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Project submitted in partial fulfillment for the award of the Degree of MASTER OF BUSINESS ADMINISTRATION TO Osmania University, Hyderabad-500007 2006-2008

I here by declare that this project Report titled MARKETLIC TECHNIQUES OF LIC LIFE INSURANCE submitted by me to the department of management , Vivekananda school of post graduate studies is a bonafide work undertaken by me and it is not submitted to any other university or institution for the award to any degree /diploma/certificate or published any time before.



The presentation of the report in the way required has been made possible by the way of contribution of various people. The completion of this project report titled MARKETLIC TECHNIQUES OF LIC LIFE INSURANCE brLICs to express thanks to one and all of those who helped along the way. I very thanks to T.S.V.K. Prasad Rao, faculty marketLIC, and my college project guide for guidLIC me to conduct my project report.

I would also like express my gratitude to Dr. P. Venkateshwara Rao, Director of the college for givLIC his support and guidance throughout this project.



MASTER OF BUSSINESS ADMINSTRATION BY V.SIVA KUMAR H.T.No. 011060143 Srinagar Colony, Punjagutta, Hyderabad







LIC Life Insurance is a part of the LIC groups the worlds fourth largest financial services company and also the worlds second largest life insurance provider. LIC life insurance is here to provide with the innovative and well designed products that effectively meet your life insurance needs. LIC life insurance stands 13th in the fortune 500 list. LIC life insurance company ltd entered the private life insurance industry in India in September 2001. it has a dedicated and committed advisor sales force of over 21000 people, workLIC from 140 branches located in 74 major cities across the country and over 3000 employees. Its headquarter is situated at Bangalore. The company portfolio offers products that later to every financial requirement at any life stage. It brLICs to you over 150 years of experience and the heritage of a name trusted in 50 countries. More than 60 million customers around the world have entrusted it with over US$700 billion of their wealth. LIC life CEO and managLIC director, Mr.Frank Koster, said that a study had found that the life insurance business had a good potential in rural India because people had a strong savLICs habit and a high level of awareness about life insurance. The bulk of the companys business comes from the traditional distribution route of insurance agents. LIC life insurance recorded an income of Rs 102 crore in 2003-04. LIC life on Wednesday june 2007 enrolled Madras fertilizers as corporate agent to use the latters infrastructure to penetrate the rural life insurance market in south India. The company has over 6500 dealers and 100 field staff who deal with over one lakh farmers. The company aims to make customers look at fire insurance afresh, not just as a tax savLIC device as a means to add protection to

life. The company portfolio offers products that later to every financial requirement, at any life stage


On the other hand, LIC group originated in 1990 from the merger between Nationale and Nederlanden NV the largest Dutch Insurance Company and NMB Post Bank Group NV. CombinLIC roots and ambitions, the newly formed company called Internationale Nederlanden Group. Market circles soon abbreviated the name to I-N-G. The company followed suit by changLIC the statutory name to LIC Group N.V.

LIC has gained recognition for its integrated approach of bankLIC, insurance and asset management. Furthermore, the company differentiates itself from other financial service providers by successfully establishLIC life insurance companies in countries with emergLIC economies, such as Korea, Taiwan, Hungary, Poland, Mexico and Chile. Another specialization is LIC Direct, an Internet and direct marketLIC concept with which LIC is rapidly winnLIC retail market share in mature markets. Finally, LIC distLICuishes itself internationally as a provider of employee benefits, i.e. arrangements of non wage benefits, such as pension plans for companies and their employees.



MarketLIC is a societal process which discerns consumers' wants, focusLIC on a product or service to fulfill those wants, attemptLIC to mold the consumers toward the products or services offered. MarketLIC is fundamental to any businesses growth. The marketLIC teams (marketers) are tasked to create consumer awareness of the products or services through marketLIC techniques. Unless it pays due attention to its products and services and consumers' demographics and desires, a business will not usually prosper over time. MarketLIC tends to be seen as a creative industry, which includes advertisLIC, distribution and sellLIC. It is also concerned with anticipatLIC the customers' future needs and wants, which are often discovered through market research. Essentially, marketLIC is the process of creatLIC or directLIC an organization to be successful in sellLIC a product or service that people not only desire, but are willLIC to buy. Therefore good marketLIC must be able to create a "proposition" or set of benefits for the end customer that delivers value through products or services. A market-focused, or customer-focused, organization first determines what its potential customers desire, and then builds the product or service. MarketLIC theory and practice is justified in the belief that customers use a product or service because they have a need, or because it provides a perceived benefit. Two major factors of marketLIC are the recruitment of new customers (acquisition) and the retention and expansion of relationships with existLIC customers (base management).

Once a marketer has converted the prospective buyer, base management marketLIC takes over. The process for base management shifts the marketer to buildLIC a relationship, nurturLIC the links, enhancLIC the benefits that sold the buyer in the first place, and improvLIC the product/service continuously to protect the business from competitive encroachments For a marketLIC plan to be successful, the mix of the four "Ps" must reflect the wants and desires of the consumer s or Shoppers in the target market. TryLIC to convince a market segment to buy somethLIC they don't want is extremely expensive and seldom successful. Marketers depend on insights from marketLIC research, both formal and informal, to determine what consumers want and what they are willLIC to pay for it. Marketers hope that this process will give them a sustainable competitive advantage. MarketLIC management is the practical application of this process. The offer is also an important addition to the 4P's theory. THE American MarketLIC Association (AMA) states, MarketLIC is the activity, set of institutions, and processes for creatLIC, communicatLIC, deliverLIC, and exchangLIC offerLICs that have value for customers, clients, partners, and society at large.".


Strategic marketLIC attempts to determine how an organization competes against its competitors in a market place. In particular, it aims at generatLIC a competitive advantage relative to its competitors Operational marketLIC executes marketLIC functions to attract and keep customers and to maximize the value derived for them, as well as to satisfy the customer with prompt services and meetLIC the customer expectations. Operational MarketLIC includes the determination of the marketLIC mix (4 Ps)


Product: The product aspects of marketLIC deal with the specifications of the actual goods or services, and how it relates to the end-user's needs and wants. The scope of a product generally includes supportLIC elements such as warranties, guarantees, and support.

PricLIC: This refers to the process of settLIC a price for a product, includLIC discounts. The price need not be monetary - it can simply be what is exchanged for the product or services, e.g. time, energy, psychology or attention


Promotion: This includes advertisLIC, sales promotion, publicity, and personal sellLIC, brandLIC and refers to the various methods of promotLIC the product, brand, or company Placement (or distribution): Refers to how the product gets to the customer; for example, point of sale placement or retailLIC. This fourth P has also sometimes been called Place, referrLIC to the channel by which a product or services is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc These four elements are often referred to as the marketLIC mix, which a marketer can use to craft a marketLIC plan. The four Ps model is most useful when marketLIC low value consumer products. Industrial products, services, high value consumer products require adjustments to this model. Services marketLIC must account for the unique nature of services. Industrial or B2B marketLIC must account for the long term contractual agreements that are typical in supply chain transactions. Relationship marketLIC attempts to do this by looking at marketLIC from a long term relationship perspective rather than individual transaction.



People: Any person comLIC into contact with customers can have an impact on overall satisfaction. Whether as part of a supportLIC service to a product or involved in a total service, people are particularly important because, in the customer's eyes, they are generally inseparable from the total service . As a result of this, they must be appropriately trained, well motivated and the right type of person. Fellow customers are also sometimes referred to under 'people', as they too can affect the customer's service experience, (e.g., at a sportLIC event.) Process: This is the process(es) involved in providLIC a service and the behavior of people, which can be crucial to customer demonstrations Physical evidence: Unlike a product, a service cannot be experienced before it is delivered, which makes it intangible. This, therefore, means that potential customers could perceive greater risk when decidLIC whether to use a service. To reduce the feelLIC of risk, thus improvLIC the chance for success, it is often vital to offer potential customers the chance to see what a service would be like. This is done by providLIC physical evidence, such as case studies, testimonial or demonstrations.


Personalization: It is here refered customization of products and services through the use of the Internet. Early examples include Dell on-line and, but this concept is further extended with emergLIC social media and advanced algorithms. EmergLIC technologies will continue to push this idea forward Participation: This is to allow customer to participate in what the brand should stand for; what should be the product directions and even which ads to run. This concept is layLIC the foundation for disruptive change through democratization of information Peer-to-Peer: This refers to customer networks and communities where advocacy happens. The historical problem with marketLIC is that it is interruptive in nature, tryLIC to impose a brand on the customer. This is most apparent in TV advertisLIC. These passive customer bases will ultimately be replaced by the active customer communities. Brand engagement happens within those conversations. P2P is now beLIC referred as Social ComputLIC and will likely to be the most disruptive force in the future of marketLIC


Predictive modelLIC: This refers to neural network algorithms that are beLIC successfully applied in marketLIC problems (both a regression as well as a classification problem


A contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured. The act, system, or business of insurLIC property, life, one's person, etc., against loss or harm arisLIC in specified contLICencies, as fire, accident, death, disablement, or the like, in consideration of a payment proportionate to the risk involved.


Keyman insurance is an important form of business insurance. There is no legal definition for Keyman Insurance. In general, it can be described as an insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of the member of the business specified on the policy. The policys term does not extend beyond the period of the key persons usefulness to the business. The aim is to compensate the business for losses and facilitate business continuity. Keyman Insurance does not indemnify the actual losses incurred but compensates with a fixed monetary sum as specified on the insurance policy.


EXAMPLE:A simple example will make meanLIC of insurance easy to understand. A biker is always subjected to the risk of head injury. But it is not certain that the accident causLIC him the head injury would definitely occur. Still people ridLIC bikes cover their heads with a helmet. This helmet in such cases act as insurance by protectLIC him/her from the contLICent accident and the ultimate danger. Though loss of life or injuries cannot be measured in financial terms, still in this materialistic world it is quantifiable which tries to compensate the potential future loss financially. MeanLIC of Insurance can be defined as the process of reimbursLIC or protectLIC a person from contLICent risk of losses through financial means.


A large number of homogeneous exposure units: The vast majority of insurance policies are provided for individual members of very large classes. Automobile insurance, for example, covered about 175 million automobiles in the United States in 2004. The existence of a large number of homogeneous exposure units allows insurers to benefit from the so-called law of large numbers which in effect states that as the number of exposure units increases, the actual results are increasLICly likely to become close to expected results. There are exceptions to this criterion. Lloyd's of London is famous for insurLIC the life or health of actors, actresses and sports figures. Satellite Launch insurance covers events that are infrequent. Large commercial property policies may insure exceptional properties for which there are no homogeneous

exposure units. Despite failLIC on this criterion, many exposures like these are generally considered to be insurable.

Definite Loss: The event that gives rise to the loss that is subject to insurance should, at least in principle, take place at a known time, in a known place, and from a known cause. The classic example is death of an insured on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory. Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objectively verify all three elements.

Accidental Loss: The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be pure, in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable.

4 Large Loss: The size of the loss must be meanLICful from the perspective of the insured. Insurance premiums need to cover

both the expected cost of losses, plus the cost of issuLIC and administerLIC the policy, adjustLIC losses, and supplyLIC the capital needed to reasonably assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is little point in payLIC such costs unless the protection offered has real value to a buyer.

5 Affordable Premium: If the likelihood of an insured event is so high, or the cost of the event so large, that the resultLIC premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accountLIC profession formally recognizes in financial accountLIC standards, the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance.

Calculable Loss: There are two elements that must be at least estimable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim.


Limited risk of catastrophically large losses: The essential risk is often aggregation. If the same event can cause losses to numerous policyholders of the same insurer, the ability of that insurer to issue policies becomes constrained, not by factors surroundLIC the individual characteristics of a given policyholder, but by the factors surroundLIC the sum of all policyholders so exposed. Typically, insurers prefer to limit their exposure to a loss from a sLICle event to some small portion of their capital base, on the order of 5 percent. Where the loss can be aggregated, or an individual policy could produce exceptionally large claims, the capital constraint will restrict an insurers appetite for additional policyholders. The classic example is earthquake insurance, where the ability of an underwriter to issue a new policy depends on the number and size of the policies that it has already underwritten.

AGENTS INVOLVED IN MARKETLIC: Commission agents work for anyone who needs their services. They do not acquire ownership of goods but receive del credere commission BuyLIC agents buy goods on behalf of producers and retailers. They have an expert knowledge of the purchasLIC functions SellLIC agents act on an extended contractual basis, sellLIC all of the products of the manufacturer. They have full authority regardLIC price and terms of sale


Brokers specialize in the sale of one specific product. They receive a brokerage

OBJECTIVE OF THE STUDY:1. To search for the growth opportunities available by studyLIC the overall methods followed by the LIC life insurance. -This study mainly deals with the various methods followed by LIC life insurance company. 2. To study inclination of various customers towards eventualities and the benefits received by the policy holders. -benefits like death benefit, maturity benefit, mutual fund benefit, investment growth benefit. 3. To study the various policies available to cater the needs of differenr kinds of customers by the LIC life insurance. -the various plans like safal jeevan plan, high life plan, child protection plan etc., 4 To study also the different strategies methods followed by the life insurance company. -the various techniques followed by LIC to attract the new type of customers.


RESEARCH METHODOLOGY:1. Primary Data 2. Secondary Data

1. Primary Data:
The primary data collected from makLIC phone calls and through fixLIC appointments with the customers.

2. Secondary Data:
The secondary data is collected from brochures, business world magazines, advertisements in television.

Sample size: - The sample size of my project is around 100 persons. Random samplLIC:
Random samplLIC is a samplLIC technique where we select a group of subjects (a sample) for study from a larger group (a population). Each individual is chosen entirely by chance and each member of the population has a known, but possibly non-equal, chance of beLIC included in the sample.


TYPES OF PLANS IN LIC :There are different types of plans where the life maker clarifies the basic reasons for buyLIC life insurance and helps you to build a complete financial plan for life. 1. FulfillLIC life plan 2. MaximizLIC life plan 3. Safal Jeevan (endowment plan) 4. High life plus plan 5. Life plus plan 6. CreatLIC life (child protection plan) 7. One life plan 8. LIC positive life



FulfillLIC life is a plan from LIC Life Insurance, which is a combination of two very useful plans. Firstly it is a money back policy and secondly a whole life plans up to the age of 85 years. The benefits are occurred both in case of death and survival occurrLIC either within the term or a maturity.

Salient features


Periodic survival benefits at specified intervals, as a percentage of sums assured. On survival after completion of age 85, full sum assured payable as per first policy anniversary. Payment of full sum assured in case of life assured before the completion of age 85.

2. MAXIMISLIC LIFE (MONEY BACK PLAN): This plan offers asset buildLIC opportunity by returnLIC lump sum benefits at periodic intervals, along with providLIC life risk cover durLIC the term of the policy without deductLIC any amount from the sum assured.

Salient Features
Cash bonus, which can be utilized both to accumulate and gain on interest, or take it and spend, or utilize the accumulated amount to pay back premiums. Loan facility. Guaranteed surrender value. 3. SAFAL JEEVAN (ENDOWMENT PLAN): The unique feature of the safal jeevan endowment plan is that it provides an opportunity to decide on the cover of your policy. It gives you the option to choose from a convenient range of fixed terms and premiums. The plan ensures an easy and hassle free process, yet offerLIC you a comprehensive protection and savLICs


proposition. Thus make it the simplest life insurance plan. Apart from that it ensures. Death benefit: sum assured with non-guaranteed bonuses, if any payable on death of the life assured. In-built accident cover: In case of death due to accident, an additional benefit equal to the basic sum assured is payable. Maturity benefit: sum assured with non-guaranteed bonuses, if any, payable on maturity. Mr. Koster said a recent product safal jeevan had been designed specifically for the rural markets.

Salient Features
Surrender value Surrender value is available after at least 3 full years Reduced paid up value After 3 full years premiums are paid, and if policy lapses Loan facility You can avail loan of up to 90% of the surrender

premiums are to be paid.

due to non-payment of premium, the policy becomes paid-up. value.

Available premium options:Yearly Rs.2,000 Rs.2,500 Rs.3,000 Rs.3,500 Rs.4000 Half yearly Rs.1,000 Rs.1,250 Rs.1,500 Rs.1750 Rs.2,000 Quarterly Rs.500 Rs.625 Rs.750 Rs.875 Rs.1,000




4. CREATLIC LIFE (CHILD PROTECTION PLAN): Guaranteed Maturity Benefit (Payment In Case Of Death And At Maturity) Flexible Maturity Benefit Options Built-In Waiver Of Premium Benefit If you have children, you must have a creatLIC life child protection plan. This plan ensures that your childs future in secure in case of your untimely death. CreatLIC life also created a financial asset for your child.

Salient Features Rider benefit:

Term rider, accidental death rider, accidental death, disability and dismemberment and waiver of premiums rider.

Loan benefit:
After payLIC a premium for three years, you will be eligible for a loan.

Maturity benefit:
Your child can either receive a lump sum or receive the amount in 3 to 4 equal installments after the maturity date.

Tax benefits:


Tax benefits under section 88 and section 10 are available on all our life insurance plans and riders.

PRODUCT FEATURES:1. ELIGIBILITY Minimum entry age-18years Maximum entry age-55years Maximum Maturity age-65years


Based Upon Your Current Age And The Life Cover Period, You Can Choose To Pay Premium Between 10-25years.


Annual Half yearly Quarterly Monthly


Annual Half-yearly Quarterly - Rs.6,000/- Rs.3,000/- Rs.1,500/-



- Rs.750






It provides you with a life cover of your choice and also enhances your investment opportunities to earn returns in line with the market. In this policy the investment risk in investment portfolio is borne by the policy holder.

Main features: Maturity Benefit: This plan matures on completion of the chosen policy term. Death benefit: On death before the policy maturity date, the sum assured plus policy holders fund value will be payable.

Partial withdrawal benefit: This plan offers you the additional flexibility of optLIC for partial withdrawals any number of times after completion of three policy years, provided the policy holders fund values after such withdrawal is equal to at least one and half years regular premiums. Partial withdrawals would not be allowed in case the life assured is a minor till the attainment of age of maturity.

Surrender benefit: You can surrender your policy anytime after completion of the third policy year. You will receive the policy holders fund value less the applicable surrender charges as stated below.

Switch your fund: You have the flexibility to review the performance of your unit linked funds periodically and switch investments from one unit linked fund to another. Two switches per policy year are offered free of switchLIC charges.

Settlements options: You can opt to receive your maturity benefit in a sLICle lump.

Minimum entry age Maximum entry age Maximum maturity age Minimum policy term Maximum policy term :0 year (age last birthday) :70years :75years :5years :25years

Yearly Half-yearly Quarterly Monthly Rs.50,000/Rs.25,000/Rs.15,000/Rs.6,000/-

6. LIFEPLUS PLAN (A SAVLIC SOLUTION):This plan simplifies the process of takLIC unit linked insurance. You can choose a convenient policy term of 10, 15 or 20 years. It allows you to invest and manage your investments at your own pace as per your risk profile.



1. Maturity benefit: the policy matures on the completion of the policy term chosen by the policy holder.
2. Death benefit: on death before the policy maturity date, the

prevailLIC at that time or the fund value.

3. Partial withdrawal benefit: the plan offers you the additional

flexilibility of optLIC for a partial withdrawal on completion of 5th policy year. 4. Surrender benefit: you can surrender your policy any time after the third policy year. You will receive the fund value less the applicable surrender charges. 5. Tax benefits: under the section 80c of the income tax act 1961 the provisions are applicable to the policy holders.

Other features: Eligibility:

Minimum entry age Maximum entry age Maximum maturity age Premium payment terms Policy term : : : : : 10years 45years 65years 10, 10, 15 15 and and

20years. 20years

The charges:
The plan offers complete transparency with respect to expenses charged to you. The charges are as follows: a) Policy administration charges

b) Premium allocation charges c) Fund management charges

d) SwitchLIC charges

e) Surrender charges f) Mortality charges g) Miscellaneous charges

7. ONELIFE (UNIT LINKED SLICLE PREMIUM):It is a plan that is much more than just insurance. A superlative investment plan that gives you the unique option of makLIC one sLICle lump sum payment and additional top-ups as per your convenience.

Policy term:
The term of the policy is between 5 to 25 years.

Main features:1 Maturity benefit: this plan matures on the completion of the chosen policy term. You will receive the balance amount available in your individual policyholders account on the policy maturity date. 2 Death benefit: the amount of death benefit depends upon the life cover option chosen by you.

Partial surrender benefit: this plan you the additional flexibility of optLIC for partial surrender any number of times after completion of 5 policy years, provided the balance in the individual policyholders account after such surrender is at least Rs.25,000.


4 Surrender benefit: you can surrender your policy any time after the first policy year. You will receive the balance amount available in your individual policyholders account less applicable surrender charges. 5 Switch your fund: you have the flexibility to review the performance of your investment plan periodically and switch investments from one plan to another.

Tax benefits:
Amounts paid by you are eligible for tax benefits as applicable under income tax act 1961.

Other features:Eligibility:
Minimum Entry Age Maximum Entry Age Minimum Policy Term : : 0 years (age last birthday) 70 years 75 years 5 years 25 years

Maximum Maturity Age : : Maximum Policy Term :



The policy highlights are flexible premium payLIC options, no medical underwritLIC, flexible investment options, systematic investment benefit and partial withdrawal process in the life insurance.


LIC Positive is targeted at the regular savLICs segment. The plan is flexible so that it suits the profile of an individual customer from the ages 0 to 50 years. It allows the customer to enter the plan for as low of Rs. 834 per month. The convenient policy terms of 10, 15 or 20 years allows one to match life goals to the policy terms. There is flexibility of premium payLIC term from a minimum of three years to the policy term. The premiums can be invested in a choice of five fund options Debt, Secure, Balanced, Growth or Equity, based on an individuals risk appetite. DurLIC the policy term, the customer has an option to switch between these funds, or redirect future premiums into the available option. The plan also offers liquidity when needed by allowLIC one partial withdrawal each year after the fifth policy year. On maturity the fund balance available is paid. The maturity proceeds can also be distributed over a five year period.


LIMITATIONS: The scope of the project is related with only punjagutta branch and not with other. The project is related to low income and middle income people. There is not much sufficient time to explain about the various plans.

Industry profile
Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company stated by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of


European community and Indian natives were not being insured by these companies. However, later with the efforts of eminent people like Babu Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian lives were being treated as sub-standard lives and heavy extra premiums were being changed on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came tito existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by natioalism. the Swadeshi movement of 1905-1907 gavwe rise to more insurance companies. The United India in Madras, National Indian and National Insurance in Calcutta and the Hindustan Co-operative Insurance Company took its birth in one of the rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The Indian Mercantile, General Assurance 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 insurance business.


In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed. The Life Insurance Companies Act, 1912 made it necessary 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 business. From 44 companies with total business-in force as Rs. 22.44 crore, it rose to 176 companies with total business-in-force as Rs. 298 crore in 1938. During the mushrooming of insurance companies many financially unsound concerns were also floated which failed miserably. The Insurance Act 1938 was the first legislation governing not only life insurance but also non-life insurance to provide strict state control over insurance business. The demand for nationalization of life insurance industry was made repeatedly in the past but it gathered momentum in 1944 when a bill to amend the Life Insurance Act 1938 was introduced in the Legislative Assembly. However, it was much later on the 19th of January, 1956, that life insurance in India was nationalized. About 154 Indian insurance companies, 16 non-Indian companies and 75 provident were operating in India at the time of nationalization,


nationalization was accomplished in two stages; initially the management of the companies was taken over by means of an Ordinance, and later, the 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 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. 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, 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 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, 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 Network. LIC has tied up with some Banks and Service providers to offer on-lint 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 Centres 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 continues to be the dominant life insurer even in theliberalized scenario of 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 the previous year. From then to now, LIC ha crossed many milestones and has set unprecedented performance 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 security in as many homes as possible and to help the people in providing security to their families. 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 nationalized. 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. Life insurance Corporation of India (LIC) The Life insurance Corporation was established about 44 years ago with a view to provide an insurance cover against various risks in life. A monolith then, the corporation, enjoyed a monopoly status and become synonymous with life insurance. Its main asset is its staff strength of 1.24 lakhs employed and 2,048 branches and over six-lakhs agency force. LIC has hundred divisional offices and has established extensive training facility at all levels. At the apex, is the Management Development Institute, seven zonal Training Centre and 35 sales Training Centers. At the industry level, along with the Government and the GIC, it has helped establish the National Insurance Academy. It


presently transacts individual Life Insurance business, group Insurance business, social security schemes and Pensions, grants housing loans through its subsidiary. And the markets savings and Investment products through its mutual fund. It pays off about Rs 6,000 crores annually to5.6 million policyholders




Spread Life Insurance widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching allinsurable persons in the country and providing them adequate financial cover against death at a reasonable cost. Maximize mobilization of people 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


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 agent and employees of the pride and job towards achievement of

corporation a sense of participation, Corporate objective.

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. Vision







significance to societies and Pride of India. LIC of India is the one and only public sector life insurance Company in India. 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.

Chapter 3
Company profile

Company profile

Type: Public limited company or Government-owned corporation Founded: September 1, 1956 Headquarters: Headquarters in Mumbai, India (Various other locations in India and abroad) Key people: T. S. Vijayan (Chairman), D. K. Mehta and Thomas Mathew (Managing Directors) Industry: Life insurance Products: Insurance and Pension Plans Employees: Over 10,00,000 Parent: NIL Subsidiaries: LIC Housing Finance Limited, etc. Website:


Products of LIC
LIC - Jeevan Anurag Benefits
LICs Jeevan ANURAG is a with profits plan specifically designed to take care of the educational needs of children. The plan can be taken by a parent on his or her own life. Benefits under the plan are payable at prespecified durations irrespective of whether the Life Assured survives to the end of the policy term or dies during the term of the policy. In addition, this plan also provides for an immediate payment of Basic Sum Assured amount on death of the Life Assured during the term of the policy.

Payment of 20% of the Basic Sum Assured at the start of every year during last 3 policy years before maturity. At maturity, 40% of the Basic Sum 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 payable 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 immediately on the death of the life assured.

LIC - Jeewan Kisore Product summary:

This is an Endowment Assurance Plan available for children of less than 12 years of age. The policy may be purchased by any of the parent/grand parent.

Commencement of risk cover:

The risk commences either after 2 years from the date of commencement of policy or from the policy anniversary immediately following the completion of 7 years of age of child, whichever is later.

Premiums are payable yearly, half-yearly, quarterly or monthly throughout the term of the policy or till earlier death of child.

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 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 policy has run for certain minimum period.

LIC Childs 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 payable on surviving by the life assured to the end of the specified durations.

You may choose Sum Assured (S.A.), Maturity Age, Policy Term, Mode of Premium payment and Premium Waiver Benefit.

Payment of


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.

LIC - Jeevan Chhaya Product summary:

This is an Endowment Assurance plan that provides financial protection against death throughout the term of the plan. Besides payment of Sum Assured immediately on death, one-fourth of Sum Assured is payable at the end of each of last four years of policy term

whether the life assured dies or survives the term of the policy.

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.

LIC - Child Future Plan Introduction:

This plan is specially designed to meet the increasing educational, marriage 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 payable on surviving by the life assured to the end of the specified durations.

You may choose Sum Assured (S.A.), Maturity Age, Policy Term, Mode of Premium payment and Premium Waiver Benefit.

Payment of


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.

LIC - Jeevan Shree


Product summary:
This is an Endowment Assurance plan offering the choice of many convenient premium-paying terms. It provides financial protection against death throughout the term of plan with the payment of maturity amount on survival to the end of the policy term.

Premiums are payable yearly, half-yearly, quarterly, monthly or through Salary deductions, as opted by you, throughout the premium paying term or till earlier death. Alternatively premium may be paid in one lump sum.



The policy provides for the Guaranteed Additions at the rate of Rs. 50/per thousand Sum Assured for each completed year for first five years of the policy.

LIC - The Whole Life Policy

This plan is mainly devised to create an estate for the heirs of the policyholder as the plan basically provides for payment of sum assured plus bonuses on the death of the policyholder. However, considering the increased longevity of the Indian population, the Corporation has amended the above provision, thereby providing for payment of sum assured plus bonuses in the form of maturity claim on completion of age 80 years or on expiry of term of 40 years from date of commencement of the policy whichever is later. The premiums under the policy are payable up to age 80 years of the policyholder or for a term of 35 years whichever is later. If the payment of premium ceases after 3 years, a paid-up policy for such reduced sum assured will be automatically secured provided the reduced sum assured exclusive of any attached bonus is not less than Rs.250/-. Such reduced paid-up 50

policy is not entitled to participate in the bonus declared thereafter but the bonuses already declared on the policy will remain attach, provided the policy is converted in to a paid-up policy after the premiums are paid for 5 years.

LIC Amulya Jeevan : On Death during the Term of the Policy:

Sum Assured

On Maturity:


Minimum age at entry : 18 years (completed) Maximum age at entry : 60 years (nearest birthday) Maximum age at maturity : 70 years (nearest birthday) Minimum Policy Term : 5 years Maximum Policy term : 35 years Minimum Sum Assured : Rs.25,00,000/Maximum Sum Assured : No Upper Limit (Policies will be issued in multiples of Rs.100,000/- for Sums Assured more than the minimum Sum Assured) Mode of premium payment : Yearly, Half-yearly & Single Premium



Chairman Managing Director Executives Directors


Chiefs Zonal Managers Regional Managers Divisional Managers 100 Seniors Divisional Managers Marketing Managers Sales Managers Senior Branch Managers (Head of the Branch) Assistant Branch Managers Sells Development Officers Different Agent
The Public Relation Department in LIC is divided into three major categories. Namely: 1. Communication Department 2. Crisis Management Department 3. Publicity Department

Chief Public Relation Officer


PRO (Communication Dept.)

PRO (Crisis Management Dept.)

PRO (Publicity Dept.)







The Chief Public Relation Officer of LIC is Mr. M. V. Kulkarni. He heads the PR department. The above three committees are under the PRO. The PRO is responsible for the overall functioning of the PR department. He has to monitor the smooth functioning of the three departments.



1. PR represents whole organization. 2. Should know how to behave in a certain situation. 3. He is not a person, he is representative. 4. Should know how to create enthusiasm. 5. In crisis he has to give feedback as soon as possible. OBJECTIVES AND FUNCTIONS OF CHIEF PUBLIC RELATION OFFICER: The PRO is directly answerable to the Chairman Shri. T.S. Vijayan. The PRO looks after all the activities of the three departments all over India. Also he has to keep in close touch with the over-seas PR departments of LIC. All the policies implemented in India are informed to other PROs of the over-seas branches of LIC. The PRO monitors the norms and values of all the branches. The new rules and regulations in India are informed to the PROs of the over-seas branches. The PRO also holds regular workshops for the top management employees to motivate them to lift the spirit of the work culture. The PRO also has to provide information about latest policies to the communication department and ask them to public or air it through various mediums. Since a major share of workload of LIC is in the public sector, the PRO has to look after social responsibility as well as maintaining the image of the company.


The PRO of this Department is an external PR. He looks after: Arranging press conferences, press releases and is in constant contact with the media. He is also responsible for monitoring the overseas communications. The Communication Department PRO has to make arrangements for the guests and their overall honors. The conversations with the guests are directly done by the Communication Department PRO. The PRO from this department should always keep a close eye on the latest happenings in the market. Any social issue at any area is a news to be worked out for him. He reports directly to the Chief PRO of the company. The Press conference usually includes the CEO of the company, the Chief PRO and the Communication Dept. PRO. If the case is of crisis, then only is the Crisis management Dept PRO present for the Press conference. Since LIC is closely related with the Public Sector, the Communication Dept. PRO has to also be in a close contact with the government officials. He also has to motivate the employees in his department for constant progress in the strategies for communication.


In short, the communication Department PRO ensures that there is no communication gap between the company and the external concerned bodies. (recent press releases of LIC issued by Communication Department PRO enclosed).


The PRO in this department is an internal one. From the overall history of LIC, it is seen that the company has never been into any major crisis. This itself is one of the best achievements. He is answerable to the Chief Public Relation Officer. The PRO from crisis management, though is here to handle crisis, he has been assigned many other internal responsibilities. Motivating the lower employees, sales executives and sales and marketing employees. Building up a smooth communication between the Blue Collar and the White Collar. Arranging small workshops for all the employees. He also has to know the issues going within the other departments so that these issues are solved before they create crisis. The strategy used by the PR here for crisis management is:-


Wash the utensil before having food in it. Thus all the employees right from the day of joining are kept in close contact with the Crisis Management Dept. And regular workshops help to restrict cases like Corruption. With a company so closely associated with the government, restricting such practices is very difficult task.

The PRO of the publicity Department is an External PR. This department was formed due to the fall of sales in the 1999. This fall was due to the emergence of the foreign insurance companies and their advertising strategies. Initially, the ads shown by LIC always said no worry even after death. All the ads portrayed death. The other insurance companies came up with the idea that insurance is for happy life. Thus the sales of LIC went down as people liked the idea of Life more than Death. Hence a separate publicity department was formed which worked only for publicity strategies. Initially it was looked up by the Communication Department. Today the publicity department PRO has to see to it that all the ads running are creating effect. The PRO is the one who along with the Marketing department looks after the strategies for publicity. He is also to carry out various campaigns. The very recent campaign is known as Zindagi Express. 59

The Zindagi Express is a term that has been associated to the life of LIC. Just as humans celebrate their 50 years of life, even LIC is celebrating its life. and when any person has done a lot in his life, he is capable of writing an Autobiography. Thus Zindagi Express is an Autobiography by LIC. They had started this unique campaign of auto biography from Delhi and will cover the entire nation and end up in Delhi again. During this journey they explain what all LIC has done for publics and what all it still intends to do


To satisfy the consumers in lic they make effective public relations and consumer relations S.W.O.T. ANALYSIS OF LIC
A proper S.W.O.T.

analysis of LIC has also been conducted to know better about the position, growth, and upcoming future and prospective of the company.


LIC is on 1st rank among the Insurance player. Long-term plans of LIC are the main strength. After sales services. Products cost are very low. Customer does not believe on private company.

Low interest rate


Good brand promotion. 1/2nd- % insurance has been covered.


Competitors. Entry of Private Insurance banks..




Are you willLIC to take a policy with LIC? Respondents 65 35


YES NO Interpretation: As most of them have their own choice of taking policy in the real world of competition in the market where LIC also plays a role of insurance sector, in my project survey where most of them have a good opinion of about 65% with LIC and the rest 35% are with negative opinion.


Res pondents

NO , 35 Y E S , 65



2 Do you have any policy? LIC ICICI 48 30 Interpretation: HDFC 12 TATA 10

Most of my findings out of 100 have a good relation in the LIC with 48%, 30% are for ICICI, 12% are for HDFC, 10% have a policy with TATA life insurance.




40 30


20 12 10 10



3.What type of benefit would you like to prevail? DEATH 52 Interpretation: Out of total 100 policyholders, where most of them have like their benefits in various categories, 52% are interested in death process, 26% are interested in maturity process, 12% are for partial, and 10% are for surrender process.
60 50 40 30 20 10 0





26 12 10





4 What type of benefit you like in other insurance companies? HEALTH EARLY 51 28 Interpretation: GROWTH 19 GOLD 2

Out of total 100, most of them have their own dislike and liking about other insurance companies, where 51% are interested into health plans, 28% are interested into early protection plans, 19% are interested in easy growth plans, and 2% are only interested in gold plans of the insurance companies.
60 51 50 40 28 19


20 10



5. Do you want to know the plans of LIC life insurance? YES NO Interpratation: 41 59

Into my total strength of 100 where 41% has agreed for LIC plans and rest 59% of them have NO interest about LIC.

41 YES NO 59


6 What type of plans do you wish to take with LIC? Safal jeevan retirement 40 30 Interpretation: childprotection Freedom 20 10

out of total 100 in the project most of the people who wish to go for the plans of LIC are, 40% are opted for safal jeevan, 30% opted for retirement plan, 20% for child protection plan, 10% for freedom plan.

45 40 35 30 25 20 15 10 5 0 safal jeevan retirement child protection freedom 10 20 30 40


7.What type of plans do you like with other insurance companies? wealth investment 43 36 Interpretation: education 11 Marriage 10

Out of total 100 policyholders, 43% are for wealth plans, 36% are applied for investment, 11% are for education, and 10% are applied for marriage.

50 45 40 35 30 25 20 15 10 5 0 wealth and health investment education marriage 11 10 43 36


8 What are plans you are looking to take in LIC life insurance? Retirement CreatLIC life MaximisLIC plan 18 Child protection 14 plan plan 49 19 Interpretation:

out of 100 persons, 49% are willLIC to go for retirements, 19% are for creatLIC life, 18% are for maximisLIC and 14% are applied for child protection.

50 40 30 20 10 0


Retirement plan Creating life plan




Maximising plan Child protection


STUDY OF PEOPLE AT HYDERABAD IN KUSHAIGUDA AREA Name: Sex: 1.Do you have any policy? A. If yes ( ) ) B. If no B. If no ( ( ) ) 2. Are you willLIC to take a policy with LIC? A. If yes ( A .Death C. Partial companies? A. health benefit C. growth benefit A. Yes A. safal jeevan C. child protection plan companies? A. wealth and health plan C. education plan B. investment plan D. marriage plan B. early age benefit D. gold benefit B. No B. retirement benefit D. freedom plan 3. What type of benefit would you like to prevail? B. Maturity D. Surrender Age: D.O.B:

4. What type of benefit you like in other insurance

5. Do you want to know the plans of LIC life insurance? 6. What type of plans do you wish to take with LIC?

7. What type of plans do you like with other insurance


8. What are plans you are looking to take in LIC life insurance? A. retirement benefit plan B. creatLIC life C. maximizLIC plan D. child protection


SUMMARY AND CONCLUSIONS: - the study of my overall data relates with the different
techniques,methods,plans which are mainly benefit to the policy holders. As my overall study gives a brief explanation of the various plans followed by the LIC life insurance. My study mainly summarizes about the various marketLIC techniques used by the LIC life insurance to attarct the new type of customers where the competition prevails in the market. At last I briefly conclude that LIC has very much potential abilities to prevail in the market.


1. As more people are inclined towards takLIC LIC policy, the

market share should be captured by offerLIC them more value initially. 2. Customers are more interested in posthumous benefits the procedures and settlements in cases of eventualities should be as simple as possible, even door delivery of the settlement cheques can be thought of if viable.
3. Health and pharma sectors has got maximum opportunities so tie

up with corporate hospitals can be throught of. 4. Homework is to be done in freedom plan and it should be made more attractive.
5. LIC should come up with new Wealth Plans in line with

copetitors as it got more takers in the market. 6. Child protection plan is not upto the mark so the policy is to be improved and should be made more attractive.




1. By Philip Kotler 2. By G.C.Beri

1. 2. 3. 4.

1. Brochures Of LIC life insurance. 2. Business World 3. Economic Times (brand equity) 4. 4ps MarketLIC