Role of LIC in Insurance Sector

ROLE OF LIC IN INSURANCE INDUSTRY
EXECUTIVE SUMMARY
Someone has greatly said that practical knowledge is far better than classroom
teaching. During this project I fully realized this and come to know about the present real
world of Insurance sector . It includes all the activities involved in providing insurance
products to the final customers. I am pleased to know about the consumers’ wants and
competitors activities in the real world of Insurance. The subject of my study is to analyse the
present insurance sector and products offered by LIC by applying various tools like cold
calling and through direct interaction with customer’s. I have also done research on the
growth of private life insurance companies.
The report contains first of all brief introduction about the company. Then it contains the
current status of private insurance companies and foreign insurance companies in India.
I also put forward recommendations of the consumers and conclusions that will help
LIC to provide consumer satisfactory services in the insurance sector
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CHAPTER 1
INTRODUCTION TO INSURANCE
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1.1 INTRODUCTION TO INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of life and
property. Under the plan of insurance, a large number of people associate themselves by
sharing risk, attached to individual. The risk, which can be insured against include fire, the
peril of sea, death, incident, & burglary. Any risk contingent upon these may be insured
against at a premium commensurate with the risk involved.
“Insurance is a contract between 2 parties whereby one party called insurer

undertakes in exchange for a fixed sum called premium to pay the other party
happening of a certain event.”
The insurance industry in India has come a long way since the time when businesses were
tightly regulated and concentrated in the hands of a few public sector insurers. Following the
passage of the Insurance Regulatory and Development Authority Act in 1999, India
abandoned public sector exclusivity in the insurance industry in favor of market-driven
competition. This shift has brought about major changes to the industry. The inauguration
of a new era of insurance development has seen the entry of international insurers, the
proliferation of innovative products and distribution channels, and the raising of supervisory
standards.
By mid-2004, the number of insurers in India had been augmented by the entry of new
private sector players to a total of 28, up from five before liberalization. A range of new
products had been launched to cater to different segments of the market, while traditional
agents were supplemented by other channels including the Internet and bank branches. These
developments were instrumental in propelling business growth, in real terms, of 19% in life
premiums and 11.1% in non-life premiums between 1999 and 2003.
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There are good reasons to expect that the growth momentum can be sustained. In particular,
there is huge untapped potential in various segments of the market. While the nation is
heavily exposed to natural catastrophes, insurance to mitigate the negative financial
consequences of these adverse events is underdeveloped. The same is true for both pension
and health insurance, where insurers can play a critical role in bridging demand and supply
gaps. Major changes in both national economic policies and insurance regulations will
highlight the prospects of these segments going forward. Insurance or assurance, device for
indemnifying or guaranteeing an individual against loss. Reimbursement is made from a fund
to which many individuals exposed to the same risk have contributed certain specified
amounts, called premiums. Payment for an individual loss, divided among many, does not
fall heavily upon the actual loser. The essence of the contract of insurance, called a policy, is
mutuality. The major operations of an insurance company are underwriting, the determination
of which risks the insurer can take on; and rate making, the decisions regarding necessary
prices for such risks. The underwriter is responsible for guarding against adverse selection,
wherein there is excessive coverage of high risk candidates in proportion to the coverage of
low risk candidates.
In preventing adverse selection, the underwriter must consider physical, psychological, and
moral hazards in relation to applicants. Physical hazards include those dangers which
surround the individual or property, jeopardizing the well-being of the insured. The amount
of the premium is determined by the operation of the law of averages as calculated by
actuaries. By investing premium payments in a wide range of revenue-producing projects,
insurance companies have become major suppliers of capital, and they rank among the
nation's largest institutional investors.
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1.2 DEFINITIONS OF INSURANCE
Insurance is a contract whereby, in return for the payment of premium by the insured,
the insurers pay the financial losses suffered by the insured as a result of the occurrence of
unforeseen events. With the help of insurance, large number of people exposed to a similar
risk makes contributions to a common fund out of which the losses suffered by the
unfortunate few, due to accidental events, are made good.
General definition:
In the words of John Magee, “Insurance is a plan by which large number of people
associate themselves and transfer to the shoulders of all, risks that attach to individuals.”
Fundamental definition:
In the words of D.S. Hansel, “Insurance may be defined as a social device providing
financial compensation for the effects of misfortune, the payment being made from the
accumulated contributions of all parties participating in the scheme.”
Contractual definition:
In the words of justice Tindall, “Insurance is a contract in which a sum of money is

paid to the assured as consideration of insurer’s incurring the risk of paying a large sum upon
a given contingency.”
General Definition:
The general definitions are given by the social scientists & they consider insurance as a
device to protection against risks, or a provision against inevitable contingencies or a co-
operative device of spreading risks. Some of such definitions are given below:
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 In the words of John Magee, ―Insurance is a plan by which large number of people
associate themselves & transfer to the shoulder of all, risks that attach to individuals.
 In the words of Sir William, ―The collective bearing of risks is insurance.
 In the words of Boone & Kurtz, ―Insurance is a substitution for a small known loss
(the insurance premium) for a large unknown loss, which may or may not occur.
 In the words of Thomas, ―Insurance is a provision, which a prudent man makes

against for the loss or inevitable contingencies, loss or misfortune.
 In the words of Allen Z. Mayer, ―Insurance is a device for the transfer to an insurer
of certain risks of economic loss that would otherwise come by the insured.
 In the words of Ghosh & Agarwal, ―Insurance is a co-operative form of distributing

a certain risk over a group of persons who are exposed to it.‖
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1.3 HISTORY OF INSURANCE IN INDIA
In India, insurance has a deep-rooted history. It finds mention in the writings of Manu
(Manusmrithi), Yagnavalkya (Dharmasastra) and Kautilya (Arthasastra). The writings talk in
terms of pooling of resources that could be re-distributed in times of calamities such as fire,
floods, epidemics and famine. This was probably a pre-cursor to modern day insurance.
Ancient Indian history has preserved the earliest traces of insurance in the form of marine
trade loans and carriers’ contracts. Insurance in India has evolved over time heavily drawing
from other countries, England in particular.
1818 saw the advent of life insurance business in India with the establishment of the Oriental
Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829, the
Madras Equitable had begun transacting life insurance business in the Madras Presidency.
1870 saw the enactment of the British Insurance Act and in the last three decades of the
nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897)
were started in the Bombay Residency. This era, however, was dominated by foreign
insurance offices which did good business in India, namely Albert Life Assurance, Royal
Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard
competition from the foreign companies.
In 1914, the Government of India started publishing returns of Insurance Companies

in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to
regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the
Government to collect statistical information about both life and non-life business transacted
in India by Indian and foreign insurers including provident insurance societies. In 1938, with
a view to protecting the interest of the Insurance public, the earlier legislation was
consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for
effective control over the activities of insurers.
The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a
large number of insurance companies and the level of competition was high. There were also
allegations of unfair trade practices. The Government of India, therefore, decided to
nationalize insurance business.
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An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and
Life Insurance Corporation came into existence in the same year. The LIC absorbed 154
Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign
insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was
reopened to the private sector.
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1.4 CHARACTERISTICS OF INSURANCE:
 Sharing of Risks
Insurance is a co-operative device to share the burden of risk, which may fall on
happening of some unforeseen events, such as the death of head of the family, or on
happening of marine perils or loss of by fire.
 Co-operative Device
Insurance is a co-operative form of distributing a certain risk over a group of persons
who are exposed to it (Ghosh & Agarwal). A large number of persons share the losses arising
from a particular risk.
 Evaluation of Risk
For the purpose of ascertaining the insurance premium, the volume of risk is
evaluated, which forms the basis of insurance contract.
 Payment of happening of specified event

On happening of specified event, the insurance company is bound to make payment to
the insured. Happening of the specified event is certain in life insurance, but in the case of
fire, marine or accidental insurance, it is not necessary. In such cases, the insurer is not liable
for payment of indemnity.
 Amount of payment
The amount of payment in indemnity insurance depends on the nature of losses
occurred, subject to a maximum of the sum insured. In life insurance, however, a fixed
amount is paid on the happening of some uncertain event or on the maturity of the policy.
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 Large number of insured persons

The success of insurance business depends on the large number of persons insured
against similar risk. This will enable the insurer to spread the losses of risk among large
number of persons, thus keeping the premium rate at the minimum.
 Insurance is not a gambling

Insurance is not a gambling. Gambling is illegal, which gives gain to one party &
loss to the other. Insurance is a valid contract to indemnity against losses. Moreover,
insurable interest is present in insurance contracts & it has the element of investment also.
 Insurance is not charity

Charity pays without consideration but in the case of insurance, premium is paid
by the insured to the insurer in consideration of future payment.
 Protection against risks

Insurance provides protection against risks involved in life, materials & property.
It is a device to avoid or reduce risks
 Spreading of risk
Insurance is a plan, which spread the risks & losses of few people among a large
number of people. John Magee writes, ―Insurance is a plan by which large number of people
associates themselves & transfer to the shoulders of all, risks attached to individuals.
 Transfer of risk
Insurance is a plan in which the insured transfers his risk on the insurer. This may
be the reason that Mayerson observes, that insurance is a device to transfer some economic
losses to the insurer, and otherwise such losses would have been borne by the insured
themselves.
 Ascertaining of losses
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By taking a life insurance policy, one can ascertain his future losses in terms of
money. This is done by the insurer to determining the rate of premium, which is calculated on
the basis of maximum risks.
 A contract
Insurance is a legal contract between the insurer & insured under which the insurer
promises to compensate the insured financially within the scope of insurance policy, & the
insured promises to pay a fixed rate of premium to the insurer.
 Based upon certain principle

Insurance is a contract based upon certain fundamental principles of insurance, which
includes utmost good faith, insurable interest, contribution, indemnity, cause proximal,
subrogation, etc., which are the basis for successful operation of insurance plan.
 Utmost Good Faith

Insurance is a contract based on good faith between the parties. Therefore, both the
parties are bound to disclose the important facts affecting to the contract before each other.
Utmost good faith is one of the important principles of insurance.
To conclude, insurance is a device for the transfer of risks from the insured to the insurers,
who agree to it for a consideration (known as premium), & promises that the specified extent
of loss suffered by the insured shall be compensated. It is a legal contract of a technical
nature.
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1.5 FUNCTION OF INSURANCE:
PRIMARY FUNCTIONS –
The primary functions of insurance include the following.
i) Provide Protection
The primary function of insurance is to provide protection against future risk,
accidents and uncertainty. Insurance cannot check the happening of the risk, but can certainly
provide for the losses of risk. Professor Hopkins observes "Insurance is a protection against
economic loss, by sharing the risk with others.”
ii) Collective bearing of risk

Insurance is a device to share the financial loss of few among many others. Dinsdale
opines, insurance is a mean by which few losses are shared among longer people. Similarly,
William Bevridge observes, "The collective bearing of risks is insurance." All the insured
contribute the premiums towards a fund and out of which the persons exposed to a particular
risk is paid.
iii) Assessment of risk

Insurance determines the probable volume of risk by evaluating various factors that
give rise to risk. Risk is the basis for determining the premium rate also.
iv) Provide certainty

Insurance is a device which helps to change from uncertainty to uncertainty. This may
the reason that John Magee writes that the function of insurance is to provide certainty.
Similarly, Riegel and-Miller observe, "Insurance is device whereby the uncertain risks may
be made more certain".
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SECONDARY FUNCTIONS
i) Prevention of losses
Insurance cautions individuals and businessmen to adopt suitable device to prevent
unfortunate consequences of risk by observing safety instructions; installation of automatic
sparkler or alarm systems, etc. Prevention of losses causes lesser payment to the assured by
the insurer and this will encourage for more savings by way of premium. Reduced rate of
premiums stimulate for more business and better protection to the insured.
ii) Small capital to cover larger risks

Dinsdale observes, insurance relieves the businessmen from security investments, by
paying small amount of premium against larger risks and uncertainty.
iii) Contributes towards the development of larger industries

Insurance provides development opportunity to those larger industries having more
risks in their setting up. Even the financial institutions may be prepared to give credit to sick
industrial units which have insured their assets including plant and machinery.
OTHER FUNCTIONS
 Means of savings and investment: insurance serves as savings and investment,

insurance is a compulsory way of savings and it restricts the unnecessary expenses
by the insured’s For the purpose of availing income-tax exemptions also, people
invest in insurance.
 Source of earning foreign exchange: Insurance is an international business. The
country can earn foreign exchange ^ by way of issue of marine insurance policies.
 Promotes exports insurance makes the foreign trade risk free with the help of
different types of policies under marine insurance cover.
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CHAPTER 2
ROLE OF INSURANCE SECTOR IN INDIA
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ROLE OF INSURANCE SECTOR IN INDIA
PROTECTIVE ROLE
Insurance has been playing protective role towards the development of industry and
commercial institutions. The major protective measures have been:
i) Protection from risks arising out of natural calamities

Insurance has also been playing important role in protecting the industry and
commercial activities from natural calamities like fire, marine losses, floods, earth quakes,
cyclones etc.
ii) Protection from the risks caused by human beings

Insurance provides protection against risks caused by human beings such as
strikes by workers, their negligence in carrying out work, theft and decoity, evil disturbances
and many other such acts. In addition to the issue of policies against such causes, insurance
also issues policies to protect the industry and commercial institutions from the loss of
money in transit.
iii) Protection against statutory liabilities

Insurance also plays the role of protecting the industry and commerce in fulfilling
statutory liabilities towards the workers, arising out of industrial accidents. The employer is
bound to compensate such workers under the provision of Workers' Compensation Act. In
case the employer obtains an accidental policy in favour of employees; the money to be paid
as compensation to the accident victims, can be chimed from the insurance company.
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iv) Financial security

Insurance provides financial security also to industry and commerce. Exports of
goods to other countries by sea, storage of goods in safe godowns and various other kinds of
financial losses are secured by insurance policies.
v) Protection from loss of profits

Insurance also has extended its role of prot6cting different industrial and
commercial activities, it provides protection against losses arising from shops or factories. It
also undertakes to indemnity the loss of profits from business functions. This way, the loss of
profits and property / both are protected.
vi) Protection of debts

A trader can protect himself by taking appropriate policy against the credit sales or
property kept on security against goods or property. Thus, the insurance protests the trader
even in case the debtor dies or of damages to the goods.
vii) Protection to the business institution due to sudden death of the me key man
The successful operation and development of a business largely depends on its directors,
managers and administrative personnel. Sudden and untimely death of such person may
badly affect the functioning of the business and many problems may also arise in day-to-
day functioning of business. Insurance plays important role by insuring the life of key
man in the business so that the future can be protected safely from uncertainties.
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viii) Provides stability in commercial and industrial activities

Insurance companies extend various kinds of assistance to business enterprise to run the
business regularly and continuously. It plays important role in partnership business by
insuring the life of partners so that in case of death of any partner, the claim received from
the insurance company can be used for meeting payment to the dependents of deceased
partner.
PROMOTIONAL ROLE OF INSURANCE

Insurance plays important role in setting up industrial and commercial units;
by way of capital formation, new investment, industrial entrepreneurship, under-
writing of shares and investment in capital market. In addition to protective measures,
it plays promotional role also, which are briefly described below:
i) Extension of credit facilities

Insurance extends credits to industrial and commercial institutions. An entrepreneur
can get insurance of unit, plant and machinery, or permanent assets purchased by him and get
them mortgaged with the financial institutions for getting credit.
ii) Facilities industrialization and commercialization

Insurance contributes for the development of various commercial activities like
buying-selling, transportation, communication, warehousing, packaging, advertising and
publicity, and agricultural marketing etc. It is due to the insurance facility that many utility
serves are created and the business solves various problems arising out of business conducts.
iii) Increases business and industrial efficiency

The efficient management of industrial and commercial activities become possible
due reductions in business risks. Insurance provides protection from various risks and thus it
increases the business efficiency.
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iv) Investment in shares and debentures

Insurance companies extends its support for the development and expansion industrial
and commercial activities by investing in shares and debentures issued by the industrial units.
v) Contribution towards the development of basic industries

Insurance has contributed much towards the development and expansion of basic
industries like iron and steel cement, engineering, chemicals, petro-chemicals, electric goods,
fertilizers, etc. by investing in shares and debentures.
vi) Contribution towards fulfillment of social and statutory obligations

Insurance institutions in the country also have been contributing much in fulfilment of
social and statutory obligations by contributing well in social welfare schemes operated by
industrial establishments, social security, schemes, workers compensation plan, payment of
gratuity etc.
vii) Contribution towards development of international trade

The various policies issued by marine insurance companies help for the development
of international trade by protecting the exporters/ importers from marine losses and risks.
This role of insurance companies has been helpful in earning more foreign exchange by
increased participation by traders in international trader
viii) Extension of export credit

Export Credit and Guarantee Corporation (ECGC) extends export credit to the
exporters and in cases where the importers commit defaults in making payment to the
exporter, the ECGC compensate the exporter through its policy issued for this purpose.
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ix) Increase competing ability among small and medium-scale units
Insurance acts as a source among the small and medium scale industrial units to
compete with larger industrial units. Large-scale industries can bear the expenses for
protection against risks and uncertainties by getting insurance against such losses.
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CHAPTER 3
INTRODUCTION OF LIFE INSURANCE

CORPORATION OF INDIA
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3.1 INTRODUCTION TO LIC
Life Insurance in its modern form came to India from England in the year 1818.
Oriental Life Insurance Company stated by Europeans in Calcutta was the first life insurance
company on Indian Soil. All the insurance companies established during that period were
brought up with the purpose of looking after the needs of European community and Indian
natives were not being insured by these companies. However, later with the efforts of
eminent people like Babu Muttylal Seal, the foreign life insurance companies started insuring
Indian lives. But Indian lives were being treated as sub-standard lives and heavy extra
premiums were being changed on them. Bombay Mutual Life Assurance Society heralded the
birth of first Indian life insurance company in the year 1870, and covered Indian lives at
normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies
came Tito existence to carry the message of insurance and social security through insurance
to various sectors of society. Bharat Insurance Company (1896) was also one of such
companies inspired by nationalism. The Swadeshi movement of 1905-1907 gave rise to more
insurance companies. The United India in Madras, National Indian and National Insurance in
Calcutta and the Hindustan Co-operative Insurance Company took its birth in one of the
rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The Indian
Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were some of the
companies established during the same period. Prior to 1912. India had no legislation to
regulate insurance business. In the year 1912, the Life Insurance Companies Act, and the
Provident Fund Act were passed. The Life Insurance Companies Act, 1912 made it necessary
that the premium rate tables and periodical valuations of companies should be certified by an
actuary. But the act discriminated between foreign and Indian companies on many accounts,
putting the Indian companies at a disadvantage.
The first two decades of the twentieth century saw lot of growth in insurance
business. From 44 companies with total business-in force as Rs. 22.44 crore, it rose to 176
companies with total business-in-force as Rs. 298 crore in 1938. During the mushrooming of
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insurance companies many financially unsound concerns were also floated which failed
miserably. The Insurance Act 1938 was the first legislation governing not only life insurance
but also non-life insurance to provide strict state control over insurance business. The demand
for nationalization of life insurance industry was made repeatedly in the past but it gathered
momentum in 1944 when a bill to amend the Life Insurance Act 1938 was introduced in the
Legislative Assembly. However, it was much later on the 19th of January, 1956, that life
insurance in India was nationalized. About 154 Indian insurance companies, 16 non-Indian
companies and 75 provident were operating in India at the time of nationalization,
nationalization was accomplished in two stages; initially the management of the companies
was taken over by means of an Ordinance, and later, the ownership too by means of a
comprehensive bill. The Parliament of India passed the Life Insurance Corporation Act on the
19th of June 1956, and the Life Insurance Corporation of India was created on 1st September,
1956, with the objective of spreading life insurance much more widely and in particular to the
rural areas with a view to reach all insurable persons in the country, providing them adequate
financial cover at a reasonable cost.
LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its
corporate office in the year 1956. Since life insurance contracts are long term contracts and
during the currency of the policy it requires a variety of services need was felt in the later
years to expand the operations and place a branch office at each district headquarter, re-
organization of LIC took place and large numbers of new branch offices were opened. As a
result of re-organization servicing functions were transferred to the branches, and branches
were made accounting units. It worked wonders with the performance of the corporation. It
may be seen that from about 200.00 crores of New Business in 1957 the corporation crossed
1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross
2000.00 crore mark of new business. But with re-organization happening in the early eighties,
by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies.
Today LIC functions with 2048 fully computerized branch offices, 100 divisional
offices, 7 zonal offices and the corporate office. 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. 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
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other cities. With a vision of providing easy access to its policyholders, LIC has launched its
SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the
customer. The digitalized records of the satellite offices will facilitate anywhere servicing and
many other conveniences in the future.
LIC continues to be the dominant life insurer even in the liberalized scenario of Indian
insurance and is moving fast on a new growth trajectory surpassing its own past records. LIC
has issued over one crore policies during the current year. It has crossed the milestone of
issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67%
over the corresponding period of the previous year.
From then to now, LIC has crossed many milestones and has set unprecedented performance
records in various aspects of life insurance business. The same motives which inspired our
forefathers to bring insurance into existence in this country inspire us at LIC to take this
message of protection to light the lamps of security in as many homes as possible and to help
the people in providing security to their families.
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3.2 MILESTONES
Some of the important milestones in the life insurance business in India are:
1818: Oriental Life Insurance Company, the first life insurance company on Indian soil
started functioning.
1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started
its business.
1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the
life insurance business.
1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.
1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective
of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers and provident societies are taken over by the central
government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with
a capital contribution of Rs. 5 crore from the Government of India.
The General insurance business in India, on the other hand, can trace its roots to the
Triton Insurance Company Ltd., the first general insurance company established in the year
1850 in Calcutta by the British.
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3.3 TYPES OF LIFE INSURANCE:
There are various types of policies and schemes prepared to suit the need of different
individual. You can avail the one that satisfy your budget and need. Life insurance can be
broadly divided into 3 types:
 Term life insurance

 Whole life insurance
 Universal life insurance
What is Term Life Insurance?
In this type of life insurance, financial coverage is provided for a certain period of time
according to the terms of the policy. When the term period gets over, the policy holder can
either end the policy or continue it by paying annual premiums.
Term life insurance does not provide permanent coverage but is good for those who want
temporary protection on a limited budget. If you are thinking of availing a short term life
insurance policy to pay off loans, term life insurance policy is the right option for you. It can
be renewed according to the policy holders wish and need.
What is Whole Life Insurance?
In this type of life insurance, the insured is provided with permanent financial protection. It is
a long term insurance plan where the policy holder needs to pay premiums annually. There
are various types of whole life insurance that individuals can avail in accordance to their
needs such as Non-participating, Participating, Indeterminate premium, Economic, Limited
Pay, Single Premium and Interest sensitive. But all life insurance companies may not offer all
the types of whole insurance policies stated above.
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What is Universal Life Insurance?
This is a permanent life insurance plan which has flexible terms. It allows some of the
benefits such as death benefits, saving benefits to be reviewed and changed according to the
policy holderï¿½s need. In this policy, the insured enjoys not only benefits of term life
insurance but also cash value (premiums that are above the cost insurance are credited as cash
value). You can choose from the 3 types of universal life insurances, i.e. Single premium,
fixed premium and flexible premium, in accordance to your requirement.
Single premium universal life insurance: In single premium universal life insurance, the
policy holder pays a big premium amount at the beginning of the policy. The policy remains
active as long as the cost of insurance (COI) is covered by the initially paid amount.
Fixed premium universal life insurance: In fixed premium universal life insurance, the
policy holder makes monthly or yearly payments of fixed amount for a certain period of time.
Flexible premium universal life insurance: In this option of universal life insurance, the
policy holder can pay monthly premiums of his choice as long as the minimum payment
amount is covered.
Life insurance is therefore an essential step towards safeguarding the future of your family.
People should understand how these life insurance policies work and avail the one that seems
suitable to their needs. Take the help of a good insurance agent who will help you with details
of the policies available.
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3.4 OBJECTIVES OF LIC
 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’ savings by making insurance-linked savings

adequately attractive.
 Bear in mind, in the investment of funds, the primary obligation to its policyholders,
whose money it holds in trust, without losing sight of the interest of the community as
a whole; the funds to be deployed to the best advantage of the investors as well as the
community as a whole, keeping in view national priorities and obligations of
attractive return.
 Conduct business with utmost economy and with the full realization that moneys
belong to the policyholders.
 Act as trustees of the insured public in their individual and collective capacities.
 Meet the various life insurance needs of the community that would arise in the
changing social and economic environment.
 Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy.
 Promote amongst all agent and employees of the corporation a sense of participation,
pride and job towards achievement of corporate objective.
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CHAPTER 4
ROLE OF LIC
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4.1 ROLE OF LIC
The insurance industry recorded a booming growth of 35% in premium income

during2004-05 with the 13 private sector players walking away with. An impressive
129%while the Life Insurance Corporation of India recorded a 21% growth. Thus the market
share of state behemoths dropped to 78% in 2004 05 from 87% a year ago. According to
ASSOCHAM Eco Pulse (AEP) Study, the industry premium increased to Rs253.42bn in
2004-05 from Rs187.1bn in 2003-04. The LIC total premium for the year 2004-05 amounted
to Rs197.85bn as against the Rs162.84bn during previousyear. The figures for the first two
months of the fiscal 2005-06 also speak of the growing share of the private insurers.
The share of LIC for this period has further come down to 75%, while the private
players have grabbed over 24% share. “With the huge potential the market has, the
Government should, more seriously look into increasing the FDI cap in the sector" said
Mahendra K. Sanghi, ASSOCHAM President. During April-June 2005, the largest private
company ICICI Prudential has increased its share from 6.25% in 2004-05 to 7.68% in current
fiscal. The opening up of the sector has given some of the most innovative products like the
customized insurance policies and now the unit linked policies that have gained much of
customer attention. The sector has huge potential and certain other new and innovative areas
can also be looked into for enhancing market share and premium income, said Sanghi.
HDFC is next in the row with 2.91% market share which has increased from
1.92%last fiscal followed by TATA AIG which now shares 2% of the market from 1.18%last
fiscal. Birla Sun life's share has dropped from 2.45% during FY'05 to 1.76% in first two
months of FY'06. SBI life comes next with 1. 72% share and has in fact dropped a
few percent points from last year. Max New York life and Aviva Life Insurance have
captured more than 1% share each from less than 1% share during FY'05.
Others like ING, AMP Sanmar, Met Life and Sahara India have less than 1 % share.
The detail of the market share of life insurance companies is attached. The market share of
29
the private players has doubled every year from 5.6% in 2002-03 to, 12% in2003-04 and
close to 22% in 2004-05.The state run insurance company has the biggest advantage of its
huge network which the company can use to penetrate into rural market that is still lying
untapped. Another option with the life insurance companies to capture more and more market
share could be product innovation and constantly developing an insurance product in order to
meet the ever-changing requirements of the customer. Quality customer service and
education can be another area where a company can differentiate itself 48 from other
companies.
30
4.2 CURRENT STANDING OF LIFE INSURANCE

COMPANIES IN URBAN SECTOR.
Life insurance is possibly the most- retail of all financial services, and is required
by people of all segments and in all locations. At a broad level, ICICI Prudential aims to
secure the families of the middle and upper class working people in urban India. To this end,
they have pursued a pan-India distribution strategy and backed it up with arrange of products
that meets the needs of a wide range of people, be they from rural or urban areas. Today, they
have branches in 74 locations and rural presence in more than 15 states. Certainly, the
majority of the business still comes from urban areas such as metros and mini-metros.
However, they have seen rural business grow significantly and expect it to continue making
greater contribution in the years to come.
31
4.3 NETWORK OF LIC
All Life Insurance Corporation branches in the country would be interconnected

under Metro Area Network (MAN) inaugurated here on Thursday.
Speaking at the function, K Vaidyalingam, LIC southern zonal manager, said about 1500
branches would be getting covered under MAN in which the premium amount of the policy
holder could be remitted in any branch. Besides, the policy holder gets his status report,
policy position, revival and quotation from the network. In every one hour the system got
upgraded, he said.
In southern region there are about 10 lakh new policy holders with a business of Rs 6500
crore. About settlement of claims, 92 per cent of policies were settled on or before maturity,
he said, adding, LIC was in a better position and 100 per cent connectivity was taking place.
Kottayam stood third in premium collection during the period between April to August 2002,
the first being Kozhikode and Thiruvananthapuram in second position in southern region.
The premium amount collected in 2001 was Rs.74,000 crore through 2.32 crore new policies
by 8.2 lakh agents. LIC has introduced a new group insurance scheme for Corporation Bank
deposit holders.
32
4.4 CURRENT STATUS
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 huge
surpluses, and contributed around 7 % of India's GDP in 2006.
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 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)
33
4.5 LIC THE BEST-KNOWN INDIAN BRAND:

CHIDAMBARAM
FROM STRENGTH TO STRENGTH: Union Finance Minister P. Chidambaram

launching LIC’s web portal in Chennai on Tuesday. Others from left are D.K. Mehotra,
Managing Director, LIC, and A.K. Shukla, Chairman. — Photo: Shaju John
34
CHENNAI: Describing Life Insurance Corporation of India as the best-known Indian brand,
Union Finance Minister P. Chidambaram, said on Tuesday that even after the opening up of
the insurance sector to private firms, the Corporation remained the market leader.
Launching LIC's e-portal here, he said the Corporation "supported us (government) when we
opened up insurance because it was confident of doing better in a competitive environment.
LIC continues to be the market leader with 88 per cent market share of new policies and 78
per cent of premium. It is clearly recognised as the market leader."
The e-portal (licindia.com) will provide information on policy status, bonus, premium
payment, loans and change of address. It will facilitate online payment of premium and has
details of the doctors and agents. It also has a branch locator and `maturity alert' facility. The
objective is to provide world-class service.
Noting that the State-owned Corporation utilised information technology in its relentless
effort to remain the leader, Mr. Chidambaram said: "My goal is to make LIC a world class
insurance company. It is nearly world class now." All 2,048 branches of LIC, which had been
adjudged the best user of IT by NASSCOM, were fully automated. Barring ten, all the
branches were networked.
Mr. Chidambaram said the e-portal was another example of LIC's constant innovation using
information technology. Some of the multi-interfaces it offered to customers included call
centres, IVRS, SMS and satellite branches.
35
4.6 WHY LIC IS TRUSTED BRAND OF INDIA?
1) As a Govt of India owned Company, LIC is 51 + years old in the field of life
insurance and money management. LIC's Life Fund size as on day is more than Rs 5
Lakh Thousand Crores.
2) Any LIC policyholder or the nominee will vouch for the best claims settlement from
LIC. Perhaps, this is the only institution where you as a policyholder are virtually
chased till such time your claim cheques is handed over to you!
3) LIC has won `NDTV Profit Leadership Award 2007 under Life Insurance Category',
`Outlook Money Award 2007 as the best Life Insurer', `CNBC Awaaz Consumer
Award 2007 as the best Life Insurance Company', `Golden Peacock Award for
excellence in Corporate Governance 2007', `Web 18 Genius of the Web Award 2007
and many more'.
4) LIC adjudged No.1 Trusted Service Brand for the 4th successive year by ET Brand
Equity Survey.
5) LIC has been adjudged Superbrand India for 2004-06 and Reader's Digest `Trusted
Brand' Asia 2007.
6) This is the only corporation that is catering to more than 190 million satisfied
policyholders in India and abroad.
7) This is one of the very few institutions that pays ex-gratia interest on pending maturity
claims!
8) More than 2050 LIC branches all over India are connected together to serve you. You
can pay your premium anywhere in the country.
9) During its long existence, LIC has kept on updating its portfolio by bringing in new
plans depending on public requirement. More than 50 of them are most popular and
can be customized to meet any of your requirements. LIC ULIPs have become
extremely popular due to the returns they offer. Money Plus- latest LIC Unit Linked
Plan is a case in point.
36
10) All LIC Plans come with Sovereign Guarantee i.e., Govt of India Guarantee regarding
repayment. Infact, as of now, only LIC plans enjoy this Govt Guarantee. Beneficiary
for this Sovereign Guarantee is you and you alone as the policyholder/ would-be
policyholder.
11) All LIC plans are characterized by low premium, high life insurance coverage and a
vast package of benefits offered by them. Add to this package, section 80C benefit
and section 10(10D) benefit on the maturity proceeds, you will find investment on
LIC plans one of the most coveted investment options available to you.
12) Premium paid under Key-Man Insurance plan is a recognized business expense under
section 37(I) of the Income-Tax Act. For companies making profits, this is a very
good incentive indeed.
13) Through Employer-Employee Insurance scheme, you can recognize the worth of your
most valuable employees whose absence you can ill afford to lose.
14) Entire contribution to LIC Group Gratuity Scheme is a recognized business expense
in the hands of the employer. In addition, through this scheme, the employer can
transfer his gratuity liability to the corporation and fund the same under cash
accumulation scheme. The most popular among all the companies.
15) LIC is declaring quite an impressive bonus (profits) on all its with-profits policies
every year. Extra attraction under LIC Bonus is (a) it is calculated every year on the
insured amount and not on the premium paid and (b) entire bonus received along with
insured amount either by you on maturity of your policy(ies) or by your nominee in
your absence during the currency of your policy(ies) is free from income-tax under
section 10(10D) of the Income-tax Act.
16) On most of the LIC plans, you can borrow to take care of your immediate monetary
requirements. None of the policy benefits get affected as a result of borrowal. Infact,
policy loans offer one of the most attractive investment opportunities.
17) You can pay your premium 3 years in advance at 5% discount. Chief attractions of
this advance payment of premium are (a) there is no possibility of your overlooking
your premium payment and getting your policy(ies) lapsed wherever you are in the
world and (b) you will be earning 5% tax-free interest on the unutilized portion of the
amount left with LIC after apportioning the regular instalment.
18) Most of the LIC plans come with Riders to take care of Total and Permanent
Disablement due to Accident and some of the most dread diseases that may result in
loss of income.
37
19) LIC pension plans that guarantee your life pension are extremely popular. You can
park your hard earned money safely with the corporation and enjoy pension as long as
you are alive.
Due to these reasons and lot more, LIC should be your obvious choice for all your life
insurance requirements.
38
CHAPTER 5
ROLE OF LIC OF INDIA IN INTERNATIONAL

MARKET
39
5.1 ROLE OF LIC IN INTERNATIONAL MARKET
Government has allowed 26% foreign equity participation in the insurance sector.
This has its limitations. While most foreign insurers planning to start their services in India
were not pleased by this condition, they reluctantly agreed that this was expected in an
opening economy and this will not change their outlook for India. After all no insurance
company can afford to ignore a market of 1bn people. But the fact remains those they:
• Cannot appoint majority directors on the company board;
• Cannot have say in the day to day workings of the company;
• Can Affect Only Special Resolutions.
This cap, however, will have a great impact on the Indian counterpart to raise 74%
of the funds in their joint venture. To add to this if Indian partners like State bank of India,
with over 9000 branches nationwide, will demand premium for their existing distribution
network, we will see the foreign insurance companies demand hefty premiums for bringing in
their global expertise and brand. Mr. Vaidya, Chairman of SBI, has recently stated that all it
is looking for is a good and reliable partner and thequestion of a hefty premium to be charged
to its foreign partner is not significant. The monolith has finally come to business senses
foreign companies are unhappy even about laws pertaining to repatriation of funds. The
Stipulated investment criteria is also something that all players in the sector, be it Indian or
foreign, are closing watching. The foreign players are essentially looking to tap their" global
expertise in the variety markets and use that know-how to work in the Indian scenario.
Designing of products, information systems, technical expertise, manpower planning etc. is
what one expects the foreign players to have a say in
Any venture of the joint kinds needs to be between equals. If this is not there then there is
every chance that a partner in the venture will feel increasingly uncomfortable and would be
looking to call the joint venture off.
40
5.2 INTERNATIONAL OPERATIONS/ASSOCIATES
LIC has always acknowledged the need to expand. Our expanding efforts have been
consistent and are evident though our associations given below for your reference.
INTERNATIONAL OPERATIONS
 LIC Fiji
 LIC Mauritius
 LIC United Kingdom
 LIC (International) B.S.C (C), Bahrain
 LIC (Nepal) Ltd
 LIC (Lanka) Ltd
 Saudi Indian Company for Co-op. Insurance, KSA.
 LIC Mauritius Offshore Ltd.
 LIC Co-ordinating Office in India
ASSOCIATES
 LIC Housing Finance Ltd.
 LICHLF Care Homes Ltd.
 LIC Mutual Fund AMC Ltd.
SUBSIDIARIES
LIC owns the following subsidiaries:
41
 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$ denominated 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
42
CHAPTER 6
RESEARCH ANALYSIS
43
RESEARCH PROBLEMS
After doing the literature review and understanding the motives of the INSURANCE
in India and benefits achieved there by, question arises whether LIC is beneficial for
Insurance sector.
. This report gaps lead to the following objectives of the study
RESEARCH OBJECTIVE:
Objective of a research work defines the driving force for a research action. It is the
focal point around which the whole action revolves. This dissertation was undertaken to fulfil
the following objectives:
 To study the insurance sector.
 To study Role of LIC on Insurance Industry
Sample Design:
a) Population: Customers of Lic Of India
c) Sampling Unit: LIC OF INDIA
d) Sample size: 20 customers
44
RESEARCH PLAN:
A systematic and planned move to accomplish the research objective is always

appreciable in conducting a resourceful research work. My dissertation was also
accomplished in a systematic way. The flowchart of my research plan was as follows:
Insight into the INSURANCE INDUSTRY
The motives and benefits of LIC in Insurance Industry.
Collection of data with regard to secondary research
Secondary research was conducted with regard to the short term &
long term impact study.
Analysis of the research findings was done, which led to certain

conclusions and recommendations.
45
1. Do you have life insurance policy?
OPTION RESPONSE PERCENTAGE (%)

YES 20 100
NO - -
25
20
15
YES
NO
10
0
YES NO
CONCLUSION
100% People Are Having Life Insurance Policy.
46
2. If yes, then in which company?

LIC 8 40
HDFC 4 20
ICICI 5 25
OTHERS 3 15
6
OTHERS
5
ICICI
4
HDFC
3 LIC
0
LIC HDFC ICICI OTHERS
CONCLUSION
Out of all the companies majority of the people prefer LIC of India.
47
3. Are you satisfied with services provided by your Insurance Company?

YES 17 85
NO 3 15
YES
NO
CONCLUSION
85% of the people are satisfied by insurance companies regarding services.
48
4. According to you, who have played a major role in the field of Life
Insurance Company?

LIC 11 55
HDFC 4 20
ICICI 5 25
OTHERS - -
12
10
8
LIC
HDFC
6
ICICI
OTHERS
4
0
CONCLUSION
55% Of The People Agree That LIC Of India Had Plays Major Role In Life Insurance
Policies
49
5. Which Insurance companies have been successful to make strong public

base by advertisement?

LIC 11 55
HDFC 2 10
ICICI 7 35
OTHERS - -
12
10
8
LIC
HDFC
6
ICICI
OTHERS
4
0
CONCLUSION
According to survey LIC of India have been successful to make strong public
base by advertisement.
50
6. Which Insurance Company has gained massive public support in the
current fiscal year?

LIC 14 70
HDFC 1 5
ICICI 5 25
OTHERS - -
14
12
LIC
10 HDFC
8 ICICI
OTHERS
6
OTHERS
4
ICICI
2 HDFC
LIC
0
CONCLUSION
LIC of India has massive public support in the current fiscal year which is 70%
51
7. Do you think Insurance Policy is in the direction of public welfare?

YES 19 95
NO 1 5
20
18
16
14
12
10 YES
8 NO
6
4 NO
2
0
YES
YES
NO
CONCLUSION
95% of people think that Insurance Policy is in the direction of public welfare.
52
8. Is retirement bond or pension policy launched by the number of private

player as well as public sector Company in the direction of secured old
age?

YES 10 50
NO 10 50
YES
NO
CONCLUSION
Half of the people agree that retirement bond or pension policy launched by the
number of private player as well as public sector Company in the direction of
secured old age.
53
9. Do you think that risk coverage factor included in Insurance policy

attracts general public towards the policy?

YES 16 80
NO 4 20
YES
NO
CONCLUSION
80% of people think that risk coverage factor included in Insurance policy
attracts general public towards the policy.
54
10.Do you think that the arrival of so many private companies in this
insurance sector envisage a lot of choice to policy holder?

YES 12 60
NO 8 40
YES
NO
NO
YES
0 2 4 6 8 10 12 14
CONCLUSION
According to survey 60% people think that the arrival of so many private
companies in this insurance sector envisage a lot of choice to policy holder.
55
11.Do you agree that customer-centricity and transparency are the

buzzwords for success in this evolving industry?

YES 17 85
NO 3 15
18
16
14
12
NO
10
YES
8
6
4
2
0
YES NO
CONCLUSION
85% OF PEOPLE agree that customer-centricity and transparency are the buzzwords
for success in this evolving industry.
56
12.Which sector is better to invest in Life Insurance Company?

PUBLIC SECTOR 15 75
PRIVATE SECTOR 5 25
16
14
12
10 NO
8 YES
0
YES NO
CONCLUSION
75% of people think that public Sector Is Better To Invest In Life Insurance
Company.
57
CHAPTER 7
FINDINGS, RECOMMENDATIONS &

CONCLUSION
58
7.1FINDINGS
1) Now days also insurance is most popular as more plain protection against death and people
are unaware about the other aspects of insurance.
2) According to current scenario life and mater insurance are the most popular ones followed
by fire insurance.
3) Majority of people consider the insurance premium paid by them as reasonable.
4) Only few counted people are unaware about the entry of private players into. The
insurance industry and a very high majority of people support their entry.
5) By the entry of private players. Consumers are expecting the premium to down which
would be the biggest blessing.
After finding’s we can see about LIC OF INDIA features and his the tendency to take
the expedient approach and focus on the far right of the LIC OF INDIA spectrum, peacetime
contingency operations and conduct training as usual, while briefing that the LIC OF INDIA
block has been checked, will lead us to a possibly fatal false sense of security. The
probability of becoming involved in a LIC OF INDIA operation is high. The potential to
attract international attention, even with limited forces, is also great. Units have demonstrated
that with a balanced training focus and proper preparation, many pitfalls outlined above can
be avoided
59
7.2 RECOMMENDATIONS
In the modernized well advanced hi-tech approach to the customer every possible
facilities and effort to build up the confidence of the rising policy holders towards. Insurance
companies, to complete one another nothing is left to recommend. But some
recommendations that are intensely felt and highly required for insures to sustain in the
market.
These are as follows:
a) More and more transparency should be ascertained between insurers and policy holders.
b) Particularly, in the emerging boom in the insurance company, every insurance company
should be customer cantered, and well versed in the handling of problem and grievances of
the policy holders
c) Each and Every product launched by the Insurance company should be in favour of
increasing need of policy holders. IRDA should be more and more responsible to the
insurance sector by determining some standard. It should be mandatory to every insurer to
make more and more responsible and responsive to the policy holders so that comprehensive
understanding may be developed among policy holders. It may be beneficial on both sides.
60
7.3 CONCLUSION
After overhauling the all situation that boosted a number of Pvt. Companies
associated with multinational in the Insurance Sector to give befitting competition to the
established behemoth LIC in public sector, we come at the conclusion that :
1) There is very tough competition among the private insurance companies on the level of
new trend of advertising to lull a major part of Customers.
2) LIC is not left behind in the present race of advertisement.
3) The entry of the Pvt. Players in the Insurance Sector has expanded the product segment to
meet the different level of the requirement of the customers. It has brought about greater
choice to the customers.
4) Private insurers have restricted reach to the customers
5) LIC has vast market and very firm grip on its traditional customers and monopoly of life
insurance products.
6) Bank assurance - that allows life insurers to leverage on the risk product through bank
network, was adopted by private players.
But LIC was also not left behind as picking up majority stake in the corporation Bank
and large equity stake in the Oriental Bank of Commerce. IRDA is also playing very
comprehensive role by regulating norms mandating to private players in this sector, that
increases the confidence level of the customers to the private players.
After Finding’s we can see about LIC features and his The tendency to take the
expedient approach and focus on the far right of the LIC spectrum, Peacetime Contingency
Operations and conduct training as usual, while briefing that the LIC block has been checked,
will lead us to a possibly fatal false sense of security. The probability of becoming involved
in a LIC operation is high. The potential to attract international attention, even with limited
forces, is also great. Units have demonstrated that with a balanced training focus and proper
preparation, many pitfalls outlined above can be avoided.
61
LIC is not conventional warfare. This is critical for the counterinsurgent to

understand. The insurgent’s violent and coercive strategy is applied so as to achieve political,
civil, military and psychological results. Hence, the counterinsurgent must counter all of
these strategic elements individually. In addition, the target of the insurgent’s violence and
coercion is the population. This is because the population is the centre of gravity in LIC.
Therefore the counterinsurgent must also focus on the population to be successful. In

terms of military principles in counterinsurgency, doctrinal precision, professionalism,
independence, initiative, force precision, restraint, combined arms, precision engagement,
joint force, effective population based intelligence, integrated communications, a civil affairs
approach and high levels of training are critical.
62
BIBLIOGRAPHY
Magazine
 Yogkshem – LIC OF INDIA Magazine

 Outlook Express
 Business today
 Finance & Banking
 Money Outlook
News Paper
 Business standard
 Times of India
 Economic times
 Hindustan times
WEBLIOGRAPHY
 www.bloomberg.com
 www.moneycontrol.com
 www.allbankingsolution.com
 www.scribd .com
 www.rbi.org
 www.licindia.in
63
QUESTIONNAIRE FORMAT
NAME OF CUSTOMER:
CONTACT NO.:
1) Do you have life insurance policy?

Yes No
2) If yes, then in which company?

3) Are you satisfied with services provided by your Insurance Company?

Yes No
4) According to you, who have played a major role in the field of Life Insurance Company?
5) Which Insurance companies have been successful to make strong public base by
advertisement?
6) Which Insurance Company has gained massive public support in the current fiscal year?
7) Do you think Insurance Policy is in the direction of public welfare?

Yes No
64
8) Is retirement bond or pension policy launched by the number of private player as

well as public sector Company in the direction of secured old age?
Yes No
9) Do you think that risk coverage factor included in Insurance policy attracts
general public towards the policy?
Yes No
10) Do you think that the arrival of so many private companies in this insurance sector
envisage a lot of choice to policy holder?
Yes No
11) Do you agree that customer-centricity and transparency are the buzzwords for
success in this evolving industry?
Yes No
12) Which sector is better to invest in Life Insurance Company?

Public Sector Private Sector
13) Would you like to give any suggestion?
65

Role of LIC in Insurance Sector

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Role of LIC in Insurance Sector

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ROLE OF LIC IN INSURANCE INDUSTRY

1.1 INTRODUCTION TO INSURANCE

“Insurance is a contract between 2 parties whereby one party called insurer

1.2 DEFINITIONS OF INSURANCE

In the words of justice Tindall, “Insurance is a contract in which a sum of money is

 In the words of Sir William, ―The collective bearing of risks is insurance.

 In the words of Thomas, ―Insurance is a provision, which a prudent man makes

 In the words of Ghosh & Agarwal, ―Insurance is a co-operative form of distributing

1.3 HISTORY OF INSURANCE IN INDIA

In 1914, the Government of India started publishing returns of Insurance Companies

1.4 CHARACTERISTICS OF INSURANCE:

 Payment of happening of specified event

 Large number of insured persons

 Insurance is not a gambling

 Insurance is not charity

 Protection against risks

 Based upon certain principle

 Utmost Good Faith

1.5 FUNCTION OF INSURANCE:

The primary functions of insurance include the following.

ii) Collective bearing of risk

iii) Assessment of risk

iv) Provide certainty

ii) Small capital to cover larger risks

iii) Contributes towards the development of larger industries

 Means of savings and investment: insurance serves as savings and investment,

ROLE OF INSURANCE SECTOR IN INDIA

ROLE OF INSURANCE SECTOR IN INDIA

i) Protection from risks arising out of natural calamities

ii) Protection from the risks caused by human beings

iii) Protection against statutory liabilities

iv) Financial security

v) Protection from loss of profits

vi) Protection of debts

viii) Provides stability in commercial and industrial activities

PROMOTIONAL ROLE OF INSURANCE

i) Extension of credit facilities

ii) Facilities industrialization and commercialization

iii) Increases business and industrial efficiency

iv) Investment in shares and debentures

v) Contribution towards the development of basic industries

vi) Contribution towards fulfillment of social and statutory obligations

vii) Contribution towards development of international trade

viii) Extension of export credit

ix) Increase competing ability among small and medium-scale units

INTRODUCTION OF LIFE INSURANCE

3.1 INTRODUCTION TO LIC

3.3 TYPES OF LIFE INSURANCE:

 Term life insurance

What is Term Life Insurance?

What is Whole Life Insurance?

What is Universal Life Insurance?

3.4 OBJECTIVES OF LIC

 Maximize mobilization of people’ savings by making insurance-linked savings

4.1 ROLE OF LIC

The insurance industry recorded a booming growth of 35% in premium income

4.2 CURRENT STANDING OF LIFE INSURANCE

4.3 NETWORK OF LIC

All Life Insurance Corporation branches in the country would be interconnected

4.4 CURRENT STATUS

4.5 LIC THE BEST-KNOWN INDIAN BRAND:

FROM STRENGTH TO STRENGTH: Union Finance Minister P. Chidambaram

4.6 WHY LIC IS TRUSTED BRAND OF INDIA?

ROLE OF LIC OF INDIA IN INTERNATIONAL