A MINOR PROJECT REPORT ON A STUDY OF LIC INDIA

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF BACHELOR OF BUSINESS ADMINISTRATION 2011-14 Under the Guidance of: Ms.ARTI MALIK Assistant Professor MSI Submitted by: AMIT KUMAR JAIN Roll. No: 0311201711 BBA (General) 2nd Shift 3rd Semester

Maharaja Surajmal Institute C-4, Janakpuri, New Delhi-110058

STUDENTS DECLARATION

This is to certify that I have completed this Project titled A STUDY OF LIC INDIA under the guidance of Ms. ARTI MALIK in partial fulfillment of the requirement of the award of degree of Bachelor of Business Administration at Maharaja Surajmal Institute, Delhi. This is an original piece of work and I have not submitted it earlier elsewhere.

Date: 25-10-12 Place: NEW DELHI

AMIT KUMAR JAIN

ROLL. NO. 03121201711

CERTIFICATE FROM THE GUIDE

This is to certify that the project titled A STUDY OF LIC INDIA is an academic work done by AMIT KUMAR JAIN submitted in the partial fulfillment of the requirement for the award of the degree of Bachelor of Business Administration from Maharaja Surajmal Institute, C-4, JANAKPURI, Delhi, under my guidance & direction.

Ms. ARTI MALIK

ASSISTANT PROFESSOR MSI

ACKNOWLEDGEMENT
First of all, I would like to express my thanks to Prof. AZAD. S. CHHILLAR (Director, MSI) for giving me such a wonderful opportunity to widen the horizons of my knowledge. In no small measures, I would also like to gratefully thank to all those who gave me constructive suggestions for the improvement of all the aspect related to this project. In particular, I would like to thank Ms. ARTI MALIK, my research guide for her valuable suggestions and guidance. I also owe a deep sense of gratitude to other faculty members for their continuous encouragement. Despite all efforts, I have no doubt that error and obscurities remain that seen to afflict all research project and for which I am culpable.

AMIT KUMAR JAIN Roll. No.: 03121201711

TABLE OF CONTENTS
CHAPTER 1= INTRODUCTION - INTRODUCTION - OBJECTIVES OF THE STUDY - RESEARCH METHODOLOGY - LIMITATIONS OF THE STUDY - SCOPE OF THE STUDY CHAPTER 2 = COMPANY PROFILE
HISTORY AND FORMATION OF LIC

CHAPTER 3=DATA ANALYSIS AND INTERPRETATION

GRAPHS, CHARTS

CHAPTER 4=RECOMMENDATIONS AND CONCLUSIONS - CONCLUSIONS BIBLIOGRAPHY - WEBSITES - BOOKS - JOURNALS

CHAPTER-1 INTRODUCTION

WHAT AND WHY OF LIFE INSURANCE

WHAT IS LIFE INSURANCE

Life insurance is a contract for payment of a sum of money to the person assured (or failing him/her, to the person entitled to receive the same) on the happening of the event insured against. Usually the contract provides for the payment of an amount on the date of maturity or at specified dates at periodic intervals or at unfortunate death, if it occurs earlier. Among other things, the contract also provides for the payment of premium periodically to the corporation by the assured. Life insurance is universally acknowledged to be an institution, which eliminates RISK, substituting certainty for uncertainty and comes to the timely aid the family in the unfortunate event of death of the breadwinner. By and large, life insurance is civilizations partial solution to the problems caused by death.

WHY IS LIFE INSURANCE REQUIRED

Life insurance is basically required to cover the two hazards that stand across the life path of every person:

1. Of dying prematurely leaving a dependent family to fend for it. 2. Of living to old age without visible means of support.

OBJECTIVES OF THE STUDY

1. To study the various products offered by LIC. 2. To study the changes in the marketing strategies of LIC with entrance of private insurance players. 3. To study the progress of LIC from its inception till recent developments. 4. To study the various products offered by LIC. 5. To study the changes in the marketing strategies of LIC with entrance of private insurance players. 6. To study the progress of LIC from its inception till recent developments. 7. To study the various products offered by LIC. 8. To study the changes in the marketing strategies of LIC with entrance of private insurance players. 9. To study the progress of LIC from its inception till recent developments. 10.To study the various products offered by LIC. 11.To study the changes in the marketing strategies of LIC with entrance of private insurance players. 12.To study the progress of LIC from its inception till recent developments.

SCOPE OF THE STUDY

Insurance is the most dynamic and growing sector in todays business environment. A big number of business houses of India have jumped into the business of insurance. Life Insurance today plays a major role in ones life at various stages because of the various benefits it offers.

This report presents a brief background of how LIC came into existence and how it became as one of the top insurance players of India.

The project deals with the market share of LIC and the current position of LIC with the coming up of various other private insurance players.

RESEARCH METHODOLOGY
METHOD OF DATA COLLECTION
Data may be obtained either from the primary sources or from the secondary sources. A primary source is a one that itself collect the data and a secondary source is a one that makes use of available data which was collected by some other agencies. Depending on the source, statistical data is classified under two categories. 1. PRIMARY DATA, 2. SECONDARY DATA. Primary is that which is collected for the first time and thus happens to be original in character. Secondary is that which is already being collected by someone else and which has already passed through the statistical process.

SAMPLE DESIGN AND DATA COLLECTION

My research is based upon secondary data which is collected from various Books, Internet and various records of LIC.

LIMITATIONS OF THE STUDY

1. touch. 2. Because of time constraint, I was not able to collect much of information. This project is entirely based upon secondary data so, it lacks the personal

CHAPTER-2 COMPANY PROFILE

LIFE INSURANCE CORPORATION OF INDIA

HISTORY OF LIFE INSURANCE
Life insurance first started in England in the 16th century. The first life that was insured was of William Gibbons on June 18, 1653. The first registered office of life was in England with the name Hand-inHand Society in 1696. In USA, the life insurance did not gain momentum till 18th century mainly because of fluctuations in death rate. But after 1800 it gained momentum. In India, some Europeans started the first life insurance company in Bengal Presidency with the name Orient Life Assurance Company in 1818. Then in 1871 Bombay Mutual Life Assurance Society was established which was a landmark in the Indian Insurance Industry. Before 1871 Indians were charged about 15% more premiums as compared to Europeans. But Bombay Mutual Life Assurance Society did not differentiate between Indians and Europeans in the matter of fixation of premiums. Then in 1874 Oriental Government Security Life Assurance Company Ltd. was established. Since then, several offices developed in India. In India the private sector was prevalent in life insurance before 1956. Then it was nationalized in 1956 and then again with coming up of IRDA Act, it has been privatized in 2000. Thus, life insurance has completed a cycle in its evolution.

FORMATION OF LIC
First attempt to regulate insurance business was made through Indian Life Insurance Companies Act in 1912. Then this was broad based and the insurance act came into existence from the year 1928 onwards. This act was later reviewed and a comprehensive legislation was enacted called the Insurance Act 1938. Then nationalization of life insurance business took place in 1956, when 245 Indian and foreign insurance and provident societies were first amalgamated and then nationalized. Then the Life Insurance Corporation of India (LIC) came into existence with its central office located at Mumbai.

Nationalization was done due to following reasons:

1. Because of the unhealthy practices by insurers, there were repeated popular demands for nationalization in parliament. 2. There was a feeling that funds from insurance may be utilized for countrys economic development. 3. The foreign exchange drain for import business would be stopped. 4. The monopolistic control of the business by a few industrialists insures would end. 5. The living and working conditions of general insurance officers were highly unsatisfactory. 6. There was high concentration of economic power in a few hands.

OBJECTIVES OF LIC
1. To spread life insurance much more widely and in particular to the rural areas and to the socially and economically backward classes with the aim of reaching all insurable positions in the country and to provide them with adequate financial cover against death at a reasonable cost. 2. To maximize mobilization of peoples savings by making insurancelinked savings adequately attractive. 3. To keep in mind, in the investment of funds, the primary obligations to its policy holders, whose money it holds in trust, without losing sight of the interests of the community as a whole, the funds to be deployed to best advantage of the investors as well as the community as a whole keeping in view national priorities and obligations of attractive return. 4. To spread life insurance much more widely and in particular to the rural areas and to the socially and economically backward classes with the aim of reaching all insurable positions in the country and to provide them with adequate financial cover against death at a reasonable cost. 5. To maximize mobilization of peoples savings by making insurancelinked savings adequately attractive. 6. To keep in mind, in the investment of funds, the primary obligations to its policy holders, whose money it holds in trust, without losing sight of the interests of the community as a whole, the funds to be deployed to best advantage of the investors as well as the community as a whole keeping in view national priorities and obligations of attractive return.

POLICIES OF LIC
As individuals it is inherent to differ. Each individuals insurance needs and requirements are different from that of the others. LICs Insurance Plans are polices that talk to you individually and give you the most suitable options that can fit your requirement.

Komal Jeevan
Product summary This is a Children's Money Back Plan that provides financial protection against death during the term of plan with periodic payments on survival at specified durations. This plan can be purchased by any of the parent or grandparent for a child aged 0 to 10 years.

Commencement of risk cover:

The risk commences either after 2 years from the date of commencement of policy or from the policy anniversary immediately following the completion of 7 years of age of child, whichever is later.

Premiums:
Premiums are payable yearly, half-yearly, quarterly, monthly or through Salary deductions, as opted by you, up to the policy anniversary immediately after the life assured (child) attains 18 years of age or till the earlier death of the life assured. Alternatively, the premium may be paid in one lump sum (Single premium).
.

Guaranteed Additions:
The policy provides for the Guaranteed Additions at the rate of Rs.75 per thousand Sum Assured for each completed year. The Guaranteed Additions are payable at the end of the term of the policy or earlier death of the Life Assured.

Loyalty Additions:
This is a with-profit plan and participates in the profits of the Corporations life insurance business. It gets a share of the profits in the form of loyalty additions which are terminal bonuses payable along with death or maturity benefit. Loyalty addition may be payable depending on the experience of the Corporation.

ENDOWMENT ASSURANCE PLANS

Jeevan Anand
Product summary:
This plan is a combination of Endowment Assurance and Whole Life plans. It provides financial protection against death throughout the lifetime of the life assured with the provision of payment of a lump sum at the end of the selected term in case of his survival.

Premium:
Premiums are payable yearly, half-yearly, quarterly, monthly or through salary deductions as opted by you throughout the selected term of the policy or till earlier death.

Bonuses:
This is a with-profit plan and participates in the profits of the Corporations life insurance business. It gets a share of the profits in the form of bonuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year. Once declared, they form part of the guaranteed benefits of the plan. Bonuses will be added during the selected term or till death, if it occurs earlier. Final (Additional) Bonus may also be payable provided the policy has run for certain minimum period.

PLANS FOR HIGH WORTH INDIVIDUALS

Jeevan Shree
Product summary:
This is an Endowment Assurance plan offering the choice of many convenient premium paying terms. It provides financial protection against death throughout the term of plan with the payment of maturity amount on survival to the end of the policy term.

Premiums:
Premiums are payable yearly, half-yearly, quarterly, monthly or through Salary deductions, as opted by you, throughout the premium paying term or till earlier death. Alternatively premium may be paid in one lump sum (Single premium).

Guaranteed Additions:
The policy provides for the Guaranteed Additions at the rate of Rs. 50/- per thousand Sum Assured for each completed year for first five years of the policy. The Guaranteed Additions are payable along with the Basic Sum Assured at the time of claim.

Bonuses:
The policy participates in the profits of the Corporations life insurance business from the 6th year onwards. It will get a share of the profits in the form of bonuses. Simple Reversionary Bonuses will be declared per thousand Basic Sum Assured annually at the end of each financial year. Once declared, they will form part of the guaranteed benefits of the plan.

MONEY BACK PLANS

Money Back Policy 20 years Features:
Unlike ordinary endowment insurance plans where the survival benefits are payable only at the end of the endowment period, this scheme provides for periodic payments of partial survival benefits as follows during the term of the policy, of course so long as the policy holder is alive.

In the case of a 20-year Money-Back Policy (Table 75), 20% of the sum assured becomes payable each after 5, 10, 15 years, and the balance of 40% plus the accrued bonus become payable at the 20th year.

For a Money-Back Policy of 25 years (Table 93), 15% of the sum assured becomes payable each after 5, 10, 15 and 20 years, and the balance 40% plus the accrued bonus become payable at the 25th year.

An important feature of this type of policies is that in the event of death at any time within the policy term, the death claim comprises full sum assured without deducting any of the survival benefit amounts, which have already been paid. Similarly, the bonus is also calculated on the full sum assured.

Money Back Policy 25 years

Unlike ordinary endowment insurance plans where the survival benefits are payable only at the end of the endowment period, this scheme provides for periodic payments of partial survival benefits as follows during the term of the policy, of course so long as the policy holder is alive.

In the case of a 20-year Money-Back Policy (Table 75), 20% of the sum assured becomes payable each after 5, 10, 15 years, and the balance of 40% plus the accrued bonus become payable at the 20 th year.

For a Money-Back Policy of 25 years (Table 93), 15% of the sum assured becomes payable each after 5, 10, 15 and 20 years, and the balance 40% plus the accrued bonus become payable at the 25th year.

An important feature of this type of policies is that in the event of death at any time within the policy term, the death claim comprises full sum assured without deducting any of the survival benefit amounts, which have already been paid. Similarly, the bonus is also calculated on the full sum assured.

JEEVAN SURABHI
Jeevan Surabhi plan is similar to other money back plans. However main differences in regular money back plans and Jeevan Surabhi are as under Maturity term is more than premium paying term. Early and higher rate of survival benefit payment. Risk cover increases every five years. The actual term and the premium paying term for these plans are as under.
Plan no. 106 107 108 Policy Term 15 years 20 years 25 years Premium Paying Term 12 years 15 years 18 years

Full sum assured is paid back as survival benefit by the end of premium paying term. However, the risk cover and additional risk cover continue and the policy participates in profits till the end of policy term. \Accident Benefit is restricted to the premium paying period and to the overall limit of Rs.5 lakhs on a single life.

Suitable For:
This plan holds special interest to people who besides wishing to provide for their old age and family feel the need for lump sum benefits at periodical intervals.

Bima Bachat
What is Bima Bachat?
LICs Bima Bachat is a money-back policy which offers financial security and assurance to the policy holder and his family. Bima Bachat requires the policy holder to pay only one premium. The amount paid for the premium depends on the duration of the policy taken and life insurance is available till the date of maturity. What other benefits do I receive during the specified duration of the policy?

For a term of 9 years: The policy holder will receive 15% of the sum assured at the end of every 3rd and 6th policy year.

For a term 12 years: The policy holder will receive 15% of the sum assured at the end of every 3rd, 6th and 9th policy year.

For a term 15 years: The policy holder will receive15% of the sum assured at the end of every 3rd, 6th, 9th and 12th policy year.

What additional benefits do I get upon maturity? If the policy holder outlives the duration of the policy, at the time of maturity, a single premium payment (excluding extra premium) is made along with loyalty additions, if any.

How much insurance do I get?

The policy holder is insured for an amount equal to the sum assured. What about the installment received already?

The insurance cover is irrespective of the installments received.

When am I eligible for the guaranteed surrender value?

The guaranteed surrender value is available only after completion of at least one policy year. This value is equal to 90 % of the single premium paid (excluding extra premium).

SPECIAL MONEY BACK PLANS FOR WOMEN

Jeevan Bharathi
This is a with-profits plan offered to women. It provides life insurance cover throughout the term of the plan along with the periodic payments on survival at specified durations during the policy term. The plan also provides the cover against affliction of certain Female Critical Illnesses and occurrence of certain Congenital Disabilities in newly born children.

Premium:
Premiums at yearly intervals are payable throughout the term of the policy or till earlier death. After at least two full years premiums have been paid, full insurance cover is available even when premiums are not paid for up to three years. Premium for congenital disability benefit ceases at policy anniversary after the life assured completes the age of 40 years.

Bonuses after the first 5 years:

This is a with-profit plan and participates in the profits of the Corporations life insurance business after 5 years. It gets a share of the profits in the form of bonuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year. Once declared, they form part of the guaranteed benefits of the plan.

WHOLE LIFE PLANS

The Whole Life Policy
This plan is mainly devised to create an estate for the heirs of the policyholder as the plan basically provides for payment of sum assured plus bonuses on the death of the policyholder. However, considering the increased longevity of the Indian population, the Corporation has amended the above provision, thereby providing for payment of sum assured plus bonuses in the form of maturity claim on completion of age 80 years or on expiry of term of 40 years from date of commencement of the policy whichever is later.

The premiums under the policy are payable up to age 80 years of the policyholder or for a term of 35 years whichever is later.

If the payment of premium ceases after 3 years, a paid-up policy for such reduced sum assured will be automatically secured provided the reduced sum assured exclusive of any attached bonus is not less than Rs.250/-. Such reduced paid-up policy is not entitled to participate in the bonus declared thereafter but the bonuses already declared on the policy will remain attach, provided the policy is converted in to a paid-up policy after the premiums are paid for 5 years.

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 policyholders premature death. The Whole Life plan is mainly devised to create an estate for the heirs of the policyholder as the plan basically provides for payment of sum assured plus bonuses on the death of the policyholder. However, considering the increased longevity of the Indian population, the Corporation has amended the above provision, thereby providing for payment of sum assured plus bonuses in the form of maturity claim on completion of age 80 years or on expiry of term of 40 years from date of commencement of the policy whichever is later.

The premiums under the policy are payable up to age 80 years of the policyholder or for a term of 35 years whichever is later.

If the payment of premium ceases after 3 years, a paid-up policy for such reduced sum assured will be automatically secured provided the reduced sum assured exclusive of any attached bonus is not less than Rs.250/-. Such reduced paid-up policy is not entitled to participate in the bonus declared thereafter but the bonuses already declared on the policy will remain attach, provided the policy is converted in to a paid-up policy after the premiums are paid for 5 years.

The Whole Life Policy Limited Payment

This is the best form of life assurance for family provision since it enables the Life Assured to pay all the premiums during the ordinarily vigorous and most productive years of life. He need not pay any premium in the later stages of life if and when his conditions might become adverse.

With Profits Limited Payments Policies do not cease to participate in profits after completion of the premium paying period but continue to share in the periodical Bonus Distribution until the death of the Life Assured. The Without-Profit option is available under Table no. 3.

If the policyholder pays at least 3 years' premiums and then discontinues paying any more premium, a reduced paid-up assurance policy comes into force.

Such a reduced paid-up Policy will not be entitled to participate in the profits declared 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.

Jeevan Anand
Product summary:
This plan is a combination of Endowment Assurance and Whole Life plans. It provides financial protection against death throughout the lifetime of the life assured with the provision of payment of a lump sum at the end of the selected term in case of his survival.

Premium:
Premiums are payable yearly, half-yearly, quarterly, monthly or through salary deductions as opted by you throughout the selected term of the policy or till earlier death.

Bonuses:
This is a with-profit plan and participates in the profits of the Corporations life insurance business. It gets a share of the profits in the form of bonuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year. Once declared, they form part of the guaranteed benefits of the plan. Bonuses will be added during the selected term or till death, if it occurs earlier. Final (Additional) Bonus may also be payable provided the policy has run for certain minimum period.

Jeevan Tarang
Introduction:
This is a with-profits whole of life plan which provides for annual survival benefit at a rate of 5 % of the Sum Assured after the chosen Accumulation Period. The vested bonuses in a lump sum are payable on survival to the end of the Accumulation Period or on earlier death. Further, the Sum Assured, along with Loyalty Additions, if any, is payable on survival to age 100 years or on earlier death.

Accumulation Period:
The plan offers three Accumulation periods 10, 15 and 20 years. A proposer may choose any of them.

Payment of Premium:
Premiums can be paid regularly at yearly, half-yearly, quarterly or monthly intervals or through salary deductions over the Accumulation Period. Alternatively, a Single Premium can be paid on commencement of a policy.

Sample Premium Rates:

The tables below provide tabular premiums for various age-term combinations for Rs. 1000/- Sum Assured.

CHAPTER-3 ANALYSIS AND INTERPRETATION

Single premiums Accumulation period Age Up to 46 years 47 years 48 years 49 years 50 years 51 to 55 years 56 to 60 years 10 years 756.00 756.00 756.00 756.00 756.00 756.00 756.00 15 years 644.00 644.00 644.00 644.00 644.00 644.00 20 years 548.00 549.00 552.00 555.20 558.90 -

Participation in Profits:
Policies under this plan shall participate in profits of the Corporation. During the accumulation period policies shall be entitled to receive simple reversionary bonuses which will be payable on survival to the end of the accumulation period or on earlier death. After the accumulation period, policies will be entitled to receive a Loyalty Addition payable on maturity or earlier death. The amount of simple reversionary bonus and Loyalty Addition will depend on the experience of the Corporation.

Anmol Jeevan
On Death during the Term of the Policy On Maturity Nil Sum Assured

Restrictions
Minimum age at entry Maximum age at entry Maximum age at maturity Minimum Term Maximum Term Minimum Sum Assured Maximum Sum Assured 18 years (completed) 55 years (nearer birthday) 65 years 5 years 25 years Rs.5,00,000/Rs. 3,00,00,000 (Inclusive of all Term Assurance plans) Yearly, Half- Yearly and Single premium

Mode of Premium Payment*

Note: The policy would be issued in multiples of Rs. one lakh for Sum Assured above Rs. five lakh.

Rebate
Sum Assured Rebate: NIL in case of regular premium policies and Re.1 per Rs.1000 Sum Assured for policies of Rs.25 lakh and above in case of single premium policies. And Mode Rebate: 1 % of Annual premium for yearly mode and nil for Half-Yearly mode.

Underwriting,

Age

Proof

and

Medical

Requirements

The plan is available to Standard and Sub-standard lives (up to Class VI EMR). This plan is also available to female lives (category I and II lives only) and to physically handicapped persons subject to certain conditions. Standard age proof will have to be submitted along with the Proposal Form.

PAID-UP

AND

SURRENDER

VALUE:

i) The

policy

will

not

acquire

any

paid-up

value.

ii) No Surrender Value will be available under this plan.

Loan
No Grace loan will Period be for granted under this plan. Non-Forfeiture Provisions

A grace period of 15 days will be allowed for payment of yearly or half-yearly premiums. If death occurs within this period and before the payment of the premium then due, the policy will still be valid and the Sum Assured paid after deduction of the said premium as also unpaid premiums falling due before the next policy anniversary of the Policy. If the premium is not paid before the expiry of the days of grace, the Policy lapses.

Revival
If the Policy has lapsed, it may be revived during the life time of the Life Assured, but before the date of expiry of policy term, on submission of proof of continued insurability to the satisfaction of the Corporation and the payment of all the arrears of premium together with interest at such rate as may be prevailing at the time of the payment. The corporation reserves the right to accept or decline the revival of discontinued policy. The revival of the discontinued policy shall take effect only after the same is approved by the Corporation and is specifically communicated to the Life Assured. The cost of the Medical reports, including Special Reports, if any, required for the purposes of revival of the policy, should be borne by the Life Assured.

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.

Amulya Jeevan
On Death during the Term of the Policy On Maturity : Sum Assured

: Nil

RESTRICTIVE CONDITIONS
Minimum age at entry Maximum age at entry :18 years (completed) :60 years (nearest birthday)

Maximum age at maturity :70 years (nearest birthday) Minimum Policy Term Maximum Policy term Minimum Sum Assured Maximum Sum Assured :5 years :35 years :Rs.25,00,000/:No Upper Limit

(Policies will be issued in multiples of Rs.100,000/- for Sums Assured more than the minimum Sum Assured) Mode payment of premium:Yearly, Premium Half-yearly & Single

REBATES

Mode Rebate There is no mode rebate for yearly mode of premium payment under this plan. In case of half-yearly mode, there is an additional premium of 2% of the tabular annual premium.

Large Sum Assured Rebates A rebate of Rs.0.25 %o Sum Assured will be allowed under Single Premium policies with Sums Assured of Rs. One Crore and above. There will be no rebate for large Sum Assured in case of Regular Premium.

Rebate for Corporation Employees Policies issued to Corporation Employees on their own lives under this plan will be eligible for a reduction @ 10% of the Tabular premium for Half-yearly and yearly mode. In case of a single premium policy this rebate will be 2% of the tabular premium.

UNDERWRITING, AGE PROOF AND MEDICAL REQUIREMENTS The Plan will be allowed to standard and substandard lives. In case of female lives, this plan will be restricted to Category-I and II lives only. Physically handicapped persons falling under Group A with loss of one limb will be eligible for this Plan with standard extra rates. This Plan can be allowed to persons engaged in hazardous occupations by charging appropriate occupation extra or with Clause 86. Further, the following points should be noted

Standard age proof will have to be submitted along with the Proposal Form.

Proposals will be considered on the basis of Medical Reports and Special reports (if any). FMR will be required to be done by DMR / Addl. DMR or by TPA. FMR from MEs with enhanced powers will not be accepted.

Cost of medical examination (including Special reports, if any) will be borne by the Corporation as per rules.

For the purpose of SUC and underwriting (Special Reports, Financial underwriting etc.), the Sum Assured under the plan is to be considered.

PAID UP AND SURRENDER VALUE

The policy will not acquire any paid-up value. No Surrender Value will be available under this plan.

LOAN
No loan will be granted under this plan. GRACE PERIOD FOR NON-FORFEITURE PROVISIONS
(For policies with Regular Premium)

A grace period of 15 days will be allowed for payment of yearly or half-yearly premiums. If death occurs within this period and before the payment of the premium then due, the policy shall be valid and the Sum Assured shall be payable after deduction of the said premium as also unpaid premiums, if any, falling due before the next policy anniversary of the policy. If premiums are not paid within the grace period, the policy will lapse.

REVIVAL

(For

policies

with

Regular

Premium)

If the policy has lapsed, it may be revived during the life time of the Life Assured, but within a period of 5 years from the date of first unpaid premium and before the date of maturity, on submission of proof of continued insurability to the satisfaction of the Corporation and the payment of all the arrears of premium together with interest at such rate as may be prevailing at the time of revival. The Corporation reserves the right to accept at ordinary terms, accept with modified terms or decline the revival of a discontinued policy.

Revival of lapsed policies can be considered with the following requirements:

Period from First Unpaid Premium Requirements for revival 16 days to 60 days Arrears of premiums with interest thereon Arrears of premiums with interest thereon subject to submission of proof of 61 days and above continued insurability to the satisfaction of the Corporation as per underwriting rules prevailing at the time of revival.

The cost of the medical reports, including special reports, if any, required for the purposes of revival of the policy, shall be borne by the Life Assured. The revival of a discontinued policy shall take effect only after the same is approved by the Corporation and is specifically communicated to the Proposer/Life Assured.

PAYMENT OF CLAIMS:
No claim concession and extended claim concession will be applicable to this policy.

REINSURANCE:
The reinsurance rules will be as applicable to term assurance plans.

JOINT LIFE PLAN

Jeevan Saathi Product summary:
This is an Endowment Assurance Plan issued on the lives of husband and wife. The plan provides financial protection against death of both the lives. It pays the maturity amount on survival of one or both the lives to the end of the policy term.

Premiums:
Premiums are payable yearly, half-yearly, quarterly, monthly or through salary deductions as per opted by you throughout the term of the policy or till the first death of the lives covered, whichever is earlier.

Bonuses:
This is a with-profit plan and participates in the profits of the Corporations life insurance business. It gets a share of the profits in the form of bonuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year. Once declared, they form part of the guaranteed benefits of the plan. Such bonuses are to be added till date of maturity or the second death of the lives covered, whichever is earlier. Final (Additional) Bonus may also be payable provided policy has run for certain minimum period.

ULIPS
4 REASONS WHY ULIPS GET THE THUMBS UP
Ask any individual who has purchased a life insurance policy in the past year or so and chances are high that the policy will be a unit linked insurance plan (ULIP). ULIPs have been selling like proverbial `hot cakes' in the recent past and they are likely to continue to outsell their plain vanilla counterparts going ahead. So what is it that makes ULIPs so attractive to the individual? Here, we have explored some reasons, which have made ULIPs so irresistible.

1. Insurance cover plus savings:

To begin with, ULIPs serve the purpose of providing life insurance combined with savings at market-linked returns. To that extent, ULIPs can be termed as a two-in-one plan in terms of giving an individual the twin benefits of life insurance plus savings. This is unlike comparable instruments like a mutual fund for instance, which does not offer a life cover.

2. Multiple investment options:

ULIPs offer a lot more variety than traditional life insurance plans. So there are multiple options at the individual's disposal. ULIPs generally come in three broad variants:

Aggressive ULIPs (which can typically invest 80%-100% in equities, balance in debt)

Balanced ULIPs (can typically invest around 40%-60% in equities)

Conservative ULIPs (can typically invest up to 20% in equities)

Although this is how the ULIP options are generally designed, the exact debt/equity allocations may vary across insurance companies. Individuals can opt for a variant based on their risk profile. For example, a 30-Yr old individual looking at buying a life insurance plan that also helps him build a corpus for retirement can consider investing in the Balanced or even the Aggressive ULIP. Likewise, a risk-averse individual who is not comfortable with a high equity allocation can opt for the Conservative ULIP.
3.

Flexibility:

Individuals may well ask how ULIPs are any different from mutual funds. After all, mutual funds also offer hybrid/balanced schemes that allow an individual to select a plan according to his risk profile. The difference lies in the flexibility that ULIPs afford the individual. Individuals can switch between the ULIP variants outlined above to capitalize on investment opportunities across the equity and debt markets. Some insurance companies allow a certain number of `free' switches. This is an important feature that allows the informed individual/investor to benefit from the vagaries of stock/debt markets. For instance, when stock markets were on the brink of 7,000 points (Sensex), the informed investor could have shifted his assets from an Aggressive ULIP to a low-risk Conservative ULIP.

3. Works like an SIP Rupee cost-averaging is another important benefit associated with ULIPs. Individuals have probably already heard of the Systematic Investment Plan (SIP) which is increasingly being advocated by the mutual fund industry. With an SIP, individuals invest their monies regularly over time intervals of a month/quarter and don't have to worry about `timing' the stock markets. These are not benefits peculiar to mutual funds. Not many realize that ULIPs also tend to do the same, albeit on a quarterly/half-yearly basis. As a matter of fact, even the annual premium in a ULIP works on the rupee costaveraging principle. An added benefit with ULIPs is that individuals can also invest a one-time amount in the ULIP either to benefit from opportunities in the stock markets or if they have an investible surplus in a particular year that they wish to put aside for the future.

ULIPs vs. Mutual Funds: Who's better?

Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to mutual funds in terms of their structure and functioning. As is the case with mutual funds investors in ULIPs are allotted units by the insurance company and a net asset value (NAV) is declared for the same on a daily basis. Similarly ULIP investors have the option of investing across various schemes similar to the ones found in the mutual funds domain, i.e. diversified equity funds, balanced funds and debt funds to name a few. Generally speaking, ULIPs can be termed as mutual fund schemes with an insurance component. However it should not be construed that barring the insurance element there is nothing differentiating mutual funds from ULIPs.

How ULIPs can make you RICH!

Despite the seemingly comparable structures there are various factors wherein the two differ. In this article we evaluate the two avenues on certain common parameters and find out how they measure up.

1. Mode of investment/ investment amounts

Mutual fund investors have the option of either making lump sum investments or investing using the systematic investment plan (SIP) route which entails commitments over longer time horizons. The minimum investment amounts are laid out by the fund house. ULIP investors also have the choice of investing in a lump sum (single premium) or using the conventional route, i.e. making premium payments on an annual, half-yearly, quarterly or monthly basis. In ULIPs, determining the premium paid is often the starting point for the investment activity. This is in stark contrast to conventional insurance plans where the sum assured is the starting point and premiums to be paid are determined thereafter. ULIP investors also have the flexibility to alter the premium amounts during the policy's tenure. For example an individual with access to surplus funds can enhance the contribution thereby ensuring that his surplus funds are gainfully invested; conversely an individual faced with a liquidity crunch has the option of paying a lower amount (the difference being adjusted in the accumulated value of his ULIP). The freedom to modify premium payments at one's convenience clearly gives ULIP investors an edge over their mutual fund counterparts.

2. Expenses
In mutual fund investments, expenses charged for various activities like fund management, sales and marketing, administration among others are subject to pre-determined upper limits as prescribed by the Securities and Exchange Board of India. For example equity-oriented funds can charge their investors a maximum of 2.5% per annum on a recurring basis for all their expenses; any expense above the prescribed limit is borne by the fund house and not the investors. Similarly funds also charge their investors entry and exit loads (in most cases, either is applicable). Entry loads are charged at the timing of making an investment while the exit load is charged at the time of sale. Insurance companies have a free hand in levying expenses on their ULIP products with no upper limits being prescribed by the regulator, i.e. the Insurance Regulatory and Development Authority. This explains the complex and at times 'unwieldy' expense structures on ULIP offerings. The only restraint placed is that insurers are required to notify the regulator of all the expenses that will be charged on their ULIP offerings. Expenses can have far-reaching consequences on investors since higher expenses translate into lower amounts being invested and a smaller corpus being accumulated. ULIP-related expenses have been dealt with in detail in the article "Understanding ULIP expenses".

3. Portfolio disclosure
Mutual fund houses are required to statutorily declare their portfolios on a quarterly basis, albeit most fund houses do so on a monthly basis. Investors get the opportunity to see where their monies are being invested and how they have been managed by studying the portfolio. There is lack of consensus on whether ULIPs are required to disclose their portfolios. During our interactions with leading insurers we came across divergent views on this issue. While one school of thought believes that disclosing portfolios on a quarterly basis is mandatory, the other believes that there is no legal obligation to do so and that insurers are required to disclose their portfolios only on demand. Some insurance companies do declare their portfolios on a monthly/quarterly basis. However the lack of transparency in ULIP investments could be a cause for concern considering that the amount invested in insurance policies is essentially meant to provide for contingencies and for long-term needs like retirement; regular portfolio disclosures on the other hand can enable investors to make timely investment decisions.

ULIPs vs. Mutual Funds

ULIPs Mutual Funds Minimum Determined by investment

the investor and amounts are Investment amounts can be modified determined by the as well fund house

No upper limits, Upper limits for expenses determined by the insurance Expenses company expenses chargeable to investors have been set by the regulator Quarterly Portfolio disclosure disclosures are Not mandatory* mandatory Generally permitted for free Entry/exit loads Modifying allocation asset or at a nominal cost Section 80C benefits are available on all ULIP Tax benefits investments have to be borne by the investor Section 80C benefits are available only on investments in taxsaving funds

* There is lack of consensus on whether ULIPs are required to disclose their portfolios. While some insurers claim that disclosing portfolios on a quarterly basis is mandatory, others state that there is no legal obligation to do so.

4. Flexibility in altering the asset allocation

As was stated earlier, offerings in both the mutual funds segment and ULIPs segment are largely comparable. For example plans that invest their entire corpus in equities (diversified equity funds), a 60:40 allotment in equity and debt instruments (balanced funds) and those investing only in debt instruments (debt funds) can be found in both ULIPs and mutual funds. If a mutual fund investor in a diversified equity fund wishes to shift his corpus into a debt from the same fund house, he could have to bear an exit load and/or entry load. On the other hand most insurance companies permit their ULIP inventors to shift investments across various plans/asset classes either at a nominal or no cost (usually, a couple of switches are allowed free of charge every year and a cost has to be borne for additional switches). Effectively the ULIP investor is given the option to invest across asset classes as per his convenience in a cost-effective manner. This can prove to be very useful for investors, for example in a bull market when the ULIP investor's equity component has appreciated, he can book profits by simply transferring the requisite amount to a debt-oriented plan.

5. Tax benefits
ULIP investments qualify for deductions under Section 80C of the Income Tax Act. This holds good, irrespective of the nature of the plan chosen by the investor. On the other hand in the mutual funds domain, only investments in tax-saving funds (also referred to as equity-linked savings schemes) are eligible for Section 80C benefits. Maturity proceeds from ULIPs are tax free. In case of equityoriented funds (for example diversified equity funds, balanced funds), if the investments are held for a period over 12 months, the gains are tax free; conversely investments sold within a 12-month period attract short-term capital gains tax @ 10%. Similarly, debt-oriented funds attract a long-term capital gains tax @ 10%, while a short-term capital gain is taxed at the investor's marginal tax rate. Despite the seemingly similar structures evidently both mutual funds and ULIPs have their unique set of advantages to offer. As always, it is vital for investors to be aware of the nuances in both offerings and make informed decisions.

MARKETING STRATEGIES OF LIC

LIC made a debut in the top 50 at No.39 in 2003 and rose to No. 18 in 2004 and in 2005, made it to the top 10 t No.6. Interestingly its rating has shot up. The following strategies have made LIC No1 in the entire service industry and No.6 in the overall brand rating LICs proactive approach to settlement has earned it a lot of goodwill. During the tsunami, LIC was the only one to set up a camp at the affected areas along with the list of policy holders and settled the claims immediately. It had earned LIC recognition in the Manila based Asia Insurance Review. Emphasis on market conduct and business ethics has contributed a lot to its success. The most critical area is quick claim settlement- The benchmark is that the policy holders ought to get post- dated checks before the date of maturity. In case of death claims , the time lag has been brought down from 90 days to 60 days, and in the near future it is recommended to be brought down to just 45 days. It has targeted both the urban and rural segments.50% of LICs agents are based in rural areas. With the help of the social security fund, LIC has covered even those families who are marginally above poverty line. It has increased the emphasis on value- added services through its online portal and allowed for premium collection through ATM machines and ECS.

 It has given due consideration to its internal structure and has been streamlined, besides this, the company ensures that it gets feedback from its agents, Customer Relationship Management (CRM) and planning managers. What really help LIC retain an edge over its competitors are its agents. It is paying more attention towards its agents than before and is offering a pretty good package. On the communication front, LIC has focused a lot on corporate advertisements commemorating with LICs golden jubilee and many others wiz reminding people who want a concession for taxation.

MARKETING STRATEGIES OF PROMINENT INSURANCE PLAYERS- A COMPARATIVE STUDY

LIFE INSURANCE CORPORATION OF INDIA
LIC is the leader in the insurance sector with around 83% market share. LIC has tied up with Corporation Bank and Vijaya Bank for distribution of its product. LIC has computerized and linked all 2048 branches. LIC was the first to introduce online premium payment facilities. LIC is focusing on rural market because of its established brand name.

ICICI PRUDENTIAL LIFE:

ICICI Pru. is the major competitor of LIC. It has the maximum market share among private players. Companies using tools like workstations marketing, corporate marketing, road shows and stalls in trade fair, loading, etc. Its strategy is to achieve scale in premium income and distribution force in shortest time. Focus is more on direct selling apart from communication and building personal relationships. Company is marketing at worksite and for corporate customers has adopted a multichannel distribution model. Company is selling its products as long-term investment plans.

MAX NEW YORK LIFE (MNYL):

Max New York Life is operating with 2500 agents spread in activities in India. It is using individual agents as its primary source of distribution. It offers flexible products with many options and riders. The company is using various methods like media advertising, event sponsorship, etc. and tools like direct marketing relationship building to generate awareness and build customer base.

MET LIFE:
Met Life is a global leader in the financial services and it has tied up with Geojet Infolin Technologies for marketing and distribution of its products in India. It has followed the strategy of phase-wise introduction of products in the market. It has bundle method of offering products which includes investment options ranging from insurance, equities, derivatives, mutual funds and TPOs The market segment on which MetLife is focusing is South India and J&K.

TATA- AIG:
The company is following mass marketing to cover as many as lives as possible in the initial years of its operation. It has expertise in assessing the risk covered.

BAJAJ- ALLIANZ:
It is giving competition to public sector general insurance companies. Its main focus is on automobile. Its advertisements are appearing in local newspaper, television and hording.

BIRLA- SUN LIFE:

It is focusing mainly on high net worth people so that higher sum assured can be taken up.

SBI STANDARD LIFE

Its products are simple It is doing branch wise segmentation. Average size of the policies is smaller.

HDFC STANDARD LIFE:

HDFC is the leader in housing finance in India and Standard Life is the UK market leader. The company is using direct marketing tactics to build HDFC brand and convincing the customer insurance as a protection tool.

WORKING RESULTS AND PROGRESS OF LIFE INSURANCE CORPORATION OF INDIA

For the year 2005-2006, the Corporation has widened its reach by registering annualized growth of 10.75% on policies, 20% on Sum Assured and 24.41% on Premium Income over the period of last two years. The Life Insurance Corporation has earned Rs.5800 crore profit in 2005-06 while its first year premium income during the period grew by a record 48% to Rs.18085 crore. Besides new products in existing categories, LIC has approached regulator IRDA for launching a micro insurance product for the rural poor.

POLICIES SUM ASSURED PREMIUM INCOME

Our surplus (profit) was Rs.5800 crore in 2005-06, LIC chairman A.K. Shukla said on the sidelines of the inauguration of LIC Zindagi Express, an exhibition showcasing LICs 50-year history on a train. LIC collected Rs.18085 crore as premium during the fiscal ended March 2006 by selling 3.17 crore policies compared to Rs.12170 crore collected by selling 2.39 crore policies in the same period last year. Shukla said LICs total investment in stocks is likely to increase to Rs.40000 crore from Rs.34000 crore at present. LIC, which is celebrating its Golden Jubilee year, has launched new products in life insurance, pension and annuity, and is now working on a micro insurance product. We have sent a micro insurance product to IRDA for approval, Shukla said, adding that it would be launched soon. He said LIC has also requested IRDA to allow it to partner with more than one general insurer for micro insurance due to largescale operations in the country.

GROWTH IN AGENCY ORGANISATION

The growth in the number of Agents from 7.92 lakh to over 9.60 lakh as at the end of the current year coupled with appointment of over 110 Corporate Agencies has contributed to the growth in the number of policies.

BEST EVER CLAIM PERFORMANCE

The settlement of claims is the best yardstick to judge the performance of any insurance company. LIC has shown best results in the area by settling 94.55 lakh claims. The claims performance has been improving year after year. Earlier, the outstanding claims ratio was 0.66% in terms of number of claims, the same has touched the lowest ebb at 0.23% during 2005-06 and this matches with the performance of any such insurance company in the world. The Corporation is committed to fulfill the objective of spreading the life insurance message to every nook and corner of the country by increasing the number of sales.

GROWTH OF LIC IN TERMS OF PREMIUMS

COMPANIES
LIC Bajaj Allianz ICICI Prudential HDFC standards SBI Life Birla Sun life Tata AIG Max New York Aviva Kotak Mahindra Old Mutual ING Vysya Reliance Life MetLife Sahara Life

First year Premium

05-06 share(%)

Growth (%) FY FY 05 06
-15.2 401.1 117.4 185.1 149.6 40.2 77.9 87.4 80 213 57.9 90 71 9.8 51.1 82.1

25645 2716 2637 1029 829 678 463 443 408 398 284 193 143 22

70.1 8 7.4 3 2.5 2 1.3 1.3 1.2 1.2 0.8 0.6 0.4 0.1

157.2 109.6 294.9 296.1 4.8 0.7

235.4 106.7 157.1 151.4 0 0

COMPANIES

Max New

HDFC

Kotak

Bajaj

Reliance

BONUS FROM LIC TO ITS POLICY HOLDERS FOR THE YEAR 2004-05
Bonus of Life Insurance Corporation of India was announced on 15th November, 2005 for its policy holders for the year 2004-05 pursuant to the Acturial Valuation as on 31st March, 2005. A surplus of Rs.13,904.21 crore emerged as a result of valuation. Out of the surplus declared, 95% i.e. Rs.695.21 crore is the share of Government of India. The number of in-force policies has gone up from 15.62 crore to 16.59 crore as on 31st March, 2005.

Birla Sun life

Sahara Life

30000 25000 20000 15000 10000 5000 0 -5000

REVERSIONARY BONUS RATES

Whole Life Policies-Rs.71.00 per thousand sum assured. Bonus on various plans per thousand sum assured for 16 years and above is as under. The bonus depends on the term of the policy. The bonus amount is higher for long term policies. Endowment Type Policies- range from Rs.45.00 to Rs.50.00. Money Back, Anticipated Endowment-Rs.41.00 (term 20 years) & Rs. 45.00 (term 25 years) Jeevan Surabhi Policies- Rs.42.00 (term 20 years) & Rs.50.00 (term 25 years). Jeevan Anand Plan- range from Rs.43.00 to Rs.47.00 Jeevan Rekha Plan- range from Rs.34.00 to Rs.40.00 Jeevan Anurag- range from Rs.28.00 to Rs. 30.00 New Jeevan Suraksha-I- range from Rs.18.00 to Rs.30.00 (%0 Notional Cash Option) New Jeevan Dhara-I- range from Rs.18.00 to Rs.28.00 (%0 Notional Cash Option).

FINAL (Additional) BONUS

In addition to the above Reversionary Bonuses, LIC has also declared Final (Additional) Bonus and Loyalty Addition to give add on value to those policyholders who keep their policies in force. The rates of Final (Additional) Bonus are up to Rs.1,400 per thousand sum assured depending upon term and sum assured of the policy for policies fulfilling the stipulated conditions. Also, as in the previous year, the Loyalty Addition in respect of Jeevan Shree policies maturing on completion of term up to 9 years in Rs.75.00 per thousand Sum Assured and with policy term 10 years at the rate of Rs.125.00 per thousand Sum Assured.

SPECIAL REVERSIONARY BONUS:

It may be mentioned that on the 1st September, 2005, the Golden Jubilee Year celebration was inaugurated by the Honble Prime Minister Dr. Manmohan Singh. On the occasion a Special Golden Jubilee Reversionary Bonus ranging from Rs.5 to Rs.50 per thousand sum assured was announced by the Honble Finance Minister Shri P. Chidambaram. That bonus was in addition to the bonus now declared.

INVESTMENTS IN LIC

Type of Investment

CENTRAL GOVT. SECURITIES STATE GOVT. & OTHERS ELECTRICITY (SEBs) HOUSING WATER SUPPLY AND SEVERAGE STATE ROAD TRANSPORTATION CORP. LOANS TO INDUSTRIAL ESTATES LOANS TO SUGAR CO-Ops DEVELOPMENT AUTHORITY ROADWAYS, PORT, RAILWAYS POWER GENERATION (PVT. SECTOR) MUNICIPALITIES TOTAL

INVESTMENTS UP TO (Rs. In Crores) 31.3.04 166939 37402 14805 20694 7111 1373 45 37 1 1272 6412 14 213477

INVESTMENTS IN LIC

STATE GOVT. HOUSING STATE ROAD LOANS TO ROADWAYS, MUNICIPALITI TOTAL

250000 200000 150000 100000 50000 0

CHAPTER -4 RECOMMENDATIONS AND CONCLUSION

CONCLUSION:
On the basis of my study of the subject, I would like to summarize the whole report by giving the following conclusions:

1. LIC still remains to be at the top by having a hold over 71% market share in the Indian market.

2. In terms of its products, LIC has introduced many new policies under various plans such as endowment plans, policies for women, whole life plans and many more. 3. LIC made the biggest achievement by introducing Unit Linked Insurance Plans (ULIPS) in the insurance market. Currently ULIPS are the most demanding policies of LIC. 4. LIC has brought a shift in its marketing strategies such as; it is now advertising all its new policies on various Medias. 5. LIC has made a step ahead and has made significant achievements in the rural sector. 6. LIC has always worked for providing security to all and with the coming up of Pension Plans in the recent years, LIC has been able to secure the future of the service class people in a better manner. 7. If we talk in terms of growth and progress then, LIC remains to be at No.1 position in the Indian Market and at No.6 in the world.

BIBLIOGRAPHY
BOOKS:
1. Mishra M.N; Principles of Insurance; Sultan Chand and Sons; 2007 2. Gupta P.K; Insurance and Risk Management; Himalaya Publishing House., 2004 3. Mittal Alka and Dr. S.L.Gupta; Principles of Insurance and Risk Management; Sultan Chand and Sons.,2007

JOURNAL:
1. Insurance Chronicle August 2007

WEBSITES:
1. www.licofindia.com 2. www.irda.com 3. www.google.com 4. www.wikipedia.com