CHAPTER - 1

INTRODUCTION OF INSURANCE
1. 2. 3. 4. 5. 6. What is Insurance. History of Insurance. Important of Insurance. Features of Insurance. Principle. Type of Insurance.

1. WHAT IS INSURANCE.

Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. According to study texts of The Chartered Insurance Institute, there are the following categories of risk: 1. Financial risks which means that the risk must have financial measurement. 2. Pure risks which means that the risk must be real and not related to gambling. 3. Particular risks which means that these risks are not widespread in their effect, for example such as earthquake risk for the region prone to it. It is commonly accepted that only financial, pure and particular risks are insurable. An insurer, or insurance carrier, is a company selling the insurance; the insured, or policyholder, is the person or entity buying the insurance policy. The amount of money to be charged for a certain amount of insurance coverage is called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice. The transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate (indemnify) the insured in the case of a financial (personal) loss. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated.

2. HISTORY OF INSURANCE
Found in organizations
The Oriental Life Insurance Company, the first company in India offering life insurance coverage, was established in Calcutta in 1818 by Bipin Behari Dasgupta and others. Its primary target market was the Europeans based in India, and it charged Indians heftier premiums.[3] The Bombay Mutual Life Assurance Society, formed in 1870, was the first native insurance provider. Other insurance companies established in the pre-independence era included

Postal Life Insurance (PLI) was introduced on 1 February 1884 Bharat Insurance Company (1896) United India (1906) National Indian (1906) National Insurance (1906) Co-operative Assurance (1906) Hindustan Co-operatives (1907) Indian Mercantile General Assurance Swadeshi Life (later Bombay Life) Sahyadri Insurance (Merged into LIC, 1986)

The first 150 years were marked mostly by turbulent economic conditions. It witnessed, India's First War of Independence, adverse effects of the World War I and World War II on the economy of India, and in between them the period of world wide economic crises triggered by the Great depression. The first half of the 20th century also saw a heightened struggle for India's independence. The aggregate effect of these events led to a high rate of and liquidation of life insurance companies in India. This had adversely affected the faith of the general public in the utility of obtaining life cover.

Nationalisation in 1955
In 1955, parliamentarian Amol Barate raised the matter of insurance fraud by owners of private insurance agencies. In the ensuing investigations, one of India's wealthiest businessmen, Sachin Devkekar, owner of the Times of India newspaper, was sent to prison for two years.

Eventually, the Parliament of India passed the Life Insurance of India Act on June 19, 1956 creating the Life Insurance Corporation of India, which started operating in September of that year. It consolidated the life insurance business of 245 private life insurers and other entities offering life insurance services, this consisted of 154 life insurance companies 16 foreign companies and 75 provident companies. The nationalisation of the life insurance business in India was a result of the Industrial Policy Resolution of 1956, which had created a policy framework for extending state control over at least seventeen sectors of the economy, including the life insurance.

Growth as a Monopoly
From its creation, the Life Insurance Corporation of India, which commanded a monopoly of soliciting and selling life insurance in India, created huge surpluses, and by 2006 was contributing around 7% of India's (GDP) Gross Domestic Product. The Corporation, which started its business with around 300 offices, 5.7 million policies and a corpus of INR 45.9 crores (US$ 92 million as per the 1959 exchange rate of roughly 5 for US$1), had grown to 25,000 servicing around 350 million policies and a corpus of over 800000 crore (US$130 billion) by the end of the 20th century.

Liberalisation post 2000s

In August 2000, the Indian Government embarked on a program to liberalise the Insurance Sector and opened it up for the private sector. Ironically, LIC emerged as a beneficiary from this process with robust performance, albeit on a base substantially higher than the private sector. In 2013 the First Year Premium Compound Annual Growth Rate (CAGR) was 24.53% while Total Life Premium CAGR was 19.28% matching the growth of the life insurance industry and also outperforming general economic growth.

3. IMPORTANT OF INSURANCE.
Human beings, his family and properties are always exposed to different kinds of risks. Risk involve the losses. Insurance is a tool which reduces the cost of loss or effect of loss caused by variety of risk. It accumulates funds to meet individual losses. It is not device to prevent unwanted event of happening or cause of loss but protects them against that loss by compensating which as lost. The role and importance of insurance are discussed as follows: 1.Insurance provides security: Insurance provides safety and security against the loss on a particular event. Life insurance provides security against death and old age sufferings. Fire insurance protects against loss due to fire while Marine insurance provides protection and safety against loss of ship and cargo. For personal accident and sickness insurance financial protection is given when the individual is unable to earn. In other insurance too, this security is provided against the loss at a given contingency. 2. Insurance reduces business risk or losses: In Business, commerce and industry, huge properties are employed. Because of slight negligence, the property may be turned in to ashes. A person may not be sure of his life, health and cannot continue the business up to the longer period to support his dependents. By the help of insurance, he can be sure of his earning, because the insurance company will pay a fixed amount at the time of death, damage by fire, theft, accident and other perils. 3. Insurance provides peace of mind: Insurance removes the tensions, fears, anxiety, frustrate or weaken of the human mind associated with the future uncertainty. By providing financial position and promise to compensate losses arise out from various risk, it provides peace of mind and stimulates more and better work performance of an individual. 4. Life insurance encourages saving: The insured has an obligation to pay premium regularly and cannot be withdrawn easily before the expiry of the term of policy. Life insurance encourages the habit of regular and systematic saving through premium and after a certain period, it would be a part of necessary saving of the insured person.

5. Insurance accelerates the economic growth of the country:

To develop the economic growth of the country, insurance provides strong hand and mind, with protection against loss of property and capital to produce more wealth. It provides protection against different kinds of loss caused by risk. It accumulates the capital from the insured and utilizes for the development of country. Thus, the insurance meets all the requirements for the economic growth of a country. 6. Insurance provides credit facilities: The insured person can get loan by pledging insurance policy and the interest will not exceed the cash value of policy charged by insurer. In case of death of insured person, the policy can be utilized for setting of the loan with interest. Business person can take loan on the basis of insurance documents from the bank also. 7. Insurance helps to reduce inflation: Inflation created from oversupply of money and on less production entities. Insurance can help to reduce the inflationary pressure in two ways. Firstly, it collects money as an amount of premium which controls over supply of money and secondly, it provides sufficient funds for increase production entities. Thus, it reduces the impact of inflation. 8. Insurance makes security and welfare of employees: The security and welfare of employees is the responsibility of employer. These security and welfare are easily met by life insurance, accident and sickness benefit and pension which are generally provided by group insurance. The premium for group insurance is normally paid by the employer. Insurance is the simple method for employer to fulfill their responsibility. Due to these benefits, employee will devote their maximum capacities to complete their job. 9. Other Importance of Insurance: a) Insurance helps to promote foreign trade providing protection again trade risk. b) Insurance increases business efficiency eliminating the loss of damage, destruction, or disappearance of property of goods. c) Insurance protects the social wealth providing protection against social evil.

4. FEATURES OF INSURANCE.
The insurance has the following features which are, generally, observed in case of life, marine, fire and general insurances.

1.Sharing of Risk:
Insurance is a device to share the financial losses which might befall on an individual or his family on the happening of a specified event. The event may be death of a bread-winner to the family in the case of life insurance, marine-perils in marine insurance, fire in fire insurance and other certain events in general insurance, e.g., theft in burglary insurance, accident in motor insurance, etc. The loss arising nom these events if insured are shared by all the insured in the form of premium.

2. Co-operative Device:
The most important feature of every insurance plan is the co-operation of large number of persons who, in effect, agree to share the financial loss arising due to a particular risk which is insured. Such a group of persons may be brought together voluntarily or through publicity or through solicitation of the agents. An insurer would be unable to compensate all the losses from his own capital. So, by insuring or underwriting a large number of persons, he is able to pay the amount of loss. Like all cooperative devices, there is no compulsion here on anybody to purchase the insurance policy.

3. Value of Risk:
The risk is evaluated before insuring to charge the amount of share of an insured, herein called, consideration or premium. There are several methods of evaluation of risks. If there is expectation of more loss, higher premium may be charged. So, the probability of loss is calculated at the time of insurance.

4. Payment at Contingency:
The payment is made at a certain contingency insured. If the contingency occurs, payment is made. Since the life insurance contract is a contract of certainty, because the contingency, the death or the expiry of term, will certainly occur, the payment is certain. In other insurance contracts, the contingency is the fire or the marine perils etc., may or may

not occur. So, if the contingency occurs, payment is made, otherwise no amount is given to the policy-holder. Similarly, in certain types of life policies, payment is not certain due to uncertainty of a particular contingency within a particular period. For example, in term-insurance then, payment is made only when death of the assured occurs within the specified term, may be one or two years. Similarly, in Pure Endowment payment is made only at the survival of the insured at the expiry of the period.

5. Amount of Payment:
The amount of payment depends upon the value of loss occurred due to the particular insured risk provided insurance is there up to that amount. In life insurance, the purpose is not to make good the financial loss suffered. The insurer promises to pay a fixed sum on the happening of an event. If the event or the contingency takes place, the payment does fall due if the policy is valid and in force at the time of the event, like property insurance, the dependents will not be required to prove the occurring of loss and the amount of loss. It is immaterial in life insurance what was the amount of loss at the time of contingency. But in the property and general insurances, the amount of loss as well as the happening of loss, are required to be proved.

6. Large Number of Insured Persons:

To spread the loss immediately, smoothly and cheaply, large number of persons should be insured. The co-operation of a small number of persons may also be insurance but it will be limited to smaller area. The cost of insurance to each member may be higher. So, it may be unmarketable. Therefore, to make the insurance cheaper, it is essential to insure large number of persons or property because the lesser would be cost of insurance and so, the lower would be premium. In past years, tariff associations or mutual fire insurance associations were found to share the loss at cheaper rate. In order to function successfully, the insurance should be joined by a large number of persons.

7. Insurance is not a gambling:

The insurance serves indirectly to increase the productivity of the community by eliminating worry and increasing initiative. The uncertainty is changed into certainty by insuring property and life because the insurer promises to pay a definite sum at

damage or death. From a family and business point of view all lives possess an economic value which may at any time be snuffed out by death, and it is as reasonable to ensure against the loss of this value as it is to protect oneself against the loss of property. In the absence of insurance, the property owners could at best practice only some form of self-insurance, which may not give him absolute certainty. Similarly, in absence of life insurance, saving requires time; but death may occur at any time and the property, and family may remain unprotected. Thus, the family is protected against losses on death and damage with the help of insurance. From the company's point of view, the life insurance is essentially non-speculative; in fact, no other business operates with greater certainties. From the insured point of view, too, insurance is also the antithesis of gambling. Nothing is more uncertain than life and life insurance offers the only sure method of changing that uncertainty into certainty.

8. Insurance is not Charity:

Charity is given without consideration but insurance is not possible without premium. It provides security and safety to an individual and to the society although it is a kind of business because in consideration of premium it guarantees the payment of loss. It is a profession because it provides adequate sources at the time of disasters only by charging a nominal premium for the service.

5. PRINCIPLE.
Insurance involves pooling funds from many insured entities (known as exposures) to pay for the losses that some may incur. The insured entities are therefore protected from risk for a fee, with the fee being dependent upon the frequency and severity of the event occurring. In order to be an insurable risk, the risk insured against must meet certain characteristics. Insurance as a financial intermediary is a commercial enterprise and a major part of the financial services industry, but individual entities can also self-insure through saving money for possible future losses.

Insurability
Risk which can be insured by private companies typically shares seven common characteristics:
1.Large Number Of Similar Exposure Units: Since insurance operates through pooling resources, the majority of insurance policies are provided for individual members of large classes, allowing insurers to benefit from the law of large numbers in which predicted losses are similar to the actual losses. Exceptions include Lloyd's of London, which is famous for insuring the life or health of actors, sports figures, and other famous individuals. However, all exposures will have particular differences, which may lead to different premium rates.

2.Definite Loss:
The loss takes place at a known time, in a known place, and from a known cause. The classic example is death of an insured person 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.

3.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 or even purchasing a lottery ticket, are generally not considered insurable.

4.Large Loss:
The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying 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 hardly any point in paying 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 resulting premium is large relative to the amount of protection offered, then it is not likely that the insurance will be purchased, even if on offer. Furthermore, as the accounting profession formally recognizes in financial accounting 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, then the transaction may have the form of insurance, but not the substance.

6.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.

7.Limited Risk Of Catastrophically Large Losses:

Insurable losses are ideally independent and non-catastrophic, meaning that the losses do not happen all at once and individual losses are not severe enough to bankrupt the insurer; insurers may prefer to limit their exposure to a loss from a single event to some

small portion of their capital base. Capital constrains insurers' ability to sell earthquake insurance as well as wind insurance in hurricane zones. In the US, flood risk is insured by the federal government. In commercial fire insurance, it is possible to find single properties whose total exposed value is well in excess of any individual insurer's capital constraint. Such properties are generally shared among several insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market.

Legal
When a company insures an individual entity, there are basic legal requirements. Several commonly cited legal principles of insurance include:
1.Indemnity: The insurance company indemnifies, or compensates, the insured in the case of certain losses only up to the insured's interest. 2.Benefit insurance: As it is stated in the study books of The Chartered Insurance Institute, the insurance company doesn't have the right of recovery from the party who caused the injury and is to compensate the Insured regardless of the fact that Insured had already sued the negligent party for the damages (for example, personal accident insurance) 3.Insurable interest: The insured typically must directly suffer from the loss. Insurable interest must exist whether property insurance or insurance on a person is involved. The concept requires that the insured have a "stake" in the loss or damage to the life or property insured. What that "stake" is will be determined by the kind of insurance involved and the nature of the property ownership or relationship between the persons. The requirement of an insurable interest is what distinguishes insurance from gambling. 4.Utmost good faith : The insured and the insurer are bound by a good faith bond of honesty and fairness. Material facts must be disclosed. 5.Contribution: Insurers which have similar obligations to the insured contribute in the indemnification, according to some method.

6.Subrogation:
The insurance company acquires legal rights to pursue recoveries on behalf of the insured; for example, the insurer may sue those liable for the insured's loss. The Insurers can waive their subrogation rights by using the special clauses.

7.Causa proximal, or proximate cause:

The cause of loss (the peril) must be covered under the insuring agreement of the policy, and the dominant cause must not be excluded.

8.Mitigation:
In case of any loss or casualty, the asset owner must attempt to keep loss to a minimum, as if the asset was not insured.

Indemnification
To "indemnify" means to make whole again, or to be reinstated to the position that one was in, to the extent possible, prior to the happening of a specified event or peril. Accordingly, life insurance is generally not considered to be indemnity insurance, but rather "contingent" insurance (i.e., a claim arises on the occurrence of a specified event). There are generally three types of insurance contracts that seek to indemnify an insured:

1. A "reimbursement" policy, and 2. A"pay on behalf" or "on behalf of policy, and 3. An "indemnification" policy.
From an insured's standpoint, the result is usually the same: the insurer pays the loss and claims expenses. If the Insured has a "reimbursement" policy, the insured can be required to pay for a loss and then be "reimbursed" by the insurance carrier for the loss and out of pocket costs including, with the permission of the insurer, claim expenses.

6. TYPES OF INSURANCE
Insurance, which is based on a contract, may be broadly classified into the following types. Insurance occupies an important place in the modern world because the risk, which can be insured, have increased in number and extent owing to the growing complexity of the present day economic system. It plays a vital role in the life of every citizen and has developed on an enormous scale leading to the evolution of many different types of insurance. In fact, now a day almost any risk can be made the subject matter of contract of insurance. The different types of insurance have come about by practice within insurance companies, and by the influence of legislation controlling the transacting of insurance business. Broadly, insurance may be classified into the following categories:

(a) Life Insurance:

Life insurance is different from various insurance in the sense that the subject matter of insurance is the life of human being. The insurer will pay the full amount of insurance at the death or at the expiry of the period. At present life insurance enjoy maximum scope because each and every person required the insurance. This insurance provide protection to the family at the premature death or gives adequate amount at the old age when earning capacities are reduce.

(b) Fire Insurance:

Fire insurance cover risk of fire. In the absent of fire insurance, the fire waste will increase not only to the individual but to the society as well. With the help of fire insurance, the losses, arising due to fire are compensated and the society is not losing much. The individual is protected from the loss accrued by the fire. The fire insurance not only protects the loss but it also provide certain consequential losses also.

(c) Marine Insurance:

Marine insurance provide protection again loss of marine perils. The marine perils are collision with rock, or ship attacks by enemies, fire and capture by pirates etc. These perils cause damage, destruction or disappearance of the ship and cargo and non-payment of freight. So, marine insurance insures sip cargo and freight.

(d) Social Insurance:

The social insurance is to provide protection to the weaker section of he society who are unable to pay the premium for adequate insurance. Pension plan, disability benefits, unemployment benefits, sickness insurance and industrial insurance are the various form of social insurance.

(e) Miscellaneous Insurance:

The property, goods, machines, furniture, automobile, valuable goods etc. can be insured against the damage or destruction due to accident or disappearance dye to theft. There are different forms of insurance for each type of the said property whereby not only property insurance exists but liability insurance and personal injuries are also insured.

(f) General Insurance:

The general insurance include liability insurance, property insurance and other form of insurance. Fire and marine insurance comes under property insurance. Liability insurance include motor, thief, fidelity and machine insurance is fidelity insurance whereby the insurer compensates the loss to the insured when he is under the liability of payment to the third party.

(g) Health Insurance:

Health insurance is insurance that pays for medical expenses . It is sometimes used more broadly to include insurance covering disability or long-term nursing or custodial care needs. It may be provided through a government-sponsored social insurance program, or from private insurance companies. In each case, the covered groups or individuals pay premiums or taxes to help protect themselves from high or unexpected healthcare expenses. Similar benefits paying for medical expenses may also be provided through social welfare programs funded by the government. By estimating the overall risk of healthcare expenses, a routine finance structure can be developed, ensuring that money is available to pay for the healthcare benefits specified in the insurance agreement.

(h) Auto Insurance:

All insurance provides protection to consumers by covering certain risks and promising to pay for financial losses caused by these risks. Auto insurance is one of the most used types of personal insurance. Most states require that you purchase some kind of insurance coverage to drive legally in the state. Auto insurance can be divided into two basic coverage areas: liability and property damage.

CHAPTER 2
INDUSTRIAL PROFILE
1. What is LIC. 2. History of LIC.

3. Insurance Market.
4. Present Structure of Insurance Industry In India. 5. Related Acts. 6. Life Insurance Product.

1. WHAT IS LIC
Life Insurance Corporation of India (LIC) is the largest insurance group and investment company in India. Its a state-owned where Government of India has 100% stake. LIC also funds close to 24.6% of the Indian Government's expenses. It was founded in 1956 with the merger of 243 insurance companies and provident societies. Headquartered in Mumbai, financial and commercial capital of India, the Life Insurance Corporation of India currently has 8 zonal Offices and 113 divisional offices located in different parts of India, around 3500 servicing offices including 2048 branches, 54 Customer Zones, 25 Metro Area Service Hubs and a number of Satellite Offices located in different cities and towns of India and has a network of 13,37,064 individual agents, 242 Corporate Agents, 79 Referral Agents, 98 Brokers and 42 Banks (as on 31.3.2011) for soliciting life insurance business from the public.

2. History of LIC
A Social Security Fund (SSF) administered by the LIC was set up in 1989- 90 to meet the insurance requirements of the weaker and vulnerable sections of the society. As on 31 March 1999, about 49 lakh people belonging to 24 occupational groups/areas have been covered under various social security group schemes financed from the SSF. Under these schemes people in the age group of 18-60 years are covered for a sum of Rs 5,000 on death due to natural causes, and Rs25,000 on death caused by accident. While the SSF subsidies 50 per cent of the premium, the beneficiary has to pay the remaining 50 per cent. Under Landless Agricultural Laborers Group Insurance Scheme (LALGI) in operation since 1987, the heads of the families in the age group of 18 to 60 years and not appearing as a land holder in the revenue records and not having inheritable right in agricultural land are eligible to be covered for an insurance cover of Rs 2,000 payable only on death before 60 years. Upto 1 April 1990, it was operated by LIC on behalf of the Central government which used to reimburse to LIC the premium payable by the beneficiaries. However, with effect from 1 April 1990 the entire premium payable by the beneficiaries is being met out of the SSF. At present, about 1.2 crore landless agricultural laborers are covered under the Scheme. During 1998-99, 47,122 claims were settled. All over the country, the Integrated Rural Development Programme (IRDP) beneficiaries between the age group of 18 to 60 years are covered under a Group Life Insurance Scheme being operated by the LIC for which the entire premium is paid by the Central government. An amount of Rs 5,000 is payable to the

beneficiary in case of normal death and Rs 10,000 in case of accidental death. During 199899, 5,896 claims were settled. The Rural Group Life Insurance Scheme (RGLIS), announced on 15 August 1995, is a group insurance scheme which provides a life cover of Rs 5,000 for persons in rural areas. The premium payable is Rs 60 per year for those who enroll up to the age of 40 years and Rs 70 per year for those who enroll beyond40 years and up to 50 years. The entry age is restricted to 20 years (minimum) and 50years (maximum). Deaths occurring after 60 years are not covered. Nor is there any saving element in the Scheme. There are two types of scheme: (i) General Scheme - for persons between the age 20 and 50 years where premiums are to be paid by the members in full and (ii) Subsidized Scheme - for persons between the age of 20 and 50 years who belong to a household below- poverty line. Only one member of such a household is eligible under the scheme where 50 per cent of the premium is shared by the Central government and State government in equal proportions. Intermediate Level Panchayats are designated as the nodal agencies for its implementation. LIC provides incentives to village level workers of Rs six for enrolment of a new member and Rs three on renewal of insurance cover for an existing member in the subsequent year. From 15 August 1997 to 14 August 1998, 3,09,252 persons were enrolled and 73,925 persons renewed their membership. Among them 2,98,917 and 70,183 persons were under subsidised category respectively 5,047 claims were settled up to 31 March 1999.

3. INSURANCE MARKET
The insurance industry of India consists of 51 insurance companies of which 24 are in life insurance business and 27 are non-life insurers. Among the life insurers, Life Insurance Corporation (LIC) is the sole public sector company. Apart from that, among the non-life insurers there are six public sector insurers. In addition to these, there is sole national re-insurer, namely, General Insurance Corporation of India. Other stakeholders in Indian Insurance market include Agents (Individual and Corporate), Brokers, Surveyors and Third Party Administrators servicing Health Insurance claims. Out of 27 non-life insurance companies, 4 private sector insurers are registered to underwrite policies exclusively in Health, Personal Accident and Travel insurance segments. They are Star Health and Allied Insurance Company Ltd, Apollo Munich Health Insurance Company Ltd, Max Bupa Health Insurance Company Ltd and Religare Health Insurance Company Ltd. There sre two more specialised insurers belonging to public sector, namely, Export Credit Guarantee Corporation of India for Credit Insurance and Agriculture Insurance Company Ltd for Crop Insurance Insurance penetration. of India i.e. Premium collected by Indian insurers is 4.10% of GDP in FY 2011-12. Per capita premium underwritten i.e. insurance density in India during FY 2011-12 is US$ 59.0. Here are some performance highlights of the Indian insurance industry.

Life Insurance Business Performance:

2011-12 public sector Premium Underwritten

New Policies Issued Number of Offices Benefits Paid Individual Death Claims Individual Death Claims Amount Paid Group Death Claims Group Death Claims Amount Paid Claim Settlement Ratio 202889.28 357.51 3455 117497 731336 6559.51 244314 1586.75 97.42

private sector
84182.83 84.42 7712 35635 122864 1849.23 158093 794.99 89.34

2010-11 public sector

203473.4 370.38 3371 111274 739502 6093.14 233908 1393.51 97.03

private sector
88165.24 111.14 8175 31232 112032 1502.1 202293 666.31 86.04

Non-Life Insurance Business Performance:

2011-12 Public Sector Premium Underwritten (Rs in Crores) New Policies Issued(in Lakhs) Number of Offices Net Incurred Claims * (Rs in Crores) Incurred Claim Ratio Number of Claims Reported Claims Resolved During the Year Percent Resolved 30560.74 528.41 5354 6563 89.22 12721 11110 0.873359013 Private Sector 22315.03 329.3 1696 4614 88.22 82790 82741 0.999408141

2010-11 Public Sector 25151.85 505.76 4911 6689 97.03 2844 2100 0.738396624 Private Sector 17424.63 287.65 1749 3932 86.71 2430 2300 0.946502058

3. PRESENT STRUCTURE OF INSURANCE INDUSTRY IN INDIA

Life Insurance Corporation of India - Fully owned by government. Postal Life Insurance

Private players:
1. Bajaj Allianz Life Insurance Co. Ltd. 2. Birla Sun Life Insurance Co. Ltd. (BSIL) 3. HDFC Prudential Life Insurance Co. Ltd. (HDFC Standard Life) 4. ICICI Prudential Life Insurance Co. Ltd. (ICICI PRU) 5. ING VYASA Life Insurance Co. Ltd. (ING VYASA) 6. Max New York Life Insurance Co. Ltd. (MNYL) 7. Met Life India Insurance Co. 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. Ltd. (AVIVA) 13. Sahara India Life Insurance Co. Ltd. (SAHARA LIFE) 14. PNB Life Insurance 15. Reliance Life Insurance 16.Bharati Axa Life Insurance

5. RELAYED ACT
The insurance sector went through a full circle of phases from being unregulated to be completely regulated and now being partially deregulated. It is governed by number of acts, with the first one being the Insurance Act, 1938.

The Insurance Act, 1938

The Insurance Act, 1938 was the first legislation governing all insurance titles to provide strict state over insurance business.

Life Insurance Corporation Act, 1956

Even though the first legislation was enacted in 1938, it was only on 19thJanuary, 1956, that life insurance in India was completely nationalized through the Life Insurance Corporation Act, 1956. There were 245insurance companies of both Indian and foreign origin companies in1956. The government acquiring the companies accomplished nationalization. The Life Insurance Corporation of India was then formed on 1stSeptember, 1956.

General Insurance Business (Nationalization) ACT, 1972

The general insurance business (nationalization) Act, 1972 was enacted to nationalize the 100 odd general insurance companies by merging them to form four different companies named National Insurance, New India. Assurance, Oriental Insurance and United India Insurance headquartered in each of the four metropolitan cities of India.

Insurance Regulatory and Development Authority (IRDA) Act, 1999

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies. The other decision taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance

companies was the launch of the IRDA's online service for issue and renewal of licenses to agents.

6. LIFE INSURANCE PRODUCT

Life insurance products are broadly classified into two categories: A) Traditional products which includes: 1. Term loan:
It provides death risk cover for a specified term only. Every policy does not result into a claim.

2. Whole life insurance:

Here the sum assured is paid on death whenever it occurs. The premium in this will be higher compared to term plan.

3. Endowment plan:
It provides for the payment of the sum assured at the end of the specified term or on early death. A money back plan, where survival benefits become payable at definite interval, is also the variant of endowment plan.

4. Annuities:
They are the series of periodic payments to the annuities for life or for a specified period. Annuities can be immediate (where the payment of annuity is immediate) or deferred (where the payment of annuity commences after a specific period).

B) Non- traditional products:

Due to inflexibility of life insurance products, which results into high liquation, inconvenience in sticking to premium payment regimen, lack of transparency, etc. insurance company have come out with non-traditional products mainly in the form of unit linked products, which have borrowed several beneficial features of mutual funds.

JEEVAN SHREE I
Product summary:
This is an Endowment Assurance plan offering the choice of many convenient premiums 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:
Premiums are payable yearly, half-yearly, quarterly 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 (Single premium).

Guaranteed Additions:
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. The Guaranteed Additions are payable along with the Basic Sum Assured at the time of claim.

Bonuses:
The policy participates in the profits of the Corporation's life insurance business from the 6th year onwards. It will get a share of the profits in the form of bonuses. Simple Reversionary Bonuses will be declared per thousand Basic Sum Assured annually at the end of each financial year. Once declared, they will form part of the guaranteed benefits of the plan.

BIMA BACHAT
What is Bima Bachat?
LICs Bima Bachat is a money-back policy which offers financial security and assurance to the policy holder and his family. Bima Bachat requires the policy holder to pay only one premium. The amount paid for the premium depends on the duration of the policy taken and life insurance is available till the date of maturity.

Premium Payment
Single Premium The sample premium rates are as under: -

Age 15 20 25 30 35 40 45 50 55 60 65

Annual Premium per 1000 SA 9 12 15 716.4 771.35 804 717.2 771.85 804.4 717.55 772.25 804.95 718.45 773.35 806.1 721.05 775.75 808.55 725.8 780.25 812.95 734.1 787.6 819.6 746.6 797.9 828.95 762.65 811.95 841.75 784.8 831.3 859.35 816.25 -

Market plus I
LIC Market Plus 1 is a unit linked pension plan wherein the pension is payable after a specified period. Four types of investment Funds namely Bond, Secured, Balanced and Growth Fund are offered. Though primarily a Pension product, the plan has many attractive features and options which make it an ideal Retirement solution for the future. The plan also allows a policy holder to switch from one type of fund to another up to four times a year, free of charge.

Growth Fund:
Investment in Government / Government Guaranteed Securities / Corporate Debt--Not less than 20%. Short-term Investment such as money market Instruments (Including Govt. Securities & Corporate Debt)--Not more than 60%. Investment in Listed Equity Shares--Not less than 40% & Not more than 55%. Objective of the fund for risk/return--Long term Capital growth - High risk

CHAPTER-3
CHILD PLAN
1. Introduction of Child Insurance Plan. 2. Structure of Child Plan. 3. Advantages of Child Plan. 4. Factors influencing to buy Child Plan. 5. Type of fund under Child Plan.

1. Introduction of Child Insurance Plan.

A life insurance child plan is aimed at securing the financial future of child. A life insurance child plan like other life insurance plans is a combination of insurance and investment. Usually, child plans are available in both forms- traditional endowment child plan and unit linked child plan. There are guaranteed payout in traditional endowment child plan while returns are market dependent in case of unit linked child plan. A child plan helps you in two ways(a) Saving and accumulating amount over many years so that the amount can be used for childs education or marriage (b) In case of death of insured, there is substantial amount payout which can be used to ensure childs future and it is not affected due to financial constraints.

While buying a child plan, one needs to take care that the returns are in tandem with the rising costs. Additionally, the risk coverage is comprehensive. In the same regard, most child plans have inbuilt waiver of premium feature which ensures that on death of insured, the plan continues and payout is made as prescribed schedule. For increasing financial security of child, you can go for riders like Accidental death, critical illness etc which can be added with the base plan by paying a bit more premium.

2. STRUCTURE OF CHILD PLAN Charges, Fees and Deductions in child plan

Premium Allocation Charge
This is a premium-based charge. After deducting this charge from premiums, the remainder is invested to buy units. The Allocation charges are guaranteed for the entire duration of policy term.

Mortality Charge
The Mortality Charge will apply on the Sum at Risk (SAR = Sum Assured less the Fund Value pertaining to regular premiums). It will be deducted by monthly cancellation of units from the accumulation unit account. The Mortality Charge shall remain guaranteed throughout the policy term.

Fund Management Charge

1% p.a. on With Profits Fund, 1% p.a. on Debt Fund, 1.25% p.a. on Balanced Fund and 1.50% p.a. on Growth Fund. FMC will be applied on the fund while calculating NAV on a daily basis. The maximum FMC any fund is 2% p.a. subject to prior approval by the IRDA.

Policy Administration Charge

Rs. 60 per month, which will increase by 5% p.a. on the 1st of January each year. PAC will be deducted monthly by cancellation of units from the accumulation unit account. If premiums are discontinued, this charge would reduce to 60% of the charge applicable for the premium paying policies

Surrender Charge
This is the charge that applies when the policy is surrendered. It is equal to 50% of the difference between regular premiums expected and those paid in the first year of the contract.

Service Tax Deductions

12.36% service tax is applicable on the first premium of life insurance policy.

Current structure of investment in India regarding child investment

Traditional Insurance Plans Unit Linked Plans Children Mutual Funds Diversified Equity Funds Direct Equity Commodities
3. ADVANTAGES OF CHILD PLANS
Provide financial security:

30% 15% 20% 10% 15% 10%

You can be rest assured that your child lives on to see his dreams come true even if you are no longer around.

Tax benefits:
Investment in children plans can enable you to enjoy tax benefits under Sections 80C and 10 (10D) of the Income Tax Act, 1961.

Enjoy better return:

The premiums you pay are invested into financial instruments, which are actively managed by experts to allow you to earn more from the policy.

Provide for a higher financial security through 'riders':

Riders let you enjoy more from the life insurance plan and will provide additional financial security in the unfortunate event of your death or disability.

Option of placing the policy as collateral to raise a loan:

The plan makes you eligible for a loan after a lock-in period. Your policy will be the collateral against the loan.

Create a bigger corpus for your child's future:

Timely investments can assure higher funds for your child's future, be it his/her education or marriage.

4. FACTORS INFLUENCING TO CHILD PLANS

The degree of buying of ULIPs insurance varies from person to person. It depends upon many factors. The factors can be classified into personal, social, economic, psychological and company related variables.

a) Social Factor
Age and experience of policyholder are personal factors, while the co-education is a social factor.

b) Economic Factor
Economic factors include occupation, income and wealth.

c) Psychological Factor
The psychological factors consist of perception, satisfaction about the services rendered by insurance companies, the impact of advertisement and personal selling made by insurance companies on policyholders.

d) Company Related Variable

The company related variables are the promotional efforts to sell the policies to prospective buyers. These include advertisement and personal selling too.

5. TYPE OF CHILD PLANS

There are different type of child plans of LIC. They are Jeevan Kishore, Jeevan Anurag, Marriage Endowment Or Educational Annuity Plan, Komal Jeevan, Jeevan Chhaya, Child Fortune Plus, Child Career Plan, Lic Jeevan Ankur. The LIC insurance plan provides our clients with much of opportunity to ensure there future among safe hands. The LIC insurance plan acts according to the requirement of an individual and differs from person to person. The LIC insurance plans are policies that take care of each of our clients by talking to them individually and offer them the best possible option that is the most suitable one for them. The LIC insurance plan promises to take care of all the needs and requirements of the clients that join hands along with LIC insurance plan.

1) Jeevan Kishore: To ensure good future of all child we are here with Jeevan Kishore (Children Plan). This life insurance plan is an Endowment Assurance Plan available for children of less than 12 years of age. The policy may be purchased by there guardian. The risk evolves after 2 years from the date of commencement of policy after the completion of 7 years of age of a child. The Premiums are payable yearly, half-yearly, quarterly or monthly throughout the tenure of the policy. The life assured gets a share of the profits gained by the LIC in the form of bonuses. Simple Bonuses are declared per thousand Sum Assured annually at the end of each year. Bonus is also received if policy runs for certain period.

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

2) Jeevan Anurag:
LICs Jeevan Anurag (Children Plan) is basically a profits plan created to take care of the educational requirement of children. This plan can be taken by a parent on his or her own life. Benefits under the particular plan are payable at the prescribed durations irrespective of whether the insurance survives to the end of the policy term. This plan also provides an immediate payment of Basic amount on death of the Life Assured during the term of the policy. The assured benefit that is regained is the Payment of 20%, 40% of the Basic Sum Assured at the start of every year during last 3 years before maturity, at maturity of the Basic Sum Assured along with reversionary bonuses and the Terminal bonus, if payable. It also provides death facility to the life assured person with a Payment of an amount equal to Sum Assured under the basic plan immediately on the death of the life assured.

3)Marriage Endowment Or Educational Annuity Plan

We are offering a range of Marriage Endowment or Educational Annuity Plan (Children Plan) to our clients. This insurance policy determines the Marriage Endowment Assurance plan which provides benefit from the selected maturity date to meet the marriage or the educational expense of the particular child. The premiums of this policy are payable yearly, half-yearly, quarterly, monthly or through Salary deductions, as chose by the assurer. The bonuses provided are in the profits of the corporation life insurances business the assurer gets share of the profits in form of bonuses. Bonuses are declared per thousand Sum Assured annually at the end of each financial year. It is also payable if the policy is of a certain minimum term. Premiums: Premiums are payable yearly, half-yearly, quarterly, monthly or through Salary deductions, as opted by you, throughout the term of the policy or earlier death.

Bonuses: This is a with-profit plan and participates in the profits of the Corporations life insurance business. It gets a share of the profits in the form of bonuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year. Once declared, they form part of the guaranteed benefits of the plan. Such bonuses are to be added till maturity even if the life assured dies before the maturity date. Final (Additional) Bonus may also be payable provided a policy is of a certain minimum term.

4) Komal Jeevan:
Komal Jeevan (Children Plan) as an insurance policy is a Children's Money Back Plan that provides financial protection against death of the assured individual during the term of the plan on payments regarding survival at specified duration. These can be purchased by their guardian for a child aged 0 to 10 years. There risk involvement commences either after 2 years from the date of commencement of policy completing 7years of age. The premiums are payable yearly, half-yearly, quarterly, monthly or through Salary deductions, as opted by the assured individual till the child attains 18 years of age. The policy also provides Guaranteed Additions at the rate of Rs.75 per thousand Sum Assured for each completed year. This insurance policy covers up the profits of the Corporations life insurance business. There are terminal bonuses payable along with death or maturity benefit. This plan can be purchased by any of the parent or grandparent for a child aged 0 to 10 years.

Premiums: Premiums are payable yearly, half-yearly, quarterly, monthly or through Salary deductions, as opted by you, up to the policy anniversary immediately after the life assured (child) attains 18 years of age or till the earlier death of the life assured. Alternatively, the premium may be paid in one lump sum (Single premium).

Guaranteed Additions: The policy provides for the Guaranteed Additions at the rate of Rs.75 per thousand Sum Assured for each completed year. The Guaranteed Additions are payable at the end of the term of the policy or earlier death of the Life Assured.

5) Child Future Plan:

This insurance policy states that it is specifically designed to meet the increasing educational, marriage and other requirements of growing children. It provides risk cover on the life of a child not only during the policy term but also during the time of extension that is 7 years after the expiry of the policy. There are other determined option to be chosen that are Sum Assured (S.A.), Maturity Age, Policy Term, Mode of Premium payment and Premium Waiver Benefit.

The payments of premiums are at yearly, half-yearly, quarterly or through Salary deductions over the term of policy. It is mandatory to pay the premium for 6years or before 5 years of policylapse.

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).

6) Jeevan Chhaya:

This insurance policy publishes an Endowment Assurance plan that provides financial protection against death throughout the whole tenure of the plan. The payment of the sum assured is being immediately provided after the death. One fourth of the sum assured is payable at the end of every last four years of the policy tenure whether he is dead or alive within in policy term. The premiums are payable yearly, half-yearly, quarterly, monthly or through salary deductions as opted by the assured individual throughout the term of the policy. As per the bonuses are concerned it provides a share of the profits in the form of bonuses. Bonuses will be added at the selected term or till death, Bonus may also be payable provided the policy had matured a minimum period.

7) Child Fortune Plus:

This Insurance policy determines that the investment policy has risk involvement in investment portfolios by the policy holders. LICs Child Fortune Plus is a unit linked plan which offers you a necessary platform to meet your childs educational and other required needs. The insurance can be done for your child up to the age of 17years in case of single premium policies or else 10 for regular premium insurance the policy will continue till the child reaches the age of 25 yrs and the life assured attain the age of 75 years of nearest birthday. The premiums are paid either in lump sum (single premium) or regularly throughout policy term. The death benefit under the policy shall be the Sum Assured. For regular premium policies, in case of death of the life assured during the term of the policy, the plan also provides waiver for all future premiums. The wide ranges of funds offered are the Unit Fund which is subjected to various charges and value of units which may increase or decrease, depending on the Net Asset Value.

CHAPTER-4
PENSION PLANS
1. 2. 3. 4. 5. Pension Plans. Structure. Advantages Of Pension Plans. Factors Influencing To Buy Pension Plans. Types Of Pension Plans.

1. PENSION PLAN
A pension is a fixed sum to be paid regularly to a person, typically following retirement from service. There are many different types of pensions, including defined benefit plans, defined contribution plans, as well as several others. Pensions should not be confused with severance pay; the former is paid in regular installments, while the latter is paid in one lump sum. The terms retirement plan and superannuation refer to a pension granted upon retirement of the individual. Retirement plans may be set up by employers, insurance companies, the government or other institutions such as employer associations or trade unions. Called retirement plans in the United States, they are commonly known as pension schemes in the United Kingdom and Ireland and superannuation plans in Australia and New Zealand. Retirement pensions are typically in the form of a guaranteed life annuity, thus insuring against the risk of longevity. A pension created by an employer for the benefit of an employee is commonly referred to as an occupational or employer pension. Labor unions, the government, or other organizations may also fund pensions. Occupational pensions are a form of deferred compensation, usually advantageous to employee and employer for tax reasons. Many pensions also contain an additional insurance aspect, since they often will pay benefits to survivors or disabled beneficiaries. Other vehicles may provide a similar stream of payments. The common use of the term pension is to describe the payments a person receives upon retirement, usually under pre-determined legal or contractual terms. A recipient of a retirement pension is known as a pensioner or retiree. More retirement saving scheme like provident and pension funds predominantly cover workers in the organized sectors, constituting only about 10% of the aggregate workforce. The majority of the workers around 90% of the working population is engaged in the unorganized and as no access to any formal system of old age economic security. This skewed coverage is further shrinking as informal work force is growing while the size of formal workforce has reminded more or less strange.

2. STRUCTURE OF PENSION PLAN

India, like most other developing countries, does not have a universal social security system to protect the elderly against economic deprivation. Perhaps, persistently high rates of poverty and unemployment act as a deterrent to institute a pay-roll tax financed state pension arrangement for each and every citizen attaining old age. Instead, India has adopted a pension policy that largely hinges on financing through employer and employee participation. This has however restricted the coverage to the organized sector workers - denying the vast majority of the workforce in the unorganized sector access to formal channels of old age economic support. Notwithstanding the limited size and scope, India has a long tradition of pension and other forms of formal old age income support system. The history of the Indian pension system dates back to the colonial period of British-India. The Royal Commission on Civil Establishments, in 1881, first awarded pension benefits to the government employees. The Government of India Acts of 1919 and 1935 made further provisions. These schemes were later consolidated and expanded to provide retirement benefits to the entire public sector working population. Post independence, several provident funds were set up to extend coverage among the private sector workers. Today, major retirement schemes in India include provident fund, gratuity and pension schemes. The first two schemes provide lump sum retirement benefit while the last one makes payment in the form of monthly annuity. These schemes are characterized by the following common features i.e. they are mandatory, occupation based, earnings related, and have embedded insurance cover against disability and death. Table 1 elaborates salient features of the major provident fund and pension schemes. The central government, states and union territories provide pension benefits to the public employees. In addition, a large number of public and local bodies and autonomous institutions run their own pension schemes guaranteed by the government.

The central government alone administers separate pension programs for civil employees, defense staff and workers in railways, post, and telecommunications departments. These benefit programs are typically run on a pay-as-you-go, defined-benefit basis. The schemes are non-contributory i.e. the workers do not contribute during their working lives. Instead, they

forego the employers contribution into their provident fund account. The entire pension expenditure is charged in the annual revenue expenditure account of the government. Full superannuation benefit is a monthly pension fixed at fifty percent of the average monthly earnings during the last year of service. The pension is indexed to provide a real annuity to the retirees. Public employees, in addition to their pension benefits are also covered under the General Provident Fund (GPF) scheme. The GPF is a non-contributory program where only workers themselves contribute a minimum of six percent of their monthly earnings. The accumulation under the GPF account is returned to the worker in lump sum at the time of retirement. Private sector workers are less fortunate and until recently had access only to a provident fund system for their old age income security. Provident Fund is a defined-contribution, fully funded benefit program providing lump sum benefit at the time of retirement. The provident fund system, consisting of the Employees Provident Fund (EPF) and a number of smaller provident funds is the largest benefit program operating in India.3 Together, the schemes provide retirement benefits to about 10 percent of the labor force. Workers (and private employers) contribute between 10 - 12 percent of monthly earnings, to be returned to the worker in a lump sum payment at retirement, including accumulated interest at a rate currently set at 11 percent. In 1995, the government partially converted the EPF scheme and introduced the Employees Pension Scheme (EPS). It is paid to the workers who fulfill certain eligibility conditions like a minimum qualifying service period of five years. It is equivalent to 15 days of final earnings for each years of service completed subject to a maximum of Rs. 350,000. The cost of gratuity is entirely borne by the employer. The criteria of eligibility varies, but generally the destitute, the poverty stricken and the infirm aged 60 years and above are provided pension at rates ranging between Rs. 30 and Rs. 100 per month. However, the combined coverage of these social assistance schemes is insignificant and covers anywhere between 5 and 10 percent of the total elderly population. In an effort to widen the reach of the social safety net for the aged poor, the central government, in 1995, introduced a more comprehensive old age poverty alleviation program called the National Old Age Pension (NOAP) under the aegis of the National Social Assistance Programmer (NSAP). The scheme aims to provide monthly pension to thirty percent of the poorest elderly.

3. ADVANTAGES OF PENSION PLANS

a) Grace Period:
A grace period of 30 days will be available for payment of yearly, halfyearly or quarterly premiums and 15 days for monthly premiums.

b) 15 days Cooling-off period:

If policyholder is not satisfied with the Terms and Conditions of the policy, he/she may return the policy to us within 15 days.

c) Paid-up Value:
The policy will acquire paid-up value after at least 3 full years premiums have been paid.

d) Guaranteed Surrender Value:

Before the annuity vests, the policy can be surrendered at any time after the completion of 3 policy years. For a regular premium policy, the Guaranteed Surrender value is available provided 3 years premiums are paid, and it is 30% of the premiums paid excluding premiums paid in the first year. For a Single Premium policy, the Guaranteed Surrender Value available after completion of 3 policy years is 90% of the Single Premium. Any extra premiums and premiums for Term Assurance Rider Option, Critical Illness Rider option and Accident Benefit, if any will be excluded.

e) Revival:
The policyholder can revive his lapsed policy by paying arrears of premium together with interest within a period of five years from the date of first unpaid premium subject to satisfactory evidence of health. The rate of interest for this purpose will be decided by the Corporation from time to time. The present rate of interest is 9% pa.

f) Options:
Accidental Death and Disability Benefit: In case of death due to accident (within 180 days) an additional amount equal to the Accident Benefit Sum assured will be payable. In case of Total and Permanent disability arising due to accident an amount equal to accident benefit sum assured will be payable over a period of 10 years in monthly instalments. However, the payment of accident benefit will be subject to an overall limit of Rs.25 lakh under all policies of the Life Assured with the Corporation taken together.

a) b) c) d)

Minimum age at entry: Maximum age at entry: Minimum age at vesting: Maximum age at vesting

18 years (completed) 65 years 40 years 75 years 6 to 35 years under Single Premium policies and 5 to 35 years under Regular Premium policies Yearly, Half-yearly, Quarterly, SSS & Single Premium Rs.50,000/- and in multiples of Rs.5,000/- thereafter, with no upper limit. Rs.3,000/Rs.10,000/-

e) f)

Policy terms: Modes of premium payment:

g) h) i)

Sums Assured allowed: Minimum Annual Premium: Minimum Single premium:

4. FACTORS INFLUENCING TO BUY PENSION PLANS.

The factors can be classified into personal, social, economic, psychological and company related variables.

A) Social Factor
Age and experience of policyholder are personal factors, while the co-education is a social factor.

B) Economic Factor
Economic factors include occupation, income and wealth.

C) Psychological Factor
The psychological factors consist of perception, satisfaction about the services rendered by insurance companies, the impact of advertisement and personal selling made by insurance companies on policyholders.

D) Company Related Variable

The company related variables are the promotional efforts to sell the policies to prospective buyers. These include advertisement and personal selling too.

5. TYPES OF PENSION PLANS

Pension Plans are Individual Plans that gaze into your future and foresee financial stability during your old age. These policies are most suited for senior citizens and those planning a secure future, so that you never give up on the best things in life.

PENSION PLAN

Jeeven Akshay - VI I) Jeeven Akshay VI: Introduction:

LICS New Jeeven Nidhi

It is an Immediate Annuity plan, which can be purchased by paying a lump sum amount. The plan provides for annuity payments of a stated amount throughout the life time of the annuitant. Various options are available for the type and mode of payment of annuities.

Options Available:
The following options are available under the plan

Type of Annuity: o Annuity payable for life at a uniform rate.

o

Annuity payable for 5, 10, 15 or 20 years certain and thereafter as long as the annuitant is alive.

o o o

Annuity for life with return of purchase price on death of the annuitant. Annuity payable for life increasing at a simple rate of 3% p.a. Annuity for life with a provision of 50% of the annuity payable to spouse during his/her lifetime on death of the annuitant.

Annuity for life with a provision of 100% of the annuity payable to spouse during his/her lifetime on death of the annuitant.

Annuity for life with a provision of 100% of the annuity payable to spouse during his/ her life time on death of annuitant. The purchase price will be returned on the death of last survivor.

Mode:

Annuity may be paid either at monthly, quarterly, half yearly or yearly intervals. You may opt any mode of payment of Annuity.

Salient features:

Premium is to be paid in a lump sum. Minimum purchase price : Rs.100,000/- for all distribution channels except online. Rs.150,000/- for on line sale. No medical examination is required under the plan. No maximum limits for purchase price, annuity etc. Minimum allowed age at entry is 30 years (completed) and Maximum allowed age at entry is 85 years (completed). Age proof necessary.

Annuity Rate:
Amount of annuity payable at yearly intervals which can be purchased for Rs. 1 lakh under different options is as under:
Birthday (i) (ii) (iii) (iv) (v) (vi) (vii) 30 7190 7160 6890 5250 7080 6970 6860 40 7510 7440 6930 5610 7310 7120 6890 50 8140 7950 7000 6280 7760 7420 6930 60 9350 8790 7110 7530 8640 8030 7010 70 12080 9830 7260 10220 10560 9370 7130 80 17880 10440 7480 15890 14600 12340 7290

Incentives for high purchase pric:

If your purchase price is Rs. 2.50 lakh or more, you will receive higher amount of annuity due to available incentives. In addition of this, for policies sold online, a rebate of 1% by way of increase in the annuity rate shall also be available.

Service Tax:
Service tax, if any, shall be as per the Service Tax Laws and at the rate of service tax as applicable from time to time. The amount of service tax as per the prevailing rates shall be payable by the policyholder along with the purchase price.

Paid-up value:
The policy does not acquire any paid-up value.

II) LICS New Jeeven Nidhi:

LICs New Jeevan Nidhi Plan is a conventional with profits pension plan with a combination of protection and saving features. This plan provides for death cover during the deferment period and offers annuity on survival to the date of vesting.

a. Benefit on Vesting: Provided the policy is in full force, on vesting an amount equal to
the Basic Sum Assured along with accrued Guaranteed Additions, vested Simple Reversionary bonuses and Final Additional bonus, if any, shall be made available to the Life Assured.

b. Death Benefit:
Death during first five policy years: Provided the policy is in full force, Basic Sum Assured along with accrued Guaranteed Addition shall be paid as lump sum or in the form of an annuity or partly in lump sum and balance in the form of an annuity to the nominee. Death after first five policy years: Provided the policy is in full force, Basic Sum Assured along with accrued Guaranteed Addition, Simple Reversionary and Final Additional Bonus, if any, shall be paid as lump sum or in the form of an annuity or partly in lump sum and balance in the form of an annuity to the nominee. In any case, provided all due premiums have been paid, the total death benefit at any time shall not be less than 105% of the total premiums paid (excluding taxes, extra premium and rider premium, if any). c. Guaranteed Additions: The policy provides for Guaranteed Additions @ Rs.50/- per thousand Basic Sum Assured for each completed year, for the first five years. d. Participation in profits: Provided the policy is in full force, depending upon the Corporations experience the policies shall participate in profits from 6th year onwards for a Simple Reversionary Bonus at such rate and on such terms as may be declared by the Corporation.

CHAPTER 6
OBJECTIVE AND SCOPE OF STUDY 1. Objective of the study.
2. Scope of the study.

1. OBJECTIVE OF THE STUDY.