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INSURANCE
(LIFE INSURANCE CORPORATION)
SUBMITTED BY
2011-2012
DECLARATION
I, EMMANUEL SAVIO , Roll No. 8246 student of St. Andrews
College, Bandra, in the Third year Bachelor of commerce in
Banking and Insurance (Semester VI) , hereby declare that I
have completed the research report on the topic of
“INSURANCE (LIC)” in the academic year 2011-2012. The
information submitted is herein is true, to the best of my
knowledge.
Signature of Signature of
Coordinator External
Examiner
CERTIFICATE
I, RENU TIWARI here by certify that the following student of
St. Andrew’s College of T.Y.B.Com (Banking & Insurance)
Semester (VI) has completed his research report on
“INSURANCE (LIC)” for the academic year 2011-2012.
Information submitted is true & original to the best of my
knowledge.
SR.NO PAGE
CONTENTS NO.
1 EXECUTIVE SUMMERY 1
2 RESEARCH OBJECTIVE & METHODOLOGY 2
3 INTRODUCTION 4
4 INTRODUCTION OF THE COMPANY 5
5 PRODUCT OF LIC 7
6 OBJECTIVES OF LIC 24
9 FINDINGS 30
10 CONCLUSION 33
11 RECOMMENDATIONS 34
12 BIBLIOGRAPHY 35
EXECUTIVE SUMMARY
Someone has greatly said that practical knowledge is far better than
classroom teaching. During this project I fully realized this and come to
know about the present real world of Insurance sector. It includes all the
activities involved in providing insurance products to the final customers.
3. The report also tries to identify the market potential for insurance products
and the strategy that can be employed to exploit the same.
4. The stress is also given on knowing the awareness level of general public.
RESEARCH METHODOLOGY:
RESEARCH DESIGN:
1. Exploratory
2. Descriptive
3. Experimental.
SECONDARY DATA:
Secondary data is one which already exists and is collected from the
published sources. The sources from which secondary data was collected
are:
• Newspapers and Magazines like Economic Times, Insurance Times, and
Insurance Post.
• Internet.
PRIMARY DATA:
The primary sources of data refer to the first hand Information. Primary data
is collected during the survey with the help of Questionnaires
However, with the successful passage IRDA Bill through both houses of
parliament in December 1999 the sector has been opened up to private
players. This will provided much. Needed impetus to the Industry and will
improve the quality of service and products and will also increase
employment opportunities.
There are still some issues their need to be sorted out, particularly with
regard to the status of intermediaries as envisaged by the Insurance
Regulatory Authority.
The then Finance Minister, Shri C.D. Deshmukh, while piloting the bill,
outlined the objectives of LIC thus to conduct the business with the utmost
economy, and a spirit of trusteeship; to charge premium no higher than
warranted by strict actuarial considerations; to invest the funds for obtaining
maximum yield for the' policy holders consistent with safety of the capital;
to render prompt and efficient service to policy holders, thereby making
insurance widely popular. Since nationalization, LIC has built up a vast
network of 2,048 branches, 100divisions and 7 zonal offices spread over the
country.
The Life Insurance Corporation of India also' transacts business abroad and
has offices in Fiji, Mauritius and United Kingdom. LIC is associated with
joint ventures abroad in the field of insurance, namely, Ken-India ,Assurance
Company Limited, Nairobi; United Oriental Assurance Company Limited,
Kuala Lumpur and Life Insurance Corporation (International) E.C.Bahrain.
November 2000. The share capital of GIC and that of the four companies
are held by the Government of India. All the five entities are Government
companies registered under the Companies Act, 1956. The general insurance
business has grown in spread and volume after nationalization. The four
companies have 2699 branch offices, 1360divisional offices and 92 regional
offices spread all over the country. GIC and its subsidiaries have
representation either directly through branches or agencies in 16countries
and through associate locally incorporated subsidiary companies in 14
other countries. A wholly- owned subsidiary company of GIC, i.e. Indian
International Pvt. Ltd. is operating in Singapore and there is a joint venture
company, viz. Ken-India Assurance Ltd. in Kenya. A new wholly owned
subsidiary called New India International Ltd., UK has also been registered.
Suitable For:
This policy is suitable for people of all ages who wish to protect their
families from financial crises that may occur owing to the policyholder's
premature death.
BENEFITS
SURVIVAL BENEFIT:
Sum assured plus accrued bonuses and the terminal bonuses, if any; on
the policyholder attaining age 80 years or on expiry of term of 40 years from
the date of commencement of the policy whichever is later.
Thereafter, but such Bonus as has already been declared on the Policy will
remain attached thereto. The premium paying term under this plan is five
years minimum and 55 years maximum.
BENEFITS
Disability Benefit:
In case policy holder becomes totally and permanently disabled due to an
accident before reaching the age of 70 and the policy is in full force, he will
not be required to pay further premiums, (the Disability Benefit is available
in respect of the firstRs.20000 sum assured on anyone life) and the policy
will continue to be in force.
Premium Stoppage:
If payment of premiums ceases after at least THREE years' premiums have
been paid , a free paid-up policy for a reduced sum assured will be
automatically secured provided the reduced sum assured, exclusive of any
attached bonus, is not less than Rs. 250/-
.
The reduced sum assured will become payable on the event as stipulated in
the policy.
Bonus:
Is there anything extra payable besides the sum assured at the time of claim
settlement? Yes, but only if it is a 'with profits' policy. Every year the Life
Insurance Corporation distributes its surplus among policyholder to 'with
profits' polices in the form of bonuses. Substantial bonuses have been
declared in the past after each valuation of policy liabilities.
On Death during the Term of the Policy: Sum Assured On Maturity: Nil
RESTRICTIONS
(A) Minimum age at entry: 18 years (completed)
(G) Maximum Sum Assured: Rs. Three Crore (Inclusive of all term
Assurance plans)
Note: The policy would be issued in multiples of Rs. one lakh for Sum
Assured above Rs. five lakh.
(I) Rebates:
•Sum Assured Rebate:
NIL in case of regular premium policies and Re. l
Sum Assured for policies of Rs.25 lakh and above in case of
single premium policies.
•Mode Rebate: 1% of Annual premium for yearly mode and nil for half
yearly mode.
PAYMENT OF CLAIMS:
No Claims concession will be applicable to this Policy.
BACK-DATING INTEREST:
The policy can be back dated within the financial year. No dating back
interest shall be charged.
BENEFITS:
Survival benefits:
If one or both the lives survive to the maturity date, the sum assured, along
with the accumulated bonus, is payable.
Death Benefits:
In case either of the couple dies during the policy's term, two things happen.
One, LIC pays to the surviving spouse the full sum assured. And, two, the
policy continues on the life of the surviving partner without him/her having
to pay any further premiums ,i.e. the life cover on the survivor continues free
of cost. The sum assured is again be payable on the death of the other
partner in case both the husband and wife were to die during the term of the
policy. Vested bonus would also be paid along with the sum assured on the
second death.
The premium under the policy is Rs.1! - Per day (i.eRs.365/-per annum) for
an individual Rs. 1.5 per day for a family of five limited to spouse and
children (i.e.Rs.548 per annum), and Rs.2/- per day (i.e. Rs. 730 per annum)
for covering dependent overall family size of seven. A subsidy of Rs. 100
per year towards annual premium for "Below Poverty Life" families is also
provided under the scheme.
•Any Hospital/Nursing home registered with the local authorities and under
the supervision of a registered and qualified Medical practitioner.
Age Limitations:
Floater Basis:
The benefit of family' will operate on floater basis i.e. the total
reimbursement of Rs.30,000/- can be availed of individually or collectively
by members of the family.
Unit plans:
Unit plans are investment plans for those who realize the worth of hard-
earned money. These plans help you see your savings yield rich benefits and
help you save tax even if you don’t have consistent income.
•Jeevan plus
•Future plus
•Bima plus
•Market plus
•Money plus
•Profit plus
•Fortune plus
1. Payment of Premiums:
You may pay premiums regularly at yearly, half-yearly, quarterly or
monthly (ECS) intervals for 5 years. The minimum First year premium will
be Rs.20,000/- and you may pay any amount exceeding it. From second
year onwards each year’s premium will be 25% of the first year premium.
Other Features:
i) Partial Withdrawals:
You may encash the units partially after the third policy anniversary subject
to the following:
In case of minors, partial withdrawals shall be allowed from the policy
anniversary coinciding with or next following the date on which the life
assured attains majority(i.e. on or after18th birthday).
For 2 years’ period from the date of withdrawal, the Sum Assured under
the Basic plan shall be reduced to the extent of the amount of partial
withdrawals made.
Under policies where less than 3 years’ premiums have been paid and
further premiums are not paid, the partial withdrawals shall not be allowed.
Under policies where at least 3 years’ premiums have been paid, partial
withdrawal will be allowed subject to Policyholder’s Fund Value being at
least Rs. 10,000/-.
iii. Till such period that the Policyholder’s Fund Value reduces to Rs.
5,000/-, whichever is earlier. The benefits payable under the policy in
different contingencies during this period shall be as under:
A. In case of Death: Higher of Sum assured under the Basic Plan or the
Policyholder’s Fund Value. The Sum Assured shall be subject to provisions
of Partial Withdrawals made, if any.
III) Revival: If due premium is not paid within the days of grace, the policy
lapses. A lapsed policy can be revived during the period of two years from
the due date of first unpaid premium or before maturity, whichever is earlier.
The period during which the policy can be revived will be called “Period of
revival” or “revival period” .If premiums have not been paid for at least 3
full years, the policy may be revived within two years from the due date of
first unpaid premium.
The Corporation reserves the right to accept the revival at its own terms or
decline the revival of a lapsed policy. The revival of a lapsed policy shall
take effect only after the same is approved by the Corporation and is
specifically communicated in writing to the Propose / Life Assured
.Irrespective of what is stated above, if less than 3 years’ premiums have
been paid and the Policyholder’s Fund Value is not sufficient to recover the
Emmanuel Savio Page 16
St. Andrew’s College T.Y.B.B.I
charges, the policy shall be terminated and thereafter revival will not be
entertained.
If 3 years’ or more than 3years’ premiums have been paid and the
Policyholder’s Fund Value reduces to Rs.5000/-, the policy shall terminate
and Policyholder’s Fund Value as on such date shall be refunded to the Life
Assured and thereafter revival will not be allowed.
IV) Settlement Option: When the policy comes for maturity, you may
exercise “Settlement Option” and may receive the policy money in
installments spread over a period of not more than five years from the date
of maturity. There shall not be any life cover during this period. The value of
installment payable on the date specified shall be subject to investment risk
i.e. the NAV may go up or down depending upon the performance of the
fund.
Reinstatement:
A policy once surrendered will not be reinstated.
Exclusions: Any amount exceeding it. From second year onwards each
year’s premium will be 25% of the first year premium. In case the Life
Assured commits suicide at any time within one year, the Corporation will
not entertain any claim by virtue of the policy except to the extent of the
Policyholder’s Fund Value on death.
MARKET PLUS
“IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT
PORTFOLIO IS BORNE BY THE POLICYHOLDER"
This is a unit linked deferred pension plan. You can take the plan with or
without risk cover. You can also choose the level of cover within the limits,
which will depend on whether the policy is a Single premium or Regular
premium contract and on the level of premium you agree to pay. The
allocated premiums will be applied to purchase units as per the Fund type
chosen. Your Unit Account will be subject to deduction of charges as
specified in the Policy Conditions. The value of the units in the Unit Fund
may increase or decrease, depending on the investment return of the assets
representing the chosen Fund i.e.
Payment of Premiums:
You may pay premiums regularly at yearly, half-yearly or quarterly intervals
over the term of the policy. The minimum annual premium will be Rs.5,
000/- increasing thereafter in multiples of Rs.1, 000/-.Alternatively, a Single
Benefits:
A) Death Benefit:
If the Life cover is opted for, the Sum Assured under the Basic Plan
together with the Fund Value of units either as a lump sum or as pension. In
case the policy is taken without life cover, then the Fund Value of the units
held in the Policyholder’s Unit Account shall be payable either as a lump
sum or as a pension. The amount of pension will depend on the then
prevailing immediate annuity rates under the annuity option chosen.
B) Benefit on Vesting:
On your surviving to the date of vesting, the Fund Value of the units held in
your Unit Account will compulsorily be utilized to provide a pension based
on the then prevailing immediate annuity rates under the relevant annuity
option. However, you may opt to commute up to one-third of the Benefit to
be paid asa lump sum. Further, you may choose to purchase pension from
LIC or other life insurance company.
i) Investment of Funds:
The premiums allocated to purchase units will be strictly invested according
to the investment pattern committed in various fund types. Various types
of fund and their investment pattern will be as under:
Bond Fund
Not less than 80%100%Nil
Secured Fund
Not less than 65% not more than 85% not less than15% & not more than
35%.
Balanced Fund
Not less than 50% not more than 70% not less than30% & not more than
50%.
Growth Fund
i. Not less than 20% not more than 40% not less than60% & not more than
80%.
ii.The Policyholder has the option to choose any ONE of the above 4
funds. Incase no fund has been opted for, the allocated premiums shall, by
default, be invested in the SECURED FUND.
Switching Charge:
This is the charge levied on switching of monies from one fund to another.
Within a given policy year 4 switches will be allowed free of charge.
Subsequent switches in that year shall be subject to a switching charge of
Rs. 100 per switch.
Bid/Offer Spread:
Nil
Surrender Charge:
Nil
Miscellaneous Charge:
This is a charge levied for an alteration within the contract, such as reduction
in policy term, change in premium mode, etc. An alteration may be allowed
subject to a charge of Rs. 50/-.
Suitability
People who wish to provide for their dependants huge sums at
comparatively low contribution as premium can take this policy. Under this
plan an individual gets life coverage for almost whole of his life.
Salient Features
Sum assured is payable only on the death of the life assured
Premiums have to be paid for 35 years or till age 80 years whichever is more
Premiums cease on death of the life assured
Benefits
On Death
Sum assured + vested bonuses are payable to nominees/beneficiaries on
death of life assured only.
Other Conditions
Minimum sum assured: Rs 20000
Minimum premium must be Rs.800 per annum
Minimum age at entry: 18 years
Maximum age at entry: 60 years
•Conduct business with utmost economy and with the full realization that the
moneys belong to the policyholders.
•Meet the various life insurance needs of the community that would arise in
the changing social and economic environment.
LIC's performance in the year to March 2004 suggests that these efforts are
working. It sold27 million new policies generating Rs.85.7 billion (US$1.9
billion) in premium income - an annual growth of about 11 percent. LIC's
deployment of information technology may have helped it maintain its 88
percent market share of premium sales. Yet few believe that technology
alone will drive the company's - and in effect, the Indian life industry's
expansion. "Ultimately the growth of life insurance depends on growth of
the economy," said TK. Banerjee, a board member of the Insurance
Regulatory Development Authority. India's economic growth rate in March
2004 hit double-digit figures to become Asia's fastest-growing economy.
Most economists forecast growth to stabilize at around 7 percent to 2005.
Banerjee said that this climate of rising economic prosperity is encouraging
consumers to think more about insurance.
To this end, they have pursued a pan-India distribution strategy and backed
it up with arrange of products that meets the needs of a wide range of
people, be they from rural or urban areas.
Today, they have branches in 74 locations and rural presence in more than
15 states. Certainly, the majority of the business still comes from urban areas
such as metros and mini-metros. However, they have seen rural business
grow significantly and expect it to continue making greater contribution in
the years to come.
This cap, however, will have a great impact on the Indian counter part to
raise 74% of the funds in their joint venture. To add to this if Indian partners
like State bank of India, with over 9000 branches nationwide, will demand
premium for their existing distribution network, we will see the foreign
insurance companies demand hefty premiums for bringing in their global
expertise and brand.
The foreign players are essentially looking to tap their" global expertise in
the variety markets and use that know-how to work in the Indian scenario.
Designing of products, information systems, technical expertise, manpower
planning etc is what one expects the foreign players to have a say in. Any
venture of the joint kinds needs to be between equals. If this is not there then
there is every chance that a partner in the venture will feel increasingly un
comfortable and would be looking to call the joint venture off.
QUESTIONNAIRE ANALYSIS
Respondents =80
1. According to you who has played a major role in the field of life
insurance companies?
3) The entry of the Pvt. Players in the Insurance Sector has expanded
the product segment to meet the different level of the requirement of the
customers. It has brought about greater choice to the customers.
5) LIC has vast market and very firm grip on its traditional customers and
monopoly of life insurance products.
6) Bank assurance - that allows life insurers to leverage on the risk product
through bank network, was adopted by private players. But LIC was also not
left behind as picking up majority stake in the corporation Bank and large
equity stake in the Oriental Bank of Commerce.
NEWSPAPERS / MAGAZINES
•The Economic Times
•DNA money
•Insurance Post
BOOKS
•Dr. Gupta S.P& Dr. Gupta M.P., Business Statistics by Addition 2004, New
Delhi.
WEBSITES
•w.w.w.liclndia.com
•www.lrdaindia.org.com
•www.indiainfoline.com
•www.icici.com
•www.hdfc.com