DECLARATION
I Leander Rodrigues , student of MBA(FINANCE) OF NEVILLE
WADIA INSTIUTE OF MANAGEMENT STUDIES & RESEARCH,PUNE
,declare that project titled A STUDY ONINSURANCE (LIFE INSURANCE
CORPORATION) was carried out by me in partial fulfillment of MBA program
under SAVITRIBAI PHULE PUNE UNIVERSITY
The project was taken as a part of academic curriculum as per UNIVERSITY
rules and norms by no commercial interest or motives. It is my original work and
not submitted anywhere else for other purpose earlier
DATE:
PLACE:
Signature Of The Student
LEANDER LOUIS RODRIGUES
(SPECIALISATION: FINANCE)
ACKNOWLEDGEMENT
I would like to express my gratitude towards our
PROF.DR ABHAY KINAKAR for the support
throughout the entire curriculum and our subject
teacher who has guided me throughout the report and
for his extended help and corporation they have been a
consistent source of inspiration and encouragement in
designing out the study.
I am grateful to all repetitive people who have guided me
throughout the project
LEANDER LOUIS RODRIGUES
MBA (SPECIALISATION: FINANCE)
Table of Content
SR.NO TOPIC
1 INTODUCTION 5
2 COMPANY PROFILE 6
3 CONCEPTUAL THEORY 7
4 RESEARCH METHODOLOGY 21
5 DATA ANALYSIS 38
6 COMPETITION 42
7 FINDINGS 52
8 LEARNINGS 55
9 SUGGESTIONS 57
10 BIBLOGRAPHY & REFERENCES 59
INTRODUCTION
Everyoneis exposed to various risks. Future is very uncertain,but there is
way to protectone’s family & make one’s children’s future safe. Life
Insurance companies help us toensure that our family’s future is not just
secure but also prosperous.Life Insurance is particularly important if you are
the sole breadwinner for your family. The loss of you and your income could
devastate your family. Life insurance will ensurethat if anything happens to
you, your loved ones will be able to manage financially. This study titled
“Study of Consumers Perception about Life Insurance Policies” enablesthe
Life Insurance Companies to understand how consumer’s perception differs
fromperson to person. How a consumer selects, organizes and interprets the
service qualityand the product quality of different Life Insurance Policies,
offered by various LifeInsurance Companies. Insurance is a tool by which
fatalities of a small number are compensated out offunds (premium payment)
collected from plenteous. Insurance companies pay back forfinancial losses
arising out of occurrence of insured events e.g. in personal accidentpolicy
death due to accident, in fire policy the insured events are fire and other
alliedperils like riot and strike, explosion etc. hence insurance safeguard
against uncertainties.It provides financial recompense for losses suffered due
to incident of unanticipatedevents, insured with in policy of insurance.
Moreover, through a number of acts ofparliament, specific types of insurance
are legally enforced in our country e.g. third partyinsurance under motor
vehicles Act, public liability insurance for handlers of hazardoussubstances
under environment protection Act. Etc.
COMPANY PROFILE
Insurance is a means of protection from financial loss. It is a form of risk
management primarily used to hedge against the risk of a contingent,
uncertain loss.
An entity which provides insurance is known as an insurer, insurance
company, insurance carrier or underwriter. A person or entity who buys
insurance is known as an insured or policyholder. The insurance transaction
involves the insured assuming a guaranteed and known relatively small loss
in the form of payment to the insurer in exchange for the insurer's promise to
compensate the insured in the event of a covered loss. The loss may or may
not be financial, but it must be reducible to financial terms, and usually
involves something in which the insured has an insurable interest established
by ownership, possession, or preexisting relationship.
The insured receives a contract, called the insurance policy, which details the
conditions and circumstances under which the insurer will compensate the
insured. The amount of money charged by the insurer to the insured for the
coverage set forth in the insurance policy is called the premium. If the
insured experiences a loss which is potentially covered by the insurance
policy, the insured submits a claim to the insurer for processing by a claims
adjuster. The insurer may hedge its own risk by taking out reinsurance,
whereby another insurance company agrees to carry some of the risk,
especially if the risk is too large for the primary insurer to carry.
CONCEPTUAL THEORY
WHAT IS INSURANCE?
It is a commonly acknowledged phenomenon that there are countless risks in
everysphere of life .for property, there are fire risk; for shipment of goods.
There are perils ofsea; for human life there are risk of death or disability; and
so on .the chances ofoccurrences of the events causing losses are quite
uncertain because these may or maynot take place. Therefore, with this view
in mind, people facing common risks cometogether and make their small
contribution to the common fund. While it may not bepossible to tell in
advance, which person will suffer the losses, it is possible to work outhow
many persons on an average out of the group, may suffer losses. When risk
occurs,the loss is made good out of the common fund .in this way each and
every one shares therisk .in fact they share the loss by payment of premium,
which is calculated on thelikelihood of loss .in olden time, the contribution
make the above-stated notion ofinsurance
DEFINITION OF INSURANCE
Insurance has been defined to be that in, which a sum of money as a premium
ispaid by the insured in consideration of the insurer’s bearings the risk of
paying a largesum upon a given contingency. The insurance thus is a contract
whereby: a. Certain sum, termed as premium, is charged in consideration, b.
Against the said consideration, a large amount is guaranteed to be paid by the
insurer who received the premium, c. The compensation will be made in
certain definite sum, i.e., the loss or the policy amount which ever may be,
and d. The payment is made only upon a contingencyMore
specifically, insurance may be defined as a contact between two parties,
whereinone party (the insurer) agrees to pay to the other party (the insured) or
the beneficiary, acertain sum upon a given contingency (the risk) against
which insurance is required.
PRINCIPLES
Insurance involves pooling funds from many insured entities (known as
exposures) to pay for the lossesthatsome may incur. The insured entities are
therefore protected from risk for a fee, withthe fee being dependent upon the
frequency and severity of the event occurring. In order to bean insurable risk,
the risk insured against must meet certain characteristics. Insurance as
afinancial intermediary is a commercial enterprise and a major part of the
financial servicesindustry, but individual entities can also self-insure through
saving money for possible futurelosses.
Insurability
Risk which can be insured by private companies typically shares seven
common characteristics:
1. Large number of similar exposure units: Since insurance operates
through pooling
resources, the majority of insurance policies are provided for individual
members of
large classes, allowing insurers to benefit from the law of large numbers in
which
predicted losses are similar to the actual losses. Exceptions include Lloyd's of
London,
which is famous for insuring the life or health of actors, sports figures, and
other famous
individuals. However, all exposures will have particular differences, which
may lead to
different premium rates.
2. Definite loss: The loss takes place at a known time, in a known place, and
from a knowncause. The classic example is death of an insured person on a
life insurancepolicy. Fire, automobile accidents, and worker injuries may all
easily meet this criterion.
Other types of losses may only be definite in theory. Occupational disease,
for instance,
may involve prolonged exposure to injurious conditions where no specific
time, place, or
cause is identifiable. Ideally, the time, place, and cause of a loss should be
clear enough
that a reasonable person, with sufficient information, could objectively verify
all threeelements.
3. Accidental loss: The event that constitutes the trigger of a claim should be
fortuitous, orat least outside the control of the beneficiary of the insurance.
The loss should be pure, inthe sense that it results from an event for which
there is only the opportunity for cost.
Events that contain speculative elements, such as ordinary business risks or
evenpurchasing a lottery ticket, are generally not considered insurable.
4. Large loss: The size of the loss must be meaningful from the perspective
of the insured.Insurance premiums need to cover both the expected cost of
losses, plus the cost ofissuing and administering the policy, adjusting losses,
and supplying the capital needed
to reasonably assure that the insurer will be able to pay claims. For small
losses, these
latter costs may be several times the size of the expected cost of losses. There
is hardly
any point in paying such costs unless the protection offered has real value to
a buyer.
5. Affordable premium: If the likelihood of an insured event is so high, or
the cost of theevent so large, that the resulting premium is large relative to the
amount of protection
offered, then it is not likely that the insurance will be purchased, even if on
offer.
Furthermore, as the accounting profession formally recognizes in financial
accounting
standards, the premium cannot be so large that there is not a reasonable
chance of a
significant loss to the insurer. If there is no such chance of loss, then the
transaction may
have the form of insurance, but not the substance. (See the US Financial
Accounting
Standards Board standard number 113)
6. Calculable loss: There are two elements that must be at least estimable, if
not formally
calculable: the probability of loss, and the attendant cost. Probability of loss
is generally
an empirical exercise, while cost has more to do with the ability of a
reasonable person in
possession of a copy of the insurance policy and a proof of loss associated
with a claim
presented under that policy to make a reasonably definite and objective
evaluation of the
amount of the loss recoverable as a result of the claim.
7. Limited risk of catastrophically large losses: Insurable losses are
ideally independent and non-catastrophic, meaning that the losses do not
happen all at
once and individual losses are not severe enough to bankrupt the insurer;
insurers mayprefer to limit their exposure to a loss from a single event to
some small portion of theircapital base. Capital constrains insurers' ability to
sell earthquake insurance as well aswind insurance in hurricane zones. In the
US, flood risk is insured by the federalgovernment. In commercial fire
insurance, it is possible to find single properties whosetotal exposed value is
well in excess of any individual insurer's capital constraint. Suchproperties
are generally shared among several insurers, or are insured by a single
insurerwho syndicates the risk into the reinsurance market.
TYPES OF INSURANCE
Insurance companies may be classified into two groups:
1. Life insurance companies, which sell life insurance, annuities and pensions
products.
2. Non-life, general, or property/casualty insurance companies, which sell
other types ofinsurance.
Type of life insurance policies. Whole life insuranceWhole life is a form of
permanent insurance, with guaranteed rates and guaranteed cashvalues. It is
the least flexible form of permanent insurance.Universal life
insuranceUniversal life is similar to whole life, except that you can change
the death benefit (themoney paid to the beneficiary when the insured person
dies), the amount of premiumsand how often you pay the premiums.Variable
life insuranceVariable life insurance is the riskiest form of permanent
insurance, but it can also giveyou the best return for your money. Essentially,
the life insurance company will investyour insurance premiums for you. If
the investments do well, the death benefit and cashvalue of the policy go up.
If they do poorly, they go down. It’s a little like putting yoursavings into the
stock market.Group life insurancemany companies allow their employees to
buy group life insurance through the company.Usually, you can get very
good rates for this insurance but you have to give the insuranceup when you
stop working there. For that reason, group insurance can be a good way tobuy
a little extra life insurance, but it does not make sense to make it your main
policy.
General insurance companies can be further divided into these sub categories.
Standard lines
Excess lines
Life Insurance
Amicable Society for a Perpetual Assurance Office, Serjeants' Inn, Fleet
Street, London, 1801.Life insurance provides a monetary benefit to a
decedent's family or other designated beneficiary, and may specifically
provide for income to an insured person's family, burial, funeral and other
final expenses. Life insurance policies often allow the option of having the
proceeds paid to the beneficiary either in a lump sum cash payment or an
annuity. In most states, a person cannot purchase a policy on another person
without their knowledge.
Annuities provide a stream of payments and are generally classified as
insurance because they are issued by insurance companies, are regulated as
insurance, and require the same kinds of actuarial and investment
management expertise that life insurance requires. Annuities and pensions
that pay a benefit for life are sometimes regarded as insurance against the
possibility that aretieewill outlive his or her financial resources. In that sense,
they are the complement of life insurance and, from an underwriting
perspective, are the mirror image of life insurance.
Certain life insurance contracts accumulate cash values, which may be taken
by the insured if the policy is surrendered or which may be borrowed against.
Some policies, such as annuities and endowment policies, are financial
instruments to accumulate or liquidate wealth when it is needed.
In many countries, such as the United States and the UK, the tax law provides
that the interest on this cash value is not taxable under certain circumstances.
This leads to widespread use of life insurance as a tax-efficient method
of saving as well as protection in the event of early death.
In the United States, the tax on interest income on life insurance policies and
annuities is generally deferred. However, in some cases the benefit derived
from tax deferrllmay be offset by a low return. This depends upon the
insuring company, the type of policy and other variables (mortality, market
return, etc.). Moreover, other income tax saving vehicles (e.g., IRAs, 401(k)
plans, Roth IRAs) may be better alternatives for value accumulation.
Auto insurance
Auto insurance protects the policyholder against financial loss in the event of
an incident involving a vehicle they own, such as in a traffic collision.
Coverage typically includes:
Property coverage, for damage to or theft of the car
Liability coverage, for the legal responsibility to others for bodily injury
or property damage
Medical coverage, for the cost of treating injuries, rehabilitation and
sometimes lost wages and funeral expenses
Health insurance
Health insurance policies cover the cost of medical treatments. Dental
insurance, like medical insurance, protects policyholders for dental costs. In
most developed countries, all citizens receive some health coverage from
their governments, paid for by taxation. In most countries, health insurance is
often part of an employer's benefit
EVOLUTION OF INSURANCE IN INDIA
Since 1972, the insurance sector has been totally under the control
ofgovernment of India through LIC and GIC and its subsidiaries. As a result,
revenue ofboth of them increased in the last years .the amount of savings
pooled by LIC increasedfrom Rs.2704 crores in 1974 to Rs .57670 in 1994
with an annual growth rate of 16.53%.similarly premium underwritten by
GIC rose from 280 crores in 193 to 7647 crores in1998 showing an annual
growth rate of 25.18%. Despite increase in premium collected by both LIC
and GIC their were inefficiencyand red tapeisumcreeped in to the insurance
sector. Apart from that a major policy shiftby the Narasimha Rau government
during 1990’s.the Indian economy opened for foreigncompetition .In this
background The government of India in 1993 had set-up a highpowered
committee by R.N Malhothra ,former governor reserve bank of India,
toexamine the structure of Indian insurance sector and recommended changes
to make itmore efficient and competitive keeping in view structural changes
in other part of thefinancial system of the country. Insurance sector has been
opened up for competition from Indian private insurancecompanies with the
enactment of Insurance Regulatory and Development Authority Act,1999
(IRDA Act). As per the provisions of IRDA Act, 1999, Insurance Regulatory
andDevelopment Authority (IRDA) was established on 19th April 2000 to
protect theinterests of holder of insurance policy and to regulate, promote and
ensure orderly growthof the insurance industry. IRDA Act 1999 paved the
way for the entry of private playersinto the insurance market, which was
hitherto the exclusive privilege of public sectorinsurance companies/
corporations. State Insurance The government of a nation, some times, owns
the insurance and runs thebusiness for the benefit of the public. The state
insurance is defined as that insurancewhich is under public sector. In Brazil,
Japan and Mexico, the insurance are largelynationalized. Previously, the state
undertook only those insurances, which were regardedas vital for the national
interest. INSURANCE SECTOR REFORMS .Having looked at the insurance
sector,
the efforts made by the government tomake the industry more dynamic and
customer friendly. To begin with, the Malhotracommittee was set up with the
objective of suggesting changes that would achieve themuch required
dynamism.The Malhotra Committee Report In 1993, Malhotra Committee,
headed by former Finance Secretary and RBIGovernor R. N. Malhotra, was
formed to evaluate the Indian insurance industry andrecommend its future
direction. In 1994, the committee submitted the report and gave thefollowing
recommendations:StructureGovernment stake in the insurance Companies to
be brought down to 50%Government should take over the holdings of GIC
and its subsidiaries so that thesesubsidiaries can act as independent
corporations .All the insurance companies should be given greater freedom to
operate
RESEARCH METHODOLOGY
Life Insurance is a contract for payment of a sum of money to the person
assured on the happening of the event insured against”. Usually the insurance
contract provides for the payment of an amount on the date of maturity or at
specified dates at periodic intervals orat unfortunate death if it occurs earlier.
Obviously, there is a price to be paid for this benefit. Among other things the
contracts also provides for the payment of premiums, by the assured Life
Insurance is universally acknowledged as a tool to eliminate risk, substitute
certainty for uncertainty and ensure timely aid for the family in the
unfortunate event of the death of the breadwinner. In other words, it is the
civilized world’s partial solution to the problems caused by death. Life
insurance helps in two ways dealing with premature death, which leaves
dependent families to fend for themselves and old age without visible means
of support The most common types of life insurance are whole life insurance
and term life insurance. Whole life insurance provides a lifetime of protection
as long as you pay thepremiums to keep the policy active. They also accrue a
cash value and thus offer a savings component. Term life insurance provides
protection only during the term of the policy and the policies are usually
renewable at the end of the term
There are many Life Insurance Companies like
LIFE INSURANCE CORPORATION OF INDIA
HDFC STANDARD LIFE INSURANCE COMPANY
ICICI PRUDENTIAL LIFE INSURANCE COMPANY
BAJAJ ALLIANZ LIFE INSURANCE COMPANY
Life Insurance Corporation (L.I.C)
LIFE INSURANCE CORPORATION OF
INDIA,COMPANY AND AREA PROFILE
Introduction to Life Insurance Corporation (LIC)
BIRTH OF LIC
The Life Insurance Corporation Act was passed on 19th June 1956, by the
Indian Parliament for nationalizing all the private life insurance companies
into a single state-owned entity. And thus, Life Insurance Corporation of
India was created on 1st September, 1956. Till the year 1999-2000, Life
Insurance Corporation (LIC) had a complete monopoly over the Indian life
insurance business until the entry of private players.
The Life Insurance Corporation of India popularly known as “LIC of
India” was incorporated on September 1, 1956 by nationalizing 245 Indian as
well as foreign companies. It was established 52 years ago with a view to
provide an insurance cover against various risk in life. The luminaries who
spearheaded this move at that time visualized an entity that will provide life
insurance to Indians, especially the vast rural people, at an economical cost
and
channel the savings for the betterment of the nation. It is the largest life
insurance company in India and also the countries largest investor. It is fully
owned by the Government of India and headquarter is Mumbai.
Today LIC function with 2048 fully computerized branch offices, 100
divisional offices, 7 Zonal offices and the corporate office. LIC’s wide area
Network cover 100 divisional offices and connects all the branches through a
Metro area network. LIC has tied up with some Banks and service providers
to
offer on- line premium collection facility in selected cities. LICs ECS and
ATM premium payment facility is an addition to customer convenience.
Apart
from on-line kiosks and IVRS, info centers have been commissioned at
Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi,
Pune and many other cities. With vision of providing easy access to its
policyholders, LIC has launched its SATELLITE SAMPARK offices. The
digitalized record of the satellite offices will facilitate anywhere to serve and
other convenience in the future.
LIC has crossed many milestones and has set unprecedented
performance records in various aspect of life insurance business. The same
motives which inspired our forefathers to bring insurance into existence in
this
country inspire us at LIC to take this message of protection to light the lamps
of security in as many homes as possible and to help the people in providing
security to their families.
The subsidiary companies of LIC
1. LIC of India, International
A joint venture offshore company promoted by LIC, commenced its
operation in july1989. The primary objective is to the US-dollar denominated
policies which cater to the insurance needs of non-resident in Indians. It
provides insurance services to policyholders who residing in Gulf. The LIC
International operates in all Gulf Cooperation Council (GCC) countries.
2. LIC Nepal
A joint venture company formed in September 2001 with the Vishal
Group of Industries with a capital base of Rs.250mn. It is one of the largest
capitalized insurance companies of Nepal. It has joint share between LIC of
India (55%) Vishal Group (25%) and has a public participation to the extent
20%.
3. Life Insurance Corporation Lanka Limited (LICL)
A joint venture company formed in 2003 with the Bartleet Group of
companies, it is one of the oldest and reliable institutions in Sri Lanka. The
combined strengths of these two formidable companies has enabled LICL to
emerge
as the premier provider of Life Insurance in Sri Lanka. The Indian-based
bluechip
also has offices in UK, Mauritius, Fiji, and in all Middle East countries.
4. LIC Housing Finance
Incorporated on June 19, 1989; its main objective is to provide longterm
finance for construction or purchase of houses or apartments. Thecompany
provides long terms finance to individuals for purchase, construction,repair
and renovation of new \ existing flats \ houses. It also provides financeon
existing property for business, personal needs and gives loans toprofessionals
for purchase or construction of clinics \ nursing homes
diagnostic centers \ office space and also for purchase of equipments. It has
setup a representative office in Dubai and Kuwait to cater to the non-
residentIndians in countries covering Bahrain, Dubai, Kuwait, Qatar and
Saudi Arabia.It has client group of over 9,40,000 prudent house owners who
enjoy the company’s financial assistance.
5. LIC Housing Finance Limited Care Homes
It is a Wholly-owned subsidiary of LIC Housing Finance. It builds
andoperates “Assisted Community Living Center” for senior citizens. It
operates anetwork of approximately 6 regional offices, 13 back offices, and
127 marketing offices.
Types of Policies
Introduction
The Researcher, found the different types of Life Insurance Plans
inthemarket. As we know that Life Insurance is important for everyone
toprotect family incase of their demise the insured money will save their
familyfor educating their children and marriage etc. According to your needs,
one canchoose Life Insurance Scheme of any form.
Term Insurance Policy
This policy is pure risk cover with the insured amount will be paid onlyif the
policy holder dies in the period of policy time. The intention of thispolicy is
to protect the policy holder’s family incase of death. For example, aperson
who takes term policy of Rs.500000 for 20 years, if he dies before 20,82years
then his family will get the insured amount. If he survive after 20 yearsthen
he will not get any amount from the insurance company. It is the reasonwhy
term policies are very low cost. So, this type of policy is not suitable
forsavings or investment.
Whole Life Policy
As the name itself says, the policy holder has to pay the premium for
whole life till his death. This policy doesn’t address any other needs of the
policy holder. Because of these reasons this kind of policy is not very popular
or insurance company not suggesting to take this policy.
Endowment Policy
It is the most popular Life Insurance Plans among other types ofpolicies.
This policy combines risk cover with the savings and investment. Ifthe policy
holder dies during the policy time, he will get the assured amount.Even if he
survives he will receive the assured amount. The advantage of thispolicy is if
the policy holder survives after the completion of policy tenure, hereceives
assured amount plus additional benefits like Bonus, etc. In this kind ofpolicy,
policy holder receives huge amount while completing the tenure. Inaddition
to the basic policy, insurers offer various benefits such as double
endowment and marriage/ education endowment plans. The cost of such
apolicy is slightly higher but worth its value.
Money Back Policy
Money Back Policy is to provide money on the occasions when the
policy holder needs for his personal life. The occasions may be marriage,
education, etc. Money will be paid back to the policy holder with the
specified
duration. If the policy holder dies before the policy term, the sum assured will
be given to his family. A portion of the sum assured is payable at regular
intervals. On survival the remainder of the sum assured is payable.
Annuities and Pension
An annuity is a series of periodic payments. An annuity contract is an
insurance policy, under which the annuity provider (insurer) agrees to pay the
purchaser of annuity (annuitant) a series of regular periodical payments for a
fixed period or during someone's life time.In an annuity, the insurer agrees to
pay the insured a stipulated sum ofmoney periodically. The purpose of an
annuity is to protect against risk as wellas provide money in the form of
pension at regular intervals. Over the years,insurers have added various
features to basic insurance policies in order toaddress specific needs of a
cross section of people.
Whole Life with Profits Plan
Features:
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 proving 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 3years, 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 thanRs.250/-. Such reduced
paidup
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 policyholder's
premature death.
BENEFITS
SURVIVAL BENEFIT:
Sum assured plus accrued bonuses and the terminal bonuses, if any; onthe
policyholder attaining age 80 years or on expiry of term of 40 years fromthe
date of commencement of the policy whichever is later.
DEATH BENEFIT:
Sum assured plus accrued bonuses and the terminal bonuses, if any, on the
death of the policyholder are paid to his/her nominees/heirs.
LIMITED PAYMENT WHOLE LIFE - PLAN 005 (WITH
PROFITS)
Features:
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. If the
policyholder pays at least 3 years' premiums and then discontinues paying
any more premiums, a reduced paid-up assurance policy comes into force.
Such a reduced paid-up Policy will not been titled 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.
BENEFITS Survival benefits
If the Life Assured survives the premium paying period and the policy
continues in full force, provided all premiums have been paid, but no further
premiums are required to be paid.
BENEFITS
Disability Benefit:
In case policy holder becomes totally and permanently disabled due to an
accident before reaching the age of 70 and the policy is in full force, he will
not be required to pay further premiums, (the Disability Benefit is available
in respect of the firstRs.20000 sum assured on anyone life) and the policy
will continue to be in force.
Accident Benefit:
By paying a small extra premium of Rs. l per Rs. 1000/- sum assured per
year he or his family are entitled to the following benefits on death or
permanent disability caused by accident. Even students above the age of 18
years can avail of this benefit.
Premium Stoppage:
If payment of premiums ceases after at least THREE years' premiums have
been paid , a free paid-up policy for a reduced sum assured will be
automatically secured provided the reduced sum assured, exclusive of any
attached bonus, is not less than Rs. 250/-The reduced sum assured will
become payable on the event as stipulated in
the policy.
Bonus:
Is there anything extra payable besides the sum assured at the time of claim
settlement? Yes, but only if it is a 'with profits' policy. Every year the Life
Insurance Corporation distributes its surplus among policyholder to 'with
profits' polices in the form of bonuses. Substantial bonuses have been
declared in the past after each valuation of policy liabilities.
ANMOL JEEVAN - I (WITHOUT PROFITS) BENEFITS
On Death during the Term of the Policy: Sum Assured On Maturity: Nil
RESTRICTIONS
(A) Minimum age at entry: 18 years (completed)
(B) Maximum age at entry: 55 years (nearer birthday)
(C)Maximum age at maturity: 65 years
(D) Minimum Term: 5 years
(E) Maximum Term: 25 years
(F) Minimum Sum Assured: Rs. Five Lakh
(G) Maximum Sum Assured: Rs. Three Crore (Inclusive of all term
Assurance plans)
Note: The policy would be issued in multiples of Rs. one lakh for
SumAssured above Rs. five lakh.
(H)Mode of Premium Payment: Yearly, Half- Yearly and Single premium.
(I) Rebates:
•Sum Assured Rebate:
NIL in case of regular premium policies and Re. l
Sum Assured for policies of Rs.25 lakh and above in case of
single premium policies.
•Mode Rebate: 1% of Annual premium for yearly mode and nil for half
yearly mode.
UNDERWRITING, AGE PROOF AND MEDICAL
REQUIREMENTS:
The plan is available to Standard and Sub-standard lives (upto 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:
•The policy will not acquire any paid-up value.
• No Surrender Value will be available under this plan.
GRACE PERIOD FOR NON-FORFEITURE
PROVISIONS:
A grace period of 15 days will be allowed for payment of yearly or halfyearly
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 gets lapsed.
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.
BENEFITS:
Survival benefits:
If one or both the lives survive to the maturity date, the sum assured, along
with the accumulated bonus, is payable.
Death Benefits:
In case either of the couple dies during the policy's term, two things happen.
One, LIC pays to the surviving spouse the full sum assured. And, two, the
policy continues on the life of the surviving partner without him/her having
to pay any further premiums ,i.e. the life cover on the survivor continues free
of cost. The sum assured is again be payable on the death of the other
partner in case both the husband and wife were to die during the term of the
policy. Vested bonus would also be paid along with the sum assured on the
second death.
Annual report 2017-2018
GROSS DOMESTIC SAVINGS (GDS)
Year Financial Physical Total Private Public Gross
Savings Savings Corporate Sector Domestic
Sector Saving
2016-17 6.75% 9.51% 16.26% 12.11% 2.36% 29.98%
2015-16 8.21% 9.58% 17.79% 12.23% 2.33% 31.25%
FISCAL POSITION
Year Centre and State Only Centre
(combined)
2018-19 BE 6.0 3.3
2017-18 PA 6.5 3.5
2016-17 6.5 3.5
2015-16 7.5 3.9
2014-15 6.6 4.1
The statistics pertaining to Life Insurance Industry are furnished below
Sr.No Data Description 31.03.2018 31.03.2017 Growth
Rate(%)
1 Capital Deployed 36,582 35,344 3.50
(including share
premium, if any) (Rs
Cr.)
2 No. of Branch Offices 11,111 10,955 1.42
3 No. of Agents 20,28,668 20,88,519 -0.28
(Individual)
4 No. of Direct 2,65,727 2,49,794 6.38
Employees
5 Total Assets (Rs 33,13,049 29,80,622 11.15
Cr.) (incl. Equity)
6 Equity (at Market 8,12,018 7,56,274 7.37
Value)
7 Infrastructure 3,76,097 3,44,075 9.31
Investments (` Cr.)
8 Renewal Premium (` 2,64,327 2,42,925 8.81
Cr.)
Agents
Name of club 2017-2018 2016-17 2015-16
Corporate 191 167 214
Galaxy 623 426 429
Chairman 39,411 39.249 38,435
Zonal Manager 31,562 31,323 31,213
Divisional 53,504 53,871 55,029
Manager
Branch Manager 45,380 50,561 56,162
Distinguished 13,078 12,500 11,477
Agents Club
Total 1,83,749 1,88,097 1,92,959
CUSTOMER RELATIONSHIP MANAGEMENT (CRM)
Settlement of Claims
Year No.(in Amount Percent No.(in Amoun Percentages
lakhs) (Crs.) age paid lakhs) t (Crs.) paid (in no.)
(in
number)
2015- 205.75 83,667.60 98.26 9.96 12,181 98.67
2016
2016- 205.11 99,109.66 97.20 10.47 13,581 98.71
2017
2017- 267.36 1,17,888.30 95.50 10.09 12,283 98.55
2018
COMPETITION
The Indian government in the year 2000-2001 lifted all entry restrictions for
private sector investors from the Life Insurance Market. Foreign investment
in the life insurance market was also allowed. Now, the Indian life insurance
market currently has 23 private players fighting a fierce battle for taking the
largest possible slice of the growing life insurance market and at the same
time maintaining their current hold.
he past year's report card of the single public player Life Insurance
Corporation against the combined strength of 23 Private Players:
Market Share - Life Insurance Corporation (LIC) currently holds 71.81% of
the total Indian Life Insurance market as against 28.19% held by all the 23
private players for the year 2016-2017. LIC’s share has decreased from its
previous holding of 72.61 % in 2015-16, the private insurers have made a
gain of 0.8%. The premium underwritten in the year 2016-17 stands at Rs.
4,18,476.62 crores, from the previous year’s Rs. 3,66,943.23 crores, a clear
growth of 14.04%.
Customer Base - During the year 2016-17, all the life insurers of India issued
264.56 lakh new policies. Out of these, Life Insurance Corporation (LIC)
alone has issued 201.32 lakh policies (76.1%) on the other hand, all the
private life insurers combined together have issued just 63.24 lakh policies
(23.9%). However, private players have registered a growth of 2.13% against
the previous year, whereas, LIC has registered a decline of 2.02%.
Claim settlement Ratio - The one thing that every individual looks before
buying a life insurance plan is the claim settlement reputation of the insurer.
The claim settlement ratio for 2016 -17 stands at 98.31% for LIC and 93.72%
for the private players combined.
This report card clearly shows that private players are gaining and slowly
people are looking up to them to meet their insurance and investment needs.
But there still remains doubt in the general population at large, so let’s bust
the biggest myth related to trusting private players.
ICICI Lombard General Insurance
Currently a leading private general insurer in India, ICICI Lombard was
started in 2001 as a joint venture between ICICI Bank and Fairfax Financial
Holdings. Over the years, it has grown rapidly along with India’s insurance
industry. In FY19, it became the fourth largest non-life insurance company in
the country and issued 26.5 million new ...
Fourth largest non-life insurance company in India as in FY18
Provides motor, health, travel, home, property, marine, liability, crop and
other specialty insurances products
253 branches as of March 2018
26.5 million policies issued in 2019 and 1.54 million claims settled in FY18
Gross Written Premium of Rs147.89 billion (US$ 2.12 billion) in FY19
Currently a leading private general insurer in India, ICICI Lombard was
started in 2001 as a joint venture between ICICI Bank and Fairfax Financial
Holdings. Over the years, it has grown rapidly along with India’s insurance
industry. In FY19, it became the fourth largest non-life insurance company in
the country and issued 26.5 million new policies. Its Gross Direct Premium
Income (GDPI) has grown as a CAGR of 13.9 per cent between FY08-18 to
reach Rs123.57 billion (US$ 1.92 billion).
For FY19 (up to October 2018), the company had 8.90 per cent share in gross
direct premium underwritten in India’s non-life insurance sector. In FY19,
the company earned GDPI of Rs 144.88 billion (US$ 2.07 billion).
SBI Life Insurance
SBI Life Insurance was established in 2000 as a joint venture between the
State Bank of India (SBI) and BNP Paribas Cardif and has become one of the
leading life insurers in the country. The company has a range of life
insurance and pension products which include individual and group products
to cater to the insurance needs of diverse customer se...
One of the leading private life insurers in India
Joint venture between State Bank of India (SBI) and BNP Paribas Cardif
Multi-channel distribution network with 116,278 agents as of March 31, 2018
Assets Under Management (AUM) reached Rs141020 (US$ 20.18 billion) in
FY19
5.98 per cent share in new business in FY19 (up to September)
1.33 million claims settled in FY18
SBI Life Insurance was established in 2000 as a joint venture between the
State Bank of India (SBI) and BNP Paribas Cardif and has become one of the
leading life insurers in the country. The company has a range of life
insurance and pension products which include individual and group products
to cater to the insurance needs of diverse customer segments.
Gross Written Premium of SBI Life has increased at a 25.4 per cent CAGR
between FY15-18, to reach Rs253.54 billion (US$ 3.93 billion). It had a 6.69
per cent share in new business in FY19 (up to Dec 2018).
HDFC Standard Life Insurance Company
HDFC Standard Life Insurance Company was established in 2000 as a joint
venture between Housing Development Finance Corporation Limited (HDFC
Ltd) and Standard Life Aberdeen. It was the first private company to get a
license from the Insurance Regulatory and Development Authority in 2001.
Today, it is the leading private life insurer in India.
Leading private sector life insurers in India
6.75 per cent share in new business in FY19 (up to September)
Sold 1.05 million new policies in FY18
414 branches and more than 11,200 partner branches
Assets under management worth Rs1,256000 crore (US$ 17.97 billion) in
FY19
HDFC Standard Life Insurance Company was established in 2000 as a joint
venture between Housing Development Finance Corporation Limited (HDFC
Ltd) and Standard Life Aberdeen. It was the first private company to get a
license from the Insurance Regulatory and Development Authority in 2001.
Today, it is the leading private life insurer in India. As of March 2018, the
company was providing 34 individual and 11 group insurance products. After
strong period of growth, the company completed its initial public offer (IPO)
in 2017.
Between FY14-18, total premium earned by the company increased at a
CAGR of 18 per cent to reach Rs 23564 crore (US$ 3.66 billion). Currently
the company has the largest share in new business among private life
insurers. It had a leading 7.02 per cent share in new business in FY19 (up to
Dec 2018)
Choose Between LIC and Private Players?
Compare - In order to choose the best product, customers need to then
stack features offered under the same plan by all the insurers, be it LIC or
private players, check their credibility through the solvency ratio maintained
by them, their past track-record and price of the product. Today we have to
look at which product is satisfying my needs and can be customized
according to my needs.
Innovation - Life Insurance Corporation though has many advantages, it
has been lagging behind in the terms of being the trendsetter for innovative
products. Private Players have always been first in introducing innovative
products like ULIPs, Cancer and Heart Insurance Plans.
Online Presence - In today’s digital world where online sales are
increasing exponentially, private players are taking advantage of this
platform by launching more and more products on their online platform.
Whereas, although LIC has entered the online market space, its portfolio of
products on this platform is limited.
Sales Channels - Private Players have been increasingly experimenting
and implementing new sales channels like Bancassurance, Point of Sale
Agents, Agency Partner Channel (APC), Web Aggregators and others. LIC
still continues relying heavily on its traditional approach of sales through
agents than focusing more on other channels.
THE TRUST FACTOR - LIC has the largest agency force in the
insurance sector. During 2008-10, when private players slowed down
business, cut down on expenses, and reduced the number of branches owing
to irrational competition, LIC was the only one adding agents. It has 11.31
lakh agents compared with 9.5 lakh in the private sector.
Moreover, LIC repudiates 1 in every 100 claims filed, while the private
sector rejects 8 out of every 100 claims. “LIC’s lower claims repudiation
helps it garner more business,” said SB Mathur, former chairman, LIC.
“LIC’s back-office support is spread across country, which helps in servicing
claims.”
IRDA Ratio 2016-2017
Findings
Market Size
Government's policy of insuring the uninsured has gradually pushed
insurance penetration in the country and proliferation of insurance schemes.
Gross premiums written in India reached Rs 5.53 trillion (US$ 94.48 billion)
in FY18, with Rs 4.58 trillion (US$ 71.1 billion) from life insurance and Rs
1.51 trillion (US$ 23.38 billion) from non-life insurance. Overall insurance
penetration (premiums as % of GDP) in India reached 3.69 per cent in 2017
from 2.71 per cent in 2001.
In FY19 (up to October 2018), premium from new life insurance business
increased 3.66 per cent year-on-year to Rs 1.09 trillion (US$ 15.46 billion).
In FY19 (up to October 2018), gross direct premiums of non-life insurers
reached Rs 962.05 billion (US$ 13.71 billion), showing a year-on-year
growth rate of 12.40 per cent.
Investments and Recent Developments
The following are some of the major investments and developments in the
Indian insurance sector.
As of November 2018, HDFC Ergo is in advanced talks to acquire Apollo
Munich Health Insurance at a valuation of around Rs 2,600 crore (US$
370.05 million).
In October 2018, Indian e-commerce major Flipkart entered the insurance
space in partnership with Bajaj Allianz to offer mobile insurance.
In August 2018, a consortium of WestBridge Capital, billionaire investor Mr
Rakesh Jhunjunwala announced that it would acquire India’s largest health
insurer Star Health and Allied Insurance in a deal estimated at around US$ 1
billion.
In September 2018, HDFC Ergo launched ‘E@Secure’ a cyber insurance
policy for individuals.
Insurance sector companies in India raised around Rs 434.3 billion (US$ 6.7
billion) through public issues in 2017.
In 2017, insurance sector in India saw 10 merger and acquisition (M&A)
deals worth US$ 903 million.
India's leading bourse Bombay Stock Exchange (BSE) will set up a joint
venture with EbixInc to build a robust insurance distribution network in the
country through a new distribution exchange platform.
Government Initiatives
The Government of India has taken a number of initiatives to boost the
insurance industry. Some of them are as follows:
In September 2018, National Health Protection Scheme was launched under
Ayushman Bharat to provide coverage of up to Rs 500,000 (US$ 7,723) to
more than 100 million vulnerable families. The scheme is expected to
increase penetration of health insurance in India from 34 per cent to 50 per
cent.
Over 47.9 million famers were benefitted under Pradhan
MantriFasalBimaYojana (PMFBY) in 2017-18.
The Insurance Regulatory and Development Authority of India (IRDAI)
plans to issue redesigned initial public offering (IPO) guidelines for insurance
companies in India, which are to looking to divest equity through the IPO
route.
IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1
(AT1) bonds that are issued by banks to augment their tier 1 capital, in order
to expand the pool of eligible investors for the banks.
Road Ahead
The future looks promising for the life insurance industry with several
changes in regulatory framework which will lead to further change in the way
the industry conducts its business and engages with its customers.
The overall insurance industry is expected to reach US$ 280 billion by 2020.
Life insurance industry in the country is expected grow by 12-15 per cent
annually for the next three to five years.
Demographic factors such as growing middle class, young insurable
population and growing awareness of the need for protection and retirement
planning will support the growth of Indian life insurance.
Exchange Rate Used: INR 1 = US$ 0.0159 as on March 31, 2019
LEARNINGS
After overhauling the all situation that boosted a number of Pvt. Companies
associated with multinational in the Insurance Sector to give befitting
competition to the established behemoth LIC in public sector, we come at
the conclusion that
1) There is very tough competition among the private insurance companies
on the level of new trend of advertising to lull a major part of Customers.
2) LIC is not left behind in the present race of advertisement.
3) The entry of the Pvt. Players in the Insurance Sector has expanded
the product segment to meet the different level of the requirement of the
customers. It has brought about greater choice to the customers.
4) Private insurers have restricted reach to the customers.
5) LIC has vast market and very firm grip on its traditional customers and
monopoly of life insurance products.
6) Bank assurance - that allows life insurers to leverage on the risk product
through bank network, was adopted by private players. But LIC was also not
left behind as picking up majority stake in the corporation Bank and large
equity stake in the Oriental Bank of Commerce.
IRDA is also playing very comprehensive role by regulating norms
mandating to private players in this sector, that increases the confidence
level of the customers to the private players
Spread Life Insurance widely and in particular to the rural areas and to the
socially and economically backward classes with a view to reaching all
insurable persons in the country and providing them adequate financial
cover against death at a reasonable cost.
•Maximize mobilization of people's savings by making insurance-linked
savings adequately attractive.
•Bear in mind, in the investment of funds, the primary obligation to
its policyholders, whose money it holds in trust, without losing sight of the
interest of the community as a whole; the funds to be deployed to the best
advantage of the investors as well as the community as a whole, keeping in
view national priorities and obligations of attractive return.
•Conduct business with utmost economy and with the full realization that the
moneys belong to the policyholders.
•Act as trustees of the insured public in their individual and collective
capacities.
•Meet the various life insurance needs of the community that would arise in
the changing social and economic environment.
•Involve all people working in—the corporation to the' best of their
capability in furthering the interests of the insured public by providing
efficient service with courtesy.
•Promote amongst all agents and employees of the Corporation a sense
of participation, pride and job satisfaction through discharge of their duties
with dedication towards achievement of Corporate Objective.
Suggestions
During the study it is found that policy holders prefer banking and insurance
together. They
prefer private insurance sectors because they provide them the banking
facility and a lot of value
added services. So it will be beneficial both to the common public and the
LIC if it offers
banking facility to the policy holders and the common public.
The overall performance evaluation of Life Insurance Corporation of India is
consistent. The
working groups have been worked hard for their functions but still some
drawbacks are left
behind, for that suggestions are as under:
1. LIC should try to increase their selling of plans to introduce new plans
with different kinds of
facilities, so that it can increase its income amount, especially Premium
amount.
2. As private insurance companies capture the market now a day, therefore,
LIC should
strengthen their working & should launch plans with more facilities.
3. The Corporation should strive to increase its business by issuing more and
more policies in
order to retain its market share in the competitive scenario.
4. Operating cost as compared to premium underwritten should be controlled.
5. A comparative statement of performance between LIC and various
insurance companies may
help increase the business
6. A comparative statement of performance of operating expenses of LIC and
various insurance
companies may help to narrow down the cost.
7. LIC of India should continue making investments, but secured investments
should be made
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