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What is Insurance? Life insurance is a type of insurance where the insured transfers a risk to the insurer. The insured pays a premium and receives a policy in exchange. The risk assumed by the insurer is the risk of death of the insured. There are three parties in a life insurance transaction; the insurer, the insured, and the owner of the policy (policyholder), although the owner and the insured are often the same person. For example, if John Smith buys a policy on his own life, he is both the owner and the insured. But if Mary Smith, his wife, buys a policy on John's life, she is the owner and he is the insured. The owner of the policy is called the grantee (he or she will be the person who will pay for the policy). Another important person involved is the beneficiary. The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured. The beneficiary is not a party to the policy, but is designated by the owner, who may change the beneficiary unless the policy has an irrevocable beneficiary designation. With an irrevocable beneficiary, that beneficiary must agree to changes in beneficiary, policy assignment, or borrowing of cash value. The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Insurance is a social device where uncertain risks of individuals may be combined in a group and thus made more certain small periodic contributions by the individuals provide a found out of which those who suffer losses may be reimbursed. In addition to being a means to protect oneself, the insurance Industry is an efficient conduit for the saving of people to be channeled towards economic growth. In India, the Insurance Industry7 is more than 150 years old. Today, it is monopolized by two PSU's in their respective fields of life and General Insurance. However, with the successful passage IRDA Bill through both houses of parliament in December 1999 the sector has been opened up to private players.
RESEARCH OBJECTIVES
The report gives the brief background of the sector and proceeds to highlight the short comings of the existing setup and players. The benefits of liberalized sector are enumerated. The report also tries to identify the market potential for insurance products and the strategy that can we employed to exploit the same. The stress is also given on knowing the awareness level of general public.
RESEARCH METHODOLOGY
To conduct the market research first of all it is necessary to create a research design. A research design is basically a blue print of how a research design is to be conducted. It may include: 1. Choosing the approach 2. Determining the types of data needed. 3. Locating the source of data. 4. Choosing a method of data.
RESEARCH DESIGN
Basically, there are 3 types of approaches which are used during the research: 1. Exploratory 2. Descriptive 3. Experimental.
During this research the explanatory and descriptive approaches are taken into consideration because of the availability of relevant information to describe the relationships between the marketing problem and available information.
SECONDARY DATA
Secondary data is one which already exists and is collected from the published sources. The sources from which secondary data was collected are: I.
INTERNAL SOURCES:
Newspapers and corporate Magazines like Economic Times, Insurance Times, and Insurance Post. Annual reports Company prospectus Company database
II.
EXTERNAL SOURCES:
Internet services
PRIMARY DATA
The primary sources of data refer to the first hand information. Primary data is collected during the survey with the help of Questionnaires.
HISTORY OF LIC
LIFE INSURANCE BUSINESS
The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance 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 areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost. Some of the important milestones in the life insurance business in India are: 1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning. 1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business. 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies are taken over by the central government and nationalised. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. 107 insurers amalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.
LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from 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 services need was felt in the later years to expand the operations and place a branch office at each district headquarter. Reorganization 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 accounting 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 crossed 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 happening 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, 109 divisional offices, 8 zonal offices, 992 satellite offices and the corporate office. LICs Wide Area Network covers 109 divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer on-line premium collection facility in selected cities. LICs ECS and ATM premium payment facility is an addition to customer convenience. Apart from on-line Kiosks and IVRS, Info Centers have been commissioned at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access to its policyholders. LIC has launched its SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many other conveniences in the future. LIC is associated with joint ventures abroad in the field of insurance, namely, Ken-India ,Assurance Company Limited, Nairobi; United Oriental Assurance Company Limited, Kuala Lumpur and Life Insurance Corporation (International) E.C. Bahrain. The Corporation has registered a joint venture company in 26th December, 2000 in Katmandu, Nepal by the name of Life Insurance Corporation (Nepal) Limited in collaboration with Vishal Group Limited, a local industrial Group. An off-shore company L.I.C. (Mauritius) Off-shore Limited has also been set up in 2001 to tap the African insurance market.
GENERAL INSURANCE
General insurance business in the country was nationalized with effect from 1st January, 1973 by the General Insurance Business (Nationalization) Act, 1972. More than 100 non-life insurance companies including branches of foreign companies operating within viz., the National Insurance Company Ltd., The New India Assurance Company Ltd., The Oriental Insurance Company Ltd., and The United India Insurance Company Ltd. with head offices at Calcutta, Bombay, New Delhi and Madras, respectively. General Insurance Corporation (GIC) which was the holding company of the four public sector general insurance companies has since been delinked from the later and has been approved as the "Indian Reinsurer" since 3rd November 2000. The share capital of GIC and that of the four companies are held by the Government of India. All the five entities are Government companies registered under the Companies Act, 1956. The general insurance business has grown in spread and volume after nationalization. The four companies have 2699 branch offices, 1360 divisional offices and 92 regional offices spread all over the country. GIC and its subsidiaries have representation either directly through branches or agencies in 16 countries and through associate locally incorporated subsidiary companies in 14 other countries. A wholly- owned subsidiary company of GIC, i.e. Indian International Pvt. Ltd. is operating in Singapore and there is a joint venture company, viz. Ken-India Assurance Ltd. in Kenya. A new wholly owned subsidiary called New India International Ltd., UK has also been registered. Some of the important milestones in the general insurance business in India are: 1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised the general insurance business in India with effect from 1st January 1973.
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. Maximize mobilization of people's savings by making insurance-linked savings adequately attractive. Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it holds in trust, without losing sight of the interest of the community as a whole; the funds to be deployed to the best advantage of the investors as well as the community as a whole, keeping in view national priorities and obligations of attractive return Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders. Act as trustees of the insured public in their individual and collective capacities. Meet the various life insurance needs of the community that would arise in the changing social and economic environment. Involve all people working in the Corporation to the best of their capability in furthering the interests of the insured public by providing efficient service with courtesy. Promote amongst all agents and employees of the Corporation a sense of participation, pride and job satisfaction through discharge of their duties with dedication towards achievement of Corporate Objective.
OUTLOOK MONEY -- NDTV PROFIT AWARD 2009 in " BEST LIFE INSURER CATEGORY "
Golden Peacock Innovative Product / Service ASIA PACIFIC HRM Congress, 2009 Award Award - 2009 for INNOVATIVE HR PRACTICES
INDY's Silver Award for Best Corporate Film NASCOM IT USER Award 2008
PRODUCTS OF LIC
INSURANCE PLANS
As individuals it is inherent to differ. Each individual insurance needs and requirements are different from that of the others. LICs Insurance Plans are policies that talk to you individually and give you the most suitable options that can fit your requirement. CHILDREN PLANS Jeevan Anurag Komal Jeevan Jeevan Chaaya Child Future Plan Child Fortune Plus Child Career Plan Jeevan Fortune Plus PLAN FOR HANDICAPPED DEPENDENTS Jeevan Adhar Jeevan Vishwas ENDOWMENT ASSURANCE PLANS Jeevan Anand Jeevan Amrit The Endowment Assurance Policy The Endowment Assurance Policy-limited payment Jeevan Mitra(double cover endowment plan) Jeevan Mitra(triple cover endowment plan) PLANS FOR HIGH WORTH INDIVIDUALS Jeevan Shree-I Jeevan Pramukh MONEY BACK PLANS The Money Back Policy- 20 years The Money Back Policy- 25 years Jeevan Surabhi-15 years Jeevan Surabhi-20years Jeevan Surabhi-25 years Bima Bachat
WHOLE LIFE PLANS The Whole life policy The Whole life policy-limited payment The Whole life policy-single premium Jeevan Anand TERMS ASSURANCE PLANS Two Year Temporary Assurance Policy The Convertible Term Assurance Policy Anmol Jeevan-I Amulya Jeevan-I
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee financial stability during your old age. These policies are most suited for senior citizens and those planning a secure future, so that you never give up on the best things in life. PENSION PLANS Market Plus-I Jeevan Nidhi Jeevan Akshay-VI New Jeevan Dhara-I New Jeevan Suraksha-I
UNIT PLANS
Unit plans are investment plans for those who realize the worth of hard-earned money. These plans help you see your savings yield rich benefits and help you save tax even if you don't have consistent income. UNIT PLANS Market Plus-I Profit Plus Money Plus-I Child Fortune Plus Jeevan Saathi Plus
SPECIAL PLANS
LICs Special Plans are not plans but opportunities that knock on your door once in a lifetime. These plans are a perfect blend of insurance, investment and a lifetime of happiness!
I. GOLDEN JUBLIEE PLAN New Bima Gold II. HEALTH PLAN Health Protection Plus III. SPECIAL PLAN Bima Niresh Jeevan Saral
MARKET PLUS-I
FEATURES
IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER This is a unit linked deferred pension plan. You can take the plan with or without life cover. You can also choose the level of cover within the limits, which will depend on whether the policy is a Single premium or Regular premium contract and on the level of premium you agree to pay. Four types of investment Funds are offered. Premiums paid after allocation charge will purchase units of the Fund type chosen. The Unit Fund is subject to various charges and value of units may increase or decrease, depending on the Net Asset Value (NAV).
1. Payment of Premiums:
You may pay premiums regularly at yearly, half-yearly or quarterly or monthly (through ECS mode only) intervals over the term of the policy. Alternatively, a Single premium can be paid.
2. Eligibility Conditions And Other Restrictions: For Basic Plan without Life Cover
a) Minimum Entry Age b) Maximum Entry Age - 18 years (last birthday) - Regular premium: 75 years (nearest birthday) Single premium: 80 years (nearest birthday)
c) Minimum Vesting Age - 40 years (completed) d) Maximum Vesting Age - 85 years (nearest birthday) e) Minimum Deferment Term - Regular premium: 10 years - Single premium: 5 years f) Sum Assured - NIL g) Minimum Premium - Regular premium (other than monthly (ECS) mode): Rs. [5,000] p.a. for deferment term 20 years and above Rs. [10,000] p.a. for deferment term 15 to 19 years Rs. [15,000] p.a. for deferment term 10 to 14 years Regular premium (for monthly (ECS) mode): Rs. [1,000] p.m. for deferment term 15 years and above Rs. [1,500] p.m. for deferment term 10 to 14 years Single premium: Rs. [30,000] for deferment term 5 years and above Annualized Premiums shall be payable in multiple of Rs. 1,000 for other than ECS monthly. For monthly (ECS), the premium shall in multiples of Rs. 250/-.
During this period, the charges for Mortality, Accident Benefit and / or Critical Illness Benefit riders, if any, shall be taken, in addition to other charges, by cancelling an appropriate number of units out of the Policyholders Fund Value every month. This will continue to provide relevant risk covers: 1. for two years from the due date of first unpaid premium, or 2. till the date of vesting, or 3. till such period that the Policyholders Fund Value reduces to one annualized premium, whichever is earlier. The benefits payable under the policy in different contingencies during this period shall be as under: A. In case of Death: Life cover Sum Assured plus the Policyholders Fund Value, if life cover is opted for. If life cover is not opted for, then only the Policyholders Fund Value is payable. B. In case of Death due to accident: Accident Benefit Sum Assured in addition to the amount under A above, if Accident Benefit is opted for. C. In case of Critical Illness claim: Critical Illness Rider Sum Assured, if opted for. D. On vesting: The Policyholders Fund Value. E. In case of Surrender (including Compulsory Surrender): The Policyholders Fund Value. The Surrender value, however, shall be paid only after the completion of 3 policy years. II. Where the policy lapses without payment of at least 3 years premiums, the Life Cover, Accident Benefit and Critical Illness Benefit rider covers, if any, shall cease and no charges for these benefits shall be deducted. However deduction of all the other charges shall continue. The benefits under such a lapsed policy shall be payable as under: A. In case of Death: The Policyholders Fund Value. B. In case of death due to accident: Only, the amount as under F above. C. In case of Critical Illness claim: Nil D. In case of Surrender (including Compulsory Surrender): Policyholders Fund Value / monetary value as the case may be, shall be payable after the completion of
the third policy anniversary. No amount shall be payable within 3 years from the date of commencement of policy.
vi) Revival:
If due premium is not paid within the days of grace, the policy lapses. A lapsed policy can be revived during the period of two years from the due date of first unpaid premium or before vesting, whichever is earlier. The period during which the policy can be revived will be called Period of revival or revival period. If premiums have not been paid for at least 3 years, the policy may be revived within two years from the due date of first unpaid premium. If the life cover is opted for, the revival shall be made on submission of proof of continued insurability to the satisfaction of the Corporation and the payment of all the arrears of premium without interest. If life cover is not opted for, the revival shall be made on the payment of all the arrears of If at least 3 years premiums have been paid and subsequent premiums are not duly paid, the policy may be revived within two years from the due date of first unpaid premium but before the date of vesting, if earlier. No proof of continued insurability is required and all arrears of premium without interest shall be required to be paid, irrespective of whether life cover is opted for or not. The Corporation reserves the right to accept the revival at its own terms or decline the revival of a lapsed policy. The revival of a lapsed policy shall take effect only after the same is approved by the Corporation and is specifically communicated in writing to the Policyholder. Irrespective of what is stated above, if less than 3 years premiums have been paid and the Policyholders Fund Value is not sufficient to recover the charges, the policy shall terminate and thereafter revival will not be entertained. If 3 years or more than 3 years premiums have been paid and the Policyholders Fund Value reduces to one annualized premium, the policy shall terminate and Policyholders Fund Value as on such date shall be refunded to the Life Assured and thereafter revival will not be allowed.
to the Corporation six months prior to the vesting date. In such case, LIC will transfer the Policyholders Fund Value directly to the chosen Company. Notwithstanding the above mentioned, in case the amount at the vesting date is insufficient to purchase the minimum amount of annuity allowed by LIC, then the balance in the Policyholders Fund Value at the vesting date shall be refunded to the Policyholder. 4. Reinstatement: A policy once surrendered cannot be reinstated.
5. Risks borne by the Policyholder: 1. LICs Market Plus I is a Unit Linked Life Insurance product which is different from the traditional insurance products and is subject to the risk factors. 2. The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. 3. Life Insurance Corporation of India is only the name of the Insurance Company and LICs Market Plus - I is only the name of the unit linked life insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns. 4. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document of the insurer. 5. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns. 6. All benefits under the policy are also subject to the Tax Laws and other financial enactments as they exist from time to time. 6. Cooling off period: If you are not satisfied with the Terms and Conditions of the policy, you may return the policy to us within 15 days. The amount to be refunded in case the policy is returned within the cooling-off period shall be determined as under: Value of units in the Policyholders Fund Plus unallocated premium. Plus Policy Administration charge deducted less charges @ Rs.0.20per thousand Life Cover Sum Assured if life cover is opted for or @ Rs. 0.20per thousand of Total Premiums payable during entire term of policy, if life cover is not opted for. Less Actual cost of medical examination and special reports, if any. 7. Loan: No loan will be available under this plan.
8. Assignment: Assignment is allowed under this plan during the deferment period. 9. Exclusions: In case the Life Assured commits suicide at any time within one year, the Corporation will not entertain any claim by virtue of the policy except to the extent of the Fund Value of the units held in the Policyholders Unit Account on death.
B) Benefit on Vesting:
On your surviving to the date of vesting, the Policyholders Fund Value will compulsorily be utilised to provide a pension based on the then prevailing immediate annuity rates under the relevant annuity option. However, you may opt to commute up to one-third of the Benefit to be paid as a lump sum. Further, you may choose to purchase pension from LIC or other life insurance company. 1. Options :
age nearer birthday of the Life Assured is 70 years. In case of death by Accident, an additional sum equal to Accident benefit will be payable.
2. Investment of Funds: The plan offers following four funds detailed below:
Fund Type Investment in Government / Government Guaranteed Securities / Corporate Debt Bond Fund Not less than 60% Secured Fund Not less than 45% Short-term Investment in investments Listed Equity such as money Shares market instruments Details and objective of the fund for risk /return
Nil Not less than 15% & Not more than 55% Not less than 30% & Not more than 70% Not less than 40% & Not more than 80%
Balanced Fund
Growth Fund
The Policyholder has the option to choose any ONE out of the above 4 funds.
3. Method of Calculation of Unit price: Units will be allotted based on the Net
Asset Value (NAV) of the respective fund as on the date of allotment. There is no Bid-Offer spread (the Bid price and Offer price of units will both be equal to the NAV). The NAV will
be computed on daily basis and will be based on investment performance, Fund Management Charge and whether fund is expanding or contracting under each fund type and shall be calculated as under:
Premium Band (per annum) 5,000 to 75,000 75,001 to 1,50,000 1,50,001 to 3,00,000 3,00,001 to 5,00,000 5,00,001 and above Allocation charge for Top-up: 1.25%
Allocation charge First Year 16.50% 15.75% 15.00% 14.25% 13.50% Thereafter 2.50% 2.50% 2.50% 2.50% 2.50%
B) Charges for Risk Covers: i) Mortality Charge This is the cost of life insurance cover which is age specific and will be taken every month. The charges per Rs. 1000/- life insurance cover for some of the ages in respect of a healthy life are as under: Age Rs. 25 1.42 35 1.73 45 3.89 55 10.76
ii Critical illness Benefit rider charge This is the cost of Critical Illness Benefit rider (if opted for). These are age specific and will be taken every month. The charges per Rs. 1000/- Critical Illness Rider Sum Assured per annum for some of the ages in respect of a healthy life are as under: Age Rs. 25 0.91 35 1.80 45 5.31 55 14.44
iii Accident Benefit charge - This is the cost of Accident Benefit rider (if opted for) and
will be levied every month at the rate of Rs. 0.50 per thousand Accident Benefit Sum Assured per policy year.
C) Other Charges:
1) Policy Administration charge: Rs. 60/- per month during the first policy year and Rs. 20/- per month thereafter, throughout the term of the policy. 2) Fund Management Charge It is a charge levied as a percentage of the value of units at following rates: 0.50% p.a. of Unit Fund for Bond Fund 0.60% p.a. of Unit Fund for Secured Fund 0.70% p.a. of Unit Fund for Balanced Fund 0.80% p.a. of Unit Fund for Growth Fund Fund Management Charge shall be appropriated while computing NAV. 3) Switching Charge This is the charge levied on switching of monies from one fund to another. Within a given policy year 4 switches will be allowed free of charge. Subsequent switches in that year shall be subject to a switching charge of Rs. 100 per switch. 4) Bid/Offer Spread Nil. 5) Surrender Charge Nil 6) Service Tax Charge A service tax charge, if any, shall be levied on the following charges a)Policy Administration, Mortality, Accident Benefit and Critical Illness Benefit rider, if any by canceling appropriate number of units out of the Policyholders Fund Value on a monthly basis as and when the corresponding Policy Administration, Mortality, Accident Benefit and Critical Illness Benefit rider charges are deducted. b) Premium allocation - at the time of allocation. c) Fund Management at the time of deduction of Fund Management Charge. d) Switching - at the time of effecting switch and e) Alteration ( as provided under Miscellaneous charge) - on the date of alteration in the policy. The level of this charge will be as per the rate of service tax as applicable from time to time. Presently, the rate of Service Tax is 12% with an educational cess at the rate of 3% thereon and hence effective rate is 12.36%.
7) Miscellaneous Charge This is a charge levied for an alteration within the contract, such as reduction in policy term, change in premium mode, etc. An alteration may be allowed subject to a charge of Rs. 50/-.
- Critical Illness Benefit charges shall not exceed by more than 200% of the current rate. - Switching Charge shall not exceed Rs. 200/- per switch. - Miscellaneous Charge shall not exceed Rs. 100/- each time when an alteration is requested. In case the policyholder does not agree with the revision of charges the policyholder shall have the option to withdraw the Policyholders Fund Value. 5. Surrender: The Surrender value, if any, is payable only after completion of the third policy anniversary both under Single and Regular premium contract. The surrender value will be the Policyholders Fund Value at the date of surrender. There will be no Surrender charge. If you apply for surrender of the policy within 3 years from the date of commencement of policy, then the Policyholders Fund Value shall be converted into monetary terms. No charges shall be deducted thereafter and this monetary value shall be paid on completion of 3 years from the date of commencement of policy. In case of death of life assured after the date of surrender but before the completion of 3 years from the date of commencement of policy the monetary value payable on the completion of 3 years shall be payable to the nominee/ legal heir immediately on death.
Compulsory Surrender:
The policy shall be surrendered compulsorily in following cases: i) where the policy is not revived during the period of revival, the policy shall be terminated after completion of 3 years from the date of commencement of the policy or on expiry of revival period, whichever is later. However, if the date of vesting falls before the expiry of revival period, then the policy shall be terminated on the date of vesting. ii) where premiums have been paid for less than 3 years or under single premium policies, if the balance in policyholders fund value is not sufficient to recover the relevant charges; iii) where premiums have been paid for at least 3 years and the balance in policyholders fund value falls below a minimum balance of one annualized premium.
35 40 45 50 55
DEATH BENEFIT:
During the policy term: Payment of an amount equal to Sum Assured under the Basic Plan on death of the Life Assured during the policy term provided the life cover is in force. During the extended term: Payment of an amount equal to 50% of Sum Assured under the Basic Plan on death of the Life Assured during the extended term provided all the premiums under the policy have been paid. Extended Term: The extended term shall be half of the policy term after the expiry of the policy term.
AUTO-COVER FACILITY:
If at least two full years premiums have been paid in respect of this policy, any subsequent premium be not duly paid, full death cover shall continue for a period of two years from the date of First Unpaid Premium(FUP) or till the end of policy term, whichever is earlier.
PAID UP VALUE:
If after at least three full years premiums have been paid in respect of this policy, any subsequent premium be not duly paid, this policy shall not be wholly void after the expiry of two years Auto Cover Period from the due date of First Unpaid Premium, but shall subsist as a paid up policy for an amount equal to the total premiums paid (excluding any extra/optional premium) less the survival benefits paid earlier, if any. This amount shall be called as Paid Up Value. This paid up value shall be payable on the date of expiry of policy term or at Life Assureds prior death. No survival benefit shall be payable under paid up policies. The policy, thereafter, shall be free from all liabilities for payment of the within mentioned premiums. The Accident Benefit Rider will cease to apply if the policy is in lapsed condition. During the Auto Cover Period also, the Accident Benefit Rider shall not be available. The extended term cover shall not be available in case of paid-up policies.
Grace Period :
A grace period of one month but not less than 30 days will be allowed for payment of yearly, half-yearly or quarterly premiums and 15 days for monthly premiums.
Revival :
Subject to production of satisfactory evidence of continued insurability, a lapsed policy can
be revived by paying arrears of premium together with interest within a period of five years from the due date of first unpaid premium. The rate of interest applicable will be as decided by the Corporation from time to time.
Cooling-off period:
If you are not satisfied with the Terms and Conditions of the policy you may return the policy to us within 15 days.
EXCLUSIONS: This policy will be void if the Life Assured commits suicide at anytime on or after the date on which the risk on the policy has commenced but before the expiry of one year from the date of commencement of risk under the policy. In case of death due to suicide during this period, the Corporation will not entertain any claim by virtue of this policy except to the extent of a third party's bonafide beneficial interest acquired in the policy for valuable consideration of which notice has been given in writing to the office to which premiums under this policy were paid, at least one calendar month prior to death.
BENEFITS Introduction
Insurance Regulatory & Development Authority (IRDA) requires all life insurance companies operating in India to provide official illustrations to their customers. The illustrations are based on the investment rates of return set by the Life Insurance Council (constituted under Section 64C(a) of the Insurance Act 1938) and is not intended to reflect the actual investment returns achieved or may be achieved in future by Life Insurance Corporation of India (LICI). For the year 2004-05 the two rates of investment return declared by the Life Insurance
Product summary:
These are Money Back type Assurance plans that provides financial protection against death throughout the term of plan along with the periodic payments on survival at specified durations during the term.
Premiums:
Premiums are payable yearly, half-yearly, quarterly, monthly or through salary deductions as opted by you throughout the term of the policy, or till the earlier death.
Bonuses:
This is a with-profit plan and participate in the profits of the Corporations life insurance business. It gets a share of the profits in the form of bonuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year. Once declared, they form part of the guaranteed benefits of the plan. Final (Additional) Bonus may also be payable provided policy has run for certain minimum period.
Death Benefit:
The Sum Assured plus all bonuses to date is payable in a lump sum upon the death of the life assured during the policy term irrespective of the Survival benefit /benefits paid earlier.
Survival Benefits:
The percentage of Sum Assured as mentioned below will be paid on survival to the end of specified durations : % of Sum Assured paid at the end of specified duration Duration 5 10 15 20 25 Plan 75 20% 20% 20% 40% 93 15% 15% 15% 15% 40%
All bonuses declared upto the maturity date will also be paid alongwith the final survival benefit.
Supplementary/Extra Benefits :
These are the optional benefits that can be added to your basic plan for extra protection/option. An additional premium is required to be paid for these benefits.
Surrender Value:
Buying a life insurance contract is a long-term commitment. However, surrender values are available under the plan on earlier termination of the contract.
Plan Parameters:
Minimum Entry age Sum assured (Rs.) Term (years) 13 (lbd) 50,000 Fixed at 20 for plan 75 and 25 for plan 93 Maximum 50 NO LIMIT -
Bonuses: This is a with-profit plan and participates in the profits of the Corporations life
insurance business. It gets a share of the profits in the form of bonuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year. Once declared, they form part of the guaranteed benefits of the plan. A Final (Additional) Bonus may also be payable provided a policy has run for certain minimum period.
Table No 133: Thrice the Sum Assured plus all bonuses on the basic sum assured to date is payable in a lump sum upon the death of the life assured.
Maturity Benefit:
The Sum Assured plus all bonuses declared up to maturity date is payable in a lump sum on survival to the end of the policy term.
Supplementary/Extra Benefits:
These are the optional benefits that can be added to your basic plan for extra protection/option. An additional premium is required to be paid for these benefits.
Surrender Value:
Buying a life insurance contract is a long-term commitment. However, surrender value will be available under the plan on earlier termination of the contract.
KOMAL JEEVAN
Premiums:
Premiums are payable yearly, half-yearly, quarterly, monthly or through Salary deductions, as opted by you, up to the policy anniversary immediately after the life assured (child) attains 18 years of age or till the earlier death of the life assured. Alternatively, the premium may be paid in one lump sum (Single premium).
Guaranteed Additions:
The policy provides for the Guaranteed Additions at the rate of Rs.75 per thousand Sum Assured for each completed year. The Guaranteed Additions are payable at the end of the term of the policy or earlier death of the Life Assured.
Loyalty Additions:
This is a with-profit plan and participates in the profits of the Corporations life insurance business. It gets a share of the profits in the form of loyalty additions which are terminal bonuses payable along with death or maturity benefit. Loyalty addition may be payable depending on the experience of the Corporation.
On the policy anniversary immediately following the Life assured attains the age of 18 years 20 years 22 years 24 years
Death Benefit:
In case of death of the life assured before the commencement of risk, the policy shall stand cancelled and premiums paid (excluding the Premium for Premium waiver Benefit ) under the policy will be refunded. However, if death occurs after the commencement of risk but before the policy matures, the full Sum Assured plus Guaranteed Additions together with Loyalty Additions, if any, is payable.
Maturity Benefit:
The Guaranteed Additions together with Loyalty Additions, if any, is payable in a lump sum on survival to the end of the policy term.
Surrender Value:
Buying a life insurance contract is a long-term commitment. However, surrender value is available on the plan on earlier termination of the contract.
products such as mutual funds. But last October, the government decided to tax premiums that paid above 20 percent of the sum assured. The decision has reduced sales of single premium products, which is likely to restrain the overall growth of India's life industry. The industry regulator has forecast growth of life premiums to be around 20 percent to March -2004, about the same level as 1999, down from a burst of sales in 2002 of 43.5 percent. India's life insurers have rallied to persuade the government to rescind the ruling later this year ,but any decision must wait for the end of parliamentary elections currently underway.
CURRENT STANDING OF PRIVATE LIFE INSURANCE COMPANIES IN URBAN SECTOR Life insurance is possibly the most- retail of all financial services, and is required by people of all segments and in all locations. At a broad level, ICICI Prudential aims to secure the families of the middle and upper class working people in urban India. To this end, they have pursued a pan-India distribution strategy and backed it up with a range of products that meets the needs of a wide range of people, be they from rural or urban areas. Today, they have branches in 74 locations and rural presence in more than 15 states. Certainly, the majority of the business still comes from urban areas such as metros and mini-metros. However, they have seen rural business grow significantly and expect it to continue making greater contribution in the years to come.
FINDINGS
QUESTIONNAIRE ANALYSIS
Respondents = 80 Respondents Responded = 60 Response Rate = 75% Respondents are taken from private, government and business sectors.
1. According to you, which have played a major role in the field of life insurance companies?
private employees LIC HDFC ICICI 10 5 3 govt. employees businessman 13 3 3 1 10 5 4 1
OTHERS 2
14 12 10 8 6 4 2 0
I DF C IC IC O TH H
LI C
After analyzing this data it is found that from the given three respective level of Pvt. Govt. and Business 10 out of 20 (30%), 13 out of 20 (39%) and 10 out of 20 (30%) are in favour of LIC, while 5 out of 20 (15%), 3 out of 20 (9%) and 5 out of 20 (6%), 1 out of 20 (30%) and 1 out of 20 (30%) are in favour of other Pvt. Companies.
ER
2. Which insurance companies have been successful to make strong public base by advertisement?
Govt employees 14 2 3 1
Business man 12 4 3 1
16 14 12 10 8 6 4 2 0
IC IC I LI C FC O TH ER HD S
From the above table, it is found that from the given three sector Private, Govt. and Business 12 out of 20 (36%), 14 out of 20 (42%), 12 out of 20 (36%), are in the favour of LIC. 3 out of 20 (9%), 2 out of 20 (6%) and 4 out of 20 (12%) are in favour of HDFC, whereas only 1 out of 20 (3%), 1 out of 20 (3%) 1 and out of 20 (3%) favour others company.
3. Which insurance company has gained massive public support in the current fiscal year?
Private employees LIC HDFC ICICI 12 3 3 govt. employees 14 2 2 2
businessman 10 5 4 1
OTHERS 2
From the above table, it is found that from the given three sector Private, Govt. and Business 12 out of 20 (36%), 14 out of 20 (42%), 10 out of 20 (30%), are in the favour of LIC 3 out of 20 (9%), 2 out of 20 (6%) and 4 out of 20 (12%) are in favour of ICICI, whereas only 2 out of 20 (6%), 2 out of 20 (6%) 1 and out of 20 (3%) favour others company.
Govt. employees 16 4
Businessman 12 8
YES NO
The above table shows that from private sector 13 out of 20 (30%) agree and 7 out of 20 (21%) disagree, from govt. sector 16 out of 20 (48%) think it right but 4 out of 20 (12%) dont thick it so and from business man 12 out of 20 (36%) are in favour of the above statement but 8 out of 20 (24%) dont favour it.
5. Is retirement bond or pension policy launched by the number of private player as well as public sector Company in the direction of secured old age?
Private employees YES NO 15 5 Govt. employees 18 2
Businessman 13 7
It is obvious from the above table that 15 out of 20 (45%), 18 out of 20 (54%) and 13 out of 20 (39%) from the given three think retirement bend or pension policy a legitimate step in the direction of secure old age but 5 out 20 (15%), 2 out of 20 (6%) and 7 out 20 (21%) dont agree with the opinion of the majority class.
6. Do you think that risk coverage factor included in Insurance policy attracts general public towards the policy?
25 20 15 10 5 0
Businessman Private employees Govt. employees
NO YES
From the above table it is found that 12 out of 20 (36%) from Private sector 16 out of 20 (48%). From Govt. sector and 11 out of 20 (33%) thinks risk coverage factor attractive but rest 8 out of 20 (24%), 4 out of 20 (12%) and 9 out 20 (27%) from the above them sector dont think it so encouraging towards saving trend whereas 3 out of 20 (9%), 2 out of 20 (6%) and 4 out of 20 (12%) dont think it so.
7. What according to you, the term plan that only covers risk and doesnt cover maturity benefit on survival at the end of the term provides security cover over policy holders or a smart way of accumulative money from policy holders?
Govt. employees 16 4
Businessman 11 9
20 15 Security Cover 10 5 0 Private Govt Business employees employees man Accumulative Money
It is obvious from the above data that 11 out of 20 (33%), from the Pvt. Sector, 15 out of 20 (45%) from Govt. sector and 12 out of 20 (36%) think term plan as a security cover but 9 out of 20 (27%), 5 out of 20 (15%) and 8 out of 20 (24%) from the three respective group think it as a way of accumulating money insurance company.
8. Do you think that the arrival of so many private companies in this insurance sector envisage a lot of choice to policy holder?
Private employees YES NO 16 4 Govt. employees 18 2
Businessman 16 4
From analyzing the above data it is found that 16 out of 20 (48%) from Pvt. Sector, 18 out of 20 (54%) from Govt. sector and 16 out of 20 (48%) think that the arrival of private players envisage a lot of choice to policy holder. But 4 out of 20 (12%), 2 out of 20 (6%) and 4 out of 20 (12%) dont think it so.
9. Do you agree that customer-centricity and transparency are the buzzwords for success in this evolving industry?
Private employees YES NO 18 2 Govt. employees 20 0
Businessman 19 1
From this above data, it is found the 18 out of 20 (54%) from Pvt. Sector and 20 out of 20 (60%) from Govt. Sector 19 out of 20 (57%) from Business men agree with this statement whereas only 2 out of 20 (6%) from Pvt. Sector and 1 out of 20 (3%) from Business men do not agree with this statement.
STANDARD LIFE
Standard Life is Europe's largest mutual life assurance company. Standard Life, which has been in the life insurance business for the past 175 years, is a modern company surviving quite a few changes since selling its first policy in 1825. The company expanded in the 19th century from its original Edinburgh premises. Standard Life currently has assets exceeding over 70 billion under its management and has the distinction of being accorded"AAA" rating consequently for the past six years by Standard & Poor.
PRUDENTIAL POLICY
Prudential policy was founded in 1848. Since then it has grown to become one of the largest providers of a wide range of savings products for the individual including life insurance, pensions, annuities, unit trusts and personal banking. It has a presence in over 15 countries, and caters to the financial needs of over 10 million customers. It manages assets of over US$ 259 billion (Rupees 11, 39,600 crores approx.) as of December 31, 1999. Prudential is the largest life insurance company in the United Kingdom (Source: S&P's UK Life Financial Digest, 1998). Asia has always been an important region for Prudential and it has had a presence in Asia for over 75 years. In fact Credentials first overseas operation was in India, way back in 1923 to establish Life and General Branch agencies.
ICICI Save 'n' Protect ICICI Prudential Cash Back ICICI Prudential Life Guard ICICI Pru Assure Investment ICICI Pru Life Link
BIRLA SUN LIFE INSURANCE COMPANY LIMITED THE ADITYA BIRLA GROUP
Aditya Birla Group is India's second largest, business house, with a turnover of over $4.75bn and an asset base of$3.8 bn. The Group is a well diversified conglomerate with 72,000 strong workforce spanning 40 Companies spread across 17 countries. The flagship companies of the Group - Grasim, Hindalco, Indian Rayon and Indo Gulf - hold leadership positions in their respective areas of business.
The area of focus will be the rural segment as the company plans to leverage the network of the Aditya Birla Centre for Community Initiative and Rural Development in rural areas. Its multi-channel distribution set up comprises insurance advisors for life and an expert marketing team for group products. Birla Sun Life Insurance Products: Money Back Endowment Whole Life Birla Sun Life Term Plant
CONCLUSION
After overhauling the all situation that boosted a number of Pvt. Companies associated with multinational in the Insurance Sector to give befitting competition to the established behemoth LIC in public sector.
RECOMMENDATIONS
In the modernized well advanced hi-tech approach to the customer every possible facilities and effort to build up the confidence of the rising policy holders towards. Insurance companies, to complete one another nothing is left to recommend. But some recommendations that are intensely felt and highly required for insures to sustain in the market.
BIBLIOGRAPHY
BROCHURE AND INFORMATION BOOKLET
Product List L.I.C. L.I.C. Annual Report, 2006 ICICI Annual Report, 2006 HDFC Annual Report, 2006 Malhotra Committee Report on Reforms in the Insurance Sector, 1993. The Insurance Regulatory and Development Authority Bill, 1999.
NEWSPAPERS / MAGAZINES
The Economic Times The Insurance Times Insurance Post
WEBSITES
www.licindia.com www.indiainfoline.com www.iciciprulife.com www.hdfc.com