Chapter I INTRODUCTION

1.1 Concept of Insurance

As the term insurance is related with risk, it will be better to understand what risk actually is before we define insurance .Risk is one of the main sources of loss which creates obstacles in every step of life of an individual. some times it is also said risk goes where people go of course human life is full of risk and people cant run away from it as risk is unpredictable and such risk causes great physical losses to people .in this case people can lose not only their property ,can lose their own life as well .the destruction of property or assets makes human suffered and if something happens to the bread earner ,person who earns for the family ,it will be hard for the other reliable family member to get survive such natural disaster or accidental events may be due to fire ,earth quake ,flood ,war, theft ,sink of ship ,accident etc .in fact those who wants to minimize such risk seeks certain mechanism to cover such losses an insurance is the only method that can avoid losses to some extent and people can be secured from risk somehow. Insurance is one of the major risk handling methods so that people can feel free to operate their business. Insurance is an instrument to spread the loss caused by a particular risk over a number of persons who are interested to accept risk for certain return. In other words insurance is a co-operative device which provides security against ones life or property. In this modern world, it is hard to live a normal life without insurance. Insurance collects a small amount called premium from the people and compensated to those who suffer. In this modern world, it is hard two concepts under insurance which are as follows:
1.1.1)

Traditional Concept

According to this concept insurance is defined as co-operative devices to spread the loss among the entire member. According to D.S. Hansell Insurance may be defined as the social device providing financial compensation for the effects of misfortune. The payment being made from accumulated contribution of misfortune. The payment being made from accumulated contribution of all parties participating in the scheme
1.1.2)

Modern Concept

According to modern concept insurance is a contract where. The insured must have an insurable interest in the subject insurance. Insurer charges a certain sum called premium as consideration.
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 Insurer will make the payment in a certain definite losses. According to W.Peterson Insurance is a contract by which one party for compensation called premium. Assumes particular risk of the other party and promises to pay to him or his nominee a certain sum of money on a specified contingency. In brief, we can say that insurance is the risk distributing devices where the insured pays a certain sum called premium to the insurer and the insurer agrees to pays security upon a particular risk within a specified period of time. There are mainly two broad sectors of Insurance: a) Non-life or general Insurance It deals with the insurance of the things not of human such as fire, marine motor, property accident, engineering, aviation. Miscellaneous, etc. b) Life insurance It deals with the insurance of human life, Life insurance is an agreement between insurer (Insurance co.) and the insured (person who does the life insurance) where insured pays a sum called premium to the insurer and the insurer promises to bear the risk that comes in insureds life for a specified period of time. According to R.S Sharma life Insurance may be defined as a contract, where by the insurer in consideration of premium, paid either in lump sum or in the periodical installments, undertakes to pay an annuity or certain sum of money, either on the death of the insured of on the expiry of certain no. of years. Actually to say, life insurance business is very important in economies as it compels people to do saving and it is a good sources of investment as well thats why the trend of life insurance business is increasing in our country too.

1.2

Historical Background Of Insurance In Nepal

One has to face uncertain risk in each stage. Such risk may be financial loss or loss of own life that really that really makes people effected .the only device to get relief from risk is insurance which some how makes human life worthy as insurance avoids the losses from uncertain risk .Insurance also can be said as device by which people can feel free to do any activities. The history of insurance business is not so long in Nepal as comparison to other countries. The scope or insurance was also narrow .therefore; no national companies were engaged in the business of the business of insurance before
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2004 B.S. The first established insurance business Co. was Nepal insurance and transport Co. ltd which established at 8th Ashwin 2004 B.S. but it was limited in conducting only general insurance thats why the insurance activities of Nepal were conducted by Indian insurance co. up to the year 2025 .those companies were successful in collecting amount of premium across the boarder and it is the development of country. So considering this on 1st poush 2024 B.S under Nepal co. act 2021 .Rastriya Beema sanstha (Pvt.) ltd was established .Under the ownership of HMG. In the establishment period it performed only non life insurance business and later on after the 5 years of its Estd. period i.e. on 2029 B.S. it is started doing the life insurance business in Nepal. Many insurance companies conducting the life and non life insurance business in Nepal are as follows:
1. Nepal insurance Co .Ltd. 2. The Oriental insurance co .Ltd 3. Rastriya Bema Sansthan 4. National Insurance Co. Ltd 5. Nepal life insurance Co. Ltd 6. National life and general insurance Co. Ltd 7. Saving bema and credit security corporation Co. Ltd 8. Himalayan general insurance Co. Ltd 9. United insurance Co. Ltd 10. Premier insurance Co. Ltd 11. Neco insurance Co. Ltd 12. Sagarmatha insurance Co. Ltd 13. Alliance insurance Co. Ltd 14. N.B insurance Co. Ltd 15. Life insurance corporation ltd 16. American life insurance Co. Ltd 17. Prudential insurance Co. Ltd 18. Everest insurance Co. Ltd

As the passage of time, today number of insurance companies has been established. This can be considered as the golden success in the insurance business history of Nepal. Such insurance companies are contributing a lot in the economic growth of the country. The insurance business that has nearly six-decade old history in Nepal has witnessed a significant growth in the recent years. In the last fiscal year, different insurance companies registered a total transaction of Rs 14.4 billion,

according to the Insurance Committee. According to the statistics provided by the committee, life insurance saw a transaction of Rs 8.9 billion and no-life insurance Rs 6.5 billion. Over 16 companies are providing non-life insurance service while eight companies are providing life insurance service. Rastriya Beema Sansthan provides both life and non-life insurance services. In the previous fiscal year, the 25 companies had registered a total transaction of Rs 10.9 billion including Rs 6.5 billion in non-life insurance and Rs 4.4 billion in life insurance. The private sector Nepal Insurance Company had begun the insurance business for the first time in Nepal on Jestha 4 2008 BS through non-life insurance. Chairman of the Insurance Committee Dr Phatya Bahadur KC said increased awareness among the people about the risks associated with life and goods has been leading to a growth in insurance business. KC said there is still lack of positive attitude about insurance while it has also not been on governments priority and insurance is yet to come within the reach of commoners. Besides, the lack of transparency also hampered monitoring in the sector in the past, he said. Rastriya Bema Sansthan recorded transaction of Rs 1.542 billion including Rs 1.2 billion in life insurance and Rs 340 million in non-life insurance in the last fiscal year. In the previous fiscal year, Beema Sansthan has recorded business of Rs 1.026 billion from life insurance and Rs 190.8 million from non-life insurance.

Administrator at Beema Sansthan Binod Aryal said the reach of insurance to rural population is yet to grow even though insurance business is growing in the urban centers. He said keeping in view with the little access of rural population to insurance, the Beema Sansthan is launching different insurance schemes like health insurance, crop insurance and livestock insurance. The Rastriya Beema Sansthan began its business in 2024 BS and it has expanded its services to all 75 districts. It has been providing life insurance service to over 75,000 employees. From both life and non-life insurance, the company has been earning around Rs 350 million premium every year. Economist Radheshyam Malakar said insurance companies play a great role in collecting the capital spread across the country. With awareness about the accidents and risks associated with industrial sector and risks posed by natural disasters, many people have started understanding the importance of insurance.

1.3 Study of life insurance business

Study of life insurance business some how provides information. Benefits and need of insurance .the interested people night get the knowledge of insurance thoroughly although they were in confusion before. From this report, the concerned organization realizes their weakness &the insurance board i.e. Beema Samitee can suggest them to do the improvement, This field report let us know the mobilization of resources & their impact in the economy of the country from the life insurance business .Most of all, the study of insurance policy of NLIC reveals the weakness & problem in the insurance business so that major remedies can be searched.
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Selection of the topic study of life insurance business may due to followings: To show the trend of life insurance business. To make people convince a about the need & importance of insurance. To disclose the weakness &give appropriate suggestion for improvement. To know the difficulties faced by Nepalese insurance business. To give entire knowledge of life insurance.

1.4 Problem of life insurance business in Nepal

Even if the insurance business started a long time ago in Nepal, till now many people do not know even the meaning of insurance .since most of the people exist here are illiterate .they do not know the importance of insurance .so no doubt, a lot of problems have been facing by life insurance companies some of the problems faced by the insurance industry of Nepal are shown in the next page.

1.4.1 Lack of insurance awareness

In the context of Nepal ,people are still unaware of life insurance policy .only few have the knowledge of life insurance polices and rest are unconscious about its polices .the future of life insurance is dark until people are introduced about its polices . In order to expand the life insurance business, people should be given the entire where cab we get the life insurance polices if we are able to make people realize about the benefits and importance of life insurance in the real life then the future of life insurance business can flourish.

1.4.2 Lack of compulsory education about insurance

In the education system of our country ,there is not given the introduction of insurance in school level .this subject is being taught only in the campus level ,which is not sufficient to get the whole knowledge about life insurance ,which make barrier in the growth of insurance business.

1.4.3 Limited market

For expanding life insurance business, wide market is necessary .but since Nepal itself is a small country; its areas of trade and industry are also small. The life insurance business has not yet been able to reach to the rural areas .it is concentrated only in urban areas and the villagers are still unaware of life insurance and in this situation it is not possible to develop the insurance business.

1.4.4 Low purchasing power

Most people of neap are living under poverty .so majority has less purchasing power in this condition no one can think of insuring themselves as they need to pay the premium compulsorily to the insurer . Their daily income is not sufficient of daily survival so cant think of insurance at the prevailing income level.

1.4.5 Lack of re-insurance company

It is very sad for us that no re-insurance companies have been established in Nepal .Nepals insurance companies has re-insurance contract with foreign companies .so countrys premium amt is going outside the country .due to the flow of currency to foreign countries. Devt. of life insurance business has been affected so in order to remove this defect, it is necessary to establish re-insurance companies in Nepal.

1.4.6 Lack of advertisement:

Of course, we have seen a lot of advertisement of a product and services that launch in the market but till now we havent fount any insurance company doing proper advertisement about life insurance and its benefits.

1.4.7 In lack of compulsory insurance

Other developed countries insurance starts as the person takes birth insurance is compulsory there but in our country, it is hard to find the person who has insured his life, which is creating problem in the development in the development of life insurance business. 1.4.8 Complicated claim procedure We hear so many complain in the claim of loss from insurance companies the claim procedure is very complicated and is very difficult to get the compensation in time. As a result people may build negative attitude towards insurance companies. 1.4.9 Problem of unemployment Unemployment is the major problem in the context like Nepal. Since there is a great problem of unemployment ,doesnt arise the question of insuring themselves as it will be difficult for unemployment people to maintain the daily expenditure of their life ,they cannot paid the premium amt regularly to the insurance company.

1.5 An Overview On Nepal Life Insurance Company (NLIC)

Nepal Life Insurance Company was established under the Company Act 2053 and Insurance Act 2049 as a public limited company on 2058/01/21 (04/05/2001). Nepal Life Insurance Company is the foremost life insurance company established by private investors. The promoters of the company are a group of well known businessmen and business houses of Nepal. Within the eleven years of operation the Company has set up an excellent business record and has a strong financial position. The company has an authorized capital of Rs. 100 Crore. issued Capital of Rs 50 Crore and Paid-up Capital of Rs 37.5 Crore. As on Ashoj 2069 the company has insured 4, 85,541 under conventional policies worth Rs. 5329 Crore and 3, 34,460 Foreign Expatriate policies worth Rs. 16273 Crore. Out of the total premium collected the company has invested Rs. 1132 Crore as per guidelines of Beema Samiti. The company has insured itself with well-know reinsurance company "Hannover Re Life Reinsurance Company", Germany for conventional policies and "SCOR Global Life", France for Term Assurance Foreign Expatriate policies.

1.5.1 Visions And Missions:

To endeavor through the noble institution of Life Insurance in making every family economically safe and secure whereby every citizen of Nepal may contribute his might in building a healthy, prosperous, strong & Vibrant Nation. To cater to financial and Social needs of every segment of society by designing differentiated and innovative insurance instruments. To provide after sales service to customers that can be hailed as the best.

1.5.2 How is NLIC Different From Other Insurance Companies?

Being in the business of selling life insurance products it is performing the same job as the other insurers dealing with "Life Insurance". However, Nepal Life Insurance Company has its own identity because of the mission and manner for which it is working. The company is working with a time bound strategy to fulfill its vision of spreading message of insurance to every home and to contribute substantially in making Nepal an economically healthy and vibrant nation. Apart from spreading the network of branches all over Nepal the company plans to make a quantum jump in number of agents and to provide them adequate training for providing knowledge and skill, so that the company can reach and depth in the market. The company is focusing on providing qualitative services of International Standard. Our ambition is to provide across the counter services in all its operations.
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This ambition cannot be fulfilled without the help of information technology. The company has strong IT infrastructure. All Branches of Nepal Life has been connected through wide area networking to provide better customers service.

1.6 Organizational Structure

The Company is having composition of seven directors, five from promoters, one public director and one independent director. The chair person is elected among the directors .The operating wing of the company is headed by the Chief Executive Officer, in the corporate office. He is assisted by a Senior Deputy General Manager, Assistant General Manager and departmental heads of underwriting and policy servicing, finance, information technology, personnel and marketing. The branch offices which are the operating offices of the company are headed by the branch managers who are assisted by marketing and administrative staff in the office and by a network of agents in the field. The company plans to reach every segment of the population geographical, social, professional etc., so as to provide social security to every eligible citizen. The board members of NLIC are as follows. Chairman Managing director Director Director Director Director Independent Director Mr. Pursatuam Lal Sanghai Mr. Govinda Lal Sanghai Mr. Ram Avtar Agrawal Mr. Ramesh Gupta Mr. Prakash Mundara Mr. Harish Chandra Subedi Mr. Kamlesh Kumar Agrawal

Nepal life insurance Companys head office is situated in heritage plaza Kathmandu Nepal. It has many branch offices. Some of them are: 1. Kathmandu Branch 2. Banepa Branch 3. Narayanghat Branch a. Gorkha b. Kawasoti 4. Heatauda Branch 5. Nuwakot Branch 6. Lalitpur Branch 7. Balaju Branch 8. Naxal Branch 9. Birgunj Branch
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10. Biratnagar Branch 11. Birtamod Branch 12. Urlabari Branch 13. Lahan Branch a. Rajbiraj b. Siraha c. Gaighat 14. Phidim Branch 15. Janakpur Branch 16. Chandranigahapur Branch 17. Gaur Branch 18. Dharan Branch 19. Mahendranagar Branch 20. Dhangadi Branch 21. Nepalgunj Branch a. Humla b. Gulariya 22. Surkhet Branch 23. Butwal Branch 24. Dang Branch 25. Pokhara Branch 26. Palpa Branch The company also has many sub-sell branch offices all over the country to facilitate the people of the remote areas. NLIC has been providing employment of the country and I think it has contributed its best to solve unemployment of the country somehow. Similarly, around 2024 agents are involved in creating the awareness of insurance business/polices that NLIC has conducted In the fiscal year 2068/69 NLIC has been increasing polices of 20% from last year. From this, what we can say is, it is in the prosperity stage and also the insurance agents are being able to convince to prospects to get the insurance business. The main aims of NLIC are as follows. 1. To run successful and profitable insurance business and maintain its position appreciable in the market. 2. To provide security are reasonable insurance premium 3. To provide adequate return to shareholders 4. To develop manpower. 5. Contribute towards betterment of nations and national

6. Lastly, to provide first class insurance services.

1.7 Types of insurance policies sold by NLIC

NLIC sells the following life insurance polices for the sake of it clients.

1.7.1 Endowment life assurance policy

The main objective of this type of life insurance policy is to encourage the insured towards saving and to providing financial support to the family members of insured who rely on him. In this type of insurance, a certain amount of money is paid in installment for a certain period of time/this premium amt. need to be paid till the expiry of the period of insurance but in case if the insured dies before the period . the premium amt need not be paid and insures pays the insured amt .to insured if he is alive till date but if the insured is dead then the amt. is paid to his beneficiaries.

1.7.2. Childs education and marriage endowment life assurance policy

Actually this type of insurance is done by parents in order to arrange the sum of money to fulfill their educational need and for their educational need and for their marriage. This type of insurance really helps to minimize the burden to get lump sum for further education and marriages as well. like others in this type of insurance also insured need to pay premium for a certain period if he is alive but if he dies before the completion of the stated period then premium shouldnt be paid but the insurer pays the insured amt. only after the completion of the period and in case if child is dead before the expiry of period then the policy can be transferred to another child.

1.7.3. Anticipated endowment life assurance policy

In other life insurance policies ,insured amt is paid only after the completion of the insurance period but in this policy insured amt is paid in advance as well after the completion of certain years .this policy is available for the term of 15 ,20 and25 years period only. Here also if the insured is dead before the completion of the period then the remaining premium shouldnt be paid and the beneficiaries is paid the whole insured amt .although the insured had already taken some percentage in advance.

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1.7.4. Endowment with accidental double benefits life assurance policy

In this type of insurance if the insured dies directly by the accident then the beneficiaries of the insured is paid the double amount of the insured amount but the amount is only up to 1 lakh

1.7.5 Level term life assurance policy

Those who are involved in the risky job and also having the weak financial condition do this type of insurance in order to get secured from unfortunate happenings .under this insurance policy the insured feels that his beneficiaries get insured amt .although he dies .this policy has found popular among people as the premium in minimum.

1.7.6 Single premium anticipated plan

It is also like as anticipated endowment plan .it is only for 10 years to 15 years only. In this policy premium has to pay whole money at once in this policy premium has to pay insured amount as the term of his period.

1.8 Objective of study

This report has been prepared specially to see the scope of life insurance business in Nepal and the problems that has been facing by Nepalese insurance businesses especially by NLIC. NLIC has raised the more scattered funds through the life insurance policy. To know the scope of life insurance business. To evaluate the trend of life insurance business. To make people realize the need and importance of insurance. To know the amt. of premium collected form life insurance. To know the weakness & give appropriate suggestion for improvement. To know the present situation of life insurance business in Nepal.

1.9 Justification of study

Since Nepal is one of the least developed countries, may people still dont know the importance and benefits of insurance. So I choose the topic Life insurance business of NLIC among many other topics in other to provide so me information about life insurance. In the present, of course, there are many companies that have been registered in the Beema Samittee (Insurance board) to run the life insurance businesses in Nepal. So it seems to be competition among them. From the
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companys point of view, the key to get success in relation to other companies is premium. So premium is the important factor that brings fluctuation in the activities of the company .Therefore, each insurance co .endeavors a lot to get more contract i.e. proposals but different factors affect them to accept the proposal & also many other things relating to insurance are the curiosity that I want to know .Besides, the great interest on insurance forced me to write the report on this topic. So I have strived, the great interest on insurance forced me to write the report on this .So I have strived a lot to study on this topic.

1.10 Research methodology

The research has been designed to extent of life insurance business conducted by NLIC. The research design has been analyze to show the trend of life insurance business & its problems. Secondary data are the base of this report .All the available data used in this report is secondary. Most of the data are collected from NLIC. How ever .The following source has been used to collect required data about NLIC. Annul reports of NLIC Records and bulletins of the concerned area Relevant previous studies Reports of bema samitee Data collection procedure The required data, facts & figures have been obtained from the office of NLIC & insurance board. The flowing procedures have been done while doing this study. 1. The obtained data were tabulated 2. The tabulated data were presented and analyzed 3. Conclusions were made on the basis of analyzed data

1.10 Limitations of study

1. Though most of the personnel from the company were very co-operative in providing the necessary facts and data, at many times they were quite reluctant to provide certain data, which they considered, was company's secrecy. 2. The study of data is limited to only 4 years period. 3. Detail study could not be done due to limitation of time.

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4. This report has been made on the basis of the course of BBS 3rd year program so this report will not be precise. 5. Basically, the study deals with NLIC so it may not be applicable to other insurance companies. 6. All sufficient data werent available therefore the secondary data from NLIC itself are the limiting factor. I hope that keeping these constraints in mind the reader will find this report informative and useful.

CHAPTER II
13

PRESENTATION AND ANALYSIS OF DATA

The main objective of this chapter is to do the performance evaluation of life insurance business in the context of NLIC. Here we analyze premium income, investment of life insurance premium fund of NLIC, commission paid to agents, advertisement and publicity expenses and policies issued by NLIC.

2.1 Premium collection

Actually the main source of earning of the insurance co. is premium .so the success of the co. depends upon how much the premium amount they can collect. Premium can be collected much if the co. is able to sell the no. of polices. The following table shows the premium collected by NLIC.

Premium income Fiscal year 2064/65 2065/66 2066/67 2067/68 Life insurance premium 11073165 80681204 111656439 162495419 Table no. 1 % increase (decrease ) 628.6% 38.392% 45.53%

Source: Annual Report of NLIC

premium Amount 162495419 200000000 111656439 150000000 80681204 100000000 50000000 11073165 0 2064/65 2065/66 2066/67 2067/68 Fiscal year

premium

Figure No.:1

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The above table shows the premium collection from the above table, the premium income for the fiscal year 2064/65 RS.11073165 .in the fiscal year 2065/66 it has increased to RS. 80681204. Similarly, on fiscal year 2066/67, 2067/68 it has increased to RS.111656439 & 162495419. From the table we knew that the life insurance business is being accepted by the society as the premium amount is being increased every year. The above figure shows that the % premium on fiscal year 2065/66 has increased by 628.61% which is satisfactory. Similarly the percentage of the increment somehow has decreased but the premium has been increased in fiscal year 2066/67 and 2067/68.

2.2 Commission paid to agents

Agents are the heart of the insurance business as the insurance business increases if agents are able to convince to the prospects and sold the policies. So sufficient commission to them can increase the insurance business some how. Following table and chart shows the amount of commission paid to agents of NILC.

Commission paid to agents Table No.:2 %increase 21.11 86.175 104.82

Fiscal year 2064/65 2065/66 2066/67 2067/68

Commission 1624648 1967755 3663479 7505706

Source: Annual Report of NLIC

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commission
Amount 10000000 5000000 1624648 1967755 3663479 commission 7505706

0
2064/65 2065/66 2066/67 2067/68

Fiscal year
Figure No.:2
The above chart and table shows the commission paid to agents. From the table we can see the commission paid to agents. From the table we can see the commission to agents is in increasing trend. In the fiscal year 2064/65 the commission was RS.1624648. For fiscal year 2065/66 the commission was RS.1967755 which was increased by 21.11%. Similarly, in the fiscal year 2066/67 the commission was RS. 3663479 which was increased by 86.17% .In the fiscal year 2067/68 the commission is RS. 7505706. In this year commission has increased in high percentage. This increasing trend of commission paid to agents shows that the agents are able to convince to prospects to sell the policy.

2.3 Advertisement and publicity expenses done by NILC

In this growing age of business, it is necessary to advertise the product and services of the co in order to survive in the competition. Advertisement helps people to know about the services that NILC has launched and it can get success to sell the life insurance policies. So advertisement let people know about the product and services of any organization. So here I am trying to show the impact of advertisement in selling life insurance polices in the context of NLIC for the following 4 years.

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Advertisement expenses
Table No.:3 Advertising % increase expenses 41538 610125 1368.83 1382127 126.53 889841 -35.68 Source: Annual report of NLIC
advertisement 1500000 1000000 Amount 500000 0 2064/65 2065/66 2066/67 2067/68 Fiscal year 41538 610125 1382127 889841 advertisem

Fiscal year 2064/65 2065/66 2066/67 2067/68

Figure No: 3

From the above table we can say that the advertisement expenses has increase in 2065/66 with 1368.68% and 126.53 % respectively in 2066/67 and in 2067/68 it has decreased with 35.68%. Here we can say that NLIC has spent huge amount in advertisement in year 2066/67. Sometimes it had spent only few amounts in advertisement. Same had happened in year 2064/65 where NLIC spent only Rs.41, 538. It is now clear from the figures that whenever NLIC spends money in advertisement the premium rises. The increase in advertisement cost had increased the premium. This can be seen in the fiscal year 2065/66 where the rise in premium as well as rise in advertisement cost is highest among other fiscal years i.e.1368.83% increase in advertisement cost brought 628.6% increase in premium. Finally we can say that NLIC need to allocate adequate budget in order to get success and it should check and evaluate the effectiveness of advertisement by checking the policy holders whether they have increased or not.

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2.4 Policy issued by NLIC

To evaluate the trend of life insurance business of NILC policies issued can be used .More the number of policy issued, more it gains popularity. We can understand about the policy from the table given below.
Table of Total Policy

Table no.:4
Fiscal year 2065/65 2065/66 2066/67 2067/68 Total policy %increase 2157 13000 502.68 19025 46.34 21375 12.35 Source: Annual report of NLIC

Amount

Total policy 19025 21375 Total policy

25000 20000 15000 10000 5000 0

20 64 /6 5

13000 2157
20 65 /6 6

20 66 /6 7
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Fiscal year
Figure No.:4

From the above table we can know that the total policy issue by NLIC for the above four year. Here from the above figure we can know that it has been increasing its policies day by day. In the fiscal year 2064/65 it has issued 2157 policies. Similarly in fiscal year 2065/66, 2066/67 it has issued 13000, 19025 policies respectively. In the fiscal year 2067/68 it has issued 21375 policies which is more satisfy. Here we find the policy issued has increased even the other life insurance companies. Therefore no one can ignore its attempts towards the insurance business.

20 67 /6 8

2.5 Investment of fund done by life insurance department of NLIC

Since profit maximization is the major objectives of the company, they used to invest net premium amount in different sectors by analyzing risk the sectors are Fixed deposit Loan to policy holders Others The following table shows the investment of fund in different sectors done by NLIC:

Table no.:5
fiscal year 2064/65 2065/66 2066/67 2067/68 Fixed deposit 2617869 16255179 24380505 27391577 Interest on policy 1700000 2947295 Total 2617869 16255179 26080505 30338872

Source: annual report of NLIC

Investment on fixed Deposit and interest on policy

30000000 27391577 25000000 24380505 20000000 16255179 Amount 15000000 10000000 5000000 2617869 1700000 2947295 0 2064/65 2065/66 2066/67 2067/68 Fiscal year

Fixed depositt Investment on policy

Figure No.:5

An investment made by NLIC in fiscal year 2064/65 in fixed deposited was Rs.2617569 but in this year NLIC did not invested on any policy. In 2065/66 investment of RS 16255179 was done in fixed deposit. This year also no investment was made on any policy.

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Similarly in 2066/67 invested of 24380505 was invested in fixed deposit which was more than year previous fiscal year. This year the company invested amount of Rs. 1700000 on policies. Investment of NLIC on 2067/68 in fixed deposited was RS27391577 but in this year they have invested in interest on policyRs.2947295. So the total investment difference is Rs. 30338872.

2.6) Balance Sheet of NLIC as on Asadh 2068 B.S

Particulars Sources Paid up capital Reserve & Surplus Life Assurance Fund Catastrophe Reserve Long term loan & Borrowing Total Sources Uses Fixed Assets (Net) Long Term investment Policy Loan Other Long Term Loan Current Assets, Loans and advances: Cash and Bank Balance Short Term Investment Other Short Term Loan Other Assets Total (A) 104,994,673 146,592,007 380,065,468 403,402,868 375,000,000 36,854,186 375,000,000 34,827,639 Current Year Previous Year

7,653,368,402 5,525,319,707 -

8,065,222,588 5,935,147,346

6,175,400,386 2,029,430,870 476,191,046 52,528,217 307,797,774 36,562,462

2,122,161,527 3,119,024,380 1,522,467 341,179,837 1,388,544 211,404,844

2,569,858,504 3,478,409,775

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Current liabilities and provisions: Current Liabilities Provision for Unexpired Risk Claims Payable Other Provision Total (B) Net Current Assets C = (A - B) 1,432,380,416 231,288,470 100,038,155 48,379,258 116,007,525 57,657,855 46,439,686 20,892,246

1,696,805,354 356,278,257 873,053,150 3,122,131,518 27,785,906 8,035,948

Miscellaneous Expenses (To the extent not written off) 31,546,046 Loss Transferred From Profit & Loss Account Total Uses 76,438,275

8,065,222,588 5,935,147,346

Source.:www.nlic.com.np/nepallife-bs-2067-68.php

Chapter III

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SUMMARY, CONCLUSION AND RECOMMENDATION

3.1 Summary
Among all other insurance policies, life insurance is the most important branch as it deals with the life of a person which is the value assets of every family. Human life is surrounded by risk. Because of the risk around the man people the man people cant fee free to run the activities smoothly. Man is mortal. One cannot run away from death. So the death of a person really affects in family members especially the death of bread earner causes a great financial loss which makes difficulty to the dependent members to run their life as usual. In this situation people seeks the devices to secure from such losses and life insurance can such the problems a bit. Insurance is defined as a social device providing financial compensation for the effects of misfortune. Insurance is also a country by which the insurance company promises to pay the stated or certain amount of money on specified contingencies to the insured by which the company charges the amount called premium from the insured. Because of life insurance if any unexpected event happens to the insured the person who insured his own life the beneficiaries can get financial support from the insurance company on the other hand insurance is the means of compulsory saving. People pays the premium amount regularly till the date of insurance contract and can get a huge amount after the expiry of the insurance contract and can use that amount for the purpose of childrens education marriage etc so from the insurance one can feel safe and can do progress in his life. Life insurance really has innumerable significance so although the size of insurance market is very small in Nepal. Its popularity is increasing day by day. In context of Nepal most of the companies are concentrated only to city so the people of remote areas is the major weakness of company in order to success firstly company needs to give equal priority to all the citizens of the country therefore important steps must be taken by NLIC to develop life insurance business in Nepal.

3.2 Conclusion
Life insurance is important not only in reducing the risk I human life but it is also a medium of compulsory saving company accumulates the scattered amount and resources and invests in the productivity sector which helps to improve the economic conditions of the county from the above study we can conclude that as

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the premium amount increases profit of the company will increase and vice versa so the company so take important steps to make the promotional activities to sell the polices. Although the company is concentrated only in the cities in present, it can expand its branches to the other remote parts of the country, which definitely creates employment opportunities. The performance of NLIC makes direct impact of the economic growth of the country as it invests the collected amount in government securities and fixed deposit account so it can e concluded that life insurance plays a vital role in the development of national economy. In present context Rastriya Beema Sansthan, NLIC Nepal Life Insurance Company, American Life Insurance Company is conducting life insurance business in Nepal. Nepal life insurance Co. and American life insurance Co. are the newly estd.

3.3 Recommendation
From the above study following recommendations can be drawn in prove the position of the company.
1. First of all company need to bring the policies and programs according to

need of prospect fro that it needs to conduct the researches to know their need.
2. Advertisement done on insurance is not satisfactory in order to success.

Popular Medias like TV, Radio, newspapers etc should be used to show the benefits and importance of insurance to the people.
3. Company is unable to provide services to all the parts of the country so its

needs to open it branches to rural areas as well.

4. As agents take part directly in the insurance business, NLIC should

motivate them by giving different types of facilities who brings more businesses.
5. Training and seminars should be held to make the agent more experienced. 6. The financials reports should be published in the time so that it will be

easier for the people to make decision whether to buy the policy from NLIC or not.
7. Due to the lack of re-insurance company in Nepal, countrys income is

going out of border which is financial loss. So in order to get secure from such losses, re-insurance company should be established.
8. New types of policies should be introduced to attract the prospect.

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9. Agents shouldnt be centralized in the urban areas.

10. Researches should be done by the expertise of the related field.

Bibliography
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 Paul, R.R. Money Banking and International Trade (1998) Kalyani Publishers, New Delhi.
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ANNUAL REPORT: Annual report of NLIC

Others:
www.nlic.com.np www.beema.com.np

http://bsib.org.np/

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