LIC Final Proj of 83

LIFE INSURANCE CORPORATION OF INDIA
Introduction to Insurance
Insurance is not necessarily an investment from which
one expects to get one's money back. Nor is it
gambling. A gambler takes risks, while insurance offers
protection against risks that already exist. Insurance is
a way to share risk with others. Since ancient times,
communities have pooled some of their resources to
help individuals who suffer loss.
"Insurance is a contract between two parties whereby
one party called insurer undertakes in exchange for a
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fixed sum called premiums, to pay the other party
called insured a fixed amount of money on the
happening of a certain event."
“Insurance is a protection against financial loss arising
on the happening of an unexpected event. Insurance
companies collect premiums to provide for this
protection. A loss is paid out of the premiums collected
from the insuring public and the Insurance Companies
act as trustees to the amount collected.”
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CONCEPT OF LIFE INSURANCE :
Life has always been an uncertain thing. To be secure

against unpleasant possibilities, always requires the
utmost resourcefulness and foresight on the part of
man. To pray or to pay for protection is the spirit of
the humanity. Man has been accustomed to pray God
for protection and security from time immemorial.
In modern days Insurance Companies want him to pay

for protection and security. The insurance man says
"God helps those who help themselves"; probably he is
correct.
Too many people in this country are not in employment;

and work for too many no longer guarantees income
security. Several millions are part-time, self employed
and low-earning workers living under pitiable
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circumstances where there is no security cover against
risk.
Further the inherent changing employment risks, the

prospect of continual change in the work place with its
attendant threats of unemployment and low pay
especially after the adoption of New Economic Policy
and the imminent life cycle risks - a new source of
insecurity which includes the changing demands of
family life, separation, divorce and elderly dependents
are tormenting the society.
Risk has become central to one's life. It is within this

background life insurance policy has been introduced by
the insurance companies covering risks at various levels.
Life insurance coverage is against disablement or in the

event of death of the insured, economic support for
the dependents. It is a measure of social security to
livelihood for the insured or dependents.
Therefore, it goes without saying that an appropriate

life insurance policy within the paying capacity and
means of the insured to pay premium is one of the
social security measures envisaged under the Indian
Constitution.
Man finds his security in income (money) which enables

him to buy food, clothing, shelter and other necessities
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of life. A person has to earn income not only for
himself but also for his dependents, viz., wife and
children. He has to provide legally for his family needs,
and so he has to keep aside something regularly for a
rainy day and for his old age.
This fundamental need for security for self and

dependents proved to be the mother of invention of the
institution of life insurance.
The business of insurance is related to the protection

of the economic values of assets. Every asset has a
value. The asset would have been created through the
efforts of the owner. The asset is valuable to the
owner, because he expects to get some benefit from it.
The benefit may be an income or some thing else. It is
a benefit because it meets some of his needs.
Every asset is expected to last for a certain period of

time during which it will perform. After that, the
benefit may not be available. There is a life-time for a
machine in a factory or a cow or a motor car. None of
them will last for ever.
The owner is aware of this and he can so manage his

affairs that by the end of that period or life-time, a
substitute is made available. Thus, he makes sure that
the value or income is not lost. However, the asset may
get lost earlier.
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An accident or some other unfortunate event may
destroy it or make it non-functional. In that case, the
owner and those deriving benefits from there, would be
deprived of the benefit and the planned substitute
would not have been ready.
Insurance, in law and economics, is a form of risk

management primarily used to hedge against the risk of
a contingent loss.
Insurance rate is a factor used to determine the

amount, called the premium, to be charged for a
certain amount of insurance coverage.
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Purpose and Need of Insurance :

Assets are insured, because they are likely to be
destroyed through accidental occurrences. Such possible
occurrences are called perils. Fire, floods, breakdowns,
lightening, earthquakes, etc, are perils. If such perils
can cause damage to the asset, we say that the asset
is exposed to that risk. Perils are the events.
The risk only means that there is a possibility of loss

or damage. The damage may or may not happen.
Insurance is done against the contingency that it may
happen. There has to be an uncertainty about the risk.
Insurance is relevant only if there are uncertainties. If

there is no uncertainty about the occurrence of an
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event, it cannot be insured against. In the case of
human being, death is certain, but the time of death is
uncertain.
Insured does not protect the asset. It does not

prevent its loss due to peril. The peril cannot be
avoided through insurance. The peril can sometimes be
avoided through better safety and damage control
management.
Insurance only tries to reduce the impact of the risk on

the owner of the asset and those who depend on that
asset. It only compensates the losses and that too, not
fully. Only economic consequences can be insured.
If the loss is not financial, insurance may not be

possible. Example of non-economic losses are love and
affection of parents, leadership of managers, innovative
and creative abilities, etc.
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History of Insurance in India
Insurance in India has its history dating back till 1818,

when Oriental Life Insurance Company was started by
Europeans in Kolkata to cater to the needs of European
community.
In the year 1912, the Life Insurance Companies Act,

and the Provident Fund Act were passed to regulate the
insurance business. 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.
However, it still existed as discrimination between

Indian and foreign companies. The oldest existing
insurance company in India is National Insurance
Company Ltd, which was founded in 1906 and is doing
business even today.
The Insurance industry earlier consisted of only
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two state insurers: Life Insurers i.e. Life Insurance
Corporation of India (LIC) and General Insurers i.e.
General Insurance Corporation of India (GIC).
GIC had four subsidiary companies. With effect from

December 2000, these subsidiaries have been de-linked
from parent company and made as independent
insurance companies:
a) Oriental Insurance Company Limited,

b) New India Assurance Company Limited,
c) National Insurance Company Limited and
d) United India Insurance Company Limited.
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Risk sharing in Insurance
The mechanism of insurance is very simple. People who

are exposed to the same risks come together and agree
that, if any one of them suffers a loss, the others will
share the loss and make good to the person who lost.
All people who send goods by ship are exposed to the

same risks, which are related to water damage, ship
sinking, piracy, etc. Those owning factories are not
exposed to these risks, but they are exposed to
different kinds of risks like fire, hailstorms,
earthquake, lightning, burglary, etc.
Like this, different kinds of risks can be identified and

separate groups made, including those exposed to such
risks. By this method, the heavy loss that any one of
them may suffer (all of them may not suffer such
losses at the same time) is divided into bearable small
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losses by all. In other words, the risk is spread among
the community and the likely big impact on one is
reduced to smaller manageable impacts on all.
If a Jumbo Jet with more than 350 passengers
crashes, the loss would run into several crores of
rupees. No airline would be able to bear such a loss. It
is unlikely that many Jumbo Jets will crash at same
time.
If 100 airline companies flying Jumbo Jets, come

together into an insurance pool, whenever one of the
Jumbo Jets in the pool crashes, the loss to be borne
by each airline would come down to a few lakhs of
rupees.
Thus, insurance is a business of sharing. There are

certain principles, which make it possible for insurance
to remain a fair arrangement.
The first is that it is difficult for any one individual to

bear the consequences of the risks that he is exposed
to. It will become bearable when the community shares
the burden.
The second is that the perils should occur in an

accidental manner. Nobody should be in a position to
make the risk happen.
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In other words, none in the group should set fire to
his assets and ask others to share the costs of
damage. This would be taking unfair advantage of an
arrangement put into place to protect people from risks
they are exposed to.
This would be indicative of the benefit he would receive

if the peril befell him. The share could be collected
from the members after the loss has occurred or the
likely shares may be collected in advance, at the time
of admission to the group. Insurance companies collect
in advance and create a fund from which the losses are
paid.
The following two examples explain the above risk

sharing in insurance:
Example 1
In a village, there are 400 houses, each valued at Rs.

20000. Each year, on the average, 4 houses get burnt,
resulting into a total loss of Rs. 80000. If all the 400
owners come together and contribute Rs. 200 each, the
common fund would be Rs. 80000. this is enough to pay
Rs. 20000 to each of the 4 owners whose houses got
burnt. Thus, the risk of 4 owners is spread over 400
house-owners of the village.
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Example 2
There are 1000 persons who are all aged 50 and are
healthy. It is expected that of these, 10 persons may
die during the year. If the economic value of the loss
suffered by the family of each dying person is taken to
be Rs. 20000, the total loss would work out to Rs.
200000. If each person in a group contributed Rs. 200
a year, the common fund would be Rs. 200000. This
would be enough to par Rs. 20000 to the family of
each of the ten persons who die. Thus, the risks in the
case of 10 persons, are shared by 1000 persons.
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INTRODUCTION OF LIC
1.ABOUT THE ORGANIZATION
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
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to 176 companies with total business-in-force as Rs.
298 crore in 1938.
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.
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.
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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.
LIC’s 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.
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LIC’s 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 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, 2009, 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.
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Mission , Vision & Objectives of LIC
Mission
"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
"A trans-nationally competitive financial
conglomerate of significance to societies
and Pride of India."
OBJECTIVES
· 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
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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.
· Achievement of Corporate 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 the achievement of the goal.
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Members on the board of the corporation

Shri. T.S. Vijayan (Chairman)
Shri. D.K. Melhrotra (Managing Director - LIC)
Shri. Thomas Mathew T. (Managing Director – LIC)
Shri. A.K. Dasgupta (Managing Director - LIC)
Shri. Ashok Chawla (Finance Secretary, Ministry of

Finance, Govt. of India)
Shri. G.C. Chaturvedi (Additional Secretary,

Department of Financial Services, Ministry of Finance,
Govt. of India.)
Shri. Yogesh Lohiya (Chairman cum Managing Director,

GIC of India)
Shri D.L. Rawal (Chairman & Managing Director , Dena

Bank)
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ORGANIZATION STRUCTURE OF LIC
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
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Rules and code of conduct of LIC
Admission Of Age:
Age is the main basis of calculation of premium under

life insurance policies. The following are accepted as
evidence of age:
• Certified extract from Municipal or Local Body’s

records made at the time of birth.
• Certified Extract from School or College records,
if age or date of birth is stated therein.
• Certified Extract from Service Register in the
case of Govt. employees and employees of Quasi-
Govt. Institutions or
• Passport issued by the Passport Authorities in
India.
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Payment Of Premium:
• By cash, local cheque (subject to realization of

cheque), Demand Draft at Branch Office.
• The DD and cheques or Money Order may be sent
by post.
• You can pay your premiums at any of our Branches
as 99% of our Branches are networked.
• Many Banks do accept standing instructions to
remit the premiums. So by providing a standing
instruction to your Bank to debit your account for
the premium amount and send it vide a banker’s
cheque to LIC, on the due dates and months
mentioned on your policy bond.
• Through Internet : Payment of premiums can be
made through Internet through Service Providers
viz.HDFC Bank, ICICI Bank, Times of Money, Bill
Junction, UTI Bank, Bank of Punjab, Citibank,
Corporation Bank, Federal Bank and Bill Desk.
• Premium payment can also be made through ATMs
of Corporation Bank and UTI Bank.
• Premium payment can also be made through
Electronic Clearing Service (ECS) which has been
launched at Mumbai, Hyderabad, Chennai, Kolkata,
New Delhi, Kanpur, Bangalore, Vijaywada, Patna,
Jaipur, Chandigarh, Trivandrum, Ahmedabad, Pune,
Goa and Nagpur, Secunderabad & Visakhapatnam.
A policyholder having an account in any Bank which
is a Member of the local Clearing House can opt
for ECS debit to pay premiums.
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Days Of Grace:
• Policyholder should pay the premiums on due dates.

However, a grace period of one month but not less
than 30 days will be allowed for payment of
yearly/half-yearly/quarterly premiums and 15 days
for monthly premiums.
• When the days of grace expire on a Sunday or a
public holiday, the premium may be paid on the
following working day to keep the policy in force.
• If the premium is not paid before the expiry of
the days of grace, the policy lapses.
Revival Of Lapsed Policy:
• If the policy has lapsed, it can be revived during

the life time of the life assured, within a period of
five years from the date of the first unpaid
premium but before the date of maturity subject
to certain conditions.
• The Corporation offers three convenient schemes
of revival viz., Ordinary Revival, Special Revival
and Installment Revival. Policies can also be revived
under Loan-cum-Revival and SB-cum-Revival
schemes.
Change Of Address And Transfer Of Policy Records:
• The policyholder should immediately intimate the

change of his/her address to the Branch Office
servicing the policy. The correct address
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facilitates better service and quicker settlement of
claims.
• Policy records can also be transferred from one
Branch Office to another for servicing, as
requested by the policyholder.
Loss Of Policy Document:
• The Policy Document is an evidence of the contract

between the Insurer and the Insured. Hence the
policyholder should preserve the Policy Bond till the
contracted amount under it is settled.
• Loss of the Policy Document should be immediately
intimated to the Branch Office where it is
serviced.
Loans:
• Loans are granted on policies to the extent of 90%

of Surrender Value of the policies which are in
force and 85% of the Surrender Value in case of
policies which are paid-up, inclusive of the cash
value of bonus. The rate of interest charged at
present is 9% p.a. payable half-yearly.
• Loans are not granted for a period shorter than
six months. The Conditions and Privileges printed
on the back of the Policy Bond states whether a
particular policy is with or without the loan
facility.
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Nomination:
• Nomination is a right conferred on the holder of a

Policy of Life Assurance on his own life to appoint
a person/s to receive policy moneys in the event of
the policy becoming a claim by the assured’s death.
The Nominee does not get any other benefit
except to receive the policy moneys on the death
of the Life Assured. A nomination may be changed
or cancelled by the life assured whenever he likes
without the consent of the Nominee.
Survival Benefit/Maturity Claims:
• LIC settles survival benefit/maturity claims on or

before the due date.
• Policyholder are intimated well in advance by the
Branch Office which services the policy regarding
the payment, and the necessary Discharge Voucher
is also sent for execution by the assured. In case
the policyholder does not get any intimation from
the Branch Office concerned, he/she should
contact them, quoting the Policy Number.
• Survival Benefit payment up to Rs.60,000/- are
settled without insisting for Policy Bond and
Discharge Voucher.
Death Claims:
• If the life assured dies during the term of the

policy, death claim arises. The death of the
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policyholder should be immediately intimated in
writing to the Branch Office where the policy is
serviced along with the following particulars:
1.The No./s of the policy/ies
2.The name of the policyholder
3.Death Certificate issued by concerned
Authority
4.The date of death
5.The cause of death and
6.Claimant’s relationship with the deceased
• On receipt of the intimation of death, necessary
claim forms are sent by the Branch Office for
completion along with instructions regarding the
procedure to be followed by the claimant.
• The claims which have arisen after a period of
three years are treated as non-early claims and
settled within 30 days from the date of receipt of
all requirements.
• The claims that have arisen within a period of two
years from the date of commencement of the
policy, are treated as early claims and
investigation is compulsory in such cases.
Claim Review Committee:
The Corporation settles a large number of Death Claims

every year. Only in case of fraudulent suppression of
material information is the liability repudiated. This is
to ensure that claims are not paid to fraudulent
persons at the cost of honest policyholders. The
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number of Death Claims repudiated is, however, very
small. Even in these cases, an opportunity is given to
the claimant to make a representation for consideration
by the Review Committees of the Zonal office and the
Central Office. As a result of such review, depending
on the merits of each case, appropriate decisions are
taken.
Insurance Ombudsman:
• The Grievance Redressal Machinery has been

further expanded with the appointment of
Insurance Ombudsman at different centers by the
Government of India. At present there are 12
centers operating all over the country.
Initiatives In Policy Servicing Areas:
• All 2048 Branches of LIC are fully computerized

covering all policy servicing aspects to give prompt
computerized services from new policy introduction,
acceptance of renewal premium, revivals, loans, etc
to final claims settlement.
• Green Channel facility has been introduced for the
speedy completion of proposals.
• Payment of premiums can be made through internet
through service providers, viz., HDFC Bank, ICICI
Bank, Times of money, Bill Junction, UTI Bank,
Bank of Punjab, Citi Bank, Corporation Bank,
Federal Bank and Bill desk.
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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.
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PLANS OFFERED BY LIC
Jeevan Anurag Komal Jeevan

CDA Endowment Vesting At Marriage Endowment
21 Or
CDA Endowment Vesting At Educational Annuity
18 Plan
Jeevan Kishore Jeevan Chhaya
Child Career Plan Child Future Plan
Child Fortune Plus
Jeevan Aadhar
Jeevan Vishwas
The Endowment Assurance Policy

The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit
Jeevan saral
Jeevan Shree-I
Jeevan Pramukh
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The Money Back Policy-20 Years

The Money Back Policy-25 Years
Jeevan Surabhi-15 Years
Bima Bachat
Jeevan Bharati - I
The Whole Life Policy

The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Two Year Temporary Assurance Policy

The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
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Jeevan Saathi Plus

Jeevan Saathi
33
34
Current status & Subsidiaries
35
36
Over its existence of around 50 years, Life Insurance

Corporation of India, which commanded a monopoly of
soliciting and selling life insurance in India, created
37
huge surpluses, and contributed around 7 % of India's
GDP in 2008.
The Corporation, which started its business with around

300 offices, 5.6 million policies and a corpus of INR
459 million, has grown to 2,048 offices servicing around
180 million policies and a corpus of over INR 3.4
trillion.
The organization now comprises 2048 branches, 100

divisional offices and 8 zonal offices, and employs over
1 million agents.
It also operates in 12 other countries, primarily to

cater to the needs of Non Resident Indians. With the
change in the India's economic philosophy from the
early 1990s, and the subsequent relaxation of state
control over several sectors of the economy, the
monopolistic position of the Life Insurance Corporation
of India was diluted, and it has had to compete with a
number of other corporate entities, Indian as well as
transnational Life Insurance brands.
In the financial year 2007-08 Life Insurance

Corporation of India's number of policy holders are said
38
to have crossed a whopping 200 million (fourth in terms
of population of the countries of the world)
Subsidiaries
LIC owns the following subsidiaries:
Life Insurance Corporation of India International:
This is a joint venture offshore company promoted by

LIC which commenced operations in July, 1989 with the
objectives of offering US$ denomimated policies to
cater to the insurance needs of NRIs and providing
insurance services to holders of LIC policies currently
residing in the Gulf. LIC International operates in all
GCC countries.
LIC Nepal: A joint venture company formed in 2001

with the Vishal Group of Industries, Nepal.
LIC Lanka: A joint venture company formed in 2003

with the Bartleet Group of Companies, Sri Lanka.
Related Acts:-
The insurance sector went through a full circle of

phases from being unregulated to completely regulated
and then currently being partly deregulated. It is
governed by a number of acts, with the first one being
the insurance Act, 1938.
39
The Insurance Act, 1938
The Insurance Act, 1938 was the first legislation

governing all forms of insurance to provide strict state
control over insurance business.
Life Insurance Corporation Act, 1956
Even though the first legislation was enacted in 1938,

it was only in January 1956, that life insurance in
India was completely nationalized, through a
Government ordinance; the Life Insurance Corporation
Act, 1956 effective from 1.9.1956 was enacted in the
same year to,form LIFE INSURANCE CORPORATION
after nationalization of the 245 companies into one
entity.
There were 245 insurance companies of both Indian and

foreign origin in 1956. Nationalization was accomplished
by the govt. acquisition of the management of the
companies. The Life Insurance Corporation of India was
created on 1 September, 1956, as a result and has
grown to be the largest insurance company in India as
of 2006.
General Insurance Business (Nationalization) Act, 1972
40
The General Insurance Business (Nationalization) Act,

1972 was enacted to nationalize the 100 odd general
insurance companies and subsequently merging them into
four companies. All the companies were amalgamated
into National Insurance, New India Assurance, Oriental
Insurance, and United India Insurance which were
headquartered in each of the four metropolitan cities.
Insurance Regulatory and Development Authority (IRDA)

Act, 1999
Till 1999, there were not any private insurance

companies in Indian insurance sector. The Govt. of
India, then introduced the Insurance Regulatory and
Development Authority Act in 1999, thereby de-
regulating the insurance sector and allowing private
companies into the insurance.
Further, foreign investment was also allowed and

capped at 26% holding in the Indian insurance
companies. In recent years many private players
entered in the Insurance sector of India.
Information Techogy in LIC
41
LIC has been one of the pioneering organizations in

India who introduced the leverage of Information
Technology in servicing and in their business. Data
pertaining to almost 10 crore policies is being held on
computers in LIC. We have gone in for relevant and
appropriate technology over the years.
FRONT END OPERATIONS
With a view to enhancing customer responsiveness and

services in July 1995, LIC started a drive of On Line
Service to Policyholders and Agents through Computer.
This on line service enabled policyholders to receive
immediate policy status report prompt acceptance of
their premium and get Revival Quotation, Loan
Quotation on demand. Incorporating change of address
can be done on line. Quicker completion of proposals
and dispatch of policy documents have become a
reality. All our 2048 branches across the country have
been covered under front-end operations.
METRO AREA NETWORK
42
A Metropolitan Area Network, connecting 74 branches

in Mumbai was commissioned in November, 1997,
enabling policyholders in Mumbai to pay their Premium
or get their Status Report, Surrender Value Quotation,
Loan Quotation etc. from ANY Branch in the city. The
System has been working successfully. More than
10,000 transactions are carried out over this Network
on any given working day. Such Networks have been
implemented in other cities also.
WIDE AREA NETWORK
All 7 Zonal Offices and all the MAN centres are

connected through a Wide Area Network (WAN). This
will enable a customer to view his policy data and pay
premium from any branch of any MAN city. As at
November 2005, we have 91 centers in India with more
than 2035 branches networked under WAN.
INTERACTIVE VOICE RESPONSE SYSTEMS (IVRS)
IVRS has already been made functional in 59 centers

all over the country. This would enable customers to
ring up LIC and receive information (e.g. next premium
due, Status, Loan Amount, Maturity payment due,
Accumulated Bonus etc.) about their policies on the
telephone. This information could also be faxed on
demand to the customer.
43
LIC ON THE INTERNET
Our Internet site is an information bank. We have

displayed information about LIC & its offices . Efforts
are on to upgrade our web site to make it dynamic and
interactive. The addresses/e-mail Ids of ur Zonal
Offices, Zonal Training Centers, Management
Development Center, Overseas Branches, Divisional
Offices and also all Branch Offices with a view to
speed up the communication process.
PAYMENT OF PREMIUM AND POLICY STATUS ON

INTERNET
(You have to register for these services)

LIC has given its policyholders a unique facility to pay
premiums through Internet absolutely free and also
view their policy details on Internet premium payments.
There are 11 service providers with whom L I C has
signed the agreement to provide this service.
INFORMATION KIOSKS
We have set up 150 Interactive Touch screen based

Multimedia KIOSKS in prime locations in metros and
44
some major cities for dissemination information to
general public on our products and services. These
KIOSKS are enable to provide policy details and accept
premium payments.
Channels of Distribution
Individual Agent:
The individual agent has been in the

marketing of insurance, especially life insurance. The
45
professional agent has been the strongest link between
the life insurer and the customer. The professional
agent has the onerous role of explaining the concepts,
terms and conditions, benefits and privileges of the
insurance contract. He has to analyze the financial
requirements and risks faced by the customers and
market insurance plans suited to the needs and means
of the customers. All insurance companies, and life
insurance companies in particular, have recognized the
paramount importance of this channel. The number of
agents has grown at a spectacular rate. The total
number of agents on they roll is 11,03,047 as on
31.03.2007 as against 10,52,283 as on 31.03.2006.
Corporate Agents:
The number of corporate agents has grown in

recent years. Corporate agent is a concept introduced
with a view to taking advantage of the presence of a
large number of entities with a sizeable client base,
contacts and Goodwill already operating in the market.
With multi locations and a network of people Assisting
them, these entities have a different structure and
purpose. Hence their existing network could be utilized
to market insurance. The corporate agent could thus be
defined as a person - meaning a firm or company
formed under the Companies Act, 1956 or a banking
company or a Bank/RRB or a co-operative society
registered under the Co-operative societies Act, 1912
or a panchayat or a NGO/MFI covered under the
46
Cooperative Societies Act or a NBFC registered with
RBI or any other institution.
Brokers:
Brokers are permitted to sell products of more
than one insurer. Brokers have been very predominant
in the non life arena. Large risks require quite
sophisticated expertise. Brokers have played a very key
role in this area both in selling products and in servicing
of Insurance claims. Brokers have now also entered the
Life Insurance market.
Bancassurance:
Bancassurance is developing as an important

channel in India. This is due to the large reach and
customer base of banks in both urban and rural areas
in India. The persistency rate in Bancassurance, due to
the continuous contact with the client is better than in
other channels. The ease of payment of premium and
the facility of maturity/claim payments through the
bank account make it a customer friendly channel.
Referrals:
This is a new concept very similar to getting a

prospecting list and leads to effect sales with
customers. It is evident that in addition to banks,
there could be various other entities which could act as
47
a referral provider due to the large database of
members/clients, like credit cardholders association
members, society members etc. In short, such
institutions could share or market their database to
provide leads to the intermediaries to sell insurance
products.
Direct Marketing:
In the new technological environment, new

innovative marketing systems have evolved. The use of
inter-net, web based sales, e-marketing, telecalling,
mobile SMS have made giant strides in reaching out to
customers. This is an emerging channel which in future
may grow in size and proportion of sales. This channel
requires active regulation which should be on issues of
transparency, disclosure, privacy, contract, TRAI
guidelines etc. It would be necessary to give full
complete information through soft copies of proposal
forms, schedules, policies etc.
Swot Analysis
The SWOT analysis involves an in depth study of
the strength and weakness of the provided
organization and it also provides information to
the promoter, consultant, other agencies and
helps in long term viability of the project.
48
Strength :
1.It is the oldest and most well experienced
player having a Pan India presence.
2.LIC has a strong and very well developed
distribution network.
3.It is having a huge consumer base and is
evolved as one of the most powerful brands
of the country.
4.It has a large product portfolio and claim
settlement is easier to get.
5.It has the advantage of government
guarantee is accompanied with it.
6.Largest insurance Company in the world in
Customer Base (23 crore customers)
49
7.No.1 insurance company in the world in
terms of agency (about 1.1 Million agents)
8.LIC is No.1 insurer in the world in Volume &
Sold around 3.75 Cr.Policies in 2007-2008.
9.2nd Biggest Real Estate Owner next to
Indian Railways.
10. LIC is one of the Highest income tax paying
Organization. For Financial Year 2007-08,
LIC has paid advance Tax Rs.2627. 14 Cr. &
Service Tax Rs.1292. 15 Cr.

11. Has Highest insurance Professionals ( Club
Member agents
12. Only 4 countries in the world have more
population that LIC`s policy holders.
13. No.1 insurance Company in the world in
terms of claims paid.
14. LIC Settles 2.21 claims per second, LIC
settled 139 lakhs claims during the year
2007-2008.
15. Prompt settlement of claims (97% maturity
claim settled on or before due date)
Advanced Technology-For better
Customer Service
50
1.Computerized and networked 2048 branch offices
and 159 satellite offices throughout the country.
2.Use of High Tech-WAN,LAN,IVRS & EDMS
3.LIC is second largest PC user in the country.
4.EDMS to make LIC a paperless office- Enabling
Policy servicing & payments through all branchs in
the country.
5.Premium Payment Facility extended through
networked 2048 branches, ECS, ATM's through
internet, online portals, collecting bank (Axis
Bank), AP online, through SMS, through selected
agents, Now LIC Premium can also be paid through.
6. "Suvidha info Serve KIOSKS" all over India.
Social Strength
LIC - an institution builder promoting many financial
and insurance institutes like NSE, NCDEX, LIC
Mutual Fund, Stock Holding Corporation of India,
51
National insurance Academy, insurance institute of
India etc.
• LIC has foreign operations in Mauritius, Fiji and
London .
• LIC is known as "Pension Provider" of the country.
• 1st Pension company in India is floated by LIC as
"LIC Pension Fund Ltd" on 21st Nov 2007.
• First to create waves in micro insurance sector by
insuring people below the poverty line. In year
2007-2008, 8.54 lac policies sold through "Jeevan
Madhur"Plan.
• Widest range of plans (about 48) for every need
of the customer of 0 to 79 years of age.
• Biggest Portfolio of Group insurance schemes
available.
• "Jeevan Saral" one of the product of LIC got
"Best innovation product " award from I.R.D.A.
52
• LIC has covered lick Risk of 1.13 crore citizens
through "AAM ADMI BIMA YOJANA" & "
JANASHREE BIMA YOJANA".
• Very Unique Salary saving Portfolio.
Financial Strengths
• LIC's investment income in 2007-08 was
Rs.40,655 crores. Out of Total income of Rs,
1,76,559.28 Crs.
• Total Assets of the corporation as on 31.3.07
were Rs. 6,74,514.78 Crs.
• Largest institutional investor in Share Market. On
an average Rs.100 crore invested every day.
During theyear 2007 LIC earned the profit
Rs.10,000 Crs. from the Sale of Equity.
Weakness :
• Its employees and other staff are lethargic and
least motivated to render prompt and sincere
customer service.
53
• After sales customer grievance redressal
mechanism is inefficient.
• Agents not taking into account the needs of people
and promote policies having high commissions only.
• Very slow decision making process and internal
problems between top management and lower cadre
staff.
• The top management or bosses are mediocre and
there is large scale corruption in main office.
• The development officers and agents who are the
foundation pillars of LIC are not provided with
extra funds and powers to promote its products
aggressively.
Opportunity :
• Emergence of a huge middle income consumer
market in the country.
54
• People becoming more aware and demanding so
there is scope for a whole lot of innovative
products.
• Pension markets, health insurance and large real
estate portfolio.
• Today’s human life becomes full uncertain, so they
prefer protection against the risk. Therefore they
prefer life insurance. This is the opportunity for
the life insurance sector.
• Easy accesses to development in the more advance
market provide further opportunity to upgrade
their working. Technological, financial or specific
area based avenues of absorbing improved system
are also now more easily available.
• To enter into rural market where customer
awareness about insurance is low by effective and
efficient marketing strategies.
• To sell insurance products through electronic
Medias.
55
• Growing population: the growth in the population
(approximately 1.7%) is very high. It is said that
one Australia is added in our country every year.
Thus potential customers for the life insurance
industry. It has become an opportunity or the life
insurance industry.
• India has traditionally been a highly savings
oriented country. Needless to say, if the insurance
market is properly tapped, it is possible to raise
life insurance premium as a percentage of GDP
from its existing level. Thus, it has become an
opportunity for the life insurance industry
Threats:
• Private entrants are naturally targeting the
profitable and more lucrative segments, by
providing better service, new products and
flexibility. They are targeting the bigger corporate
the other clients in the well established
metropolitan center.
56
• These new entrants succeeded in eating share of
the existing entities. This creates threat among
rival firms itself.
• Interest rate of P.F and bank saving create threat
to insurance sector. All other saving is obviously
the threat for life insurance sector.
• Increasing intensity of competition among industry
rivals-may cause squeeze (fall) on profit margins.
Consumer’s education- consumers are more and
more confused because the market players are
offering large number of product range. As at
present the awareness level is not much, it is only
because the education level is only 62 %( in which
only 10% are well educated).
• Fraud in insurance sector: the major problem
fraud, which affects the life insurance sector.
• The flight of talent to new entrants is already in
evidence, and could be on the rise for some time
to come. Retaining qualified and competent
57
executives will be considerable challenges for
existing companies.
• One very serious danger that the government on
units is likely to face is that even if at some point
of time, the government does decide to disinvest a
portion of its equity; they may not be fully free
from government interference. They could face a
peculiar problem that although paper and in terms
of legal definition they would not be public sector
units. In effects, their working could be no
different from what it was before their ownership
pattern change.
58
PROGRESS BY LIC
Headquartered in Mumbai, which is considered the

financial capital of India, the Life Insurance
Corporation of India currently has :
a) 8 zonal Offices and
b)101 divisional offices located in different parts of

India
c)2048 branches located in different cities and towns

of India.
59
d) Contributed around 7 % of India's GDP in 2006.
e) It also funds close to 24.6% of the Indian

Government's expenses.
f) It has assets estimated of 5 Trillion Rupees.
g) 1.2 million agents and Employs over .
h) In the financial year 2006-07 Life Insurance

Corporation of India's number of policy holders are said
to have crossed a whopping 200 million (fourth in terms
of population of the countries of the world)
i) It also operates in 12 other countries.
j) The recent Economic Times Brand Equity Survey

rated LIC as the No. 1 Service Brand of the Country.
1,12,184.
Major players of industry
60
1. Bajaj Allianz Life Insurance Co. Ltd.
2. Birla Sun Life Insurance Co. Ltd. (BSLI)
3. HDFC Standard Life Insurance Co. Ltd. (HDFC STD
LIFE)
4. ICICI Prudential Life Insurance Co. Ltd. (ICICI
PRU)
5. ING Vysya Life Insurance Co. Ltd. (ING VYSYA)
6. Max New York Life Insurance Co. Ltd. (MNYL)
7. MetLife India Insurance Co. Pvt. Ltd. (METLIFE)
8. Kotak Mahindra Old Mutual Life Insurance Co. Ltd.
9. SBI Life Insurance Co. Ltd. (SBI LIFE)
10. TATA AIG Life Insurance Co. Ltd. (TATA AIG)
11. AMP Sanmar Assurance Co. Ltd. (AMP SANMAR)
12. Aviva Life Insurance Co. Pvt. Ltd. (AVIVA)
61
13. Sahara India Life Insurance Co. Ltd. (SAHARA
LIFE)
14. Shriram Sunlam
62
63
Awards won by LIC
INDY's Silver Award for World Brand Congress

best Corporate Film Award
OUTLOOK MONEY -- NDTV

NDTV PROFIT BUSSINESS
PROFIT AWARD 2009 in
LEADERSHIP, AWARDS
" BEST LIFE INSURER
2009
CATEGORY
64
CNBC AWAAZ CONSUMER ASIA PACIFIC HRM

AWARD 2009 for Congress, 2009 Award for
" Most preferred insurance INNOVATIVE HR
company " PRACTICES
Brand Equity Most Trusted Golden Peacock

Brand 2009 Top in Innovative Product /
Insurance Category Service Award - 2009
Loyalty Award - 2009 Reader's Digest Trusted
65
Brand Award, 2009
CNBC Awaaz Consumer NDTV Profit Business

Awards 2008 Leadership Award 2008
INDY's Silver Award for NASCOM IT USER Award

Best Corporate Film 2008
Business Superbrand India ASIA BRAND CONGRESS

2009 BRAND LEADERSHIP
AWARD, 2008
66
REAEARCH METHODOLOGY &

INTERPRETATION
The study will conduct on the bases of survey through

questionnaires given to respondents.
Sampling Design
Population: MUMBAI
Sample Size: Population of 50
Statistical Tools: Correlation.
QUESTIONARE ON
(LIC)
V/S
PRIVATE INSURANCE COMPANIES(PIC)
NAME :
AGE :
67
CONTACT NO :
Q1) Do you have insurance ? If yes , of which

company ?
70%
60%
60%
50%
40%
40%
30%
20%
10%
0%
yes no
Q2) Have you heard about LIC anytime ?
68
120%
98%
100%
80%
60%
40%
20%
2%
0%
yes no
Q3) According to you , which insurance company you

will prefer to go for ?
70%
60%
60%
50%
40%
40%
30%
20%
10%
0%
LIC PIC
Q4) Whose schemes are interesting and appealing ?
69
80%
71%
70%
60%
50%
40%
29%
30%
20%
10%
0%
LIC PIC
Q5) Which schemes of insurance company will you like

to opt for ?
45%
40%
40%
35%
30%
30%
25%
20%
20%
15%
10%
10%
5%
0%
endowement pension whole life childrens
plans plans plans plan
Q6) Why do you prefer private insurance companies ?
70
70%
60%
60%
50%
40%
30% 25%
20%
10%
10% 5%
0%
high returns security tax benefit less risk
Q7) Why do you prefer LIC’S schemes ?
40% 38%
35% 32%
30%
25%
20%
20%
15%
10%
10%
5%
0%
largest widely guaranteed flexible
public sector acceptable returns
co
Q8) How do you rate the quality of service provided

by private insurance companies ?
71
45% 41%
40%
35%
35%
30%
25%
20%
15%
9% 10%
10%
5%
5%
0%
good bad can't say average very good
Q9) How do you rate the quality of service provided

by LIC ?
50% 47%
45%
40%
35%
30%
25% 22%
20%
13%
15% 11%
10% 7%
5%
0%
ge
y
nt
od
or
lle
ba
ct
go
er
ce
fa
av
tis
ex
sa
Q10) According to you , which is the most trusted

company of the following ?
72
80% 76%
70%
60%
50%
40%
30% 24%
20%
10%
0%
LIC PIC
Q11) According to you , at the time of claims /

maturity settlement which company is better ?
80%
70% 67%
60%
50%
40% 33%
30%
20%
10%
0%
LIC PIC
Q12) Which of the following company gives you the

better returns in the form of Bonus ?
73
70% 66%
60%
50%
40% 34%
30%
20%
10%
0%
LIC PIC
Q13) According to you , which company is better in

building good customer relationships ?
80% 76%
70%
60%
50%
40%
30% 24%
20%
10%
0%
LIC PIC
Q14) Which company better serves your need ?
74
90%
79%
80%
70%
60%
50%
40%
30%
21%
20%
10%
0%
LIC PIC
THANK YOU
DATE : SIGNATURE
Project Analysis and Personal experience
AS AN LIC AGENT ,I JINESH MEHTA WOULD LIKE

TO SHARE MY PERSONAL EXPERIENCE THROUGH
THIS PROJECT. The Positive side of LIC as well as
Negative side of LIC. I encourage other readers to
correct me if I am wrong and also add light to any
point that I may have missed.
First let’s talk about the Positive side of

LIC
75
1. LIC is owned by the government and therefore it is
the only company besides the PPF that has the
sovereign guarantee of the govt. of India. It is a
different story that today LIC has become so powerful
that the govt. leans on LIC every time that the Stock
Market crashes. Imagine having an Asset base of over
Rs 6 Lac Crore. . That’s a 14 digit number! No company
in India can boast of such figures. Mind boggling.
2. LIC is the only Life Insurance Company making

profits. Most of the Private Insurers including the self
proclaimed market leaders like ICICI and Bajaj Allianz
are booking heavy losses. Check IRDA website in the
Annual Report column. The point is that if an insurance
company makes losses year over year, then how will
they manage to pay the Claim amount? After all no
Insurance company is here to do charity business.
3. When it comes to paying claims, again LIC is

Number One with the claims settlement ratio of more
than 99%. Private Insurers cannot match LIC’s ability
on claims settlement. Again, please visit IrDA’s website
to see the claims settlement performance of various
companies.
4. LIC has the world’s largest sales force, yes over 10

lac agents and now universities in western countries are
trying to study how a company managed to appoint such
76
a large sales force. A sales force of over 1 million!
Truly a remarkable achievement.
5. Many people argue that LIC has not been able to

penetrate the market as it has insured only 15% of the
population. My point is, in a poor country like India
where there are so many people living below the poverty
line, so many people who die of starvation, so many
people who don’t have access to basic medication, so
many people who don’t have basic necessities of life like
food, shelter, education and clothing. Will such a
person first feed his children or buy Insurance ? Lets
not forget that a majority of the Indian population is
poor and a substantial percentage is living below the
poverty line. At a personal level i feel that LIC has
done a satisfactory job of insuring people.
# NOW THE NEGATIVE POINTS OF LIC #
 The Administrative staff in LIC is in deep slumber.

Try writing a complaint to them and they wont
even bother to reply back. If you ask the Branch
Manager for the complaints book, he probably wont
have it in place. If an Agent complains against any
staff, then the Agent is black listed and next time
onwards his work is not done.
• In order to show a better performance & achieve

branch targets, Agents are motivated by the
Managers to split the policies. This not only adds
77
to the in convenience of the policyholders but it
also increases the expenses of LIC.
 Competitions for Agents are held with Prizes being

offered on the number of policies sold and not on the
number of lives insured. Therefore many Agents are
tempted to split the policies in order to get better
prizes. However if an agent wants the forms or sales
literature, most of the time its out of stock. But
surprisingly just a week before any scheme is about to
close, the office is flooded with forms & sales
literature. This is very disturbing.
• As I earlier said, LIC is lacking in Effective

Leadership in recent times. Managers having
designations like Marketing Manager or Sales
Manager do not have the capability to motivate an
audience at a meeting. Yes this is true even in a
city like Mumbai. Even the Senior level managers
cannot make effective presentations or design a
sales strategy. Their only mantra at an Agents
meeting is "Friends, bring more policies!’. If you
ask them how to bring more policies, they wont
know. Its a pity !
 Though LIC has more than 2000 branches, they

are not systematically located. In Mumbai’s Fort
area, LIC has more than 20 branches within a
78
radius of 1.5kms. Whats the use ? In the suburbs
where most of the people reside, there are no
branches at all. LIC has no branches in Bandra
East, Khar East & West, Santacruz East, Vile
Parle East, Andheri West, Jogeshwari West,
Mahim, Matunga, etc. If LIC gives a thought to
systematic relocation of its offices, it will
immensly help the policyholders
 Even though LIC claims to have taken several

initiatives in the IT sector, policyholders still face
problems in revival of their policies, payment of
premium in several branches, change of mode,
change of address, etc. The After-sales policy
services department needs to be revamped.
Policyholders feel that LIC agents are humble while
selling a policy and thereafter they fail to provide
any service to the client.
• To sum up, i would say that LIC will never cheat a

Policyholder in payment of claim, but at the same
time everyone will agree that LIC is not responsive
to the needs of the customer. If you have
purchased an LIC policies then dont forget to pay
the premium on time, and when your policy gets
matured LIC will honestly pay your Maturity
amount on time.
79
• The employees are sometimes rude in their
behaviour with the Policyholder. If a claim cheques
is handed over by a courteous and smiling employee
of LIC, it will enhance the image of LIC in the
mind of the policyholder.
• Today LIC is not just an Insurance Company, LIC

is a Movement, LIC is a Cult, LIC is a Religion.
Imagine 10 lac agents and 1 lac employees serving
16 crore policyholders in India. You cannot deny
that LIC has become the way of life in India.
Daily you can hear someone or the other talking of
LIC in local trains,at restaurants, on News
Channels, in your own offices, etc.
80
The Life Insurance Corporation of India has been a

nation-builder since its formation in 1956. The
Corporation has deployed the funds to the best
advantage of the policyholders as the community as a
whole.
Year on year LIC’s productivity and profitability

provides shareholders with an improving dual return -
81
as co-operative shareholders through a wider range of
services and products and as investors in the business,
with a useful return on capital and an increasing share
price.
The LIC investment strategy is very clear. It is based

on their investment policy, IRDA regulations, Insurance
Act and the LIC Act. According to the guidelines, 50
per cent of the total investible funds must be in
government securities - 25 per cent should be in
central government securities, and up to 50 per cent in
both state and central government securities.
The market has come down by about 50 per cent from

its peak in January, but the value of their investments
have come down by only 15-20 per cent.
For LIC, the situation has turned out to be a boon, as

the public is now more biased towards public sector
entities like them instead of investing in private
companies.
82
1 ) Wings ready reckoner -2010 edition
2 ) Insurance principles and performance

- DR. Harish M. chandarana
83
1.WWW.GOOGLE.COM 2.WWW.YAHOO.COM
84
3. WWW.WIKIPEDIA.COM 4. WWW.LIC .COM
85

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LIFE INSURANCE CORPORATION OF INDIA

Insurance is not necessarily an investment from which

one expects to get one's money back. Nor is it

gambling. A gambler takes risks, while insurance offers

protection against risks that already exist. Insurance is

a way to share risk with others. Since ancient times,

communities have pooled some of their resources to

help individuals who suffer loss.

"Insurance is a contract between two parties whereby

one party called insurer undertakes in exchange for a

called insured a fixed amount of money on the

happening of a certain event."

“Insurance is a protection against financial loss arising

on the happening of an unexpected event. Insurance

companies collect premiums to provide for this

protection. A loss is paid out of the premiums collected

from the insuring public and the Insurance Companies

act as trustees to the amount collected.”

CONCEPT OF LIFE INSURANCE :

Life has always been an uncertain thing. To be secure

In modern days Insurance Companies want him to pay

Too many people in this country are not in employment;

Further the inherent changing employment risks, the

Risk has become central to one's life. It is within this

Life insurance coverage is against disablement or in the

Therefore, it goes without saying that an appropriate

Man finds his security in income (money) which enables

This fundamental need for security for self and

The business of insurance is related to the protection

Every asset is expected to last for a certain period of

The owner is aware of this and he can so manage his

Insurance, in law and economics, is a form of risk

Insurance rate is a factor used to determine the

Purpose and Need of Insurance :

The risk only means that there is a possibility of loss

Insurance is relevant only if there are uncertainties. If

Insured does not protect the asset. It does not

Insurance only tries to reduce the impact of the risk on

If the loss is not financial, insurance may not be

History of Insurance in India

Insurance in India has its history dating back till 1818,

In the year 1912, the Life Insurance Companies Act,

However, it still existed as discrimination between

GIC had four subsidiary companies. With effect from

a) Oriental Insurance Company Limited,

Risk sharing in Insurance

The mechanism of insurance is very simple. People who

All people who send goods by ship are exposed to the

Like this, different kinds of risks can be identified and

If 100 airline companies flying Jumbo Jets, come

Thus, insurance is a business of sharing. There are

The first is that it is difficult for any one individual to

The second is that the perils should occur in an

This would be indicative of the benefit he would receive

The following two examples explain the above risk

In a village, there are 400 houses, each valued at Rs.

1.ABOUT THE ORGANIZATION

In the year 1912, the Life Insurance Companies Act,

But the act discriminated between foreign and Indian

The first two decades of the twentieth century saw lot

However, it was much later on the 19th of January,

The Parliament of India passed the Life Insurance

LIC had 5 zonal offices, 33 divisional offices and 212