A project report Submitted to Punjab technical university As partial Fulfillment of MBA Programme (MARKETING) Submitted by Jagannath Sahu ROLL

NO-840663001 Under the Guidance of MR.Sarata Chandra sahu Lecturer of DISHA COLLEGE OF MANAGEMENT &TECHONOLOGY

DISHA COLLEGE OF MANAGEMENT &TECHONOLOGY AUTHORISED LEARNING CENTER OF PUNJAB TE CHINICAL UNIVERSITY Batch-2008-10

Date-

26/07/2010

TO WHOM IT MAY CONCERN This is certify that Mr.Jagannath Sahu having Reg/Roll No.840663001 (PTU, under DISHA COLLEGE OF MANAGEMENT AND TECHNOLOGY Berhampur 2008-10Batch) has successfu lly completed summer Internship program from 10/06/2010 to25/07/2010 under my gu idance.

I wish him all the success for his future endeavors. Authorised Arun Kumar mohapatro Development Officer LIC Berhampur

DECLERATION I herby declare that the project work. Entitled on Need & purpose of L I C Submitt ed by me for the partial Fulfillment of the MBA Programmer in the DISHA, Berhamp ur, Under the Punjab Technical University is my own original work & has been sub mitted. I also declare that no chapter of this manuscript in whole or in part is lifted & Incorporated in this report from any earlier work done by me or others .

Place- Berhampur Date-

Jagannath sahu Roll.No-840663001

ABSTRACT Summer Internship Programmed is usually done to improve our knowledge and skill. To work in augmenting my knowledge regarding the theory and to bridge the gap between my theoretical and practical knowledge about the business environment. This project intends to identify the marketing strategy. Basic purposes are to findings the parameters in the mind of the customers when they are involve the i nsurance company. The data collected are basically primary however to study the survey style, natu re of questionnaires, pattern of analysis. I also took help of secondary sources like from office records etc. This project report are based on information collected by me are true to the bes t of my knowledge and belief. ACKNOWLEDGEMENT I would like to thank all those who directly or indirectly contributed in making this project a success. I owe a lot to Mr. Arun Kumar Mahapatra for his constan t encouragement and support: and to my friends for all the help. I would like thank Mr.Sarata Chandra sahu, Course Coordinator MBA for this help

and support. Friends and parents are an inevitable pat of life in all endeavors. So, we would like to express our sincere thanks for the encouragement and help they have ren dered.

Jagannath Sahu Roll No.840663001 TABLE OF CONTENTS ABSTRACT iv ACKNOWLEDGEMENT v TABLE OF CONTENTS vi 1. INTRODUCTION 1 1.1 RESEARCH DESIGN 3 1.1.1 Need for the Study 3 1.1.2 Objective of the Study 3 1.1.3 Scope of the Study 3 1.1.4 Methodology 5 1.1.5 Sources of Data 5 1.1.6 Sample Size 6 1.1.7 Tools and Techniques 6 1.1.8 Problem of the Study 6 1.1.9 Limitations of the Study 7 1.1.10 Presentation of the Study 7 2. INDUSTRY PROFILE 8 2.1 First India Insurance Company M8701 8 2.2 Insurance Act 1938 8 2.3 The Historic Day - 19th January 1956 10 2.4 Insure Your Risk 10 3. COMPANY PROFILE 11 3.1 About Life Insurance 11 3.2 A Profile of Life Insurance Corporation of India 12 3.2.1 Objective of LIC 13 3.2.2 Mission 14 3.2.3 Vision 14 3.2.4 Benefits of LIC 14 3.2.5 Marketing Strategy of LIC 16 3.2.6 LIC Marketing Strategy With Respect To Various Policy Plans 3.2.7 Current Insurance Market Situation 41 3.2.8 Present Scenario of Globalisation 43 3.2.9 Opportunities 45 3.2.10 Challenges Before the Industry 47 3.2.11 Essentials to Meet the Challenges 50 3.3 SWOT Analysis 51 3.3.1 Strength 51 3.3.2 Weakness 52 3.3.3 Opportunities 52 3.3.4 Threats 52 3.4 Human Resources 52 3.4.1 Basic Training & Induction 53 3.5 Appraisal System 53 3.6 Segmentation 54 3.7 Competitors 55 4. ANALYSIS AND FINDINGS 56 4.1 Consumer Analysis 56

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4.2 Insurers Analysis 57 5. CONCLUSION & SUGGESTION 5.1 Conclusion 63 5.2 Suggestions 63 REFFERENCES 64 QUESTIONNAIRE 65

63

1. INTRODUCTION The story of insurance is probably as old as the story of mankind. The same inst inct that prompts modern businessmen today to secure themselves against loss and disaster existed in primitive men also. They too sought to avert the evil conse quences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is larg ely a development of the recent past, particularly after the industrial era past few centuries yet its beginnings date back almost 6000 years. Life Insurance in its modern form came to India from England in the year 1818. O riental Life Insurance Company started by Europeans in Calcutta was the first li fe insurance company on Indian Soil. All the insurance companies established dur ing that period were brought up with the purpose of looking after the needs of E uropean community and Indian natives were not being insured by these companies. However, later with the efforts of eminent people like Babu Muttylal Seal, the f oreign life insurance companies started insuring Indian lives. But Indian lives were being treated as sub-standard lives and heavy extra premiums were being cha rged on them. Bombay Mutual Life Assurance Society heralded the birth of first I ndian life insurance company in the year 1870, and covered Indian lives at norma l rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social secur ity through insurance to various sectors of society. Bharat Insurance Company (1 896) was also one of such companies inspired by nationalism. The Swadeshi moveme nt of 1905-1907 gave rise to more insurance companies. The United India in Madra s, National Indian and National Insurance in Calcutta and the Co-operative Assur ance at Lahore were established in 1906. In 1907, Hindustan Co-operative Insuran ce Company took its birth in one of the rooms of the Jorasanko, house of the gre at poet Rabindra nath Tagore, in Calcutta. The Indian Mercantile, General Assura nce and Swadeshi Life (later Bombay Life) were some of the companies established during the same period. Prior to 1912 India had no legislation to regulate insu rance business. In the year 1912, the Life Insurance Companies Act, and the Prov ident Fund Act were passed. The Life Insurance Companies Act, 1912 made it neces sary that the premium rate tables and periodical valuations of companies should be certified by an actuary. But the Act discriminated between foreign and Indian companies on many accounts, putting the Indian companies at a disadvantage. The first two decades of the twentieth century saw lot of growth in insurance bu siness. From 44 companies with total business-in-force as Rs.22.44 core, it rose to 176 companies with total business-in-force as Rs.298 core in 1938. During th e mushrooming of insurance companies many financially unsound concerns were also floated which failed miserably. The Insurance Act 1938 was the first legislatio n governing not only life insurance but also non-life insurance to provide stric t state control over insurance business. The demand for nationalization of life insurance industry was made repeatedly in the past but it gathered momentum in 1 944 when a bill to amend the Life Insurance Act 1938 was introduced in the Legis lative Assembly. However, it was much later on the 19th of January, 1956, that l ife insurance in India was nationalized. About 154 Indian insurance companies, 1 6 non-Indian companies and 75 provident were operating in India at the time of n

ationalization. Nationalization was accomplished in two stages; initially the ma nagement of the companies was taken over by means of an Ordinance, and later, th e ownership too by means of a comprehensive bill. The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insur ance Corporation of India was created on 1st September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural are as with a view to reach all insurable persons in the country, providing them ade quate financial cover at a reasonable cost. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart fro m its corporate office in the year 1956. Since life insurance contracts are long term contracts and during the currency of the policy it requires a variety of s ervices need was felt in the later years to expand the operations and place a br anch office at each district headquarter. Re-organization of LIC took place and large numbers of new branch offices were opened. As a result of re-organization servicing functions were transferred to the branches, and branches were made acc ounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 crores of New Business in 1957 the corporation c rossed 1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with re-organization happe ning in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies. Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices, 7 zonal offices and the corporate office. LICs Wide Area Network covers 100 divisional offices and connects all the branches through a Metro Area Networ k. LIC has tied up with some Banks and Service providers to offer on-line premiu m collection facility in selected cities. LICs ECS and ATM premium payment facili ty is an addition to customer convenience. Apart from on-line Kiosks and IVRS, I nfo Centers have been commissioned at Mumbai, Ahmadabad, Bangalore, Chennai, Hyd erabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providi ng easy access to its policyholders, LIC has launched its SATELLITE SAMPARK offi ces. The satellite offices are smaller, leaner and closer to the customer. The d igitalized records of the satellite offices will facilitate anywhere servicing a nd many other conveniences in the future LIC continues to be the dominant life insurer even in the liberalized scenario o f Indian insurance and is moving fast on a new growth trajectory surpassing its own past records. LIC has issued over one crore policies during the current year . It has crossed the milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the corresponding period of t he previous year. From then to now, LIC has crossed many milestones and has set unprecedented perf ormance records in various aspects 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 secu rity in as many homes as possible and to help the people in providing security t o their families. 1.1 RESEARCH DESIGN 1.1.1 Need for the Study As we all know the need of any research survey lies in its ability to bring out certain facts, which can add in decision-making. Any marketing manager in orde r to take decisions regarding the marketing mix of their products require tactfu l and unbiased information about t6he existing and potential market, their compe titors strategies about the customers perceptions for their product and those of t

he substitutes. The main purpose of the study is to know about the marketing strategies of LIC p articularly Marketing of services of better service opportunities to their custome rs and to what extent they are gaining customers satisfaction towards their rende red services. 1.1.2 Objective of the Study The main obnjective3s of the study is to find out the marketing orientation and level of satisfaction of customers towards the services provided by insurance se ctors with special reference to LIC (Life Insurance Corporation of India). 1.1.3 Scope of the Study As growth of insurance business rests on services provided by the company and po licyholders satisfaction level. So the present study is concerned with Marketing Orientation and the Level of Satisfaction of Customers towards the Services Pro vided by Insurance Sectors (w.s.r. LIC). By doing proper marketing research, it enables marketers to predict how consumer would react in the market place and to understand the reason they made the purchase decision. The present study, anal ysis, findings and suggestions proposed by the present researcher will be of imm ense use for future researcher with similar studies in insurance market. 1.1.4 Methodology The purpose of methodology section is to describe the research procedure. This includes the sampling procedure and the data collection. The research methodolo gy consists of the following aspects: 1.1.5 Sources of Data After the objective of the study has been clearly stated the next step in formal research project into determine the sources of data from which the data is requ ired to be collected for the purpose of achieving data efficiency. The information considered of two kinds of data. Primary Data Secondary Data Primary Data: Primary data were collected from the customers of LIC to know their behavior and satisfaction level towards insurance policy by putting questionnaire to the cus tomers. The questionnaire comprises of Multiple questions Ranking questions Open end questions Suggestion questions Scoring questions. Secondary Data: The secondary data was collected from various bibliographical sources. These da ta were collected from books, records, articles in the magazines, various report s and booklets of the company, monthly and annual journals of LIC. 1.1.6 Sample Size The sampling universes for the survey are the policyholders of LIC kin Berhampur

city. The people who have different educational level, income group, age are co nstitute the target sample in the study. And the sample size is 100. 1.1.7 Tools and Techniques To analyze the sample data collected from the sample holder of LIC policy and to make a comment on the total population out of which the sample is done, differe nt tools are to be applied for sample responses. Graphs like Pie, Bar, Cone etc . are applied for analysis. 1.1.8 Problem of the Study The study has been undertaken in order to find out the behavior of consumer taki ng place in insurance sector among insurance buyers in Berhampur City. It obser ves consumers buying behavior and their changing preferences. It takes into acc ount various problems of customers and a suggested strategy for life insurance C orporation of India. Under this study an attempt is made by management trainee to strengthen brand awareness among insurance buyers in Berhampur City.

1.1.9 Limitations of the Study During the course of the study the researcher faced with the following limitatio ns: Firstly, the short span of time could not permit me to have An in-depth study regarding consumer behaviors. The research study was carried out only at Berhampur. Therefore the result ma y not be applicable to national or state level. It is difficult to generate the main findings since the sample size is small. Some policyholders also hesitate to give data or ever hesitate to answer quest ionnaire. Contradictory responses of name customers were a limitation to drawn necessary conclusion. The above are some of the aspects which posed real problems in the way of comple tion of the research work but the majority of respondents were co-operative and my gratitude are due to them. 1.1.10 Presentation of the Study Chapter 1 contains the introduction of the project whereas Chapter 2 reveals the industry profile of the project, chapter 3 contains company profile and finally chapter 4 provides analysis of the content. 2. INDUSTRY PROFILE 2.1 First India Insurance Company M8701 The year 1870 heralded the birth of the first Indian Insurance company, the Bomb ay Mutual Life Assurance Society, which came into existence to cover India lives at normal rates. There was an increasing demand to start controlled life insurance companies, whi ch the Government turned down on the plea that there by were no significant stat istics adopted for Indians. On 3rd December, 1870, G.A. summers Asst. Registrar, Bombay High Court. 2.2 Insurance Act 1938

The Insurance Act, 1938 was the first comprehensive legislation governing not on ly life but also non-life branches of insurance to provide strict state control over insurance business. In separate sub sections it dealt with provident compan ies, mutual offices and co-operative society as well. The silent features of the act were as follows: Constitution of a Department of Insurance under a superintendent vested with wid e powers of supervision and control over all kinds of insurance companies. Regulation of the compulsory registration of insurance companies and for filling of investment and financial conditions. Provisions for deposits, to prevent insurers of inadequate financial resources o r speculative concerned from commencing business. Periodical valuation for Indian business of foreign companies and the business o f Indian companies. Provision for policyholders; directors, making it possible for the representativ es of policyholders to be on the board of Directors. 2.3 The Historic Day - 19th January 1956 When the All India Radio announced that the Finance Minister Sri C.D. Deshmukh w ould broad cast to the nation at 8.30 P.M. that day, no body had any idea of wha t he was going to talk about. Most people thought that he would be talking on th e problems of Bombay state reorganization, a burning topic of the day. But they heard him say: This afternoon the government has promulgated an ordinance regarding life insura nce. All life insurance companies, Indian as well as foreigner are doing busine ss in India came under Government management and control. 2.4 Insure Your Risk Life insurance is not an investment; it is cover for risk! And it is absolutely vital that everyone, depending on there age, number of dependents, income and li festyle take an appropriate policy at each point in life, insurance is a risk co ver. It is a cover to ensure that your family is not left unshielded if the earn ing member of the family expires. Insurance has become cheaper in recent times as private players have come into t he field. 3. COMPANY PROFILE 3.1 About Life Insurance Life insurance in India made its debut well over 100 years ago. In our country, which is one of the most populated in the world, the prominence of insurance is not as widely understood, as it ought to be. What follows is an attempt to acqua int readers with some of the concepts of life insurance, with special reference to LIC. It should, however, be clearly understood that the following content is by no means an exhaustive description of the terms and conditions of an LIC poli cy or its benefits or privileges. Life insurance in India made its debut well ov er 100 years ago. In our country, which is one of the most populated in the worl d, the prominence of insurance is not as widely understood, as it ought to be. W hat follows is an attempt to acquaint readers with some of the concepts of life insurance, with special reference to LIC. It should, however, be clearly underst ood that the following content is by no means an exhaustive description of the t erms and conditions of an LIC policy or its benefits or privileges. Life insurance is a contract that pledges payment of an amount to the person ass

ured (or his nominee) on the happening of the event insured against. The contra ct is valid for payment of the insured amount during: The date of maturity, or Specified dates at periodic intervals, or Unfortunate death, if it occurs earlier. Among other things, the contract also provides for the payment of premium period ically to the Corporation by the policyholder. Life insurance is universally ack nowledged to be an institution, which eliminates risk , substituting certainty for uncertainty and comes to the timely aid of the family in the unfortunate eve nt of death of the breadwinner. By and large, life insurance is civilizations par tial solution to the problems caused by death. Life insurance, in short, is conc erned with two hazards that stand across the life-path of every person: 1. That of dying prematurely is leaving a dependent family to fend for itse lf. 2. That of living till old age without visible means of support. 3.2 A Profile of Life Insurance Corporation of India Life Insurance Corporation is not only an eminent institution rather it is a popul ar industry. Life insurance is provided in the country by the life insurance corporation (LIC ) which was set up in 1956 as a result of the amalgamation of 245 private life i nsurance companies into a monolithic public sector organization. The Berhampur Division of LIC was originally a sister branch of the division off ice of LIC, Cuttack. The population area of Berhampur Division covers 58,971 sq. kilometer, covering population of approximately 9, 62,000. At present, it has 1 4 Branches in different area such as Berhampur (3), Chatrapur (1), Bhanjanagar ( 1), aska (1), Phulbani (1), Paralkhemundi (1), Rayagada (1), Koraput (1), Jaypor e (1), Nabarangpur (1), Bhawanipatna (1), and Nuapada (1). The total number of customers covered in the individual insurance plan and group insurance plan are 11.94 crores and 2.57 crores respectively. 3.2.1 Objective of LIC Spread Life Insurance widely and in particular to the rural areas and to the soc ially and economically backward classes with a view to reaching all insurable pe rsons in the country and providing them adequate financial cover against death a t a reasonable cost. Maximize mobilization of people s savings by making insurance-linked savings ade quately attractive. Bear in mind, in the investment of funds, the primary obligation to its policyho lders, whose money it holds in trust, without losing sight of the interest of th e community as a whole; the funds to be deployed to the best advantage of the in vestors 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 mone ys belong to the policyholders. Act as trustees of 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 w ith courtesy. Promote amongst all agents and employees of the Corporation a sense of participa tion, pride and job satisfaction through discharge of their duties with dedicati on towards achievement of Corporate Objective.

3.2.2 Mission "Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns, and by rendering resources for economic development." 3.2.3 Vision "A trans-nationally competitive financial conglomerate of significance to societ ies and Pride of India." 3.2.4 Benefits of LIC Protection: Savings through life insurance guarantee full protection against risk of death o f the saver. Also, in case of demise, life insurance assures payment of the enti re amount assured (with bonuses wherever applicable) whereas in other savings sc hemes, only the amount saved (with interest) is payable Aid to Thrift: Life insurance encourages thrift . It allows long-term savings since payments c an be made effortlessly because of the easy installment facility built into th e scheme. (Premium payment for insurance is monthly, quarterly, half yearly or y early). For example: The Salary Saving Scheme popularly known as SSS provides a convenie nt method of paying premium each month by deduction from one s salary. In this c ase the employer directly pays the deducted premium to LIC. The Salary Saving Sc heme is ideal for any institution or establishment subject to specified terms an d conditions. Liquidity: In case of insurance, it is easy to acquire loans on the sole security of any po licy that has acquired loan value. Besides, a life insurance policy is also gene rally accepted as security, even for a commercial loan. Money when you need: A policy that has a suitable insurance plan or a combination of different plans can be effectively used to meet certain monetary needs that may arise from timeto-time. Children s education, start-in-life or marriage provision or even perio dical needs for cash over a stretch of time can be less stressful with the help of these policies. Alternatively, policy money can be made available at the time of one s retirement from service and used for any specific purpose, such as, pu rchase of a house or for other investments. Also, loans are granted to policyhol ders for house building or for purchase of flats (subject to certain conditions) . Values: Integrity and transparency; Caring and courtesy; Initiative and innovation. 3.2.5 Marketing Strategy of LIC According to Rajan Saxena Marketing Strategy means Segmentation so lets know somet hing about Segmentation. 1. What Is A Segmentation: Dividing a market into distinct groups with distinct groups with a distinct need

s, characteristics, or behavior who might require separate products or marketing mixes. Segmenting markets is simply the analytical process of breaking the mark et into distinct segments. Before segmenting a market practically, lets first con sider some key issues and questions: 1. Its the only way to have a clear message in the market. 2. Its the only way to deliver what the customer wants. 3. Marketing academics have not been successful at segmenting the markets d ifferently and still finding meaningfully different segments. 2. The Bases For Segmentation: While it is difficult to determine what will segment a market into different seg ments based on different benefit tradeoffs, there are some useful ways of thinki ng about how this might be done. In any event, however, this is typically a reit erative process (i.e., trying one way, then another). One way to start the process is to look at the various benefits and think about whether There are groups of customers who would care about different clusters of these b enefits. In my opinion, this may lead to the following bases for beginning about segmenti ng a market. Usage - often how customers use a product can result in their making tradeoffs a cross different benefits. For example, light users and heavy users of a product often care about different benefits. Application - customers who apply a product in a mission critical way often care about different benefits (for business buyers this could be a way central to th eir business, but a cook may use a product that is central to a recipe as well). Prior experience with the product category - often denoted as experts and novice s, these different types of prior experience usually highly correlate with diffe rent needs. Often in consumer markets, prior brand loyalty, buying situation (work vs. enter tainment), or some- times lifestyle (as in the case of may cars) can be the basi s of segmentation. A good segmentation will also meet other criteria, such as The segments are measurable - that is, you can identify the size of the segment The segments are reachable - that is, you can reach the segment by media (often this can be ascertained by looking at the segment descriptors) 3. Establishing Possible Bases For Segmenting: It is widely thought in marketing that than segmentation is an art, not a scienc e. The key task is to find the variable, or variables that split the market into actionable segments there are two types of segmentation variables: Needs Profilers The basic criteria for segmenting a market are customer needs. To find the needs of customers in a market, it is necessary to undertake market research. Profile rs are the descriptive, measurable customer characteristics (such as location, a ge, nationality, gender, income) that can be used to inform a segmentation exerc ise. The most common profilers used in customer segmentation include the followi ng: Demographic Geographic Age, sex, family size, Income, occupation, Region of the country Urban or rural Behavioral Psycho graphic

Product usage ( light, medium, heavy users) Brand loyalty (none, medium, high) Type of user (meals, special occasions) Social class Lifestyle type Personality type Segmenting customer groups. 4. How To Segment Markets Perhaps the most important analytical process of marketing is segmentation. By s egmenting the market, one obtains a very clear understanding of customers and ul timately provides a basis for clear and precise targeting and positioning. But s egmentation is also very difficult and, especially without complete customer dat a, is what I would admit as an art form in marketing. One can become quite confused about segmentation because the term has been used to signify many things. Typically, one will find the term segmentation applied to demographics and lifestyles in consumer markets and size, industry, and geogr aphy in business markets. On the internet, people use age, gender, etc. for segm entation (or worse yet, confuse segmentation with terms like one-to-one marketin g as though people are so unique and share little commonality). Its all very confusing, but there is a way to make this clearer and the answer li es in the work of Russell Haley (Journal of Marketing, July 1968) who first used the term benefit segmentation. Also known as Needs-Based segmentation, benefit se gmentation is essentially the idea that customers should be segmented on the bas is of their needs. Simply put, customers in different benefit segments have diff erent needs.

3.2.6 LIC Marketing Strategy With Respect To Various Policy Plans LIC has a family of schemes for this customer and their family to meet various n eeds.

Jeevan Anurag Komal Jeevan CDA Endowment Vesting At 21 Marriage Endowment Or Educational Annuity Plan CDA Endowment Vesting At 18 Jeevan Kishore Jeevan Chhaya Child Career Plan

Child Future Plan

Jeevan Aadhar Jeevan Vishwas

The Endowment Assurance Policy The Endowment Assurance Policy-Limited Payment Jeevan Mitra(Double Cover Endowment Plan) Jeevan Mitra(Triple Cover Endowment Plan) Jeevan Anand New Janaraksha Plan Jeevan Amrit

Jeevan Shree-I Jeevan Pramukh

The Money Back Policy-20 Years The Money Back Policy-25 Years

Jeevan Surabhi-15 Years Jeevan Surabhi-20 Years Jeevan Surabhi-25 Years Jeevan Rekha (closed for sale) Bima Bachat

INSURANCE PLANS - THE ENDOWMENT ASSURANCE POLICY Features: Moderate Premiums High bonus High liquidity Savings oriented. This policy not only makes provisions for the family of the Life Assured in even t of his early death but also assures a lump sum at a desired age. The lump sum can be reinvested to provide an annuity during the remainder of his life or in a ny other way considered suitable at that time. Premiums are usually payable for the selected term of years or until death if it occurs during the term period. Suitable For: Being an endowment assurance policy, this plan is apt for people o f all ages and social groups who wish to protect their families from a financial setback that may occur owing to their demise. The amount assured if not paid by reason of his death earlier will payable at the end of the endowment term where it can be invested in an annuity provision for the rest of the policyholder s l ife or in any other way he may think most suitable at time. Disability Benefit: In case policy holder becomes totally and permanently disabl ed due to an accident before reaching the age of 70 and the policy is in full fo rce, he will not be required to pay further premiums, (the Disability Benefit is available in respect of the first Rs.20, 000 sum assured on any one life) and t he policy will continue to be in force. Accident Benefit: By paying a small extra premium of Rs.1 per Rs.1000/- sum assu red 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 year s can avail of this benefit. Premium Stoppage: If payment of premiums ceases after at least THREE years prem iums have been paid , a free paid-up policy for a reduced sum assured will be au tomatically secured provided the reduced sum assured, exclusive of any attached bonus, is not less than Rs. 250/-. The reduced sum assured will become payable o n the event as stipulated in the policy. Bonus: Is there anything extra payable besides the sum assured at the time of cl aim 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 p olices in the form of bonuses. Substantial bonuses have been declared in the pas t after each valuation of policy liabilities.

GROUP SCHEME - JANASHREE BIMA YOJANA Features: The objective of the scheme is to provide life insurance protection to the rural and urban poor persons below poverty line and marginally above the poverty line . Eligibility: Nodalagency: A State Government Department which is concerned with the welfare o f any such vocation/occupation group, a Welfare Fund/ Society, Village Panchayat , NGO, Self-Help Group, etc. Minimum Membership Size: Twenty five. SPECIAL PLANS - BIMA NIVESH 2005 Bima Nivesh 2005 is a plan with compound rate of guaranteed additions and loyalt y additions. This is the revised version of our popular Bima Nivesh Plan 2004 an d is introduced to meet the overwhelming demand for a single premium plan from o ur customers. It is a single premium, ideal investment plan for those who have n o regular income but good periodical income. Bima Nivesh 2005 is available for t erms 5 and 10 years. The guaranteed surrender value is payable after the policy has run for at least one year. Term Assurance Rider is also available by payment of a single premium at the option of the proposer. INSURANCE PLANS: BIMA BACHAT What is Bima Bachat? LICs Bima Bachat is a money-back policy which offers financial security and assur ance to the policy holder and his family. Bima Bachat requires the policy holder to pay only one premium. The amount paid for the premium depends on the duratio n of the policy taken and life insurance is available till the date of maturity. What other benefits do I receive during the specified duration of the policy? For a term of 9 years: The policy holder will receive 15% of the sum assured at the end of every 3rd and 6th policy year. For a term 12 years: The policy holder will receive 15% of the sum assured at th e end of every 3rd, 6th and 9th policy year. For a term 15 years: The policy holder will receive15% of the sum assured at the end of every 3rd, 6th, 9th and 12th policy year. INSURANCE PLANS: HILDREN S DEFERRED ENDOWMENT ASSURANCE PLAN Product Summary: This is an Endowment Assurance plan designed to enable a parent or a legal guardian or any near relative of the child (called proposer) to prov ide insurance cover on the life of the child (called life assured). The plan has two stages, one covering the period from the date of commencement of policy to the Deferred Date (called deferment period) and the other covering the period fr om the Deferred Date to the date of maturity. The insurance cover on the childs l ife starts from the Deferred Date and is available during the latter period.

The Deferred Date in case of Plan No 41 is the policy anniversary date coincidin g with or next following the date on which the child completes 21 years of age. In case of Plan No 50 it is the policy anniversary date coinciding with or next following the 18th birthday of the child. Premiums: Premiums are payable yearly, half-yearly, quarterly or monthly and this shall ce ase on the death of the life assured . Premiums are waived on death of Proposer provided this benefit is availed. Bonuses: This is a with-profits plan and participates in the profits of the Corporations l ife insurance business after the deferred date. It gets a share of the profits i n the form of bonuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year. Once declared, they form pa rt of the guaranteed benefits of the plan. INSURANCE PLANS - CHILD FUTURE PLAN Death Benefit: On death (after the Date of Commencement of Risk) - Sum Assured a long with vested Simple Reversionary Bonuses and Final (Additional) Bonus, if an y shall be payable. On death during the Extended Term - Sum Assured is payable. On death (before the Date of Commencement of Risk) - All the premiums paid (excl uding extra premium and premium for premium waiver benefit, if any,) along with interest of 3% p.a compounding yearly shall be payable. INSURANCE PLANS - JEEVAN ANURAG LICs Jeevan ANURAG is a with profits plan specifically designed to take care of t he educational needs of children. The plan can be taken by a parent on his or he r own life. Benefits under the plan are payable at prespecified durations irresp ective of whether the Life Assured survives to the end of the policy term or die s during the term of the policy. In addition, this plan also provides for an imm ediate payment of Basic Sum Assured amount on death of the Life Assured during t he term of the policy. Assured Benefit: Payment of 20% of the Basic Sum Assured at the start of every y ear during last 3 policy years before maturity. At maturity, 40% of the Basic Su m Assured along with reversionary bonuses declared from time to time on full Sum Assured for the full term and the Terminal bonus, if any shall be payable. For example, if term of the policy is 20 years, 20% of the Sum assured will be payab le at the end of the 17th, 18th, 19th year and 40% of the Sum Assured along with the reversionary bonuses and the terminal bonus, if any, at the end of the 20th year. Death Benefit: Payment of an amount equal to Sum Assured under the basic plan im mediately on the death of the life assured. INSURANCE PLANS -CHILD CAREER PLAN Introduction: This plan is specially designed to meet the increasing educational and other needs of growing children. It provides the risk cover on the life of child not only during the policy term but also during the extended term (i.e. 7 years after the expiry of policy term). A number of Survival benefits are payabl e on surviving by the life assured to the end of the specified durations. Options: You may choose Sum Assured (S.A.), Maturity Age, Policy Term, Mode of P remium payment and Premium Waiver Benefit. Payment of Premiums: You may pay the premiums regularly at yearly, half-yearly, quarterly or through Salary deductions over the term of policy. Premiums may be

paid either for 6 years or up to 5 years before the policy term. UNIT PLANS - FUTURE PLUS Auto-cover: If the Policyholder has opted for risk cover, then charges for the s ame shall be taken by canceling an appropriate number of units out of the Policy holders Unit Account every month. This will continue to provide relevant risk cov ers even if premiums have not been paid as and when due under the policy. During the period of Auto-cover any/ all unpaid Premiums that have fallen due may be p aid at anytime without interest. For Regular premium policies, where 3 or more y ears premiums have been paid, the Auto-cover facility will compulsorily be availa ble throughout the term of the policy. However, for Regular premium policies whe re less than 3 years premiums have been paid, the Auto-cover facility will compul sorily be available only for a period of 6 months from the due date of the First Unpaid Premium. Thereafter, the risk cover will cease i.e. the policy will laps e. In such cases, the Policyholder shall have the option of reviving the policy within a period of 5 years from the due date of the First Unpaid Premium, by pay ing all unpaid premiums without interest and on submission of proof of continued insurability to the satisfaction of the Corporation. Notwithstanding what is st ated above, the balance in the Policyholders Unit Account, at all times, and shou ld be sufficient to cover the relevant charges. However, for all Regular Premium policies where at least 3 years premiums have been paid, the Policyholders Unit A ccount, at all times, and shall be subject to a minimum balance of one years annu alized premium in the Policyholders Unit account. In case the Policyholders Unit A ccount falls below this limit, the policy shall compulsorily be terminated and t he balance amount in the Policyholders Unit Account will be refunded to the Polic yholder. Top-up (Additional Premium): The policyholder can pay additional premium in mult iples of Rs.1,000 without any limit at anytime during the term of the policy. In case of yearly or half-yearly mode of premium payment such Top-up can be paid o nly if all premiums have been paid under the policy. Increase / decrease of benefits: No increase (except to the extent of Top-up sta ted above) of benefits will be allowed under the plan. The Policyholder can, how ever, decrease the risk cover once in a year during the Policy term, subject to the respective minimum limits, provided all due premiums under the Policy have b een paid. Minimum Guaranteed Growth rate: For the Bond fund, the allocated premiums, net of all charges and deductions, will have a guaranteed minimum growth rate of 3% p.a . compounding yearly, provided the minimum policy term is 10 years and the polic y is held till the vesting date without any switching to any other fund in betwe en. The guarantee shall not apply to any Top-up premiums paid under the Policy. There will be no guarantee under other funds. INSURANCE PLANS: As individuals it is inherent to differ. Each individual? Insurance needs and r equirements are different from that of the others. LIC? Insurance Plans are poli cies that talk to you individually and give you the most suitable options that c an fit your requirement. INSURANCE PLANS - JEEVAN ADHAR Product summary: This plan may be offered to a person who has a handicapped depe ndant satisfying conditions as specified in Section 80DDA of Income Tax Act, 196 1. The plan provides life insurance cover throughout the lifetime of the purchas er. The benefits under the plan are for the handicapped dependants who are partl y in lump sum and partly in the form of anannuity.The premiums paid under this p lan are eligible for Income Tax relief under Section 80DDA of Income Tax Act.

Premiums: Premiums are payable yearly, half-yearly, quarterly, monthly or throug h Salary deductions, as opted by you, within the selected premium paying terms o f 10, 15, 20, 25, 30 or 35 years or till the earlier death. Alternatively, the p remiums may be paid in one lump sum (Single Premium). Guaranteed Additions: The policy provides for the Guaranteed Additions at the ra te of Rs.100 per thousand Sum Assured for each completed policy year. The Guaran teed Additions will accrue up to age 65 of the life assured or till his/her deat h, if earlier. Terminal Additions: This is a with-profits plan and participates in the profits of the Corporations life insurance business. It gets a share of the profits in t he form of Terminal Additions. The policy will be entitled for Terminal Additio ns if at least 10 years premiums have been paid. The Terminal additions would de pend on the future experience of the Corporation. INSURANCE PLANS - JEEVAN REKHA Product summary: This is a Money Back Whole Life plan. It provides financial pro tection against death throughout the lifetime with regular flow of survival bene fits at five yearly intervals. Premium: Premiums are payable yearly, half-yearly, quarterly, monthly or through salary deduction, as opted by you. The premium paying terms available are 5, 10 , 15, 20, 25 years or for life. Alternatively, the premium may be paid in one lu mp sum (single premium). Bonuses: This is a with-profit plan and participates in the profits of the Corpo rations life insurance business. It gets a share of the profits in the form of b onuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annual ly at the end of each financial year. Once declared, they form part of the guar anteed benefits of the plan. A Final (Additional) Bonus may also be payable prov ided the policy has run for certain minimum period.

INSURANCE PLANS - JEEVAN SAATHI Product summary: This is an Endowment Assurance Plan issued on the lives of husb and and wife. The plan provides financial protection against death of both the l ives. It pays the maturity amount on survival of one or both the lives to the en d of the policy term. Premiums: Premiums are payable yearly, half-yearly, quarterly, monthly or throug h salary deductions as opted by you throughout the term of the policy or till th e first death of the lives covered, whichever is earlier. Bonuses: This is a with-profit plan and participates in the profits of the Corpo rations life insurance business. It gets a share of the profits in the form of bo nuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annuall y at the end of each financial year. Once declared, they form part of the guaran teed benefits of the plan. Such bonuses are to be added till date of maturity or the second death of the lives covered, whichever is earlier. Final (Additional) Bonus may also be payable provided policy has run for certain minimum period. INSURANCE PLANS - THE WHOLE LIFE POLICY- LIMITED PAYMENT This is the best form of life assurance for family provision since it enables th

e Life Assured to pay all the premiums during the ordinarily vigorous and most p roductive years of life. He need not pay any premium in the later stages of life if and when his conditions might be come 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 be entitled to participate in the profits declared thereafter, but such Bonus as has already been declared on the Policy will remain attached thereto. The premium paying term under this plan is five ye ars minimum and 55 years maximum.2 UNIT PLANS - MARKET PLUS IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLIC YHOLDER LICS MARKET PLUS: This is a unit linked deferred pension plan. You can take the plan with or witho ut risk cover. You can also choose the level of cover within the limits, which w ill depend on whether the policy is a Single premium or Regular premium contract and on the level of premium you agree to pay. The allocated premiums will be applied to purchase units as per the Fund type ch osen. Your Unit Account will be subject to deduction of charges as specified in the Policy Conditions. The value of the units in the Unit Fund may increase or d ecrease, depending on the investment return of the assets representing the chose n Fund. Payment of Premiums: You may pay premiums regularly at yearly, half-yearly or qu arterly intervals over the term of the policy. The minimum annual premium will b e Rs.5,000/- increasing thereafter in multiples of Rs.1,000/-. Alternatively, a Single premium can be paid subject to a minimum of Rs.10,000 and thereafter in m ultiples of Rs.1,000. Benefits: (a) Death Benefit: If the Life cover is opted for, the Sum Assured under the Basic Plan together with the Fund Value of units either as a lump sum or as pen sion. In case the policy is taken without life cover, then the Fund Value of the units held in the Policyholders Unit Account shall be payable either as a lump s um or as a pension. The amount of pension will depend on the then prevailing imm ediate annuity rates under the annuity option chosen. (b) Benefit on Vesting: On your surviving to the date of vesting, the Fund V alue of the units held in your Unit Account will compulsorily be utilized to pro vide a pension based on the then prevailing immediate annuity rates under the re levant annuity option. However, you may opt to commute up to one-third of the Be nefit to be paid as a lump sum. Further, you may choose to purchase pension from LIC or other life insurance company. INSURANCE PLANS - MARRIAGE ENDOWMENT OR EDUCATIONAL ANNUITY PLAN Product summary: This is an Endowment Assurance plan that provides for benefits on or from the selected maturity date to meet the Marriage/Educational expenses of the named child. Premiums: Premiums are payable yearly, half-yearly, quarterly, monthly or throug h Salary deductions, as opted by you, throughout the term of the policy or earli er death.

Bonuses: This is a with-profit plan and participates in the profits of the Corpo rations life insurance business. It gets a share of the profits in the form of b onuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annual ly at the end of each financial year. Once declared, they form part of the guar anteed benefits of the plan. Such bonuses are to be added till maturity even if the life assured dies before the maturity date. Final (Additional) Bonus may als o be payable provided a policy is of a certain minimum term. UNIT PLANS - MONEY PLUS LICs MONEY PLUS IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLIC YHOLDER This is a unit linked Endowment plan which offers investment cum insurance durin g the term of the policy. You can choose the level of cover within the limits, w hich will depend on whether the policy is a Single premium or Regular premium co ntract, term chosen and on the level of premium you agree to pay. The allocated premiums will be applied to purchase units as per the Fund type ch osen. Your Unit Account will be subject to deduction of charges as specified in the Policy Conditions. The value of the units in the Unit Fund may increase or d ecrease, depending on the investment return of the assets representing the chose n Fund Type. Payment of Premiums: You may pay premiums regularly at yearly, half-yearly or qu arterly intervals over the term of the policy. The minimum annual premium will b e Rs.5,000/- increasing thereafter in multiples of Rs.1,000/-. Alternatively, a Single premium can be paid subject to a minimum of Rs.10,000/- and thereafter in multiples of Rs.1,000/-. Benefits: (a) Death Benefit: Higher of Sum Assured or the Fund Value of the units held in the Policyholders Fund Value* shall be available as death benefit. *For the Life Assured of age less than 12 years before the commencement of risk, the Fund Value of units held in the Policyholders Fund Value shall be paid in ca se of death. (b) Maturity Benefit: On the Life Assured surviving the maturity date of the contract, an amount equal to the Fund value of the units held in the Policyhold ers Fund Value is payable. Options: (a) Accident Benefit option: If you are above 18 years of age, you may opt f or Accident Benefit equal to the amount of life cover subject to minimum of Rs. 25,000 and maximum of Rs. 50 lakh (taken all policies with LIC of India and othe r insurers.) In case of death by Accident, an additional sum equal to Accident B enefit sum assured shall be payable. (b) Critical Illness Benefit Rider: If you are between 18 and 50 years of ag e, you may opt for Critical Illness Benefit equal to the life cover subject to a minimum of Rs. 50,000 and maximum of Rs. 5 lakh (including other policies with LIC of India) provided the policy term is 10 years and above. In case of diagnos is of defined categories of Critical Illness subject to certain terms and condit ions, an additional sum equal to the Critical Illness Benefit shall be payable. INSURANCE PLANS - MONEY BACK WITH PROFIT Unlike ordinary endowment insurance plans where the survival benefits are payabl e only at the end of the endowment period, this scheme provides for periodic pay

ments of partial survival benefits as follows during the term of the policy, of course so long as the policy holder is alive. In the case of a 20-year Money-Back Policy (Table 75), 20% of the sum assured be comes payable each after 5, 10, 15 years, and the balance of 40% plus the accrue d bonus become payable at the 20th year. For a Money-Back Policy of 25 years (Table 93), 15% of the sum assured becomes p ayable each after 5, 10, 15 and 20 years, and the balance 40% plus the accrued b onus become payable at the 25th year. An important feature of this type of policies is that in the event of death at a ny time within the policy term, the death claim comprises full sum assured witho ut deducting any of the survival benefit amounts, which have already been paid. Similarly, the bonus is also calculated on the full sum assured. UNIT PLAN Unit plans are investment plans for those who realise the worth of hard-earned m oney. These plans help you see your savings yield rich benefits and help you sav e tax even if you dont have consistent income.

Jeevan Plus (closed for sale) Future Plus (closed for sale) Bima Plus (closed for sale) Market Plus Money Plus (closed for sale) Profit Plus Fortune Plus

UNIT PLANS - JEEVAN PLUS Live the Plus Life with LICs Jeevan Plus a unique Unit Linked Whole Life plan that offers the twin benefits of investment plus insurance cover through out your lif e. You can choose the level of cover you are most comfortable with. Selecting yo ur premium payment options from either single premium or a regular premium. You can even decide the level of premium you wish to pay. Welcome to a life of conv enience. Welcome to the Plus Life! The premium will be applied to purchase units as per the Fund type chosen by you . The unit account will be subject to deduction of charges as specified in the P olicy conditions. The value of the units in the Unit Fund may increase or decrea se, depending on the investment return of the assets representing the chosen Fun d. Premiums: Regular premium can be paid either in yearly, half-yearly or quarterly installments. The minimum annual premium will be Rs.5, 000/- increasing therea fter in multiples of Rs.1, 000/-.Alternatively, a Single premium can be paid sub ject of a minimum of Rs.25, 000 and thereafter in multiples of Rs.1, 000. UNIT PLANS - FUTURE PLUS If the Policyholder has opted for risk cover, then charges for the same shall be taken by canceling an appropriate number of units out of the Policyholders Unit Account every month. This will continue to provide relevant risk covers even if premiums have not been paid as and when due under the policy. 3.2.7 Current Insurance Market Situation

The introduction of private players in the industry has added colours to the dul l industry. The initiatives taken by the private players are very competitive an d have given immense competition to the on time monopoly of the market LIC. Sinc e the advent of the private players in the market the industry has seen new and innovative steps taken by the players in the sector. The new players have improv ed the service quality of the insurance. As a result LIC down the years have see n the declining in its career. The market share was distributed among the privat e players. Though LIC still holds 75% of the insurance sector the upcoming natur e of these private players are enough to give more competition to LIC in the nea r future. LIC market share has decreased from 95%(2002-03) to 81% (2004-05). The following company holds the rest of the market share of the insurance industry. Table 1 Name of the Player Market Share COMPANY % OF SHARE LIC 82.30% ICICI PRUDENTIAL 5.63% BIRLA SUN LIFE 2.56% BAJA ALLIANZ 2.03% SBI LIFE 1.80% LIC STANDARD 1.36% TATA AIG 1.29% MAX NEW YORK 0.90% AVIVA 0.79% OM KOTAK MAHINDRA 0.51% ING VYASA 0.37% AMP SANMAR 0.26% METLIFE 0.21% Source:www.imrbintl.com

3.2.8 Present Scenario of Globalisation In a tough battle to expand market shares the private sector life insurance indu stry consisting of 14 life insurance companies at 26% have lost 3% of market sha re to the state owned Life Insurance Corporation (LIC) in the domestic life insu rance industry in 2006-07. According to the figures released by Insurance Regula tory & Development Authority, the total premium of these 14 companies have shot up by 90% to Rs 19,471.83 crore in 2006-07 from Rs 10, 252cr . LIC with a total premium mobilisation of Rs 55,934 crore has been able to retain a market share of 74.26 % during the reporting period. In total the life insura nce industry in first year premium has grown by 110% to Rs 75, 406 crore during 2006-07. The 2006-07 performance has thrown a few surprises in the ranking among the private sector life insurance companies. New entrants like Reliance Life and SBI Life had shown a huge growth of over 381% and 210% respectively during the year . Reliance Life which has become one of the top five companies ended the year wi th a premium of Rs 930 crore during the year. Though ICICI Prudential Life Insurance remained as the No 1 private sector life insurance company during the year. Bajaj Allianz overtook ICICI Prudential in te rms of monthly market share in March, for the first time ever. Bajaj s market sh are among private players in non-single premium for March stood at 29.1% vs. ICI CI Prudential s 23.8%. Bajaj gained 4.6-percentage point market share among priv

ate sector players for FY07. Among other private players, SBI Life and Reliance Life continued to do well, ea ch gaining 4% market share in FY07. SBI Life s growth was driven by increasing c ontribution from ULIP premiums. Another notable developments of the 2006-07 perf ormances have been the expansion of retail markets by the life insurance compani es. Bajaj Alliannz Life insurance has added 20 lakh policies while ICICI Prudent ial has expanded over 19 lakh policies during the year. LIC as on March 31, 2007 holds 81.9 per cent of equity in the joint venture. With the largest number of life insurance policies in force in the world, Insura nce happens to be a mega opportunity in India. Its a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion. Tog ether with banking services, it adds about 7 per cent to the countrys GDP. Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investments are 8 per cent of GDP. Yet, nearly 80 per cent of Indian population is without life insurance cover whi le health insurance and non-life insurance continues to be below international s tandards. And this part of the population is also subject to weak social securit y and pension systems with hardly any old age income security. This itself is an indicator that growth potential for the insurance sector is immense. A well-developed and evolved insurance sector is needed for economic development as it provides long-term funds for infrastructure development and at the same t ime strengthens the risk taking ability. It is estimated that over the next ten years India would require investments of the order of one trillion US dollar. Th e Insurance sector, to some extent, can enable investments in infrastructure dev elopment to sustain economic growth of the country. Insurance is a federal subject in India. There are two legislations that govern the sector- The Insurance Act- 1938 and the IRDA Act- 1999. The insurance sector in India has become a full circle from being an open competitive market to nati onalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360-degree turn witnessed over a period of almost two centuries. 3.2.9 Opportunities A state monopoly has little incentive to innovative or offers a wide range of pr oducts. It can be seen by a lack of certain products from LICs portfolio and lack of extensive risk categorization in several GIC products such as health insuran ce. More competition in this business will spur firms to offer several new produ cts and more complex and extensive risk categorization. It would also result in better customer services and help improve the variety and price of insurance pro ducts. The entry of new players would speed up the spread of both life and general insu rance. Spread of insurance will be measured in terms of insurance penetration an d measure of density. With the entry of private players, it is expected that insurance business roughl y 400 billion rupees per year now, more than 20 per cent per year even leaving a side the relatively under developed sectors of health insurance, pen More import antly, it will also ensure a great mobilization of funds that can be utilized fo r purpose of infrastructure development that was a factor considered for globali zation of insurance. More importantly, it will also ensure a great mobilization of funds that can be utilized for purpose of infrastructure development that was a factor considered for globalization of insurance.

With allowing of holding of equity shares by foreign company either itself or th rough its subsidiary company or nominee not exceeding 26% of paid up capital of Indian partners will be operated resulting into supplementing domestic savings a nd increasing economic progress of nation. Agreements of various ventures have a lready been made to be discussed later on in this paper. It has been estimated that insurance sector growth more than 3 times the growth of economy in India. So business or domestic firms will attempt to invest in ins urance sector. Moreover, growth of insurance business in India is 13 times the g rowth insurance in developed countries. So it is natural, that foreign companies would be ostering a very strong desire to invest something in Indian insurance business.Most important not the least tremendous employment opportunities will b e created in the field of insurance which is burning problem of the present day today issues.

3.2.10 Challenges Before the Industry New age companies have started their business as discussed earlier. Some of thes e companies have been able to float 3 or 4 products only and some have targeted to achieve the level of 8 or 10 products. At present, these companies are not in a position to pose any challenge to LIC and all other four companies operating in general insurance sector, but if we see the quality and standards of the prod ucts which they issued, they can certainly be a challenge in future. Because the challenge in the entire environment caused by globalization and liberalization the industry is facing the following challenges. The existing insurer, LIC and GIC, have created a large group of dissatisfied cu stomers due to the poor quality of service. Hence there will be shift of large n umber of customers from LIC and GIC to the private insurers. LIC may face problem of surrender of a large number of policies, as new insurers will woo them by offer of innovative products at lower prices. The corporate clients under group schemes and salary savings schemes may shift t heir loyalty from LIC to the private insurers. There is a likelihood of exit of young dynamic managers from LIC to the private insurer, as they will get higher package of remuneration. LIC has overstaffing and with the introduction of full computerization, a large number of the employees will be surplus. However they cannot be retrenched. Henc e the operating costs of LIC will not be reduced. This will be a disadvantage in the competitive market, as the new insurers will operate with lean office and h igh technology to reduce the operating costs. GIC and its four subsidiary companies are going to face more challenges, because their management expenses are very high due to surplus staff. They cant reduce t heir number due to service rules. Management of claims will put strain on the financial resources, GIC and its sub sidiaries since it is not up the mark. LIC has more than to 60 products and GLC has more than 180 products in their kit ty, which are outdated in the present context as they are not suitable to the ch anging needs of the customers. Not only that they are not competent enough to co mplete with the new products offered by foreign companies in the market.

Reaching the consumer expectations on par with foreign companies such as better yield and much improved quality of service particularly in the area of settlemen t of claims, issue of new policies, transfer of the policies and revival of poli cies in the liberalized market is very difficult to LIC and GIC. Intense competition from new insurers in winning the consumers by multi-distribu tion channels, which will include agents, brokers, corporate intermediaries, ban k branches, affinity groups and direct marketing through telesales and interest. The market very soon will be flooded by a large number of products by fairly lar ge number of insurers operating in the Indian market. Even with limited range of products offered by LIC and GIC, the consumers are confused in the market. Thei r confusion will further increase in the face for large number of products in th e market. The existing level of awareness of the consumers for insurance product s is very low. It is so because only 62% of the Indian population is literate an d less than 10% educated. Even the educated consumers are ignorant about the var ious products of the insurance. The insurers will have to face an acute problem of the redressal of the consumer s, grievances for deficiency in products and services. Increasing awareness will bring number of legal cases filled by the consumers ag ainst insurers is likely to increase substantially in future. Major challenges in canalizing the growth of insurance sector are product innova tion, distribution network, investment management, customer service and educatio n. 3.2.11 Essentials to Meet the Challenges Indian insurance industry needs the following to meet the global challenges Unde rstanding the customer better will enable insurance companies to design appropri ate products, determine price correctly and increase profitability. Selection of right type of distribution channel mix along with prudent and efficient FOS [Fl eet On Street] management. An efficient CRM system, which would eventually creat e sustainable competitive advantages and build a long-lasting relationship Insur ers must follow best investment practices and must have a strong asset managemen t company to maximize returns. Insurers should increase the customer base in sem i urban and rural areas, which offer a huge potential. Promoting health insuranc e and using e-broking to increase the business. The table below gives a general guide to the plans that are appropriate for diff erent life stages. Table 2 - General Guide to the plans that are appropriate for different life sta ges. Life Stage Primary Need Life Insurance Product Young & Single Asset creation Wealth creation plans Young & Just married Asset creation & protection Wealth creation and mort gage protection plans Married with kids Children s education, Asset creation and protection Education insurance, mortgage protection & wealth creation plans Middle aged with grown up kids Planning for retirement & asset protection Retirement solutions & mortgage protection Across all life-stages Health plans Health Insurance

(Source: LIC Executive Manual) 3.3 SWOT Analysis SWOT analysis holds a mirror to the strength, weakness, opportunity and threat t o a company. The assessment of those things will help the company to adopt chang es keeping in view the growing demand of the customers for a quality product, re asonable price and good after and before sales service. In order to thrive in th e market to gain more and more market share as well as to protect the old one a company needs to be more and more introspective. It is no matter how we look to us, but its a matter how they look to us. SWOT analysis will feed us with this id ea. 3.3.1 Strength LIC is having More market share in the Insurance industry It cover toward whole the country More Popularity among the people

3.3.2 Weakness Lack of Competitive Toward the Private insurance Company They have to fulfill all the unfulfilled customer needs There have not much unit linked product

3.3.3 Opportunities Arrival of new technologies. Loosening of regulations. An opportunity to trap untargeted markets.

3.3.4 Threats Entering new private players into the market. Somewhat increased trade barrier. Shifts in consumer tastes away from the firms product.

3.4 Human Resources At LIC, training is an inherent element of our support system - at no extra cost - for our new Financial Consultants. Some of our training, guidance and support initiatives are as follows: 3.4.1 Basic Training & Induction Perfects your knowledge about the insurance industry as well as our products Advanced Training: Upgrades your capability and knowledge through sophisticated training programs customized for the changing world of financial products and ma rkets Unmatched Support: Marketing activity support to make your task easier advertisi ng & communication support throughout the year customer friendly brochures and s ales aids, to help you sell better 24-hour information support, to help you trac k your performance and income. 3.5 Appraisal System Decide your own salary amount: Your income is directly proportional to the effort put in by you. The more you s

ell, the more you earn. And our commission structure (as per IRDA guidelines) ha s the ability to give you the maximum benefits for every policy you sell. Long term earning potential: The policies sold by you will give you a renewed income every year. So every yea r your income keeps increasing steadily even if you sell the same number of poli cies. Regular income: The company pays gularly income when you associate with he commission you earn e very 15 days. This ensures that you get a reward. Your reward: We have several reward programs to inspire good performance and create a positiv e spirit amongst our Financial Consultants. So you can look forward to foreign t rips, seminars, prizes and special club memberships to the Silver Club, Gold Clu b & Platinum Club We also sponsor our top performing Financial Consultants for international train ing programs and seminars. This year we are sponsoring 124 Financial Consultants for such events.

3.6 Segmentation The life insurance and pension business has two distinct customers segments - in dividuals and corporate. In case of the retail business for individuals, the 4 s ub-segments are - protection, investment, savings and pension. Apart from the ex isting leader LIC, new companies such as LIC , TATA AIG, ICICI Prudential and mo re will seek to be present across all the segments of the market.Among the retai l products for individuals, pure risk protection products have been introduced b y some of the new life insurance companies in the market. As these products have no savings component to it, the premiums are very low compared to other product s. Investment products provide long term investment growth and insurance cover. This segment is growing rapidly. Savings products like Endowments and Money-Back s provide a combination of protection and investment benefits. The last segment of pension includes products that are aimed at offering customers an income duri ng their retirement years. In case of the group business, there are three sub-segments - protection, statut ory savings and pension. Group insurance products are taken to provide low cost life insurance cover to a group of people. Group insurance can be taken to provi de low cost life insurance cover as part of employee benefit packages to motivat e employees or to cover the housing or vehicle loan given by employer to employe e. It can also be used as a substitute for the statutory EDLI subject to approva l by the Regional Provident Fund Commissioner. The statutory savings segment ess entially comprises of the gratuity products for companies. The pension segment w ill include products like group superannuation, which will enable a company to b enefit from the actuarial, investment and operational expertise of a specialist company to manage its superannuation Service involves measuring customer satisfaction levels, improving enterprise-wi de support and response times, and managing customer data to look for buying or complaint trends. LIC SLIC gives many customer services i.e. On line trading & E -commerce 3.7 Competitors ICICI-PRUDIATIAL

SBI LIFE INSURANCE LIC-SLIC BAJAJ ALLIANZ TATA AIG BIRLA SUNLIFE

4. ANALYSIS AND FINDINGS 4.1 Consumer Analysis Results indicate that males who have qualified the senior school more in the age group of 31-43 represent the highest potency to buying life insurance. Those ru ral households with head of the family more educated but with less family income are more likely to purchase a life insurance policy than those with better soci al security but lesser education. Factorial analysis of rural customer preferences for life insurance products ind icates the consistency of income is on the top of the rural consumers mind. The second rank is for behaviour. Old age provision, followed by provision for the s pouse life and others. This argument can be further substantiated from the resul ts obtained for buying The rural customers consider safety of invested funds as the most important fact or in buying a life insurance followed by claims settlement and assistance in po licy purchases. This is obvious because of the low-income levels and money avail able for investment. Rural consumers predominantly are risk avoiders, therefore, the insurance companies cannot project the similar appearance and image they ma intain for an average urban insured. Also, it is observed that rural customers having bank accounts have higher poten tial for buying insurance, which implies the possibility of cross selling or ban cassurance. The agents play an important role in assisting the rural customers i n buying a right kind of product. Claim settlement is also vital for rural consu mers. Whereas the legal grievance redressel system is considered effective in ur ban India, rural customers expect hassle-free claims and dispute settlement mach inery without resorting to judiciary. Traditionally, the agents play an importan t role in claims settlement, since they mostly do all the work relating to submi ssion of documents with the insurer for claims till release of payments. It ther efore implies that efficiency of the agents is an important aspect of rural mark eting for the private insurance players. LIC has been predominantly very success ful in this aspect. Assistance in purchase and first level underwriters (the agents) has an importan t role to play. Rural customers need more advisory services, rely only on people of trust. The onus is also in the agents to offer a product affordable to custo mers and profitable to the insurer. Flexibility in premiums conventionally a str ategy of LIC should also work well for private players Results suggest that 31.3 0% of the respondents couldnt recall even a single brand of private life insurer. This indicates poor promotional efforts on part of the private life insurance p layers. The brand recall of the SBI Life is higher than the ICICI Pru Life, thou gh the ICICI Pru Life holds the second position in the Indian Life insurance mar ket. This may be due to the deep penetration of the State Bank of India (SBI) in the rural banking gamut. This logically implies that bancassurance can be an ef fective means of capturing rural market (Table 7). Factorial analysis also suppo rts the importance of distribution channels . A significant proportion (33.40%) of uninsured rural population thinks that life insurance is not needed . This may be due to no risk of life perception, guided b y belief in God and superstition. Contrarily, the commercialisation hazards have accentuated the demand for insurance among urban masses (Lakshmi, 2004). Also,

possibly, the fear of life has not been commercially communicated to the rural m asses since long. The income levels and the lack of awareness are the other impo rtant reasons for rural population not being insured. This is an important impli cation for private players. 4.2 Insurers Analysis The private insurers have been relying on the traditional channels of distributi on especially agents for capturing the market which was in monopolized by LIC fo r many years. There is firm belief among these companies that agents are best su ited for tapping the rural segments. But increased awareness levels have already transformed this thinking of rural people and they are relying more on unorthod ox channels of distribution like bancassurance. Success of LIC and ICICI Pruden tial Life Insurance almost proves this fact. The problem of high distribution costs is a problem for private insurers. This m ay not be the case for LIC in the public sector since it has huge corpus and wid e distribution network. Incentivisation of rural agents is not adequate leading to a cause and effect relationship between the number of agents, their efforts a nd the rural business. Probably this may be reason for decline in the number of rural agents. Some players are also not happy with the mandatory requirement of 100 hours training prescribed by IRDA for agents. They feel that the training re quirements must be relaxed especially for the rural agents. The results show that in the rural market there is a strong tilt towards long te rm saving products. Endowment policies for definite term with low premiums and s tandard money back policies that offer return of the accumulated saving at regul ar intervals rank high in popularity. The pure term insurance plans meant for on ly risk coverage are not popular. Most of the private players are still struggli ng to design and offer effective products to rural masses. Joint family system s till prevailing significantly in rural areas is a hindrance for marketing of lif e insurance products. The payment frequency of life premiums is not found suitab le in case of some players. LIC has been able to build an image of corporate responsibility and social devel opment, which is difficult for the private players. It is communicating developm ent as its thrust area. On similar lines, private life insurer have started orga nising health check-up programs, children recreation programs, and similar other activities to capture the rural market. Some of the private insurers have not been able to meet the statutory requiremen ts especially in the initial years. However, some of them have now become proact ive in their strategies and have now realised the rural potential. According to Shobit & Shukla (2004), professional style of working has failed to generate confidence and goodwill, as rural population prefers personalised appr oach and that too in accordance with the regional culture. Private companies somewhat lack in coordinating between their underwriting pract ices and marketing activities especially with their risk selection process and p ricing for rural consumers. The methodology of setting premiums well above the a ctual risk exposure in urban markets does not work in rural markets where lower margins or cost-to-cost basis approach is quite successful. Sales communication (literature and media) in some case of private players is tr aditionally in English language, which makes little or no impact on potential ru ral customer. The use of regional languages by LIC is an effective publicity too l. Another noticeable feature of the private players is that marketing strategists are urban executives having no knowledge of rural India, which is an area of con

cern. Contrarily, the LIC has wide representations from the various regions of I ndia and communities. The positioning strategies used by players are overlapping. LIC is following acc ess based positioning strategy for market penetration, which has worked well. So me players like Birla Sun Life are following a variety based positioning and foc ussing on specific products like investment related schemes. Niche marketing str ategy used by ICICI Pru Life has been useful to tap High Net worth Individuals ( HNIs) in certain states but failed in others. Some life life insurance companies focusing on rural markets have adopted innovative means of distribution like in stead of using agents; gramsevaks are used as distribution channels, which have enabled them to utilise their special knowledge for gaining local competitive ad vantage. Table 3 - Rural New Business of LIC Year No. of Policies (in Lakhs) Sum Assured (in Rs. Crores) %age share of the rural Policies Sum Assured 1969-70 4.61 251.76 33.00 1974-75 5.72 464.27 35.70 1983-84 8.30 1260.24 1989-90 30.48 8086.35 1995-96 52.57 21,263.59 1997-98 68.40 27,550.69 1998-99 81.23 35,372.94 1999-00 97.04 44,168.19 2000-01 109.20 59,676.42 2001-02 37.02 25,461.94 2002-03 45.23 22,574.69 2003-04 62.20 35,651.22 Source: LIC Annual Report 2006. Table 4 - Respondents Age Groups Gender Male Female 18-30 58.33% 41.67% 31-43 58.82% 41.18% 44-56 66.67% 33.33% Above 56 50.00% %age of Total 57.50%

new business in the total business 24.50 14.90 35.00 41.19 47.70 51.40 54.70 57.50 55.53 16.94 18.90 22.79

28.54 34.68 41.00 43.30 47.00 48.70 47.76 13.65 13.37 17.85

Demographic Information: Age-Gender Relationship % age of Total 30.00% 42.50% 18.75% 50.00% 8.75% 42.50% 100.00%

Table 5 - Respondents Demographic Information: Education Age Groups % age of Total Below High School PG and above 18-30 9.09% 31.82% 27.27% 31-43 15.15% 33.33% 18.18% 44-56 7.69% 30.77% 46.15% Above 56 33.33% 33.33% %age of Total 12.68% 32.39% High School 27.27% 33.33% 15.38% 0.00% 25.35% 4.55% 0.00% 0.00% 33.33% 28.17% Senior School 30.99% 46.48% 18.31% 0.00% 4.23% 1.41% 100.00% Graduate Education

Table 6 - List of Registered Life Insurance Companies

Sl. No. Name of the Life Insurance Company 1. LIC of India 2. Allianz Bajaj Life Insurance Co. Ltd. 3. ICICI Prudential Life Insurance 4. Tata AIG Life Insurance Co. Ltd. 5. HDFC Standard Life Insurance Co. Ltd. 6. AMP Sanmar Insurance Co. Ltd. 7. ING Vyasya Life Insurance Co. Pvt. Ltd. 8. Max New York Life Insurance Co. Ltd. 9. Birla Sun Life 10. AVIVA Life Insurance Co. India Pvt. Ltd. 11. MetLife India Insurance Co. Pvt. Ltd. 12. Om Kotak Mahindra Life Insurance Co. Ltd. 13. Shri Ram Life Insurance Co. Ltd. 14. SBI Life Insurance Co. Ltd. 15. Sahara India Life Insurance Co. Ltd. 16. Bharti AXA Life Insurance Company Ltd. Table 7 - Brand Recall Company Recalled SBI Life 21.30 ICICI Pru Life 20.00 HDFC Standard Life Birla Sunlife 3.80 Max New York Life ING Yyasya 2.50 Allianz Bajaj 2.50 Tata AIG Unable to Recall Total 100.00 Private Players Percentage of respondents 13.80 3.80 1.30 31.30 Insurance Not Important 65.00 6.30 57.50 1.30 5.00 12.50 80.00 12.50 12.50

Table 8 - Factors Affecting Purchase of Variables Responses (%age) Very Important Important Assistance in Policy Purchase 28.80 Safety of Invested Funds 41.30 Affordability 25.00 62.50 12.50 Usefulness 22.50 65.00 12.50 Claim Settlement 36.30 58.70 Office Environment 25.00 62.50 Administrative Procedures 12.50 Post Purchase Services 23.80 63.80 Behaviour of Agents 25.50 62.50 Table 8 - Uninsured Respondents Reasons for not being insured Never felt the need of it Not enough funds for it 33.30 Lack of knowledge 25.78 Bad experiences of others Any other reason 21.21 Total 100.00 5. CONCLUSION & SUGGESTION 5.1 Conclusion

7.50

Responses Percentage of Respondents 33.40 13.63

In any field of marketing the new mantra today is customers care, customer protecti on, and customer Retention. Customer remains the prime focus area for marketing act

ivity. An effective strategy for marketing would be focusing upon these areas. I t is the customer who determines the market, so listening to the customer is the best way to achieve success.

The Life Insurance Corporation as a major investment institution plays a very si gnificant role in individual development. It contributes a lot to national econo my by mobilizing saving through insurance. 5.2 Suggestions As customer satisfaction is the only source of growth and survival of the instit ution realizing the satisficance LIC could more initiative to improve customers servicing. Before introducing various types of policies, conduct of market resea rch and study of customer is inevitable. Finally as per the customers suggestion the following measures should be taken to improve the goodwill and make the inst itution more reliable to the customers. LIC policies through service scheme should be implemented. Easy and timely payment of money back policies. Clear account on deposits and dues should be made. It should provide better service with the premium. LIC should introduce new policies with low rate of premium. REFFERENCES [1] [2] [3] [4] [5] [6] Consumer Behaviour- By L.G.Schiffman. LIC Magazines. Business Today. Business World. Economies Times. Marketing Strategies - By Harsh V. Verma.

QUESTIONNAIRE

1. Do you invest your savings: ( Yes / No ) If No: Never felt the need of it Not enough funds for it Lack of knowledge Bad experiences of others Any other reason 2. Why do you invest your savings? i. To meet future contingency iii. To have good returns on the saving ii. To have secure future iv. To get tax rebate 3. Have you invested in any of the following types of investment?

Shares /Stocks Debentures N.S.C Traditional Investment Mutual Fund Insurance Fixed Deposits Any Other 4. What type of investment you would like to have? Safety only Returns only Safety + Returns + Flexibility Safety + Returns 5. What do you think about the LIC? Good Better Best Reliable Unreliab le 6. Do you know about LIC, India Yes No 7. What are the other companies who provide Insurance other than LIC? ICICI Pru Bajaj Allianz SBI Life Tata AIG HDF-SLIC 8. In what aspect you feel that LIC is better than its competitors? Speed Transparency Security Easy Returns Satisf action 9. Would you like to have a investment & protection plan with benefits like: Short-Term Investment + High Returns + Safety + Flexibility + Tax Rebate + Insur ance Yes No 10. Does it matters if you do not insure yourself? Yes No 11. Do you have any account in LIC, India? If Yes, Why ______________If No, Where do you have? Why___________________ Why not LIC, India 12. What comment would you rate LIC, India? No comments Poor Best 13 .How would you rate LIC, INDIA Very Important Important Not Important Assistance in Policy Purchase Safety of Invested Funds Affordability Usefulness Claim Settlement Office Environment Administrative Procedures Post Purchase Services Behavior of Agents Average Good