Comparative Study of Life Insurance Policies of LIC and HDFC Life

A DISSERTATION ON
LIFE INSURANCE POLICIES IN INDIA: A COMPARATIVE

STUDY OF LIC OF INDIA AND HDFC LIFE INSURANCE
COMPANY
PREPARED BY:
DAVE KANDARP DUSHYANT
BATCH: 2018 – 2023
ACADEMIC YEAR: 2022 – 2023
SEMSESTER: IX
IL 506 - DISSERTATION
GLS LAW COLLEGE
UNDER THE GUIDANCE OF:
DR. MAYURI H. PANDYA
DIRECTOR I/C
GLS LAW COLLEGE
I
GLS LAW COLLEGE
GLS CAMPUS,
OPP. LAW GARDEN, ELLISBRIDGE,
AHMEDABAD – 380 006.
CERTIFICATE
This is to certify that dissertation entitled “LIFE INSURANCE POLICIES IN

INDIA: A COMPARATIVE STUDY OF LIC OF INDIA AND HDFC LIFE
INSURANCE COMPANY” which is being submitted by Mr. Dave Kandarp
Dushyant for the IL 506 – Dissertation.
Mr. Dave Kandarp Dushyant has worked under my guidance and supervision to
fulfill all requirements for the submission of this dissertation.
_____________________ ______________________
GUIDE: Dr. MAYURI H. PANDYA

Dr. MAYURI H. PANDYA DIRECTOR I/C
DIRECTOR I/C GLS LAW COLLEGE.
GLS LAW COLLEGE.
II
GLS LAW COLLEGE
GLS CAMPUS,
OPP. LAW GARDEN, ELLISBRIDGE,
AHMEDABAD – 380 006.
DECLARATION
I, DAVE KANDARP DUSHYANT, hereby declare that this dissertation entitled

“LIFE INSURANCE POLICIES IN INDIA: A COMPARATIVE STUDY OF LIC
OF INDIA AND HDFC LIFE INSURANCE COMPANY” is a presentation of my
original work. Wherever contributions of others are involved, every effort is made to
indicate this clearly, with due reference to the literature, and acknowledge of
collaborative research and discussions. This piece of work has not been submitted
before or published elsewhere.
The work was done under the guidance of Dr. MAYURI H. PANDYA, at GLS Law
College, Ahmedabad.
____________________
Place: Ahmedabad Dave Kandarp Dushyant

Date: Roll No.: 09
GLS Law College.
III
ABBREVIATIONS
AIR All India Reports
SCC Supreme Court Cases
LIC Life Insurance Corporation
IRDA Insurance Regulatory and Development

Authority
RBI Reserve Bank of India
GIC Guaranteed Investment Certificate
ECGC Export Credit Guarantee Corporation of India

Ltd.
GDP Gross Domestic Product
PPF Public Provident Fund
ULIP Unit Linked Insurance Plan
LTCG Long Term Capital Gains
SA Sum Assured
GA Guaranteed Additions
PV Present Value
FMC Fund Management Charges
APE Annual Premium Equivalent
IV
TABLE OF CONTENT
CHAPTER: 1 INTRODUCTION 1
1.1 Insurance Law 2
1.2 History of Insurance 5
1.3 Functions and Benefits of Insurance 9
CHAPTER: 2 RESEARCH METHODOLOGY 12
2.1 Objectives of the Study 13
2.2 Importance of the Study 14
2.3 Hypothesis 15
2.4 Research Tools and Techniques 15
2.5 Literature Review 16
CHAPTER: 3 CONCEPT, NATURE & PRIVATISATION 19
OF LIFE INSURANCE
3.1 Life Insurance: Concept, Nature & Scope 20
3.2 Contract of Life Insurance Business in India 24
3.3 Privatisation of Life Insurance Business 30
3.4 Profile of LIC of India and HDFC Life Insurance Company 48
3.5 Types of Life Insurance Policies 51
CHAPTER: 4 COMPARATIVE STUDY ON LIFE INSURANCE 56
POLICIES OF LIC AND HDFC LIFE
4.1 Whole Life Insurance Plan 57
4.2 Term Life Insurance Plan 66
4.3 Child Insurance Plan 76
4.4 Retirement Plans 86
4.5 Unit Linked Insurance Plans 93
V
CHAPTER: 5 CONCLUSION & SUGGESTIONS 108
5.1 Conclusion 109
5.2 Suggestions 112
BIBLIOGRAPHY 115
APPENDIX 120
VI
B.A.LL.B. FIVE-YEAR INTEGRATED LAW DISSERTATION 2022-23
CHAPTER: 1
INTRODUCTION
1
INTRODUCTION
1.1 INSURANCE LAW
“INSURE AND BE SECURE! Risk is inherent in our life.
It is so, in whatever we do in our day to day life.”
However, depending on the circumstances, some people may place a premium

on such a risk, while others may not. However, it is commonly acknowledged that, in
some instances, people must take steps to limit such risk. In this context, insurance is
seen as a reasonable answer. In a business transaction, for example, the parties
involved often assess risk and start efforts to adequately allocate effective solutions.
Similarly, most individuals regard life insurance as a safety.
Only the words of Hon’ble Justice Channel can better describe what insurance
is. “Where you insure a ship or a home, you cannot assure that the ship will not be lost
or the house will not be destroyed,” he says, “but what you can insure is that a
quantity of money will be paid on the occurrence of a given event.” That, I believe, is
the first requirement in an insurance contract. It must be a contract in which you
obtain some advantage for some consideration, generally, but not always, for a
periodic payment called premiums. Usually, but not always, that event should contain
some level of uncertainty. There must be some ambiguity as to whether the event will
ever occur or not, or if the event must occur at some point, there must be uncertainty
as to when it will occur 1.
The main purpose of insurance, a sort of risk management, is to guard against

the possibility of a contingent, unforeseen loss. A reasonable risk of loss is transferred
from one entity to another in return for money, which is what insurance is. Insurance
is essentially a contract under which the losses of a few are shared by a large group of
people who face similar risks. It is financial protection against unforeseen financial
loss. In exchange for the insurer’s pledge to reimburse or indemnify the insured in the
case of a big, possibly stunning loss, the insured accepts a guaranteed and known,
relatively minor loss in the form of payment to the insurer. The insured agrees to an
1
M. N. Srinivasan, Principles of Insurance Law 01 (Wadhwa and Company Nagpur 2006).
2
insurance policy, which is a contract outlining the terms and conditions under which
the insured will be compensated.
Life is a wild ride with numerous twists and turns. Insurance policies provide
protection against life’s uncertainties. As with all insurance, the insured transfers a
risk to the insurer in exchange for a policy and payment of a premium. In the case of
life insurance, the risk assumed by the insurer is the risk of the insured’s death.
Insurance policies protect against the risk of death as well as other assets and
valuables such as a home, automobiles, jewellery, and so on. Insurance policies are
classified into two types based on the risk they cover:
a) Life Insurance
b) General Insurance
Life insurance products protect the insurer against risks such as death or
disability. Non-life insurance products cover risks such as natural disasters, burglary,
and so on.
Insurance is a system in which the losses of a few are spread across many
people who face similar risks. With the help of insurance, a significant number of
people who are exposed to a comparable risk contribute to a shared fund, which
compensates the unlucky few for losses caused by inevitable circumstances. Insurance
protects you from financial loss in the event of an unexpected event. Insurance
policies not only help to mitigate risks, but also provide a financial cushion against
adverse financial burdens.
Insurance is defined as a cooperative device for spreading the loss produced

by a specific risk shared by a group of persons who are exposed to it and agree to
insure against it. Risk is the possibility of financial loss. Insurance is also defined as a
social device for accumulating funds to meet the uncertain losses arising from a
specific risk to a person injured against the risk. Insurance protects you financially
against a loss caused by an unforeseeable event. A person can obtain this protection
by paying a premium to an insurance company. A pool is formed through
contributions made by individuals seeking to protect themselves from common risk.
Any loss incurred by the insured as a result of an unforeseeable event is paid from this
3
pool. Life insurance has come a long way since its inception as a risk-covering
medium for short periods of time, covering temporary risk situations such as sea
voyages. As life insurance became more popular, it became clear what a valuable tool
it was for a variety of situations such as temporary needs, threats, savings, investment,
retirement, and so on. Insurance is a contract between two parties in which one party
agrees to assume the risk of another in exchange for a consideration known as a
premium and offers to pay a set amount of money to the other party if in an uncertain
event (death) or after the expiry of a certain period in the case of life insurance or to
indemnify the other party in the case of general insurance in the event of an uncertain
event. The party bearing the risk is referred to as the “insurer” or “assurer,” while the
party whose risk is covered is referred to as the “insured” or “assured.”
According to the U.S. Life Office Management Inc., “Life Insurance provides
a sum of money if the person who is insured dies whilst the policy is in effect2.”
The definition of insurance can be seen from two viewpoints:
a) Functional Definition
b) Contractual Definition
a) Functional Definition
Insurance is a scheme in which a big number of people band together and shift
the risks associated with individuals to their shoulders. A cautious man makes
provision for loss or unforeseeable circumstances, loss or disaster3.
b) Contractual Definition
Insurance is a contract in which an amount of money is provided to the insured

in exchange for the insurer taking the risk of having to pay a significant sum in the
event of a specific catastrophe4.
2
Dr. Manish Dadhich, An Empirical Study of Investment Pattern of Indian Insurance Companies: A
Case Study of Public and Private Insurance Companies, Google Books, (Jul. 26 2022, 5:13 PM),
https://books.google.co.in/books?id=T0dxEAAAQBAJ&printsec=frontcover#v=onepage&q&f=false
3
Id.
4
Id.
4
1.2 HISTORY OF INSURANCE
Yakshaprashna in Mahabharata – “What is the most wonderful thing in the

world”? – Yaksha asked Yudhishtira in the Epic ‘Mahabharata’. Yudhisdtira replied,
“The most wonderful thing in the world is that men seeing every day the dead being
carried to the burial ground, still imagine that they are eternal”. Death is a sublime
theme of reflection and is a natural phenomenon. Therefore, one should not be
distressed for what is inevitable and unavoidable, observed Shri Krishna in the
Bhagvad Geeta.
The risk protection has been a primary goal of humans and institutions
throughout history. Insurance is all about protecting against such risks.
Insurance has a long history in India. It is mentioned by Manu (Manusmrithi),

Yagnavalkya (Dharmasastra), and Kautilya ( Arthasastra ). The papers discuss the
pooling of resources that may be redistributed after disasters such as fire, floods,
diseases, and starvation. This was most likely a forerunner to current insurance. The
oldest traces of insurance may be found in ancient Indian history in the form of
maritime trade loans and carrier’s contracts. Insurance in India has changed through
time, greatly influenced by other countries, particularly England5.
The creation of the Oriental Life Insurance Company in Calcutta in 1818

marks the start of the Indian life insurance industry. This corporation, however, folded
in 1834. In 1829, the Madras Equitable began offering life insurance in the Madras
Presidency. The British Insurance Act was approved in 1870, and the Bombay Mutual
(1871), Oriental (1874), and Empire of India (1897) insurance firms were created in
the Bombay Residency over the last three decades of the nineteenth century.
However, this age was dominated by international insurance offices that performed
well in India, namely Albert Life Assurance, Royal Insurance, Liverpool, and London
Globe Insurance, and the Indian offices faced tough competition from the foreign
corporations.
5
Insurance Regulatory and Delevelopment Authority of India,
https://www.irdai.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo4&mid=2 (last
visited Jul. 27, 2022).
5
In 1914, the Government of India began publishing the returns of Insurance

Companies in India. The first governmental act to manage the life insurance sector
was the Indian Life Assurance Companies Act of 1912. The Indian Insurance
Companies Act, enacted in 1928, authorised the government to gather statistical data
on both life and non-life business performed in India by Indian and international
insurers, including provident insurance organisations. The prior law was unified and
revised to safeguard the interests of the insurance public by the Insurance Act of
1938, which included comprehensive measures for effective regulation over insurers’
actions.
The Insurance Amendment Act of 1950 disbanded principal agencies. There

were, however, many insurance firms, and competition was severe. There were also
allegations of unethical commercial activities. As a result, the government of India
chose to nationalise the insurance business.
An Ordinance was adopted on January 19, 1956, to nationalise the life

insurance business, and the Life Insurance Corporation was founded the following
year. The LIC acquired 154 Indian insurers, 16 non-Indian insurers, and 75 provident
societies, bringing the total number of Indian and international insurers to 245. Until
the late 1990s, when the insurance business was reopened to competition, the LIC
enjoyed a monopoly6.
General insurance has its roots in the Western Industrial Revolution and the
consequent expansion of sea-faring trade and industry in the 17th century. It came to
India as a result of British rule. General insurance in India dates back to 1850, when
the British established Triton Insurance Company Ltd. in Calcutta. In 1907, the Indian
Mercantile Insurance Ltd was established. This was the first firm to offer all sorts of
general insurance. The General Insurance Council was founded in 1957 as a section of
the Insurance Association of India. To guarantee ethical behavior and competent
business procedures, the General Insurance Council created a code of conduct.
In 1968, the Insurance Act was revised to control investments and set
minimum solvency margins. At the same time, the Tariff Advisory Committee was
formed. With the enactment of the General Insurance Business (Nationalisation) Act
6
Id.
6
in 1972, the general insurance business was nationalised on January 1, 1973. National
Insurance Company Ltd., New India Assurance Company Ltd., Oriental Insurance
Company Ltd., and United India Insurance Company Ltd. were formed through the
merger of 107 firms. The General Insurance Corporation of India was established in
1971, and activities commenced on January 1, 1973.
In this millennium, insurance has completed a roughly 200-year journey. The

process of re-opening the industry began in the early 1990s and has progressed
dramatically over the previous decade and more. The government established a
committee led by former RBI Governor RN Malhotra in 1993 to provide suggestions
for insurance industry reforms. The purpose was to enhance the already underway
banking sector reforms. The group delivered its findings in 1994, suggesting that the
private sector be permitted to enter the insurance market, among other things. They
said that foreign firms should be permitted to participate through joint ventures with
Indian partners.
In response to the Malhotra Committee report’s recommendations, the

Insurance Regulatory and Development Authority (IRDA) were founded in 1999 as
an autonomous entity to govern and grow the insurance market. The IRDA was
founded as a legislative entity in April of 2000. The IRDA’s key aims include
encouraging competition to promote customer satisfaction through expanded
consumer choice and reduced prices, as well as safeguarding the financial stability of
the insurance sector. The IRDA opened the market in August 2000 by inviting
applicants to apply for registration. Foreign corporations might own up to 26% of the
enterprise. Under Section 114A of the Insurance Act of 1938, the Ability has the
authority to enact rules ranging from the registration of firms to carry out insurance
business to the protection of policyholders’ interests, which it has done since 2000.7
In December 2000, the General Insurance Corporation of India’s subsidiaries

were reformed as separate entities and GIC was converted into a national re-insurer at
the same time. In July 2002, Parliament passed legislation detaching the four
subsidiaries from GIC.
7
Id.
7
There are now 34 general insurance firms in the nation, including the ECGC
and the Agriculture Insurance Corporation of India, and 24 life insurance companies.
The insurance sector is massive and increasing at a pace of 15-20% every

year. Insurance and banking services account for around 7% of the country’s GDP. A
well-developed and evolving insurance industry benefits economic growth by
providing long-term money for infrastructure development while also boosting the
country’s risk-taking capacity8.
Individuals can purchase life insurance to protect their families’ financial

future in the event of their own premature death. It also meets the savings and
investment needs of people who are unfamiliar with or fearful of investing in mutual
funds or the stock market. In India, unlike in other developed countries, social
security or government pension schemes are only available to a small percentage of
the population. Most people save and invest using bank savings, fixed deposits, post
office savings, and public provident fund (PPF). Because of a lack of access to formal
financial markets, as well as a lack of information and financial literacy, life insurance
plays an important role in the financial well-being of a large segment of society. It is
especially important for rural and impoverished communities.
Despite recent growth, India’s life insurance market has low penetration rates
when compared to other countries. Financial inclusion is a major concern for
policymakers all over the world. Financial inclusion is defined by the World Bank as
“access to useful and affordable financial products and services that meet their needs -
transactions, payments, savings, credit, and insurance - delivered in a responsible and
sustainable manner.” It is worth noting that the World Bank definition includes access
to and use of insurance services as an essential component of financial inclusion.
Financial inclusion is especially important in a country like India, where many
millions of people are financially excluded.
In 2014 and 2015, the Indian government implemented a number of policies to

advance the goal of greater financial inclusion. The first of these is the Pradhan
Mantri Jan Dhan Yojana (PMJDY), which aims to provide more Indians with basic
banking services. The Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and
8
Id.
8
Pradhan Mantri Suraksha Bima Yojana (PMSBY), both launched in 2015, aim to
provide low-cost life and accident insurance.
1.3 FUCTIONS AND BENEFITS OF INSURANCE
The primary function of insurance is the equitable distribution of the financial

losses of insured, in other words, compensating the few who have lost from the fund
built up by the contribution of all the members. The insured member’s contribution to
the fund is proportional to the risk against which he is protected, and it is the insurer’s
exclusive responsibility to calculate and charge this contribution or premium. It is also
his function to manage the fund so built up and pays compensation to the insured who
have suffered losses.
This is advantageous to both the insured and the insurer. The insured is
relieved of anxiety because he knows he will be protected by the insurance fund. The
insurer benefits from the fund’s investment.
The subsidiary functions of Insurance are:
1) It provides stimulus to business enterprise by releasing capital funds for

further development of the business, which otherwise would have to be kept in
idle reserve to meet any unforeseen losses or break down of plant and other
machinery.
2) It encourages business efficiency of the executives by freeing from fear and
anxiety in respect of their insurable risk and leaving them free o give
undivided attention to their management problems. Their life insurance gives
them confidence that their dependents will not be stranded in the event of their
premature death.
3) It helps in the reduction of material losses by the community as a whole in the
following ways9:-
i. Technical staff of insurers like surveyors inspects installations periodically
and make helpful suggestions for safe and efficient working of the machinery
which the insured usually adopt to their benefit.
9
M. N. Srinivasan, Principles of Insurance Law 06 (Wadhwa and Company Nagpur 2006).
9
ii. The system of rating which provides for allowing discount for good features
and charging extra for bad features in the risk induces the insured to make
improvements which go to reduce losses.
iii. Loss and salvage experts who belong to independent organizations are
employed when losses have occurred, to inspect the premises,
recommendations measures for reducing the losses and to prevent recurrence
of the risk10.
Some of the indirect benefits of the insurance are: -

1) Investment of funds – In the course of their business, vast sums is collected by
insurers by way of premiums. Especially in life business much of it can be
invested profitably over long periods. This benefits much of it can be cause
insurers and required by law to invest the major portion in Government
securities and other approved investments, out of which nation building
activities are undertaken.
2) Reduction of cost of insurance – Income earned by investment of accumulated
funds further increases the funds and goes to reduce the cost of insurance. For,
otherwise, the premiums would have to be higher to that extent.
3) Affect on prices – Manufacturers pass on to the consumers the cost of
insurance along with other production costs. Still, it is beneficial to the
consumers because without insurance the cost would have been much more.
4) Invisible export – Providing insurance service overseas is our invisible export,
like export of material good, and the profit brought in is a contribution to the
favorable balance of trade.
5) Reducing cost of social services – Life insurance particularly is a way of
saving for the future. The sum assured often goes to persons who have lost
earning members and thereby relieves their dependents in distress as they
would otherwise would have been an additional burden on social security and
other public funds. Also no victim or heirs of a deceased victim of motor
accidents, nowadays goes without compensation from insurance funds built
10
Id.
10
out of compulsory insurance of motor vehicles and this is no small beneficial

social relief.11
11
Id. at 7.
11
CHAPTER: 2
RESEARCH
METHODOLOGY
12
2.1 OBJECTIVES OF THE STUDY
In this paper, the researcher will be dealing with the different types of life
insurance policies available in India. There will be a comparative study between the
different types of life insurance policies namely Whole Life Insurance, Term Life
Insurance, Child Insurance, Retirement Plans, Unit Linked Plans and many more.
Firstly, the researcher will associate himself towards the Introduction and history of
Insurance law, Nature and scope of Insurance, Principles of Insurance, Functions of
Insurance, and Importance of Insurance Law. This will be further added by the
Introductory and Historical background of Life Insurance in India, Territorial
Jurisdiction and scope of Life Insurance, Legislations Governing Life Insurance
Business, and Types of Insurance Polices etc. There will be a detailed study on
different types of life insurance policies in India namely: 1)Term Life Insurance
2)Whole Life Insurance 3)Unit Linked Plan 4)Child Insurance 5)Endowment Policy
6)Money Back Policy 7)Retirement Plan 8)Group Insurance Plan. Through, this paper
the researcher would try to bring the clarification on the formation of Life Insurance
Corporation of India in India and the process of privatisation of different life
Insurance business in India. Finally, the researcher would try to study and compare
the cost efficiency, purpose, eligibility, benefits, terms and conditions of a policy and
the policy types of Life Insurance Corporation of India and HDFC Life Insurance
Company.
For, the above-mentioned scope, the objectives of the research are as follows:
1. To study nature and scope of Insurance Law and Life Insurance in India.
2. To compare the performances of LIC of India and HDFC Life Insurance

Company.
3. To compare different life insurance policies available with LIC of India and
HDFC Life Insurance Company and out of the available policies which
insurance policy will be best suitable for people in general?
13
2.2 IMPORTANCE OF THE STUDY
Insurance in India started without any regulation in the nineteenth century. It

was a typical story of a colonial epoch: few British insurance companies dominated
the market serving mostly large urban centers. After independence, it took a
theoretical turn by nationalisation of Insurance. First the life insurance companies
were nationalised in 1956 and then the General insurance business was nationalised in
1972. It was accordingly in 1999 that private insurance companies have allowed back
into the business of insurance with a maximum of 26 percent of foreign holding. In
India, insurance is a federal topic. The insurance industry is governed by two pieces
of legislation: the Insurance Act of 1938 and the Insurance Regulatory and
Development Authority Act of 1999. In India, life insurance is commonly regarded as
a tax-saving tool rather than for its other long-term financial benefits. Indians prefer to
invest in real estate and gold, followed by bank deposits. They invest in stocks
selectively as well, but the percentage is very small. Even to this date the LIC
dominates Indian insurance sector. With the entry of private sector insurers backed by
foreign expertise, Indian insurance market has become more vibrant.
This research in its important aspects contains the meaning and concepts of
Insurance Law and also about the Life Insurance and its policies. This research
discuss the concept and the origin of the Life Insurance in India, territorial
jurisdiction, scope of life insurance, the process of formation and nationalisation of
life insurance law along with the process of its privatisation is discussed with
reference to some landmark cases. This paper has also been stated about the profile of
LIC and HDFC Life with the types of life insurance policies available in India.
Looking at the life insurance policy comparison between the LIC of India and
HDFC Life Insurance Company, this researcher helps it in finding the best insurance
that fits your requirement according to its benefits, features and many more. This
paper helps in understanding the Life Insurance online leads to cost efficiency due to
having low operating costs to maintain online.
It also aids in calculating the benefits and drawbacks of the policy and the
desired policy. It distinguishes between carrier backgrounds and incurred claim
settlement ratio to help you configure the best insurance policy. Obtain top carrier
14
quotes to determine the best life insurance plan in terms of premium, coverage, and
insurance industry experience.
Both LIC and HDFC Life Insurance are well-established in the Indian
insurance market, but they differ in many ways. LIC is a state-owned insurer, whereas
HDFC Life Insurance is a private company. Both LIC Life Insurance and HDFC Life
Insurance are well-known for their low-cost plans and comprehensive benefits.
However, they each have unique features and benefits that make them suitable for
different people. Thus, for understanding all these aspects regarding the life insurance,
life insurance policy and about the two big insurance companies in India – LIC and
HDFC, this research is very important in understanding the above stated aspects.
2.3 HYPOTHESIS OF THE STUDY
Every researcher has a vision to address particular problem may be related to

any business organization or to society. While studying any research problem
researcher has to define the objectives of such study. Researcher also makes some
pre-assumptions or considerations about the outcome of proposed research and these
statements are called as hypothesis. In order to achieve the objectives of the study, the
following hypothesis are framed:
1. Ho: LIC of India is diverting from its very objective of social finance
towards the quick and profit oriented business.
2. Ho: Life Insurance policies of LIC of India are much better in terms of
their premium cost, benefits and claim settlement ratio than HDFC Life
Insurance Company.
3. Ho: There is no significant difference in the growth rate of total life

insurance premium among LIC of India and HDFC Life Insurance Company.
2.4 RESEARCH TOOLS AND TECHNIQUES
The present study involves a comparison of different types of life insurance

policies available with the LIC of India and HDFC Life. It also compares the cost
efficiency of LIC and HDFC Life in India during the same period. Prediction of new
15
business and total premium of the life insurance companies has also been done. The
following are the various Tools and Techniques used in this Research:
1. Case Study,
2. Books,
3. Journals,
4. Statutes,
5. Study on various research papers,
6. Study on different policies of both the companies.
2.5 LITERATURE REVIEW
1. BOOKS:
a) M. N. Srinivasan in his book “Principles of Insurance Law” has made an

attempt to discuss the Principles of Insurance Law that includes Introduction
to topic, History, Rating of risks. This book mainly focused on all types of
Insurance in India and it also discussed the Special Aspects relating to Life
Insurance Business in India with some landmark Illustrative cases.
b) Dr. G. Gopalakrishna in his book “Life Insurance and Human Life Values”
discusses the Life Insurance and Human Life Values, Economic Value of
Human Life, Conservation of Life Values Through Life Insurance and How
Life Insurance Plays or Helps in Conserving Values is been discussed in
detail.
c) K.S.N. Murthy and K.V.S. Sarma in his book “Murthy: Modern Law of
Insurance in India” included the General Principles of the Law of Insurance
and the claim Settlement and Payment of Money under Life Insurance, the
circumstances affecting the risk and finally the persons entitled to payment of
the premium are discussed.
d) Avtar Singh in his book “Law of Insurance (3rd edition)” discussed about the
Refund of premium, Misrepresentation as to age, Surrender Value, Legal
Consequences, Doctrinal of proximity cause and many more aspects regarding
the Life Insurance in India.
16
e) Dr. S. R. Myneni in his book “Law of Insurance (2nd edition) focused on the
growth of insurance business in India, Privatisation of Life Insurance Business
and Kinds of Life Insurance Policies. In this, he also mentioned some of the
insurance policies of LIC including Pension Plan and Children Benefits Plans.
2. ARTICLES:
a) Dr. Manish Dadhich in his research paper “An Emphirical Study of

Investment Pattern of Indian Insurance Companies: A Case Study of Public
and Private Insurance Companies” has discussed the Investment Patters for
General Insurance along with total premiums of Life Insurers. The main focus
of this paper was to compare the LIC and ICICI Prudential life Insurers.
b) In the Article titled “The National Institute of Open Schooling” has discussed
the Introduction, Life Insurance History and its need and also the Modern
aspects of Insurance are stated.
c) In the Article titled “Life Insurance 101” by the Life Happens it mentions
about the ingredients of a life insurance cover, the different types of life
insurance and the average life cost and who can be the Life Insurance
beneficiary and many more aspects related to life insurance are discussed.
d) In the Article by Arjun Bhattacharya & O’ Neil Rane titled “Nationalisation of

Insurance in India” it mainly focused on the Life Insurance, its nationalisation
process of life insurance and the Performances of the LIC in the Post
Nationalisation process.
e) In an Article written by Adv. Priscilla Rodrigues “Life Insurance Contract-

Functioning of LIC” published in iPleaders states about all the information
regarding the Life Insurance contract, Functioning and Objectives of LIC.
f) Tapen Sinha in his article “An Analysis of the Evolution of Insurance in

India” highlighted the importance of the rural sector; it also showed how the
recent privatisation is playing out in the market.
g) Sonal Trivedi in her article “A study on risk management tools and techniques
in life insurance industry in India” discussed the Risk Management and
Insurance Planning and also about the IRDA.
17
h) Mr. Sanjaykumar R. Shindey in his thesis “A Comparative Study of Life

Insurance Corporation of India and Private Life Insurance Companies in
India” discussed the types of life insurance policies, profiles of various life
insurance companies were also discussed and it included the nationalisation
and privatisation process of the life insurance in India.
i) Mrs. Jyoti Gajanan Hiremath in her thesis “A Critical Analysis of Law
Relating to Life Insurance Business in India” she focused on the history, types,
benefits, nature, and formation of life insurance contract and finally her main
focus was on the comparative study on the legal aspects of LIC and Private
Life Insurance Companies.
j) Ms. Nandidni Nitin Singh in her thesis “A Comparative Study Of Marketing

Strategies Of Private Life Insurance Companies” where she discussed Life
Insurers through low income urban and pension markets, future of Insurance
in India, Life Insurance need and awareness analysis for Indian market and
functions of IRDA were briefly discussed.
k) Ms. Reetika in her thesis “Law Of Life Insurance In India : A Study Of

Legislative Policies And Judicial Response” were she mainly focused on the
Contract of Life Insurance, Kinds of Life Insurance, advantages of the same
and the comparison between life insurance and other insurance.
MISCELLANEOUS:
a) Websites
A number of standard websites such as Life Insurance Corporation of India,

Insurance Regulatory and Development Authority, Law Commission of India, etc.
were visited and consulted for latest information on various issues; a detailed list of
all these websites is given in the internet reference section of the bibliography.
18
CHAPTER: 3
CONCEPT, NATURE &
PRIVATISATION OF LIFE
INSURANCE
19
3.1 LIFE INSURANCE: CONCEPT, NATURE AND SCOPE
3.1.1 CONCEPT AND NATURE OF LIFE INSURANCE
The question, “Why is life insurance important?” has numerous answers. The
most important consideration, however, is ensuring the financial security and peace of
mind of your family. If you die, everyone who relies on your income would most
certainly struggle. That is why it is critical to get life insurance. Life insurance plans
come in a variety of forms, but they all pay out cash to your loved ones when you die.
The earnings from life insurance can be used to pay for daily living expenses,
mortgage or rent payments, outstanding loans, college tuition, and other obligations.
Life insurance is the most effective strategy to assure that your loved ones will be
financially secure if you and your income die12.
Now days, apart from its primary function of managing risk and providing
protection and security, insurance also aids in economic development of the country
in a big way through investment of funds. Such investment goes a long way in
industrial development and expansion of trade and commerce. Thus, insurance also
plays a significant role in shaping the economy of a nation.
Life insurance is a financial arrangement that allows a person to prepare for

the continuance of his income in the event that he dies, becomes disabled, or becomes
too old to work. The word “life insurance” refers to all forms of insurance meant to
protect against income loss due to inability to work owing to death, accidental injury,
disease, or old age. In its most literal sense, life insurance only provides protection in
the case of death. Income protection in the case of an accidental injury or disease is
covered by the phrase “health insurance,” and the term “annuity” is used to signify
income replacement in old age; nevertheless, income insurance may be a more
standard term for the larger realm of human life13.
Life insurance is a financial arrangement that lets a person to prepare for the
continuance of income in the event that uncertainties and certainties (such as illness,
12
Life Happens, https://lifehappens.org/life-insurance-101/ (last visited Jul. 28, 2022).
13
Dr. G. Gopalakrishna, Life Insurance and Human Life Values, 114, 114 (2009).
https://www.insuranceinstituteofindia.com/downloads/Forms/III/Journal-2009-10-
11/LifeInsuranceHumanValues.pdf (Jul. 28, 2022, 12:46 PM)
20
accident, death, or old age) disturb or destroy his capacity to earn a livelihood. As a
result, insurance is:
1. The business of insurance is related to the protection of human life, human

created assets, human disability, and business liabilities possessed by humans
that have a definite value, and
2. Assets and human life generate benefit and income for the owner and his/her
family members, and
3. Loss of assets / human life for any reason stops the benefits and income to the
owner and family members, respectively, and
4. Causes a drop in the family’s living standards, quality of life, and future
growth of the related family members, and
5. Insurance is a system that helps to mitigate such negative repercussions by
pooling, distributing, and sharing risk. As a result, the life insurance market
supplements the government’s social management initiatives14.
As a result, the life insurance market supplements the government’s social

management initiatives.
In the vast majority of situations, the family’s livelihood is dependent on the

present wages of the family’s head, also known as the breadwinner. The family
members have the right to demand proper maintenance from him, and it is his
responsibility to pay it to them as best he can. If this source of income is lost due to
death, the family will have to make economic and social changes, which may result in
considerable physical and psychological trauma15.
With respect to the human life-value, life insurance has two functions:
1. To contribute to the preservation of human life; and

2. To defend against financial damages arising from the destruction of human
life16.
14
The National Institute of Open Schooling, https://nios.ac.in/media/documents/VocInsServices/m2--
f2.pdf (last visited Jul. 28, 2022).
15
Dr. G. Gopalakrishna, Life Insurance and Human Life Values, 114, 114 (2009).
https://www.insuranceinstituteofindia.com/downloads/Forms/III/Journal-2009-10-
11/LifeInsuranceHumanValues.pdf (Jul. 28, 2022, 12:52 PM)
16
Id.
21
3.1.2 TERRITORIAL JURISDICTION OF LIFE INSURANCE
In the case of a life insurance policy, the claimant must demonstrate the death
of the assured before he can sue the insurance company. The death of the assured is
thus a material part of the cause of action; the plaintiff is bound to prove the fact if
traversed, and if not proved the defendant will have an immediate right to judgement.
Hence the court at the place where the assured died has jurisdiction to try a suit for
recovery of money under Life Insurance Policy17.
In the case where a Small Cause Court has the jurisdiction to try a suit filed by
a mother for recovery of her share in the insurance amount of her deceased son, the
Bombay High Court held that it could not be said that the Small Cause Court will
have no jurisdiction has to be decided as ancillary for determination of the rights of
the parties, the suit does not get out of the jurisdiction of the trial court. The
jurisdiction of the trial court in a particular case has to be decided on the basis of the
averments made in the plaint. In the instant case, the Court held that on going through
the averments made in the plaint it was a simple money suit for recovery of the
plaintiff’s one half share in the insurance amount which the Corporation, through
demanded by the plaintiff, had not paid to her, and thus the Small Causes Court will
have jurisdiction to try the same18.
3.1.3 SCOPE OF LIFE INSURANCE
In a broader sense, the expression ‘life insurance’ as defined in Section 2(11)

of the Insurance Act, 1939, comprised any contract in which one party agrees to pay a
given sum upon happening of a particular event contingent upon the duration of
human life.
Scope of Section 52(A)
The provisions in the Insurance Act making a distinction between life

insurance business and general insurance business, the keeping of separate accounts
and balance sheets have been enacted for the safeguard of the holders of life insurance
17
LIC of India v. Krishna Singh, AIR 1999 Pat 106
18
Mrs. Annie Lewis v. LIC of India, 1988 (3) Bom CR 354, (1988) 90 BOMLR 180
22
policies and they vide an overall picture of the business done by the insurer. These
provisions cannot and do not affect the provisions of Section 52(A) of the act. Section
52(A) (1) speaks of “If at any time the 2[Authority] has reason to believe that an
insurer carrying on life insurance business is acting in a manner likely to be
prejudicial to the interests of holders of life insurance policies, 3[it] may, after giving
such opportunity to the insurer to be heard as 3[it] thinks fit, make a report thereon to
the Central Government19“. It does not speak of “only life insurance business”. Where
an insurer is carrying on insurance business of various kinds which include life
insurance business, he becomes amenable to the provisions of Section 52(A) if he is
acting in a manner prejudicial to the interests of the holders of life policies and he
would have to suffer the consequences following the report made by the Controller
and the appointment of administrator by the Government20.
Scope of Section 52(C)
The fact that the Administrator did not cancel and contract entered into on
behalf of the Insurance Company under the powers given to him by Section 52(C)
which states [Cancellation of contracts and agreements.—The Administrator may, at
any time during the continuance of his appointment with respect to an insurer and
after giving an opportunity to the persons concerned to be heard, cancel or vary
(either unconditionally or subject to such conditions as he thinks fit to impose) any
contract or agreement (other than a policy) between the insurer and any other person
which the Administrator is satisfied is prejudicial to the interest of holders of life
insurance policies that does not means that every such contract was in the interests of
the company21.
19
Insurance Act, 1938, § 52(A), No. 4, Acts of Parliament, 1938 (India).
20
Tropical Insurance Company v. Union of India, 1955 AIR 789
21
The Jupiter General Insurance Co. v. Rajagopalan and Anr, AIR 1952 P H 9
23
3.2 CONTRACT OF LIFE INSURANCE BUSINESS IN INDIA
3.2.1 NATIONALISATION OF LIFE INSURANCE
The nationalisation of life insurance is a significant step forward in India’s

transition to a socialist society. According to Jawaharlal Nehru, “its goal will be to
serve both the individual and the State. The requirement for life insurance to spread
quickly throughout the country and provide a measure of security to our people.”
The Life Insurance (Emergency Provisions) Ordinance, 1956, took the first
step toward nationalisation of life insurance on January 19, 1956. The management of
insurers’ “controlled business” was vested in the Central Government under this
Ordinance. The period between the 19th of January 1956 and the 31st of August 1956
was used to prepare for the subsequent integration of the various insurers into a single
State-owned Corporation22.
The insurance sector was divided into 243 autonomous entities before to
nationalisation, each with its own distinct administrative structure, office and field
staff, as well as its own distinct group of agents and medical examiners. Their
operational area was limited to the major urban areas, and their offices were focused
in the big cities. As many as 103 of the 145 Indian insurance companies had their
headquarters in the cities of Bombay, Calcutta, Delhi, and Madras23.
When the Corporation was constituted on 1st September 1956, it integrated

into one organization and the controlled business of 243 different units, Indian and
foreign, which were engaged in the transaction of life insurance business in India. As
of August 31, 1956, the aforementioned 243 units had total assets of around Rs. 4,110
million and had more than five million active policies, which together insured a total
of more than Rs. 12,500 million. There were over 27,000 salaried workers overall.
These numbers provide a general understanding of the difficulty of building up an
integrated organisation24.
22
Arjun Bhattacharya & O’Neil Rane, Nationalisation of Insurance in India, Centre for Civil Society
(Jul. 29, 2022, 6:10 PM), https://ccs.in/internship_papers/2003/chap32.pdf.
23
Id.
24
Id.
24
When the Parliament established the Life Insurance Corporation as a

monopolistic state undertaking, there was argument and belief that the eradication of
competition and the malpractice that competition has given rise to would result in:
1. Better and more economical management of the business of the life insurance,
1. Reduction in administrative expenses,
2. Improvement in the quality of service,
3. Increase in volume of business and
4. Maximization of social advantages that insurance can provide through higher
returns on investments of life fund, consistent with safety and liquidity of the
invested funds25.
The Chairman, two Managing Directors, and two more Life Insurance
Corporation members made up the Executive Committee of the Life Insurance
Corporation. The Chairman, a Functional Director, and five other people made up the
Investment Committee, which was charged with advising the Life Insurance
Corporation on topics pertaining to the investment of its funds. The five zones that
made up the entire nation were headquartered at Bombay, Calcutta, Madras, Delhi,
and Kanpur. Bombay served as the location of the Corporation’s Central Office.
Every full-time worker of the insurers whose business was transferred to and
was vested in the Corporation became a member of the Life Insurance Corporation’s
staff. They continued to hold the same posts with the same pay, under the same rules
and regulations, and with the same privileges and entitlements as before. The Life
Insurance Corporation was required to request an actuarial examination into the
financial health of its business, including an assessment of its liabilities, at least once
every two years and to present the results to the Central Government.
3.2.2 FORMATION OF LIFE INSURANCE CONTRACT
The researcher initially; gives following two important definitions:
25
Arjun Bhattacharya & O’Neil Rane, Nationalisation of Insurance in India, Centre for Civil Society
(Jul. 29, 2022, 6:10 PM), https://ccs.in/internship_papers/2003/chap32.pdf.
25
1. The term “life insurance business” refers to the activity of effecting contracts of
insurance on human life, which includes any contract in which the payment is
guaranteed upon death (other than death by accident only) and the occurrence of
any contingency dependent on human life, as well as any contract in which the
payment is contingent upon the payment of premiums for a term dependent on
human life, and shall be deemed to include any contract in which the payment is
contingent upon the payment of premiums for a term dependent on human life:
a. The payment of disability and double or triple indemnity accident benefits, if

provided for in the insurance contract;
b. The payment of annuities on human life; and
c. The payment of superannuation allowances and annuities payable out of any

fund solely for the relief and maintenance of persons engaged or who have
been engaged in any particular profession, trade, or employment, or of the
dependents of such persons26.
2. 2. The term “Life Insurance” is not defined by statute, but it is commonly

understood to mean “a contract in which the insurer agrees to pay the assured or
the person for whose benefit the policy is taken, a stated sum of money upon the
occurrence of a particular event dependent on the continuation of human life, in
exchange for the payment of a premium, either in a single payment or over
time27“.
Like any other contract, a contract of insurance must satisfy the essentials
stated in the Contract Act, 1872 and as per Section 10 of the said Act, “If an
agreement is signed with the free assent of the parties who are legally able to do so,
for a legal consideration, and for a legal purpose, and it is not specifically declared to
be void by this document, it is a contract28“.
From this, it follows that every contract including Life Insurance contract must
contain the following essential elements namely,
26
Insurance Act, 1938, § 2(11), No. 4, Acts of Parliament, 1938 (India).
27
K.S.N. Murthy and K.V.S. Sarma, Murthy: Modern Law of Insurance in India [Chapter 12 - 17] 1 of
46, (Lexis Nexis 2020).
28
The Contract Act, 1872, § 10, No. 9, Acts of Parliament, 1938 (India).
26
a) An Agreement,
b) Competency of Parties,
c) Free Consent,
d) Consideration,
e) Lawful Object,
f) Principle of utmost good faith and
g) Principle of insurable interest
Following is the in brief information about above essential element:
a) AN AGREEMENT: A contract is defined as “an agreement enforceable by

law” under Section 2(h) of the Indian Contract Act of 1872. As a result, all contracts
are agreements, but not all agreements are contracts. According to Section 2(e) of the
Indian Contract Act of 1872, “an agreement” is “every promise and every group of
promises, comprising the consideration for each other.” Section 2(b) defines a
promise as “a proposition that becomes a promise when accepted.” As a result, the
proposal and acceptance are the two necessary components of every agreement.
The proposal is normally made by the insured in the written form of the
proposal given by the insurer in the ‘Life Insurance Contract.’ The proposal is divided
into four sections in the ‘Life Insurance contract29, namely -
a. Proposal form,
b. Medical report consisting of two parts:-
i. family history and
ii. medical examination report,
c. Agent’s report and
d. Friend’s report.
In the ‘Life Insurance contract’, the acceptance is to be made by the insurer.

As per section 2(b) of The Indian Contract Act, 1872, it states “When the person to
whom the proposal is made signifies his assent thereto, the proposal is said to be
accepted. A proposal, when accepted, becomes a promise.30“ The letter is known as
an acceptance letter, and it is also printed. The insurer examines the papers that
29
30
The Contract Act, 1872, § 2(b), No. 9, Acts of Parliament, 1938 (India).
27
include the proposal upon receipt, and when he finds them to be in order, he indicates
his approval by letter.
b) COMPETENCY OF AN INSURED (PARTY TO THE INSURANCE

CONTRACT): Anyone who is competent to enter into a contract under Section 11 of
the Indian Contract Act of 1872 is likewise qualified to engage into a Life Insurance
contract31.
In India, a person is deemed to have attained majority at the age of 18 and, if a

guardian has been appointed or his estate is under Court of wards, at the age of 21. As
a result, rates in Life Insurance Corporation rate tables begin at 18 years in some
circumstances, 19 years in others, but 20 years in the majority of cases. The proof of
the age of the proposer is relevant in insurance contracts for two purposes namely i) to
determine the validity of the contract and ii) to determine the rate of premium. After
the memorable decision of the Privy Council in Mohoribibi v. Dharmodas Ghose, in
India, a contract by a minor is not merely voidable but is altogether void, but he can
enter into a contract through a guardian. Therefore, a parent or a guardian of a child,
can take a policy under the scheme of ‘Children’s Deferred Assurance’, ‘Children
Education Policy’, ‘ Children Marriage Policy’ etc32.
A person of unsound mind, an alien enemy and an un-discharged insolvent are

incompetent to enter into contract and so they are also incapable of affecting the life
insurance policies.
c) FREE CONSENT: Consent is defined in Section 13 of the Indian Contract

Act of 1872 as “two or more persons are said to consent when they agree upon the
same thing in the same sense,” and Free Consent is defined in Section 14 of the same
Act as “a consent is said to be not free when it is obtained by i) coercion, ii) undue
influence, iii) fraud, iv) misrepresentation, or v) mistake.” The first four factors lead
to error in causa and contract become voidable while the last one leads to error in
31
The Contract Act, 1872, § 11, No. 9, Acts of Parliament, 1938 (India).
32
Mohoribibi v. Dharmodas Ghose, (1930) 30 Cal 539 (Pc)
28
consensus and makes contract void33. These factors also apply to the Life Insurance
contracts and hence insured can reject the policy on any of these grounds.
d) CONSIDERATION: The payment of the initial premium is the consideration

for the insurer, and the assurance is the consideration for the insurer’s commitment to
reimburse the insured from the specified risk in the policy. The second and
subsequent premiums cannot be considered consideration since the insurer cannot
compel the insured to pay them. If consecutive premiums are not paid on time, the
insurer may be freed from the commitment to pay the sum promised but remains
obligated to the policy’s other subsidiary obligations, such as surrender value.
e) LAWFULL OBJECT: In its applicability to Life Insurance contracts, the

rule assumed importance with reference to the suicide clause and policies without
insurable interest. Wager is one of the recognised goals against public policy, and an
insurance contract without insurable interest is a wagering arrangement and is void.
Because life insurance is a specific sort of contract, insurance contracts are

subject to two extra rules, namely the concept of greatest good faith and the principle
of insurable interest.
f) PRINCIPLE OF UTMOST GOOD FAITH: Commercial contracts are

usually subject to the caveat emptor principle, which means that the buyer must be
patient. Which party to the contract is thought to be capable of inspecting the item or
service that is the subject of the contract? This concept, however, does not apply to
insurance contracts. The proposer is aware of the majority of the facts concerning
health, conduct, personal history, family history, and so on that form the basis of the
life insurance policy34. Unless the insured reports them, the insurer is unable to
identify them. A medical report may be requested by the underwriter. But even with
the best medical test, there can still be additional issues that go undetected.35.
33
34
Adv. Priscilla Rodrigues, Life Insurance Contract – Functioning of LIC, iPleaders (Jul. 30, 2022,
10:55PM), https://blog.ipleaders.in/life-insurance-contract-functioning-lic/
35
Id.
29
As a result, the principle of utmost good faith, which states that the proposer
has an obligation to disclose all material information to the insurer, presumes that
failure to do so could render the contract null and void from the outset.
g) PRINCIPLE OF INSURABLE INTEREST: The term “insurable interest”

refers to an interest that may or may not be protected by an insurance policy. Both
liabilities are not insurable; otherwise, there is no distinction between an insurance
contract and a wagering contract, which is prohibited under Section 30 of the Indian
Policy Act of 187236.
Insurance contracts differ from wagering contracts in that the insured must
have an insurable interest in the subject matter of the insurance—that is, the promoter
must be interested in the continuation of the covered topic and risk losing money if
the continuation is impeded. The financial or pecuniary interest in the subject of
insurance is protected in insurance contracts. The insured and the insurance subject
must be related such that the insured benefits from the other’s health and well-being
and is injured by the other’s loss or damage37.
The term “insurable interest” is not defined in the Insurance Act of 1938. The
circumstances under which insurable interest is permitted to exist, however, have
been established by court decisions. It has been argued that each person has an
unrestricted, insurable interest in their own lives.
3.3 PRIVATISATION OF LIFE INSURANCE BUSINESS
3.3.1 NECESSITY TO PRIVATISE:
The Indian life insurance business before nationalisation -
Life insurance began in 1871 with the ‘Bombay Mutual’ as the first Life
Insurance Company in India. From 1900 to 1912, during the Swadeshi movement, the
Indian entrepreneurs introduced their own insurance companies to drive away the
36
Id.
37
Id.
30
English insurance companies, or companies which were exclusively owned by the

British shareholders. Many life insurance offices were established with totally Indian
capital. Thereafter, there was mushroom growth of life insurance companies, which
could be controlled by the Indian Life Assurance Act, 1912. The Government of India
was under a statutory obligation according to this law; to the performance of life
insurance companies in India till 1914 are published.
The small insurance companies could not withstand the losses after the First
World War. Only a few survived the economic slump in the post-war period. S.C.
Sen, a special officer, was appointed to study and investigate the insurance business
and report to the Government. Thereafter, under the chairmanship of N. N. Sircar, a
Commission was constituted to draft a bill based on the analysis of suggestions in the
report of S. C. Sen. In 1937, a draft bill was prepared which was approved as the
Insurance Act, 1938. Insurance law evolved comprehensively during l928 to 1956.
The Insurance laws were modified during this period to develop new products, to
attract new customers and introduce professionalism in the business. The insurance
business expanded to include different varieties of marketable products and the
companies made huge profits between 1935 and 1956, which required from time to
time modifications and alterations in the law because of peculiar nature of insurance
business and professional competency was felt essential to be introduced. For making
it professional and well-regulated business, the law was modernized and consolidated.
The first piece of comprehensive law of 1928 was thus amended to meet increasing
needs of modern business38.
After India became independent in 1947, a National Planning initiative

modeled after the Soviet Union’s was implemented with a vision was to have key
industries under direct government control to facilitate the implementation of National
Planning. Any financial service, including the insurance industry, was not seen to be
strategically important. Such a planning strategy raised two questions: First, why did
the Government of India nationalise life insurance in 1956? Second, why did it not
nationalise general insurance at the same time?39
38
Mrs. Jyoti Gajanan Hiremath, A Critical Analysis Of Law Relating To Life Insurance Business In
India, 132 (Ph.D. Thesis, Solapur University, 2014).
39
Tapen Sinha, An Analysis of the Evolution of Insurance in India (Jul. 31, 2022, 6:21 PM),
http://www.icpr.itam.mx/papers/IndiaChapter.pdf.
31
Dealing with first question, the genesis of nationalisation of life insurance

came from a document produced by H. D. Malaviya called “Insurance Business in
India” on behalf of the Indian National Congress. Malaviya had written a dozen
books, and this was one of the more obscure ones and in the same, he made four
important claims to justify nationalisation40:
 First, he argued that insurance is a “cooperative enterprise” under a socialist

form of government, and, therefore, it is more suited for government to be in
the insurance business on behalf of the people.
 Second, he claimed that Indian companies are excessively expensive.
 Third, he argued that private competition has not improved services to the
public or to the policyholders. Preventative activities such as better public
health, medical check-ups, and hazard prevention activities did not improve
under privatisation.
 Fourth, lapse ratios of life policies were very high, leading to “national waste”.
Thus, the nationalisation was justified based on three distinct arguments41:
 First, the government wanted to use the resources for its own purpose.
Apparently, the government was not willing to pay the market rate of return
for the assets (otherwise, it could have raised the capital whether insurers were
private or public).
 Second, it sought to increase market penetration by nationalisation. How could
nationalisation possibly deepen the market that private insurers could not?
There are two possibilities. (1) A monopoly would result from nationalisation.
The government would be able to reduce the cost of operating each policy sold
below what private enterprises could if there were market economies of scale.
(2) Through nationalisation, the government could take life insurance into
rural areas, where it was not profitable for private businesses to sell insurance.
 Third, the government found the number of failures of insurers to be
unacceptable and claimed that the failures were the result of mismanagement.
Given that, by the end of the century, the government did denationalise life
insurance, one can examine in some detail whether nationalisation did succeed
40
Id.
41
Id.
32
in these three areas. The government did succeed in channeling the resources
of life insurance business into infrastructure.
 The LICI, as of March 2001, had a total sum assured of U.S. $155 billion. The
value of its life fund was $40 billion. The book value of Life Insurance
Corporation’s “socially oriented investments”, mainly comprised of
government securities holdings at March 31, 2001, amounted to $27 billion
(73 percent of a total portfolio value of $37 billion). In total, 84 percent of Life
Insurance Corporation’s portfolio comprises exposure to the public sector. The
Reserve Bank of India Weekly Statistical Supplement of October 11, 2003,
shows that 52 percent of the outstanding stock of government securities is held
by just two public sector institutions- the State Bank of India and the LICI,
approximately in equal proportions42.
Following are the landmarks in the development of Life Insurance business in

India –
a) The Insurance Act, 1938:
In 1938, the insurance legislation was improved and unified, with five sections
and eight schedules. It has granted the insurance firms the authority to direct, advise,
caution, prohibit, investigate, search, prosecute, seize, fine, amalgamate, authorise,
register, and liquidate if they fail to accomplish their objectives. The new Act
provided some stability and assurance, as well as the potential of ongoing regulation.
Though the Insurance Act, 1938 provided comprehensive regulatory mechanism, the
LICI Act, 1956 itself contained internal regulatory measures. Except postal Life
Insurance, no other organization was allowed to engage in Life Insurance. This
imposed strong checks on insurance companies both foreign and domestic, which led
to discontinuation of several foreign companies in India43.
42
Tapen Sinha, An Analysis of the Evolution of Insurance in India (Jul. 31, 2022, 6:21 PM),
43
Id.
33
b) Values of nationalist struggle and market demands:
With the nationalist struggle and demand for Swadeshi governance, the Indian
companies consolidated their business with less interference from foreign business
undertakings. As the business expanded, heavy funds were collected as premium and
huge funds were available with insurers. The State felt that there was no control over
the funds that were with the insurance companies and their misutilization. In 1945, the
government appointed the Committee under the Chairmanship of Cowasji Jahangir to
study the existing situation and suggest remedies. This resulted in regularization of
investments. The object of the Committee appointed in 1945 was to study the
insurance business and to suggest possibility of controls to find the remedy in the
situation arising out of misutilization.
After the political bifurcation of the Indian subcontinent into India and
Pakistan, the insurance business suffered a setback. S.L. Ranganathan headed a
Committee to review the insurance activity, which recommended some measures to
increase controls in the hands of state. The Insurance Act was amended in 1950 based
on the recommendations of Ranganathan Committee to create effective regulatory
mechanism. The statutory power of Controller of Insurance was established, to
receive and hear the complaints against the insurance companies, Life Insurance
Council and General Insurance Council were also established. The Amendment Act
also provided for appointment of investigators and administrators. The strict controls
over the investments and compulsory reinsurance business were some other important
features of the amendment44.
After independence, insurance business expanded by leaps and bounds. They

accumulated huge funds without any limitations and regulation. The state was
interested in diverting these funds for developmental purposes or at least to stop
insurance companies from investing the funds in other business enterprise, which
might affect the prospects of the insured people and property. However, effective the
law might be, the control over the funds used, and their investments were difficult.
Despite prescribing the goals, objectives and directives, it was not possible for the
44
Mrs. Jyoti Gajanan Hiremath, A Critical Analysis Of Law Relating To Life Insurance Business In
India, 136 (Ph.D. Thesis, Solapur University, 2014).
34
Government to supervise the investments and to control the funds of insurance

companies.
c) Towards nationalisation:
It was felt at that time except nationalisation; there was no other means to have
effective control over the huge funds collected by insurance companies, in general as
well as life insurance companies, in particular. Life Insurance business was
nationalised in l956 with enactment of the Life Insurance Corporation Act, 1956. This
Act enabled the transfer of assets and liabilities of existing Life Insurance companies
to the LICI and it is the only Government agency to undertake Life Insurance. All the
243 companies were acquired by State and consolidated into a Corporation. The LICI
was authorized to continue business of Life Insurance, reinsurance and to acquire
assets, sanction loans against the securities and to constitute subsidies for the smooth
conduct of life insurance business.
The LICI expanded throughout the length and breadth of the country taking
the business to almost every walks of people. The Corporation was actively involved
in social security programs, financial assistance schemes, advances, developmental
activities and welfare measures. The enormous fund collected in the shape of
premium was used as the capital for several developmental activities in our country.
Since its inception the LICI has been growing and is one of the largest life insurance
organizations in the world. The LICI stands out as an organization which has been
built in a very solid manner and which encompasses in its mammoth size immense
value and vast resources of innate strength which have been added to it through
prudent conduct. The LICI has a very vibrant and distinct culture reflecting the best in
Indian ethos. While it has been conducting business never losing sight of commercial
principles its operations have always been formed by the awareness that it is in the
business for spreading care and compassion. Over the years the LICI has been able to
transmit its mission of service to the people of the nation and it stands central in their
financial concerns. The LICI is fully poised to remain on the top of popular
preferences.
35
d) Paradigm shift through privatisation:
According to Malhotra Committee Report-
“The announcement of the new industrial policy in 1991 envisaged the

transition of the economy from a regulated to a liberalized and deregulated regime
leading to the privatisation of insurance sector to provide a better coverage to
citizens and to augment the flow of long-term financial resources45.”
With the introduction of several private entities, mainly foreign firms in joint
venture with Indian partners, this transformation also meant that competition was
certain to worsen in the future. It was crucial to put in place an efficient regulatory
framework in order to prevent insurance funds from misusing shareholders’ and
policyholders’ money and to assure responsibility. Insurers being repositories of
public trust, efficient regulation of their business become necessary to ensure that they
remained worthy custodians of this trust. Additionally, insurance payment flows
produced the finances required for infrastructure development and investment in the
social sector. So, in order for the insurance industry to support economic growth,
insurance regulation required a paradigm shift from only supervisory and maintaining
roles to development roles.
The monopoly in life insurance field continued with LICI till R.N. Malhotra
recommended privatisation and opening up of the insurance business for foreign
companies to develop healthy competition. The changes in the world economy and
economic reforms involving privatisation and globalization influenced the field of
insurance making reforms inevitable. A strong regulatory system emerged in the
shape of IRDA with changes effected in the Insurance Act, 1938 through the IRDA.
Accordingly, Life Insurance Corporation Act, 1956 was also amended to end its
monopoly and permit other organizations to do the Life Insurance business in India.
The Insurance Act of l938 is the principal legislation regulating the insurance
business in India. The LICI Act, 1956, the Marine Insurance Act, 1963, the General
Insurance Business (Nationalisation)Act, l972 and the IRDA, 1999 are the other
existing legislations in this area. The provisions of the Indian Contract Act, 1872 are
45
Id. at 138.
36
applicable to the contracts of insurance, both for life or non-life. Likewise, the
provisions of the Companies Act, 1956 are also applicable to the companies carrying
an insurance business in India.
The subordinate legislation includes the Insurance Rules, 1939 and the
Ombudsman Rules, l998 framed by the Central Government under Section 114 of the
Principal Act and also 27 regulations made by the IRDA under Section 114 (A) of the
Principal Act and Section 26 of the IRDA,199946.
The Insurance Act, 1938 was amended by the IRDA Act, 1999 and the
Insurance Amendment Act, 2002. The Amendment Act, 2002 provides for insurance
intermediaries, including insurance brokers and consultants and provisions for the
payment of commission brokerage or fee to them. Further, Section 49 of the Act has
been modified to provide shareholders an entitlement of actuarial surplus. The
amendment, made from Section 64, authorizes the IRDA to prescribe the mode of
payment of premium, i.e., through credit cards or through the internet which in turn
may boost up the insurance business47.
The various trade unions of the then-operating insurance companies

vehemently resisted this, which caused a delay in the implementation of the Malhotra
Committee’s recommendations. However, in order to control the insurance industry in
the nation, the government passed the IRDA Act in 1999 and created IRDA. As a
result, both the general and life insurance sectors in India were opened to the private
sector. Additionally, IRDA permitted up to 26% foreign ownership of equity shares in
private enterprises48.
46
Id. at 139.
47
Id. at 140.
48
Dr. Sonika Chaudhary and Priti Kiran, “Life Insurance Industry in India - Current Scenario”, IJMBS,
Vol. 1, Issue 3, September 2011 (Aug. 11, 2022, 8:21 AM), http://www.ijmbs.com/13/priti.pdf.
37
3.3.2 PRIVATISATION OF THE LIFE INSURANCE SECTOR:
During 1818 in British rule practice of the modern concept of Insurance

Corporation was initiated when Oriental Life Insurance Company was establishes in
Calcutta. Since 1956, Life Insurance Corporation has been treated as one of the
biggest pioneer organizations in India. With the amalgamation of 246 companies, Life
Insurance Corporation has been treated as one of the biggest pioneer organizations in
India. With amalgamation of 245 companies, Life Insurance Corporation was
nationalised. At that time basic objective of the corporation was to establish a
mechanism through which government can inculcate a habit of savings in Indians as it
was a government – regulated monopoly. Initially, the insurance was governed by the
Life Insurance Companies Act of 1912 and the Provident Fund Act of 1912. The
Indian insurance business undergoes structural transformation as a result of
liberalisation and privatisation.
On January 19, 1956, an ordinance was passed to nationalise the Life

Insurance Sector, and the Life Insurance Corporation was established the following
year. The LIC absorbed 154 Indian insurers, 16 non-Indian insurers, and 75 provident
societies, totaling 245 Indian and international insurers.
Privatisation means where the role of government is reduced by transferring

the ownership, business, industry or service to the private sector. It was essential to
privatise the insurance sector as there was a byzantine problem from the side of public
enterprises. Public enterprises lack flexibility and are too rigid to yield higher
productivity. Insurance Regulatory Authority is sanctioned to allow public and private
companies which are incorporated in India to operate their life insurance business and
49% for foreign shareholders. Now, the insurance industry has observed healthy
competition between private and public companies and it ensures good service and
sound business.
After privatisation which results in competition Life Insurance Corporation

market shares was 78% in 2005 which was comparatively reduced in late 90s when
Until the insurance business was reopened to the private sector, LIC held a monopoly.
In India now, there are 24 life insurance firms. The list of Life Insurance Companies
is as follows:
38
SR. REGISTRATION NAME OF DATE OF NAME OF

NO. NUMBER THE REGISTRATION THE
INSURANCE CHAIRMAN /
COMPANY MD & CEO
CORPORATE
OFFICE
ADDRESS
Life Insurance
Corporation of
India Mr. M. R.
512 Yogakshema,
1. 01/09/1956 Kumar
Jeevan Bima Chairman
Marg Mumbai –
400021
HDFC Life
Insurance Co.
Ltd.
13th Floor,
Lodha Excelus,
Apollo Mills Ms. Vibha
101 Compound, 23/10/2000 Padalkar
2.
N.M. Joshi MD & CEO
Road,
Mahalaxmi,
Mumbai
400011,
Maharashtra.
Max Life
Insurance Co. Mr. Prashant
Ltd. Tripathy
104 15/11/2000
3. rd
3 , th
11 , 12th
MD & CEO
Floor, DLF
Square
39
Building,
Jacaranda Marg,
DLF City, Phase
– II, Gurgaon –
122002,
Haryana.
ICICI
Prudential Life
Insurance Co.
Ltd.
ICICI Prulife Mr. N. S.
105 Towers 1089, 24/11/2000
4. Kannan
Appasaheb MD & CEO
Marathe Marg,
Prabhadevi,
Mumbai –
400025.
Kotak
Mahindra Life
Insurance Co.
Ltd.
7th Floor, Kotak
Infiniti,
Building No. 21, Mr. Mahesh
107 Infinity Park, 10/01/2001 Balasubramanian
5.
Off Western MD & CEO
Express
Highway,
General AK
Vaidya Marg,
Malad (East),
Mumbai –
40
400097
Aditya Birla
SunLife
Insurance Co.
Ltd.
One India Bulls
Centre, Tower
1, 16th Floor, Mr. Kamlesh
109
6. Jupiter Mill 31/01/2001 Rao
Compound, 841, MD & CEO
Senapati Bapat
Marg,
Elphinstone
Road, Mumbai -
400013
TATA AIA
Life Insurance
Co. Ltd.
14th Floor,
Tower A, Mr. Naveen
110 Peninsula
7. 12/02/2001 Tahilyani
Business Park MD & CEO
Lower Parel,
Senapati Bapat
Marg, Mumbai -
400013
SBI Life
Insurance Co.
Mr. Mahesh
Ltd.
111 30/03/2001 Kumar Sharma
8. “Natraj”,
MD & CEO
M.V.Road &
Western
41
Express
Highway
Junction,
Andheri (East),
Mumbai 400069
Exide Life
Insurance Co.
Ltd.
3rd Floor, JP
Techno Park, Mr. Sanjay Vij
114
9. No.3/1, Millers 02/08/2001 ED & PO
Road,
Bengaluru,
560001,
Karnataka
Bajaj Allianz
Life Insurance
Co. Ltd.
Bajaj Allianz Mr. Tarun
116
10. House, Airport 03/08/2001 Chugh
Road, MD & CEO
Yerawada, Pune
– 411006
PNB MetLife
India
Insurance Co.
Mr. Ashish
Ltd.
117 Kumar
11. Unit No. 101, 1st 06/08/2001
Srivastava
Floor,
MD & CEO
Techniplex-1,
Techniplex
Complex, Veer
42
Savarkar
Flyover, OFF S
V Road
Goregaon
(West),
Maharashtra-
400060.
Reliance
Nippon Life
Insurance
Company Ltd.
Reliance Centre, Mr. Ashish
121 Off Western 03/01/2002
12. Vohra
Express MD & CEO
Highway,
Santacruz East,
Mumbai –
4000055
Aviva Life
Insurance
Company India
Ltd.
Aviva Tower,
122 Sector Road, 14/05/2002
13. Mr. Amit Malik
Opposite Golf
Course, DLF
Phase V, Sector
43, Gurgaon
122002
Sahara India Mr. A. K.

127 Life Insurance 06/02/2004
14. Dasgupta
Co. Ltd. CEO &
43
Sahara India President

Centre, 1,
Kapoorthala
Complex,
Aliganj,
Lucknow –
226024
Shriram Life
Insurance Co.
Ltd.
Ramki
Selenium, Plot
No:31 & 32, Mr. Casparus
Beside Andhra 17/11/2005 Jacobus Hendrik

128
15.
Bank Training Kromhout
centre, Financial MD & CEO
District,
Gachibowli,
Hyderabad –
500032
Bharti AXA
Life Insurance
Company Ltd.
Unit No:1904,
19th Floor,
Parinee
Mr. Parag Raja
130 Crescenzo, ‘G” 14/07/2006
16.
MD & CEO
Block, Bandra
Kurla Complex,
BKC Road,
Behind MCA
Ground, Bandra
East, Mumbai –
44
400051
Future
Genereli India
Life Insurance
Company Ltd.
Indiabulls Mr. Burce de
Finance Centre, Broize
133
17. Tower 3, 6th 04/09/2007 MD, CEO &
Floor, Senapati Principal Officer
Bapat Marg,
Elphonstone
(W), Mumbai -
400013
Ageas Federal
Life Insurance
Company Ltd.
22nd Floor, A
Wing, Marathon Mr. Vighnesh
135
18. Futurex, N. M. 19/12/2007 Shahane
Joshi Marg, MD & CEO
Lower Parel –
East Mumbai –
400013
Canara HSBC
Oriental Bank
of Commerce
Life Insurance
Mr. Anuj Mathur
136 Company Ltd. 08/05/2008
19.
MD & CEO
Orchid Business
Park, Seconf
Floor, Sohna
Road, Sector-
45
48, Gurgaon
122018,
Haryana.
Aegon Life
Insurance
Company Ltd.
Building No. 3,
Third Floor,
Unit No. 1, Mr. Satishwar
138 Nesco IT Park, 27/06/2008
20. Balakrishnan
Western MD & CEO
Express
Highway,
Goregaon
(East), Mumbai
– 400063
Pramerica Life
Insurance Co.
Ltd.
4th Floor, Tower Ms. Kalpana B.
140 B, Building no. 27/06/2008
21. Sampat
9, DLF Cyber MD & CEO
City, Phase III,
Gurgaon
122002
Star Union
Dai-Ichi Life
Insurance Co. Mr. Abhay
142 Ltd. 26/12/2008 Tewari
22.
th
11 Floor, Plot MD & CEO
No:34,35 & 38,
Vishwaroop IT
46
Park, Sector-
30A of IIP,
Vashi, navi
Mumbai 400703
IndiaFirst Life
Insurance
Company Ltd.
12th and 13th
Floor, Morth
(C) Wing,
Tower 4, Ms. R. M.
143 NESCO IT 05/11/2009
23. Visakha
Park, NESCO MD & CEO
Centre, Western
Express
Highway,
Goregaon
(East), Mumbai
– 400063
Edelweiss
Tokio Life
Insurance
Company Ltd.
3rd & 4th Floor,
Mr. Sumit Rai
147 Tower 3, Wing 2011
24. MD & CEO
B, Kohinoor
City, Kirol
Road, Kurla
(West), Mumbai
– 400070
Sources:https://www.irdai.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=
PageNo129&mid=3.1.9
47
3.4 PROFILE OF LIC OF INDIA AND HDFC LIFE INSURANCE

COMPANY
3.4.1 LIFE INSURANCE CORPORATION OF INDIA
The Life Insurance Corporation of India (LIC) is a self-governing organisation

based in Mumbai that is authorised to handle life insurance operations in India. India
had roughly 154 Indian insurance firms, 16 non-Indian companies, and 75 provident
fund organisations at the time of nationalisation. Nationalisation occurred in two
stages: first, the firms’ management was taken over by an Ordinance, and then
ownership was taken over through a comprehensive statute. The Life Insurance
Corporation Act was passed by the Indian Parliament on June 19, 1956, and the Life
Insurance Corporation of India was established on September 1, 1956, with the goal
of spreading life insurance much more widely, particularly to rural areas, and
providing adequate financial cover at a reasonable cost to all insurable persons in the
country.
There are only two types of insurance companies in India: life insurance and
non-life insurance. In the public sector, Life Insurance Corporation of India is solely
in charge of life insurance activities. The Life Insurance Corporation (LIC) was
founded around 55 years ago with the goal of providing insurance against various
risks in life. The corporation, which was a monopoly at the time, became synonymous
with life insurance.
It has collaborated with the government and the General Insurance

Corporation to establish the National Insurance Academy. It currently conducts
individual life insurance, group insurance, social security schemes, and pensions,
grants housing loans through its subsidiary, and markets savings and investment
products through its mutual fund. It has a diverse range of business strategies in India
and abroad. LIC of India was one of the first organisations in India to use information
technology in customer service and business operations.
Computers were first introduced to LIC of India in 1964. Unit Record

Machines, which had been in use since the late 1950s, were gradually phased out in
the 1980s and replaced at branch and divisional offices for back office
48
computerization by microprocessor-based computers. In the 1990s, hardware and

software standardised. Standard computer programmes for Ordinary and Salary
Savings Scheme (SSS) Policies were created and put into use49.
Apart from its corporate headquarters, LIC had 5 zonal offices, 33 divisional
offices, and 212 branch offices in 1956. Because life insurance contracts are long-
term contracts that require a range of services during the policy’s currency, a need
was seen in subsequent years to extend operations and locate a branch office at each
district headquarters. The LIC was reorganised, and a substantial number of new
branch offices were established. Servicing tasks were assigned to branches as a
result of reorganisation, and branches were designated as accounting units. It
improved the corporation’s performance significantly50.
LIC now has 2048 completely computerised branch offices, 113 divisional
offices, eight zonal offices, 1381 satellite offices, and the corporate office. The LIC
Wide Area Network encompasses 113 divisional offices and connects all branches
via a Metro Area Network. In some areas, LIC has partnered with banks and other
providers to allow online premium collection. Customers would appreciate LIC’s
ECS and ATM premium payment options. In addition to online Kiosks and IVRS,
Info Centers have been established in Mumbai, Ahmedabad, Bangalore, Chennai,
Hyderabad, Kolkata, New Delhi, Pune, and a number of other cities. LIC has
inaugurated its SATELLITE SAMPARK offices in order to provide its
policyholders with simple access. The satellite offices are smaller, leaner, and more
convenient for customers 51.
3.4.1 HDFC LIFE INSURANCE COMPANY
HDFC Standard Life Insurance Business Ltd. is a significant private insurance

company in India that offers a wide range of individual and group insurance products.
49
Life Insurance Corporation of India, https://licindia.in/Top-Links/About-Us/Information-
Technology-And-LIC (last visited Aug. 2, 2022).
50
Life Insurance Corporation of India, https://licindia.in/Top-Links/about-
us/History#:~:text=1956%3A%20245%20Indian%20and%20foreign,from%20the%20Government%20
of%20India. (last visited Aug. 2, 2022).
51
Id.
49
HDFC Standard Life Insurance Co. Ltd. is a partnership between HDFC Ltd., India’s
largest housing financing organisation, and Standard Life Assurance Business,
Europe’s largest mutual life company. It was the first life insurance business to be
awarded a certificate of registration by the IRDA on October 23, 2000. HDFC holds
72.43 percent of the equity, Standard Life owns 26 percent, and the rest is held by
others.
Standard Life, UK was formed in 1825 and has over 185 years of expertise.
Standard & Poor’s (AA) rates the corporation as “extremely solid,” while Moody’s
rates it as “outstanding” (Aa2). Standard Life, headquartered in Edinburgh, employs
around 9,000 people throughout the United Kingdom, Canada, Ireland, Germany,
Austria, India, the United States, Hong Kong, and mainland China. The Standard Life
group includes savings and investment companies that operate in the United
Kingdom, Canada, and Europe; corporate pensions and benefits businesses in the
United Kingdom and Canada; and Standard Life Investments, a worldwide investment
manager52.
HDFC Life, founded in 2000, is a prominent supplier of long-term life

insurance solutions in India, offering a variety of individual and group insurance
products to fulfill a variety of consumer demands such as Protection, Pension,
Savings, Investment, Annuity and health. As on March 31, 2020 the Company had 37
individual and 11 group products in its portfolio, along with 6 optional rider benefits,
catering to a diverse range of customer needs53.
With 421 branches and additional distribution contact points thanks to a

number of partnerships, HDFC Life has continued to profit from its presence all over
the nation. The relationships include 270 bancassurance partners, including NBFCs
(Non Banking Financial Companies), MFIs (Micro Finance Institutions), SFBs (Small
Finance Banks), and more than 40 new ecosystem partners. Strong financial
consultants provide as another asset for the company. In addition, the HDFC Life
insurance firm promises to settle claims in a single day while taking into account
52
Sonal Trivedi, A study on risk management tools and techniques in life insurance industry in India,
89 (2016), https://www.uok.ac.in/notifications/(15)%20Sonal%20Trivedi.pdf
53
HDFC LIFE, https://www.hdfclife.com/hdfc-careers/our-
story.html#:~:text=HDFC%20was%20incorporated%20as%20a,29A%20of%20the%20NHB%20Act.
(last visited Aug. 2, 2022).
50
numerous restrictions and circumstances to simplify the claim settlement procedure

for the less fortunate.
3.5 TYPES OF LIFE INSURANCE POLICIES IN INDIA
The following are the different types of Life Insurance Policies available in India:
1) Term Life Insurance,
2) Whole Life Insurance,
3) Unit Linked Plan,
4) Child Insurance Policy,
5) Endowment Policy,
6) Money back Policy,
7) Retirement Plan and
8) Group Insurance Plan.
1) Term Life Insurance:
Insurance for a term of years only, or until the insured reaches a certain age, or
for the term or period for which a premium has been paid, with the option to renew it
from term to term in exchange for the requested premium. Term insurance is typically
for a short period of time, ranging from three months to seven years. One example is
the Life Insurance Corporation of India’s two-year temporary assurance policies,
which were deemed to be contracts of insurance for the term of one year and only
with provisions for renewal for additional years when the agreement to pay a
specified amount in the event of death before the expiration of one year and to renew
and extend the insurance during succeeding years if required premiums were paid.
These are contracts that pay the sum assured if the life insured dies within a specified
period, to protect the interests of people who are going on long tours or who want to
secure mortgage loans, etc., during short periods, and so on.
This type of policy is typically used as collateral security for loans. The Life
Insurance Corporation’s two-year short-term assurance policies can be classified as
term policies or short-term policies. Term insurance policies are the most affordable.
51
The premium rate for these policies is initially low and gradually increases. These
policies are also known as “Ascending Scale Policies.”
2) Whole Life Insurance:
Whole Life Insurance is the most common type of insurance, and it entails
paying insurance money to the insured’s legal representatives or assigns upon his
death in exchange for periodic payments of fixed premiums.
The sum promised is only payable at death with a whole life plan, and
premium payments must be made during the life of the life insured. It is possible to
notice that whole life insurance is exactly a term assurance plan with a fixed term that
is determined by the length of a person’s life. In accordance with your financial
requirements and risk tolerance, you can choose a participating or non-participating
policy. Even if the premiums for participating whole life insurance are greater in
comparison, the policyholders receive dividend payments on a regular basis. A non-
participating policy has reduced premium rates, but the policyholder typically cannot
take advantage of monthly dividends.
These are contracts in which the sum assured, with or without profits, is only
payable at the death of the life insured, with premiums payable throughout the life, up
to the age of 80, or for a set number of years. These are appropriate for making
provisions for dependent relatives such as wife and children or for any other purpose.
3) Unit Linked Plan:
You may face a dilemma in life about choosing between any of the two
options – investment or insurance.
Due to their adaptability, ULIPs rank highly in terms of popularity among the
various forms of life insurance policies that are offered. ULIPs offer the dual
advantages of investment and insurance. It is a form of life insurance with a five-year
lock-in period, making it an instrument for long-term investments that offers reducing
risk. A portion of the premiums paid for ULIPs are used to ensure insurance coverage,
52
while the remainder is invested in a variety of investment instruments such as market-

backed equity funds, debt funds, and other securities. Because investors can easily
switch or redirect their premiums between the various funds available, ULIPs are
extremely flexible instruments. ULIPs are also touted as having a tax advantage over
other market instruments because their proceeds are exempt from LTCG (Long Term
Capital Gains).
4) Child Insurance Policy:
The International Year of the Child (1979) saw the unique introduction of the
Children’s Insurance Policy. One of the various types of life insurance available is a
kid insurance plan. Such a strategy is designed to achieve a single, focused objective:
to provide financial security for the policyholder’s child in the terrible event of the
policyholder’s passing. It is perfect for ensuring that the child’s future needs are met,
even in the event that the life insured is not there. Your ability to build wealth for your
child’s future requirements, such as schooling, will be aided by a child insurance plan.
From the moment your child is born, you can start making investments in these
programs.
5) Endowment Policy:
Endowment policies are one type of life insurance policy that combines the
benefits of life insurance and savings. Along with providing life insurance, these
policies enable you to save money on a regular basis in order to receive a lump sum at
maturity. Endowment insurance contracts pay a fixed sum insured if he survives for a
specified period, or to another person nominated or indicated if he dies within such
period. They are one of the most useful types of life insurance policies because they
help people achieve long-term goals in life. If you survive the policy’s term, you will
also receive the maturity amount.
Endowment plans are ideal for people who want maximum coverage as well
as a substantial savings component. They assist policyholders in developing the habit
of saving while also providing financial security to their families. Endowment plans
53
are broadly classified into two types: profit and non-profit. Policyholders can select
between these two types based on their risk tolerance.
6) Money back Policy:
The money back policy is useful for those who, in addition to wanting to
provide for their own old age and family, require lump sum benefits at regular
intervals. The sum assured is paid in appropriate installments until maturity. These
policies are issued for a term of twelve/fifteen/twenty years, with a percentage
repayment once every four or five years. These plans also include increased term
insurance coverage with a premium payment period that is shorter than the policy’s
term.
Money back policies, as the name implies, are one of the most common types
of life insurance policies in India that provide regular incentives. Unlike other types of
life insurance plans, it pays a percentage of the assured sum throughout the policy
term. When the policy matures, the remaining Sum Assured is paid to the
policyholder. If the policyholder dies during the term, their dependents receive the
entire Sum Assured with no deductions.
7) Retirement Plan:
A retirement plan is a type of life insurance designed to provide financial

stability and security after you retire. When you retire, you lose your regular income
from employment. Investing in retirement plans can assist you in generating a
consistent stream of income. If you keep investing until retirement, the plan will help
you meet your post-retirement expenses. A retirement plan requires you to regularly
invest a portion of your earnings throughout your working life. When you retire, the
money you’ve saved over the years will be converted into a steady stream of income.
If you die unexpectedly during the policy term, your nominee will receive the
death benefits. Retirement plans include both a death benefit and a vesting benefit,
which protects you and your family members.
54
8) Group Insurance Plan:

A group life insurance policy covers a group of people under one policy.
Individual life insurance policies, on the other hand, cover only one person for the
duration of the policy. A group insurance policy must have at least 10 members.
Employers, banks, corporations, and other similar organisations can purchase

group Life Insurance policies for their employees and customers. While employers
want to provide financial security to their employees’ families, banks and lending
institutions want to keep the debt off the borrowers’ families after they die.
a) The Master Plan is the plan under which the group is covered.
b) The policy is issued to the group’s manager (master), but it is only in the name
of the group.
It is important to remember that you will be covered by the group insurance as

long as you are a member of the group. If you leave the group, your cover disappears.
55
CHAPTER: 4
Comparative Study on Life
Insurance Policies of
LIC and HDFC Life
56
4.1 WHOLE LIFE INSURANCE PLAN
4.1.1 LIC OF INDIA
For the category of Whole Life Insurance Plans, LIC of India has one plan
under this head namely LICs Jeevan Umang with Plan No. 945 and UIN NO.
512N312V02.
 ELIGIBILITY CRITEREA
Minimum Sum Insured Rs. 2,00,000
Maximum Basic Sum Insured

No Limit
(Your Basic Sum Insured must be multiples of Rs.
25000/-)
15, 20, 25 and 30
Premium Payments years
(100 – age at entry)

Policy Term years
90 days (completed)
Minimum Age at Entry
55 years (completed)
Maximum Age at Entry
30 years (nearest
Age requirement at the end of the premium-paying
birthday)
term
70 years (nearest
Maximum age at the conclusion of the period of
birthday)
premium payment
100 years (nearest
Age at maturity birthday)
57
 PREMIUM RATES
Premiums can be paid on a regular basis at yearly, half-yearly, quarterly, or

monthly intervals, or through payroll deductions throughout the policy’s Premium
Paying Term.
A grace period of one month, but no less than 30 days, shall be provided for
annual, half-yearly, or quarterly premium payments, and 15 days for monthly
premium payments.
The following is an example premium rate for a basic sum insured of Rs.
2,00,000/- for standard lives:
AGE/PREMIUM PAYING
15 20 25 30
TERM
Rs. Rs. Rs. Rs.

20 15,739/- 10,692/- 7,830/- 6,105/-
Rs. Rs. Rs. Rs.

30 15,739/- 10,692/- 7,879/- 6,282/-
Rs. Rs. Rs. Rs.

40 15,739/- 10,741/- 8,291/- 6,880/-
Rs. Rs.
- -
50 15,739/- 11,544/-
 BENEFITS
The LIC’s Jeevan Umang plan provides your family with both income and
safety. This plan offers yearly survival benefits from the end of the premium-paying
period until maturity, as well as a lump sum payout at maturity or on the death of
the policyholder during the policy term 54.
54
Life Insurance Corporation of India, https://licindia.in/getattachment/Products/Insurance-Plan/LICs-
Jeevan-Umang/LIC_Jeevan_Umang_Brochure_9-inch-x-8-inch_Eng(2021).pdf.aspx (last visited Aug.
22, 2022).
58
1. Death Benefit:
If the Life Assured dies before the policy’s maturity date, assuming the policy
is still in effect, then:
(i) In the event of death prior to the initiation of the risk, an amount
equivalent to the whole amount of premiums paid without interest,
excluding taxes, Extra Premium, and Rider Premium, if applicable, is
payable.
(ii) Death Benefit defined as the total of “Sum Assured on Death,” vested
Simple Reversionary Bonus, and Final Additional Bonus, if any, shall
be payable on death after the Date of Risk Inception.
Where the “Sum Assured on Death” is greater than seven times the annualised
premium or the basic sum assured.
This death benefit shall not be less than 105% of the total premiums paid up to
the date of death (excluding taxes, Extra Premium, and Rider(s) premiums, if
applicable).
The Death Benefit will be paid in a lump sum as indicated above and/or in
instalments as described in Condition 8 of Part D of this Policy Document, depending
on the Policyholder/Life Assured’s preference.
2. Survival Benefit:
If the life guaranteed survives to the end of the premium-paying period, a
survival benefit equal to 8% of the Basic Sum Assured is payable each year as long as
the policy is in existence. The first survival benefit payment is made at the end of the
premium-paying period, and each consecutive year until the Life Assured dies or until
the policy anniversary previous to the date of maturity, whichever comes first.
3. Maturity Benefit:
If the Life Assured survives to the specified Date of Maturity and the policy is
still in existence, the “Sum Assured on Maturity” plus any vested Simple
Reversionary Bonuses and Final Additional Bonus, if any, will be paid. Where
“Maturity Sum Assured” equals “Basic Sum Assured.”
59
4. Rider Benefits:
The policyholder has an option of availing following Rider benefits:
RIDER UIN SCOPE OF BENEFITS

Under an active policy, either of these
riders can be selected at any time during the
Base Policy’s premium-paying term, as
long as the outstanding premium-paying
LIC’s Accidental Death term of both the Base Policy and the rider
512B209V02
and Disability Benefit is at least five years. This rider will be
Rider provided under the policy on the life of
minors from the policy anniversary after
the completion of age 18 years on receipt of
a particular request.
These riders are only offered at the policy’s

LIC’s New Term 512B210V01
beginning for an extra premium.
Assurance Rider
Under an active policy, either of these
riders can be selected at any time during the
Base Policy’s premium-paying term, as
long as the outstanding premium-paying
term of both the Base Policy and the rider
LIC’s Accident Benefit 512B203V03
is at least five years. This rider will be
Rider
provided under the policy on the life of
minors from the policy anniversary after
the completion of age 18 years on receipt of
a particular request.
These riders are only offered at the policy’s

LIC’s New Critical 512A212V01
beginning for an extra premium.
Illness Benefit Rider
Under an in-force policy, this rider can be
selected on the life of the policy’s proposer
LIC’s Premium Waiver 512B204V03 (as the Life assured is minor), at any time
Benefit Rider coinciding with the policy anniversary but
within the Base Policy’s premium paying
60
term, provided the outstanding premium

paying term of the Base Policy and the
rider is at least five years. Furthermore, this
rider will be permitted under the policy if
the Life Assured is a minor at the time of
selecting this rider. The tenure of the rider
should not exceed (25 minus age of the
minor Life Assured at the time of opting
this rider).
 EXCLUSIONS
1. Suicide: This policy is null and invalid.
 If the Life assured (whether sane or crazy) commits suicide at any point
within 12 months of the start of the risk, the Corporation will not accept any
claim under this policy save for 80% of the premiums paid, as long as the
policy is in existence. This provision is not applicable if the Life Assured’s
age at the time of entrance is less than eight years.
 If the Life Assured (whether sane or mad) commits suicide within 12 months
of being revived, the greater of 80% of the premiums paid up to the date of
death or the surrender value is payable. Under this policy, the Corporation
will not consider any further claims. This condition shall not apply:
 if the Life Assured’s age at the time of revival is less than 8 years; or
 if the policy has expired without accumulating paid-up value and nothing
shall be payable under such policy. 55.
55
Id. at 17.
61
For the category of Whole Life Insurance Plans, HDFC Life has one plan
under this head namely HDFC Life Sampoorn Samridhi Plus with UIN NO.
101N102V05.
Minimum Sum Insured Rs. 65,463
No Limit
5 years
Premium Paying Term
15 years
Minimum Policy Term
40 years
Maximum Policy Term
30 days (completed)
60 years (completed)
18 years
Minimum Age of Maturity
75 years
Maximum Age of Maturity
 PREMIUM RATES
You can select a “Sum Assured on Maturity” at policy start. The premium
amount for the needed “Sum Assured on Maturity” will be determined based on the
policy specifications. Alternatively, you can select the premium amount that best suits
your needs. The premium you choose will be used to determine your “Sum Assured
on Maturity.” You can pay your premiums annually, biannually, quarterly, or
monthly. “Sum Assured on Maturity” refers to an absolute amount of benefit that is
guaranteed to become payable at policy maturity.
62
The following is the sample illustration of premium rate for basic sum insured
of Rs. 2,00,000/- for the standard lives:
AGE/PREMIUM PAYING
15 20
TERM
Rs. 28,722/- Rs. 19,146/-

30
Rs. 29,248/- Rs. 19,470/-

35
Rs. 19,470/- Rs. 19,914/-

40
 BENEFITS
1. Death Benefit:
We would pay the nominee the highest of the following amounts if the life
guaranteed died during the insurance period and all required premiums were paid:
 Death Benefit Sum + Accrued Guaranteed Additions + Accrued Reversionary

Bonuses (if declared) + Interim Bonus (if declared) + Terminal Bonus (if
declared)
 To date, 105% of all premiums paid have been paid.

Where Sum Assured on Death is the greater of: • Sum insured on maturity,
which is the absolute amount of benefit guaranteed to be payable on policy
maturity in line with the policy’s terms and conditions.
 An absolute sum guaranteed to be paid on death, which is equal to the Sum
Assured on Maturity in this circumstance.
 10 times Annualized Premium for entering ages up to 50 years, and 7 times
Annualized Premium for ages above 50 years.
Risk coverage begins on the first day of the policy for all lives, including
minors.56.
56
HDFC Life, https://www.hdfclife.com/content/dam/hdfclifeinsurancecompany/products-
page/brochure-pdf/PP12201710730-HDFC-Life-Sampoorn-Samridhi-Plus-Retail-Brochure.pdf (last
visited Aug. 23, 2022).
63
If all due premiums are paid at the conclusion of the policy period, you will
receive the sum of:
 Sum Assured on Maturity
 Accrued Guaranteed Additions
 Reversionary bonuses earned (if declared)Interim bonus (if declared)
 Terminal bonus (if declared)
After the policy matures, a Whole Life cover equivalent to the “amount
insured on maturity” will be available. Such entire life benefit shall be awarded at the
death of the life assured upon policy maturity or upon the life assured reaching the
age of 100, whichever occurs first57.
3. Accident Death Benefit:
In the event of death due to an accident within the policy’s term, an extra Sum
equal to the Sum Assured on Death is payable. This sum is payable if the life
guaranteed is at least 18 years old on the day of death. An accident is defined as an
unexpected, abrupt, and involuntary event induced by external, visible, and forceful
methods. Accidental Death refers to death caused by or as a result of a bodily harm
caused by an Accident, regardless of other causes of death. Accidental Death must
occur within 180 days of any physical harm58.
4. Rider Benefits:

In the event of an Accidental Total
HDFC Life Income Permanent Disability, the payout is
101B013V03
Benefit on Accidental equivalent to 1% of the Rider Sum Assured
Disability Rider every month for the following ten years.
57
Id. at 4.
58
Id. at 4.
64
This rider does not provide any maturity

benefits.
If you are diagnosed with any of the 19

Critical Illnesses and live for 30 days after
the diagnosis, you will receive a lump sum
HDFC Life Critical 101BO14V02
benefit equal to the Rider Sum Assured.
Illness Plus Rider
benefits.59
 EXCLUSIONS
1. Suicide Exclusion
 In the event of a suicide death within 12 months of the commencement of risk

under the policy or the date of revival of the policy, as applicable, the
policyholder’s nominee or beneficiary shall be entitled to at least 80% of the
total premiums paid up to the date of death or the surrender value available as
of the date of death, whichever is greater, provided the policy is in force.
2. Accidental Death Benefit Exclusion

 Intentional self-inflicted harm or suicide, regardless of mental state.
 Abuse of alcohol or solvents, or use of narcotics except under the supervision
of a certified medical practitioner.
 Participating in or practicing for any dangerous activity, pursuit, or race unless
we have already consented in writing.
 War, invasion, hostilities (whether declared or unproclaimed), civil war revolt,
revolution, or participation in riot or civil commotion.
 Participating in any flying activity other than that of a passenger in a
commercially certified aircraft.
 Participating in any unlawful conduct with criminal intent60.
59
Id. at 7.
60
Id. at 7.
65
4.1.3 OBSERVATION
Under the head of Whole Life Insurance Policy of LIC of India which is LICs
Jeevan Umang and HDFC Life Insurance Company which is HDFC Life Sampoorn
Samridhi Plus. For both the company’s policy the eligibility criteria of an individual,
benefits given under a particular policy, premium rates are discussed of both the
companies by taking an average example for Rs. 2,00,000/- each and finally the
exclusions are stated above.
Thus, considering all the aspects which are discussed above, it is not incorrect
to say that for the purpose of taking a Whole Life Insurance policy of LIC of India
that is LICs Jeevan Umang is far better than the policy of HDFC Life Insurance
Company that is HDFC Life Sampoorn Samridhi Plus by the main virtue, that LIC is
a nationalise company running its business in the field of Life Insurance and been
introduced since September 1, 1956.
The second important aspect is the premium rates, there is a huge gap between
the premium rates for a same amount of Rs. 2,00,000/- between LIC of India and
HDFC Life i.e. For LIC the policy term is 40 years with the premium paying term
been 20 years, for this the premium rate is Rs. 190,741. And, For HDFC Life the
policy term is 40 years with the premium term been 20 years, for this the premium
rate is Rs. 19,914. Thus, in this instance where the sum insured, policy term and
premium paying term are same then also there is a vast difference of the premium
rates between LIC of India and HFC Life of Rs. 9,173/-.
Thus, finally by considering all the above mentioned aspects LICs Jeevan
Umang plan is an ideal plan for the people of India in general.
4.2 TERM LIFE INSURANCE PLAN
4.2.1 LIC OF INDIA
For the category of Term Life Insurance Plans, LIC of India has three plans
under this head namely 1) LICs Tech Term with Plan No. 854 and UIN NO.
512N333V01, 2) LICs Jeevan Amar with Plan No. 855 and UIN No. 512N332V01, 3)
LICs Saral Jeevan Bima with Plan No. 859 and UIN NO. 512N341V01.
66
 Rs. 5,00,000 (LICs Saral Jeevan

Bima)
Minimum Sum Insured
 Rs. 25,00,000 (LICs Jeevan Amar)
 Rs. 50,00,000 (LICs Tech Term)
 Rs. 25,00,000 (LICs Saral Jeevan
Bima)
 No Limit The Basic Sum Insured
shall be the multiple of Rs. 1,00,000
Maximum Basic Sum Insured (LICs Jeevan Amar)
shall be the multiple of Rs. 5,00,000
(LICs Tech Term)
 5 - 40 Years (LICs Saral Jeevan
Bima)
Policy Term  10 – 40 Years (LICs Jeevan Amar
and LICs Tech Term)
18 Years (last birthday)

Minimum Entry Age
65 (last birthday)
Maximum Entry Age
 70 years (LICs Saral Jeevan Bima)
Maturity Date  80 Years (LICs Jeevan Amar and

LICs Tech Term)
 PREMIUM RATES
This plan accepts regular premium, limited premium, and single premium
payments. In the case of Regular Premium and Limited Premium payment options,
the premium can be paid on a regular basis during the premium paying period, with
premium payment modes of Yearly, Half-yearly, or Monthly (through ECS/NACH
only).
67
The premium due is determined by the age at which the life to be insured
enters the policy, the policy term, the premium paying term, and the sum assured
selected.
The following is the sample illustrative for Basic Sum Assured of Rs 10 lakhs
and Policy Term 25 years for Standard lives:
AGE ONLINE PAYMENT OFFLINE PAYMENT

MODE (ANNUAL MODE (ANNUAL
PREMIUM) PREMIUM)
Rs. 3,574/- Rs. 3,850/-

25
Rs. 4,336/- Rs. 4,670/-
30
Rs. 5,675/- Rs. 6,110/-
35
Rs. 7,749/- Rs. 8,340/-
40
Rs. 10,837/- Rs. 11,660/-
45
 BENEFITS
1. Death Benefit:
The death benefit payable in the event of an acceptable death claim during the
policy term as long as the policy is in existence is the “Sum Assured on Death.” The
“Sum Assured on Death” for Regular premium and Limited premium payment
policies is defined as the greater of:
 7 times the yearly premium; or
 105% of all premiums paid as of the date of death; or
 Absolute amount assured to be paid on death. The “Sum Promised on Death”

for single premium insurance is defined as the greater of:
 125% of the single premium or
 The absolute amount assured to be paid on death. The above-mentioned

premiums do not include any additional amount charged under the policy as a
result of an underwriting decision or any rider premium(s), if applicable.
68
The absolute amount assured to be paid on death is determined by the Death

Benefit Option selected when purchasing this policy and is as follows:
 Option I: Assured Level Sum
The absolute sum promised to be paid on death should be the same as the
Basic Sum Assured and shall stay constant throughout the insurance duration.
 Option II: Increasing the Assured Sum
Until the end of the fifth policy year, the absolute amount promised to be paid on
death must remain equal to the Basic Sum Assured. Following that, it rises by 10% of
the Basic Sum Assured every year from the sixth to the fifteenth policy year, until it
reaches double the Basic Sum Assured. This rise will continue under an active policy
until the conclusion of the policy term, the date of death, or the fifteenth policy year,
whichever comes first. After the sixteenth policy year, the Absolute amount promised
to be paid on death stays constant, i.e. twice the Basic Sum Assured until the policy
term expires61.
There is no maturity benefit payable if the life insured survives to the

conclusion of the policy term.
3. Rider Benefit:
The policyholder may get the LIC’s Accident Benefit Rider

(UIN:512B203V03) under the Regular Premium and Limited Premium payment
modes by paying additional premium throughout the Premium Paying Term, provided
the outstanding premium paying term is at least five years. The benefit cover under
this rider shall be accessible only throughout the Premium Paying period or until the
policy anniversary on which the Life Assured’s age closest birthday is 70 years,
whichever comes first. If this rider is selected, the Accidental Benefit Rider Amount
Assured will be paid as a lump sum along with the death benefit under the base plan
in the event of accidental death. The Premium under this rider shall not exceed 100%
of the premium under the Base plan. The Accidental Benefit Sum Assured shall not
exceed the basic Sum Assured under the policy62.
61
Life Corporation of India, https://licindia.in/getattachment/Products/Insurance-Plan/LICsTECH-
TERM/brochure-eng.pdf.aspx (last visited Aug. 23, 2022).
62
Id.
69
 EXCLUSIONS
1. Under Regular/Limited Premium Payment Policy:
If the Life Assured (whether sane or insane) commits suicide at any time
within 12 months of the date of risk commencement, provided the policy is in force,
or within 12 months of the date of revival, the Corporation will not entertain any
claim except for 80% of the premiums paid up to the date of death.
2. Under Single Premium Policy:
If the Life Assured (whether sane or crazy at the time) commits suicide at any
time during 12 months of the start of the risk, the policy is null and invalid, and the
Corporation will not accept any other claim save for 90% of the Single Premium paid.
This provision does not apply to expired insurance because nothing is payable
under them.
Note: The above-mentioned single premium/premium does not include any taxes, any
additional amount paid under the policy owing to underwriting choices, or any rider
premium63.
For the category of Whole Life Insurance Plans, HDFC Life has three plans
under this head namely: 1) HDFC Life Click 2 Protect Life with UIN NO.
101N139V04, 2) QuickProtect by HDFC Life and 3) HDFC Life Saral Jeevan Bima
with UIN NO. 101N140V01.
 Rs. 5,00,000 (HDFC Life Saral

Jeevan Bima)
Minimum Sum Insured  Rs. 20,00,000 (HDFC Life Click 2
Protect Life)
 Rs. 75,00,000 (QuickProtect by
63
Id. at 1.
70
HDFC Life)

shall be the multiple of Rs. 50,000
(HDFC Life Saral Jeevan Bima)
Maximum Basic Sum Insured  No Limit (HDFC Life Click 2

Protect Life)
 1,25,00,000 (QuickProtect by HDFC
Life)
 5 - 40 Years (HDFC Life Saral
Jeevan Bima and QuickProtect by
HDFC Life)
Policy Term
 10 – 30 Years (HDFC Life Click 2
Protect Life)
18 Years (last birthday)

 60 Years (HDFC Life Saral Jeevan
Bima)
 65 Years (HDFC Life Click 2
Protect Life)
 45 Years: All 3 package Sum
Maximum Age at Entry Assured Option (QuickProtect by
HDFC Life)
 50 Years: 75 lakhs package Sum
Assured Option (QuickProtect by
HDFC Life)
 23 years (HDFC Life Saral Jeevan
Bima and QuickProtect by HDFC
Life)
Minimum Age at Maturity
 28 Years (HDFC Life Click 2
Protect Life)
 65 Years (HDFC Life Saral Jeevan
Maximum Age at Maturity Bima)
71
 75 years (HDFC Life Click 2 Protect

Life and QuickProtect by HDFC
Life)
 PREMIUM RATES
This product is offered in single, annual, half-yearly, and monthly frequencies.

There is no upper limit. Acceptance of any case, however, is subject to the Board
Approved Underwriting Policy (BAUP). The product is also available for purchase
online through the company’s website.
The following is the sample illustrative for Basic Sum Assured of Rs 10 lakhs
and Policy Term 25 years and Premium Payment Term of 25 years for Standard lives:
ENTRY AGE ANNUAL PREMIUM
Rs. 3,792/-
25
Rs. 4,505/-
30
Rs. 5,905/-
35
Rs. 8,289/-
40
Rs. 12,177/-
45
 BENEFITS
1. Death Benefit:
The product has a 45-day waiting period from the date of risk initiation. The
waiting time will not apply if the policy is revived.
Death during Waiting Period
The Death benefit amount payable as a lump sum on the death of the Life
Assured during the Waiting Period and provided the Policy is in force is:
(1) In case of Accidental Death, for regular premium or limited premium
payment policy, equal to Sum Assured on Death which is the highest of: a) 10 times
72
the Annualized Premium, or b) 105% of all premiums paid as on the date of death, or
c) Absolute amount assured to be paid on death.
(2) In the event of accidental death, the sum promised on death for a single
premium insurance is equal to the greater of: a) 125% of the single premium or b) the
absolute amount assured to be paid on death.
(3)In the event of death due to causes other than accident, the Death Benefit is
equivalent to 100% of all premiums paid, excluding any taxes.
Death after expiry of Waiting Period

When the Waiting Period has expired If the Life Assured dies after the
Waiting Period has expired but before the specified date of maturity, and the Policy is
still in existence, the Death Benefit amount payable as a lump payment is:
(1) In the case of a regular premium or limited premium payment policy, the
“Sum Promised on Death” is the greater of:
a) 10 times the yearly premium;
b) 105% of all premiums paid as of the date of death; or
c) The absolute amount assured to be paid on death.
(2) For a single premium policy, the “Sum Assured on Death” is the greater
of: a) 125% of the single premium or
b) The whole sum guaranteed to be paid upon death.
The above-mentioned premiums do not include any additional amount charged
under the policy as a result of an underwriting decision or any rider premium(s), if
applicable.
The absolute amount insured to be paid on death should be equal to the Basic
Sum Assured64.
No benefit is payable on survival till end of policy term65.
64
page/brochure-pdf/saral-jeevan-brochure.pdf (last visited Aug. 23, 2022).
65
Id. at 5.
73
3. Riders Benefit:

A reward equivalent to 1% of Rider Sum
Assured every month for following 10
HDFC Life Income
101B013V03 years, in event of an Accidental Total
Benefit on Accidental
Permanent Disability. There is no maturity
Disability Rider
advantage available under this rider.
The following Options under this rider are
applicable for this policy:

HDFC Life Protect 101BO16V01
A: Personal Accident Cover
Plus Rider
B: Accidental Benefit Cover 66
 EXCLUSIONS
1. Under Regular/Limited Premium Policy:
If the Life Assured commits suicide at any time within 12 months of the
commencement of risk, provided the policy is in force, or within 12 months of the
date of revival, the policy is void, and the Company will not entertain any claim
except for 80% of the premiums paid (excluding any extra amount charged under the
policy due to underwriting decisions, taxes, and rider premiums, if any) until the date
of death. This provision does not apply to expired insurance because nothing is
payable under such policies.
2. Under Single Premium Policy:
The policy will be null and void if the Life Assured commits suicide at any
time within 12 months of the date of risk commencement, and the company will not
entertain any claim for anything less than 90% of the Single Premium paid, excluding
66
Id. at 6.
74
any extra amount charged under the policy due to underwriting decisions and rider
premiums, if any.67.
4.2.3 OBSERVATION
Under the head of Term Life Insurance Policy of LIC of India which are LICs
Saral Jeevan Bima, LICs Jeevan Amar and LICs Tech Term. While HDFC Life
Insurance Company also have three types of term life insurance policy namely HDFC
Life Click 2 Protect Life, QuickProtect by HDFC Life and HDFC Life Saral Jeevan
Bima. For both the company’s policy the eligibility criteria of an individual, benefits
given under a particular policy, premium rates are discussed of both the companies by
taking an average example for Rs. 10,00,000/- each and finally the exclusions are
stated above.
Thus, considering all the aspects HDFC Life insurance Company’s Term
Policy are very much suitable for the people of India in general by the virtue of the
benefits available from both the companies and the premium rates too. For the
benefits HDFC gives the insured 10 times the Annualized Premium while, the LIC is
only giving 7 times the Annualized Premium.
For the aspect of Premiums rates there is a marginal difference between the
two, where the researcher has taken an illustrative example of Rs. 10,00,000/- from
the age of entry at 40 Years, Policy Term of 25 Years Premium Payment Term of 25
years for Standard lives, where the Annualized Premium of LICs policy is Rs.8,340/-
while HDFCs policy have Rs. 8,289/- only. Thus in the premium rates of LIC and
HDFC policy there is a marginal difference of Rs. 51.
Thus, under the Term Insurance Policy, both are equivalent in this business
but by some marginal difference HDFCs Policy of Term Insurance is ahead.
67
Id.
75
4.3 CHILD INSURANCE PLAN
4.3.1 LIC OF INDIA
For the category of Child Insurance Policy, LIC of India has two plans under
this head namely LICs NEW CHILDREN’S MONEY BACK PLAN with Plan No.
932 and UIN No. 512N296V02 and LICs Jeevan Tarun with Plan No. 934 and UIN
No. 512N299V02.
 Rs. 1,00,000 (LICs New Children’s

Minimum Sum Insured Money Back Plan)
 Rs. 75,000 (LICs Jeevan Tarun)
No Limit
[25 – Age at Entry] years

Policy Term
 25 Years (LICs New Children’s
Money Back Plan)
Premium Paying Term
 20 Years (LICs Jeevan Tarun)
 0 Years [Last Birthday] (LICs New
Children’s Money Back Plan)
Minimum Entry Age  90 days [Last Birthday] (LICs
Jeevan Tarun)
12 Years [Last Birthday]

Maximum Entry Age
25 Years [Last Birthday]
Maturity Age (Minimum/Maximum)
 PREMIUM RATES
Over the course of the policy’s premium-paying term, premiums can be paid
on a regular basis in the annual, half-yearly, quarterly, or monthly modes (via NACH
or by wage deductions exclusively).
76
The following is the sample illustrative of annual premium for Basic Sum
Assured of Rs 1 lakhs at different ages:
LICS JEEVAN TARUN
AGE ANNUAL PREMIUM
Rs. 4,390/-
0
Rs. 5,483/-
4
Rs. 7,414/-
8
Rs. 11,045/-
12
 BENEFITS
1. Death Benefit:
If the Life Assured dies within the policy term, provided the policy is still in
force. When all due premiums have been paid, the following will be the result: In the
event of death prior to the Date of Risk Commencement, a refund of premiums paid,
minus taxes, additional premiums, and rider premiums, if any, will be made without
interest. Death Benefit, defined as the total of “Sum Assured on Death” and vested
Simple Reversionary Bonuses and Final Additional Bonus, if any, shall be payable on
death after the Date of Risk Commencement. Where “Sum Assured on Death” is
defined as the greater of seven times the yearly premium or 125% of the Sum
Assured. This Death Benefit must be at least 105% of the total premiums paid up to
the date of death68.
2. Survival Benefit:
On each policy anniversary corresponding with or immediately succeeding the

completion of 20 years of age, and subsequently on each of the next four policy
anniversaries, a predetermined percentage of Sum Assured shall be payable69.
68
Life Insurance Corporation of India, https://licindia.in/getattachment/Products/Insurance-
Plan/jeevan-tarun/934-Sales-Brochure-Jeevan-Tarun.pdf.aspx (last visited Aug. 23, 2022).
69
Id.
77
If the Life Assured survives the policy term and the policy is still in place, the
"Sum Assured on Maturity" plus any vested Simple Reversionary Bonuses and Final
Additional Bonus, if any, will be paid.70.
4. Participation in Profits:
The policy will share in the Corporation’s earnings and be eligible for Simple
Reversionary Bonuses based on the Corporation’s experience, as long as the policy is
in effect. In the year that the insurance results in a claim, either by death or maturity, a
last further bonus may be issued under the policy. Under paid-up plans, the last
additional bonus is not payable71.
5. Rider Benefits:
Under an in-force policy, this rider can be

selected on the life of the policy’s proposer
(as the Life assured is minor), at any time
coinciding with the policy anniversary but
within the Base Policy’s premium paying
term, provided the outstanding premium
LIC’s Premium Waiver paying term of the Base Policy and the
512B204V03
Benefit Rider rider is at least five years. Furthermore, this
rider will be permitted under the policy if
the Life Assured is a minor at the time of
selecting this rider. The tenure of the rider
should not exceed (25 minus age of the
minor Life Assured at the time of opting
this rider).72
70
Id.
71
Id.
72
Id. at 4.
78
 EXCLUSIONS
1. Suicide:
A policy is null and invalid.
i. If the Life Assured (whether sane or crazy) commits suicide at any point
within 12 months of the start of the risk, the Corporation will not consider any
claim under the policy save for 80% of the total premiums paid, providing the
policy is still in existence. This provision is not applicable if the Life
Assured’s age at the time of entrance is less than eight years.
ii. If the Life Assured (whether sane or crazy) commits suicide within 12
months after the date of revival, the greater of 80% of the total premiums paid until
the day of death or the surrender value available on the date of death is payable.73.
2. Prohibition of rebates under Section 41 of Insurance Act, 1938.74
3. Non-Disclosure: In accordance with Section 45 of the Insurance Act,
1938.75
For the category of Child Life Insurance Policy, HDFC Life has three plans
under this head namely: 1) HDFC Life Youngstar Udaan with UIN No. 101N099V04,
2) HDFC SL YoungStar Super Premium with UIN No. 101L068V03, 3) HDFC Life
Click 2 Wealth – Premium Waiver Option with UIN No. 101L133V03.
Here, the researcher is only considering the best plan of HDFC Life under the
Child Insurance Plan that is HDFC Life Youngstar Udaan. This plan comes with three
maturity benefits – 1) Aspiration (Endowment benefit), 2) Academia (Money back
benefit) and 3) Career (Money back benefit). This plan helps the parents to secure
their child’s future expenses like education and marriage.
73
Id. at 11.
74
Insurance Act, 1938, § 41, No. 4, Acts of Parliament, 1938 (India).
75
79
 0 Years [30 days] (Aspiration)

 8 Years (Academia and Career)
Maximum Age at Entry 60 Years
 18 Years (Aspiration)
Minimum Age at Maturity
 23 Years (Academia and Career)
Maximum Age at Maturity 75 Years
Minimum Policy Term 15 Years
Maximum Policy Term 25 Years
 7 Years
Premium Paying term  10 years
 Policy Term minus 5 Years
 PAYOUT AMOUNT
 The following is the sample payout amount Illustration for Aspiration option
available under HDFC Life Youngstar Udaan plan by taking the policy term
of 20 years or more and the premium paying term of 10 years with sum
assured of 5 lakhs.
Option – 1 ASPIRATION – An immediate source of assistance in meeting life’s

broader obligations
Year of Payout How Much? How can be the Guaranteed

payouts be used? payout amount
for 5 lakhs of
sum assured on
maturity
Lumpsum paid at 100% of SA + A lumpsum that Rs. 6,25,000
80
Maturity GA(25% of SA) can be used to pay

for marriage
expenses or help
you finance your
start-up business
venture
Total 125% of SA Rs. 6,25,000
 The following is the sample payout amount Illustration for Academia option
assured of 5 lakhs.
Option – 2 ACADEMIA – The meticulously planned and properly timed

investment for your child’s educational requirements

for 5 lakhs of
sum assured on
maturity
5th year before 30% of SA To join a Rs. 1,50,000

Maturity professional course
4th year before 15% of SA Course fees for Rs. 75,000

Maturity next 4 years or
hostel expenses for
3rd year before 15% of SA your child Rs. 75,000
Maturity
2nd year before 15% of SA Rs. 75,000
81
Maturity
1st year before 15% of SA Rs. 75,000

Maturity
At Maturity 15% of SA + Further education Rs. 2,00,000

GA(25% of SA) or add on courses
Total 130% of SA Rs. 6,50,000
 The following is the sample payout amount Illustration for Career option
assured of 5 lakhs.
Option – 3 CAREER – An extra benefit for launching your child’s career

for 5 lakhs of
sum assured on
maturity
5th year before 15% of SA Rs. 1,50,000

Maturity
Higher secondary
or junior college
4th year before 15% of SA Rs. 75,000
Maturity
3rd year before 15% of SA Rs. 75,000

Maturity
Graduation
2nd year before 15% of SA Rs. 75,000
82
Maturity
1st year before 15% of SA Rs. 75,000

Maturity
At Maturity 40% of SA + Higher post Rs. 3,25,000

GA(25% of SA) graduate studies or
further education
abroad or
alternatively can be
used to fund your
child’s marriage
expenses.
Total 140% of SA Rs. 7,00,000
 BENEFITS
1. Death Benefit:
If the Life Assured dies on or before the Maturity date and all required
premiums have been paid. The Death Benefit payable is the greater of the following:
 Sum Assured on Death
 105% of total premium paid (In addition to that accrued Guaranteed
Additions, accrued reversionary bonus, interim bonus and terminal bonus if
declared would be payable). Where the Sum Assured on Death is more than
the Sum Assured on Maturity.
 10 times annualised premium for entries up to 50 years old and 7 times
annualised premium for entries above 50 years old 76.
76
page/brochure-pdf/MC0620179915-HDFC-Life-YoungStar-Udaan-Retail-Brochure.pdf (last visited
Aug. 23, 2022).
83
 The final guaranteed payoff for Moneyback Options OR the sum assured on
maturity for Endowment Options.
 Obtaining Guaranteed Additions (if applicable).
 Reversionary, intermediate, and terminal bonuses (if declared) 77.
3. Tax Benefit:
4. Nomination as per Section 39 of the Insurance Act 1938 as amended from

time to time.78
5. Assignment shall be as per Section 38 of the Insurance Act, 1938 as

amended from time to time.79
6. Rider Benefits:

Illness Plus Rider
benefits.
 EXCLUSIONS
1. Suicide:
If the policyholder dies by suicide within 12 months of the commencement of

risk under the policy or the date of revival of the policy, whichever is later, the
nominee or beneficiary is entitled to at least 80% of the total premiums paid until the
77
Id. at 7.
78
79
84
date of death or the surrender value available as of the date of death, whichever is
greater, provided the policy is in force.
2. Prohibition of rebates under Section 41 of Insurance Act, 1938. 80

1938.81
4.3.3 OBSERVATION
Under the head of Child Insurance Policy of LIC of India which have two
different types of plan under it. While HDFC Life Insurance Company also have vide
three different types of plans available under it. For both the company’s policy the
eligibility criteria of an individual, benefits given under a particular policy, premium
rates (LIC of India) is discussed by taking a sample illustration for sum assured of Rs.
1 lakhs and payout amount on maturity (HDFC Life) is discussed by taking one
sample illustration for each of the three maturity benefits option available by taking
sum assured of Rs. 5 lakhs each and finally the exclusions are stated above.
LIC’s JEEVAN TARUN is a Non-linked, Participating, and Individual.

Children’s life assurance savings plans that provide an appealing blend of protection
and savings elements. This plan is specifically designed to satisfy the educational and
other needs of growing children through yearly Survival Benefit payments from the
ages of 20 to 24 and Maturity Benefit payments at the age of 25.
HDFC Life YoungStar Udaan plan is a traditional participating insurance plan.

This plan is perfect for parents who want to plan for academic expenditures that arise
prior to enrolling their children in college. Specific goals like college fees or marriage
expenses etc, all miscellaneous and extra-curricular expenses that occur during
college or school can be taken care off with this plan.
Thus, both the Insurance plans are good in their segment as they posses
different benefits and the eligibility criteria also they are of different usages. Their
premium patter and payout amount is also not common among the two. Now its upto
80
81
85
the individual to decide between the two policies which suites them better and protect
their child’s need in near future.
4.4 RETIREMENT PLAN
4.4.1 LIC OF INDIA
For the category of Retirement/Pension Plans, LIC of India has four plans
under this head namely 1) “Pradhan Mantr Vaya Vandana Yojna” with Plan No. 855
and UIN No. 512G336V01, 2) LIC’s Jeevan Akshay – VII with Plan No. 857 and
UIN No. 512N337V02, 3) LIC’s New Jeevan Shanti with Plan No. 858 and UIN No.
512N338V02 and 4) LIC’s Saral Pension with Plan no. 862 and UIN No.
512N342V02.
 60 Years (Pradhan Mantr Vaya
Vandana Yojna)
Minimum Age at Entry  30 Years (LIC’s Jeevan Akshay –
VII and LIC’s New Jeevan Shanti)
 40 Years (LIC’s Saral Pension)
 No Limit (Pradhan Mantr Vaya
Vandana Yojna and LIC’s Saral
Pension)
 85 Years (LIC’s Jeevan Akshay –
VII)
 79 Years (LIC’s New Jeevan Shanti)
 1,000 per Month
 3,000 per Quarter
Minimum Pension / Annuity
 6,000 per Half Year
 12,000 per Year
86
 ANNUITY RATES
Here, the researcher have considered the purchase amount of Rs. 10,00,000/-
with GST of 1.8% for the annuity plans, the total premium comes out of Rs.
10,18,000/-. The following are the annuity rates for different entry ages and variants.
The comparison made is only of those ages and premium variants that were available
on LIC of India website. The following annuity rates compared are of the single life
variant and of LICs Jeevan Shanti Plan.
LICs Jeevan Shanti Plan, Purchase Price: 10 lakhs, Annual Payout
Entry Age Immediate Immediate Deferred Deferred

Annuity Annutity with Annuity 5 Annuity 10
without return return of Years Years
of purchase purchase price
price
50 77,700 65,600 91,800 1,28,300
60 89,200 66,200 95,800 1,34,700
70 1,12,700 67,200 1,03,400 1,24,600
80 1,79,100 68,700 NA NA
 BENEFITS
1. Death Benefit:
Option 1 - During Deferment Period:

 On survival of the Annuitant, nothing shall be payable.
 In the event of the Annuitant’s death, the Death Benefit, as specified below,
will be paid to nominees.
Option 2 - After Deferment Period:
 Annuity payments, regardless of manner, will be made in arrears for the
duration of the Annuitant’s life.
 When the Annuitant dies, the annuity payments end immediately, and the
Death Benefit, as defined below, is paid to nominees.
87
Higher of
 Purchase price + Accrued Additional Benefit on Death (as defined below) less
Total annuity amount due till death, if any
OR
 Purchase Price: 105%Accrued Additional Benefit on Death:
 The Additional Benefit on Death will be paid at the conclusion of each policy
month until the end of the Deferment Period. The following is the rate of
Additional Benefit on Death during the Deferment Period:
Additional Death Benefit per month = (Purchase Price * Annuity rate per
annum payable monthly) / 12
Whereas the Annuity Rate p.a. payable monthly shall be equal to the Annuity
Rate per unit Purchase Price applicable for monthly mode without any incentive and
shall be determined by the Option chosen, the annuitants’ age at entrance, and the
Deferment Period chosen.82.
 EXCLUSIONS
1. Suicide:
The insurance is null and void if the Annuitant/Last Survivor (whether sane or
crazy at the time) commits suicide at any point within 12 months of the initiation of
risk. In such a circumstance, the greatest of 80% of the Premium paid or the Surrender
Value is due. Any other claim will be rejected by the corporation.83.

1938.85
82
Life Insurance Corporation of India, https://licindia.in/getattachment/Products/Pension-Plans/LIC-s-
New-Jeevan-Shanti-(Plan-No-858)-(UIN-512N338/LIC-s-New-Jeevan-Shanti_sales-brochure.pdf.aspx
(last visited Aug. 26, 2022).
83
Id. at 6.
84
85
88
For the category of Whole Life Insurance Plans, HDFC Life has nine plans
under this head namely: 1) HDFC Life New Immediate Annuity Plan with UIN No.
101N084V27, 2) HDFC Life Systematic Retirement Plan with UIN No. 101N143V04
, 3) HDFC Life Systematic Pension Plan with UIN No. 101N144V01, 4) HDFC Life
Click 2 Retire with UIN No. 101L108V04, 5) HDFC Life Pension Guaranteed Plan
with UIN No. 101N118V10, 6) HDFC Life Guaranteed Pension Plan with UIN No.
101N092V08, 7) HDFC Life Personal Pension Plus with UIN No. 101N091V04, 8)
HDFC Life Assured Pension Plan with UIN No. 101L109V05 and 9) HDFC Life
Saral Pension with UIN No. 101N141V02.
Here, it is difficult to compare all the nine retirement plans of HDFC Life with
LICs plan. Thus, the researcher is only taking one plan of HDFC Life that is HDFC
Life Pension Guaranteed Plan.
 30 Years (Immediate Life Annuity)

 30 Years (Immediate Life Annuity
Minimum Age at Entry with Return of Purchase Price)
 45 Years (Deferred Life Annuity
with Return of Purchase Price)
 1,000 per Month
Minimum Pension / Annuity
 12,000 per Year
Maximum Pension / Annuity No Limit
Minimum Group Size (For Group
Five
Policies)
Premium Payment term Single Pay
89
 ANNUITY RATES
Here, the researcher have considered the purchase amount of Rs. 10,00,000/-
with GST of 1.8% for the annuity plans, the total premium comes out of Rs.
10,18,000/-. The following are the annuity rates for different entry ages and variants.
The comparison made is only of those ages and premium variants that were available
on HDFC Life website. The following annuity rates compared are of the single life
variant and of HDFC Life pension Guaranteed Plan.
HDFC Life Pension Guaranteed Plan, Purchase Price: 10 lakhs, Annual Payout
Entry Age Immediate Immediate Deferred Deferred

Annuity Annuity with Annuity 5 Annuity 10
without return return of Years Years
of purchase purchase price
price
50 58,156 66,997 79,120 1,06,124
60 76,420 61,083 82,649 1,12,965
70 91,010 61,344 86,152 1,12,724
80 1,18,652 60,682 NA NA
 BENEFITS
1. Death Benefit:
The Death Benefit is determined by the annuity plan chosen by the

policyholder.
Option 1 – Immediate Life Annuity Option: None
Option 2 – Immediate Life Annuity with Purchase Price Return Option: 100% of the
annuity’s purchase price.
Option 3 – Deferred Life Annuity with Purchase Price Refund Option:
90
Higher of
Purchase price + Guaranteed Additions (GA) - Total Annuity Payouts till death •
110% of Purchase price GA = Purchase Price x Annuity Rate x 12 and are accrued at
the conclusion of each insurance month throughout the deferral period. GA ceases to
accrue after the conclusion of the deferral term86.
2. Surrender Benefit:
It is recommended that you keep your coverage in order to get the full benefits
of your plan. However, we recognise that in some cases, you may choose to cancel
your coverage. The following are the surrender benefits offered under various plan
options:
Surrender is not permitted for
Option 1 - Immediate Life Annuity Option (Single and Joint Life Option).
Option 2 - Immediate and Deferred Life Annuity with Purchase Price Return (single
and Joint Life): Surrender Value should be equal to the Present Value (PV) of
projected future benefits discounted at the then-prevailing interest rate + 2%.87.
3. Tax Benefit:
All annuity distributions may be subject to income taxation based on the law
in effect on the date of payout.88.
4. Nomination as per Section 39 of the Insurance Act 1938 as amended from

time to time.89
5. Assignment shall be as per Section 38 of the Insurance Act, 1938 as

amended from time to time.90
86
page/brochure-pdf/MC01201810853-HDFC-Life-Pension-Guaranteed-Plan-Brochure-Retail.pdf (last
visited Aug. 26, 2022).
87
Id. at 6.
88
Id. at 8.
89
90
91
 EXCLUSIONS
1. Changes: No changes may be made once the annuity has been acquired.
2. This plan has no maturity benefit.
1938.92
4.4.3 OBSERVATION
Under the head of Retirement Insurance Plan of LIC of India which have four
different types of plan under it. While HDFC Life Insurance Company also have vide
area for selection from its nine plans available under it. For both the company’s policy
the eligibility criteria of an individual, benefits given under a particular policy,
annuity rates are discussed of both the companies by taking an average example of
Purchase Price of Rs. 10,00,000/- each and finally the exclusions are stated above.
As it is evident, LICs Jeevan Shanti is providing better annuity income in

almost all the scenarios. The only time HDFC Life Pension Guaranteed Plan does
better is when the entry age is 50 and the variant is “with the return of purchase
price”. This can be due t some business decisions too as many investors start thinking
about the retirement income around that age. If it so, then when such investors starts
to compare the rates, HDFC Life’s plan wins the race as it is good from that point of
view. Though, this plan gives you fine rate at a lower age too.
Therefore, if a person is planning to purchase an annuity plan, LICs Jeevan

Shanti is likely a better option. However, the rates must be compared before buying
such plan. It may be possible that HDFC Life Pension Guaranteed Plan provides you
with a better rate then LICs Jeevan Shanti. Moreover, LICs Jeevan Shanti and HDFC
Life Pension Guaranteed Plan are not the only plans. An individual can also consider
other plans too which are available with LIC of India and HDFC Life.
91
92
92
4.5 UNIT LINKED INSURANCE PLANS
4.5.1 LIC OF INDIA
For the category of Unit Liked Insurance Plans, LIC of India has three plans
under this head namely 1) LICs Nivesh Plus with Plan No. 849 and UIN No.
512L317V01, 2) LIC’s SIIP with Plan No. 852 and UIN No. 512L334V01 and 3)
LIC’s New Endowment Plus with Plan No. 935 and UIN No. 512N301V02.
Minimum Age at Entry 90 Days [Completed]
 50 Years [Nearer Birthday] (LIC’s

New Endowment Plus)
 70 Years [Nearer Birthday] (LICs
Nivesh Plus)
SIIP)
 3,000 per Month
Minimum Premium Amount  13,000 per Half Year
 20,000 per Year (LIC’s New
Endowment Plus)
Maximum Premium Amount No Limit
Minimum Maturity Age 18 Years [Completed]

New Endowment Plus)
Maximum Maturity Age
 85 Years [Nearer Birthday] (LICs
Nivesh Plus and LIC’s SIIP)
 10 to 20 Years (LIC’s New
Endowment Plus)
Policy Term
 10 to 25 Years (LICs Nivesh Plus
and LIC’s SIIP)
93
Premium Payment term Same as Policy Term
 INVESTMENT OF UNIT FUNDS
The allocated premiums will be utilized to buy units as per the fund type
opted by the policyholder out of the four fund types options available. Various types
of fund options and broadly their investment patterns are as under:
Asset Class
Governme
Risk
nt
Money &
Securities,
Market Retur
Fixed Equit
Fund SFIN Details Instrumen n
Income y
ts, Cash & Ratin
Instrumen
Deposits g
ts &
Bonds
Fund Composition
ULIF00120111 To provide Not more Not less Nil Low

4LI relatively than 40% than 60% Risk
CNED+BND51 safe and

less
2
volatile
Bond investment
Type option
mainly
through
accumulati
on of
income
94
through
investment
in fixed
income
securities
Secure ULIF00220111 To provide Not more Not less Not Lower

d Fund 4LI steady than 40% than 45% less to
income than mediu
CNED+SEC51
through 15% & m risk
2
investment Not
in both more
equities than
and fixed 55%
income
securities
Balanc ULIF00320111 To provide Not more Not less Not Mediu

ed 4LI balanced than 40% than 30% less m risk
CNED+BAL51 income
Fund than
and 30% &
2
growth Not
through more
similar than
proportion 70%
investment
in both
equities
and fixed
income
securities
Growt ULIF00420111 To provide Not more Not less Not High
95
h Fund 4LI long term than 40% than 20% less risk
capital than
CNED+GRW5
growth 40% &
12
through Not
investment more
primarily than
in equities 80%
 BENEFITS
1. Death Benefit:
On death before the Date of Risk Inception:
Amount equivalent to the Unit Fund Value is due.
On death after the Date of Risk Inception:
An amount equal to the highest of the following shall be payable
 Basic Sum Assured reduced by Partial Withdrawals made during the two
years period immediately preceding the date of death; or
 Unit Fund Value; or
 105% of all premiums received up to the date of death, less partial

withdrawals made during the two years before the date of death.
Where, ‘Basic Sum Assured’ is equal to ‘10 times of Annualized Premium’.
If the Settlement Option is selected, the death benefit will be paid in either a
single sum or in installments 93.
If Life Assured survives the specified maturity date, a payment equal to the
Unit Fund Value is payable.
93
Life Insurance Corporation of India, https://licindia.in/getattachment/Products/Unit-Plans/LIC-s-
NEW-ENDOWMENT-PLUS/LIC_New-Endowment-Plus_9-inch-x-8-inch_Eng.pdf.aspx (last visited
Aug. 27, 2022).
96
3. Rider Benefit:
The policyholder may use LIC’s Linked Accidental Death Benefit Rider
(UIN:512A211V02) at any policy anniversary throughout the policy term, but only on
or before the policy anniversary on which the Life Assured’s age nearer birthday
reaches 55 years, subject to a minimum rider period of 5 years. The benefit coverage
under this rider is available as long as the Policy remains in effect on the date of the
accident. If this rider is selected, the Accidental Benefit Rider Sum Assured will be
paid in a lump sum in the event of accidental death. This Rider will not be accessible
under a policy on the life of a minor during the Life Assured’s minority. The
Accidental Benefit Rider Sum Assured must not be more than the Basic Sum
Assured94.
4. Partial Withdrawals
5. Switching
 EXCLUSIONS
1. Suicide:
In the event of a suicide death within 12 months of the date of risk beginning
or the date of policy revival, the nominee or beneficiary of the policyholder is entitled
to the Unit Fund value available on the day of death notification. Any costs collected
after the date of death, other than Fund management Charges (FMC), should be added
back to the Fund Value accessible as of the date of intimation of death, together with
the death certificate. This provision does not apply if the Life Assured’s age at
admission or age at revival is less than eight years95.
1938.97
94
Id. at 3.
95
Id at 16.
96
97
97
For the category of Whole Life Insurance Plans, HDFC Life has ten plans
under this head namely: 1) HDFC Life ProGrowth Plus with UIN No. 101L081V06,
2) HDFC Life Click 2 Wealth with UIN No. 101L133V03, 3) HDFC Life
Click2Invest ULIP with UIN No. 101L100V03, 4) HDFC SL ProGrowth Super II
with UIN No. 101L066V04, 5) HDFC SL Crest with UIN No. 101L064V03, 6)
HDFC SL ProGrowth Flexi with UIN No. 101L072V05, 7) HDFC Life Smart
Woman Plan with UIN No. 101L082V03, 8) HDFC Life Sampoorn Nivesh with UIN
No. 101L103V03, 9) HDFC Life Classic One with UIN No. 101N132V03 and 10)
HDFC Life Capital Shield with UIN No. 101L112V02.
Here, it is difficult to compare all the ten unit linked plans of HDFC Life with
LICs plan. Thus, the researcher is only taking one plan of HDFC Life that is HDFC
Life ProGrowth Plus.
Minimum Age at Entry 30 Days [Completed]

 2,500 per Month
Minimum Premium Amount
 24,000 per Year
Maximum Premium Amount No Limit
Minimum Maturity Age -
Maximum Maturity Age 75 Years

Policy Term 10 to 30 Years
 Limited Pay: 5,7, 10 &12 years
Premium Payment term
 Regular Pay: Same as Policy Term
98
 INVESTMENT OF UNIT FUNDS
The assigned premiums will be used to purchase units in the fund type
chosen by the policyholder from among the 10 fund types available. Various types
of fund options and broadly their investment patterns are mentioned and from that a
person can choose either all or a combination of all the following funds:
Asset Class
Governme
Money nt Risk
Market Securities, &
Instrume Fixed Equi Retur
Fund SFIN Details
nts, Cash Income ty n
& Instrumen Rating
Deposits ts &
Bonds
Fund Composition
ULIF05301/0 To 0% to 20% 0% to 80% to Very

8/12 generate 20% 100% High
long term Risk
EquityPlus10
capital
1
Equity appreciatio
Plus Fund n in line or
better than
Nifty
index
returns
Diversifie ULIF05501/0 To 0% to 40% 0% to 60% to Very

d Equity 8/13 generate 40% 100% High
Fund long term Risk
DivrEqtyFd1
99
01 capital
appreciatio
n by
investing
in high
potential
companies
across the
market cap
spectrum
Blue Chip ULIF03501/0 Exposure 0% to 20% - 80% to Very

Fund 8/13 to large- 100% High
cap Risk
BlueChipFd1
equities &
01
equity
related
instrument
s
Opportuni ULIF03601/0 Exposure 0% to 20% - 80% to Very

ties Fund 1/10 to mid-cap 100% High
equities & Risk
OpprtntyFd1
equity
01
related
instrument
s
ULIF03901/0 Dynamic 0% to 20% 0% to 40% to Moder

9/10 Equity 60% 80% ate to
Balanced
exposure High
Fund BalancedFd1
to enhance Risk
01
the returns
100
while the
Debt
allocation
reduces
the
volatility
of returns
Income ULIF03401/0 Higher 0% to 20% 80% - Moder

Fund 1/10 potential to ate
IncomeFund1 returns due 100% Risk

to higher
01
duration
and credit
exposure
Bond ULIF05601/0 Active 0% to 60% 40% - Moder

Fund 8/13 allocation to ate
across all 100% Risk
Bond
fixed
Funds101
income
instrument
s
Conservat ULIF05801/0 To invest 0% to 60% 40% - Low

ive Fund 8/13 in high to Risk
grade 100%
ConsertvFd1
fixed
01
income
instrument
s and
Governme
nt
101
securities
at the short
end of the
yield
curve, to
deliver
stable
returns
Discovery ULIF0618/01 Long term 0% to 10% 0% to 90% to Very

Fund /18 capital 10% 100% High
growth by Risk
DiscvryFnd1
investing
01
predomina
ntly in
mid-cap
companies
. The fund
may invest
upto 25%
of the
portfolio
in stocks
outside the
mid-cap
index
capitalizati
on range.
Upto 10%
of the fund
may be
invested in
Fixed
102
income
instrument
s, money
market
instrument
s, cash,
deposits
and Liquid
mutual
funds
Equity ULIF06723/0 Long term 0% to 20% 0% to 80% to Very

Advantage 3/18 capital 20% 100% High
Fund growth Risk
EqtyAdvtFd1
through
01
diversified
investment
in
companies
across the
market
capitalizati
on
spectrum.
Upto 20%
of the fund
may be
invested in
Fixed
income
instrument
s, money
market
103
instrument
s, cash,
deposits,
and liquid
mutual
funds.
 BENEFITS
1. Death Benefit:
In the event of Life Assured’s untimely passing, we shall pay the nominee the
highest of the following amounts.
 Assured Sum (less all withdrawals made during the two year period
immediately preceding the death of Life Assured)
 The unit fund value.
 A death benefit of at least 105% of the total premiums paid.
The policy will then expire, and no further benefits will be paid. In addition to
the Death benefit indicated above, we shall pay the Accidental Death Benefit (if
applicable), which is the Sum Assured. Your coverage will then expire, and no further
benefits will be paid.98.
You will get your redeemed balance units at the then-current unit price plus
the fund value.
3. Discontinuance Benefit:
The grace period for this plan is 30 days for annual and half-yearly modes and
15 days for monthly mode. You must pay your premiums for the duration of the
coverage. The insurance is regarded to be in force with the risk cover without
interruption throughout the grace period99.
98
page/brochure-pdf/PP10201710536-HDFC-Life-ProGrowth-Plus-Retail-Brochure.pdf (last visited
Aug. 27, 2022).
99
Id. at 5.
104
4. Revival of Discontinued Policies:
This product has a three-year revival term beginning with the date of the first
unpaid premium.
5. Partial Withdrawals
6. Rider Benefits:

In the event of an Accidental Total
Permanent Disability, the payout is
HDFC Life Income equivalent to 1% of the Rider Sum Assured
101B013V03
Benefit on Accidental every month for the following ten years.
Disability Rider This rider does not provide any maturity
benefits.

Illness Plus Rider
benefits.100
 EXCLUSIONS
1. Suicide:
In the event of a suicide death within 12 months of the policy’s inception date
or, if applicable, the date of policy revival, the nominee or beneficiary of the
policyholder is entitled to the fund value as of the date of death notification.
Furthermore, any costs collected after the date of death, other than Fund Management
100
Id. at 7.
105
Charges (FMC) and guarantee charges, will be added back to the fund in the amount
accessible on the date of death notification101.
2. Accidental Death:
If the death happens after 90 days from the date of the accident, HDFC will
not pay the Accidental Death benefit. Unless we have previously agreed in writing,
we will not pay accidental death benefit if the death is caused directly or indirectly by
participating in or practicing for any dangerous pastime, pursuit, or race102.

1938.104
4.5.3 OBSERVATION
Under the head of Unit Linked Insurance Plans of LIC of India which have
three different types of plan under it. While HDFC Life Insurance Company also have
vide area for selection from its ten plans available under it. For both the company’s
policy the eligibility criteria of an individual, benefits given under a particular policy,
investments of unit funds in different types funds along with the details of the
mentioned funds, percentage of fund composition in market share, government
securities and equity also stating the level of risk is also mentioned and finally the
exclusions are stated above.
As stated above comparing the two companies by the features of its specific
policies, HDFC Life ProGrowth Plus policy has very vide option for the investment of
unit funds from its available ten types of funds allocation option available from which
one can easily choose either all or a combination of any of the above mentioned
funds. The benefits + the rider’s option are also available with the policy of HDFC
Life. The minimum premium available at yearly basis is also high then that of the
LICs New Endowment plus Policy.
101
Id.
102
Id.
103
104
106
Therefore, if a person is planning to purchase a Unit Linked Insurance plan,

HDFC Life ProGrowth Plus Plan is likely a better option. Moreover, HDFC Life
ProGrowth Plus Plan and LICs New Endowment Plus plan are not the only plans. An
individual can also consider other plans too which are available with LIC of India and
HDFC Life Insurance Company’s website.
Thus, these were the different types of life insurance policies available with
the LIC of India and HDFC Life Insurance Company and the comparison for the same
policies was also done. But before buying the Life Insurance policy, the claim
settlement ration is considered to be an important aspect. The claim settlement ration
is a metric to gauge the percentage of life insurance claims an insurer has settled
during a financial year against the number of claims it receives in the period including
pending claims from last year.
According to the Insurance Regulatory and Development Authority of India’s

(IRDAI) annual report for 2020-21, “In case of individual life insurance business,
during the year 021-21, out of the total 11.01 lakhs claims, the life insurers paid 10.84
lakhs claims, with a total benefit amount of Rs. 26,422 crore. The number of claims
repudiated was 9,527 for an amount of Rs. 865 crore and the number of claims
rejected was 3,032 for amount of Rs. 60 crore. The claims pending at the end of the
year was 3,055 for Rs. 625 crore.”
The claim settlement ration of LIC of India was 98.62% as at March 31, 2021
compared to 96.69% as at March 31, 2020 and the proportion of claims
repudiated/rejected has decreased to 1.0% in 2021-21 from 1.09% in the previous
year.
The claim settlement ratio of HDFC Life Insurance Company was 98.01% as
at March 31, 2021 compared to 99.07% as at March 31, 2020.
107
CHAPTER: 5
CONCLUSION &
SUGGESTIONS
108
5.1 CONCLUSION
The research always has the purpose of innovating new conclusions from the
analyzed data. In this chapter the researcher is concluding the finding of her study on
the basis of analysis of material and data screened in accordance with the hypotheses
evolved in the initial chapter. Hence, the study will attempt to give conclusions in
comprehensive manner. The research in general is always useful for the society,
public at large, academicians, students, legislators and this research also definitely
help the various stakeholders in the life insurance field. This chapter also gives
suggestions to the concerned members of the life insurance sector like life insurance
companies, regulatory bodies etc. In the form of this research, the researcher focuses
on the best life insurance policies to be taken by the people between LIC of India and
HDFC Life.
In Life Insurance business, India is ranked tenth in the world. In 2019, India’s
share of the global life insurance market was 2.73%. Life insurance premiums in India
climbed by 9.63% year on year, while worldwide life insurance premiums increased
by 1.18%.
The life insurance penetration of India was 2.71% in the year 2001 has
steadily increased to 3.76% in 2019. Since opening up of Indian Insurance sector for
private participation, India has reported an increase in both life insurance density and
penetration. But compared to UK, France, South Korea, Japan and South Africa, India
is way behind. Among developing countries it stands second to South Africa. There is
much scope for the life insurance sector to develop in India.
Life insurance generated a premium income of Rs. 5,72,910 in fiscal 2019-20,

up from Rs. 5,08,132 crores in the previous fiscal year, representing a 12.75%
increase. While renewal premiums made up 54.75% of total premiums collected by
life insurers, new business made up the remaining 45.25%.
For over a century, the United States has been the largest economy in the
world but major developments have taken place in the world economy since then,
leading to the shift of focus from the US and the rich countries of Europe to the two
Asian giants India and China. Economic experts and various studies conducted across
the globe envisage India and China to rule the world in the 21st century. India, which
is now the fourth largest economy in terms of purchasing power parity, may overtake
109
Japan and become third major economic power within 10 years. Life insurance will
grow very rapidly over the next decades in India. The major drivers include sound
economic fundamentals, a rising middle-income class, an improving regulatory
framework and rising risk awareness.
Thus, in the light of global competition in life insurance field, the researcher
has chosen this topic because of following reasons:
1. To study nature and scope of Insurance Law and Life Insurance in India.
2. To compare the performances of LIC of India and HDFC Life Insurance

Company.
3. To compare different life insurance policies available with LIC of India and
HDFC Life Insurance Company and out of the available policies which
insurance policy will be best suitable for people in general?
The researcher has started his research with the main objective to compare the
different types of life insurance policies available with LIC of India and HDFC Life
Insurance Company and out of the above two companies which company is providing
the best plan for its customers. The other secondary objectives of this research were to
study the nature and scope of Insurance law and Life Insurance in India and to
compare the performances of the two above companies.
This study is limited in its scope as it covers laws related to life insurance and
only policies related to life insurance in India only. Further, this study on emphasis on
the two life insurance companies LIC of India and one private life insurance company
out of total 24 private life insurance companies that is HDFC Life Insurance
Company. This study is purely doctrinal as there is little scope for empirical work.
Hence, the secondary data and information is used in this study. The secondary data
consisted of treatises (text books, reference books etc.) written by renowned authors,
five official reports (including Parliamentary Debates), few periodicals and legal
journals of international repute and also some websites. In this research study,
methodology of data collection was from secondary sources. The material in the form
of the secondary data was collected from Libraries and from the Electronic source
along with the print material.
110
The thesis comprises in all 5 chapters. These are: 1) Introduction, 2) Research

Methodology, 3) Concept, Nature & Privatisation of Life Insurance, 4) Comparative
Study on Life Insurance Policies of LIC and HDFC Life and 5) Conclusion and
Suggestions.
With the above information of the chapters, the researcher initiated his
research with the following hypothesis:
1. LIC of India is diverting from its very objective of social finance towards the
quick and profit oriented business.
2. Life Insurance policies of LIC of India are much better in terms of their
premium cost, benefits and claim settlement ration than HDFC Life Insurance
Company.
3. There is no significant difference in the growth rate of total Life Insurance
premium among LIC of India and HDFC Life Insurance Company.
With these hypotheses, the researcher started collecting data from the
secondary sources like commentaries, articles, websites etc. by visiting various
libraries and through the internet. After the analysis of the data so collected from the
secondary sources, above hypotheses brought varied results which can be summarized
as follows:
1. In all three hypotheses were formulated by the researcher in which hypothesis

numbers 1 and 2 as described above stands accepted whereas hypothesis
number 3 as described above stands rejected.
2. The research study supports the first hypothesis that not only the public life
insurance company but also private life insurance companies of India have
diverted from its very objective of social finance towards the quick and profit
oriented business as is the need of hour. After six decades of the
independence, India is growing as one of the developing nations, hence the
lifestyle and priorities of the people have also brought large changes under the
influence of Liberalization, Privatisation and Globalization. Hence looking
into the needs of the people, life insurance companies have shifted their
objective in short term and attractive plans.
3. The research study supports the second hypothesis that is LIC of India are
much better in terms of their premium cost, benefits and claim settlement
111
ration than HDFC Life Insurance Company as in the research, the researcher
compared five types of life insurance policies of both the company and by this
the researcher can say that premium cost of LIC is comparatively less than the
HDFC Life, the benefits are quite equal among the two and lastly the claim
settlement ration of LIC of India is marginal higher than that of HDFC Life
Insurance Company as LIC has claim settlement ration of 98.62% while the
HDFC Life has 98.01%. Thus it is evident that LIC of India has around 0.61%
higher claim settlement ratio.
4. The research study does not supports the third hypothesis made by the
researcher that there is a significant difference in the growth rate of
investments and premiums received among LIC of India and HDFC Life
Insurance Company as LIC of India has a higher income than the HDFC
Insurance Company. The LICs income from the investments was 559600 crore
last year, far more than the HDFC’s overall income. There is a significant
difference in the overall number of insurance issued by LIC and HDFC.
HDFC is attempting to acquire additional policies from LIC, which is a well
known participant in the insurance industry. The oldest player in the existing
insurance industry LIC, has the largest market share of 46% in 2022(APE
Terms – Annual Premium Equivalent) up from 59% in 2020. Though the
grievance management is handled well by HDFC when compared to LIC of
India. HDFC has resolved the 100% grievance where LIC of India has solved
around 97.46% during 2019-20.
5.2 SUGGSTIONS
Following are the suggestions given by the researcher to minimize the gap
between LIC of India and HDFC Life Insurance Company activities and to achieve
unique development of life insurance business in India:
1. The insurers have to conduct market research either in-house or through

professional agencies to initiate tailor-made products targeted at specific
segments of the population so that insurance can become more meaningful and
affordable.
112
2. Risk assessment studies have to be carried out for measuring accumulation of

risk of a particular place at any one point of time.
3. Consumer awareness campaigns have to be encouraged to advance insurance

literacy levels by conducting workshops, distributing literature etc.
4. To safeguard the welfare of insurance policyholders and to regulate, develop,

and secure the insurance industry’s orderly expansion, the Authority must
simplify its Grievance Redressal apparatus and set criteria for efficient and
effective service.
5. All insurance companies have to adhere to the Insurance Ombudsman scheme

formulated by the Government and complaints against insurance companies
are being referred to them by the aggrieved policyholders from time to time.
6. Premium Charged can be lowered: The policyholders perceive the LICI

policies as costly before liberalization. No doubt it might be charging a high
premium, since it was the only company offering life insurance. Charging
reasonable premium and attracting customers may be difficult for new
insurers, but they must lower the premium on policies and take this as
opportunity for the growth of business.
In the global era, Insurance companies are increasingly willing to spend more
on the customer satisfaction and brand building exercises. Though it is one of the
highly regulated industries, it still provides lot of scope for creativity and innovations.
As this industry is predominantly dominated by personal selling and personalized
services, many a time the service standards vary based on the intermediary involved
in the process. In order to achieve the competitive edge over others, it is necessary to
standardize the process and bring about quality improvement and get feedback from
the customers regarding the quality of services rendered. This will result in customer
satisfaction, customer retention, customer acquisition and employee retention and cost
reduction. Servicing focuses on enhancing the customer’s experience and maximizing
his convenience. This calls for effective Customer Relationship Management system,
which eventually creates sustainable competitive advantage and enables to build long
lasting relationship.
Thus, at the outset and on the basis of above discussion, the researcher
concludes that there are very less number of studies available that researches to
113
identify the best suitable life insurance policies for people in general among the LIC
of India and HDFC Life Insurance Company still there is a lot to be explored and
discussed in this area except the factors considered in this research.
114
BIBLIOGRAPHY
115
A. NEWSPAPERS
1. The Hindu
2. The Times of India
3. The Financial Express
4. The Indian Express
5. Hindustan Times
6. Business Line
7. Gujarat Samachar
8. Sandesh
9. Divya Bhaskar
B. CASES
1. LIC of India v. Krishna Singh, AIR 1999 Pat 106
2. Mrs. Annie Lewis v. LIC of India, 1988 (3) Bom CR 354, (1988) 90 BOMLR
180
3. Tropical Insurance Company v. Union of India, 1955 AIR 789
4. The Jupiter General Insurance Co. v. Rajagopalan and Anr, AIR 1952 P H
5. Mohoribibi v. Dharmodas Ghose, (1930) 30 Cal 539 (Pc)
C. STATUTES & REPORTS
1. The Insurance Act, 1938.
2. The Indian Contract Act, 1872.
3. Law Commission Of India 190th Report On The Revision Of The Insurance

Act, 1938 And The Insurance Regulatory And Development Authority Act,
1999 : June, 2003.
4. Malimath Committee Report, 1994.
5. Narasimhan Committee Report, 1998.
116
D. OFFICIAL WEBSITES
1. Insurance Regulatory and Development Authority Of India.

https://www.irdai.gov.in/
2. Life Insurance Corporation Of India.

https://licindia.in/
3. HDFC Life Insurance.

https://www.hdfclife.com/
E. BOOKS
1. M. N. Srinivasan, Principles of Insurance Law (Wadhwa and Company

Nagpur 2006).
2. B. N. Singh, New Insurance Law (Universal Law Publishing 2017).
3. Dr. G. Gopalakrishna, Life Insurance and Human Life Values, (2009),

available at
https://www.insuranceinstituteofindia.com/downloads/Forms/III/Journal-
2009-10-11/LifeInsuranceHumanValues.pdf
4. K.S.N. Murthy and K.V.S. Sarma, Murthy: Modern Law of Insurance in India
(Lexis Nexis 2020).
5. Dr. S. R. Myneni, Law of Insurance (Asia Law House 2018).
6. Avtar Singh, Law of Insurance (EBC Explorer 2018).
F. ARTICLES
1. Dr. Manish Dadhich, An Empirical Study of Investment Pattern of Indian

Insurance Companies: A Case Study of Public and Private Insurance
Companies, available at
https://books.google.co.in/books?id=T0dxEAAAQBAJ&printsec=frontcover#
v=onepage&q&f=false
2. The National Institute of Open Schooling, available at

https://nios.ac.in/media/documents/VocInsServices/m2--f2.pdf
117
3. Law Commission Of India 190th Report On The Revision Of The Insurance

Act, 1938 And The Insurance Regulatory And Development Authority Act,
1999 : June, 2004, available at
http://www.lawcommissionofindia.nic.in/reports/InsuranceReport-
2nddraft1.pdf.
4. Report Of The K P Narsimhan Committee On Provisions Of The Insurance

Act, 1938, available at
http://www.irda.gov.in/.../frmGeneral_Layout.aspx?...Committee%20reports.
5. Life Insurance 101, available at https://lifehappens.org/life-insurance-101/
6. Arjun Bhattacharya & O’Neil Rane, Nationalisation of Insurance in India,

Centre for Civil Society, available at
https://ccs.in/internship_papers/2003/chap32.pdf.
7. Life Insurance Corporation of India, available at

http://www.llm_pre_pap5_U2.
8. An Analysis of the Evolution of Insurance in India, available at

9. Privatization of the Insurance Market in India: From the British Raj to

Monopoly Raj to Swaraj, available at
http://www.unpan1.un.org/intradoc/groups/public/.../UNPAN023811.pdf.
10. List of Insurers” available at

https://www.irdai.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=P
ageNo129&mid=3.1.9.
11. Role Of Insurance Regulatory And Development Authority In Indian

Insurance Sector, available at
http://www.ssijmar.in/vol%201%20no%204/vol%201%20no%204.10.pdf.
12. Adv. Priscilla Rodrigues, Life Insurance Contract – Functioning of LIC,

available at https://blog.ipleaders.in/life-insurance-contract-functioning-lic/
13. Tapen Sinha, An Analysis of the Evolution of Insurance in India, available at

14. Tapen Sinha, (2002) Privatization of insurance market of India: From British
Raj to Monopoly, Raj to Swaraj.
118
15. Sonal Trivedi, A study on risk management tools and techniques in life
insurance industry in India, available at
https://www.uok.ac.in/notifications/(15)%20Sonal%20Trivedi.pdf
16. Mr. Sanjaykumar R. Shindey, A Comparative Study of Life Insurance

Corporation of India and Private Life Insurance Companies in India, available
at https://shodhganga.inflibnet.ac.in/handle/10603/3519.
17. Mrs. Jyoti Gajanan Hiremath, A Critical Analysis of Law Relating to Life
Insurance Business in India, available at
https://shodhganga.inflibnet.ac.in/handle/10603/130702.
18. Ms. Nandidni Nitin Singh, A Comparative Study Of Marketing Strategies Of

Private Life Insurance Companies, available at
19. Ms. Reetika, Law Of Life Insurance In India: A Study Of Legislative Policies
And Judicial Response, available at,
119
APPENDIX
120
THE INSURANCE ACT, 1938
RELEVANT PROVISIONS:
 Section 2(11):
“life insurance business” means the business of effecting contracts of insurance
upon human life, including any contract whereby the payment of money is
assured on death (except death by accident only) or the happening of any
contingency dependent on human life, and any contract which is subject to
payment of premiums for a term dependent on human life and shall be deemed to
include— (a) the granting of disability and double or triple indemnity accident
benefits, if so provided in the contract of insurance, (b) the granting of annuities
upon human life ; and (c) the granting of superannuation allowances and 1
[benefit payable out of any fund] applicable solely to the relief and maintenance
of persons engaged or who have been engaged in any particular profession, trade
or employment or of the dependents of such persons.
 Section 38: Assignment and transfer of insurance policies.

(1) A transfer or assignment of a policy of insurance, wholly or in part, whether with
or without consideration, may be made only by an endorsement upon the policy
itself or by a separate instrument, signed in either case by the transferor or by the
assignor or his duly authorised agent and attested by at least one witness,
specifically setting forth the fact of transfer or assignment and the reasons thereof,
the antecedents of the assignee and the terms on which the assignment is made.
(2) An insurer may, accept the transfer or assignment, or decline to act upon any
endorsement made under sub-section (1), where it has sufficient reason to believe
that such transfer or assignment is not bona fide or is not in the interest of the
policyholder or in public interest or is for the purpose of trading of insurance
policy.
(3) The insurer shall, before refusing to act upon the endorsement, record in writing
the reasons for such refusal and communicate the same to the policyholder not
later than thirty days from the date of the policyholder giving notice of such
transfer or assignment.
(4) Any person aggrieved by the decision of an insurer to decline to act upon such
transfer or assignment may within a period of thirty days from the date of receipt
of the communication from the insurer containing reasons for such refusal, prefer
a claim to the Authority.
(5) Subject to the provisions in sub-section (2), the transfer or assignment shall be
complete and effectual upon the execution of such endorsement or instrument
duly attested but except, where the transfer or assignment is in favour of the
insurer, shall not be operative as against an insurer, and shall not confer upon the
transferee or assignee, or his legal representative, any right to sue for the amount
of such policy or the moneys secured thereby until a notice in writing of the
transfer or assignment and either the said endorsement or instrument itself or a
copy thereof certified to be correct by both transferor and transferee or their duly
authorised agents have been delivered to the insurer: Provided that where the
insurer maintains one or more places of business in India, such notice shall be
delivered only at the place where the policy is being serviced.
(6) The date on which the notice referred to in sub-section (5) is delivered to the
insurer shall regulate the priority of all claims under a transfer or assignment as
between persons interested in the policy; and where there is more than one
instrument of transfer or assignment the priority of the claims under such
instruments shall be governed by the order in which the notices referred to in sub-
section (5) are delivered: Provided that if any dispute as to priority of payment
arises as between assignees, the dispute shall be referred to the Authority.
(7) Upon the receipt of the notice referred to in sub-section (5), the insurer shall
record the fact of such transfer or assignment together with the date thereof and
the name of the transferee or the assignee and shall, on the request of the person
by whom the notice was given, or of the transferee or assignee, on payment of
such fee as may be specified by the regulations, grant a written acknowledgement
of the receipt of such notice; and any such acknowledgement shall be conclusive
evidence against the insurer that he has duly received the notice to which such
acknowledgement relates.
 Section 39: Nomination by policyholder.

(1) The holder of a policy of life insurance on his own life, may, when effecting the
policy or at any time before the policy matures for payment, nominate the person
or persons to whom the money secured by the policy shall be paid in the event of
his death: Provided that, where any nominee is a minor, it shall be lawful for the
policy holder to appoint in the prescribed manner any person to receive the money
secured by the policy in the event of his death during the minority of the nominee.
(2) Any such nomination in order to be effectual shall, unless it is incorporated in the
text of the policy itself, be made by an endorsement on the policy communicated
to the insurer and registered by him in the records relating to the policy and any
such nomination may at any time before the policy matures for payment be
cancelled or changed by an endorsement or a further endorsement or a will, as the
case may be, but unless notice in writing of any such cancellation or change has
been delivered to the insurer, the insurer shall not be liable for any payment under
the policy made bona fide by him to a nominee mentioned in the text of the policy
or registered in records of the insurer.
(3) The insurer shall furnish to the policy-holder a written acknowledgment of having
registered a nomination or a cancellation change thereof, and may charge a fee not
exceeding one rupee for registering such cancellation or change.
(4) A transfer or assignment of a policy made in accordance with section 38 shall
automatically cancel a nomination:
Provided that the assignment of a policy to the insurer who bears the rats on the
policy at the time of the assignment, in consideration of a loan granted by that
insurer on the security of the policy within its surrender value, or its reassignment
on repayment of the loan shall not cancel a nomination, but shall affect the rights
of the nominee only to the extent of the insurer's interest in the policy.
(5) Where the policy matures for payment during the lifetime of the person whose life
is insured or where the nominee or, if there are more nominees than one, all the
nominees die before the policy-holder or his heirs or legal representatives or the
holder of a succession certificate, as the case may be.
(6) Where the nominee or, if there are more nominees than one, a nominee or
nominees survive the person whose life is insured, the amount secured by the
policy shall be payable to such survivor or survivors.
(7) The provisions of this section shall not apply to any policy of life insurance to
which section 6 of the Married Women's Property Act, 1874 (3 of 1874), applies
or has at any time applied:
Provided that where a nomination made whether before or after the
commencement of the Insurance (Amendment) Act, 1946 (VII of 1946), in favour
of the wife of the person who has insured his life or of his wife and children or
any of them is expressed, whether or not on the face of the policy as being made
under this section, the said section 6 shall be deemed not to apply or not to have
applied to the policy.
 Section 41: Prohibition of rebates.

(1) No person shall allow or offer to allow, either directly or indirectly, as an
inducement to any person to 2 [take out or renew or continue] an insurance in
respect of any kind of risk relating to lives or property in India, any rebate of the
whole or part of the commission payable or any rebate of the premium shown on
the policy, nor shall any person taking out or renewing 3 [or continuing] a policy
accept any rebate, except such rebate as may be allowed in accordance with the
published prospectuses or tables of the insurer.
(2) Any person making default in complying with the provisions of this section shall
be liable for a penalty which may extend to ten lakh rupees.
 Section 45: Policy not be called in question on ground of misstatement after

three years.
No policy of life insurance effected before the commencement of this Act shall
after the expiry of two years from the date of commencement of this Act and no
policy of life insurance effected after the coming into force of this Act shall, after
the expiry calf two years from the date on which it was effected be called in
question by an insurer on the ground that statement made in the proposal or in any
report of a medical officer, or referee, or friend of the insured, or in any other
document leading to the issue of the policy, was inaccurate or false, unless the
insurer shows that such statement was on a material matter or suppressed facts
which it was material to disclose and that it was fraudulently made by the
policyholder and that the policy-holder knew at the time of making it that the
statement was false or that it suppressed facts which it was material to disclose:
Provided that nothing in this section shall prevent the insurer from calling for
proof of age at any time if he is entitled to do so, and no policy shall be deemed to
be called in question merely because the terms of the policy are adjusted on
subsequent proof that the age of the life insured was incorrectly stated in the
proposal.
 Section 52(A): When Administrator for management of insurance business

may be appointed
(1) If at any time the Authority has reason to believe that an insurer carrying on life
insurance business is acting in a manner likely to be prejudicial to the interests of
holders of life insurance policies, it may, after giving such opportunity to the
insurer to be heard appoint an Administrator to manage the affairs of the insurer
under the direction and control of the Authority.
(2) The Administrator shall receive such remuneration as the Authority may direct
and the Authority may at any time cancel the appointment and appoint some other
person as Administrator.
 Section 52(C): Cancellation of contracts and agreements.

The Administrator may, at any time during the continuance of his appointment
with respect to an insurer and after giving an opportunity to the persons concerned
to be heard, cancel or vary (either unconditionally or subject to such conditions as
he thinks fit to impose) any contract or agreement (other than a policy) between
the insurer and any other person which the Administrator is satisfied is prejudicial
to the interest of holders of life insurance policies.

Comparative Study of Life Insurance Policies of LIC and HDFC Life

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Comparative Study of Life Insurance Policies of LIC and HDFC Life

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A DISSERTATION ON

LIFE INSURANCE POLICIES IN INDIA: A COMPARATIVE

DAVE KANDARP DUSHYANT

BATCH: 2018 – 2023

ACADEMIC YEAR: 2022 – 2023

GLS LAW COLLEGE

UNDER THE GUIDANCE OF:

DR. MAYURI H. PANDYA

GLS LAW COLLEGE

OPP. LAW GARDEN, ELLISBRIDGE,

AHMEDABAD – 380 006.

This is to certify that dissertation entitled “LIFE INSURANCE POLICIES IN

GUIDE: Dr. MAYURI H. PANDYA

OPP. LAW GARDEN, ELLISBRIDGE,

AHMEDABAD – 380 006.

I, DAVE KANDARP DUSHYANT, hereby declare that this dissertation entitled

Place: Ahmedabad Dave Kandarp Dushyant

AIR All India Reports

SCC Supreme Court Cases

LIC Life Insurance Corporation

IRDA Insurance Regulatory and Development

RBI Reserve Bank of India

GIC Guaranteed Investment Certificate

ECGC Export Credit Guarantee Corporation of India

GDP Gross Domestic Product

PPF Public Provident Fund

ULIP Unit Linked Insurance Plan

LTCG Long Term Capital Gains

FMC Fund Management Charges

APE Annual Premium Equivalent

1.1 Insurance Law 2

1.2 History of Insurance 5

1.3 Functions and Benefits of Insurance 9

CHAPTER: 2 RESEARCH METHODOLOGY 12

2.1 Objectives of the Study 13

2.2 Importance of the Study 14

2.4 Research Tools and Techniques 15

2.5 Literature Review 16

CHAPTER: 3 CONCEPT, NATURE & PRIVATISATION 19

3.1 Life Insurance: Concept, Nature & Scope 20

3.2 Contract of Life Insurance Business in India 24

3.3 Privatisation of Life Insurance Business 30

3.4 Profile of LIC of India and HDFC Life Insurance Company 48

3.5 Types of Life Insurance Policies 51

CHAPTER: 4 COMPARATIVE STUDY ON LIFE INSURANCE 56

POLICIES OF LIC AND HDFC LIFE

4.1 Whole Life Insurance Plan 57

4.2 Term Life Insurance Plan 66

4.3 Child Insurance Plan 76

4.4 Retirement Plans 86

4.5 Unit Linked Insurance Plans 93

5.1 Conclusion 109

5.2 Suggestions 112

“INSURE AND BE SECURE! Risk is inherent in our life.

It is so, in whatever we do in our day to day life.”

However, depending on the circumstances, some people may place a premium

The main purpose of insurance, a sort of risk management, is to guard against

Insurance is defined as a cooperative device for spreading the loss produced

The definition of insurance can be seen from two viewpoints:

Insurance is a contract in which an amount of money is provided to the insured

1.2 HISTORY OF INSURANCE

Yakshaprashna in Mahabharata – “What is the most wonderful thing in the

Insurance has a long history in India. It is mentioned by Manu (Manusmrithi),