Professional Documents
Culture Documents
Prepared For:
Muhammad Mizanoor Rahman Howlader
Lecturer
Department of Marketing
Faculty of Business Administration and Management
Prepared By:
Group: 06(Warrior)
Level- 3, Semester- II
Faculty of Business Administration and Management
To
Muhammad Mizanoor Rahman Howlader
Lecturer
Department of Marketing
Faculty of Business Administration and Management
Dear Sir,
Please call me for any further information at your convenient time and place.
Yours truly,
Group: 06(Warrior)
Level-3, Semester-II
Faculty of Business Administration and Management
Patuakhali Science and Technology University
Introduction
► Abstract 01
► Introduction 01
► Literature Review 02
► The Research Gap 03
► Rationale of the Study 03
► Objective of the Study 03
► Methodology of the Report 04
► Limitations of the reports 04
Abstract: Insurance is one of the major risk-handling mechanisms. Life insurance provides a monetary benefit
to a decedent's family or other designated beneficiary, and may specifically provide for income to an insured
person's family, burial and other final expenses. Life insurance policies often allow the option of having the
proceeds paid to the beneficiary either in a lump sum cash payment or an annuity. Over the year’s large section
of people have become acquainted with the concept of life insurance. But, the amount of life insurance per
individual in Bangladesh is still extremely low, which is only less than one U.S. Dollar. On the other hand, per
capita insurance premium of life insurance is approximately U.S. $ 4000 in Japan. Low level of paying capacity
is the main reason for insignificant growth of life insurance in Bangladesh. Religion also plays a negative role in
respect of life insurance in our country. Insurance especially life insurance is considered as inconsistent with
religious faith. The entry of private companies and the significant number of players, in Bangladesh, bulk of life
and non-life business continues to remain in the hands of public sector units. This is true for life insurance where
Jiban Bima in Bangladesh continue as market leaders by varying wide margins. This report highlighted the
problems regarding the life insurance in Bangladesh and some remedies to solve the problems and also the
prospect of life insurance in Bangladesh.
Individuals unwilling or unable to handle their own funds have been pleased to find and
outlet for their investment in life insurance policies. Endowment policies, multipurpose
policies, deferred annuities are certain better form of investment. The elements of
investment i.e. regular saving, capital formation, and return of the capital along with
certain additional return are perfectly observed in life insurance. An individual from his
own capacity cannot invest regularly with enough of security and profitability. The life
insurance fulfils all these requirements with a lower cost. The beneficiary of the policy-
holder can get a regular income from the life insurer, if the insured amount is left with
him. Foreign exchange regulations governing insurance business entered into and
completed in Bangladesh are set out in this chapter. Branches and agencies in
Bangladesh of insurance companies whose head offices are situated abroad are, from
To help people improve their standard of livings with a saving content and create funds
for nation’s economic development Jiban Bima Corporation (JBC) is the lone state-
owned life Insurance company in Bangladesh, which started its maiden journey on May
14, 1973 with assets and liabilities worth TK. 157 million of defunct 37 life Insurance
companies. Since its inception, JBC is working among the people of Bangladesh with
two basic objectives: firstly, to cover the risks and raise savings habits among the people
and secondly, create funds for the country’s economic development through innovative
life insurance schemes.
Delta Life Insurance Co. Ltd. established mainly through the initiative of a group of
Bangladeshi professionals then working abroad along with a few enthusiastic local
entrepreneurs, started its operation in December, 1986 after the Government of
Bangladesh allowed the private sector to operate in the insurance sector in 1984 to carry
on the business of insurance in the Private Sector.
Many of the existing literatures reviewed above clearly indicate that the life insurance in
Bangladesh has not yet stood on a solid footing. Many reasons are there for the
backwardness and underdevelopment of life insurance in Bangladesh.
Research Gap
Life insurance is one of the largest and most important institutions for collecting and
distributing the nation’s savings. Therefore, insurance has grown rapidly throughout the
world. It is regarded as essential to a highly industrialized nation. But in our country like
Bangladesh where premature death is very severe, natural calamities are very common;
insurance is of great importance. The literatures reviewed above clearly indicate that a
relatively little attention has been given by the professionals and researchers to the study
of life insurance. Thus the issues of life insurance products have been largely unexplored.
Problems and Prospect of Life Insurance in Bangladesh
12
As such, literatures on marketing of life insurance products throughout the world have
grown rapidly. It is a vital sector of our economy and its role in our national life is
indispensable. It has a good prospect for our country, although there are so many
problems in life insurance in Bangladesh. So smooth functioning of this sector is utmost
necessary. If we want to ensure proper operation of insurance business, the constraints
behind this field are to be identified and resolved.
The main objectives of this study are to unveil the problems that inhibit the growth and
development of life insurance business in Bangladesh. The other objectives of this study
are to generate some suggestions to overcome the problems identified so as to ensure
smooth functioning and growth of insurance. To know about the prospect of life
insurance of Bangladesh is also another objective of this study.
The data of this study were collected from both primary and secondary sources. The
primary data were collected through interview with aid of an interview schedule. A total
number of 20 respondents randomly selected were interviewed. The sample respondents
comprised of 5 insurers from life insurance, 10 policyholders and 5 non-policyholders.
This study faced a number of problem and complexity during the operation that
ultimately limited its purposes thoroughly. The limitations of the study were as follow:
The time frame for this study was one of the major limitations. This kind of studies
essentially needs a secondary data collecting team for the survey. Moreover such time
frame doesn’t allow the collection of all necessary data from all the respondents.
It becomes too hard for us to collect necessary information and prepare a standard report.
Without enough funds, these types of studies research cannot reach up to the desired
standard.
Lack of experience in this field
Lack of proper authority to conduct the interview program
Life insurance is a type of insurance in which one person makes regular payments so
that he receives a sum of money when he is a particular age, or so that his family will
receive a sum of money when he dies.
According to M.N. Sharma— Life insurance may be defined as a contract, where by the
insurer, in consideration of a premium, paid either in a lump-sump or in periodical
installments, undertakes to pay, an annuity or a certain sum of money, either on the
death of the insured or on the expiry of a certain number of years.
About the definition of life insurance Sir Judge Jesel said that it is a purchase of a
reversionary sum in consideration of a present payment of money or as is generally the
case of the payment of an annuity during the life of the party insuring.
It is recognized that every things must have some own features or characters. Every
contract must also have some features; in the same way life insurance have some
features. The features of life insurance contract are described as follows—
1. Formal as well as specialty contract
Generally a contract may be three types, such as—
a. General contract
b. Specialty contract, and
c. Contracts of record
Life insurance contract is formal or specialty contract in terms of their characteristics.
The formalities of the specialty contract is that the contract must be—
There are some common elements for any contract, life insurance is also a contract so
the common elements of life insurance —
a. There must have two parties
b. Offer of one party and acceptance of that offer by another party.
Problems and Prospect of Life Insurance in Bangladesh
12
c. Free consent of the parties
d. Competencies of the parties
e. Person of sound mind
f. Legal consideration
g. Legal object
Following are the essential elements those are too much necessary for the life
insurance contract. The elements are shown in the following figure (Next page)–
Return of
The classification of Premium
Insurable interest in life insurance are shown in the following —
Warranties
Nomination
INSURABLE INTEREST
and
Assignment
4. Return on Premium
Ordinarily, the premium once paid cannot be refunded. However in the following case
the paid are returnable—
For reason of equity: Equity implies a condition that the insurer shall not receive the
price of running a risk he runs. Thus, there the contract does not come into effect or it
is held to be void ab initio.
5. Proximate Cause
The efficient and effective cause which causes the loss is called proximate cause. It is
real and actual cause of loss. If the cause of loss is insured, the insurer will pay;
otherwise the insurer will not compensate. But in case of life insurance proximate
cause is not essential because the insurer is bound to pay the amount of insurance
whatever may be the reason of death. It may be natural or unnatural. But in the
following cases proximate cause is essential for life insurance contract. These are –
1. War-risk
2. Suicide
3. Accident benefit.
The process of life insurance has been evolved to safeguard the interests of people from
uncertainty by providing certainty of payment at a given contingency. The insurance
principle comes to be more and more used and useful in modern affairs. Not only does it
serve the ends of individuals, or of special groups of individuals, it tends to pervade and
to transform our modern social order, too. The role and importance of life insurance are
discussed in the next page.
The life insurance provides safety and security to the individual or the family against the
loss on life or death of the insurer, because life insurance payment is made when death
occurs or the term of insurance is expired. The loss to the family at a premature death
and payment in old age are adequately provided by insurance. In other words, security
against premature death, and old age sufferings are provided by life insurance.
At the death of the owner of the mortgaged property, the property is taken over by the
lender of money and the family will be deprived of the uses of the property. On the other
hand, the mortgagee wishes to get the property insured because at the damage or
destruction of the property he will lose his right to get the loan repaid. The life insurance
will provide adequate amount to the dependents at the early death of the property-owner
to pay off the unpaid loans. Similarly, the mortgagee gets adequate amount at the
destruction of the property.
At the death of the husband or father, the destruction of family needs no elaboration.
Similarly, at destruction of property and goods, the family would suffer a lot. It brings
The elements of protection and investment are present only in case of life insurance. In
property insurance, only protection element exists. In most of the life policies elements
of saving predominates. These policies combine the programs of insurance and savings.
ii. In insurance the deposited premium cannot be withdrawn easily before the expiry of
the term of the policy. As contrast to this, the saving which can be withdrawn at any
moment will finish within no time.
iii. The insurance will pay the policy money irrespective of the premium deposited while
in case of bank-deposit; only the deposited amount along with the interest is paid.
The insurance, thus, provides the wished amount of insurance and the bank provides
only the deposited amount.
iv. The compulsion or force to premium in insurance is so high that if the policy-holder
fails to pay premiums within the days of grace, he subjects his policy to lapsation and
may get back only a very nominal portion of the total premiums paid on the policy.
For the preservation of the policy, he has to try his level vest to pay the premium.
After a certain period, it would be a part of necessary expenditure of the insured. In
absence of such forceful compulsion elsewhere life insurance is the vest media of
saving.
Individuals unwilling or unable to handle their own funds have been pleased to find and
outlet for their investment in life insurance policies. Endowment policies, multipurpose
policies, deferred annuities are certain better form of investment. The elements of
investment i.e. regular saving, capital formation, and return of the capital along with
certain additional return are perfectly observed in life insurance. An individual from his
own capacity cannot invest regularly with enough of security and profitability. The life
insurance fulfils all these requirements with a lower cost. The beneficiary of the policy-
holder can get a regular income from the life insurer, if the insured amount is left with
him.
Life insurance fulfills the needs of the human beings. It helps the human beings in case
of following fields—
Family needs
Old-age needs
Re-adjustment needs
The life insurance policies according to the duration may be in the four forms. Which
are as follows—
i. Whole life policy
ii. Term policy
iii. Endowment policy
iv. Survivorship policy
Whole life policies are issued for life. It means that the policy amount will be paid at
the death of the life assured. The life assures, thus, he can not get the policy amount
during his life time; only his dependents will get the advantages of this policy. The
whole life policies can be affected by either by payment of single premium, continuous
premium, or limited premium. The limited premium is most popular form of premium
for the whole life policies, because it is convenient to the policy-holders to arrange the
payment of premium during his income-earning period. In continuous premium
payment, this benefit is not available because premium is payable up to the life of the
policy-holder. This is loosing its importance because only the dependence of life
assured is getting the benefit.
Single premium payment Continuous premium payment Limited premium payment Convertible whole life policy
Pure endowment policy Ordinary endowment policy Joint life endowment policy Double endowment policy Educational endowment policy
Sandhani Life Insurance Co. Ltd Taranga Complex (3dr floor) 19,Rajuk
Avenue, Motijheel, Dhaka 1000
The Jiban Bima Corporation (JBC) is the lone state-owned life Insurance company in
Bangladesh, which started its maiden journey on May 14,1973 with assets and liabilities
worth TK. 15.70 crore (157 million) of defunct 37 life Insurance companies. Since its
inception, JBC is working among the people of Bangladesh with two basic objectives:
firstly, to cover the risks and raise savings habits among the people and secondly, create
funds for the country’s economic development through innovative life insurance
schemes.
Meanwhile, the life fund of Jiban Bima Corporation has shot up to TK. 577.3 crore (5773
million), the highest in industry, which was only TK. 21.83 crore (218.3 million) in 1973.
JBC has paid TK. 755.4 crore (7554 million) against various claims, the highest such
payments in the country’s life Insurance business. The JBC’s investment has reached TK.
578.25 crore (5.78 billion) from only TK. 19.7 crore (197 million) in 1973.
The JBC has the largest network all over the country with 6 regional, 10 zonal, 61 sales
and 365 branch offices.
Objectives
Vision
A business organization that covers risks and offers profits to make life a matter.
Mission
To help people improve their standard of livings with a saving content and create funds
for nation’s economic development.
The Head Office of Jiban Bima Corporation (JBC) is located at 24, Motijheel,
Commercial Area, Dhaka, Bangladesh with twelve storied own premise. The activities of
regional, zonal. Sales and branch offices of JBC is conducted through eight divisions.
The following table shows the concerned divisions of Head Office.
Policy Statistics
Serial Policy In force Insurance Amount
No. (TK. in Million)
1 Individual Insurance
i. No. of Policies:- 3,95,947 30,985.20
2 Group Insurance
i. No. of Institutions: - 231 17
ii. No. of Members:- 1,72,110
Existing Schemes
Delta Life Insurance Co. Ltd. established mainly through the initiative of a group of
Bangladeshi professionals then working abroad along with a few enthusiastic local
entrepreneurs, started its operation in December, 1986 after the Government of
Bangladesh allowed the private sector to operate in the insurance sector in 1984 to carry
on the business of insurance in the Private Sector. A brief explanation as to the growth of
Problems and Prospect of Life Insurance in Bangladesh
12
life insurance business in Bangladesh is in order here. Bangladesh declared independence
from the Pakistani rules on March 26, 1971 following which she had to witness a bloody
liberation struggle with the occupation forces lasting for 9 months before they were
defeated. Insurance business which was exclusively carried on in private sector before
independence was nationalized after liberation in 1972 primarily to address the emerging
situation of eroding public confidence in the industry that was left staggeringly short of
resources in the face of huge losses caused by the war of liberation.
Since inception, Delta Life set before itself a high standard of all round performance
coextensive with professional soundness and proficiency. It soon made a mark in the life
insurance arena by not only being the leader among the private sector indigenous
companies, but by undertaking and successfully implementing innovative and welfare
oriented life insurance schemes. It introduced an array of conventional life and group
insurance products - many of which were the first in Bangladesh. For the first time,
health insurance products were also introduced by Delta Life.
Two projects of the company namely Grameen Bima for the rural people and Gono Bima
for the poor and marginal savers of the urban areas were initiated to devote them slave
exclusively to marketing and management of these innovative products. We are happy to
report that we have achieved a good measure of success although there is a long way to
go.
These schemes that we have introduced have created great stir and enthusiasm among the
general mass who, before these projects started functioning, could not even dream of
owning a policy that provides the much needed life insurance coverage along with
facility of regular savings on a long-term basis. At a later stage i.e. in the year 2002, the
projects were merged into a division of Delta Life, namely, Gono Grameen Bima
Division. The GNGRB Division has been growing at a first rate of more than 25% p.a.
Delta Life can take pride in moulding the saving habits of the lower and middle class
people and transforming them into prospective policyholders. The potential is now so
strongly perceived that all life insurance companies - old and new alike - operating in the
country have started their own micro insurance products.
Cover Map
Lack of confidence
Lack of confidence upon insurers in one of the fundamental reasons for which
insurance business cannot a strong position in Bangladesh. Out of the total sample
about 65% opined that insurance in Bangladesh could not achieve the fullest faith of
people.
Non-settlement of claims
It is a complementary problem of the preceding one, 40% respondents mentioned that
the policyholders are suspicious about claim settlement at the maturity of their policies.
It is an indication of little faith on insurers, while focusing on claim settlement.
Economic adversity
Our country’s economy is low investing economy; people have low income, so their
saving is also poor. The per capita income is only USD-598 (2007). For this economic
adversity is the most significant problem for life insurance for our country.
Undue promotion
A very commonly noticed problem in every employment area of Bangladesh is the
undue promotion. Life insurance sector is also not free from this infamy. 40% of the
respondents answered in favor of undue practice with regard to promotion.
There are so many other problems for life insurance in Bangladesh. Some of these are
as follow—
Problems and Prospect of Life Insurance in Bangladesh
12
Lack of training, licensing difficulty, corruption, inadequate evaluation of performance
by the government, inflation, rapid premium payment system, delay in claim
settlement, illiteracy, work economic base, low rate of industrialization, backwardness
of mentality, ignorance about claim settlement procedure, non-disclosure of material
fact, and anti- religious.
Clear opportunity
The responsibility and authority of the employees should be made clear. In many cases
the private owners locks the information and necessary documents in their own hands.
Instead of this practice, the concerned officers should be given adequate freedom to
discharge their duty.
Conclusion
Insurance is a key mechanism to handle risk. This means insurance protects those
unfortunates who suffer heavy financial impact of anticipated misfortunes by
distributing the loss among many who are exposed to the risk of similar misfortunes. It
is a core component of financial infrastructure of a country. As people are exposed to
new type of risks in everyday life they increasingly feel the importance of life
insurance. Life insurance in Bangladesh is facing multidimensional problems. As
consequences of these problems, the pace of development of life insurance in our
country is very slow. Therefore, currently identified problems should be solved to
accelerate the growth of life insurance in our country. In this regard, proper, fair, and
quick settlement of claims, wide publicity, and diversification of insurance products,
customer responsiveness, and cost control trained personnel, dedication and honesty of
employees and positive steps from the government are required.
www.deltalife.bd.com
www.jibanbima.org.bd.com
www.bia.org.com