Documente Academic
Documente Profesional
Documente Cultură
SUBMITTED BY
VISHAKHA DEEPAK KADAM
ROLL NO – 49
UNIVERSITY OF MUMBAI
AY: 2017-18
DECLARARTION
Student
Vaishnavi Padte
Place: Thane
Date:
ACKNOWLEDGEMENT
In one form or another, we all own insurance. Whether it's auto, medical, liability,
disability or life, insurance serves as an excellent risk-management and wealth
preservation tool. Having the right kind of insurance is a critical component of any good
financial plan. While most of us own insurance, many of us don't understand what it is or
how it works. In this tutorial, we'll review the basics of insurance and how it works, then
take you through the main types of insurance out there.
1.2 What Is Insurance?
Insurance is a form of risk management in which the insured transfers the cost of potential
loss to another entity in exchange for monetary compensation known as the premium.
Insurance allows individuals, businesses and other entities to protect themselves against
significant potential losses and financial hardship at a reasonably affordable rate. We say
"significant" because if the potential loss is small, then it doesn't make sense to pay a
premium to protect against the loss. After all, you would not pay a monthly premium to
protect against a $50 loss because this would not be considered a financial hardship for
most. Insurance is appropriate when you want to protect against a significant monetary
loss. Take life insurance as an example. If you are the primary breadwinner in your home,
the loss of income that your family would experience as a result of our premature death is
considered a significant loss and hardship that you should protect them against. It would be
very difficult for your family to replace your income, so the monthly premiums ensure that
if you die, your income will be replaced by the insured amount. The same principle applies
to many other forms of insurance. If the potential loss will have a detrimental effect on the
person or entity, insurance makes sense. Everyone that wants to protect themselves or
someone else against financial hardship should consider insurance
This may include:
Protecting your home against theft, fire, flood and other hazards
1957 saw the formation of the General Insurance Council, a wing of the
Insurance Associaton of India. The General Insurance Council framed a code
of conduct for ensuring fair conduct and sound business practices.
In 1968, the Insurance Act was amended to regulate investments and set
minimum solvency margins. The Tariff Advisory Committee was also set up
then.
In 1972 with the passing of the General Insurance Business
(Nationalisation) Act, general insurance business was nationalized with effect
from 1st January, 1973. 107 insurers were amalgamated and grouped into four
companies, namely National Insurance Company Ltd., the New India
Assurance Company Ltd., the Oriental Insurance Company Ltd and the
United India Insurance Company Ltd.
1.4 TYPES OF INSURANCE
Agricultura
l Insurance
Fire Life
Insurance Insurance
Types of
Marine
Insurance General
Insurance Insurance
Vehicle Health
Insurance Insurance
1: Agricultural insurance:
Agriculture in India is highly susceptible to risks like droughts and floods. It is necessary
to protect the farmers from natural calamities and ensure their credit eligibility for the next
season. For this purpose, the Government of India introduced many agricultural schemes
throughout the country.
2: Life insurance:
Life insurance (or life assurance, especially in the Commonwealth), is a contract between
an insurance policy holder and an insurer or assurer, where the insurer promises to pay a
designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the
death of an insured person (often the policy holder). Depending on the contract, other
events such as terminal illness or critical illness can also trigger payment. The policy
holder typically pays a premium, either regularly or as one lump sum. Other expenses
(such as funeral expenses) can also be included in the benefits.
3: General insurance:
4: Health insurance:
Health insurance is insurance against the risk of incurring medical expenses among
individuals. By estimating the overall risk of health care and health system expenses,
among a targeted group, an insurer can develop a routine finance structure, such as a
monthly premium or payroll tax, to ensure that money is available to pay for the health
care benefits specified in the insurance agreement. The benefit is administered by a central
organization such as a government agency, private business, or not-for profit entity.
5: Vehicle insurance:
Vehicle insurance (also known as car insurance, motor insurance or auto insurance) is
insurance for cars, trucks, motorcycles, and other road vehicles. It
primary use is to provide financial protection against physical damage and/or bodily injury
resulting from traffic collisions and against liability that could also arise there from. The
specific terms of vehicle insurance vary with legal regulations in each region.
6. Marine Insurance
Marine insurance covers the loss or damage of ships, cargo, terminals, and any transport or
cargo by which property is transferred, acquired, or held between the points of origin and
final destination. Cargo insurance is a sub-branch of marine insurance, though Marine also
includes Onshore and Offshore exposed property, (container terminals, ports, oil
platforms, pipelines), Hull, Marine Casualty, and Marine Liability. When goods are
transported by mail or courier, shipping insurance is used instead
7. FIRE Insurance
Fire insurance covers damage or loss to a property because of fire. It is a specific form of
insurance in addition to homeowner’s or property insurance, and it covers the cost of
replacement and repair or reconstruction above what the property insurance policy covers.
Fire insurance policies cover damage to the property, and may also cover damage to
nearby structures, personal property and costs because of not having the capacity to live in
or use the property if damages occur. The policy typically includes additional coverage
against smoke or water damage due to a fire. A fire insurance policy is usually set up for
one year. The policyholder may renew the policy according to the terms of the policy
Fundamentals Of Insurance:
How does insurance work? Insurance works by pooling risk. What does this
mean? It simply means that a large group of people who want to insure
against a particular loss pay their premiums into what we will call the
insurance bucket, or pool. Because the number of insured individuals is so
large, insurance companies can use statistical analysis to project what their
actual losses will be within the given class. They know that not all insured
individuals will suffer losses at the same time or at all. This allows the
insurance companies to operate profitably and at the same time pay for claims
that may arise. For instance, most people have auto insurance but only a few
actually get into an accident. You pay for the probability of the loss and for
the protection that you will be paid for losses in the event they occur.
RISK
Risks Life is full of risks - some are preventable or can at least be minimized, some are
avoidable and some are completely unforeseeable. What's important to know about risk
when thinking about insurance is the type of risk, the effect of that risk, the cost of the risk
and what you can do to mitigate the risk. Let's take the example of driving a car.
Type of risk: Bodily injury, total loss of vehicle, having to fix your car The effect:
Spending time in the hospital, having to rent a car and having to make car payments for a
car that no longer exists The costs: Can range from small to very large Mitigating risk: Not
driving at all (risk avoidance), becoming a safe driver (you still have to contend with other
drivers), or transferring the risk to someone else (insurance)
Risk Control
There are two ways that risks can be controlled. You can avoid the risk altogether, or you
can choose to reduce your risk. Risk Financing If you decide to retain your risk exposures,
then you can either transfer that risk (i.e. to an insurance company), or you retain that risk
either voluntarily (i.e. you identify and accept the risk) or involuntarily (you identify the
risk, but no insurance is available).
Risk Sharing Finally, you may also decide to share risk. For example, a business owner
may decide that while he is willing to assume the risk of a new venture, he may want to
share the risk with other owners by incorporating his business. So, back to our driving
example. If you could get rid of the risk altogether, there would be no need for insurance.
The only way this might happen in this case would be to avoid driving altogether. Also, if
the cost of the loss or the effect of the loss is reasonable to you, then you may not need
insurance. For risks that involve a high severity of loss and a low frequency of loss, then
risk transference (i.e. insurance) is probably the most appropriate protection technique.
Insurance is appropriate if the loss will cause you or your loved ones a significant financial
loss or inconvenience. Do keep in mind that in some instances, you are required to
purchase insurance (i.e. if operating a motor vehicle). For risks that are of low loss severity
but high loss frequency, the most suitable method is either retention or reduction because
the cost to transfer (or insure) the risk might be costly. In other words, some damages are
so inexpensive that it's worth taking the risk of having to pay for them yourself, rather than
forking extra money over to the insurance company each month.
RISK MANAGEMENT PROCESS
The Risk Management Process After you have determined that you would like to insure
against a loss, the next step is to seek out insurance coverage. Here you have many options
available to you but it's always best to shop around. You can go directly to the insurer
through an agent, who can bind the policy. The process of binding a policy is simply a
written acknowledgement identifying the main components of your insurance contract. It
is intended to provide temporary insurance protection to the consumer pending a formal
policy being issued by the insurance company. It should be noted that agents work
exclusively for the insurance company.
1. Captive Agents: Captive agents represent a single insurance company and are required
to only do business with that one company.
Underwriting Underwriting is the process of evaluating the risk to be insured. This is done
by the insurer when determining how likely it is that the loss will occur, how much the loss
could be and then using this information to determine how much you Investopedia.com –
the resource for investing and personal finance education. This tutorial can be found at:
http://www.investopedia.com/university/insurance/ (Page 5 of 29) Copyright © 2010,
Investopedia.com - All rights reserved. should pay to insure against the risk. The
underwriting process will enable the insurer to determine what applicants meet their
approval standards. For example, an insurance company might only accept applicants that
they estimate will have actual loss experiences that are comparable to the expected loss
experience factored into the company's premium fees. Depending on the type of insurance
product you are buying, the underwriting process may examine your health records,
driving history, insurable interest etc. The concept of "insurable interest" stems from the
idea that insurance is meant to protect and compensate for losses for an individual or
individuals who may be adversely affected by a specific loss. Insurance is not meant to be
a profit center for the policy's beneficiary. People are considered to have an insurable
interest on their lives, the life of their spouses (possibly domestic partners) and dependents.
Business partners may also have an insurable interest on each other and businesses can
have an insurable interest in the lives of their employees, especially any key employees.
Insurance Contract
The insurance contract is a legal document that spells out the coverage, features,
conditions and limitations of an insurance policy. It is critical that you read the contract
and ask questions if you don't understand the coverage. You don't want to pay for the
insurance and then find out that what you thought was covered isn't included
INSURANCE REGULATORY AND DEVELOPMENT
AUTHORITY OF INDIA (IRDAI)
Introduction
The agency operates from its headquarters at Hyderabad, Telangana where it shifted from
Delhi in 2001.
IRDA batted for a hike in the foreign direct investment (FDI) limit to 49 per cent in the
insurance sector from the erstwhile 26 per cent. The FDI limit in insurance sector was
raised to 100% in June 2016.
3.2 Powers and functions of IRDAI
The powers and functions of the IRDAI are defined under Section 14 of the
IRDAI Act, 1999.They include:
Promoting and regulating professional organizations connected with the insurance and
re-insurance business;
Levying fees and other charges for carrying out the purposes of this Act;
Calling for information from, undertaking inspection of, conducting enquiries and
investigations including audit of the insurers, intermediaries, insurance intermediaries
regulation of the rates, advantages, terms and conditions that may be offered by
insurers in respect of general insurance business not so controlled and regulated by the
Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938);
Specifying the form and manner in which books of account shall be maintained and
statement of accounts shall be rendered by insurers and other insurance intermediaries;
Regulating investment of funds by insurance companies;
Regulating maintenance of margin of solvency;
Adjudication of disputes between insurers and intermediaries or insurance
intermediaries;
Supervising the functioning of the Tariff Advisory Committee;
Specifying the percentage of premium income of the insurer to finance schemes for
promoting and regulating professional organizations referred to in clause (f);
Specifying the percentage of life insurance business and general insurance business to
be undertaken by the insurer in the rural or social sector.
3.3 Growth of Life Insurance corporation of India:
As of September 30, 2010, Insurance players have infused more than Rs.30, 000 crore of
capital and are a major contributor to economic development, especially infrastructure
development. The industry plays a critical role in mobilizing savings, providing risk cover
and has played a pivotal role in stabilizing the financial markets. During the global
financial crisis of 2008-09, the life insurance industry invested more than Rs.51, 562 crore
in the equity market when foreign institutional investors pulled out approximately Rs..
47,000 crore.
The growth in total premium is derived from the increase in new business premium by 60
per cent, backed by strong performance by Life Insurance Corporation.
The growth is all the more noticeable since this period was marked by significant changes
in product profile of unit-linked insurance policies female is up to 30 years and if she does
not have an income attracting Income Tax.
3.4 Objectives of LIC
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.
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.
Mission
"Ensure 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."
Vision
Primary Data:-
In this research with sample size of 30 customers data will be available in the form of
questionnaire in terms of different question influencing the life insurance policy preferred
by them. Only the customers of LIC of India are taken into consideration. Also the view
of agent of LIC taken in the consideration.
Secondary Data:-
The Secondary data has been collected referring the various books, websites, magazines
and other sources related to Life insurance policies and companies. The data collected is
pertaining to the theoretical aspects of insurance sector. Collection of information for the
project is done from different kinds of books and through interne
2.2 NEED AND OBJECTIVE OF STUDY
In order to study the growth cycle of LIC during post liberalization era
This research aims at finding out the impressions of the public about the basic need for life
insurance.
To examine the Indian Insurance market and make a comparative study of the operations
and claim settlement procedures
To have an in depth understanding of the problems faced Life Insurance Companies and
suggest suitable remedies.
2.3 SCOPE OF STUDY
The study involves the life insurance services provided by the LIC of India
and to show the better performance of LIC.
This is done by interviewing the agent of LIC, policy holders of the
respective company. Therefore the scope of the study is limited to some
extent information gathered from these people.
The study seeks to collect information from among the existing customer
about their satisfaction level with regards to the services provided by the
company.
The scope is limited to the thane branch and it is collected from the people
nearby holding life insurance policies.
2.4 LIMITATIONS OF STUDY
1. The Cons of a Life Insurance chosen carefully is almost negligible. However the
disadvantage of Life Insurance arises when it is used as an investment product. Insurance
companies also promote these as people are uncomfortable in paying premiums on which
returns are uncertain.
2. People buy insurance when they have no need for example an old woman buying life
insurance. Also the example of buying life insurance for a very long time period till you
are 80 years old. At that age you have no need since you would have no dependents and
earning power as well.
3. Millions of people every year buy insurance products without understanding it. Most of
the complex products give suboptimal returns and have no suitability for the buyers.
Agents frequently give bad advice to get more commissions. Companies also make more
money by selling complex product which people don’t understand.
4. People have little clue and don’t compare life insurance products even from the same
provider. Sometimes they buy insurance policies which are far too expensive leading to
heavy burden which is unnecessary.
CHAPTER 3
REVIEW OF LITERATURE
CHAPTER 4:
4%
YES NO
96%
Interpretation:
Among total respondents 96% respondents hold Life
Insurance policy of LIC, while 4% do not hold Life Insurance policy of
LIC.
2. You have been dealing with LIC for the last how many years?
4%
11%
Interpretation:
23%
Quality
Less Premium
47%
Better terms
7%
Better services
All of the above
13%
10%
Interpretation:
3%
YES NO
97%
Interpretation:
Among total respondents 97% respondents are happy with the
services of LIC and the remaining 3% are not happy with the services of LIC.
5. What is the periodicity of premium?
28%
Monthly
59% 5% Quarterly
8% Half Yearly
Yearly
Interpretation:
17% 13%
3% Cash
Cheque
Credit card
Debit Card
67%
Interpretation:
Interpretation:
0%
4%
20% 13%
Bad
Worse
Average
Very good
Excellent
63%
Interpretation:
3%
Positive
Negative
97%
Interpretation:
The overall perception about LIC is 97% positive and 3%
negative
CHAPTER 5
RECOMMENDATION AND SUGGESTION
The insurance company must offer loan or bonus after a specified duration so that the
amount given to the policyholder may help in supplement liquidity requirement like
marriage, child care, untoward incidents and emergencies, for acquiring assets.
2. The agents must be trained enough to use need analyzer and apply financial planning to
an individual policyholder so that they may explain all the benefits associated with the
policy to their respective client.
3. On maturity the procedure of settlement of claim should be easy, fast and concise. The
policyholder should able to get their surrender value/maturity value well in time with
hassle free paper work.
4. Some of the policyholders face problem when they surrender their policy and want to
withdraw the deposited amount against any policy. The agents emphasize that they should
continue the policy and necessary explanation should be given in order to continue the
policy.
5. The company should provide option for auto-switching option and fund transfer options
to the policyholders according to the profitable portfolio available in the market from least
profitable plans to most profitable plan.
6. The companies should also consider the time value of money and the insurance policies
may be reframed by which the insurer may get higher yield and return.
7. Money back policies are needed to be restricted in a better way so that investor may get
some recurring amount after a periodic interval. This could motivate the policyholder to
take insurance as a continuous profitable opportunity.
8. Low premium insurance policy should be introduced to cater the need of low income
groups, students and dependents. One time premium policies should be offered to the poor
with low premium amount so that more people could get insured.
9. Policyholders demand a policy with lump sum return or regular income at frequency
ntervals of time and at the verge of retirement, for children marriage and education.
10. Policyholders expect more novelty in the products of LIC since is a known, familiar
and trusted brand among urban and rural policy holders.
CONCLUSION
The study was a concise study of the variables related to policyholder buying
decisions and the factors influencing buying decisions for purchasing
insurance policy. The findings help in the development of a valid conclusion
for assessing determinants of policyholder behaviour for life insurance policy
in. After processing, analyzing and summarizing the collected data the crux of
the study presented in this chapter. The study was primarily based on a self-
designed structured questionnaires therefore the research instrument was
statistically tested and various statistical methods were applied to conclude
the research findings.
The main objective of study was to show that how LIC of India is better than
Life insurance policy companies. The data is collected from the policy
holders of both the companies.
The results indicated that the quality of services offered to the policyholders
and reputation of the insurance company was the another influencing criteria
for the policyholder of the insurance policy followed comfort and promptness
provided to the policyholder. Ambience and experience of service provider
also influence the policyholders in deciding the insurance policy up to some
extent. The policyholders are rational and want to take investment and
financial decisions after exhaustive study therefore expect transparent and
precise terms and conditions for ease.
BIBLIOGRAPHY
www.wikipedia.org
www.licindia.com
www.scribd.com
www.irdai.gov.in
www.easypolicy.com
www.myinsuranceclub.com
http://en.wikipedia.org/wiki/Insurance
http://www.economywatch.com/indianeconomy/india-insurance-sector.html
Primary data by survey
ANNEXURE
Name:
Q.1. Age
Q.2. Gender
Female
Male
Married
Unmarried
Less than 2
2 to 4 members
4 to 6 members
More than 6
Q.6. Occupation
Government employee
Private employee
Business man
Retired employee
Professional
Below Rs 10000
Rs 10000 to 20000
Rs 20000 to 50000
More than Rs 50000
Yes
No
Other
Q.9. You have been dealing with LIC for the last how many years?
Quality
Less premium
Better terms
Better services
All of the above
Q.11. Are you happy with the services of LIC of India?
Yes
No
Monthly
Quarterly
Half yearly
Yearly
Cash
Cheque
Credit card
Debit card
Risk Cover
Tax saving
Investment
Confidence building
All of them
Bad
Worse
Average
Very good
Excellent
Q.16. What is your overall perception about LIC of India?
Positive
Negative