PROJECT REPORT

ON

LIFE INSURANCE CORPORATION OF INDIA

SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF THE DGREE OF MASTER OF BUSINESS ADMINISTRATION 2010-2012
UNDER THE GUIDANCE OF Mr. Rajesh Ku. Agrawal

LIC AGENT, BARGARH SUBMITTED BY: ANAMICA AGRAWAL BATCH NO: MBA(IRM) 2ndSEMESTER ROLL NO: 01

SAMBALPUR UNIVERSITY
Affiliated to Sambalpur University, Orissa

INDEX
Table of Contents Student Declaration Certificate from Guide Acknowledgement Executive Summary CHAPTER-1 Introduction CHAPTER -2 Company Profile CHAPTER -3 Research Methodology CHAPTER-4 Policies and Plans CHAPTER -5 Findings CHAPTER -6 Conclusion BIBLIOGRAPHY 57 55 53 25 21 4 i ii iii iv 1

STUDENT DECLARATION

This is to certify that the project titled LIFE INSURANCE CORPORATION OF INDIA under the guidance of Mr. Rajesh Ku. Agrawal has been completed and submitted in partial fulfillment of the requirement for the award of degree of Master of Business Administration(Insurance and Risk Management) at earlier elsewhere. Sambalpur University,Sambalpur. This is an original piece of work & I have not submitted it

ANAMICA AGRAWAL

GUIDE CERTIFICATE

This is to certify that the project titled LIFE INSURANCE CORPORATION OF INDIA is an academic work done by ANAMCA AGRAWAL submitted in the partial fulfillment of the requirement for the award of the degree of Master Of Business Administration(Insurance and Risk Management) from Sambalpur University, Sambalpur, under my guidance & direction. To the best of my knowledge and belief the data & information presented by him/her in the project has not been submitted earlier.

Mr. Rajesh Ku. Agrawal

ACKNOWLEDGEMENT

I am highly obliged to Mr. Rajesh Ku. Agrawal (project guide) for his constant and excellent guidance and also his valuable support without whom this project report could not be successfully completed. I am also thankful to my friends, my parents, brother-sister for helping me in the completion of this project report.

EXECUTIVE SUMMARY

Insurance is the most familiar word or phrase used in todays 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:-

CHAPTER-1
It consist of information of the industrial profile of the life insurance sector i.e. when and how does this sector emerges and how it contributes to the economy,

CHAPTER-2
Chapter 2 includes company profile of LIC i.e. how and when it is formed, which were the companies that merges and form LIC, its milestones, its objectives, mission and vision, what is life insurance, board of directors, a brief on the subsidiaries. It also includes awards and achievements by LIC.

CHAPTER-3
Purpose of the study for which it is conducted, objective while conducting the study and methodology which consist of the medians used and the tools used to complete the study.

CHAPTER-4
It includes some of the products offered by LIC, net asset value of the products, tax benefits to its policy holders categorized according to their age. It also shows the relationship of LIC with information technology.

CHAPTER-5

This chapter includes the findings and analysis retrieved after the study of the of the project.

CHAPTER-6
Chapter 6 consists of the conclusion arrived after analyzing and findings from the study.

CHAPTER-1

INRODUCTION

INSURANCE COMPANIES IN INDIA

In India, Insurance is a national matter, in which life and general insurance is yet a booming sector with huge possibilities for different global companies, as life insurance premiums account to 2.5% and general insurance premiums account to 0.65% of India's GDP. The Indian Insurance sector has gone through several phases and changes, especially after 1999, when the Govt. of India opened up the insurance sector for private companies to solicit insurance by passing Insurance Regulatory and Development Authority (IRDA) Bill, allowing FDI up to 26%. Since then, the Insurance sector in India is considered as a flourishing market amongst global insurance companies. However, the largest life insurance company in India is still owned by the government. The history of Insurance in India dates back to 1818, when Oriental Life Insurance Company was established by Europeans in Kolkata to cater to their requirements. Nevertheless, there was discrimination among the life of foreigners and Indians, as higher premiums were charged from the latter. In 1870, Indians took a sigh of relief when Bombay Mutual Life Assurance Society, the first Indian insurance company covered Indian lives at normal rates. Onset of the 20th century brought a drastic change in the Insurance sector. In 1912, the Govt. of India passed two acts - the Life Insurance Companies Act, and the Provident Fund Act - to regulate the insurance business. National Insurance Company Ltd, founded in 1906, is the oldest existing insurance company in India. Earlier, the Insurance sector had only two state insurers - Life Insurers i.e. Life Insurance Corporation of India (LIC), and General Insurers i.e. General Insurance Corporation of India (GIC). In December 2000, these subsidiaries were de-linked from parent company and were declared independent insurance companies: Oriental Insurance Company Limited, New India Assurance Company Limited, National Insurance Company Limited and United India Insurance Company Limited. With an annual growth rate of 15-20% and the largest number of life insurance policies in force, the potential of the Indian insurance industry is huge. Total value of the Indian insurance market (2004-05) is estimated at Rs. 450 billion (US$10 billion).

The life insurance industry in India grew by an impressive 36%, with premium income from new business at Rs. 253.43 billion during the fiscal year 2004-2005, braving stiff competition from private insurers. This report, "Indian Insurance Industry: New Avenues for Growth 2012", finds that the market share of the state behemoth, LIC, has clocked 21.87% growth in business at Rs.197.86 billion by selling 2.4 billion new policies in 2004-05. But this was still not enough to arrest the fall in its market share, as private players grew by 129% to mop up Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in 2003-04. Though the total volume of LIC's business increased in the fiscal year (2004-2005) compared to the previous one, its market share came down from 87.04 to 78.07%. The 14 private insurers increased their market share from about 13% to about 22% in a year's time. The figures for the first two months of the fiscal year 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 percent, while the private players have grabbed over 24 percent. There are presently 12 general insurance companies with four public sector companies and eight private insurers and private insurance companies collectively have a 10% share of the non-life insurance market.

CHAPTER-2 COMPANY PROFILE

COMPANY PROFILE
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. 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 nonIndian 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. LICs 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. LICs ECS and ATM premium payment facility is an addition to customer convenience. Apart from 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. 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. 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.

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 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.

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 civilizations 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. 2. That of dying prematurely leaves a dependent family to fend for itself. That of living till old age without visible means of support.

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 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 policyholders state of health, the proponent's income and other relevant factors 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.

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.

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."

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

AWARDS AND ACHIVEMENTS

Brand Equity Most Trusted Brand Golden Peacock Innovative Product / 2009 Top in Insurance Category Service Award 2009

Loyalty Awards - 2009

Readers Digest Trusted Brand Award 2009 in the Platinum category

CNBC Awaaz Consumer Awards 2008

NDTV Profit Business Leadership Award 2008

INDY's

Silver

Award

for

Best INDY's Silver Award for Best in House Magazine

Corporate Film

IT USER 2008 NASCOM

Selected Business Super brand India 2008

ASIA BRAND CONGRESS BRAND Pitch Award -" Rank 1 " India's Top LEADERSHIP AWARD 2008 50 service Brands

Loyalty Awards 2008 - Insurance SKOCH Challengers Award 2008 for Sector Jeevan Madhur

Readers Digest Trusted Brand Award Golden Peacock Award for Excellence 2008 in the Platinum category. in Corporate Governance

Web 18 Genius of the web awards 2007

CHAPTER-3

RESEARCH METHODOLOGY

PURPOSE OF THE STUDY

The purpose behind the study of LIFE INSURANCE CORPORATION OF INDIA is to understand the companies background as well as the nature of the various products offered over many years in India. Purpose is to study the products and their benefits to customers. This gives a brief idea of the nature of products of the company.

OBJECTIVES OF THE STUDY

The objectives behind the study of the plans and policies of LIFE INSURANCE CORPORATION OF INDIA are:

1. To impart knowledge about the history and objectives of the company and also its different subsidiaries. 2. To aware the readers about the different plans and policies provided by LIC, there value and benefits to its customers.

METHODOLOGY
DATA COLLECTION:

All the information provided on LIFE INSURANCE CORPORATION OF INDIA in the project report has been collected through secondary resources. No survey has been conducted to collect information for the study. Therefore only secondary data is used in the study.

STATICAL TOOLS:
Secondary resources used in the study for information collection is internet and magazines. Magazines & websites have been used and the information retrieved from these sources is then gathered in this project. Other tools used in the study which are used in the preparation of the project after collecting information are: 1. 2. MS Word MS Excel

CHAPTER-4

POLICIES

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 individuals insurance needs and requirements are different from that of the others. LICs Insurance Plans are policies that talk to you individually and give you the most suitable options that can fit your requirement.

Jeevan Anurag CDA Endowment Vesting At 21 CDA Endowment Vesting At 18 Jeevan Kishore Child Career Plan Child Fortune Plus Jeevan Aadhar Jeevan Vishwas

Komal Jeevan Marriage Endowment Educational Annuity Plan Jeevan Chhaya Child Future Plan

Or

The Endowment Assurance Policy The Endowment Assurance Policy-Limited Payment Jeevan Mitra(Double Cover Endowment Plan) Jeevan Mitra(Triple Cover Endowment Plan) Jeevan Anand New Janaraksha Plan Jeevan Amrit Jeevan Shree-I Jeevan Pramukh The Money Back Policy-20 Years The Money Back Policy-25 Years Jeevan Surabhi-15 Years Jeevan Surabhi-20 Years Jeevan Surabhi-25 Years Bima Bachat

Jeevan Bharati - I The Whole Life Policy The Whole Life Policy- Limited Payment The Whole Life Policy- Single Premium Jeevan Anand Jeevan Tarang Two Year Temporary Assurance Policy The Convertible Term Assurance Policy Anmol Jeevan-I Amulya Jeevan-I Jeevan Saathi Plus Jeevan Saathi

Mortgage Redemption

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

Jeevan Nidhi Jeevan Akshay-VI New Jeevan Dhara-I New Jeevan Suraksha-I

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.

Market Plus I

Profit Plus Fortune Plus Money Plus-I Child Fortune Plus

SPCIAL PLANS
LICs 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!

New Bima Gold Health Protection Plus Health Plus Bima Nivesh 2005 Jeevan Saral Jeevan Madhur

Jeevan Mangal

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 LIC's Superannuation Plus Group Term Insurance Schemes Group Insurance Scheme in Lieu Of EDLI Group Gratuity Scheme Group Super Annuation Scheme Group Savings Linked Insurance Scheme

Group Leave Encashment Scheme Group Mortgage Redemption Assurance Scheme Gratuity Plus Group Critical Illness Rider JanaShree Bima Yojana (JBY) Shiksha Sahayog Yojana Aam Admi Bima Yojana

PRODUCTS BY LIC

INSURANCE PLANS

1. Jeevan Anand
Features
Product summary: This plan is a combination of Endowment Assurance and Whole Life plans. It provides financial protection against death throughout the lifetime of the life assured with the provision of payment of a lump sum at the end of the selected term in case of his survival. Premium: Premiums are payable yearly, half-yearly, quarterly, monthly or through salary deductions as opted by you throughout the selected term of the policy or till earlier death. Bonuses: This is a with-profit plan and participates in the profits of the Corporations life insurance business. It gets a share of the profits in the form of bonuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year. Once declared, they form part of the guaranteed benefits of the plan. Bonuses will be added during the selected term or till death, if it occurs earlier. Final (Additional) Bonus may also be payable provided the policy has run for certain minimum period

Benefits
Benefits in case of death during the selected term: The Sum Assured along with the vested bonuses is payable on death in a lump sum. Benefits in case of survival to the end of selected term: The Sum Assured along with the vested bonuses is payable in a lump sum on survival to the end of the term. An additional Sum Assured is payable on death thereafter. Accident Benefit: An additional Sum Assured (subject to a limit of Rs.5 lakh) is payable in a lump sum on death due to accident up to age 70 of life assured. In case of permanent disability of the life assured due to accident this additional Sum assured is payable in installments.

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 values are 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 years premium. Any extra premium(s) paid and premium(s) towards Accident Benefit are also excluded. Corporations 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.

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 Corporations 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.

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 years premium. In case of a single premium policy the guaranteed surrender value is 90% of the single premium paid excluding any extra premium. Corporations 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.

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

For a term of 9 years: The policy holder will receive 15% of the sum assured at the end of every 3rd and 6th policy year.

For a term 12 years: The policy holder will receive 15% of the sum assured at the end of every 3rd, 6th and 9th policy year.

For a term 15 years: The policy holder will receive15% of the sum assured at the end of every 3rd, 6th, 9th and 12th policy year. What additional benefits do I get upon maturity? If the policy holder outlives the duration of the policy, at the time of maturity, a single premium payment (excluding extra premium) is made along with loyalty additions, if any. How much insurance do I get? The policy holder is insured for an amount equal to the sum assured. What about the installment received already? The insurance cover is irrespective of the installments received. When am I eligible for the guaranteed surrender value? The guaranteed surrender value is available only after completion of at least one policy year. This value is equal to 90 % of the single premium paid (excluding extra premium). What other benefits does this insurance cover offer? Bima Bachat is the only money-back policy that offers a loan facility. The rate of interest for this will be determined from time to time by the corporation. Presently the rate of interest is 9% p.a. payable half-yearly. It also offers other benefits like the 15 day cooling off period, grace period and revival. Who is eligible for the policy? Are there other conditions or restrictions? The following are the requirements that one needs to be aware of before applying for this policy: The person applying for the policy should have completed 15 years and should not be older than 66 years. The policy will mature when the person is 75 years old. There is a choice of three terms to choose from (9, 12 and 15 years) for the policy depending on the age and requirement of the applicant.

 The minimum sum that needs to be assured is Rs 20,000/- and there is no limit on the amount that can be assured. It is important to note that the sum assured should be in multiples of Rs 5000/- only. The policy requires the holder to pay a single premium.

Premium payment

4. The Convertible Term Assurance Policy

Features
This plan of assurance is designed to meet the needs of those who are initially unable to pay the larger premium required for a Whole Life or Endowment Assurance Policy, but hope to be able to pay for such a policy in the near future. This plan would be found useful also in cases where it is desired to leave the final decision as to the plan to a later date when, perhaps a better choice could be made. Policy holders get an option of converting an policy into endowment assurance or limited payment whole life assurance. Suitable For: For all people with earned income under Category I and unearned incomes under Category II, basically Standard and sub-Standard lives attracting EMR classes I and II.

PENSION PLANS
1. New Jeevan Dhara-I
Features
Product summary: These are Deferred Annuity plans that allow the policyholder to make provision for regular income after the selected term. Premiums: Premiums are payable yearly, half-yearly, quarterly, monthly or through Salary deduction, as opted by you, throughout the term of the policy or till earlier death.

Alternatively, the premium may be paid in one lump sum (single premium). Tax Benefits: Tax relief under Section 80ccc is available on premiums paid under New Jeevan Suraksha I (Table No.147). The premiums paid under New Jeevan Dhara I (Table No.148) qualify for tax relief under Section 88. Bonuses: These are with-profit plans and participate in the profits of the Corporations annuity / pension business. Policies get a share of the profits in the form of bonuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year. Once declared, they form part of the guaranteed benefits of the plan. Final (Additional) Bonuses may also be payable provided policy has run for a certain minimum period.

Benefits
Death Benefit: On death of the Life Assured during the term of the policy the basic premiums paid, excluding any rider premiums or extra premiums, up to the date of death accumulated with interest at such rates as decided by the Corporation will be payable to the nominee. Currently, the interest rate is 3%, 4% or 5 % if the death occurs within the first 10 years, 20 years or thereafter respectively. Maturity Benefit: At maturity the policyholder can encash up to a maximum 25% of the maturity proceeds as a tax-free lump sum. The balance should be compulsorily converted to an annuity at the rates applicable at the time of maturity of the policy. The policyholder has the choice of opting for any one of 5 annuity options. The annuity options available are: (i) annuity payable for remainder of life (ii) annuity payable for life with guaranteed period of 5, 10, 15 or 20 years (iii) Joint life and last survivor annuity to the annuitant and his/ her spouse under which annuity payable to the spouse on death of the purchaser will be 50% of that payable to the annuitant

(iv) Life annuity with a return of purchase price on death of the annuitant (v) Life annuity increasing at a simple rate of 3% per annum 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 2 years or more but before the vesting date. The guaranteed surrender value is 90% of the basic premiums paid excluding the first years premium. In case of a single premium policy the guaranteed surrender value is allowed after 2 years from the date of commencement of the policy. Corporations policy on surrenders: In practice, the company will pay a Special Surrender Value which is equal to or higher 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.

UNIT PLANS-I
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, 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 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
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. 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.

GROUP SCHEME
1. Group Term Insurance Scheme
A) Nature of the Scheme: Group (term) Insurance Scheme is meant to provide life insurance protection to 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 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-employeremployee 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 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,SelfHelp Group,etc. MINIMUM MEMBERSHIP SIZE: Twenty five. FORMS FOR JANASHREE BIMA YOJANA 1. 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 utilization ( Proforma C )

Benefits

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. 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 earthen 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.

TAX BENEFITS

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)
should not

Life
be in excess

Insurance
of 20% of

premia:
capital sum assured.

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

(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 Rs. 15,000 for premiums paid for an assessees 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 LICs 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

CHAPTER-5

FINDINGS

FINDINGS
Findings: After completing the study following points can be drawn:
1. It has one of the single distribution networks amongst government insurance players. 2. LIC has many numbers of insurance policies and plans having flexible to meet the customers requirement and expectation. 3. LIC entered the market with aggressive marketing and supported by after sale services with the help of technology. 4. All LIC Plans come with Sovereign Guarantee i.e., Government of India Guarantee regarding repayment. Infact, as of now, only LIC plans enjoy this Government Guarantee.

CHAPTER-6

CONCLSION

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 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.

BIBLIOGRAPHY
Information and data used in the project has been collected from the following sources:-

1. www.licindia.com 2. www.licmutual.com 3. www.lichousing.com 4. www.wikipedia.org 5. www.reportbuyer.com 6. Outlook Money Magazine 7. Money Today Magazine