings program against saver's premature death. Cash value built up
inside the policy, equals death benefit (face amount) at certain age, called
endowment age. Endowments are considerably more expensive (in terms of
annual premiums) than other policies because premium paying period is
shortened and endowment date is earlier.
Various types of Endowment policies are:
@ Pure Endowment Policy
@ Ordinary Endowment Assurance policy
@ Double Endowment Policy
@ Joint Life Endowment Plan
@ Marriage Endowment Plan

Page | 19

Money Back Policies:

Money back policy provides for periodic payments of partial survival

benefits during term of policy, as long as policyholder is alive. They differ
from endowment policy in sense that in endowment policy survival benefits
are payable only at end of endowment period. Important feature of money
back policies is that in event of death at any time within policy term, death
claim comprises full sum assured without deducting any of survival benefit
amounts, which may have already been paid as money-back components.
Bonus is also calculated on full sum assured.

Unit linked insurance plans (ULIPs):

The advent of unit linked insurance policies has created new issues with
regard to policy conditions and privileges of the policyholder apart from
issues on disclosures. To overcome these issues, IRDA came out with its
guidelines in Dec 2005 which mandate, among others, that the following be
mentioned prominently on a policy bond:
The minimum and maximum percentage
of the investments in different types (like equities, debt etc)
The definition of all applicable charges, method of appropriation of these
charges and the quantum of charges that are levied

Page | 20

 The maximum limit up to which the insurer reserves the right to increase
the charges subject to prior clearance of the Authority
On top of the policy document, wherever applicable, the statement 'In this
policy, the investment risk in investment portfolio is borne by the
policyholder'. At present as many as sixteen life insurance companies are
operating in India and each one is issuing policy formats with different
variations. As there is no uniformity, it is difficult for the market as well as
policyholders to comprehend and make reasonable comparisons of terms
and conditions, privileges and benefits offered by different insurers.
Hence, it is worthwhile that a serious attempt is made at the earliest to
reduce the complexities of the policy bond with a judicial standardization
which provides much needed solution without compromising the
competitive spirit of the market.
The developments in technological front enabled financial sector to move
from paper based documentation to digitalization of documentation. The
trend which was initiated in securities market has revolutionized the
services and reduced the transaction costs to individual investors. The
pace of services has also improved with the time.

Page | 21

Digitalization of documents along with the availability of techno-driven

banking services like ECS (Electronic Clearing Services) enabled financial
sector to settle financial transactions on a real time basis, thus increasing
the expectations of investing public for a similar service in other spheres
of financial sectors like 'insurance'.Drawing a cue from the success stories
of these sectors there is a growing demand from various sections of
society that insurance companies shall also usher in digitalization of policy
documents, thus converting them to a dematerialized (demat) form.
However, unlike other financial transactions, in the case of insurance
contracts, they are either annual contracts as in the case of general
insurance or long term contracts as in the case of life insurance contracts.
Further, there is not much movement in these contracts, except at the time
of renewal or final payments.

Permanent life insurance:

Permanent life insurance is one that remains in force until policy matures.
The policy cannot be canceled by insurer for any reason except fraud in
application, and that cancellation must occur within a period of time defined
by law. Permanent insurance builds a cash value that reduces amount at risk
to insurance company and thus insurance expense over time.
Page | 22

Whole life coverage:

A whole life policy runs as long as policyholder is alive. Simple whole life
policy requires insurer to pay regular premiums throughout life. In a whole
life policy, insured amount and bonus is payable only to nominee of
beneficiary upon death of policyholder. There is no survival benefit as
policyholder is not entitled to any money during his / her own lifetime.
Primary advantages of whole life are guaranteed death benefit; guaranteed
cash values, fixed and known annual premiums, and mortality and expense
charges will not reduce cash value shown in policy. Riders are available that
can allow one to increase death benefit by paying additional premium. Cash
value can be accessed at any time through policy "loans".
Various Whole life policies available in India are:
@ Whole Life policy (with profits)
@ Whole Life limited payment plan
@ Whole life single premium plan
@ Convertible whole life plan

Page | 23

Accidental death:Accidental death is limited life insurance that is

designed to cover insured when they pass away due to accident.
Accidents include anything from injury, but do not typically cover any
deaths resulting from health problems or suicide. Because they only
cover accidents, these policies are much less expensive than other life
insurances. It is very commonly offered as "ACCIDENTAL DEATH
AND DISMEMBERMENT INSURANCE", also known as AD&D
policy. In AD&D policy, benefits are available not only for accidental
death, but also for loss of limbs or bodily functions such as sight and
hearing, etc. Accidental death and AD&D policies very rarely pay
benefit; either cause of death is not covered, or coverage is not
maintained after accident until death occurs. To be aware of what
coverage they have, insured should always review their policy for what
it covers and what it excludes. Accidental death benefits can also be
added to standard life insurance policy as rider. If this rider is
purchased, policy will generally pay double the face amount if insured
dies due to accident.

Joint Life Insurance Policy:

Joint life insurance policies are similar to endowment policies as they too
offer maturity benefits to policyholders, apart from covering risks like all life
insurance policies. Joint life policies are categorized separately as they cover
two lives simultaneously, thus offering a unique advantage in some cases,
notably, for married couple or for partners in a business firm. Under a joint
life policy sum assured is payable on first death and again on death of the
survivor during term of policy.
Page | 24

Annuities / Children's policies:

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

not immediately on death of insured. On survival insured receives money at
same pre-determined time. These policies are best suited for planning
children's future education and marriage costs.

Pension Plan:

Pension plan is investment that is made either in single lump sum payment or
through installments paid over certain number of years, in return for specific
sum that is received every year, every half-year or every month, either for life
or for a fixed number of years. If insured dies during term of policy, his
nominee would receive benefits either as lump sum or as pension every
month. Annuities differ from all other forms of life insurance in way that an
annuity does not provide any life insurance cover but, instead, offer a
guaranteed income either for life or certain period. Typically annuities are
bought to generate income during one's retired life, which is why they are
also called pension plans. By buying annuity or a pension plan annuitant
receives guaranteed income throughout life.

Page | 25

Group Insurance:

Group insurance offers life insurance protection under group policies to

various groups such as employers-employees, professionals, co-operatives,
weaker sections of society, etc. It also provides insurance coverage for people
in certain approved occupations at lowest possible premium cost. Group
insurance plans have low premiums. Such plans are particularly beneficial to
those for whom other regular policies are costlier proposition. Group
insurance plans extend cover to large segments of population including those
who cannot afford individual insurance. Number of group insurance schemes
has been designed for various groups.

Loan Cover Term Assurance Policy:

Loan cover term assurance policy is insurance policy, which covers home
loan. Such policy covers individual's home loan amount in case of
eventuality. Cover on such policy keeps reducing with passage of time as
individuals keep paying their EMIs (equated monthly installments) regularly,
which reduces loan amount. This plan provides lump sum in case of death of
life assured during term of plan. The lump sum will be decreasing percentage
of initial sum assured as per policy schedule. Since this is non-participating
(without profits) pure risk cover plan, no benefits are payable on survival.

Page | 26

LIFE INSURANCE CORPORATION OF INDIA:

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

embarked upon its momentous journey in true spirit of serving the people and
nation as a whole. Since then it has spearheaded the financial and
infrastructure development of the nation. The performance of LIC has been
exemplary and it has been growing from strength to strength be it customer
base, agency network, branch office network, and the like. LIC has played a
significant role in spreading life insurance among the masses and
mobilization of peoples money for peoples welfare. Even after the entry of
private insurers for almost a decade now, LIC continues to be the frontrunner
in the industry in terms of market share.
AARJSH VOLUME 1 ISSUE
5 (NOVEMBER 2278 859X137
LIC today services its customers through 8 Zonal offices, 113 Divisional
Offices, 2048 Branches, 1202 Satellite Offices, more than 1.19 lakh
employees and 12.78 lakh agents. Besides life insurance, through its various
subsidiaries, it is involved in providing various financial services viz. Pension
(LIC Pension Fund Ltd.), Housing Finance (LIC HFL Ltd), Mutual Fund
(LIC Nomura MF), Credit cards (LIC Card Services Ltd), Financial Products
distribution (LIC HFL Financial Services Ltd) and LIC HFL Care Homes
Ltd. It also provides insurance services in several countries abroad through
branch offices, Joint Ventures (JVs) and a wholly owned subsidiary. As a
result of product innovation by private players, LICs market share has
gradually reduced in the post-liberalization period. Despite that, the Life
Insurance Corporation of India continues to remain the largest player in the
Indian Life Insurance market with a market share of 71.30% in FY 2011-12.
The Life Insurance Corporation of India also transacts business abroad and
has offices in Fiji, Mauritius and United Kingdom. With its multinational
presence, it is associated with joint venture abroad in field of insurance
namely, Ken India Assurance Company Limited, Nairobi, United Oriental
Assurance Company Limited, Kualalumpur and LIC (international)
E.C.Bahrain.

Page | 27

LIC OPERATES ALL OVER INDIA:

Mission:

Explore and enhance the quality of life of people through financial

security by providing products and services of aspired attributes with
competitive return, and by rendering resources for economic
development.
Vision:

A trans-nationally competitive financial conglomerate of significance to

societies and pride of India.
Page | 28

MARKET SHARE (2009 - 2010) OF LIFE INSURERS:

Premium Mode
Regular Premium
Single Premium
1st year Premium
Renewal Premium

LIC
43.13%
92.19%
65.08%
73.64%

Other than LIC

56.87%
07.81%
34.92%
26.36%

Overall Average

70.10%

29.90%

MARKET SHARE (2010 - 2011) OF LIFE INSURERS:

Premium Mode
Regular Premium
Single Premium
1st year Premium
Renewal Premium

LIC
56.73%
81.26%
68.85%
70.49%

Other than LIC

43.27%
18.74%
31.15%
29.51%

Overall Average

69.78%

30.22%

Source: IRDA Annual Report

AARJ

Page | 29

ORGANISATION STRUCTURE OF LIC:

Chairman
Managing Director
Executives Directors
Chiefs
Zonal Managers
Regional Managers
Divisional Managers
Seniors Divisional Managers
Marketing Managers
Sales Managers
Senior Branch Managers (Head of the Branch)
Assistant Branch Managers Sells
Development Officers
Different Corporate and Retail Agent

Page | 30

PUBLIC RELATION DEPARTMENT:

The Public Relation Department in LIC is divided into three major

categories. Namely:
1. Communication Department
2. Crisis Management Department
3. Publicity Department
Chief Public Relation Officer

PRO (Communication Dept.)

PRO (Crisis Management Dept.)

PRO (Publicity Dept.)

Page | 31

CHAIRMAN OF LIC

PUBLIC RELATIONS

COMMUNICATION DEPARMENT

PUBLICITY DEPARMENT

CRISIS MANAGEMENT DEPATMENT

Page | 32

LIC's logo:

SH V

LIC's slogan:

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

english as "Your welfare is our responsibility". This is derived from the
Ancient Hindu text, the Bhagavad Gita's 9th Chapter, 22nd verse. The slogan
can be seen in the logo, written in Devanagiri script.LUME 1 ISSUE 5
(NOVEMBER

Page | 33

Product line of LIC:

LICs insurance product majorly categorized into seven segments. They are
the following:

Insurance plans
Pension plans
Unit plans
Special plans
Micro insurance plans
Withdrawn plans
Health plans

Now, we will discuss something brief about different plans:

Insurance plans:
As individuals it is inherent to differ. Each individual's insurance needs
and requirements are different from that of the others. LIC's Insurance
Plans are policies that talk to everybody individually and give almost
everyone the most suitable options that can fit anybodys requirement.
Under this plans there are some following products:
Bima account plans:
Under this plan there are further two subcategories:
Bima account 1
Bima account 1
Endowment plus:
Children plans:
Under children plans there are further ten subcategories:
Jeevan anurag
Komal jeevan
CDA endowment vesting at 21
CDA endowment vesting at 18
Marriage endowment or Educational annuity plan
Jeevan Kishore
Jeevan chhaya
Child career plan
Child future plan
Jeevan Ankur
Page | 34

 Plans for handicapped dependents:

Under this policy there are further two subcategories:
Jeevan aadhar
Jeevan Vishwas
Endowment assurance plans:
There are seven different plans under this option:
The endowment assurance policy
The endowment assurance policy with limited premium
term
Jeevan mitra (Double cover Endowment plan)
Jeevan mitra (Triple cover Endowment plan)
Jeevan Anand
New janaraksha plan
Jeevan amrit
Plans for HNI client:
There are two different plans:
Jeevan shree I
Jeevan pramukh
Money back plans:
There are some plans under this:
The money back policy 20 years
The money back policy 25 years
Jeevan Surabhi 20 years
Jeevan Surabhi 25 years
Jeevan Surabhi 15years
Bima bachat
Special money back plan for woman Jeevan Bharati I
Whole life plans:
There are five different plans under this:
The whole life policy
The whole life policy limited payment
The whole life policy single payment
Jeevan anand
Jeevan tarang
Term assurance plans:
Two year temporary assurance policy
The convertible term assurance policy
Page | 35

 Joint life policy Jeevan Sathi

Pension plans:
LIC has two different pension plan options:
Jeevan akshay VI
New jeevan nidhi
Unit plans:
LIC has two different pension plan options:
Endowment plus
Flexi plus
Special plans:
LIC has some plans under this:
Golden jubilee plan New bima gold
Special plan:
LIC has two different options under this:
Bima nivesh 2005
Jivan saral
Micro insurance plans:
LICs Micro Insurance Plans are not plans but opportunities that knock
on door once in a lifetime. These plans are a perfect blend of insurance,
investment and a lifetime of happiness.
LIC has three different plan options:
Jeevan madhur
Jeevan mangal
Jeevan deep
Page | 36

 Withdrawn plans:

There are altogether nineteen products under this banner:

Jeevan nischay
Wealth plus
Jeevan aastha
Jeevan varsha
Fortune plus
Health plus
Pension plus
New jeevan dhara I
Jeevan vriddhi
Jeevan sugam
Market plus I
Profit plus
Money plus I
Child fortune plus
Jeevan saathi plus
Samridhi plus
Jeevan nidhi
New jeevan suraksha I
Jeevan Vaibhav

Health plans:

LIC has some plans under this:

Health protection plus
Jeevan arogya

Page | 37

SWOT ANALYSIS:

The SWOT analysis involves an in depth study of the strength and weakness of
the provided organization and it also provides information to the promoter,
consultant, other agencies and helps in long term viability of the project.

Strength :
1. It is the oldest and most well experienced player having a Pan India
presence.
2. LIC has a strong and very well developed distribution network.
3. It is having a huge consumer base and is evolved as one of the most
powerful brands of the country.
4. It has a large product portfolio and claim settlement is easier to get.
5. It has the advantage of government guarantee is accompanied with it.
6. Largest insurance Company in the world in Customer Base (23 crore
customers)
7. No.1 insurance company in the world in terms of agency (about 1.1
Million agents)
8. LIC is No.1 insurer in the world in Volume & Sold around 3.75
Cr.Policies in 2007-2008.
9. 2nd Biggest Real Estate Owner next to Indian Railways.
10. LIC is one of the Highest income tax playing Organization. For Financial
Year 2007-08, LIC has paid advance Tax Rs.2627. 14 Cr. & Service Tax
Rs.1292. 15 Cr.
11. Has Highest insurance Professionals ( Club Member agents )

Page | 38

12. Only 4 countries in the world have more population that LIC`s policy
holders.
13. No.1 insurance Company in the world in terms of claims paid.
14. LIC Settles 2.21 claims per second, LIC settled 139 lakhs claims during
the year 2007-2008.
15. Prompt settlement of claims (97% maturity claim settled on or before
due date)
16. One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B
Claim-0.07%)
17. Advanced Technology-For better Customer Service
18. Computerized and networked 2048 branch offices and 159 satellite
offices throughout the country.
19. Use of High Tech-WAN,LAN,IVRS & EDMS
20. LIC is second largest PC user in the country.
21. EDMS to make LIC a paperless office- Enabling Policy servicing &
payments through all branchs in the country.
22. Premium Payment Facility extended through networked 2048 branches,
ECS, ATM's through internet, online portals, collecting bank (Axis
Bank), AP online, through SMS, through selected agents, Now LIC
Premium can also be paid through.
23. "Suvidha info Serve KIOSKS" all over India.
24. Policy Holder's Portal allow on line access to policy status and other
details.
25. Info centre set up in 12 cities for customers to interact easily.

Page | 39

26. 45 interactive Voice Response System (IVRS) centers all over the
country to provide information on policy servicing. Facility is available
24 7, Facility can be availed on following phone Nos. 1251 OR 02025514248.
27. LIC - an institution builder promoting many financial and insurance
institutes like NSE, NCDEX, LIC Mutual Fund, Stock Holding
Corporation of India, National insurance Academy, insurance institute of
India etc.
28. LIC has foreign operations in Mauritius, Fiji and London and has joint
venture operating in Sri lanka, Nepal, Bahrain & Saudi Arabia. New
offices will be shortly oprned in Australia, USA&Canada.
29. LIC is known as "Pension Provider" of the country.
30. 1st Pension company in India is floated by LIC as "LIC Pension Fund
Ltd" on 21st Nov 2007.
31. First to create waves in micro insurance sector by insuring people below
the poverty line. In year 2007-2008, 8.54 lac policies sold through
"Jeevan Madhur"Plan.
32. Widest range of plans (about 48) for every need of the customer of 0 to
79 years of age.
33. Biggest Portfolio of Group insurance schemes available.
34. "Jeevan Saral" one of the product of LIC got "Best innovation product "
award from I.R.D.A.
35. LIC has covered life Risk of 1.13 crore citizens through "AAM ADMI
BIMA YOJANA" & " JANASHREE BIMA YOJANA".

Page | 40

 Very Unique Salary saving Portfolio.

Highest Number of Corporate Clients in Group insurance Scheme.

Expending Distribution Channel through Bancassurances, Corporate

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

New East - Central Zonal Office opened at patina to caterto the needs of
states of Bihar, Jharkhand and Orissa. 5 new Divisional offices were also
opened in 2007-08. Pune D.O.was splited in 2 divisions, viz Pune
Division (i) and Pune Division (ii).
"Golden Jubilee Foundations" established for undertaking charitable
activities like education, health, relief of poverty etc.
LIC invested more than 11,630 crores, in infrastructure sector is
Rs.56,691crores.
In socially oriented sector like water, drainage & housing etc, LIC has
invested Rs.5,635 crores during 2007-08 & total investment in this sector
is Rs.32,321 crores.

Page | 41

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

Different incentive schemes for villages, Schools and Banks under Bima
Gram, Bima School and Bima Banks.
Total investment in Nation Building Activities is 5,76,000 Crs.
LIC's investment income in 2007-08 was Rs.40,655 crores. Out of Total
income of Rs, 1,76,559.28 Crs.
Total Assets of the corporation as on 31.3.07 were Rs. 6,74,514.78 Crs.
Largest institutional investor in Share Market. On an average Rs.100
crore invested every day. During theyear 2007 LIC earned the profit
Rs.10,000 Crs. from the Sale of Equity.
Largest Financial institutional investor both Equity market & Term
House.

Page | 42

Weakness :

prompt and sincerecustomer service.

having high commissions only.

al problems between top

management and lower cadre staff.

corruption in main office.

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

Page | 43

Opportunity :

lot of innovativeproducts.
on markets, health insurance and large real estate portfolio. Todays
human life becomes full uncertain, so they prefer protection against the
risk. Therefore they prefer life insurance. This is the opportunity for the life
insurance sector.
Easy accesses to development in the more advance market provide further
opportunity to upgrade their working. Technological, financial or specific area
based avenues of absorbing improved system are also now more easily
available. So, that insurance companies working efficiently and fast service.
Increased economic activities: increase in the economic activity has become
the opportunity for the life insurance sector. The activity such as development
in the automobile industry, development in the shipping industry. The growth in
the GDP shows the opportunity for this industry. The growth rate expected this
year 7-7.5%. So this is also one of the opportunities for the life insurance sector.

Page | 44

The Indian insurance market is the one of the least markets in the world. India
has a population 1044.15 million out of which only 77.7 million have a life
insurance policy. Almost 300 million people in the country can afford to buy
life insurance but of this only 20 % have an insurance cover. Thus there lies a
big opportunity for the life insurance industry. No doubt lots of marketing and
promotional efforts have to be done for trapping the uncovered portion of the
huge market. Indias insurance has long way to catch up with the rest of the
world. According to the institute of charted financial analyst of India. India is
the 23rd largest insurance market in the world. India accounts for just 0.4% of
the global insurance market which is very low. the ratios of premium to GDP
for India stands at only 3% against 5.2% in US ,6.5%in UK.

To enter into rural market where customer awareness about insurance is low
by effective and efficient marketing strategies.
To sell insurance products through electronic Medias.
Natural calamities: natural calamities taking place now days have created a
concern for life insurance among the public. Because of natural calamities like
earthquake, flood, and cyclone people have become conscious about benefits
and need of insurance. Thus through a calamity it has become a considerably
big opportunity for the industry.

Page | 45

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

very high. It is said that one Australia is added in our country every year. Thus
potential customers for the life insurance industry. It has become an opportunity
for the life insurance industry.
The lack of comprehensive social security system combined with a
willingness to save means that Indian people demand for pension products will
be large. Thus, it has become an opportunity for the life insurance industry.
India has traditionally been a highly savings oriented country. Needless to
say, if the insurance market is properly tapped, it is possible to raise life
insurance premium as a percentage of GDP from its existing level. Thus, it has
become an opportunity for the life insurance industry.
To use Internet and e-commerce technologies to dramatically cut the costs
and/or to pursue new sales-growth opportunities. With the help of technology it
has become easy for the companies to reach the customer quickly, easily,
efficiently and in a better way. Also the companies can cut down the cost of
operation up to considerable level. Thus technology has thrown lots of
opportunity for the company.
Liberalized government policy toward insurance sector: the government has
liberalized the government policy in the life insurance sector. Now a day role of
government has changed. Due to liberalized policy of government the country is
benefited in earning foreign inflows: the domestic company can also collaborate
with foreign country and can create synergy. Thus there is great opportunity for
those who can trap it. Exist the option of joint venture& alliance etc for
companies to make Synergy, value as well as competitive capabilities for firms.

Page | 46

Threats:
Private entrants are naturally targeting the profitable and more lucrative
segments, by providing better service, new products and flexibility. They are
targeting the bigger corporate the other clients in the well established
metropolitan center. These new entrants succeeded in eating share of the
existing entities. This creates threat among rival firms itself.
Decreased in bank rate: the decreased bank rate is the biggest threat for the
life insurance sector. Fluctuation in the bank rate makes big difference for the
life insurance industry. It has become threats for the life insurance industry.
Interest rate of P.F and bank saving create threat to insurance sector. All
other saving is obviously the threat for life insurance sector.
Increasing intensity of competition among industry rivals-may cause squeeze
(fall) on profit margins. Consumers education- consumers are more and more
confused because the market players are offering large number of product
range. As at present the awareness level is not much, it is only because the
education level is only 62 %( in which only 10% are well educated).
Fraud in insurance sector: the major problem fraud, which affects the life
insurance sector.

Page | 47

 The flight of talent to new entrants is already in evidence, and could be on the
rise for some time to come. Retaining qualified and competent executives will
be considerable challenges for existing companies.
One very serious danger that the government on units is likely to face is that
even if at some point of time, the government does decide to disinvest a portion
of its equity; they may not be fully free from government interference. They
could face a peculiar problem that although paper and in terms of legal
definition they would not be public sector units. In effects, their working could
be no different from what it was before their ownership pattern change. This
could be genuine threats since they would be competing with units which are
free from such artificial and unnecessary restrictions.
The new units, equipped with state of arts equipment and innovative
procedure would have an in-built edge over the erstwhile public sector units,
which until recently had no such opportunity and incentives. Due to possible
negative impact on employment, there were no serious efforts at updating
technology and equipment. The resultant inadequate investment in
infrastructure could lead to their lagging behind in the race.

Page | 48

USP of LIC:

LIC have been taken following steps to increase its market competitiveness
and retains its dominant position in the insurance market.

1. PRODUCT DEVELOPMENT:
In a competitive market, there is a greater need to provide insurance products
that meet the needs of our customers. LIC therefore offers a wide variety of
products, which fulfills the needs of different segments of the society. As at
the end of the financial year 2010-11, the Corporation had 52 products
available for sale. During the Year Corporation introduced 5 new plans viz.
LICs Pension Plus, LICs Endowment Plus, LICs Bima Account I, LICs
Bima Account II and LICs Samridhi Plus. As a result of product innovation
by private players, LICs market share has gradually reduced in the
postliberalisation period. Despite that, the Life Insurance Corporation of
India continues to remain the largest player in the Indian Life Insurance
market with a market share of 71.30% in FY 2011-12.H VOLUME 1 ISSUE
5 (NOVEMBER 2012
2. COMPETITION:
Private and foreign entrants in the insurance industry have made others
difficult to retain their market. Higher customer aspirations lead to new
expectations and forced him or her to move towards the insurer who provides
him the best service in time. It becomes less viable for them even to maintain
the functional networks or competitive standards and services. To survive in
the industry they analyze the emerging requirements of the policyholders
/insurers and they are in the forefront in providing essential services and
introducing novel products. Thereby they become niche specialists, who
provide the right service to the right person in the right time. Today, a public
giant LIC is facing direct competition with the rest 23 private life insurers.
Page | 49

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

information technology for enhancing the quality of its service to customers.
Being the largest insurer in India, LIC has always explored all the avenues
that technology offers to provide the best of services to its valued customers
and other stakeholders. Today, LIC customers can pay their premium not
only in any one of its offices, but also through LICs Premium Payment
Gateway on our website through partner Banks like Corporation Bank, Axis
Bank or through associate agencies like APOnline, MPOnline, etc.
Customers can also use their Net Banking accounts, Debit Cards and Credit
Cards to pay premiums online. LIC reaches out to its customers through
IVRS, Call Centres, Customer Zones, SMS, e-mail, website and now even
the Social Networking sites. LIC has also undertaken many other customercentric initiatives like Enterprise Document Management System, Portal for
Customers, Agents, Development officers and Employees, etc. All LIC
offices and Training Centres have been connected to a Wide Area Network
for more than 10 years now. Last year Central Office, Zonal Offices, Zonal
Training Centres and the 113 Divisional Offices are connected through high
definition Video-Conferencing. In order to safeguard its IT infrastructure
from external threats, LIC has also installed the latest IT Security products in
its setup. To keep pace with changes in the business environment and the
technology platforms, LIC migrated our Core Insurance Application to web
based architecture.
4. CHIEF LIFE INSURANCE ADVISORS (CLIAs):LIC introduced the
above Scheme on 12.04.2008 with an objective of increasing its market
presence through more agents by utilizing capabilities of existing high
performing agents for organizational growth. In order to increase market
presence, more number of agents should be in the field. Understanding this
well, the Corporation decided to utilize the capabilities of existing senior
agents for organizational growth by incentivizing them for identifying,
training and mentoring new agents. Retired employees and Financial Service
Executives (FSE) are also allowed to become Chief Life Insurance Advisors
under certain conditions.
Page | 50

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

the rural and social sector. Microinsurance is defined as the protection of low
income households against specific perils in exchange for premium payments
proportionate to the likelihood and cost of the risk involved. It provides an
opportunity to the insurance companies to meet their social responsibility as
well as secure a strong footing in the rural market. The active distribution
channels for micro insurance in India are NGOs, MFIs, and SHGs (self-help
groups), Micro agents, Cooperative Banks and RRBs (regional rural banks),
and Post Offices. The MFIs/NGOs have been identified as main delivery
channels by most of the insurance companies. These have a large network,
catering to huge number of clients. The year 2011-12 has been another
successful year for the Micro Insurance vertical of LIC. The vertical
exceeded the budget of 32 lacs Policies by a hefty margin of more than 6 lacs
policies with 119.59 % A2B.The total number of Policies stood at 38.27 lacs
with a growth rate of 29.67%. As many as 7 Zones crossed their budget with
good margin. Similarly 80 MI Units have achieved their budget. 7 MI Units
have procured more than 1 lac policies during the year. During this financial
year MI vertical crossed magical figure of 1crore policies and completed 1.12
crore policies as on 31.03.2012 since inception. The table 4 shows the new
business of Micro Insurance.
6. DIRECT MARKETING:In its 3 years of operations, Direct Marketing
has successfully established itself as a Value Pioneer. Through the years, it
had striven to take a fresh view of the environment, capture changes, identify
new business opportunities and orchestrate appropriate response. Direct
Marketing has achieved reasonable success in creating a professional and
disciplined work force comfortable with approaching and tapping emerging
segments in the market. The channel, through the effective use of LMS has
been able to ensure fast response to queries to successfully position the
Corporation as a responsive organization sensitive to changing customers
expectations. The table 6 shows the direct marketing channel wise new
business of LIC.
Page | 51

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

Under Bancassurance, at present LIC have tie-ups with 8 PSU Banks, 4
Private Banks and 33 UCBs / RRBs / CO-OP Banks under Corporate Agency
agreement. These Banks procure New Business for LIC through their Branch
Outlets. At present, approximately 19,000 Outlets under these Banks. The
share of Banks in the total business of B&AC in the year 2011-12 was 91%
in FPI and 77% in Policies.
8. HEALTH INSURANCE:
During 2010-11, 67,668 Health Insurance Policies were sold for a Premium
Income of Rs.58.02 crore. LIC settled an amount of Rs. 8.38 crore towards
health insurance claims under 5,096 lives. Incidence of claims under Health
Policies is 1.39%, of which 51% are settled. As at 31.03.2011 LIC covering
7,23,752 lives under Health Insurance Policies. LIC started Health Insurance
Division in 2007-08, to tap the vast potential for Health Insurance Business
and to devise Health Products and Services. The first product Health Plus
was launched in February, 2008 and the second product Health Protection
Plus in April, 2009. Both are Unit Linked Health Insurance policies
providing for hospitalization and major surgery cover for 49 specified
surgeries. The plans also have a facility of withdrawal, linked to domiciliary
treatment. Following IRDA regulations on cap of charges, Health plus Plan
was withdrawn from 01.01.2010. After LIC of India introduced to Health
product of Jeevan Arockya plan.
9. INDEPENDENT FINANCIAL ADVISORS (IFAs):IFAs are authorised
agents of insurance companies having tie-ups with more than one insurance
company. They are qualified persons or institution who can provide advice
on financial products. Independent financial advisors are commissioned
agents whose primary business is the sale of property and casualty insurance
for several insurers. IFA assembles different financial products in accordance
to customer needs and provide value added product by creating customized
financial product. Today, IFA show their significant presence as distribution
channel in both life and non-life insurance business.
Page | 52

10) INTERNATIONAL OPERATIONS:

Life Insurance Corporation of India operates in 13 countries abroad through

its various branches and Joint Venture Companies/ Wholly Owned
Subsidiaries. Branch Offices in the U.K., Mauritius & Fiji and operate
through Joint Venture Companies in Bahrain, Qatar, Kuwait, U.A.E., Oman,
Kenya, Saudi Arabia, Nepal & Sri Lanka. A wholly owned subsidiary Life
Insurance Corporation (Singapore) Pte. Ltd. has been incorporated in
Singapore and we are in the process of applying for an operating license.

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

around Rs. 349 Crores in the 12 months period of each unit ended during
2011-12, thereby registering a growth of 15.69%.
2. The Total Net Premium Income (TPI) of our units was around Rs. 1,247
Crores during the same period in 2011-12 registering a growth of 28.2%. LIC
(International) B.S.C. (c), Bahrain and LIC Fiji are market leaders in their
respective geographies.

11) RECOGNIZED ALL AROUND:14

6
LIC has been reorganizing itself in order to perform better than the new
players. LIC offers a wide variety of products, which fulfills the needs of
different segments of the society. As at the end of the financial year 2010-11,
the Corporation had 52 products available for sale. The performance of LIC
has been exemplary and it has been growing from strength to strength be it
customer base, agency network and branch office network. LIC continues to
remain the largest player in the Indian insurance market.
Page | 53

Marketing Mix (4Ps):

Product:
LIC is the leading company offering Life insurance services to the
users.
Apart from offering life insurance policies, they also offer underwriting
and consulting services.
All Life insurances have been divided into different plans based on the
financial technicality. Eg:
ENDOWMENT, ULIP, TERM,
TRADITIONAL.
Price:
In the insurance business the pricing decisions of LIC are concerned with:
The premium charged against the policies,
Interest charged for defaulting the payment of premium and credit
facility,
Commission charged for underwriting and consultancy activities.
In India where the disposable income in the hands of prospects is low,
the pricing decision also governs the transformation of potential
policyholders into actual policyholders.
Promotion:
The insurance service depend on effective promotional measures.
In India, the rate of illiteracy is very high and the rural economy has
dominance in the national economy. They have both personal and
impersonal promotion strategies.
In promoting insurance business, the agents and the rural career agents
play an important role here in LIC. Due attention have been given in
selecting the promotional tools for agents and rural career agents and
even for the branch managers and front line staff.
Place (Physical distribution):
The insurer is willing to take advantage of Indias large population and
reach a profitable mass of customers and for that new distribution
avenues and alliances have necessarily been made.
They have the most attractive distribution channel in India majorly
works through the individual agency model.
Household Agent Assistant Development Officer (ADO) DO Sr.
DO Marketing manager Branch Manager AM ZM.
Page | 54

Target market of LIC:

Faced with stiff competition from private insurers, Indias largest public
sector insurance company, the Life Insurance Corp. of India (LIC), is
planning to make the most of its reach in rural India.
It has lined up ambitious plans to aggressively tap the rural sector in the
current fiscal through micro insurance plans, while its private sector rivals
primarily target high net worth individuals in urban India. In the current
financial year alone, LIC plans to sell five million new microinsurance
policies to the rural and unorganized sector, although it has manged to sell
only 80,000 policies so far. The state-owned insurance firm is looking at
villages with a population of less than 5,000, 75% of whom are engaged in
agricultural activities. LIC has 2,048 branches and 1.1 million agents across
the country. Out of the total of 38.2 million new policies sold in 2006-07,
23%, or 8.85 million policies, were sold to rural clients. This is, however,
independent of the microinsurance category. This year, LIC plans to sell 10
million policies to its rural clients, which would approximately work out to
25% of their premium income. LIC managing director Thomas Mathew T. is
enthusiastic about the microinsurance targets. Private insurers have a limited
reach, he says. There is a huge demand for insurance in the rural and
unorganized sector. We are ideally placed to provide theseservices to this
segment with our network of branches and agents. India opened up the
insurance sector early this century and since then more than a dozen private
players have entered into the sector, picking up a substantial chunk of the
incremental business even though LIC continues to have the largest share of
the market. LIC is launching about 10 new products, targeting agricultural
labourers, landless labourers and small land owners. These policies offer up
to Rs30,000 life cover and Rs75,000 accident cover. The premium structures
have been tailor-made for people without a regular income. For example, a
landless labourer signing up for the recently-launched Aam Admi Bima
Yojna can pay as little as Rs25 a week to avail a cover of Rs5,000. In 200607, LIC reported premium income of Rs39,541 crore, registering a growth of
118% over 2005-06, compared with an industry average of 110% growth.
LIC is also looking at innovative channels for collection of the premia from
such schemes. It has tied up with a number of non-governmental
organizations and other grass-roots groups, such as microfinance institutions
and self-help groups. The rural customer paid an average annual premium of
Rs3, 000-4,000.
Page | 55

Webpage of LIC:

Page | 56

Sales growth of LIC:

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

crore reported during the same period in the previous financial year,
recording a growth of 35%. On the other hand, private sector companies
together recorded a meagre growth of 4% during the same period with a total
premium of R30,756 crore. The insurance major notched a total premium of
R5,986 crore in February 2011 and holds a total market share of 70.39%,
according to a latest data.
However, the ticket size (calculated on individual non-single premium basis)
of LIC stood at R7,597 for the period ended February, the data said.
Private sector companies together hold a market share of 29.61%. For the
month of February 2011 alone the total premium notched up by the 22
companies was estimated to be around R2.891.50 crore, the data maintained.
In total, life insurance companies together as an industry, reported a healthy
growth of 24% for the 11-month period of the current financial year to
R103,878 crore when compared with R83,891 crore achieved during the
same period in the previous financial year.
As per the LIC annual report of fiscal year 2011 2012, the direct marketing
Channel procured a New Business of ` 264.14 crore FP with 87578 policies
showing a growth of 83% in FPI over previous year. LIC Direct is ahead of
five private companies in New Business as on 31.03.2012. The Channel is
shaping up as a highly productive channel as revealed by the higher
productivity of DSEs and higher ticket size of policies.
The other 5 clubs which were formed to recognize Agents who perform
consistently year after year, viz. Chairman, Zonal Manager, Divisional
Manager, Branch Manager and Distinguished Agents, have also shown good
growth as business volumes generated by the agents have been increased.
Gross Revenue from Estate Portfolio of the Corporation for the current year as
on 31.03.2012 is Rs. 217.95 crore as against Rs. 199.00 crore of previous year
ending 31.03.2011. This reflects a growth of 9.52% over the previous year.
Page | 57

Branding of LIC:

Brand LIC has become synonymous with the service keeping its lead
Think life insurance and the image you are most likely to conjure up is that of
Life Insurance Corporations (LIC) logo. For decades now, the two hands
gently circling the lamp has been the most enduring image of the life
insurance business in India. Yet, just eight years ago, when the insurance
business was thrown open to private players, many believed things would
change irrevocably for LIC. After all, the multinational giants with their deep
pockets and smart marketing strategies would inevitably eat into the
humongous customer base of the public sector giant.
But much to the chagrin of the private insurers and their backers, LIC has
been able to leverage two of the more crucial attributes trust and its
generic brand image to its advantage. Even as market conditions were hardly
anything to talk about in 2008, Brand LIC has demonstrated that trust can
also translate into business opportunity. While its performance in Brand
Equitys Most Trusted Brands survey has been stellar (LIC has been the Most
Trusted Service Brand in India for five consecutive years in the study), LIC
has delivered on the numbers front as well. Even as most Indian businesses
have struggled to find their feet on the profitability street, Brand LIC
continued to grow stronger in 2008.
The brand has also been able to leverage its positive aura beyond life
insurance to its other group businesses like housing finance, asset
management and so on. In its mutual fund business, for example, LIC
witnessed a growth of almost 4% in the assets under management (AUM) in
2008, a remarkable feat if one considers the timing and the context.
Most players from the mutual fund industry in India saw a decline in their
AUMs, while only three other players Escorts Mutual Fund, Canara
Robeco Mutual Fund and Birla Sun Life Mutual Fund were able to
demonstrate growth. Just to put this in context, the Indian mutual fund
business has 35 players.
Page | 58

Even in housing finance, LICHF also performed impressively. The

companys net profit moved up by 16% to Rs 135 crore in the second quarter
of the current financial year, against Rs 116 crore in the same period last
year. Analysts believe that the reluctance of banks to lend to the housing
sector would provide further opportunity for growth to housing finance
players like LICHF. The company currently has a market share of 7% in the
housing loan segment.The flagship life insurance business continued to
thrive, of course. As per the latest first year premium figures issued by
market regulator Insurance Regulatory Authority of India (IRDA), the total
premium collected in the month of November by LIC is more than 145% of
the total premium collected by all the private insurers put together. In
segments like individual single premium and group single premium, private
companies account for merely 11% and 8% of the premium that LIC
collected in November 2008. Branding experts attribute the performance of
Brand LIC to its ability to connect with the customer base. The more you
change, the more you remain the same. By reinventing itself, LIC showed
maturity and responsibility which has helped the brand to go to the next level.
The strong element of availability and accessibility, on the other hand,
ensured that it continues to enjoy proximity to the customers. As consumers
took a flight to safety in the ups and downs of the market in 2008, LICs
credibility was further enhanced. Life Insurance Corporation caters to every
segment of society by addressing individual needs, group needs and needs of
special segments. This, in turn, has built trust. The brand loyalty and the
customer trust have been built over the years. Underlining the real challenge
time and heritage that the private insurance players are up against.
Others feel that the being generic to the segment has worked for LIC. LIC has
become synonymous with the service. One reason why customers still have
LIC at the top of their consideration set is because a brand is not a process, a
brand is a promise. LIC, being fully-owned by the Government of India,
delivers a comfort value to its policy holders. Even if things go wrong in the
future, LICs customers think that the Government will bail it out.

Page | 59

Following the US financial system crisis, the customers are a bit reluctant to
turn to private companies for services as they feel government-owned bodies
at least carry sovereign guarantee.

Insurance is something that LIC has made a business out of, but the second
largest public sector company in India is already insuring its own growth
story. Soon the LIC brand plans to foray into venture fund management
which will be a dedicated real estate fund. In the long run, this is expected to
give a further boost to Brand LIC.

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

India, has decided to appoint a brand consultant to ensure that it appears as a
tech-savvy institution to the public.

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

further value for the strong LIC Brand'. Among other things, the corporation
is seeking advice on brand strategy and support on brand tracking and media
audit.

Although LIC has one of the largest in-house technology teams with over 140
programmers, it does not have the image of a tech-savvy company. The brand
consultant would change that.

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

company in the world and makes extensive use of technology to manage such
a huge customer database. With assets under management of over Rs
11,00,000 crore, LIC is the largest financial institution in the country.
Page | 60

Consumer Behavior and Customer Satisfaction:

Page | 61

Seven steps customer satisfaction in LIC:

1.
Encourage
Face-toFace
Dealings

4. Have a
ClearlyDefined
Customer
Service
Policy

2. Respond
to Messages
Promptly &
Keep Your
Clients
Informed

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

3. Be Friendly
and
Approachable

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

7. Honour
Your
Promises

1. Encourage Face-to-Face Dealings:

This is the most daunting and downright scary part of interacting with a
customer. If you're not used to this sort of thing it can be a pretty nervewracking experience. Rest assured, though, it does get easier over time. It's
important to meet your customers face to face at least once or even twice
during the course of a project.
My experience has shown that a client finds it easier to relate to and work
with someone they've actually met in person, rather than a voice on the phone
or someone typing into an email or messenger program. When you do meet
them, be calm, confident and above all, take time to ask them what they need.
I believe that if a potential client spends over half the meeting doing the
talking, you're well on your way to a sale.
Page | 62

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

This goes without saying really. We all know how annoying it is to wait days
for a response to an email or phone call. It might not always be practical to
deal with all customers' queries within the space of a few hours, but at least
email or call them back and let them know you've received their message and
you'll contact them about it as soon as possible. Even if you're not able to
solve a problem right away, let the customer know you're working on it.

A good example of this is my Web host. They've had some trouble with
server hardware which has caused a fair bit of downtime lately. At every step
along the way I was emailed and told exactly what was going on, why things
were going wrong, and how long it would be before they were working again.
They also apologised repeatedly, which was nice. Now if they server had just
gone down with no explanation I think I'd have been pretty annoyed and may
have moved my business elsewhere. But because they took time to keep me
informed, it didn't seem so bad, and I at least knew they were doing
something about the problems. That to me is a prime example of customer
service.

3. Be Friendly and Approachable:

A fellow SitePointer once told me that you can hear a smile through the
phone. This is very true. It's very important to be friendly, courteous and to
make your clients feel like you're their friend and you're there to help them
out. There will be times when you want to beat your clients over the head
repeatedly with a blunt object - it happens to all of us. It's vital that you keep
a clear head, respond to your clients' wishes as best you can, and at all times
remain polite and courteous.
Page | 63

4. Have a Clearly-Defined Customer Service Policy:

This may not be too important when you're just starting out, but a clearly
defined customer service policy is going to save you a lot of time and effort
in the long run. If a customer has a problem, what should they do? If the first
option doesn't work, then what? Should they contact different people for
billing and technical enquiries? If they're not satisfied with any aspect of your
customer service, who should they tell?

There's nothing more annoying for a client than being passed from person to
person, or not knowing who to turn to. Making sure they know exactly what
to do at each stage of their enquiry should be of utmost importance. So make
sure your customer service policy is present on your site -- and anywhere else
it may be useful.

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

Have you ever received a Happy Birthday email or card from a company you
were a client of? Have you ever had a personalised sign-up confirmation
email for a service that you could tell was typed from scratch? These little
niceties can be time consuming and aren't always cost effective, but
remember to do them.

Even if it's as small as sending a Happy Holidays email to all your customers,
it's something. It shows you care; it shows there are real people on the other
end of that screen or telephone; and most importantly, it makes the customer
feel welcomed, wanted and valued.
Page | 64

6. Anticipate Your Client's Needs & Go Out Of Your Way to Help Them
Out:
Sometimes this is easier said than done! However, achieving this supreme
level of understanding with your clients will do wonders for your working
relationship.
Take this as an example: you're working on the front-end for your client's
exciting new ecommerce endeavour. You have all the images, originals and
files backed up on your desktop computer and the site is going really well.
During a meeting with your client he/she happens to mention a hard-copy
brochure their internal marketing people are developing. As if by magic, a
couple of weeks later a CD-ROM arrives on their doorstep complete with
high resolution versions of all the images you've used on the site. A note
accompanies it which reads: "Hi, you mentioned a hard-copy brochure you
were working on and I wanted to provide you with large-scale copies of the
graphics I've used on the site. Hopefully you'll be able to make use of some
in your brochure."
Your client is heartily impressed, and remarks to his colleagues and friends
how very helpful and considerate his Web designers are. Meanwhile, in your
office, you lay back in your chair drinking your 7th cup of coffee that
morning, safe in the knowledge this happy customer will send several
referrals your way.
7. Honor Your Promises:
It's possible this is the most important point in this article. The simple
message: when you promise something, deliver. The most common example
here is project delivery dates.Clients don't like to be disappointed.
Sometimes, something may not get done, or you might miss a deadline
through no fault of your own. Projects can be late, technology can fail and
sub-contractors don't always deliver on time. In this case a quick apology and
assurance it'll be ready ASAP wouldn't go amiss.
Page | 65

Conclusion on customer satisfaction by LIC:

Customer service, like any aspect of business, is a practiced art that takes
time and effort to master. All you need to do to achieve this is to stop and
switch roles with the customer. What would you want from your business if
you were the client? How would you want to be treated? Treat your
customers like your friends and they'll always come back.

Page | 66

Promotional activities of LIC:

Sales promotions are being increasingly used to influence the purchase

behavior of consumers in a desired way. The major reasons for the
phenomenal use of sales promotional measures can be attributed to increased
competition, declining brand loyalty, consumer's sensitivity to promotional
deals, and increased advertising clutter. LIC, having realized its importance
has undertaken sales promotion in all its three forms, such as consumeroriented promotion, trade-oriented promotion and salesforce promotion. In
view of its importance in the highly competitive life insurance market, an
attempt is made in this article to examine the sales promotional measures of
LIC.
Sales promotion, a key ingredient in marketing campaigns, consists of a
diverse collection of incentive tools, mostly short-term, designed to stimulate
a quicker or greater purchase of a particular product or service by the
consumers or the traders. Sales promotion is generally defined as those
marketing activities that provide extra value or incentives to the sales force,
the distributors, or the ultimate consumer and can stimulate immediate sales.1
Sales promotions add value, provide a `competitive edge', boost sales during
periods when demand would otherwise be weak, hasten the introduction and
acceptance of new services, and generally get customers to act quicker than
they would in the absence of any promotional incentive.2 A decade ago, the
advertising to sales promotion ratio was about 60:40. Today, in many
consumer goods companies, sales promotion accounts for 65% to 75% of the
combined budget.
Sales promotion is generally broken into three major categories, such as
consumer-oriented, trade-oriented and salesforce- oriented activities. Having
realized the significance of sales promotion, LIC has vigorously undertaken it
and made a significant benefit out of it. The consumer-oriented promotions in
fact, are a part of the promotional pull strategy. These promotions include tax
benefits, payment of bonus, provision of accidental benefits and higher nonmedical limits.
Page | 67

Tax benefit is one of the major weapons in the arsenal of strategies at the
disposal of the corporation to promote sales. The corporation was successful
in convincing the government to exempt payments made to the corporation
from the purview of Income Tax Act, subject to certain limits.

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

addition to the sum assured, or sum assured plus prevailing bonus addition.
The former case is known as simple reversionary bonus, and the latter is
known as compound reversionary bonus. The former is simple, popular and
flexible as every time a bonus is distributed as some addition to the policy
payment. The compound reversionary bonus becomes more equitable, but it
is hard to calculate

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

understood by majority of the Indian population. Even though every insurer
knows that it is not bought and it has to be sold, there is a lot of gap among
promotional activities and advisors (agents). Hence it caused complications
in marketing its products. Making the uneducated, rural and economically
backward people to understand the insurance concept is a challenging task.
Insurers may succeed if they develop separate strategies for each segment.
Promotional activities and agents of life insurance companies is all about to
inform, bringing awareness, develop belief, to reinforce trust etc. in the minds
of the consumers by using tools such as advertising, public relations,
displays, word of mouth, sales promotion, personal selling etc. Promotion
bring positive attitude or may cause negative attitude so knowing the feelings
of respondents found essential. Today customers are more informed with
number of options, even still majority of the customers trusts only LIC.
Therefore it is the duty of all insurers to study the attitudes of customers on
their agents and promotional activities to reinforce trust in the customers.

Page | 68

Some Promotional Materials Of LIC:

Page | 69

Market Survey Sample analysis and Interpretation:

Analysis on Consumer preferences on LICs Various Plan:

Endowment
Term
Ulip
Pension
Moneyback

6
7
4
2
8

8
6
4
2
0
endowment

term

ulip

pension

moneyback

Result:
So, the analysis itself says people mostly prefer the moneyback policy
followed by term, endowment and rest other plan. The likings behind
choosing the term plan hopefully is because of incoming cash flow at a
regular interval which mainly starts after certain periods of time which is
generally known as the premium payment periods.

Page | 70

 Interpretation based on the profession of people:

Service 9
Business 1
10
9
8
7
6
5
4
3
2
1

0
Service

Business

Preference of Insurance companies :

LIC
Other

8
2

LIC
Other

Page | 71

 Why people choose Life Insurance:

Death benefit
Living benefit
Income replacement
Self-insured
Retirement
Tax benefit

7
8
8
10
2
10

10

9
8
7
6
5
4
3
2
1
0

Page | 72

 Consumer preferences on various plan:

Jeevan anand
Money back
Children plan
Marriage Endowment plan
Empower pension plan by birla sunlife
Maxlife 20 yrs endowment by maxlife
Money back plan 20 yrs
Jeevan pramukh
Jeevan shree
Jeevan mitra
Bima bachat
Money back plan 25 yrs

2
1
1
1
1
1
1
1
1
1
1
1

Jeevan anand

Money back
Children plan
Marriage Endowment
plan
Empower pension plan
by birla sunlife
Maxlife 20 yrs
endowment by maxlife
Money back plan 20
yrs
Jeevan pramukh

Page | 73

Why LIC is trusted brand of India?

1. As a Govt of India owned Company, LIC is 51 + years old in the field of

life insurance and money management. LIC's Life Fund size as on day is
more than Rs 5 Lakh Thousand Crores !
2. Any LIC policyholder or the nominee will vouch for the best claims
settlement from LIC. Perhaps, this is the only institution where you as a
policyholder are virtually chased till such time your claim cheques is handed
over to you !
3. LIC has won `NDTV Profit Leadership Award 2007 under Life Insurance
Category', `Outlook Money Award 2007 as the best Life Insurer', `CNBC
Awaaz Consumer Award 2007 as the best Life Insurance Company', `Golden
Peacock Award for excellence in Corporate Governence 2007', `Web 18
Genius of the Web Award 2007 and many more'.
4. LIC adjudged No.1 Trusted Service Brand for the 4th successive year by
ET Brand Equity Survey.
5. LIC has been adjudged Superbrand India for 2004-06 and Reader's Digest
`Trusted Brand' Asia 2007.
6. This is the only corporation that is catering to more than 190 million
satisfied policyholders in India and abroad.
7. This is one of the very few institutions that pays ex-gratia interest on
pending maturity claims !
8. More than 2050 LIC branches all over India are connected together to
serve you. You can pay your premium anywhere in the country.

Page | 74

9. During its long existence, LIC has kept on updating its portfolio by
bringing in new plans depending on public requirement. More than 50 of
them are most popular and can be customized to meet any of your
requirements. LIC ULIPs have become extremely popular due to the returns
they offer. Money Pluslatest LIC Unit Linked Plan is a case in point.
10. All LIC Plans come with Sovereign Guarantee i.e., Govt of India
Guarantee regarding repayment. Infact, as of now, only LIC plans enjoy this
Govt Guarantee.

11. All LIC plans are characterized by low premium, high life insurance
coverage and a vast package of benefits offered by them. Add to this
package, section 80C benefit and section 10(10D) benefit on the maturity
proceeds, you will find investment on LIC plans one of the most coveted
investment options available to you.
12. Premium paid under Key-Man Insurance plan is a recognized business
expense under section 37(I) of the Income-Tax Act. For companies making
profits, this is a very good incentive indeed.
13. Through Employer-Employee Insurance scheme, you can recognize the
worth of your most valuable employees whose absence you can ill afford to
loose.
14. Entire contribution to LIC Group Gratuity Scheme is a recognized
business expense in the hands of the employer. In addition, through this
scheme, the employer can transfer his gratuity liability to the corporation and
fund the same under cash accumulation scheme. The most popular among all
the companies.
Page | 75

15. LIC is declaring quite an impressive bonus (profits) on all its with-profits
policies every year. Extra attraction under LIC Bonus is (a) it is calculated
every year on the insured amount and not on the premium paid and (b) entire
bonus received along with insured amount either by you on maturity of your
policy(ies) or by your nominee in your absence during the currency of your
policy(ies) is free from income-tax under section 10(10D) of the Income-tax
Act.
16. On most of the LIC plans, you can borrow to take care of your immediate
monetary requirements. None of the policy benefits get affected as a result of
borrowal. Infact, policy loans offer one of the most attractive investment
opportunities.
17. You can pay your premium 3 years in advance at 5% discount. Chief
attractions of this advance payment of premium are (a) there is no possibility
of your overlooking your premium payment and getting your policy(ies)
lapsed wherever you are in the world and (b) you will be earning 5% tax-free
interest on the unutilized portion of the amount left with LIC after
apportioning the regular installment.
18. Most of the LIC plans come with Riders to take care of Total and
Permanent Disablement due to Accident and some of the most dread diseases
that may result in loss of income.
19. LIC pension plans that guarantee you life pension are extremely popular.

Due to these reasons and lot more, LIC should be your obvious choice for all
your life insurance requirements.

Page | 76

 LIC is Indias most trusted brand, INSURING LIVES AND

ENSURING SMILES from more than 50 Years.
SUPER BRAND & MOST TRUSTED SERVICE BRAND OF INDIA.
BEST IT USER IN INDIA (NASSCOM 2003).
Largest Institutional Investor in India and Second largest in Asia
among insurers. (Source: Asian Investor)
LIC - An Institution Builder promoting many financial and insurance
institutes like NSE, NCDEX, LIC Mutual Fund, Stock Holding
Corporation of India, National Insurance Academy, Insurance Institute
of India etc.
LIC is the largest life insurer of India
Asset value as on 31.3.2004: 3,673,598.4 mn (INR).
Offers over 45 plans to cover your life at various stages.
Over 160 million customers and 1.1 million agents. It has underwritten
more than 160 million policies.
2,048 branch offices (all computerized) of which 2019 are networked

Page | 77

Recent News About LIC:

LIC to outdo first premium collection target for FY14 comapring

the current FY13, which has shown a little dipressed over the
FY12.
Source: Zee News; November 27, 2013
LIC has said it has asked the regulator for extending the deadline
for withdrawing existing products.
Source: Business Line, September 29, 2013
LIC cuts stake in Infosys to 4.95%; sells shares worth Rs 3,400 cr.
Source: Zee News; Octoberber 20, 2013
LIC reduces stake in Britannia to 3.26%.
Source: Zee News; Octoberber 01, 2013
LIC has decided to stop selling as many as 14 policies, including
two top selling products; Jeevan Mitra and Anmol Jeevan.
Source: NDTV; November 22, 2013
LIC has open special offices in Uttarakhand to settle claims which
occurred due to the natural calamity.
Source: One India; June 25, 2013
LIC is going to launch different innovative insurance policies by
FY14.
Source: Business Today; September 25, 2013
LIC is Indias the no. 1 BFSI brand ahead of all its competitors
across India.
Source: One India; June 25, 2013
The Indore division of LIC may claim itself to be at No 1, when it
comes to number of branches it has got on its fold. LICs
competitors have much less number.
Source: Times Of India; November 28, 2013
LIC has started levying service tax of around 3 per cent on all nonunit-linked products from October 2013 which made the policy a
little bit costlier
Source: India; October 08, 2013
Page | 78

Accolades received during 2011-2012 by LIC:

Page | 79

Page | 80

Page | 81

Page | 82

Challenges faced by LIC:

1. The Administrative staff in LIC is in deep slumber. Try writing a

complaint to them and they wont even bother to reply back. If you ask the
Branch Manager for the complaints book, he probably wont have it in place.
If an Agent complains against any staff, then the Agent is black listed and
next time onwards his work is not done.

2. In order to show a better performance & achieve branch Targets, Agents

are motivated by the Managers to split the policies. This not only adds to the
inconvinience of the policyholders but it also increases the expenses of LIC.
Competitions for Agents are held with Prizes being offered on the number of
policies sold and not on the number of lives insured. Therefore many Agents
are tempted to split the policies in order to get better prizes. However if an
agent wants the forms or sales literature, most of the time its out of stock. But
surprisingly just a week before any scheme is about to close, the office is
flooded with forms & sales literature. This is very disturbing.

3, As I earlier said, LIC is lacking in Effective Leadership in recent times.

Managers having designations like Marketing Manager or Sales Manager
donot have the capability to motivate an audience at a meeting. Yes this is
true even in a city like Mumbai. Even the Senior level managers cannot make
effective presentations or design a sales strategy. Their only mantra at an
Agents meeting is "Friends, bring more policies!. If you ask them how to
bring more policies, they wont know. Its a pity !

Page | 83

4. Though LIC has more than 2000 branches, they are not systematically
located. In Mumbais Fort area, LIC has more than 20 branches within a
radius of 1.5kms. Whats the use ? In the suburbs where most of the people
reside, there are no branches at all. LIC has no branches in Bandra East, Khar
East & West, Santacruz East, Vile Parle East, Andheri West, Jogeshwari
West, Mahim, Matunga, etc. If LIC gives a thought to systematic relocation
of its offices, it will immensly help the policyholders.
5. Even though LIC claims to have taken several initiatives in the IT sector,
policyholders still face problems in revival of their policies, payment of
premium in several branches, change of mode, change of address, etc. The
After-sales policy services department needs to be revamped. Policyholders
feel that LIC agents are humble while selling a policy and thereafter they fail
to provide any service to the client. The truth is that LIC is so weak in policy
services department, that even a good agent finds it difficult to get the work
done from the administrative staff. To sum up, i would say that LIC will
never cheat a Policyholder in payment of claim, but at the same time
everyone will agree that LIC is not responsive to the needs of the customer. If
you have purchased an LIC policies then dont forget to pay the premium on
time, and when your policy gets matured LIC will honestly pay your Maturity
amount on time. The employees are sometimes rude in their behaviour with
the Policyholder. If a claim cheques is handed over by a courteous and
smiling employee of LIC, it will enhance the image of LIC in the mind of the
policyholder. Today LIC is not just an Insurance Company, LIC is a
Movement, LIC is a Cult, LIC is a Religion. Imagine 10 lac agents and 1 lac
employees serving 16 crore policyholders in India.
Page | 84

6. Daily you can hear someone or the other talking of LIC in local trains, at
fish markets, at restaurants, on News Channels, in your own offices, etc. As i
earlier said, LIC has started lacking in effective leadership. If a company like
LIC starts sponsoring irrelevant awards like Zee Cine awards which it had
done 2 years ago, then it will send the wrong message in the minds of the
policyholders. Imagine Indias most famous institution sponsoring a Cine
Awards function stating that it was done to increase the brand awareness of
LIC. That sounded like a big joke. It is time that the top level officials of LIC
come out of their air-conditioned cabins and travel by public transport for
sometime in order to feel the pulse of the common man.

Page | 85

Recommendations:

Unit Linked Policies of Insurance Company should be bought for a

long term horizon. Insurance is a business of credibility. As we know in
service marketing proper care of the customers after and before buying the
product is an important criterion of competing in the market. So proper
Customer Relationship Management program should be adopted by the
company.

Term Plan Insurance policy should be bought if wants to Invest in Insurance.

The company should use proper Customer Relationship Programs. This is

because in the insurance sector proper care of the customer is necessary.

Since the company has its bases in urban areas only, it should think of
launching its policies in urban area as well as rural areas.

Implementation of proper technology should be done. It can adopt VSAT

technology or can implement payment of premium through ATM and they
should be revealed about due premium through SMS.

Proper advertising, sales promotion tools and public relation tools should be
implemented.

Page | 86

Conclusion:

After Findings we can see about LIC features and his The tendency to take
the expedient approach and focus on the far right of the LIC spectrum,
Peacetime Contingency Operations and conduct training as usual, while
briefing that the LIC block has been checked, will lead us to a possibly fatal
false sense of security. Instinctive behavior and ingrained training must be
adjusted to fit new circumstances. STXs must be developed locally or
borrowed from units who have already been through the training. The
probability of becoming involved in a LIC operation is high. The potential to
attract international attention, even with limited forces, is also great. Units
have demonstrated that with a balanced training focus and proper preparation,
many pitfalls outlined above can be avoided LIC is not conventional warfare.
This is critical for the counterinsurgent to understand. The insurgents violent
and coercive strategy is applied so as to achieve political, civil, military and
psychological results. Hence, the counterinsurgent must counter all of these
strategic elements individually. In addition, the target of the insurgents
violence and coercion is the population. This is because the population is the
centre of gravity in LIC. Therefore the counterinsurgent must also focus on
the population to be successful. In terms of military principles in
counterinsurgency, doctrinal precision, professionalism, independence,
initiative, force precision, restraint, combined arms, precision engagement,
joint

force,

effective

population

based

intelligence,

integrated

communications, a civil affairs approach and high levels of training are

critical. So all policies and plan toally satisfied the customers.
Page | 87

Improvement of QDC:

Page | 88

Appendix 1: SAMPLE QUESTIONNAIRE

NAME:

GENDER:

PROFESSION:

AGE:

Which Life Insurance Companys product do you buy / prefer most?

(
) LIC.
(
)Other than LIC.
(1) In which plan do you want to buy or already bought?
(
) Endowment.
(
) Term.
(
) ULIP.
(
) Pension.
(
) Money back.
(2) What is your basic objective behind the life insurance coverage? Please tick the
appropriate box.
(
) Death benefit
(
) Living benefit/cash flow
(
) Income replacement
(
) Self insured
(
) Retirement supplement
(
) Tax benefit
(3) Mention any one LIC policys name that you have currently?

(5) What is the current amount of premium that you are paying per annum?

(6)What according to you is Life Insurance?

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?
(

) 5-10 years.

) 10-15 years.

) Longer than 15 years.

Page | 89

Appendix 2 : Respondent answers 01

NAME:Rajeev Jain
PROFESSION: Service

GENDER: M
AGE: 48

(1) Which Life Insurance Companys product do you buy / prefer most?
( Y
) LIC.
(
)Other than LIC.
(2) In which plan do you want to buy or already bought?
(
Y ) Endowment.
(
) Term.
(
) ULIP.
(
) Pension.
(
Y ) Money back.
(3) What is your basic objective behind the life insurance coverage? Please tick the
appropriate box.
(
Y
) Death benefit
(
Y ) Living benefit/cash flow
(
Y ) Income replacement
(
Y ) Self insured
(
) Retirement supplement
(
Y ) Tax benefit
(4) Mention any one LICpolicys name that you have currently?
Children plan,Marriage endowment plan
(5) What is the current amount of premium that you are paying per annum?
5 Lakh
(6)What according to you is Life Insurance?
Secured child future

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?
(

) 5-10 years.

) 10-15 years.

) Longer than 15 years.

Page | 90

Respondent answers 02:

NAME: Abhisek Banerjee

GENDER: M

PROFESSION: Service

AGE: 27

(1) Which Life Insurance Companys product do you buy / prefer most?
( Y
) LIC.
(
)Other than LIC.
(2) In which plan do you want to buy or already bought?
(
Y ) Endowment.
(
Y ) Term.
(
) ULIP.
(
Y ) Pension.
(
Y ) Money back.
(3) What is your basic objective behind the life insurance coverage? Please tick the
appropriate box.
(
Y
) Death benefit
(
Y ) Living benefit/cash flow
(
Y ) Income replacement
(
Y ) Self insured
(
) Retirement supplement
(
Y
) Tax benefit
(4) Mention any one LICpolicys name that you have currently?
Insurance is an investment which gives us the benefit Zindegi ke sath v. zindegi ke
bad v
(5) What is the current amount of premium that you are paying per annum?
1 Lakh
(6)What according to you is Life Insurance?
Secured future

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?
(

) 5-10 years.

) 10-15 years.

) Longer than 15 years.

Page | 91

Respondent answers 03:

NAME:Vaibhav Gupta
PROFESSION: Service

GENDER: M
AGE: 29

(1) Which Life Insurance Companys product do you buy / prefer most?
(
) LIC.
( Y )Other than LIC.
(2) In which plan do you want to buy or already bought?
(
) Endowment.
(
) Term.
(
Y ) ULIP.
(
Y ) Pension.
(
) Money back.
(3) What is your basic objective behind the life insurance coverage? Please tick the
appropriate box.
(
) Death benefit
(
Y ) Living benefit/cash flow
(
Y ) Income replacement
(
Y ) Self insured
(
Y ) Retirement supplement
(
Y ) Tax benefit
(4) Mention any one LICpolicys name that you have currently?
Empower pension plan by birla sun life insurance
(5) What is the current amount of premium that you are paying per annum?
1 Lakh
(6)What according to you is Life Insurance?
Its a combination of different advantage like life cover and tax benefit

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?
(

) 5-10 years.

) 10-15 years.

) Longer than 15 years.

Page | 92

Respondent answers 04:

NAME:Sandeep Goyal

GENDER: M

PROFESSION: Service

AGE: 34

(1) Which Life Insurance Companys product do you buy / prefer most?
(
) LIC.
(
Y )Other than LIC.
(2) In which plan do you want to buy or already bought?
(
Y ) Endowment.
(
) Term.
(
) ULIP.
(
Y ) Pension.
(
Y ) Money back.
(3) What is your basic objective behind the life insurance coverage? Please tick the
appropriate box.
(
Y
) Death benefit
(
Y ) Living benefit/cash flow
(
Y ) Income replacement
(
Y ) Self insured
(
) Retirement supplement
(
Y
) Tax benefit
(4) Mention any one LIC policys name that you have currently?
Max life 20 year endowment by max life insurance
(5) What is the current amount of premium that you are paying per annum?
3 Lakh
(6)What according to you is Life Insurance?
Substitute of regular income after certain period of time

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?
(

) 5-10 years.

) 10-15 years.

) Longer than 15 years.

Page | 93

Respondent answers 05:

NAME:Raman Gupta
PROFESSION: Service

GENDER: M
AGE: 40

(1) Which Life Insurance Companys product do you buy / prefer most?
( Y
) LIC.
(
)Other than LIC.
(2) In which plan do you want to buy or already bought?
(
) Endowment.
(
Y
) Term.
(
) ULIP.
(
) Pension.
(
Y
) Money back.
(3) What is your basic objective behind the life insurance coverage? Please tick the
appropriate box.
(
) Death benefit
(
Y
) Living benefit/cash flow
(
) Income replacement
(
Y ) Self insured
(
Y ) Retirement supplement
(
Y ) Tax benefit
(4) Mention any one LIC policys name that you have currently?
Money back plan 20 years
(5) What is the current amount of premium that you are paying per annum?
Two lakh
(6)What according to you is Life Insurance?
Lfe insurance is something which gives you monetary benefits after certain period of
time

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?
(
(
(

) 5-10 years.
Y
Y

) 10-15 years.
) Longer than 15 years.
Page | 94

Respondent answers 06:

NAME:Durgesh Kumar
PROFESSION: Service

GENDER: M
AGE: 42

(1) Which Life Insurance Companys product do you buy / prefer most?
( Y
) LIC.
(
)Other than LIC.
(2) In which plan do you want to buy or already bought?
(
Y
) Endowment.
(
Y
) Term.
(
Y
) ULIP.
(
) Pension.
(
Y
) Money back.
(3) What is your basic objective behind the life insurance coverage? Please tick the
appropriate box.
(
Y
) Death benefit
(
) Living benefit/cash flow
(
Y ) Income replacement
(
Y ) Self insured
(
) Retirement supplement
(
Y ) Tax benefit
(4) Mention any one LIC policys name that you have currently?
Jeevan pramukh
(5) What is the current amount of premium that you are paying per annum?
15 lakh
(6)What according to you is Life Insurance?
Investment of extra income to financial secure of future

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?
(

) 5-10 years.

) 10-15 years.

) Longer than 15 years.

Page | 95

Respondent answers 07:

NAME:Amit Jain
PROFESSION: Bussiness

GENDER: M
AGE: 47

(1) Which Life Insurance Companys product do you buy / prefer most?
( Y
) LIC.
(
)Other than LIC.
(2) In which plan do you want to buy or already bought?
(
Y
) Endowment.
(
Y
) Term.
(
Y
) ULIP.
(
) Pension.
(
Y
) Money back.
(3) What is your basic objective behind the life insurance coverage? Please tick the
appropriate box.
(
Y
) Death benefit
(
Y ) Living benefit/cash flow
(
Y ) Income replacement
(
Y ) Self insured
(
) Retirement supplement
(
Y ) Tax benefit
(4) Mention any one LIC policys name that you have currently?
Jeevan Shree-I
(5) What is the current amount of premium that you are paying per annum?
18 lakh
(6)What according to you is Life Insurance?
Life insurance is something which gives the financial security to the entire family.

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?
(

) 5-10 years.

) 10-15 years.

) Longer than 15 years.

Page | 96

Respondent answers 08:

NAME:Swatantra Sharma

GENDER: M

PROFESSION: Service

AGE: 54

(1) Which Life Insurance Companys product do you buy / prefer most?
( Y
) LIC.
(
)Other than LIC.
(2) In which plan do you want to buy or already bought?
(
) Endowment.
(
Y
) Term.
(
) ULIP.
(
) Pension.
(
Y
) Money back.
(3) What is your basic objective behind the life insurance coverage? Please tick the
appropriate box.
(
) Death benefit
(
Y ) Living benefit/cash flow
(
Y ) Income replacement
(
Y ) Self insured
(
) Retirement supplement
(
Y ) Tax benefit
(4) Mention any one LIC policys name that you have currently?
Jeevan anand,Jeevan mitra
(5) What is the current amount of premium that you are paying per annum?
Four lakh
(6)What according to you is Life Insurance?
Life insurance is a particular mechanism which gives the financial security to the family.

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?
(

) 5-10 years.

) 10-15 years.

) Longer than 15 years.

Page | 97

Respondent answers 09:

NAME:Somnath Banerjee
PROFESSION: Service

GENDER: M
AGE: 25

(1) Which Life Insurance Companys product do you buy / prefer most?
( Y
) LIC.
(
)Other than LIC.
(2) In which plan do you want to buy or already bought?
(
Y
) Endowment.
(
Y
) Term.
(
) ULIP.
(
) Pension.
(
) Money back.
(3) What is your basic objective behind the life insurance coverage? Please tick the
appropriate box.
(
Y
) Death benefit
(
Y ) Living benefit/cash flow
(
Y ) Income replacement
(
Y ) Self insured
(
) Retirement supplement
(
Y ) Tax benefit
(4) Mention any one LIC policys name that you have currently?
Bima bachat
(5) What is the current amount of premium that you are paying per annum?
Three lakh
(6)What according to you is Life Insurance?
Life insurance policy is more important during the financial crises

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?
(

) 5-10 years.

) 10-15 years.

) Longer than 15 years.

Page | 98

Respondent answers 10:

NAME:Ritesh goyal
PROFESSION: Service

GENDER: M
AGE: 25

(1) Which Life Insurance Companys product do you buy / prefer most?
( Y
) LIC.
(
)Other than LIC.
(2) In which plan do you want to buy or already bought?
(
) Endowment.
(
Y
) Term.
(
) ULIP.
(
) Pension.
(
Y
) Money back.
(3) What is your basic objective behind the life insurance coverage? Please tick the
appropriate box.
(
Y
) Death benefit
(
Y ) Living benefit/cash flow
(
) Income replacement
(
Y ) Self insured
(
) Retirement supplement
(
Y ) Tax benefit
(4) Mention any one LIC policys name that you have currently?
MONEY BACK PLAN -25 years
(5) What is the current amount of premium that you are paying per annum?
One lakh
(6)What according to you is Life Insurance?
An investment jiska fayada milta hai zindagi ke sath bhi zindagi ke bad bhi

(7)Keeping in mind your primary goals what is your general Life Insurance investment time?
(

) 5-10 years.

) 10-15 years.

) Longer than 15 years.

Page | 99

Appendix - 3: GLOSSARY:

A
Accident
A sudden and unintentional happening leading to a loss. In the context of
life insurance, it is a sudden and unforeseen happening that causes disability
or death of the policyholder.
Accumulation account
It is a virtual account to keep the track of what all is paid and deducted till
date.
Agent (Life Advisor)
A representative of an insurance company authorized to sell insurance
policies.
Age Limits
The maximum and minimum ages above or below which an insurance
company will not accept applications for insurance from or will not renew a
policy with a person.
Annuitant
The person who will receive annuity benefits at stipulated intervals of time
like yearly / half yearly/ quarterly / monthly intervals.
Annuity
The amount paid under an annuity scheme at stipulated intervals like
yearly/half yearly/quarterly/monthly intervals.

Page | 100

 Authority
The Insurance Regulatory and Development authority established under
sub-section (1) of section 3 of the Insurance Regulatory and Development
Authority Act, 1999.
Automatic cover maintenance
In case when the insure is unable to pay his/her for a fixed time period the
policy does not get lapsed and it is continued due to automatic cover
maintenance.

B
Beneficiary
The person who receives the benefit of a policy in case of death
during the term or the policyholder who receives the benefit on maturity.
Bonus
It is the total growth a person gets for the amount of money he paid till date
to the insurance company. It is paid on compound reversionary basis.
C
Claim
A request for payment of the contractual benefits by the insurer that is made
by the insured or the beneficiary.
Companys expenses
It is the amount of money a company charges to manage its functioning and
the fund of the people.
Page | 101

D
Death Benefit
The benefit received by the beneficiary (ies) on the death of the insured

E
Endowment Plan
A plan in which the amount is paid to a policyholder if he outlives the
tenure of the contract or to the beneficiary if the insured person dies before
the date on which the policy matures.

Free look period

A free look period gives the client an option to review the terms and
conditions of the policy within 15 days from the date of receipt of the
policy document. Where he disagrees with the terms and conditions
stated in the policy, he has the option to return the policy, stating the
reasons for objection. In such a case the Policy would then be cancelled
and the premium paid by the client would be refunded to him, after
deducting: proportionate risk premium for the period on cover, expenses
incurred by the Insurance Company on medical examination of the client
and stamp duty charges.

Page | 102

H
Human Life Value
The present value of the family's share of the breadwinner's future earnings is
considered as Human Life Value, for purposes of life insurance.
I
IRDA
The acronym for the Insurance Regulatory and Development Authority of
India, it is the apex body overseeing the insurance business in India. It
protects the interests of the policyholders, regulates, promotes and ensures
orderly growth of the insurance industry and for matters connected therewith
or incidental thereto.
Investible portion
It is that part of the premium which is invested by the company and provides
growth to the amount accumulated.
L
Lapse
The termination of an insurance policy due to non-payment of premium.
License
Permission granted by IRDA to the applicant for commend cement and
operation of the insurance business in India.
Life Insurance
A contract provided for the payment of a sum of money to the person assured
or failing him, to the person entitled to receive the same, on the happening of
certain event for the consider ation. Here, sum of money refers to sum
assured/benefits; certain event refers to contingent event; consideration refers
to premium.
Page | 103

M
Maturity Date
The date on which the policy term expires.
Money Back Plan
A plan in which par t of the sum assured is paid back to the
policyholder at regular intervals.
Mortality
It is the amount of money a company charges in order to provide the risk
cover to a persons life.
N

Nomination

A provision by which a policyholder can designate any person to

receive the policy money in the event of his death.
Nominee
A person selected by the policyholder to receive the benefit in case of death of
the life insured.
P
Policyholder
The person who owns the policy, in this case, a life insurance policy.
Premium
It is the amount of policy money an insured person has to pay as per his/her
mode of payment.
Page | 104

R
Reinsurance
The transfer of part or whole of the risk by the original insurance
company to one or more reinsurers.
Riders
These are additional benefits provided to the life insured for a minimal
charge. It gives an additional risk covers like disability cover, illness due to
some major diseases, accidental loses, etc.

S
Surrender Value
A value payable if you want to surrender the plan before a claim arises.

T
Term
The tenure of the policy.
Term Cover
A type of life insurance where the sum assured is payable only in the
event of death of insurer during the specified term. In the case of survival,
the contract expires and the premium is not paid back to the insured.

Page | 105

W
Waiver of premium
when the life insured is different from proposer, in that case if due to some
uneven circumstances like death of proposer, the policy gets continued
without any payment for the premium.
Whole Life Insurance
A life insurance policy where benefits are payable to a beneficiary on
death of the insured, whenever that occurs. The premium payment can
happen for a specified number of years or throughout life.

Page | 106

BIBLIOGRAPHY:

Websites: www.licindia.in
www.wikipedia.org
www.icallinsurance.com
www.aom.com
www.bimaonline.com
www.irdaindia.org
http://www.religareinsurance.com
www.censusofindia.org

Books: Insurance Fundamentals, Environment and Procedures by B S Bodla,

M C Garg, K P Singh.
Life insurance and General Insurance from ICMR.

News Paper: Business standard

Times of India
Economic times
Hindustan times
Page | 107

Others: T.S. Ramakrishna Rau, Insurance Chronicle, January 2009

Endowment plans now , Business India [march 2009]
Niraj Bajaj , insuring a bright future ,business India , [April2008]
T s Rama Krishna Rao Unit-linked insurance Products the Big
leap,insurance chronicle [march2009]
Naryan Krishnamurthy , in the long run outlook money [march2009]
Articles related to insurance from various news papers like The
Times of India, The Hindu, Economic Times, Business Standard etc

ICMR books on Financial Management and Business Research

Methods.
IRDA Journal
Dr. Ranjan Das and Prof. Ravindra C, Faculty Member, IIM Kolkata
Prof. Rajarshi Ghosh, Faculty Member, IBS Kolkata
Mr.Abhisek Banerjee, Manager corporate solutions,BMT.
Page | 108

Business magazine: Yogkshem LIC Magazine

Outlook Express
Business Today
Finance & Banking
Money Outlook

Blogs:-

http://insureguru.blog.com
http://www.firstpost.com/tag/lic
http://ourlic.blogspot.in
http://www.licindiainfo.com/blog

Page | 109