Role of LIC in Indian insurance in India

ABSTRACT It is worth interesting to note that the origin of the concept of insurance is very old and dates back almost 4500 years ago in the ancient empire of Babylonia. This concept prevailed and developed during the medieval period in Europe. The emphasis of insurance was on traders' merchants and seafarers in marine industries at that time to provide them safety in terms of money against certain unseen risks including death. The concept of insurance has its origin in Indian scriptures. The Vedas give the idea of 'Yougkshema' means a promise to provide community insurance to the risk bearers as back as around 1000 B.C., which was practised by the Aryans. In 1956 a radical step was taken by the central govt. regarding nationalization of insurance industries which emerged as the Life Insurance of India the major objective of this corporation was to give maximum benefits to maximum citizens of India by providing them wide range of benefits against a number of risks. The details of Lick's business during last 5 years are given in the paper, which are self explanatory. INTRODUCTION Almost 4500 years ago, in the ancient Land of Babylonia, traders used to bear risk of the caravan trade by giving loans that had to be later repaid with interest when the goods arrived safely. In 2100 B.C. the code of Hammurabi granted legal status to the practice. That perhaps, was how insurance made its beginning. Life insurance had its origins in ancient Rome, Where citizens formed burial clubs that would meet the funeral expenses of its members as well as help survivors by making some payments. In 1347, in Genoa, European maritime nations entered into the earliest known insurance and decided to accept marine insurance as a practice. Back to the 17th century, in 1693, astronomer Edmond Halley constructed the first mortality and compound interest. In 1756, Joseph Dodson reworked the table, linking premium rate to age. The 19 th century saw huge developments in the field of insurance, with newer products being devised to meet the growing needs of urbanization and industrialization. LIFE INSURANCE IN INDIA Insurance in India can be traced back to the Vedas. For instance, Yougkshema, the name of Life Insurance Corporation of India's corporate headquarters, is derived from the Rig Veda. The term suggests that a form of 'community insurance' was prevalent around 1000 BC and practised by the Aryans. Bombay Mutual Assurance Society, the first Indian life assurance society, was formed in 1870. Other companies like Oriental, Bharat and Empire of India were also set up in the 1870 90s. The Insurance Act was passed in 1912, followed by a detailed and amended Insurance Act of 1938 that looked into investments, expenditure and management of these companies' funds.

By the mid 1950s, there were around 170 insurance companies and 80 provident fund societies in the country's life insurance scene. However, in the absence of regulatory systems, scams and irregularities were almost a way of life at most of these companies' funds. As a result, the government decided to nationalise the life assurance business in India. The Life Insurance Corporation of India was set up in 1956 to take over around 250 life assurance companies. After the RN Malhotra Committee report of 1994 became the first serious document calling for the re-opening up of the insurance sector to private players that the sector was finally opened up to private players in 2001. WHAT IS LIFE INSURANCE Life Insurance is a contract for payment of a sum of money to the person assured on the happening of the event insured against. Usually the contract provides for the payment of an amount on the date of maturity or at specified dates at periodic intervals or at unfortunate death, if it occurs earlier. It is concerned with two hazards that stand across the life- path of every person that of dying prematurely leaving a dependent family to fend itself and that of living to old age without visible means of support

What is Life Insurance? People have various wrong conceptions about life insurance. They feel that lifei n s u r a n c e i s n e e d e d d u r i n g t h e l a t t e r ye a r s o f o n e l i f e . Li f e i n s u r a n c e i s actually an agreement between the insured and the insurer in which the policyh o l d e r a c c e p t s t o p a y r e gu l a r p r e m i u m t o t h e i n su r e r . In r e t u r n , t h e i n s u r e r guarantees monetary protection to the insured in case of any accident or mishaps.If the insured dies in accident, financial help is provided to his family members.Thus, life insurance is necessary as it provides protection to not only you but alsoto your family in case of any unwanted disaster. Types of Life Insurance: T h e r e a r e v a r i o u s t yp e s o f p o l i c i e s a n d s c h e m e s p r e p a r e d t o s u i t t h e n e e d o f different individual. You can avail the one that satisfy your budget and need. Lifeinsurance can be broadly divided into 3 types: Term life insurance Whole life insurance Universal life insurance
What is Term Life Insurance?

In this type of life insurance, financial coverage is provided for a certain period of time according to the terms of the policy. When the term period gets over, the policy holder can either end the policy or continue it by paying annual premiums. Term life insurance does not provide permanent coverage but is good for those who want temporary protection on a limited budget. If you are thinking of availing a short term life insurance policy to pay off loans,

term life insurance policy is the right option for you. It can be renewed according to the policy holders wish and need. What is Whole Life Insurance? In this type of life insurance, the insured is provided with permanent financial protection. It is a long terminsurance planwhere the policy holder needs to pay p r e m i u m s a n n u a l l y . T h e r e a r e v a r i o u s t y p e s o f w h o l e l i f e i n s u r a n c e t h a t individuals can avail in accordance to their needs such as Nonp a r t i c i p a t i n g, Participating, Indeterminate premium, Economic, Limited Pay, Single Premium and Interest sensitive. But all life insurance companies may not offer all the typesof whole insurance policies stated above. What is Universal Life Insurance? This is a permanent life insurance plan which has flexible terms. It allows some of the benefits such as death benefits, saving benefits to be reviewed and changed according to the policy holders need. In this policy, the insured enjoys not only benefits of term life insurance but also cash value (premiums that are above thecost insurance are credited as cash value). You can choose from the 3 types of u n i v e r s a l l i f e i n su r a n c e s , i . e . S i n gl e p r e m i u m , fi x e d p r em i u m a nd f l ex i b l e premium, in accordance to your requirement. S i n g l e p r e mi u m u n i v e r s a l l i f e i n s u r an c e : In s i n gl e p r e m i u m un i v e r s a l l i f e insurance, the policy holder pays a big premium amount at the beginning of the policy. The policy remains active as long as the cost of insurance (COI) is covered by the initially paid amount. Fi x e d p r e mi u m u n i v e r s a l l i f e i n su r a n c e : In f i x e d p r e m i um un i v e r s a l l i f e insurance, the policy holder makes monthly or yearly payments of fixed amount for a certain period of time. Fl e x i b l e p r e mi u m u n i v e r s a l l i f e i n s u ra n c e : I n t h i s o p t i o n o f u n i v e r s a l l i f e insurance, the policy holder can pay monthly premiums of his choice as long as the minimum payment amount is covered. Life insurance is therefore an essential step towards safeguarding the future of your family. People should understand how these life insurance policies work and avail the one that seems suitable to their needs. Take the help of a good insurance agent who will help you with details of the policies available.