Introduction
Life insurance is a contract between an insured (insurance policy holder) and an insurer, where the insurer promises to pay a designated beneficiary a sum of money (the "benefits") upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger payment. The policy holder typically pays a premium, either regularly or as a lump sum. Other expenses (such as funeral expenses) are also sometimes included in the benefits. Life Insurance is the fastest growing sector in India since 2000 as Government allowed Private players and FDI up to 26% and recently Cabinet approved a proposal to increase it to 49%. Life Insurance in India was nationalized by incorporating Life Insurance Corporation (LIC) in 1956. All private life insurance companies at that time were taken over by LIC. In 1993, the Government of India appointed RN Malhotra Committee to lay down a road map for privatization of the life insurance sector. While the committee submitted its report in 1994, it took another six years before the enabling legislation was passed in the year 2000, legislation amending the Insurance Act of 1938 and legislating the Insurance Regulatory and Development Authority Act of 2000. The same year the newly appointed insurance regulator - Insurance Regulatory and Development Authority IRDA—started issuing licenses to private life insurers. The advantage for the policy owner is "peace of mind", in knowing that the death of the insured person will not result in financial hardship for loved ones and lenders. It is possible for life insurance policy payouts to be made in order to help supplement retirement benefits; however, it should be carefully considered throughout the design and funding of the policy itself. Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot and civil commotion. Life-based contracts tend to fall into two major categories:

Protection policies – designed to provide a benefit in the event of specified event, typically a lump sum payment. A common form of this design is term insurance.

Investment policies – where the main objective is to facilitate the growth of capital by regular or single premiums. Common forms (in the US) are whole life, universal life and variable life policies.

A life insurance policy is a contract with an insurance company. In exchange for premiums (payments), the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries in the event of the insured's death.

Typically, life insurance is chosen based on the needs and goals of the owner. Term life insurance generally provides protection for a set period of time, while permanent insurance, such as whole and universal life, provides lifetime coverage. It's important to note that death benefits from all types of life insurance are generally income tax-free.1

There are many varieties of life insurance. Some of the more common types are discussed below.
Term life insurance

Term life insurance is designed to provide financial protection for a specific period of time, such as 10 or 20 years. Typically, premiums are level and guaranteed for that time. After that period, policies may offer continued coverage, usually at a substantially higher premium rate. Term life insurance is generally a less costly option than permanent life insurance. Needs it helps meet: Term life insurance proceeds are most often used to replace lost potential income during working years. This can provide a general safety net for your beneficiaries and can also help ensure the family's financial goals will still be met—goals like paying off a mortgage, keeping a business running, and paying for college. It's important to note that, although term life can be used to replace lost potential income, life insurance benefits are paid at one time in a lump sum, not in regular payments like paychecks.

Universal life insurance Universal life insurance is another type of permanent life insurance designed to provide lifetime coverage. Unlike whole life insurance, universal life insurance policies are flexible and may allow you to raise or lower your premium or coverage amounts throughout your lifetime. Like whole life insurance, universal life also has a tax-deferred savings component, which may build wealth over time. Additionally, due to its lifetime coverage, universal life typically has higher premiums than term.

which functions as a savings component and may accumulate tax-deferred over time. They too sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security.Needs it helps meet:.Universal life insurance is most often used as a flexible estate planning strategy to help preserve wealth to be transferred to beneficiaries. In addition to providing lifetime coverage. whole life usually has higher premiums than term life. particularly after the industrial era – past few centuries – yet its beginnings date back almost 6000 years. Because of the lifetime coverage period. Fidelity does not currently offer whole life insurance. Life Insurance in its modern form came to India from England in the year 1818. Policy premiums are typically fixed. . The same instinct that prompts modern businessmen today to secure themselves against loss and disaster existed in primitive men also. whole life has a cash value. Another common use is long term income replacement. Some universal life insurance product designs focus on providing both death benefit coverage and building cash value while others focus on providing guaranteed death benefit coverage. where the need extends beyond working years.  Brief History Of Insurance The story of insurance is probably as old as the story of mankind. and. whole life is commonly used to accumulate tax-deferred savings. Oriental Life Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. Whole life can also be used as an estate planning tool to help preserve the wealth you plan to transfer to your beneficiaries Whole life insurance Whole life insurance is a type of permanent life insurance designed to provide lifetime coverage. unlike term. Though the concept of insurance is largely a development of the recent past. 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.

Type Industry Founded State-owned Financial services 1 September 1956 Headquarters Mumbai.25 trillion (US$241.966 (2010) LIC Housing Finance Subsidiaries LIC Cards Services LIC Nomura Mutual Fund Website www. investment management.in Products Total assets Owner(s) Employees . Mehrotra.licindia. K. (Chairman) Life and health insurance. India Key people D. mutual fund 13.15 billion) (2010) Government of India 115.

putting the Indian companies at a disadvantage. 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 Cooperative Assurance at Lahore were established in 1906. The Life Insurance Companies Act. Prior to 1912 India had no legislation to regulate insurance business. 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. Starting as Indian enterprise with highly patriotic motives.However. house of the great poet Rabindranath Tagore. and covered Indian lives at normal rates.22. But Indian lives were being treated as sub-standard lives and heavy extra premiums were being charged on them. About 154 Indian insurance companies. In the year 1912. later with the efforts of eminent people like Babu Muttylal Seal. and the Provident Fund Act were passed. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870. that life insurance in India was nationalized.298 crore in 1938. 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary. The Indian Mercantile. 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. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism.44 crore. General Assurance and Swadeshi Life (later Bombay Life) were some of the companies established during the same period. However. From 44 companies with total business-in-force as Rs. In 1907. it was much later on the 19th of January. 16 non-Indian companies and 75 provident were . it rose to 176 companies with total business-in-force as Rs. During the mushrooming of insurance companies many financially unsound concerns were also floated which failed miserably. 1956. the foreign life insurance companies started insuring Indian lives. But the Act discriminated between foreign and Indian companies on many accounts. in Calcutta. The first two decades of the twentieth century saw lot of growth in insurance business. insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. the Life Insurance Companies Act. Hindustan Co-operative Insurance Company took its birth in one of the rooms of the Jorasanko.

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. Since life insurance contracts are long term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter.00 crore Sum Assured on new policies. Today LIC functions with 2048 fully computerized branch offices. 109 divisional offices. Bangalore. initially the management of the companies was taken over by means of an Ordinance. As a result of re-organisation servicing functions were transferred to the branches. and the Life Insurance Corporation of India was created on 1st September. LIC had 5 zonal offices. Apart from on-line Kiosks and IVRS. providing them adequate financial cover at a reasonable cost. 8 zonal offices. 1956. . New Delhi. The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956. LIC’s Wide Area Network covers 109 divisional offices and connects all the branches through a Metro Area Network. LIC has launched its SATELLITE SAMPARK offices. Kolkata. 992 satallite offices and the Corporate office. 33 divisional offices and 212 branch offices. Chennai. Pune and many other cities. and branches were made accounting units. LIC has tied up with some Banks and Service providers to offer on-line premium collection facility in selected cities. But with re-organisation happening in the early eighties. With a vision of providing easy access to its policyholders. the ownership too by means of a comprehensive bill. It worked wonders with the performance of the corporation. Re-organization of LIC took place and large numbers of new branch offices were opened. Ahmedabad. Info Centres have been commissioned at Mumbai. LIC’s ECS and ATM premium payment facility is an addition to customer convenience. and later. and it took another 10 years for LIC to cross 2000. by 1985-86 LIC had already crossed 7000.operating in India at the time of nationalization. Nationalization was accomplished in two stages.00 crore mark of new business. apart from its corporate office in the year 1956. Hyderabad.00 crores of New Business in 1957 the corporation crossed 1000. It may be seen that from about 200.00 crores only in the year 1969-70.

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.32. and the United India Insurance Company Ltd. 4) 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. on the other hand. 6) 1956: 245 Indian and foreign insurers and provident societies are taken over by the central government and nationalised. LIC formed by an Act of Parliament.955 new policies by 15th Oct. the National Insurance Company Ltd..The satellite offices are smaller. 1956. with a capital contribution of Rs. the first Indian life insurance company started its business. 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. The General insurance business in India.67% over the corresponding period of the previous year.107 insurers amalgamated and grouped into four companies viz. GIC incorporated as a company. posting a healthy growth rate of 16. 2005. 5 crore from the Government of India. 3) 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. From then to now. Some of the important milestones in the life insurance business in India are: 1) 1818: Oriental Life Insurance Company. 5) 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. the first general insurance company established in the year 1850 in Calcutta by the British. LIC has issued over one crore policies during the current year.01. can trace its roots to the Triton Insurance Company Ltd. viz.. . LIC Act. leaner and closer to the customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many other conveniences in the future. the first life insurance company on Indian soil started functioning. 2) 1870: Bombay Mutual Life Assurance Society. the Oriental Insurance Company Ltd. the New India Assurance Company Ltd.. It has crossed the milestone of issuing 1.

which would end their respective monopolies. With the passage of the IRDA Act the Indian Life insurance industry was liberalized in FY00 with the aim of increasing competition in the industry and to tap the vast potential it provided. recommended that the insurance sector in India be opened up to private players. which submitted its report in Jan 94. It was also felt that the nationalisation of this sector would lead to more effective mobilisation of funds to enable capital to be allocated to development projects. which would make IRDA the statutory regulatory body and amendment of the LIC and GIC Acts. These were the Insurance Regulatory and Development Authority (IRDA) Act in FY99. However these legislations became insignificant with time and the Government nationalized the sector in 1956 by combining about 250 Indian life insurance companies to form a single firm. insurance coverage and allocation of resources needed to be improved within the industry. Also more innovative products were needed to suit varied customer needs and to change the attitude of people towards insurance. In Apr 93. sectors such as banking and finance were reformed. The Committee. . It was felt that customer service. the government of India appointed the Malhotra Committee on Reforms in the Insurance Sector. to increase insurance market penetration through nationalisation and to protect the interests of the policy holders from failures which were the result of mismanagement. The liberalisation of the Indian economy also forced policymakers to review the policies governing the Indian Life insurance industry. Regulations were passed to regulate the Indian insurers but not the foreign companies providing insurance services in India. Thus the industry was transformed from a competitive one to a highly regulated monopoly. The reasons behind the nationalisation decision included the Government’s need to channel more resources towards national development programmes. Evolution of life insurance:Pre-Liberalisation The Indian Insurance Industry is as old as it is in any other part of the world. Opening up the insurance sector resulted in the passage of two legislatures. There were a number of foreign and Indian insurers operating in the Indian market.the Life Insurance Corporation (LIC) of India who was the sole provider. under which the Indian economy was opened up to foreign investment. With the Government of India implementing the New Industrial Policy in FY91.

showing a growth of over 65%.373 at the beginning of the year to 8. As a result.072 to 6. Subsequently. there were eighteen life insurance companies operating in India. LIC’s offices increased at a more modest 10% from 2.913 by the end of the year. By the end of Mar 08. Number of Private Players: The number of private life insurers has more than doubled from 10 in FY01 to 21 in FY08 with expansion of existing as well as new players continuing to rise. customers today are more conscious of the need for risk mitigation and greater security for the future such as retirement plans. Ltd and DLF Pramerica Life Insurance Company Limited were given Certificate of Registration by the Authority. Life insurance companies have been quick to recognize the larger need for structured retirement plans and have leveraged their abilities of long-term fund management towards building this segment. Intense competition has also forced the life insurance industry to improve its underwriting and risk management abilities that has greatly benefitted the policyholders. first year premium (single as well as regular) in the life insurance industry (LIC as well as private players) registered significant growth in the last eight years (FY02-FY09). The number of offices of the Life insurers has also increased dramatically during the year FY08 from 5.08 bn in FY09.Post Liberalisation Since opening up the sector. A major portion of this expansion was in the private sector whose offices more than doubled from 3.301 offices to 2. Canara HSBC Oriental Bank of Commerce Life Insurance Co.391.522. the Life insurance market in India witnessed dynamic changes including the entry of a number of global life insurers that led to increased competition in the Indian Life insurance market. . from Rs 198.6 bn in FY02 to Rs 871. Moreover. Aegon Religare Life Insurance Company Limited.

unit linked insurance products continue to dominate most private player’s portfolio and the proportion of business coming from ULIPs remains large. LIC has also expanded its product portfolio and has added a number of new products in its basket such as ‘Jeevan Anurag’ and ‘Jeevan Nidhi’ insurance policies.3% (y-o-y) in FY08. first policy receipt. growing by 29. which helped them to compete against LIC and also create a clientele comprising of individuals who are willing to opt for these plans for purely investment purposes.3% (y-o-y) in total private life insurance business in FY06. Innovative Distribution Channels: Innovation in distribution channels has also played a major role in pushing products into markets that were initially uncovered. Public sector giant SBI Life has developed an interactive website and a toll free helpline to match the marketing might of private players. more than half of the premium income of private companies in the life insurance segment is contributed by these unit-linked plans. final maturity payment and settlement of claims by companies. Competition: To counter competition from the private players. Since these unit link plans have been developed keeping in mind the various investment needs of the consumers. The companies have also discovered innovative ways to better the services provided by them by outsourcing some of the processes and services. Traditional policies like term products and endowment based products form a relatively small proportion and remains small.Unit-Linked Insurance Plans: In the life insurance segment. Unit linked products were also a major contributor to LIC business portfolio. the growing popularity of ULIPs has been a key factor behind the growth in private sector life insurers.76% (y-o-y) in FY06 while non-linked products grew by . Since liberalisation. From a growth rate of 82. In fact. ULIPs registered a growth rate of 90. various unit linked insurance plans (ULIPs) have been introduced by private players. these products have become very popular. Even today. All the companies have indulged themselves in appointing and training advisors for better productivity. These changes have led to marked improvement in the response and turnaround time in policy documentation.

a well-established brand and distribution network continues to aid LIC in retaining a dominant share in the Indian Life insurance market today.31% and 62. Insurance Penetration: Expansion of business by private life insurance players in uncovered market has been the main reason behind India’s increased insurance penetration.24% (y-o-y) during the same year.00% in 2007. bancassurance). Total Life insurance penetration (premiums as a percentage of GDP) in India was 1.70.70%).50%).53% in 2004 and remained at the same level in the subsequent year. the life insurance market in India is significantly under.69% (y-o-y) in FY07 and FY08 respectively. From 2. France (7.30%). .10% before declining marginally to 4. Switzerland (5.20%) and Japan (7. India continues to remain way behind (as on 2007) industrialized nations like UK (12. As a result. Life insurance penetration in India improved since liberalisation in 2000. However.penetrated.31% in FY07 and FY08 respectively. when compared to other countries. However. this scenario has improved with LIC making stronger strides in the sale of ULIPs to counter stiff competition posed by the private players. South Korea (8. However. Insurance penetration rose to 2. while the growth rate of non-linked products moderated from 53.15% in 2001.60%). A milestone occurred in 2006 when India’s insurance penetration nearly doubled to 4. Life insurance penetration rose yet again to 2. since then. This in turn has contributed to an increase in the level of penetration.26% in 2003.5% in 1990 and was not much higher by the middle of the decade.59% in 2002 before declining to 2. Life insurance players have been able to target previously uncovered markets.69% (y-o-y) to 37. Through the development and effective use of new distribution channels (eg. y-o-y growth rates of ULIPs in LIC’s portfolio increased to 46. Besides making rapid strides in the ULIP segment.

4. UK (US$ 5. Thus India continues to be an attractive market for most insurance players both domestic and foreign. However. spending on insurance is on a growth trajectory in India.922. while higher than its neighbours (Sri Lanka US$ 10.6) and just behind China (US$ 44.6 and Bangladesh US$ 1.9).9) and South Korea (US$ 1.1 on insurance in 2001. India. . India is among the lowest-spending nations in the world in respect of purchasing insurance. India’s improving economic fundamentals was a key support factor for faster growth in per capita income in recent years. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors.The level of penetration which is the measure of premiums as a percentage of a country’s GDP in life insurance has a strong positive correlation to income levels. with its huge middle class households. Insurance Density: Per capita income of consumers plays a vital role in determining the amount an average consumer spends on insurance. exhibits untapped potential for the insurance industry.7% over the past ten years. Japan (US$ 2. continues to remain far behind most industrial nations like the US (US$ 1. One factor that has been slowing down the improvement of insurance density is India’s relatively high population growth rate. By this measure. From spending a mere US$ 9.2).730. spending rose consistently over the next six years to touch a high of US$ 40.0).2.656. which translated into stronger demand and spending for and on insurance products. Pakistan US$ 2.583. which has averaged 1.5). This 2007 level of spending.

 Types of insurance:Life insurance products come in a variety of offerings catering to the investment needs and objectives of different kinds of investors. Unlike a regular term insurance policy. The policy holder does not get any monetary benefit at the end of the policy term except for the tax benefits he or she can choose to avail of throughout the tenure of the policy. Term insurance policies are also relatively cheap to acquire compared to other insurance products. . a persona can opt for insurance products that provide both the benefit of insurance as well as investment. In the event of death of the policy holder. With an endowment plan. Following is the list of broad categories of life insurance products: Term Insurance Policies The basic premise of a term insurance policy is to secure the immediate needs of nominees or beneficiaries in the event of sudden or unfortunate demise of the policy holder. Endowment Policies This basically falls into the category of an insurance-cum-investment product. the sum assured is paid to his or her beneficiaries. an endowment plan provides returns on investment at the end of the policy term. There are several varieties of endowment plans. and the rate of returns and the type of benefits can vary based on the kind of endowment plan an individual has opted for.

In the event of the unfortunate death of the policy holder. ULIP plans are more or less similar in comparison to mutual funds except for the difference that ULIPs offer the additional benefit of insurance. Unit-linked Insurance Policies (ULIP) Main article: Unit-linked insurance plan Unit linked insurance policies again belong to the insurance-cum-investment category where one gets to enjoy the benefits of both insurance and investment. the full sum assured is paid to the beneficiaries. the remaining money is invested in various types of funds that invest in debt and equity instruments. There are again several types of pension plans that cater to different investment needs. While a part of the monthly premium pay-out goes towards the insurance cover. This basically is a retirement planning investment scheme where the sum assured or the monthly payout after retirement entirely depends on the capital invested. Now it is recognized as insurance product and being regulated by IRDA.Money-back Policies Money back policies are basically an extension of endowment plans wherein the policy holder receives a fixed amount at specific intervals throughout the duration of the policy. Pension Policies Pension policies let individuals determine a fixed stream of income post retirement. The terms again might slightly vary from one insurance company to another. and the age at which one wishes to retire. Comparing Types of Life Insurance Term Life Universal Life Insurance Whole Life . the investment timeframe.

The private companies have come out with products called ULIPs (Unit Linked Investment Plans) which offer both life cover as well as scope for savings or investment options as the customer desires. remains by far the largest player in the market. the state owned behemoth. generally income tax-free beneficiaries free Investment options May help build equity No No 2 No Yes Yes Available through Yes. income protection Income replacement in a and some designs focus on taxlump sum deferred wealth accumulation Insurance Wealth transfer preservation and tax-deferred wealth accumulation Designed for a specific Protection period period (usually a number Flexible.Insurance Needs it helps meet Wealth transfer. Universal Life Insurance. primarily Not currently offered focused on death benefit protection  Indian life insurance industry overview:All life insurance companies in India have to comply with the strict regulations laid out by Insurance Regulatory and Development Authority of India (IRDA). Life Insurance Corporation of India (LIC). generally. Comparison of such products with mutual funds would be erroneous. These type of plans are subject to a minimum lock-in period of three years to prevent misuse of the significant tax benefits offered to such plans under the Income Tax Act. Fidelity Term Life 3 Fidelity Insurance Yes. generally income taxfree No Proceeds paid to Yes. generally income taxYes. Commission / intermediation fees  The maximum commission limits as per statutory provisions are: . for a lifetime of years) Cost differences Premiums Typically less expensive than permanent Typically fixed Generally more expensive than term Flexible For a lifetime Generally more expensive than term Typically fixed Yes.

thereafter for all premium paying terms. The initial years of liberalisation continued to see the Life Insurance Corporation of India (LIC) retaining a dominant position in the market. witnessed great success in securing new business.the year the sector was liberalised.5% .10% for 1st year premium if the premium paying term is more than 15 years 7.Agency commission for retail life insurance business:     7. . as time went by. which were among the first batch of entrants. the above commission may be further subject to the product wise limits specified by IRDA while approving the product  Industry overview The Life insurance sector in India has witnessed significant changes since FY00 .5% for 1st year premium and 2.5% to 6% on the premium paid.yr 2 and 3rd year and 3.10% for 1st year premium if the premium paying term is less than 10 years 7% .  However. However in any case this fee cannot be more than the agency commission as filed under the product. People's perception of insurance has also changed from an instrument of saving to a risk-hedging tool. However.25% for 1st year premium if the premium paying term is more than 20 years 7. private companies like ICICI Prudential Life and Birla Sun Life.5% thereafter   Maximum broker commission . o Agency commission for retail pension policies  7. In case of Mutual fund related . This change has been facilitated by the emergence of a range of new insurance products suiting diverse needs of consumers.30% Referral fees to banks – Max 55% for regular premium and 10% for single premium. The new liberal policies permitting the entry of private players and the reform initiatives undertaken by the Insurance Regulatory and Development Authority (IRDA) have helped the industry evolve at a fast pace and emerge as one of the fastest growing industries in the country.Unit linked policies it varies between 1.

These factors have contributed to changes in demand for insurance products. in India only two million people (0. While LIC still dominates in segments like endowments and moneyback policies. private insurers have already wrested a significant share of the annuity and pension products market. the situation may change soon. it still retains a commanding position in the life insurance segment.2% of the total population of 1 billion) are covered under Mediclaim. there is good reason to expect that the growth momentum in the life insurance sector can be sustained. Insurance has emerged as an attractive and stable investment alternative that offers total protection for life. Currently.Competition between the public LIC and the private sector insurers continues to intensify. LIC joined the race soon in order to protect its turf. retirement products. At the same time. Insurance to mitigate the negative financial consequences of adverse events (such as natural disasters) is still underdeveloped. investment-linked.  Industry structure: Currently India is a US$41 billion industry. Given India’s strong economic fundamentals. Such intense competition has resulted in faster premium growth as well as deeper penetration for the entire market. there is huge untapped potential in various segments of the market. As a result. Major changes in both national economic policies and insurance regulations will reveal the prospects for the Life insurance segment going forward. While innovative products have been underpinning private insurers’ premium growth. variable life and annuity products are on a growth trajectory. While traditional life insurance products like individual insurance. Specialisation . whole life insurance and term life insurance continue to remain popular to this day. new products such as single premium. and are increasingly looking to integrated financial solutions that can offer stability of returns along with more comprehensive protection. In fact. health as well as wealth. Consumers are more actively managing their financial assets. While. the threat of losing market share has also led to more aggressive pushes by LIC to stay competitive such as to develop new distribution channels like bancassurance. whereas in developed nations like USA about 75% of the total population are covered under some insurance scheme. though LIC lost significant market share to private companies in the post-liberalisation period. With more and more private companies in the sector. most of the product innovations came from the private players initially. the profile of Indian consumers is also evolving.

The Insurance Act of 1938[1] was the first legislation governing all forms of insurance to provide strict state control over insurance business. Notaries. Architects and Company Secretaries. Authorities:The industry recognises examinations conducted by IAI (for actuaries). The General Insurance Business Act of 1972 was enacted to nationalise the about 100 general insurance companies then and subsequently merging them into four companies. their scope is limited by legislation but enjoy some special powers. Acts:The insurance sector went through a full circle of phases from being unregulated to completely regulated and then currently being partly deregulated. ESIC and AIC provide insurance services for niche markets. 1956. Oriental Insurance and United India Insurance. thereby de-regulating the insurance sector and allowing private companies. It is governed by a number of acts. All 245 insurance companies operating then in the country were merged into one entity. Life insurance in India was completely nationalized on January 19. Cost & Works Accountants. A minimum capital of US$80 million(Rs. the Life Insurance Corporation of India. brokers and third-party administrators) and IIISLA (for surveyors and loss assessors). IBAI gives voice for brokers while GI Council and LI Council are platforms for insurers. there were no private insurance companies in India. . In 2006. So. Until 1999. foreign investment was also allowed and capped at 51% holding in the Indian insurance companies. which were headquartered in each of the four metropolitan cities. The government then introduced the Insurance Regulatory and Development Authority Act in 1999. III (for agents. Advocates.400 Crore) is required by legislation to set up an insurance business. the Actuaries Act was passed by parliament to give the profession statutory status on par with Chartered Accountants. TAC is the sole data repository for the non-life industry. All the companies were amalgamated into National Insurance. through the Life Insurance Corporation Act. Furthermore.ECGC. New India Assurance.

/B.Their two year PGDM program in insurance business has been recognized as equivalent to the Associate level of the Insurance Institute of India. Pune. has a 32 acre campus & 30-plus faculty. Jodhpur. The Chartered Insurance Institute(CII). Mumbai. AIIEF. They are setting structure and boundaries f . Insurance and Banking. both Life (LIC) and Non-Life (GIC. Amity School of Insurance Banking and Actuarial science (ASIBAS) of Amity University. NIA was founded as Ministry of Finance initiative with capital support from the then public insurance companies.AIGIEA. The Institute was set up jointly by the Insurance Regulatory and Development Authority (IRDA) of India and the State Government of Andhra Pradesh. there are a dozen Ombudsman offices to address client grievances. Oriental. offers a two year MBA and one year MS (for engineering graduates) program in insurance.USA is BIMTECH's educational partner and BIMTECH is an approved centre for LOMA examination. in 2002 for promotion of International Post Graduate Diploma Courses in Insurance / Risk Management(Regular and Distance learning) . AILIEA. National. NLU. AILICEF. UK has accorded recognition (by way of credits) to the BIMTECH PGDM-IBM program.Sc. IRDA controls all the Insurance business in India. AIIEA. Life Office Management Association (LOMA). Insurance education National Insurance Academy.This program was launched in 2000 by the Centre for Insurance and Risk Management and is accredited by the Insurance Regulatory and Development Authority. specialized in teaching. International School of Actuarial Sciences (ISAS) opened on 6th August 2007 leading to a Post Graduate Diploma in Actuarial Sciences. Birla Institute of Management Technologyn a graduate business school located in Greater Noida. FLICOA. actuarial sciences. and M. located in Noida and established in 2000. The Institute of Insurance and Risk Management (IIRM) is an international education and research organization. established in 1988. In addition. United & New India).Sc. NIA offers a two year PGDM program in insurance. offers MBA programs in Insurance. conducting research and providing consulting services in the insurance sector. GIEAIA. offers a PGDM-IBM program in insurance business management. GIEU and NFIFWI cater to the employees of the insurers.

This may also be marketed as final expense insurance. Individual proof of insurability is not normally a consideration in the underwriting. Group life insurance Group life insurance (also known as wholesale life insurance or institutional life insurance) is term insurance covering a group of people. A common rider is accidental death (see above). Modified whole life is a whole life policy featuring smaller premiums for a specified period of time. the underwriter considers the size. which waives future premiums if the insured becomes disabled. to allow a senior citizen purchasing insurance at an older issue age an opportunity to buy affordable insurance. Another common rider is a premium waiver. Rather. turnover and financial strength of the group. Many companies offer policies tailored to the needs of senior applicants. or members of a pension or superannuation fund. This type of insurance is . usually employees of a company. Related products Riders are modifications to the insurance policy added at the same time the policy is issued. Single premium whole life is a policy with only one premium which is payable at the time the policy matures. are usually purchased by older applicants. although available at almost any age. Senior and preneed products Insurance companies have in recent years developed products to offer to niche markets. Survivorship life is a whole life policy insuring two lives with the proceeds payable on the second (later) death. These are often low to moderate face value whole life insurance policies. most notably targeting the senior market to address needs of an aging population. Joint life insurance is either a term or permanent policy insuring two or more persons with the proceeds payable on either the first or second death. after which the premiums increase for the remainder of the policy. Group life insurance often includes a provision for a member exiting the group to buy individual coverage. Preneed life insurance policies are limited premium payment whole life policies that. These riders change the basic policy to provide some feature desired by the policy owner. members of a union or association. and an agent or company may suggest that the policy proceeds could be used for end-of-life expenses. Contract provisions will attempt to exclude the possibility of adverse selection.

 Services of life :"It gives our personnel the option to take out insurance that is tailor-made to reflect the unique nature of what they do. as set forth in the prearrangement funeral contract. coverage for hospitalisation charges and more Travel Insurance:Travel Insurance with a health cover of US$ 150. a designated beneficiary. which the applicant has designated in a preneed funeral goods & services contract with a funeral home. In exchange for the policy owner's designation of the funeral home as the primary beneficiary. ship and regiment at every stage of their career. which combines investments with extra protection. or to the funeral home.Citibank's Health Insurance plan is packed with benefits like cashless claim facility. Health & Accident Insurance." Life Insurance :Citibank Insurance Services brings to you comprehensive Insurance packages. Purchasers of these polcies usually make a single premium payment equal to the funeral amount at the time of prearrangement.designed to cover specific funeral expenses when the insured person dies. no medical checkups etc Home Power Protect Quality insurance package provides complete coverage for damage to your building and c ontents . the funeral home will typically guarantee that the death benefit proceeds will cover the future cost of the selected goods & services no matter when death occurs. Cover is available to each and every serviceman or woman across every unit.000 and a host of other benefits Home Loan Insurance:Citibank's Home Loan insurance comes with added advantages like attractive premium rates. Excess proceeds may go to either the insured's estate. but companies offering these products also allow premiums to be paid over as much as ten years. and it then typically grows as interest is credited. The policy's death benefit is initially based on the total funeral cost at the time of prearrangement.

Kotak Life Insurance 10. CANARA HSBC Oriental Bank of Commerce LIFE INSURANCE 20. Tata AIG LifeHDFC Standard Life 8. Metlife India Life Insurance 3. AEGON Religare Life Insurance 18. The limit to . Reliance Life Insurance Company Limited . Shriram Life Insurance 14. Bharti AXA Life Insurance Co Ltd 15. SBI Life Insurance 2. Bajaj Allianz Life 5. Life Insurance Corporation of India Life Insurers in Private Sector 1. DLF Pramerica Life Insurance 19.Formerly known as AMP Sanmar LIC 12. foreign participation in an Indian insurance company is restricted to 26. Sahara Life Insurance 7. ICICI Prudential Life Insurance 4. IDBI Fedaral Life Insurance 17. Ltd  Foreign Direct Investment (FDI) Policy in Insurance Sector:As per the current (March 2006) FDI norms.0% of its equity / ordinary share capital. ING Vysya Life Insurance 13. Max Life Insurance 6. The Insurance Regulator has stipulated that foreign investment in Indian Insurance companies be limited to 26% of total equity issued (FDI limit) with the balance being funded by Indian promoter entities. IndiaFirst Life Insurance Company Star Union Dia-ichi Life Insurance Co. Aviva Life Insurance 11. List Of Life Insurance Companies”Life Insurer in Public Sector 1. Birla Sunlife 9. Future Generali Life Insurance Co Ltd 16.

Under the Insurance Guidelines.foreign investment includes both direct and indirect investment and has been a cause of significant lobbying by foreign insurance companies for a change in regulations to increase the FDI limit to 49% of equity issued. Securities and Exchange Board of India (SEBI). which requires a change in the Insurance Act. The Indian government has tabled the bill in the Upper House of Parliament in August 2010. The Indian government has supported an increase in the FDI limit. insurance has a deep-rooted history. In October 2010. A change in the Insurance Act requires a passage of the bill in both houses of Parliament. issued disclosure norms for Indian Life Insurance Companies seeking to make an initial public offer for sale of equity shares to the public. Yagnavalkya (Dharmashastra) and Kautilya (Arthashastra). The Union Budget for fiscal 2005 had recommended that the ceiling on foreign holding be increased to 49. . Initial Public Offer (IPO) rules for Indian Life Insurance Companies:A key piece of legislation impacting on the Life Insurance industries capital raising abilities is the lock-in period of 10 years for investment to be limited to promoter group equity investments. the securities market regulator. Indian Life Insurance companies can opt for a public issue of equity through an Initial Public Offer (IPO) after 10 years of operations. History in India.0%. Insurance in various forms has been mentioned in the writings of Manu (Manusmrithi). .

e. pooling of resources that could be re-distributed in times of calamities such as fire. In 1972 with the General Insurance Business (Nationalisation) Act was passed by the Indian Parliament. and consequently. LIC) and General Insurers (General Insurance Corporation of India. In 1870. namely National Insurance Company Ltd. the New India Assurance Company Ltd. The pre-independence era in India saw discrimination between the lives of foreigners (English) and Indians with higher premiums being charged for the latter. In the year 1912. 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. The Government of India issued an Ordinance on 19 January 1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year.The fundamental basis of the historical reference to insurance in these ancient Indian texts is the same i. . Before that.. The Life Insurance Corporation (LIC) absorbed 154 Indian. floods. GIC). General Insurance business was nationalized with effect from 1 January 1973. epidemics and famine.. The Life Insurance Companies Act. the industry consisted of only two state insurers: Life Insurers (Life Insurance Corporation of India. However. when Oriental Life Insurance Company was started by Anita Bhavsar in Kolkata to cater to the needs of European community. the disparity still existed as discrimination between Indian and foreign companies. At the dawn of the twentieth century. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. The oldest existing insurance company in India is the National Insurance Company Ltd. 1912 made it necessary that the premium-rate tables and periodical valuations of companies should be certified by an actuary. It is in business. Insurance in its current form has its history dating back until 1818. 1973. The early references to Insurance in these texts have reference to marine trade loans and carriers' contracts. the Life Insurance Companies Act and the Provident Fund Act were passed to regulate the insurance business.. GIC had four subsidiary companies. Bombay Mutual Life Assurance Society became the first Indian insurer. which was founded in 1906. The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on January 1. 107 insurers were amalgamated and grouped into four companies. the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. many insurance companies were founded.

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