INDEX

SR.NO

TOPIC PAGE.NO

1 ACKNOWLEGMENT. 22 EXECUTIVE SUMMARY. 33 RESEARCH METHODOLOGY. 44 INTRODUCTION. 55 HISTORY OF INSURANCE IN INDIA. 66 WHAT IS LIFE INSURANCE? 107 COMPANY PROFILE- LIC OF INDIA 148 LIC SUBSIDIARIES 209 OBJECTIVES OF LIC 2210 MISSION/VISSION 2311 BOARD OF DIRECTORS 2412 AWARDS AND ACHIEVEMENTS 2513 POLICIES(SCHEMES) 2814 PROCUTS BY LIC

INSURANCE PLANS PENSION PLANS UNIT PLANS SPEACIAL PLANS GROUP SCHEME HEALTH PLAN

32

15 TAX BENEFITS. 5316 56YRS OF NATION BUILDING “LIC PRIDE OF

INIDA”55

17 ARTICLES 5818 CONCLUSION 6119 BIBLIOGRAPHY 62

1

ACKNOWLEGDEMENT

If words are considered to be signs of gratitude then let these words convey the

very same my sincere gratitude to LIFE INSURANCE CORPORATION OF

INDIA for providing me with necessary directions on doing this project to the

best of my abilities.

I am highly indebted to Mr. Ramkumar executive director of the bank who

helped me connect with Mr. Sohandeep Singh, who has provided me with the

necessary information and also for the support extended out to me in the

completion of this report and his valuable suggestion and comments on bringing

out this report in the best way possible.

I also thank Prof. MEENA DESAI who has sincerely supported me with the

valuable insights into the completion of this project.

I am grateful to all my friends who have helped me in the successful completion

of this project.

2

EXECUTIVE SUMMARYInsurance is the most familiar word or phrase used in today’s life. Insurance

companies are those institutes that provide various types of facility and services

in term of there plans and policies to the consumers. The following project has

been made on one of the largest company in insurance sector in India which is

owned by government which is “LIFE INSURANCE CORPORATION OF

INDIA”. The following project makes an analysis of the products of LIC. The

brief summary of each chapter is discussed as follows:-

3

RESEARCH OBJECTIVE

This project gives the brief background of the sector. To more about the company . Brief about the products . LIC’s 56years of serving the insurance sector.

4

INTRODUCTION

What is an insurance?

Insurance is a term in law and economics. It is something people buy to protect

themselves from losing money. People who buy insurance pay what is called a

premium (often paid every month) and promise to be careful (which is called a

"duty of care"). In exchange for this, if something bad happens to the person or

thing that is insured, the company that sold the insurance will pay money back.

(However, there are some times when the company will not have to pay money

back, such as if the person was not careful.)

There are different kinds of insurance. One kind is called "fire insurance". It

pays people if their property catches on fire and burns down. Another kind is

called "life insurance", which pays somebody else (called the "beneficiary")

money if the person who has life insurance dies or becomes seriously ill.

Actuaries are the people who figure out how much the premium should be. They

balance how much the insurer might have to pay out against the chances of

having to pay out. If an actuary thinks that there is a big chance that the

company will have to pay out, he will make the premium higher.

5

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

6

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.

 

      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.

 

     The history of general insurance dates back to the Industrial Revolution in

the west and the consequent growth of sea-faring trade and commerce in the 17th

century. It came to India as a legacy of British occupation. General Insurance in

India has its roots in the establishment of Triton Insurance Company Ltd., in the

year 1850 in Calcutta by the British. In 1907, the Indian Mercantile Insurance

Ltd, was set up. This was the first company to transact all classes of general

insurance business.

1957 saw the formation of the General Insurance Council, a wing of the

Insurance Associaton of India. The General Insurance Council framed a code of

conduct for ensuring fair conduct and sound business practices.

 

    In 1968, the Insurance Act was amended to regulate investments and set

minimum solvency margins. The Tariff Advisory Committee was also set up

then.

 

7

    In 1972 with the passing of the General Insurance Business (Nationalisation)

Act, general insurance business was nationalized with effect from 1st January,

1973. 107 insurers were amalgamated and grouped into four companies, namely

National Insurance Company Ltd., the New India Assurance Company Ltd., the

Oriental Insurance Company Ltd and the United India Insurance Company Ltd.

The General Insurance Corporation of India was incorporated as a company in

1971 and it commence business on January 1sst 1973.

 

     This millennium has seen insurance come a full circle in a journey extending

to nearly 200 years. The process of re-opening of the sector had begun in the

early 1990s and the last decade and more has seen it been opened up

substantially. In 1993, the Government set up a committee under the

chairmanship of RN Malhotra, former Governor of RBI, to propose

recommendations for reforms in the insurance sector.The objective was to

complement the reforms initiated in the financial sector. The committee

submitted its report in 1994 wherein , among other things, it recommended that

the private sector be permitted to enter the insurance industry. They stated that

foreign companies be allowed to enter by floating Indian companies, preferably

a joint venture with Indian partners.

 

     Following the recommendations of the Malhotra Committee report, in 1999,

the Insurance Regulatory and Development Authority (IRDA) was constituted

as an autonomous body to regulate and develop the insurance industry. The

IRDA was incorporated as a statutory body in April, 2000. The key objectives of

the IRDA include promotion of competition so as to enhance customer

satisfaction through increased consumer choice and lower premiums, while

ensuring the financial security of the insurance market.

 

     The IRDA opened up the market in August 2000 with the invitation for

application for registrations. Foreign companies were allowed ownership of up

8

to 26%. The Authority has the power to frame regulations under Section 114A

of the Insurance Act, 1938 and has from 2000 onwards framed various

regulations ranging from registration of companies for carrying on insurance

business to protection of policyholders’ interests.

 

    In December, 2000, the subsidiaries of the General Insurance Corporation of

India were restructured as independent companies and at the same time GIC was

converted into a national re-insurer. Parliament passed a bill de-linking the four

subsidiaries from GIC in July, 2002.

 

     Today there are 27 general insurance companies including the ECGC and

Agriculture Insurance Corporation of India and 24 life insurance companies

operating in the country.

 

     The insurance sector is a colossal one and is growing at a speedy rate of 15-

20%. Together with banking services, insurance services add about 7% to the

country’s GDP. A well-developed and evolved insurance sector is a boon for

economic development as it provides long- term funds for infrastructure

development at the same time strengthening the risk taking ability of the

country.

9

WHAT IS LIFE INSURANCE?

Life insurance is a contract that pledges payment of an amount to the person

assured (or his nominee) on the happening of the event insured against.

The contract is valid for payment of the insured amount during:

The date of maturity, or

Specified dates at periodic intervals, or

Unfortunate death, if it occurs earlier.

Among other things, the contract also provides for the payment of premium

periodically to the Corporation by the policyholder. Life insurance is universally

acknowledged to be an institution, which eliminates 'risk', substituting certainty

for uncertainty and comes to the timely aid of the family in the unfortunate

event of death of the breadwinner.

By and large, life insurance is civilization’s partial solution to the problems

caused by death. Life insurance, in short, is concerned with two hazards that

stand across the life-path of every person:

1. That of dying prematurely leaves a dependent family to fend for itself.

2. That of living till old age without visible means of support.

10

Life Insurance Vs. Other Savings

Contract of Insurance:

A contract of insurance is a contract of utmost good faith technically known as

uberrima fides. The doctrine of disclosing all material facts is embodied in this

important principle, which applies to all forms of insurance.

At the time of taking a policy, policyholder should ensure that all questions in

the proposal form are correctly answered. Any misrepresentation, non-

disclosure or fraud in any document leading to the acceptance of the risk would

render the insurance contract null and void.

Protection:

Savings through life insurance guarantee full protection against risk of death of

the saver. Also, in case of demise, life insurance assures payment of the entire

amount assured (with bonuses wherever applicable) whereas in other savings

schemes, only the amount saved (with interest) is payable.

Aid to Thrift:

Life insurance encourages 'thrift'. It allows long-term savings since payments

can be made effortlessly because of the 'easy installment' facility built into the

scheme. (Premium payment for insurance is either monthly, quarterly, half

yearly or yearly). For example: The Salary Saving Scheme popularly known as

SSS provides a convenient method of paying premium each month by deduction

from one's salary. In this case the employer directly pays the deducted premium

to LIC. The Salary Saving Scheme is ideal for any institution or establishment

subject to specified terms and conditions.

Liquidity:

In case of insurance, it is easy to acquire loans on the sole security of any policy

11

that has acquired loan value. Besides, a life insurance policy is also generally

accepted as security, even for a commercial loan.

Tax Relief:

Life Insurance is the best way to enjoy tax deductions on income tax and wealth

tax. This is available for amounts paid by way of premium for life insurance

subject to income tax rates in force.

Assesses can also avail of provisions in the law for tax relief. In such cases the

assured in effect pays a lower premium for insurance than otherwise.

Money When You Need It:

A policy that has a suitable insurance plan or a combination of different plans

can be effectively used to meet certain monetary needs that may arise from

time-to-time. Children's education, start-in-life or marriage provision or even

periodical needs for cash over a stretch of time can be less stressful with the

help of these policies.

Alternatively, policy money can be made available at the time of one's

retirement from service and used for any specific purpose, such as, purchase of

a house or for other investments. Also, loans are granted to policyholders for

house building or for purchase of flats (subject to certain conditions).

Who Can Buy A Policy?

Any person who has attained majority and is eligible to enter into a valid

contract can insure himself/herself and those in whom he/she has insurable

interest.

Policies can also be taken, subject to certain conditions, on the life of one's

spouse or children. While underwriting proposals, certain factors such as the

policyholder’s state of health, the proponent's income and other relevant factors

12

are considered by the Corporation.

Insurance For Women

Prior to nationalization (1956), many private insurance companies would offer

insurance to female lives with some extra premium or on restrictive conditions.

However, after nationalization of life insurance, the terms under which life

insurance is granted to female lives have been reviewed from time-to-time.

At present, women who work and earn an income are treated at par with men. In

other cases, a restrictive clause is imposed, only if the age of the female is up to

30 years and if she does not have an income attracting Income Tax.

Medical And Non-Medical Schemes

Life insurance is normally offered after a medical examination of the life to be

assured. However, to facilitate greater spread of insurance and also to avoid

inconvenience, LIC has been extending insurance cover without any medical

examination, subject to certain conditions.

With Profit And Without Profit Plans

An insurance policy can be 'with' or 'without' profit. In the former, bonuses

disclosed, if any, after periodical valuations are allotted to the policy and are

payable along with the contracted amount.

In 'without' profit plan the contracted amount is paid without any addition. The

premium rate charged for a 'with' profit policy is therefore higher than for a

'without' profit policy.

Keyman Insurance

Keyman insurance is taken by a business firm on the life of key employee(s) to

protect the firm against financial losses, which may occur due to the premature

demise of the Keyman.

13

COMPANY PROFILELIC – LIFE INSURACE CORPORATION OF INDIA

The story of insurance is probably as old as the story of mankind. The same

instinct that prompts modern businessmen today to secure themselves against

loss and disaster existed in primitive men also. They too sought to avert the evil

consequences of fire and flood and loss of life and were willing to make some

sort of sacrifice in order to achieve security. Though the concept of insurance is

largely a development of the recent past, particularly after the industrial era –

past few centuries – yet its beginnings date back almost 6000 years.

Life Insurance in its modern form came to India from England in the year 1818.

Oriental Life Insurance Company started 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 charged 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 into existence to carry the message

of insurance and social security through insurance to various sectors of society.

14

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 Co-operative Assurance at Lahore were established in 1906.

In 1907, 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 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

15

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-line premium collection facility in selected cities. LIC’s ECS and ATM

premium payment facility is an addition to customer convenience. Apart from

16

on-line Kiosks and IVRS, Info Centers have been commissioned at Mumbai,

Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and

many other cities. With a vision of providing easy access to its policyholders,

LIC has launched its SATELLITE SAMPARK offices. The satellite offices are

smaller, leaner and closer to the customer. The digitalized records of the satellite

offices will facilitate anywhere servicing and many other conveniences in the

future.

LIC 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.

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.

17

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.

Some of the important milestones in the general insurance business in India are:

1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact

all classes of general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of India,

frames a code of conduct for ensuring fair conduct and sound business practices.

1968: The Insurance Act amended to regulate investments and set minimum

solvency margins and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalization) Act, 1972 nationalized

the general insurance business in India with effect from 1st January 1973.

18

107 insurers amalgamated and grouped into four companies’ viz. the National

Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental

Insurance Company Ltd. and the United India Insurance Company Ltd. GIC

incorporated as a company.

19

LIC SUBSIDIARIES

Unlike provisions for private players in the insurance sector, the LIC Act

provides for setting up subsidiaries through policy holders fund. It is due to the

LIC act that LIC of India has a number of subsidiaries which help it in

leveraging its potential to the maximum, providing an enhanced set of

diversified services to its customers. These subsidiaries include LIC

International, LIC Nepal, LIC Lanka, LIC Housing Finance and LIC Mutual

Fund.

LIC INERNATIONAL

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.

LIC HOUSING FINANCE LTD.

The Company is recognized by National Housing Bank and listed on the

National Stock Exchange (NSE) & Bombay Stock Exchange Limited (BSE).

LIC Housing Finance Ltd. is one of the largest Housing Finance Company in

20

India. Incorporated on 19th June 1989 under the Companies Act, 1956, the

company was promoted by LIC of India and went public in the year 1994. Its

main objective is to provide long term finance for construction or purchase of

houses or apartments. It has a Dubai office.

LIC MUTUL FUND LTD.

Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989

and contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund

was constituted as a Trust in accordance with the provisions of the Indian Trust

Act, 1882.

There are some other subsidiaries of LIC which are

1. LIC Mutual Fund Asset Management Company Ltd.

2. LIC HFL Care Homes Ltd.

3. LICHFL Asset Management Company Private Limited.

4. LICHFL Trustee Company Private Limited.

5. LICHFL Financial Services Limited, etc.

21

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's savings by making insurance-linked

savings adequately attractive.

Bear in mind, in the investment of funds, the primary obligation to its

policyholders, whose money it holds in trust, without losing sight of the interest

of the community as a whole; the funds to be deployed to the best advantage of

the investors as well as the community as a whole, keeping in view national

priorities and obligations of attractive return.

Conduct business with utmost economy and with the full realization that

the moneys belong to the policyholders.

Act as trustees of the insured public in their individual and collective

capacities.

Meet the various life insurance needs of the community that would arise

in the changing social and economic environment.

Involve all people working in the Corporation to the best of their

capability in furthering the interests of the insured public by providing efficient

service with courtesy.

Promote amongst all agents and employees of the Corporation a sense of

participation, pride and job satisfaction through discharge of their duties with

dedication towards achievement of Corporate Objective.

22

MISSION/VISSION

MISSION

"Explore and enhance the quality of life of people through financial security by

providing products and services of aspired attributes with competitive returns,

and by rendering resources for economic development."

VISSION

"A trans-nationally competitive financial conglomerate of significance to

societies and Pride of India."

23

BOARD OF DIRECTORS

Members on the Board of the Corporation

1. Chairman: Shri. T.S. Vijayan

2. Managing Director: Shri. D.K. Mehrotra

3. Managing Director: Shri. Thomas Mathew T.

4. Managing Director: Shri. A.K. Dasgupta

5. Finance Secretary: Shri. Ashok Chawla (Ministry of Finance, Govt. of

India)

6. Additional Secretary: Shri. G.C. Chaturvedi (Department of Financial

Services, Ministry of Finance, Govt. of India.)

7. Chairman cum Managing Director: Shri. Yogesh Lohiya (GIC of India)

8. Chairman & Managing Director: Shri. T.C. Venkat Subramanian (Export

Import Bank of India)

9. Dr. Sooranad Rajashekhran

10. Shri. Monis R. Kidwai

24

AWARDS AND ACHIVEMENTS

Brand Equity Most Trusted Brand 2009

Top in Insurance Category

Golden Peacock Innovative Product /

Service Award – 2009

Loyalty Awards - 2009Readers Digest Trusted Brand Award

2009 in the Platinum category

CNBC Awaaz Consumer Awards 2008 NDTV Profit Business Leadership

25

Award 2008

INDY's Silver Award for Best Corporate

Film

INDY's Silver Award for Best in House

Magazine

IT USER 2008  NASCOM Selected Business Super brand India

2008

ASIA BRAND CONGRESS BRAND

LEADERSHIP AWARD 2008

Pitch Award -" Rank 1 " India's Top 50

service Brands

26

Loyalty Awards 2008 - Insurance SectorSKOCH Challengers Award 2008 for

Jeevan Madhur

Readers Digest Trusted Brand Award

2008 in the Platinum category.

Golden Peacock Award for Excellence

in Corporate Governance

Web 18 Genius of the web awards 2007

27

POLICIES (SCHEMES)

Life Insurance Corporation of India provides number of products to its

costumers. LIC differentiated their policies into five different types which are:

1. Insurance Plans

2. Pension Plans

3. Unit Plans

4. Special Plans

5. Group Scheme

INSURANCE PLANS

As individuals it is inherent to differ. Each individual's insurance needs and

requirements are different from that of the others. LIC's Insurance Plans are

policies that talk to you individually and give you the most suitable options that

can fit your requirement.

ENDOWMENT PLAN

Single Premium Endowment Plan.

New Endowment Plan.

New Jeevan Anand.

MONEY BACK PLANS

LIC’S New Money BACK PLAN – 20 yrs

LIC’S New Money BACK PLAN- 25yrs

LIC’s New Bima Bachat.

TERM ASSURANCE PLANS

LIC’s Anmol Jeevan II

LIC’s Amulya Jeevan II

PENSION PLANS

Pension Plans are Individual Plans that gaze into your future and foresee

28

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.

Jeevan Akshay VI

LIC’s new Jeevan Nidhi.

UNIT PLANS

Unit plans are investment plans for those who realize the worth of hard-earned

money. These plans help you see your savings yield rich benefits and help you

save tax even if you don't have consistent income.

SPECIAL PLANS

LIC’s Special Plans are not plans but opportunities that knock on your door

once in a lifetime. These plans are a perfect blend of insurance, investment and

a lifetime of happiness!

GROUP SCHEME

Group Insurance Scheme is life insurance protection to groups of people. This

scheme is ideal for employers, associations, societies etc. and allows you to

enjoy group benefits at really low costs.

GROUP SCHEME

Group Term Insurance Schemes.

Group Insurance Scheme in lieu of EDLI.

29

Group Gratuity Scheme.

Group Savings Linked Insurance Scheme.

Group Leave Encashment Scheme.

Group Mortgage Redemption Assurance Scheme.

Group Critical Illness Rider.

WITHDRAWN PLANS

Jeevan Nischay Market Plus IWealth Plus Profit PlusJeevan AasthaMoney Plus-IJeevan Varsha Child Fortune PlusFortune Plus Jeevan Saathi PlusHealth Plus Samridhi PlusPension Plus Jeevan NidhiNew Jeevan Dhara-I New Jeevan Suraksha-IJeevan Vriddhi Jeevan Vaibhav (Single Premium Endowment Assurance Plan)

Jeevan SugamTwo Year Temporary Assurance Policy

Mortgage Redemption Flexi PlusCDA Endowment Vesting At 21CDA Endowment Vesting At 18The Whole Life Policy- Limited Payment Health Protection PlusJeevan Arogya Bima Account 1The Whole Life Policy Bima Account 2Jeevan Pramukh Jeevan Mitra(Double Cover Endowment Plan)Anmol Jeevan-I New Jeevan Nidhi

Jeevan AmritJeevan Surabhi-25 Years

Jeevan Bharthi-IJeevan Surabhi-20 Years

The Money Back Policy-25 Years Jeevan Mitra(Triple Cover Endowment Plan)

Jeevan Surabhi-15 YearsThe Whole Life Policy- Single Premium

Jeevan Anurag Komal Jeevan

Child Career Plan Child Future PlanJeevan Kishore Jeevan Chhaya

Marriage EndowmentEducational Annuity Plan

Jeevan Saathi Jeevan Shree-I

30

Jeevan Ankur The Endowment Assurance Policy - Limited PaymentNew Janaraksha Plan The Money Back Policy - 20 YearsJeevan Tarang The Endowment Assurance PolicyJeevan Anand Bima BachatJeevan Aadhar Jeevan VishwasEndowment Plus New Bima GoldBima Nivesh 2005 Jeevan SaralJeevan Deep Jeevan MangalJeevan Madhur Jeevan MangalAmulya Jeevan-I

HEALTH PLANS

Jeevan Arogya .

MICRO INSURANCE PLAN

LIC’S New Jeevan Mangal.

PRODUCTS BY LIC

INSURANCE PLANS

1. New Jeevan Anand

Features

31

Product summary:

LIC's New Jeevan Anand Plan is a participating non-linked plan which offers an

attractive combination of protection and savings. This combination provides

financial protection against death throughout the lifetime of the policyholder

with the provision of payment of lumpsum at the end of the selected policy term

in case of his/her survival. This plan also takes care of liquidity needs through

its loan facility.

1. Benefits: Death benefit : Provided all due premiums have been paid, the

following death benefit shall be paid: · On Death during the policy term: Death

benefit, defined as sum of “Sum Assured on Death” and vested Simple

Reversionary Bonuses and Final Additional bonus, if any, shall be payable.

Where, “Sum Assured on Death” is defined as higher of 125% of Basic Sum

Assured or 10 times of annualised premium. This death benefit shall not be less

than 105% of all the premiums paid as on date of death. The premiums

mentioned above exclude service tax, extra premium and rider premiums, if any.

On death of policyholder at any time after policy term: Basic Sum Assured

Benefits payable at the end of Policy Term: Basic Sum Assured, along with

vested Simple Reversionary Bonuses and Final Additional Bonus, if any, shall

be payable in lump sum on survival to the end of the policy term provided all

due premiums have been paid.

Participation in Profits : The policy shall participate in profits of the

Corporation and shall be entitled to receive Simple Reversionary Bonuses

declared as per the experience of the Corporation during policy term provided

the policy is in full force. Final (Additional) Bonus may also be declared under

the plan in the year when the policy results into death claim during the policy

term or due for the survival benefit payment provided the policy is in full force

and has run for certain minimum term.

2. Optional Benefit:

32

LIC’s Accidental Death and Disability Benefit Rider: LIC’s Accidental

Death and Disability Benefit Rider is available as an optional rider by payment

of additional premium during the policy term. In case of accidental death during

the policy term, Accident Benefit Sum Assured will be payable as lumpsum

along with the death benefit under the basic plan. In case of accidental

permanent disability arising due to accident (within 180 days from the date of

accident), an amount equal to the Accident Benefit Sum Assured will be paid in

equal monthly installments spread over 10 years and future premiums for

Accident Benefit Sum Assured as well as premiums for the portion of Basic

Sum Assured which is equal to Accident Benefit Sum Assured under the policy,

shall be waived.

2. 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.

33

Benefits

Death Benefit:

The Sum Assured along with guaranteed additions and vested bonuses, if any, is payable

in a lump sum on death of the life assured during the policy term.

Maturity Benefit:

The Sum Assured along with guaranteed additions and reversionary bonuses, if any  is

payable in a lump sum on survival to the end of the policy term.

Supplementary/Extra Benefits:

These are the optional benefits that can be added to your basic plan for extra

protection/option.  An additional premium is required to be paid for these benefits.

Surrender Value:

Buying a life insurance contract is a long-term commitment. However, surrender value

is available on the plan on earlier termination of the contract.

Guaranteed Surrender Value:

The policy may be surrendered after it has been in force for 3 years or more. The

guaranteed surrender value is 30% of the basic premiums paid excluding the first year’s

premium. In case of a single premium policy the guaranteed surrender value is 90% of

the single premium paid excluding any extra premium.

Corporation’s policy on surrenders:

In practice, the Corporation will pay a Special Surrender Value – which is either equal to

or more than the Guaranteed Surrender Value. The benefit payable on surrender

reflects the discounted value of the reduced claim amount that would be payable on

death or at maturity. This value will depend on the duration for which premiums have

been paid and the policy duration at the date of surrender. In some circumstances, in

case of early termination of the policy, the surrender value payable may be less than the

total premium paid.

LIC’S NEW BHIMA BACHAT:

LIC’s New Bima Bachat is a participating non-linked savings cum protection

plan, where premium is paid in lump sum at the outset of the policy. It is a

34

money-back plan which provides financial protection against death during the

policy term with the provision of payment of survival benefits at specified

durations during the policy term. In addition, on maturity, the single premium

shall be returned along with Loyalty Addition, if any. This plan also takes care

of liquidity needs through its loan facility.

a) BENEFITS: Death benefit: On death during the first five policy years: Sum

Assured.On death after completion of five policy years: Sum Assured along with

Loyalty Addition, if any.

b)Survival Benefits: Payable as given below in case of Life Assured surviving

to the end of the specified durations:For policy term 9 years: 15% of the Sum

Assured at the end of each of 3rd & 6th policy yearFor policy term 12 years:

15% of the Sum Assured at the end of each of 3rd, 6th & 9th policy year For

policy term 15 years: 15% of the Sum Assured at the end of each of 3rd, 6th,

9th & 12th policy year

c) Maturity Benefit: Payment of Single Premium (excluding taxes and extra

premium, if any) along with Loyalty Addition, if any, in case of Life Assured

surviving to the end of the policy term.

d) Loyalty Addition Depending upon the Corporation’s experience the policies

shall be participate in the profits and shall be eligible for Loyalty Addition. The

Loyalty Addition, if any, is payable on death after completion of five policy

years and on policyholder surviving to maturity, at such rate and on such terms

as may be declared by the Corporation.

PENSION PLANS

1. LIC’s NEW JEEVAN ANAND

LIC’s New Jeevan Nidhi Plan is a conventional with profits pension plan with a

combination of protection and saving features. This plan provides for death

35

cover during the deferment period and offers annuity on survival to the date of

vesting.

1.Benefits:

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.

 

The following options shall be available to the Life Assured for utilization of the

benefit amount.

1.To purchase an immediate annuity

The Life Assured shall have a choice to commute the amount available on

vesting to the extent allowed under Income Tax Act. The entire amount

available on vesting or the balance amount after commutation, as the case may

be, shall be utilized to purchase immediate annuity at the then prevailing annuity

rates. Commutation shall only be allowed provided the balance amount is

sufficient to purchase a minimum amount of annuity as per the provisions of

section 4 of Insurance Act, 1938.

In case the total benefit amount is insufficient to purchase the minimum amount

of annuity, then the said amount shall be paid as a lump sum to the Life assured.

The annuity shall only be purchased from Life Insurance Corporation of India.or

1.To purchase a new Single Premium deferred pension product from Life

Insurance Corporation of India

Under this option the entire proceeds available on vesting shall be utilized to

purchase a single premium deferred pension product provided the policyholder

satisfies the eligibility criteria for purchasing single premium deferred pension

product.

36

The Life Assured will have to intimate his / her intention to go for a particular

option available on the date of vesting atleast six months prior to the date of

vesting.

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).

The amount of annuity will depend on the payable lump sum and the then

prevailing immediate annuity rates.

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 Corporation’s 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.

Final (Additional) Bonus may also be declared under the policy in the year when

37

the policy results into a claim either by way of death or on vesting, provided the

policy has run for certain minimum term.

1.Optional Benefit:

 

LIC’s Accidental Death and Disability Benefit Rider:  LIC’s Accidental

Death and Disability Benefit Rider is available as an optional rider by payment

of additional premium under regular premium policies. In case of accidental

death, the Accident Benefit Sum Assured will be payable as lumpsum along

with the death benefit under the basic plan.  In case of accidental disability

arising due to accident (within 180 days from the date of accident), an amount

equal to the Accident Benefit Sum Assured will be paid in equal monthly

instalments spread over 10 years and future premiums for Accident Benefit Sum

Assured as well as premiums for the portion of Basic Sum Assured which is

equal to Accident Benefit Sum Assured under the policy, shall be waived. If the

policy becomes a claim either by way of death or the policy vests before the

expiry of the said period of 10 years, the disability benefit instalments which

have not fallen due will be paid in lump sum. 

The Accident Benefit Sum Assured may be opted for an amount upto the Basic

Sum Assured subject to minimum of Rs. 1,00,000 and maximum of Rs. 50 lakh

(under individual as well as group policies with LIC of India). This benefit will

be available only till the vesting age.

UNIT PLANS

1. Market plus-I

This 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,

38

the plan has many attractive features and options which make it an ideal

Retirement solution for the future.

BENEFITS

A) - On Vesting:

On   vesting of the policy, the Fund Value will be utilized to provide a pension

based on the then prevailing Annuity rates. An option to commute up to one

third of the payable benefit in a lump sum is available.

B) On Death:

 In event of the unfortunate death of the policy holder the Fund Value along

with the Riders, if any,  will be payable in a lump sum or as a pension.

OPTIONS

Three attractive benefits, viz. - Life Cover, Accident Benefit and Critical Illness

Benefit are available as options or riders. Life option is available within certain

limits depending on the age at entry of the life assured. The other options are

available to all proposers who have opted for Life Cover. The quantum of the

risk covers can also be reduced; subject to the minimum limits, once a year. A

policy can be taken without any of the riders also.

REVIVAL

An attractive feature of the plan is that provided the premiums have been paid

for a minimum period of three years, all the riders under the policy will continue

for a period of two years from the due date of first unpaid premium by

deduction of relevant charges from the policy fund. This period of two years is

called the “Revival Period”. Further, if premiums have been paid for a minimum

period of three years, revival can be effected merely by paying the arrears of

premium, within the Revival Period.

PAYMENT OF PREMIUMS

39

Premiums can be paid in a lump sum (single premium) and also by monthly

(ECS), quarterly, half-yearly and yearly modes.

CHANGE IN FUND TYPE (SWITCH)

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.

OTHER FEAUTRES

 There will be no spread between the Bid and Offer price. The Net Asset Value

(NAV) will be declared on a daily basis. Additional premium in multiples of

Rs.1,000 can be paid without any limit at anytime during the term of policy.

SPECIAL PLANS

1. Bima Nivesh

Features

40

Bima Nivesh 2005 is a plan with compound rate of guaranteed additions and

loyalty additions. This is the revised version of our popular Bima Nivesh Plan

2004 and is introduced to meet the overwhelming demand for a single premium

plan from our customers. It is a single premium, ideal investment plan for those

who have no regular income but good periodical income. Bima Nivesh 2005 is

available for terms 5 and 10 years. The guaranteed surrender value is payable

after the policy has run for at least one year. Term Assurance Rider is also

available by payment of a single premium at the option of the proposer.

Benefits

Guaranteed Additions: Guaranteed additions at the compound rate of Rs.50

per thousand Sum Assured per annum for the policy with term of 5 years and at

the compound rate of Rs.55 per thousand Sum Assured per annum for the policy

with term of 10 years.

Loyalty Addition: Depending upon the Corporation's experience with regard

to mortality, interest and expenses and based on term of the policy, Loyalty

addition, if any, may be declared by the corporation and paid on maturity.

Maturity Benefit: The Basic Sum Assured along with compounded

Guaranteed Additions will be payable. Loyalty addition, if any, will also be

added to this benefit.

Payment on death: In case of the unfortunate death of the Life Assured

during the term of the policy, Sum Assured along with the accrued guaranteed

additions will be payable.

Surrender Value: Surrender value is payable after the policy has run at least

for one year.

Riders: Term Assurance rider is available.

Eligibility conditions and other restrictions

For the Main Plan Term Assurance Option

41

Min. Age at entry 13 years completed 18 years completed

Max. Age at entry 70 years 50 years

Max. Maturity

Age75 years 60 years

Policy Term 5 yrs. and 10 yrs Same as main plan

Sum Assured

Rs.25,000.

Maximum – No

limit.

Min. Sum Assured -

Rs.1,00,000/-

Max. Sum Assured - An amount

up to the basic Sum Assured for

Term Assurance subject to a

maximum of Rs.25 lakh overall

Option limit, under all policies

of the life assured.

Premium Rates:

Single Premium rates for Rs.1000 Sum Assured are Rs.995 for 5 years term and

Rs. 976 for 10 years term;

The Term Rider Premium depends on the age nearer birthday and the term of

the policy.

REBATES

1% of basic premium on the premium in excess of Rs.50,000.

Rs.500 plus 1.5% of basic premium on the premium in excess of Rs.1,00,000.

LOAN

Loan will be available to the policyholders under this plan within the Surrender

Value.

42

GROUP SCHEME

1. Group Term Insurance Scheme

A) Nature of the Scheme:

Group (term) Insurance Scheme is meant to provide life insurance protection to

43

groups of people. Administration of the scheme is on group basis and cost

is low. Under Group (Term) Insurance Scheme, life insurance cover is allowed

to all the members of a group subject to some simple insurability conditions

without insisting upon any medical evidence. Scheme offers covers only on

death and there is no maturity value at the end of the term.

B) Premium Chargeable:

Group (Term) Insurance Scheme is at present offered under One Year

Renewable Group term assurance plan (OYRGTA). Every year on Annual

Renewal date LIC charges the premium depending upon the changes in size and

age distribution of the age group.

C) Different Schemes:

Group (term) Insurance Scheme has a number of varieties. The Scheme may

provide for a uniform cover to all members of the group or graded covers for

different categories of members, cover for all amounts of outstanding housing

loans or vehicle advances, or some other benefits (e.g., life cover to supplement

pension or PF benefits in case of death). The schemes may have add-ons like

Double Accident Benefit, Critical Illness Benefit, Disability benefit etc.

D) General Features of various Group Insurance Schemes:

1. PREMIUM:

The premium under such scheme may be wholly paid by the employer or the

Nodal Agency. However, the scheme may be contributory i.e. the members may

also contribute.

2. DOUBLE ACCIDENT BENEFIT:

Double Accident Benefit, i.e. payment of double the sum assured on death due

to accident (without permanent disability benefit), may be allowed under Group

Insurance Schemes for an extra premium.

3. ELIGIBILITY:

For Group Insurance Scheme in lieu of EDLIS the insurability condition is that

44

should be a member of the Provident Fund Scheme of the employer. For other

GI Schemes of employer-employee groups the insurability condition is that the

member should not be absent on ground of sickness on the entry date. For all

non-employer-employee Group Schemes the basic insurability condition is that

the member should be in good health on the date of entry.

4. ADMINISTRATION OF THE SCHEME:

At the commencement and thereafter on each Annual Renewal Date, the Group

Policyholder will have to send all the member's data (and particulars of the new

entrants from time to time) to the P & GS unit of LIC. Detailed OYRGTA

premium calculation will be made on each Annual Renewal Date.

2. Janashree Bima Yojana (JBY)

Features

The objective of the scheme is to provide life insurance protection to the rural

and urban poor persons below poverty line and marginally above the poverty

45

line.

ELIGIBILITY:A person who is*Aged between 18 and 59 years.*Below or

marginally above poverty line*A member of any of the approved

vocation/occupation groups.

NODAL AGENCY:A State Government Department which is concerned with

the welfare of any such vocation/occupation group, a Welfare Fund/ Society,

Village Panchayat,NGO,Self-Help Group,etc.

MINIMUM MEMBERSHIP SIZE:Twenty five.

FORMS FOR JANASHREE BIMA YOJANA1. Claim form & discharge

receipt under JBY ( Annexure A )

2. Application for scholarship under Shiksha Sahayog Yojana ( Proforma A )

3. List of students eligible for scholarship under Shiksha Sahayog Yojana

( Proforma B)

4. Certificate of utilisation ( Proforma C )

BENEFIT ENHANCED

In the events of*Death (other than by accident) of the member,an amount of

Rs.30,000/- is payable.*death/total permanent disability, due to accident,an

amount of Rs.75,000/-is payable.*Permanent partial disability, due to accident,

an amount of Rs.37,500/- is payable.

PREMIUM :*The premium under the scheme is Rs.200/-per annum per

member. *50% of the premium i.e. Rs.100/- will be contributed by the member

and/or Nodal Agency/State Government. *Balance 50% will be borne by the

Social Security Fund.

46

APPROVED VOCATION & OCCUPATIONAL GROUPS:

A) The group that can be covered are like workers in -

(i) Foodstuffs like khandsari

(ii) Textile

(iii) Manufacture of wood products

(iv) Manufacture of paper products

(v) Manufacture of leather products

(vi) Printing

(vii) Rubber and coal products

(viii) Chemical products like candle manufacture

(ix) Mineral products like earthern toys manufacture

(x) Fire cracker's workers

(xi)Construction workers

(xii)Other related cottage industries to be identified by Nodal Agencies and

other groups as identified by the Nodal Agency and approved by LIC.

B) The occupational groups are : Beedi workers, Brick Kiln

Workers(Jalandhar),Carpenters, Cobblers, Fisherman, Hamals, Handicraft

Artisans, Handloom Weavers, Handloom and Khadi Weavers, Lady Tailors,

Leather and Tannery Workers, Papad Workers attached to 'SEWA', Physically

Handicapped self- Employed Persons, Primary Milk Producers, Rickshaw

Pullers/ Auto Drivers, Safai Karmacharis, Salt Growers, Tendu Leaf Collectors,

Scheme for the Urban Poor, Forest Workers, Sericulture, Toddy Tappers,

Powerloom Workers, Scheme for Women in Remote Rural Hilly Areas.

47

HEALTH PLAN

JEEVAN AROGYA:

LIC's Jeevan Arogya is a unique non-participating non-linked plan which

provides health insurance cover against certain specified health risks and

48

provides you with timely support in case of medical emergencies and helps you

and your family remain financially independent in difficult times.

Health has been a major concern on everybody’s mind, including yours. In

these days of skyrocketing medical expenses, when a family member is ill, it is

a traumatic time for the rest of the family. As a caring person, you do not want

to let any unfortunate incident to affect your plans for you and your family. So

why let any medical emergencies shatter your peace of mind.

LIC’s Jeevan Arogya gives you:

2.Valuable financial protection in case of hospitalisation, surgery etc

3.Increasing Health cover every year

4.Lump sum benefit irrespective of actual medical costs

5.No claim benefit

6.Flexible benefit limit to choose from

7.Flexible premium payment options

Very easy to choose your plan

Step 1

Choose the level of Health cover you need

Step 2 Work out the premium payable along with our Representative

 Step 1: Choose the level of Health cover you need:

You can choose the amount of Initial Daily Benefit (i.e. the daily Hospital Cash

Benefit applicable in the first year of the policy) as per your need from out of

the following choices:

` 1000 per day

` 2000 per day ` 3000 per day ` 4000 per day

This is the amount that will be payable to you in the event of hospitalisation in

the first year on a per day basis. The Major Surgical Benefit that you will be

49

covered for will be 100 times the Initial Daily Benefit you have chosen. Thus

the initial Major Surgical Benefit Sum Assured will be ` 1 lakh, 2 lakh, 3 lakh,

4 lakh respectively. Other benefits such as Day Care Procedure Benefit, Other

Surgical Benefit and Premium waiver Benefit (PWB) mentioned below shall

also be payable depending upon the daily Hospital Cash Benefit chosen.

Step 2: Work out the premium payable along with our representativeYour

premium will depend on your age, gender, the Health cover option you have

chosen, whether you are Principal Insured or other insured life and the mode of

payment.

Tables below give an indicative annual premium, payable yearly, for all health

benefits corresponding to an Initial Daily Benefit of ` 1000 per day, for some of

the ages in respect of  various lives that can be covered under a single policy:

     PRINCIPAL INSURED (Male)

Age at entry

Premium (`)

20 1922.65

30 2242.90

40 2799.70

50 3768.00

         SPOUSE (Female) / PARENT (of PI/Spouse) (Female)

Age at entry

Premium (`)

20 1393.15

50

30 1730.65

40 2240.60

50 2849.10

CHILD

Age at entry

Premium (`)

0 792.00

5 794.75

10 812.35

15 870.75

(Premiums indicated are exclusive of Service Tax)

Who can be insured?You (as Principal Insured (PI)), your spouse, your

children, your parents and parents of your spouse can all be insured under one

policy. Quite a relief isn’t it, to have all insured under one policy! The

minimum and maximum age at entry is as under:

Minimum age at

entry

Maximum age at entry

Self / spouse 18 years 65 years (last birthday)

Parents / parents-in-law 18 years 75 (last birthday)

Children 91 days 17 years (last  birthday)

51

How long are each insured under this policy? Each of the insured are

covered for Health risks up to age (80). Children are insured up to age 25 years.

TAX BENEFITS

52

The aggregate amount of deduction under all the relevant sections viz. section

80C, section 80CCC and section 80CCD shall not, exceed Rs.1 Lakh.

1)  Deduction from Income for payment of Premium (Sec. 80C).

(a)life insurance premia.

The insurance premia paid for a policy is eligible for deduction. The premium

paid should not be in excess of 20% of capital sum assured.

(b) Contribution to Deferred Annuity Plans:  

The premia paid for a Deferred Annuity; provided such contract does not

contain a provision to exercise an option by the insured to received a cash

payment in lieu of the payment of annuity is eligible for deduction.

(c) Contribution to Pension/Annuity Plans:

Contribution to New Jeevan Dhara-I and New Jeevan Akshay-V Schemes of

LIC are qualified for rebate under this section.

2) Income tax exemption on Maturity/Death Claims proceeds under

Section 10(10D)

All the benefits payable under a Life Insurance policy are tax free. However in

cases the premium paid in excess of 20% of the capital sum assured within a

year, benefits paid excess of premiums will be taxable. The benefits from a key

man Insurance policy and any sum received under Sec 80DD, Sub-section (3)

are also taxable.

3) Jeevan Nidhi Plan & New Jeevan Suraksha - I Plan (U/s. 80CCC)

Amounts paid from the taxable income to premiums of the above annuity are

deductible.

4) Deduction under section 80D Medical Premium paid for a Health

Insurance policy is deductible to the extent of Rs. 15000 for an assessee

and/or his family members’ policy/s. A separate exemption to the extent of

53

Rs. 15,000 for premiums paid for an assessee’s parent is also available. If

any one or both of the parents are Senior citizens, then an enhanced

exemption limit of Rs. 20,000 is available. Section 80D also covers

payment of premium exclusively for Critical Illness Rider.

5) Jeevan Aadhar Plan (Sec.80DD)

Premium paid for LIC’s Jeevan Aadhar Plan (for the maintenance of an

handicapped dependent) is eligible for deduction from the total income to the

extent of Rs.50,000 and to the extent of Rs.75,000/- where handicapped

dependent is suffering from specified severe disability.

6) Exemption in respect of commutation of pension under Jeevan

Suraksha &    Jeevan Nidhi Plans.  (Section 10(10A):

A payment received by way of commutation of pension from Jeevan Suraksha

& Jeevan Nidhi Annuity plans is exempt from tax.

56 years of Nation building

“LIC the pride of India”54

 On 1st September 2012, LIC completes 56 years of its glorious and purposeful

existence. It was on this day in the year 1956, that LIC of India came into being

with the government of India nationalizing the life insurance business through

an ordinance on 19th January 1956.  Ever since 1956, LIC has progressed from

strength to strength. In the process, it has fulfilled its objectives and has been

immensely contributing to the nation building activities. Today, LIC is an

Institution of national importance and operates at a very large scale and

efficiency. It has created a significant value for its customers and dominates the

life insurance industry in our country. LIC has institutionalized a culture of

Trust within its organization which is the basis for its extraordinary success. LIC

has grown today to be the premiere public sector financial institution and the

pride of India.

 LIC has invested Rs. 8,19,835 crores as on 31.3.2012 in central/state

government securities, power generation, road transport, water supply, housing

and other social activities. LIC has played a very important role in nation

building. LIC’s contribution to the Five Year Plans has been commendable. It

contributed  Rs. 184 crore to the second Five Year Plan (1956-61), Rs. 3, 94,779

to tenth Five Year Plan (2002-2007) and Rs.7,04,151  Crores to the eleventh

Five Year Plan (2007-2012. The most amazing aspect is that around 25% of

internal borrowings of the central government are met by LIC every year.  On an

initial investment of Rs.5 crores in the year 1956 by the Union Government, it’s

share  of the valuation surplus of 5% for the year 2011-12 worked out to be Rs.

1281.23 Crore. With an investment of just Rs.5 crore, till this fiscal year end, the

government received a cumulative dividend of Rs. 11,376.10 Crore which is

unimaginable in any other institution. The Government of India has entrusted

several social security schemes to LIC. Over 1.63 crore landless households

under Aam Aadmi Bima Yojana till date are covered by LIC. Taking up the

cause of financial inclusion, over 57.76 lac people have been insured under

LIC’s Micro insurance schemes. As a part of Corporate Social Responsibility,

55

the ‘Golden Jubilee Foundation’ has been dedicated to the cause of promoting

education, health and to provide relief to the people who are poor. So far LIC

has sanctioned more than 140 projects worth Rs.18.06 crores, across the

country. LIC Golden Jubilee Scholarship Scheme provides scholarship to

economically weaker sections of the society to pursue higher education. Every

year 1000 deserving students are given scholarship

under this scheme dedicated towards nation building; LIC is one of the strongest

pillars of India’s social and economic structure.

 Ever since the opening up of the insurance sector in the year 2000, LIC is

performing marvelously dominating the insurance market. The public sector LIC

has surprised the critics with a very strong performance. 

 The Compounded Annual Growth Rate (CAGR) of LIC during the last ten

years has jumped to 30.24% from 15.23% since inception. LIC’s total policies

have risen from 10.12 Croresin to 34 Crores in conventional business along with

10.45  crores of customer base in group business. LIC’s Life fund has grown

from 1.54 lakh crore to 12.83  lakh crore. LIC’s asset base has grown from 1.60

lac crore to 14.17 lakh crore by September 2012. The new business premium has

gone up from Rs.5930 Crore to Rs. 81515 Crore. Total Premium Income has

increased from Rs.27489 Crore to 202802.90 Crore. Thus, through this amazing

performance, LIC has retained it’s domination over the market.  It is holding on

to a market share of 81 percent in number of policies and 74 percent in new

business premium.  The LIC has also an impressive share of 87.4% in the total

assets under management. Insurance is a promise which needs to be fulfilled on

the happening of an eventuality. LIC settles 99.86% of the claims which is a

world record. The track record of the private insurance companies on settlement

of claims is abysmally low.  In spite of such a strong performance, it is

surprising to note that the rating agencies to facilitate the entry of foreign capital

56

to access the domestic savings of the Indian people, are trying to arm twist by

down grading the investment rating of LIC ironically quoting that LIC is

exposed to investments in government securities.

 The performance of private insurance companies even after a decade of

operation is not encouraging. Out of the 23 private insurance companies, 16

have reported operating losses and majority of them are yet to break even. The

private insurance companies sell more than 90% of their policies in ULIPs

where the returns are dependent on the vagaries of the volatile stock market.

According to the government, the public sector LIC has dominated the

investment in infrastructure development by accounting for more than 94%

where as the private companies are unable to invest for infrastructure

development of our country.

 In spite of the sterling performance by the Life Insurance Corporation of India,

the government, under pressure from the international finance capital, is making

attempts to weaken the public sector. The Insurance Laws (amendment) bill

2008 which seeks to increase the FDI cap in insurance from 26% to 49% is a

pointer in this direction. More Over, the hurdles created by IRDA with regard to

clearing new plans, in recruitment of agents, suspending group superannuation

scheme (P&GS) etc are all the hindrances which LIC is able to successfully

overcome till now.

ARTICLES

1. LIC turns 56 today; sells 367 lakh policies

57

in one year India's largest domestic institutional investor, Life Insurance

Corporation of India (LIC), which turns 56 year old today, sold a

whopping 357 lakh policies last year, a commanding 80.9% market share

of new policies issues.

India's largest domestic institutional investor, Life Insurance Corporation of

India (LIC), which turns 56 year old today, sold a whopping 357 lakh policies

last year, a commanding 80.9% market share of new policies issues. Its total first

year premium income was pegged at more than Rs 81514.49 crore including Rs

38955.06 crore of premium through Pension and Group schemes i.e. 71.36 % of

the market share. In pension and group schemes, new lives insured were 284.12

lakhs under conventional business and 94.44 lakh lives under social security

schemes. In the year 2011-12, 185.7 lakh claims amounting to Rs 66022.82

crore were settled. Nearly 93.19% of total maturity claims were settled on or

before the date of maturity and 94.34% of non-early death claims were settled

within 15 days of intimation. The outstanding maturity claims ratio is as low as

0.5% and the outstanding death claim ratio is 1.22%. Total payments to

policyholders aggregated to Rs. 112,911.82 crore. LIC has launched a new

micro insurance product 'Jeevan Deep' on today. This is an endowment

assurance with an added feature of guaranteed additions along with provision of

Loyalty addition. An immediate annuity product is available for 'on-line buy'.

2. LIC also keeps the economy healthy.BUSINESS TODAY

Edition:August 21, 2011

As a home loan officer with a private sector bank, Yatindra Pathak says he has

58

often heard people say: "Mere pass ICICI ka hi LIC hai" (I have ICICI's LIC).

LIC, or the Life Insurance Corporation of India, is practically synonymous with

insurance in the country. And with good reason: despite 22 private entrants into

the industry since it was liberalised in 2000, LIC has the lion's share.

At Rs 86,445 crore, it notched up an overwhelming 69 per cent share of first

premiums in 2010/11 - nearly 22 per cent more than in the previous year. By

contrast, private insurers garnered a cumulative Rs 39,831 crore, which worked

out to an annual growth of 2.56 per cent.

The sailing has not been all smooth, though. In 2009/10, 75 per cent of LIC's

new business came through unit-linked insurance policies, or ULIPs. But

regulators questioned the governance of these products. The Securities

Exchange Board of India wanted to oversee them because of their high

investment component, and the Insurance Regulatory and Development

Authority wanted to continue overseeing them as they did, after all, provide

insurance.

The insurance regulator framed stringent norms for ULIPs. "The entire sales

focus has now moved to non-ULIP products," says an LIC official who asked

not to be named. With lower advisor commissions and ULIP sales, new business

premiums for the industry as a whole shrank 12 per cent in April-May 2011

compared to the previous year. Business dropped eight per cent for LIC, and 23

per cent for private insurers.

LIC's nationwide sales force of 1.34 million advisors is just one of its strengths.

"The government guarantee gives it the edge on private players," says the head

of a private insurer. Of course, the guarantee does not come free. LIC is among

India's largest institutional investors, and the biggest participant in state and

public sector bond issues. Its i nvestments in 2009/10 were Rs 10.96 trillion, of

59

which roughly 92 per cent was in securities, and 7.75 per cent was in loans. In

2009/10, LIC paid Rs  3,625 crore in taxes, and another Rs 1,030 crore was the

government's five per cent share of LIC's life fund valuation surplus. So LIC not

only insures lives, but also helps keep the economy healthy. LIC is the industry leader, with a 69 per cent market share in 2010/11

Compared to 2.6 per cent annual growth in first-year premiums for private insurers, LIC recorded growth of nearly 22 per cent in 2010/11

LIC has the largest sales force of 1.34 million advisors, as of March 2010

LIC's 13.1 per cent expense ratio (including advisor commission) is lowest in the world

With total investments of Rs 10.96 trillion, LIC was India's largest institutional

investor as of March 2010.

CONCLUSION

After completing the project it is concluded that LIC develop its various plans

and policies, flexible in nature, according to the requirements of its targeted

60

market or customers and is thus beneficial to its customers in various ways. The

most important benefit it provides to its customers is that it is a government

owned company. This lead to increase in the satisfaction level of its customer

that is why LIC has more than 200 million policyholders which is equal to the

fourth largest country in world. Therefore it is not only beneficial but better than

other insurance companies not only regarding its product but also its services.

61