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Life Insurance has come a long way from the earlier days when it was
originally conceived as a risk-covering medium for short periods of
time, covering temporary risk situations such as sea voyages. As life
insurance became more established, it was realized what a useful tool
it was for a number of situations, including –
Temporary needs/threats:
The original purpose of life insurance remains an important element,
namely providing for replacement of income on death, etc.
Regular Savings:
Providing for one’s family and oneself, as a medium to long- term
exercise (through a series of regular payment of premiums). This has
become more relevant in recent times as people seek financial independence for their
family.
Investment:
Put simply, the building up of savings while safeguarding it from the
ravages of inflation. Unlike regular saving products, investment
products are traditionally lump sum investments, where the individual
makes one off payment.
Retirement:
Provision for later years becomes increasingly necessary, especially in
a changing cultural and social environment. One can buy a suitable
insurance policy, which will provide periodical payments in one’s old
age.
Definition
Objective:
This provides was conducted after taking into consideration the
changing facet of the Life Insurance Sector. The main objective for
conducting this project was:
To understand the scenario of the Life Insurance Sector in India.
To survey the upcoming private Life Insurance companies and
the Life Insurance Corporation.
To find out the unique feature of the policies provided by the
private Life Insurance Companies to lure the customers.
Scope:
The project has been prepared with the intention to provide knowledge
about the existing policies and the uniqueness of the private life
insurance company and the Life Insurance Corporation (LIC).
Understanding every company’s value proposition would help in
choosing the best from the rest.
Limitations:
Primary Data:
The primary data has been collected through personal interviews
carried out with certain officials of the private life insurance companies
like ICICI Prudential Life Insurance. The data has also been collected
from the agents of the private companies.
Secondary Data:
Another main source in making this project has been the secondary
data, obtained after having done a detailed study through various
books, insurance magazines and newspapers. This was later
thoroughly scrutinized by me before listing out the statistical figures
and the findings. Certain information pertaining to company profile,
rules and regulations were obtained through the Internet.
Need for insurance
This simple example illustrates the impact premature death can have
on a family, where the main earner has no life cover.
Had Mr. Atul taken a life cover, his family would not have faced such
hardships in the event of his unfortunate death. A simple life insurance
policy could have provided Mr. Atul’s family with a lump sum that could
have been invested to provide an income equal to all or part of this
income.
Depending upon its usage, life insurance provides the customer with
following benefits. They are as follows:
• Equalize Inheritances:
When an asset such as the family business passes on to
family members who are active in it, life insurance proceeds can be
used to provide equal assets to other family members.
Life insurance also encourages “forced thrift”. This means that the
insured is made to pay his/her premiums by saving his/her money,
which he/she might not do in the regular course of life.
Some life insurance policies often allow you to take loans against your
policy and savings on taxes.
Together, all of these benefits ensure that a life insurance policy is
your ideal financial tool to gain protection and ensure savings.
Role of insurance
Insurance plays a very constructive role in the present world,
Which is full of risks and uncertainties of varied nature. The importance
of insurance and its role is made clear on the basis of following
advantages of insurance.
1) Protection of interest :
Insurance protects and safeguards the interest of individual and
businessmen in their business operations. It gives them safety and
creates confidence in their minds. Thos indirectly brings expansion
of business activities.
2) Diversification of risk:
It results in Diversification of risk among specialized
professional agencies called insurance companies.
8) Investment advice:
It gives proper investment advice to businessmen and creates
proper investment climate in the country.
9) Helps industrialization:
By rendering various services it accelerates the process of
industrialization. It suggests the role of insurance in the society as well
as in the development of national economy.