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CHAPTER NO 1- OVERVIEW OF INSURANCE

1.1 INTRODUCTION OF INSURANCE
With largest number of life insurance policies in force in the world,
Insurance happens to be a mega opportunity in India. Its a business
growing at the rate of 15-20 per cent annually and presently is of the
order of Rs 450 billion. Together with banking services, it adds about 7
per cent to the countrys GDP. Gross premium collection is nearly 2 per
cent of GDP and funds available with LIC for investments are 8 per cent
of GDP.Yet, nearly 80 per cent of Indian population is without life
insurance cover while health insurance and non-life insurance continues
to be below international standards. And this part of the population is also
subject to weak social security and pension systems with hardly any old
age income security. This itself is an indicator that growth potential for
the insurance sector is immense.
A well-developed and evolved insurance sector is needed for economic
development as it provides long term funds for infrastructure
development and at the same time strengthens the risk taking ability. It is
estimated that over the next ten years India would require investments of
the order of one trillion US dollar. The Insurance sector, to some extent,
can enable investments in infrastructure development to sustain economic
growth of the country.
Insurance is a federal subject in India. There are two legislations that
govern the sector- The Insurance Act- 1938 and the IRDA Act- 1999.
Tracing the developments in the Indian insurance sector reveals the 360
degree turn witnessed over a period of almost two centuries.
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1.2 TYPES OF INSURANCE
1) Life Insurance
Life insurance is a guarantee that your family will receive financial
support, even in your absence. Put simply, life insurance provides your
family with a sum of money should something happen to you. It thus
permanently protects your family from financial crises.
In addition to serving as a protective cover, life insurance acts as a
flexible money-saving scheme, which empowers you to accumulate
wealth-to buy a new car, get your children married and even retire
comfortably. Life insurance also triples up as an ideal tax-saving scheme.
Some outstanding advantages of life insurance
a) It is superior to an ordinary saving plan: This is so because unlike
other savings plans, it affords full protection against risk of death. In case
of death, the full sum assured is made available under a life assurance
policy, whereas under other savings schemes the total accumulated
savings alone will be available. The latter will be considerably less than
the sum assured, if death occurs during early years.
b) Insurance encourages and forces thrift: A savings deposit can be too
easily withdrawn. Many may not be able to resist the temptation of using
the balance for some less worthy purpose. On the other hand, the payment
of life insurance premiums becomes a habit and comes to be viewed with
the same seriousness as the payment of interest on a mortgage. Thus,
insurance, in effect brings about compulsory savings.


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c) Easy settlement and protection against creditors: The Life Assured
can name a person or persons to whom the policy moneys would be
payable in the event of his death. The proceeds of a Life insurance Policy
can be protected against the claims of the creditors of the Life Assured by
effecting a valid assignment of the policy. A Married Womens Property
Act policy constitutes a trust in favor of the wife and/or children and no
separate assignment is necessary. The beneficiaries are fully protected
from creditors except to the extent of any interest in the policy retaining
by the assured.
d) Ready marketability and suitability for quick borrowing: After an
initial period, if the policyholder finds him unable to continue payment of
premiums he can surrender the policy for a cash sum. Alternatively, he
can surrender the policy for a by taking a loan on the sole security of the
policy without delay. Further, a life insurance policy is sometimes
acceptable as security for a commercial loan.
e) Tax relief: For computing Income-tax the Indian Income-tax Act
allows deduction from Income-Tax payable, a certain percentage of a
portion of the taxable income of individual or Hindu Undivided Families
which is diverted to payment of insurance premiums. When this tax relief
is taken into account it will be found that the assured is in effect paying a
lower premium for his insurance.
2) Non- Life Insurance
a) Property
Personal and Business property insurance that covers risks against fire,
marine ,theft and burglary. The types of insurance under this category
are:
Home Insurance
Business Insurance
Commercial Insurance
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b) Liability
This protects the insured against injury or damage claims made by a third
party. The types of insurance under this category are:
1) Motor Insurance
2) Workmen Insurance
3) Aviation Insurance
4) Project and Engineering Insurance
c) Health
In case of an illness or injury suffered by the insured or his/her
dependents, health insurance covers their medical expenses incurred. The
types of insurance under this category are:
1) Hospital Insurance
2) Medical cover
1.3 FUNDAMENTAL PRINCIPLES OF INSURANCE
Some useful terms in Insurance:
1) Indemnity
A contract of insurance contained in a fire, marine, burglary or any other
policy (excepting life assurance and personal accident and sickness
insurance) is a contract of indemnity. This means that the insured, in case
of loss against which the policy has been issued, shall be paid the actual
amount of loss not exceeding the amount of the policy, i.e. he shall be
fully indemnified. The object of every contract of insurance is to place
the insured in the same financial position, as nearly as possible, after the
loss, as if he loss had not taken place at all. It would be against public
policy to allow an insured to make a profit out of his loss or damage.


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2) Utmost Good faith
Since insurance shifts risk from one party to another, it is essential that
there must be utmost good faith and mutual confidence between the
insured and the insurer. In a contract of insurance the insured knows more
about the subject matter of the contract than the insurer. Consequently, he
is duty bound to disclose accurately all material facts and nothing should
be withheld or concealed. Any fact is material, which goes to the root of
the contract of insurance and has a bearing on the risk involved. It is only
when the insurer knows the whole truth that he is in a position to judge
(a) whether he should accept the risk and (b) what premium he should
charge. If that were so, the insured might be tempted to bring about the
event insured against in order to get money.
3) Insurable Interest
A contract of insurance affected without insurable interest is void. It
means that the insured must have an actual pecuniary interest and not a
mere anxiety or sentimental interest in the subject matter of the insurance.
The insured must be so situated with regard to the thing insured that he
would have benefit by its existence and loss from its destruction. The
owner of a ship run a risk of losing his ship, the chartered of the ship runs
a risk of losing his freight and the owner of the cargo incurs the risk of
losing his goods and profit. So, all these persons have something at stake
and all of them have insurable interest. It is the existence of insurable
interest in a contract of insurance, which distinguishes it from a mere
watering agreement.



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4) Risk
In a contract of insurance the insurer undertakes to protect the insured
from a specified loss and the insurer receive a premium for running the
risk of such loss. Thus, risk must attach to a policy.
5) Mitigation of Loss
In the event of some mishap to the insured property, the insured must take
all necessary steps to mitigate or minimize the loss, just as any prudent
person would do in those circumstances. If he does not do so, the insurer
can avoid the payment of loss attributable to his negligence. But it must
be remembered that though the insured is bound to do his best for his
insurer, he is, not bound to do so at the risk of his life.
6) Subrogation
The doctrine of subrogation is a corollary to the principle of indemnity
and applies only to fire and marine insurance. According to it, when an
insured has received full indemnity in respect of his loss, all rights and
remedies which he has against third person will pass on to the insurer and
will be exercised for his benefit until he (the insurer) recoups the amount
he has paid under the policy. It must be clarified here that the insurer's
right of subrogation arises only when he has paid for the loss for which he
is liable under the policy and this right extend only to the rights and
remedies available to the insured in respect of the thing to which the
contract of insurance relates.




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7) Contribution
Where there are two or more insurance on one risk, the principle of
contribution comes into play. The aim of contribution is to distribute the
actual amount of loss among the different insurers who are liable for the
same risk under different policies in respect of the same subject matter.
Any one insurer may pay to the insured the full amount of the loss
covered by the policy and then become entitled to contribution from his
co-insurers in proportion to the amount which each has undertaken to pay
in case of loss of the same subject-matter.
In other words, the right of contribution arises when (i) there are different
policies which relate to the same subject-matter (ii) the policies cover the
same peril which caused the loss, and (iii) all the policies are in force at
the time of the loss, and (iv) one of the insurers has paid to the insured
more than his share of the loss.














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CHAPTER NO 2 - CUSTOMER SERVICES
2.1 INTRODUCTION TO CUSTOMER SERVICES
Customer services what does it mean? The answer is the Customer
services are the services, they are the facilities, which are required by the
customers. Customer services has been always important but todays
customers have so much freedom of choice than in the past decade that
the market place for every product, for every service is considerably more
competitive. A company can outperform rivals only when they can
provide the best quality of the services as compared to his competitors.
Customer services cannot be directly provided to the customers because it
is firstly important to understand the needs of the customer, his wants and
desires after that it will be easier for the seller to provide customer with
better services and ultimately secure their loyalty. In this way the seller or
the organization will also be able to allocate its available resources in a
way that gives him the greatest return possible.
The modern concept of the customer services has its roots in 18
th
century
but now with the rising dominance of the service sector in the global
economy customer service has grown in importance , as its impact on
individuals households firms and societies has become wide spread.
Definitions of Customer service
Here are some of the definitions of customer services in use today:
Customer Service is the ability to provide a service or product in the
way that it has been promised.
Customer service is the ability of an organization to constantly and
consistently exceed the customers expectations.
A customer defines good Customer service as how he or she perceives
that an organization has delighted him or her by exceeding to meet his or
her needs.
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Customer service has to be a team effort and not just the responsibility of
employees who deal with the public directly. Providing good customer
service is a vital part of managing a business. Most customers have the
option to go elsewhere if the quality of customer service is lacking. On
the other hand, good customer service is a source of competitive
advantage. Good customer service leads to customer satisfaction.
Satisfied customers are more loyal and profitable. Dissatisfied customers
take their money elsewhere and tell their friends about the poor service
they have received.
Benefits of good Customer Services
The potential benefits to the firm from providing a consistently high level
of customer service include:
Increased sales more likely to try out other products/services
too.
Customer loyalty more likely to be a source of repeat business
and to recommend the business to friends and family.
Enhanced public image helps build a brand and provides
protection if there is a slip-up in customer service.
More effective workforce satisfied customers help create a
positive working environment.
It should be evident from the points made above that the benefits of good
customer service are interrelated, i.e.
Satisfied customers will lead to more sales from their own repeat
business and from the new customers generated by their
recommendations.
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A positive public image will generate more sales by attracting new
customers.
Staff who deliver good customer service receive their customers
appreciation and are further motivated to offer good customer
service and so on.
2.2 CUSTOMER SATISFACTION
The following ideas are usually considered to be fundamental in
achieving customer satisfaction:
1) The product or service must meet customer needs & wants i.e. it
must be of good quality.2) Sales and promotional activities need to create
a positive experience for the customer. For example, the attitudes of
employees who make contact with customers should be positive and
professional. 3) After-sales service should also be positive and
appropriate (e.g. user training, help lines, servicing). Customers often
need reassurance after they have bought something that they have made
the right choice, or help in using a product properly.
Customer expectations of good customer service also play a part in
customer satisfaction. These expectations typically include factors such
as:
Safety and security
Clear and accurate information
Legal rights to be upheld
Impartiality and objectivity
Complaint, enquiry and suggestion procedures
Special needs catered for (e.g. disability access)
Ethical delivery
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CHAPTER NO -3 CUSTOMER SERVICES IN LIFE
INSURANCE
3.1 INTRODUCTION
Every parent would have chalked out a dream for their children long
before they have born and also expects that his family should be always
financially stable even when he reaches to his retirement age or after his
life. But what they cant imagine is what would happen if the
breadwinner doesnt return home one night.
The recent railway bomb blasts in Mumbai have reminded once again
how thin the line dividing life and death is. While emotional trauma due
to loss of life is one thing, the impact of financial stress that manifests
itself in due course, could be phenomenal. That kind of unfortunate
happening in the vicinity made many to believe and use the services of
life insurance. The customer services are nothing but mainly the products,
policies and plans of different life insurance companies.
LIC was the first life insurance company in India which provides the
services of life insurance but now there is lots of development of
insurance in private sector. ICICI prudential, Bajaj Allianz, MetLife
insurance and many more private insurance companies are development
to provide the life insurance services to the people.
It is true that customer service in life insurance makes the financial
provisions for the policyholders family like Whole life insurance but
along with that life insurance companies provides many more customer
services which goes along with the life of policyholders like
For providing such types of services life insurance companies charges
fixed amount of money periodically known as Premium.


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Insurance representatives (Agents, Development officers and brokers)
play a very important role in providing the services to the customers.
They should not only sell the policy to the person or remind him for the
premium payment but also provide the services of the problem solving of
the policyholder and very important service is during the time of
settlement of the claims on the death of the policyholder or maturity
whichever is earlier. There is also lot of development in providing the
services to the customers. They provide the developed services like life
insurance services through Internet or concept of Bancassurance and
many more.
So it becomes necessary to have the customer services of Life insurance
for the protection of the policyholder as well as his dependents.
Characteristics of Life Insurance Services
Life insurance services have number of unique characteristics that place
them in separate category compared to physical goods. These
characteristics create special marketing challenges. They are given below:
1) Intangibility: Life insurance services are intangible in nature. It is
quite different from other commercial products. The consumers have to
have faith in the services of life insurance provider. Services are
intangible and therefore, cannot be seen, felt or tasted. The customer has
to be encouraged, enthused and helped to visualize the unforeseen
tomorrow and usefulness of a life insurance products. Unlike tangible
products, there are no factories and production lines for life insurance.
2) Heterogeneity: Life insurance services are heterogeneous in their
nature. That is, they are highly variable. Each life insurance products of
the service is some what different from other products of the same
services.

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3) Inseparability: Very often services cannot be separated from their
provider. It is very important to understand the heart and the soul
relationship between product and service cost and quality. Life insurance
products continuous to exist over a long period of time, and for making
its service available, the3 insured person has to go on paying the purchase
price through out the term of the policy. This ensures that the benefits
already accrued under sale are not lost. Hence due to inseparability, direct
sale of services, is the only channel of distribution. In LIC, insurance
agents represent and help in promoting inseparable services.
4) Changing Demand: The success of life insurance service marketing in
turn depends on the ability of the firm to find a customer and to satisfy
his wants. For this purpose instead of trying to sell what can be produced
the business firm should produce what would satisfy his wants. It is a
buyers market by and large the seller that is the LIC has to take decision
whether to sell a particular policy to particular person or not on the basis
of information disclosed by the buyer himself in the proposed form.












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3.2 CRM IN INSURANCE
Life Insurance companies provide the service of selling the products,
collecting the premium and providing the claims after the death or on
maturity whichever is earlier.
But as insurance options broaden and products grow more complex,
customers seek superior, personalized service more than ever. Insurance
companies face increased competition from banks and brokerages. To
maintain competitive edge and viability, insurance companies are
focusing on delivering superior customer service. A comprehensive
customer relationship management (CRM) strategy address three
imperatives
(a) Sum providing a unified enterprise customer view.
(b) Sum retaining customers with great services.
(c) Sum controlling costs as the insurance company in question expands.
For Insurance Companies, knows thy customer can be a challenging
imperative. Customer data may be divided among product lines or among
legacy claims, policy and billing systems. If an insurance company has
expanded its customer base through mergers or acquisitions, its
information may be even more fragmented.
CRM enables insurance organization to use resources and technology to
optimize effectiveness and to leverage customer information to improve
the effectiveness and efficiency of sales and service processes. This
results in improved customer acquisition, customer retention and overall
profitability. CRM provides a platform that helps insurance companies
increase customer and agent loyalty through improved service.
CRM provides more efficient communication of information where it lets
insurance underwriters and operators access to customer product, policy
service claims and ongoing demand.

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Role of insurance agents in CRM
Agents act as intermediaries between the company and customer. Agent
can be used as an enabler for building an effective CRM system and be
part of an information management network operated by the insurance
agent. The customer-agent link is stronger than the agent-company link,
which in turn, is stronger than the customer company link customer
loyalty to the insurer depends on how strong the relationship is managed
by the agent with customers.
An agent has to strike towards building long-term relationship with
policyholders many techniques of CRM can be suggested, but all of them
depend on one simple principle the other person has to feel that his
concerns are uppermost in the agent mind.
Benefits of CRM
1) Improved Customer Retention-
In many organizations, customer information is typically fragmented
across lines of business, channels, product lines or business functions and
service processes are complex tasks that cross multiple systems and
involve much manual interaction. Fragmented information and the
resulting complex processes make it challenging to resolve customer
issues quickly and effectively. This is happening while customers expect
customer satisfaction by providing a comprehensive, up-to-the minute
view of customers and key business indicators.
2) Enhanced Customer Analysis-
CRM provides sales personnel and sales managers with complete views
of their current customers (whether customers are household, consumers,
commercial accounts or groups) and service requests in one work
window. It also allows them to collect sophisticated profile information
and track prospect opportunity, offer and quote histories.

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3) Problem Resolution and Claim excellence-
CRM functionality empowers service professionals at every level by
providing up-to-the-minute information and in-depth customer and
product knowledge. This enables quick and accurate problem resolution
and generates greater selling opportunities. CRM provides a state of the
art properly and casualty claims environment for the entire claims life
cycle from the first notice of loss of the claim. CRM claims capabilities
ensure a customer-centric view of the key service event in a
policyholders relationship with an insurer. Additionally, CRM claims
environment can environment can stream line processes, resulting in
improved adjuster efficiency and improved settlement times and
sufficient quality.
One of the most important aspects of customer service is knowledge
about the customers needs, wants and the capability to build them.
Customer service is an organizational approach to delight a customer.
Customer relationship building is a continuous process. CRM emphasis
towards building long-term relationship between the customer and the
organization. Today CRM as an interactive process to improve and
strengthen customer relationship. We set in motion, the process of
promoting a structure at different levels of customer care and to make this
structure visible and approachable to the policyholders, responsiveness of
the CRM will inspire greater confidence in the customer.
3.3 SOURCES FOR PROVIDING CUSTOMER SERVICES
Earlier there where only agents through which the insurance companies
can propose the people for their life insurance services but now the time
is changed apart from agents there are many other sources for providing
the services to the customers of life insurance. There are agents, brokers,
distribution channels, advertising. Insurance companies today are having
the above sources for providing customer services.
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Various Sources are:
1) Agents or Advisors
The agent is the main intermediary between the customer and insurer.
The customer agent link is stronger than the agent company link.
Customer loyalty to the insurer depends on how stronger the agents link
with the customer is. A death claim provides a tremendous opportunity to
strengthen this link. He is thus in the unique role of a person trusted by
both the parties to the transaction. His main functions would include:-
Understand the prospects needs and persuade him to buy a plan of life
insurance that suits his interests that suits his interest best.
Complete the formalities (paper work , medical examination) necessary to
get the policy expeditiously.
Keep in touch to ensure that changing circumstances are reflected in the
arrangements relating to premium payments , nomination and other
necessary alterations.
Facilitate quick settlement of claims. Be totally honest with both the
prospect and the insurer
2) Brokers
There is also the system of brokers in some of the countries , who canvass
business and place the same with insures, on terms that are standard or
even negotiated. Negotiation of terms will be necessary, if the needs of
the prosper are unique and not met by the benefits under the standard
plans of insurance. A broker usually does business for more than one
insurance company. He collects commission from the insurer with whom
the business is placed and does not charge the prospect.
In India however, till the beginning of the year 2002, the system of the
brokers was not permitted. The IRDA has powers to review the law in
these regards. Brokers have to obtain licenses from the government in
order to be able to procure business and receive commission therefore.
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3) Distributions channel
A distribution channel is the route by which the product (or offer)
prepared by the producer reaches the ultimate consumer (or buyer). The
distribution channel bridges the distance between the producer (point of
manufacture) and the consumer (point of sale). In the case of goods, the
product manufactured in the factory passes through wholesalers, stockiest
and retailers, before it reaches the consumer. In the case of life insurance ,
the agents is the primary component of agents , by whatever name called ,
is an important part, because it is he who, by creating and training agents
makes the channel effective. New agents wide the channel.
Equally important would be the other intermediaries, like brokers and
insurance consultants. Some life insurers are trying to eliminate
intermediaries to save costs. Direct selling is one such attempt. This is
increasing in foreign countries. In India, people, by and large know about
life insurance, but still have a lot of wrong notions about it. Personal
contracts by agents may continue to be necessary for quite some time.
4) Advertisements
Life insurance is rarely bought as a response to advertisements.
Advertisements are effective As reminders to intimate change of address,
pay premium, make nominations, etc. As information on bonus
declaration, special revival schemes, concessions, new plans, etc.
To build corporate image as financially strong, as responsible social
citizen, etc. The Regulations framed by the IRDA have made some
stipulations about advertisements about advertisements by insurers as
well as by intermediaries like agents. These stipulations apply to all
messages in the print and electronic media, hoardings, internet, leaflets,
business cards, etc., that urge others to buy life insurance.


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5) Banks
The insurer also try to use the extensive network of branches of banks.
The customers of both banks and life insurers are practically from the
same segments of population. Through the same contact, the prospect can
be helped to arrange for both bank deposits and life insurance. There
would be saving in infrastructure costs and overheads. New insurers find
this an easy way to access vast areas. It may be possible to develop
composite products having the elements of both life insurance and
banking. These trends have to develop.
So these were some of the sources through which insurance companies
can provide services through customers.
3.4 IMPROVED CUSTOMER SERVICE
In any organization customer service should be given top priority.
Organizations market share and profits can affect by the quality of
customer service, more so in the case of a service providing organization.
LIC is a service providing organization offering intangible and invisible
products, evaluating the performance is quiet difficult. Customer
satisfaction is dependent on the factors like the advantages he perceived
as accruing from the policy, the way the policy is presented to him and
the expectations regarding the services from the agent who is source
between the company and the customer. Furthermore, since the contract
runs for a very long period, sometimes few decades, customer must be
convinced about the creditability of the service the agent is going to offer.
With competitors entering in the market this has become all the more
important for LIC. In fact, to maintain the quality of the service and retain
the customer LIC needs to work harder.


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To do it successfully LIC must focus its attention on the following
points:-
1) Service at the branch-
While there is a lot of effort to train agents, Life Insurance Companies
has given little attention to improve the services at the various branches.
As a result customers often feel pain at the careless attitude of the
branch staff. The corporations also must take serious step to train its
branch staff and make them mare customer friendly. Life Insurance
Companies should also initiates steps to strengthen their information-
based connectivity between different branches so that customers can
deposits their premium at any of the branches.
2) Simplified policy documents-
In an insurance contract the clause must be simple and easy to
understand. In India, policyholders usually do not read the documents for
the simple reason that the way the clauses are framed therein they do not
make sense to the average reader. New players are introducing the free
look-in period. Whatever be the free part of it, the policyholder is being
made to go through the clauses or the policy conditions and to this extent
alone, it is a great achievement. In this regard Life Insurance Companies
should think and prove its leaders position in the market.
3) Right Insurance-
The problem of both the insurers and the insured that is confronting the
whole industry is that the distributor (the agent or the broker) is not
honest in communicating a product to the prospect. Little attention is
given to the proponents needs and risk profile and more to personnel
interest, whether in the form of high commission or achievement of high
targets. These acts of cleverness do not go a long way. More so, in a
business like insurance where credibility and trust are essential ingredient
for success.
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4) Trained agents-
It would be helpful for the LIC to have trained and educated agents who
can explain the nuances of the proposed contract and do the job of the
primary underwriter. It can increase the satisfaction level of the insurer
and lead to the higher retention ratio. Hitherto, agents were working like
sales persons interested in selling the product anyhow.
An agent is link between the insurer and the insured so that the
policyholder treats him as a representative of Life Insurance Companies.
In the absence of the positive role expected from these agents, the
policyholders might be deprived of the service that they and gets
dissatisfaction. The agents must learn to satisfy their policyholders in
contract that can retain customers interest in their policy and also in the
agents.
5) Informed Customer-
While some new products have been introduced in the market,
information related to them is not being introduced related to them is not
being communicated completely thereby putting the customer in
quandary. When a new policy is being introduced in the market it sounds
as if it is a competitive product rather than a genuine useful for customer.
The Life Insurance Companies must make sure that its products and the
customers properly understand their implication.







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CHAPTER NO -4
LAWS FOR PROTECTION OF CUSTOMERS IN LIFE
INSURANCE
4.1 INSURANCE ACT, 1938
The insurance act 1938 which came into effect from 1
st
July 1939 and
was amended in 1950 and later in 1999 is the principal enactment relating
to the business of insurance in India. The Act contains provisions
regarding licensing of agents and their remunerations, prohibition of
rebates and protection of policyholders interests. It also has provisions
placing limits on the expenses of insurers, use of funds and patterns of
investments, maintaining solvency levels and constitution of Insurance
Associations and Insurance Councils.
4.2 CONSUMER PROTECTION ACT 1986
In the past several decades, there had been a movement to safeguard the
interest of the customer. This has become known as a consumerism and
had developed a reaction to business ignoring the rights of consumers and
exploiting them. The following four consumer rights have been accepted
as basic.
1) The right to safety
2) The right to be informed
3) The right to choose
4) The right to be heard
Under this act a consumer as an individual or along with other individuals
or through a consumer organization, can approach the various forums
prescribed under the Act for redress, in case he is not satisfied with the
goods or services provided.

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In order to attend to complaints under this Act consumer dispute redressal
forums are to be established in each District level will hear complaints up
to the value of Rs. 500000 and the forum at the state will hear complaints
up to the value of 2000000. There is a provision also for the constitute of
a National Commission, which will attend to matters beyond the
jurisdiction of the state forums and also appeals against the decisions of a
State forum.
The COPA applies to the insurance business as well. Policyholders have
the right to seek redress against unfair practices or unsatisfactory service
from insures and from insurers and from agents. The majority of disputes
relating to insurance arise out of repudiation and delays in claims. on all
these matters , agents can help a great deal to mitigate the complaints or
grievance. A written presentation is a sure method of ensuring that the
correct information is given. Delays in office procedure can be avoided
through the agents personal intervention. Such delays often occur often
due to non compliance with requirements or ambiguity in title. If due
care is taken at the time of proposal and all material information supplied,
there cannot be a repudiation of a claim.
4.3 OMBUDSMAN
In exercise of the powers conferred by sub-section (1) of Section114 of
the Insurance Act ,the Central Government has framed rules known as
Redressal of Public Grievances Rules, 1998, whereby Ombudsman are
appointed. Ombudsman is appointed by the Governing body of the
Insurance council. Their function is to resolve complaints in respect of
disputes between policyholders and insurers in cost effective, efficient
and impartial manner.
The complaints of the ombudsman may relate to (a) partial or total
repudiation of claims (b) any dispute regarding premium paid or payable
in terms of policy.
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(c) any dispute on the legal construction of the policy relating to claims
(d) delay in settlement of claims (e) non-issue of any insurance document
to customers after receipt of premium.
The ombudsman shall act as counsel and mediator in matters within its
terms of reference. It is not a judicial authority. It has no right to summon
witness. It has to make its decision on the basis of documents submitted
to make personal submissions. But lawyers are not permitted to argue the
case.
A complaint can be made within one year after the insurer had rejected
the representation. The subject matter should not be already before any
court or consumers forum or arbitration.
4.4 MARRIED WOMENS PROPERTY ACT 1874
Section 6 of MWP Act provides that a policy of insurance effected by any
married man on his own life and expressed on the face of it for the benefit
of his wife and children shall be deemed to be a trust for the benefit of his
wife and children and shall not be subject to the control of the life assured
or his creditors or form part of his estate.












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CHAPTER NO 5 PROFILE OF LIC
5.1 INTRODUCTION
Life Insurance Corporation of India (LIC) is the largest insurance
group and investment company in India. Its a state-owned
where Government of India has 100%stake. LIC also funds close to
24.6% of the Indian Government's expenses. It has assets estimated of
13.25 trillion (US$241.15 billion). It was founded in 1956 with the
merger of 243 insurance companies and provident societies.
Headquartered in Mumbai, financial and commercial capital of India, the
Life Insurance Corporation of India currently has 8 zonal Offices and 113
divisional offices located in different parts of India, around 3500
servicing offices including 2048 branches, 54 Customer Zones, 25 Metro
Area Service Hubs and a number of Satellite Offices located in different
cities and towns of India and has a network of 13,37,064 individual
agents, 242 Corporate Agents, 79 Referral Agents, 98 Brokers and 42
Banks (as on 31.3.2011) for soliciting life insurance business from the
public.
The slogan of LIC is "Yogakshemam Vahamyaham" which translates
from Sanskrit to "Your welfare is our responsibility". The slogan is
derived from the Ancient Hindu text, the Bhagavad Gita's 8th Chapter,
22nd verse. The literal translation from Sanskrit to English is "I carry
what you require". The slogan can be seen in the logo, written in
Devanagiri script.



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5.2 HISTORY OF LIC
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
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valuations of companies should be certified by an actuary.
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 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
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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-organisation 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, 109
divisional offices, 8 zonal offices, 992 satellite offices and the Corporate
office. LICs Wide Area Network covers 109 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 Centres 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.


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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.
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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 ,Insurance Company Ltd., the
New India Assurance Company Ltd, Oriental Insurance Company Ltd.
and the United India Insurance Company Ltd. GIC incorporated as a
company.


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5.3 OBJECTIVES OF LIC
1) 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.
2) Maximize mobilization of people's savings by making insurance-linked
savings adequately attractive.
3) 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.
4) Conduct business with utmost economy and with the full realization
that the moneys belong to the policyholders.
5) Act as trustees of the insured public in their individual and collective
capacities.
6) Meet the various life insurance needs of the community that would
arise in the changing social and economic environment.




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5.4 MISSION AND VISION
"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."
Vision
"A trans-nationally competitive financial conglomerate of significance to
societies and Pride of India."
















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CHAPTER NO -6 CUSTOMER SERVICES SYSTEM IN
LIC
6.1 POLICIES OFFERED BY LIC
A) INSURANCE PLANS
Insurance plans are policies that talk to you individually and give you the
most suitable options that can fit your requirement. 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.
a) Children Plans
1) LIC Jeevan Anurag Plan
LIC Jeevan Anurag Plan is a plan designed specifically to take care of
your childs education needs. In this plan, you get an Assured Benefit and
Death Benefit. On death of the Life Insured, the Sum Assured is paid
immediately to the nominee and all future premiums are waived off, but
the policy continues. Payment of 20% of the Basic Sum Assured at the
start of every year during last 3 policy years before maturity, and on
maturity the remaining 40% of the Sum Assured along with the bonus
would also be paid, irrespective of whether the life insured is alive or not.
Key Features of LIC Jeevan Anurag Plan
Double Benefit Plan. On Maturity the remaining 40% of the Sum
Assured along with the bonus would be paid. Premium needs to be paid
till maturity and in case of an early death, future premiums are waived
off.

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Benefits you get from LIC Jeevan Anurag Plan
Death Benefit In case of death of the Life Insured, the nominee would
get the Sum Assured immediately. The future premiums would be waived
and again 20% of the Basic Sum Assured at the start of every year during
last 3 policy years before maturity and then the Maturity Benefit would
also be paid.
Survival Benefit On Survival of the Life Insured, he receives 20% of
the Basic Sum Assured at the start of every year during last 3 policy years
before maturity.
Maturity Benefit On maturity, the life insured or his nominee gets the
remaining 40% of the Sum Assured plus the Bonus.
Income Tax Benefit - Life Insurance premiums paid up to Rs. 1,00,000
are allowed as a deduction from the taxable income each year under
section 80C.
2) LIC Child Career Plan
LIC Child Career Plan is a Money Back Endowment Plan for the benefit
of a child such that Sum Assured plus Bonus is paid immediately to the
nominee on death of the Life Insured after commencement of risk.
However, if the child outlives the entire tenure, then he actually received
105% of the Sum Assured. He would receive 30% of the Sum Assured
along with vested Simple Reversionary Bonuses 5 years before the date
of expiry of policy term. Then he would receive 15% of the Sum Assured
in the last 4 years, 3 years, 2 years and 1 year before Maturity of the
policy. Also, when the policy matures, he would receive the remaining
15% of the Sum Assured along with Final Addition Bonus, if any.




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Key Features of LIC Child Career Plan
1) This plan provides the risk cover on the life of child not only during
the policy term but also during the extended term of 7 years post
maturity.
2) The Survival Benefit is 30% of the Sum Assured along with vested
Simple Reversionary Bonuses 5 years before the date of expiry of policy
term and 15% of the Sum Assured in the last 4 years, 3 years, 2 years and
1 year before Maturity of the policy.
3) Maturity Benefit is 15% of the Sum Assured along with Final Addition
Bonus, if any declared.
4) There is an additional rider of Premium Waiver Benefit.
Benefits you get from LIC Child Career Plan
Death Benefit In case of death of the Life Insured, i.e. child after risk
commencement, the nominee would receive the Sum Assured plus
Bonus. However, if the Life Insured, i.e. the child dies before risk
commencement, then the nominee would receive all basic premiums paid
till date + 3% p.a. interest compounded annually.
Survival Benefit On Survival of the Life Insured, i.e. child, he receives
30% of the Sum Assured along with vested Simple Reversionary Bonuses
5 years before the date of expiry of policy term and 15% of the Sum
Assured in the last 4 years, 3 years, 2 years and 1 year before Maturity of
the policy.
Maturity Benefit On maturity, the Life Insured, i.e. the child gets the
remaining 15% of the Sum Assured plus the final addition Bonus.
Income Tax Benefit - Life Insurance premiums paid up to Rs. 1,00,000
are allowed as a deduction from the taxable income each year under
section 80C


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b) Whole life plans
1) LIC Whole Life Policy
The Whole Life Policy from LIC is a simple regular payment whole life
plan along with Bonus facility.
In this plan, the premium is paid for 35 years or till the life insured is 80
years old. The Life Insured can choose to withdraw the Sum Assured +
accrued Bonuses declared under the policy anytime after 40 years from
the date of commencement of the policy provided the life insured has
attained a minimum age of 80 years. However, if the Life Insured dies,
then his nominee would be given the Sum Assured + accrued Bonuses
and the policy would be terminated.
Key Features of the Whole Life Policy from LIC
1) This plan is a simple whole life plan with regular premium paying
term.
2) Death Benefit is Sum Assured + accrued Bonus.
3) After the Life Insured attains 80 years of age and completes 40 policy
years, he may choose to withdraw the Sum Assured + accrued Bonuses.
4) Simple Reversionary Bonus is payable on maturity or earlier death.
5) An additional Accidental Death Benefit rider can be opted for.
Benefits you get from the Whole Life Policy from LIC
Death Benefit In case of death of the Life Insured, the nominee would
get the Sum Assured + accrued Bonus.
Maturity Benefit This being a whole of life plan has no specific
maturity date. However, there is an option to withdraw the Sum Assured
+ accrued bonuses declared under the policy anytime after 40 years from
the date of commencement of the policy provided the life insured has
attained a minimum age of 80 years.

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2) LIC Jeevan Anand Plan
LIC Jeevan Anand is an endowment cum whole life policy along with
Bonus facility. This is a Double Death Benefit Plan if the life insured
survives till the end of the policy term. This plan has average premium,
high bonus rate and great liquidity features.
In this plan, the Life Insured receives the Sum Assured + Bonus as
Maturity Benefit but the life cover chosen continues till his death. Again
an additional Sum Assured is paid whenever the Life Insured dies. Thus
this plan is both an endowment plan and a whole life plan.
However, if the life insured dies before the completion of premium
paying term, i.e. within the policy tenure, the entire Sum Assured along
with accrued Bonus is paid to the nominee and the policy would
terminate.
There is also an additional Accidental Death and Disability Benefit is
payable till 70 years of age of the life insured.
c) Joint Life Plan
1) LIC Jeevan Saathi Plan
LIC Jeevan Saathi Plan is a joint life endowment policy. This plan pays
for the Death Benefit during the policy term for both husband and wife
but the Maturity Benefit is paid even if both or anyone are alive till the
end of the policy term. Hence it is a double death benefit plan.
In this plan, if any one of the husband or the wife dies within the policy
tenure, the Sum Assured is paid in a lump sum but the policy continues
but the future premiums are waived and paid by the insurance company.
If the last survivor also dies within the policy tenure, then the Sum
Assured is paid along with the accrued Bonus and the policy is
terminated.

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Key Features of LIC Jeevan Saathi Plan
1) This plan an endowment plan with guaranteed returns
2) This is a double cover joint life death benefit plan as Sum Assured is
paid on the death of BOTH the husband and the wife.
3) If only 1 of the 2 dies and the other one is living then Sum Assured is
paid but the policy continues by waiving off the future premiums
4) If the last survivor of the husband and wife dies within the policy
tenure, then the Sum assured + accrued Bonus paid as Death Benefit and
the policy is terminate.
d) Endowment Plans
1) LIC Jeevan Mitra Plan
LIC Jeevan Mitra is a simple endowment policy with 2 variants. One
variant is called Jeevan Mitra (Double Cover Endowment Plan) and
Jeevan Mitra (Triple Cover Endowment Plan). In this plan, if the Life
Insured dies within the policy tenure then his nominee would receive
Double or Triple the Sum Assured (according to the variant opted for) +
accrued Bonus. Now, if the Life Insured survives the entire term, then he
would receive basic Sum Assured + accrued Bonus.
Key Features of LIC Jeevan Mitra Plan
Death Benefit is double the Sum Assured + accrued Bonus for Double
Cover Endowment Plan and it is triple the Sum Assured + accrued Bonus
for Triple Cover Endowment Plan. Maturity Benefit is basic Sum
Assured + accrued Bonus.
2) LIC Jeevan Amrit Plan
LIC Jeevan Amrit Plan is a limited payment endowment policy with
bonus facility. Premium needs to be paid for a maximum of 5 years in
this plan but the cover continues till the end of the policy. The first year
premium under this plan is noticeably higher than the subsequent years
premium.
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In this plan, the Sum Assured + accrued Bonus would be paid as Death
Benefit if the life insured dies within the policy tenure. However, if he
lives till the policy maturity, then all the premiums paid till date along
with accrued Bonus would be paid as Maturity Benefit.
Key Features of LIC Jeevan Amrit Plan
1) This plan an endowment plan with guaranteed returns.
2) Sum assured + accrued Bonus paid as Death Benefit.
3) The premiums paid till date along with accrued Bonus is paid as
Maturity Benefit.
4) Premium needs to be paid only for 3 to 5 years in this plan.
5) The first year premium is much higher than the subsequent years
premiums so that the premium paying commitment is low.
6) There is a large Sum Assured rebate available under this plan.
B) 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.
1) LIC New Jeevan Nidhi Plan
LIC New Jeevan Nidhi Plan is a conventional with Profit Deferred
Annuity Plan. Thus, it is a traditional Pension Plan with Bonus facility.
How it works There are 2 phases in this plan- the Accumulation
Phase and the Vesting Phase. In this plan, premium needs to be paid till
the end of the Accumulation Phase under Regular Premium Payment
Option or in a lump sum under Single Premium Payment Option. This
plan offers Guaranteed Additions of Rs.50 per thousand Sum Assured for
each completed year, for the first five years. Bonus starts to accrue only
after completion of 5 policy years.
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In the Accumulation Phase, premium is paid to build the Retirement
Corpus which will be used for purchasing an Annuity.
The Retirement Corpus that is created to provide annuity for old age is
the (Sum Assured + accrued Guaranteed Additions + simple
Reversionary Bonus + Terminal Bonus).
Key Features of LIC New Jeevan Nidhi Policy
1) This plan is a deferred annuity plan with bonus facility
2) This plan offers Guaranteed Additions of Rs.50 per thousand Sum
Assured for each completed year, for the first five years
3) Bonus starts to accrue only after completion of 5 policy years
4) The corpus for annuity is (Sum Assured + accrued Guaranteed
Additions + simple Reversionary Bonus + Terminal Bonus)
5) Death Benefit before Vesting Date is also (Sum Assured + accrued
Guaranteed Additions + simple Reversionary Bonus + Terminal Bonus)
6) Optional higher cover through Accidental Death Benefit ride
7) There is large sum assured rebate in this plan
2) Jeevan Akshay VI
It is an Immediate Annuity plan, which can be purchased by paying a
lump sum amount. The plan provides for annuity payments of a stated
amount throughout the life time of the annuitant. Various options are
available for the type and mode of payment of annuities.
Mode: Annuity may be paid either at monthly, quarterly, half yearly or
yearly intervals. You may opt any mode of payment of Annuity..





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C) UNIT PLANS
Unit plans are investment plans for those who realise 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.
1) LIC Endowment Plus Policy
LIC Endowment Plus is a unit linked insurance plan (ULIP), where the
risk of investment is borne by the policyholder. If the Life Insured dies
within the policy tenure, the nominee would receive the Sum Assured or
the Fund Value, whichever is higher.
Key Features of LIC Endowment Plus
1) Unit linked insurance plan with choice of 4 investment funds.
2) Higher of Sum Assured or Fund Value will be paid as Death Benefit.
3) Choice of two riders is Accidental Death Benefit and Critical Illness
Benefit cover.
4) Option to decrease the Sum Assured during the policy tenure.
2) LIC Flexi Plus Plan
LIC Flexi Plus Plan is a simple Unit Linked Insurance Plan. Thus, it is a
Non-Traditional Insurance Plan without Bonus facility.
How it works In this plan, premium needs to be paid for the entire
policy tenure. The premium that is paid is invested in either of the 2
available funds-Debt Fund or Mixed Fund, as per the risk appetite of the
policyholder.
Thus, the Fund Value is paid on policy maturity as Maturity Benefit to
the policyholder. However, if the Life Insured dies within the policy
tenure, then the nominee gets the Sum Assured as immediate Death
Benefit and policy continues. The future premiums are waived off and
paid by the company so as to pay the Fund Value of policy maturity as
per schedule.

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Key Features of LIC Flexi Plus Insurance Plan
1) It is a simple Unit Linked Insurance Plan where the Sum Assured is
fixed at 10 times the Annualized Premium or 105% of the total premiums
paid including any premiums which have fallen due but not paid,
whichever is higher.
2) In this plan, premium needs to be paid for the entire policy tenure.
3) There are 2 funds for Investment -Debt Fund or Mixed Fund.
4) The Fund Value is paid on policy maturity as Maturity Benefit to the
policyholder.
D) HEALTH PLANS
1) LIC Jeevan Arogya Plan
LIC Jeevan Arogya is a non-linked Health Insurance Policy which helps
individuals to cope up with the rising medical costs. In this plan you can
cover yourself, spouse, children, parents as well as mother-in-law and
father-in-law. It is a comprehensive health insurance policy for the entire
family.
Key Features of LIC Jeevan Arogya
1) One health insurance policy that covers self, spouse, children, parents
and parents-in-law.
2) Covers hospitalisation, surgery and much more.
3) Provides benefit payout irrespective of actual medical cost incurred.
4) Can be availed along with existing mediclaim policy for the same
hospitalisation / surgery.
5) Cover can be extended to new members of the family in case of
marriage and childbirth.




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What is covered in LIC Jeevan Arogya?
1) Hospitalisation Cash Benefit (HCB).
2) Major Surgical Benefit (MCB) is 100 times the HCB / Accidental
Death Benefit (ADB).
3) Day Care Procedure Benefit paid as lump sum.
4) Other Surgical Benefits (where all other surgeries are covered) is 2
times HCB / ADB.
2) LIC Health Protection Plus
LIC Health Protection Plus is a unit linked insurance (ULIP) health
insurance policy that combines health insurance covers for the entire
family including husband, wife and the children.
How it works In this plan, premium is divided into 2 parts- one part is
utilized to provide health protection and the other part is utilized for
investment in the market linked fund.
In this plan, the policyholder has Health Cover for which he needs to
choose a HCB, i.e. Hospitalisation Cash Benefit, i.e. the daily cash
benefit on hospitalisation. Thus, if he is hospitalized, he would receive
HCB for the number of days of hospitalisation. HCB increases by 5%
every year.
Along with this coverage, the policyholder would also get Major Surgical
Benefit of 200 times the HCB. This Lump Sum amount would be
provided to the policyholder in case of diagnosis of any of the major
surgeries enlisted, irrespective of the amount spent of treatment. Also,
domiciliary treatment expenses are also paid for which there is no
requirement for hospitalisation.




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Key Features of LIC Health Protection Plus
1) Fund Value is paid as Maturity Benefit or on earlier death of the life
insured
2) Provides health cover for the entire family, including newborn from
the age of 3 months.
3) Both hospital cash benefit and major surgical benefit are covered.
Hence, this plan can be classified as individual health plan, family floater
and critical illness all three are covered in one plan.
6.2 COMPLAINT HANDLING PROCEDURE OF LIC
In a vast Organization like LIC, catering to the various needs and
aspirations of millions of policyholders, grievances of customers do arise
occasionally. In order to redress these grievances LIC has established
elaborate Grievance Rederessal Machinery and the details are as under.
1) Grievance Redressal Officers:
Grievance Redressal Officers have been designated at all levels of the
Organization: At the Branch level: The Sr/Branch Manager At the
divisional level : The Marketing Manager at the zonal office. The
Regional Manager (Marketing) in case of Ordinary policies.
The Regional Manager (Pension and Group Schemes) in case of P&GS.
At the central level.The Addl. Executive Director/Chief
(Marketing/Customer Services) in case of Ordinary policies.
Chief (Pension and Group Schemes) in case of P & GS policies.
Policyholders can personally contact these designated Officials and seek
redressal of their grievances.The respective Grievance Redressal Officers
are available at their Offices for personal interviews with the customers
on all Mondays between 2.30 p.m. to 4.30 p.m. without prior
appointment.
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Customers can meet the Grievance Redressal Officers on other days also
with prior appointment. The names of the Grievance Redressal Officers
are displayed in the respective Offices and are periodically published in
the local
2) Complaint Cells:
For those customers who are not in a position to meet the Grievance
Redressal Officers in person, a Complaint Cell is functioning at the
Central, Zonal and Divisional Offices. They can send their written
complaints to these Offices. Such complaints are registered and
monitored with the respective servicing units for proper redressal.
3) Claims Review Committee:
In a few cases of death claims, LIC is put to the necessity of repudiating
them to safeguard the interest of the genuine policyholders. Claimants
who are dissatisfied with the decision of repudiation of claim can
approach the Claims Review Committees set up at all the seven Zonal
Offices and at the Central Office. These Committees comprise of senior
Officials of the Corporation and also retired High Court/District Judges
and they review the claims objectively and dispassionately to rule out any
miscarriage of justice to the claimant.
4) Complaints received through the Government:
Some of the aggrieved policyholders write directly to the Government of
India seeking redressal of their grievances. Such grievances are attended
to on a top priority basis. For this purpose, a special cell has been set up
at the Central Office level for monitoring and for satisfactory redressal.

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5) Policyholder Councils and Zonal Advisory Boards:
In all the 100 Divisional Centers, Policyholders Councils have been
established. Three policyholders of the area represent the interest of the
policyholders and interact with the Divisional Management on consumer
concerns. Similarly, at all the seven Zonal Centers, Zonal Advisory
Boards are functioning. Many consumer-activists are inducted as
Members to these Forums to protect the rights of the consumers.
6) Consumer Affairs Committee:
A Consumer Affairs Committee has been constituted at the Board level
with many eminent consumer activists and members of public joining as
members along with the Chairman and the Managing Directors of the
Corporation. This Committee looks into various areas of consumer
interests and advises the Corporation.
7) Citizens Charter:
LIC has adopted a Citizens Charter through which it reiterates its
commitments to the customers and the standards for general procedures,
the standards for policy servicing, the standards for easy access to
information for customers and the standards for fairness in dealing with
the customers have been laid down.






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CHAPTER NO 7 . CUSTOMER SERVICES-
CHALLENGES AHEAD

Customer service always remain at the top of an organizations agenda.
But in reality, not many organizations are able to deliver real customer
service. While the constraints are many, is it not possible to accomplish
delivering what we promise.
Customer service is the buzzword of the corporate world and a firm will
be better known by the quality of service it provides rather than its
market share or profit-earning capacity. While providing good and
efficient customer service is a prerequisite for any entity, it poses several
problems as far as service organizations are concerned. On account of the
invisible and intangible product, it makes the assessment of the service
provided, that much more complicated and difficult. This holds true for
an insurance organization and in fact, the problem is of very special
significance, especially in a life insurance product, where the contract for
a very long-term, sometimes to a few decades. Hence, it is very essential
for insurance companies to sustain the quality of service to retain the
loyalty of the client. All business entities claim to provide the best to
customer service, but how much of it is being translated into reality is a
question of doubt. In order to be sure that they are really delivering the
best service, business houses should first know clearly what the customer
expects and then ensure that the service is delivered.
Need for Explicit Policy Conditions
In an insurance contract, there are several clauses which maybe beyond
the comprehension of the policyholder as a part of the innate nature of an
insurance contract. While a part of it cannot be totally ruled out, insurers
should make these clauses as explicit as can be.
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This would pave the way for a reasonable settlement of the claim, if and
when it arises. In the absence of such a clarity and openness, it is bound
to lead to a situation wherein the two parties, the insure and the insurer,
would fail to come to consensus, leading to the intervention to the third
party viz., the legal mechanism. The courts normally take the ambiguity
of the clauses to work against the insurers and to this the extent, the
customer is well-protected. But why not avoid the whole episode by but
putting in place simple and comprehensible clauses! In India, the problem
is more complicated to the extent that no policyholder has the practice of
reading the clauses. In this regard, the new players deserve to be
complimented for the introduction of the free look-in period. Whatever be
the free part of it, the policyholder is being made to go through the
clauses or the policy condition and to this extent alone, it is a great
achievement.
Agents Priorities
Another problem that confronts the industry (both insurers as well as the
insured) is the lopsided priority of the distributor, either the agent or the
broker, in canvassing a product to the prospect. There is a certain tilt
towards his own interests in the form of higher commission and his
targets to be achieved rather than the proponents needs and the risk
profile. This could lead to a sense of dissatisfaction for the policyholder
and could possibly lead to an abortive end to the contract. One possible
solution to this problem could be having in place a better system of
remuneration to the agent, which would compel him to look at the long-
term perspective rather than the short-term interests like an immediate
high rate of commission.



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It would also be in interest of the industry to have more educated
distributors who can explain the nuances of the proposed contract to the
prospect and do the job of the primary underwriter, which he is purported
to be. This could eventually lead to lesser heartburns and a higher
retention ratio for the insurer. Further, an agent is the link between the
insurer and the insured.
For whatever service the policyholder requires during the term of the
contract, he looks up to the agent to be his representative. In the absence
of the agent playing this middlemans role positively, the policyholder
may be deprived of the services that he expects. This is one more reason
for a better regulated compensation system for the agent, in order to
sustain his interest in the continuation of the contract.
Retention of Business
Talking about retention ratios, one is compelled to know about the
insurers obsession about a higher retention ratio. One gets to hear that a
particular company is progressively improving its customer retention
ratio. Is it merely to satisfy the companys ego that these ratios are
considered from time to time, or are we objectively looking at the
improvement in retaining a client? Let us consider a few points in this
regard. As discussed above, the large skew in the agents commission
rates could be a factor for several contracts being terminated half way
through, if not in the initial years itself. By having a more regulated
commission payment system, perhaps, the agent would be more
interested in the continuation of the policy thereby leading to a possible
improvement in the retention ratio. Further when a contract is achieved
by the payment of a huge rebate, the policyholder may not have sufficient
motivation to continue the policy and could drop out at the slightest
possible excuse.

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It is a strong case for ruling against rebate payment in insurance, if it can
be helped. There maybe some other factor compelling a policyholder to
discontinue his life insurance contract like inability to sustain the
premium payment, other commitments etc. the insurance company has to
consider all these factors in absolute detail, in order that a genuine
retention ratio is improved in the long run.
The insurers should adopt a customer-centric approach rather than being
product-centric. This would ensure that the customer would not shift
loyalties as he develops a feeling that he is being taken care of. This
would have a ballooning effect on the business as it would ensure that the
satisfied client would spread the good word around. In this way, the
customer base can be widened to a great extent. It is not for nothing that
one says a satisfied customer is the greatest brand ambassador.
One positive development which would work towards the
accomplishment of this objective is the introduction of the riders in life
insurance policies. While the needs of the customer are multifaceted,
there cannot be a matching number of basic products for obvious reasons.
The role of riders comes into play exactly in such situations. What
exactly are these riders and how do they add to the flexibility of option
for a customer.
Ever ordered pizza from the neighborhood baker? If you did, you must be
aware that the first thing that the baker would ask is What is the topping
of your choice? Only after you make your choice can the order be
finalized, which goes to indicate that the toppings are the only
differentiating factor, while the pizza base remains the same. The riders
in a life insurance policy are exactly like the toppings of a pizza and can
be ordered as per ones needs. Just as the cost of the pizza changes by the
toppings that one prefers, the cost of the policy (or the total premium)
also changes with the rider that a policyholder orders for himself/herself.
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Above all, a policyholder can order several riders for himself/herself
(once again like the multiple toppings of a pizza) and pay for them
separately.
The convenience of having riders in a policy is that one does not need to
obtain a separate policy for each of the needs. By talking just one policy,
several needs can be fulfilled by going for several riders. In this aspect,
there is great deal of flexibility for the customer. The overriding factor,
however, is that these riders have to be paid for and in a few cases can be
quite expensive.
These are some of the riders that insurers offer. Not all these riders are
offered by all the insurers everywhere (not each of them is required by
every policyholder), but there are at least some which are available for
the policyholder. Life insurance is an assurance; whereby there is a
solemn promise to make payment, either on maturity or on earlier death.
Life insurance is still treated as an investment by several sections of the
society, especially in India and in this regard the premium spent on riders
may not provide any payment in return. This point must be clearly made
to be understood by the insured, so that it does not lead to any sort of
misgivings at the time of claim settlement.
The entry of foreign, private players into the insurance industry in India
marked the onset of several riders. While the trend in the earlier era was
to have bundled products, the new players are emphasizing the
importance of riders. Most of the new players have only a few base
products to offer and their contention is, by mixing different
combinations of riders, several policies can be designed. They are
leveraging on the utilities of these riders to come up with customized
solutions, rather than rigid bundled products.


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Need for Healthy Competition
It is a universal fact that there is resistance to change. This holds good in
the insurance domain as well. The policyholder, on his part, is resistant to
changes occurring in the domain, post-liberalization, or he has been so
attuned to the working of insurance companies that he is not able to
appreciate anything novel in this regard. The incumbent insurance
companies suffer from a similar limitation and are finding it very hard to
come to grips with a competitive scenario. In the process, the customer
has to pay the price. Being incumbents, if the public sector behemoths
take the lead in spreading a healthy competition, it would be better for the
industry as well as the customer in the long run. The competition that one
gets to see presently is leaving a lot to be desired.
While some new products and riders have been introduced into the
market, information with regard to them is not being disclosed
completely thereby putting the customer in a quandary. In some cases, it
sounds as if one company is announcing the onset of a new product just
as a competition for another, rather than a genuine customer interest. If
this is the trend, are we not being production-centric rather than
customer-centric and defeating the very basic tenet? Insurance companies
should try to see beyond mere alternatives to products and at coming out
with customized solutions for the policyholder.
The best thing that has happened in the post-liberalization scenario is the
introduction of brokers into the system. These brokers, being better
literate and also being neutral to any particular company can be good
crusaders for the policyholders. However, the institution has not taken off
to the expected level and the market is yet to experience positive results.



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Innovation Product Line
The customer of today is having more to choose in terms of policy
instruments of policy instruments as new players have come up with
innovative product. Naturally, the policies issued by LIC need to be seen
in this light and suitable steps taken to customize the products. Hitherto,
when challengers were not there LIC could get a way with whatever
products it had to offer. The customer had no inkling as to what insurance
could offer by way of products. Obviously, he was satisfied with
whatever he could get. Entry of new players has changed all this. As the
new players are coming up with their innovative products the customers
expectations are rising. Even through LIC is the market leader, it still
needs to change its product mix to suit customer needs. Further it can
carve out a niche for itself with the help of these innovative product lines.
In fact LIC has already started launching these products with a view to
targeting new markets.
Challenges faced by Life Industry
Life insurance industry all over the world is in a state of turbulence and
turmoil due to rapid changes in the financial global market place and
challenges from the competitors. The challenges being faced by the life
insurance industry at present are the result of:
Reforms in industrial policy and industrial licensing investment
promotions expenditure control etc.
a) Reforms in trade policy and changing regulations, price stability, and
taxation etc.
b) Industry image problems and methods of conducting business.
c) Industry image problems and methods of conducting business.
d) Low productivity and high cost of agency organization.
e) Reducing controls on imports of investment norms.
f) Changes in the external environment for life insurance market.
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CHAPTER NO:- 8
ANALYSIS OF DATA
1) Which LIC Scheme do you have?
Schemes No of Respondents
Pension Plans 20%
Health Plans 50%
Children Plans 20%
Others 10%

8.1 Graph showing how many customers have which LIC
Scheme

Source :- By Researcher Data








0
10
20
30
40
50
60
Pension Plans Health Plans Children
Plans
Others
No of Respondents
No of Respondents
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2) Are you Satisfied with Insurance Plans you have?




8.2 Graph Showing how many customers are satisfied with
Insurance Plans



Source :- By Researcher Data
3) Are you Satisfied with the services provided by the LIC regarding
new Policies and Schemes ?



8.3 Graph Showing how many customers are satisfied with the
services provided by LIC regarding new Policies and Schemes

Source :- By Researcher Data
0
10
20
30
40
50
60
70
Yes No
0
10
20
30
40
50
60
70
80
Yes No
Yes 60%
No 40%
Yes 70%
No 30%
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4) What attracts you towards LIC ?
Options No of Respondents
Reputation 15%
Services 30%
Goodwill 15%
Security 40%

8.4 Pie Diagram showing what attracts you towards LIC

Source :- By Researcher Data









No of Respondents
Reputation
Services
Goodwill
Security
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5) Do you have any other Insurance Plans apart from LIC?





8.5 Graph showing how many customers have Insurance Plans
apart from LIC




Source :- By Researcher Data









0
10
20
30
40
50
60
70
80
Yes No
Yes 30%
No 70%
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CHAPTER NO 9
FINDINGS
Manager
1) Customers are really very important for the insurers because of
them today insurance industry is existing.
2) LIC often conduct the seminars and workshop for the employees
but at smaller level but the big seminars and workshops are
conducted in our head office.
3) Along with our policy services like whole life policies, joint
policies LIC also provide technological services and many more.
4) LIC define customer service as an attempt of bank to satisfy the
insurance needs of customers to their entire satisfaction.
5) Providing good. Timely, prompt and effective customer service to
the expectation of customers.
6) Firstly our advisors then brokers , banks and then News papers,
Television, Hoarding, we use such type of means to publish our
customer services.
7) Yes, the Insurance Company has special customer service
department which solves the problem of the customers.







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Customers
1) 20% customers have Pension plans, 50% have Health Plans,
20% have Children Plans and 10% customers have other LIC
Scheme.
2) 60% customers are satisfied with the Insurance Plans and 40%
are not satisfied with the Insurance Plans they have.
3) 70% customers are satisfied with the services and 30% are not
satisfied with the services provided by the LIC regarding
new Policies and Schemes.
4) 15% customers are attracted towards LIC because of its
Reputation, 30% are attracted towards LIC because of its
Services, 15% customers are attracted towards LIC because of
its Goodwill, 40% customers are attracted towards LIC because
of its Security.
5) 30% customers have Insurance Plans apart from LIC and 70%
customers dont have Insurance Plans apart from LIC.














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CONCLUSION
Life Insurance is essentially a service industry, where in services of
varied nature in form of policies, schemes or products are being rendered
to customers and the general public. In todays world it is difficult for
insurance companies to encourage people to try their services because
there are today large number of life insurance companies having large
scale expansions of branches due to which the life insurance industry has
today shows its competitive picture.
Within the world of life insurance, customers need have not changed, nor
has the basic nature of the insurance service they require. However the
ways meet these needs and the frame within which they are delivered,
have altered and so the customers today are not selective regarding
services but they are selective regarding the ways through which life
insurance companies serve their needs. Banks today are providing highly
technological developed services like Bancassurance, Internet facilities,
online services. Today insurance industry is crossing every limit of
improvement in their services.
Thus the concept of customer service in life insurance does not conclude
here today life insurance companies are everyday, every minute trying to
find new formulas improvement in their services.

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SUGGESTIONS
In the modernized well advanced hi-tech approach to the customer every
possible facilities and effort to build up the confidence of the rising policy
holders towards Insurance companies, to complete one another nothing is
left to recommend. But some recommendations that are intensely felt and
highly required for insures to sustain in the market. These are as follows:
a) More and More transparency should be ascertained between insurers
and policyholders.
b) Particularly in the emerging boom in the insurance company, every
insurance company should be customer centered, and well versed in the
handling of problem and grievances of the policy holders.
c) Each and every product launched by the insurance company should be
in the favour of increasing need of policy holders.
d) IRDA should be more and more responsible to the insurance sector by
determining some standard. It should be mandatory to every insurers to
make more and more responsible and responsive to the policy holders so
that comprehensive understanding may be developed among policy
holders. It may be beneficial on both sides.








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BIBLIOGRAPHY
1) Books
a) Principles and Practices of Insurance- Dr. P.Periasamy
b) Innovation In Banking and Insurance- Vipul Prakashan
2) Web-sites
a) www.irdaindia.org
b) www.insuremagic.com
c) www.licindia.com