INSTITUTIONAL TRAINING REPORT ON

TATA AIA LIFE INSURANCE COMPANY

Submitted to

Department of Commerce
Submitted in
partial fulfillment of the requirement for the award of the degree of

Bachelor of Commerce (Banking and Insurance)

Submitted by: K. K. ARUN KUMAR

(Register No: 18434)

Under the guidance of Mrs. V. PADMAVATHY

(Faculty Department of Commerce)

SUBBALAKSHMI LAKSHMIPATHY COLLEGE OF SCIENCE

(An autonomous institution affiliated to Madurai Kamaraj University
Re-accredited with B+status by NAAC)
TVR NAGAR, ARUPPUKOTTAI ROAD MADURAI-625022
MARCH 2021
 SUBBALAKSHMI LAKSHMIPATHY COLLEGE OF SCIENCE

(An autonomous institution affiliated to Madurai Kamaraj University

Re –accredited with B+ status by NAAC)

TVR NAGAR ARUPUKOTTAI ROAD,

MADURAI-625022.

BONAFIDE CERTIFICATE

This is to certify that the project report entitled institutional training report on
TATA AIA LIFE INSURANCE COMPANY LIMITED is a Bonafide record of the
project work done by K. K. ARUN KUMAR, Register No.18434 Course –B.Com.(Banking
& Insurance) in partial fulfillment of requirements for the award of degree of B.Com
(Banking & Insurance). I certify that the project work carried out by him is an independent
work under my supervision and guidance and this project has not formed for the award of any
degree/diploma/associate ship/fellow ship or similar nature to any candidate in any
university/institution earlier.

INTERNAL GUIDE HOD PRINCIPAL

Place:
Date:
 SUBBALAKSHMI LAKSHMIPATHY COLLEGE OF SCIENCE

(An autonomous institution affiliated to Madurai Kamaraj University

Re -accredited with B+ status by NAAC)

TVR NAGAR ARUPUKOTTAI ROAD,

MADURAI-625022.

DECLARATION BY THE CANDIDATE

I hereby declare that the report work entitled Institutional Training Report on
TATA AIA LIFE INSURANCE COMPANY LIMITED Submitted to Subbalakshmi
Lakshmipathy College of Science, Madurai-625022, is the record of original work carried out
by me from 11. 03. 2021 to 26. 04. 2021. And this report has not formed for the award of any
degree/diploma/associate ship/fellow ship or similar nature to any candidate in any
university/institution earlier.

Signature of the candidate

K. K. ARUN KUMAR
Date:
 ACKNOWLEDGEMENT

At the very outset, I show my deepest sense of gratitude to my parents for showering their
blessing and love which have induced me to make this project a successful one.
I would like to express my grateful thanks to our Honourable President Dr. R.
LAKSHMIPATHYand our beloved Former Principal Dr. R. Sujatha for permitting me to
do this project and for their encouragement in my academic year.
I take this opportunity to thank our Head of the Department Mrs. V. PADMAVATHY for all
the help in completing the project.
I express my deepest sense of gratitude to Mrs. V. PADMAVATHY, for her guidance and
moral support during the project period. Herkeen interest and valuable suggestion have
helped me throughout the project.
Last but not the least, I thank the Lord Almighty for showering his blessings on me, during
my internship period.
 CONTENTS

CHATER TITLE PAGE NO

I Introduction 1

II Industrial Profile 6

III Profile of Company 25

IV Field of Study 27

V Observations And 43
Conclusion
 CHAPTER-1

INTRODUCTION

INTRODUCTION:

INSURANCE:

Insurance is a means of protection from financial loss. It is a form of risk management,

primarily used to hedge against the risk of a contingent or uncertain loss. An entity which
provides insurance is known as an insurer, insurance company, insurance carrier or
underwriter. A person or entity who buys insurance is known as an insured or as a
policyholder. The insurance transaction involves the insured assuming a guaranteed and
known relatively small loss in the form of payment to the insurer in exchange for the insurer's
promise to compensate the insured in the event of a covered loss. The loss may or may not be
financial, but it must be reducible to financial terms, and usually involves something in which
the insured has an insurable interest established by ownership, possession, or pre-existing
relationship.

TERM LIFE INSURANCE:

Term insurance will pay a death benefit only if the insured dies within the policy’s term.
Term Insurance has no investment or cash value component. Since it is a temporary contract,
some of the circumstances in which these policies are useful are when the need for life
insurance is temporary, such as a mortgage being paid off or children finishing college. Term
Insurance is also appropriate when the need is long-term, but cash flows are insufficient to
pay the larger permanent insurance premiums. If an individual has a better investment
opportunity for the money he/she will spend on whole life premiums, he/she can buy a term
policy for lower premiums and invest the difference. In this case the individual will be
insured and can pursue the alternative investment.
 INTERNSHIP
An internship is a professional learning experience that offers meaningful, practical work
related to a student’s field of study or career interest. An internship gives a student the
opportunity for career exploration and development, and to learn new skills. It offers the
employer the opportunity to bring new ideas and energy into the workplace, develop talent
and potentially build a pipeline for future full-time employees.

DEFINITION OF INTERNSHIP
The training conducted to offer a practical knowledge to the students, lasting for few months,
is called as the internship training. These trainings are conducted for such courses viz.
Engineering, Medical, Management, etc., wherein the advanced theoretical knowledge is to
be backed up by the practical experience of the job.

IMPORTANCE OF INTERNSHIP

Deliberative preparation for a rewarding career is a must. Internships are beneficial because
they help develop the professional aptitude, strengthen personal character, and provide a
greater door to opportunity. By investing in internships, you’ll give theself the broadest
spectrum of opportunity when seeking and applying for a job after college.

1. Application of education and career exploration. Internships are a great way to apply the
knowledge from the classroom to real world experience. Learning is one thing, but taking
those skills into the workforce and applying them is a great way to explore different career
paths and specializations that suit individual interests.
2. Gain experience and increase marketability. Having an internship gives you experience in
the career field you want to pursue. Not only does this give individuals an edge over other
candidates when applying for jobs, it also prepares them for what to expect in their field and
increases confidence in their work.
3. Networking. Having an internship benefits you in the working environment, and it also
builds the professional network . There is a 1 in 16 chance of securing a job by connecting
with people, so networking is critical. Internships provide a great environment to meet
professionals in the career field you want to pursue, as well as other interns who have similar
interests.
4. Professionalism. Internships can provide students with the soft skills needed in the
workplace and in leadership positions. In a Linked in skills report. (2018), 57% of people
rated soft skills as being more important than technical skills. Skills, such as communication,
leadership, problem-solving, and teamwork can all be learned through an internship and
utilized beyond that experience.
5. Learn how a professional workplace operates. Depending on the major, you may read
about how organizations thrive and function in textbooks, hear from guest speakers who talk
about organizational structures, or dive into case studies about workplace culture, but
 nothing compares to living the actual experience. Internships help students learn all about
workplace culture, employee relations, and leadership structure, which should help them
onboard in their first professional job with more ease than if they haven’t had professional
experience.
6. Build the resume. Most organizations and jobs that you apply to following graduation want
employees to have some sort of professional experience, even for entry-level jobs. In the
event that you are a finalist for a position and haven’t had an internship experience but the
other finalist has, you may lose out on a job opportunity, so make sure you at least have one
interenship on the resume before leaving college to give you a leg up on the competition.
7. Gain professional feedback. Not only will you be helping out the organization you intern
with, but they’ll help you out too. While professors and teachers will prepare you for the
theoretical side of the field and hands-on projects, internships provide opportunities for
receiving feedback, from someone who works in the desired field on a daily basis.
8. Learn from others. It might seem common sense – you’re interning to learn skills, after all
– but don’t forget to purposefully observe others in their job role to learn the ins and outs of
different positions. Consider asking the supervisor if you can shadow them for a day, along
with other people in the department. Ask to sit in on departmentwide meetings as well. Act
like a sponge and soak up all the information you can during the internship – it will benefit
you in the long run.
9. Figure out what you like and don’t like. While everyone probably wants to walk away
from an internship feeling excited and passionate about the experience, there’s a silver-lining
to be found if you didn’t enjoy the job: you’ll know what you don’t like. According to
an article from  “figuring out what type of job you don’t want while you’re interning can
help prevent you from accepting an ill-fitting job when you graduate.”

TYPES OF TRAINING

1. Time of year. Internships typically run the duration of an academic quarter or semester, or

over a summer or winter break. Summer internships are typically the most popular because
students have less academic requirements and more availability.
Based on the time of year, the basic types of internships are semester internships, quarterly
internships, summer internships, fall internships, spring internships, and holiday or winter
internships (i.e. over a winter break). It’s also possible to work with interns for longer
durations, or even year-round.

2. Industry. Internship programs are also classified by industry; this usually corresponds with
the interns' majors. While there are obviously hundreds of possibilities, some of the most
common include marketing internships, advertising internships, finance internships, fine or
performing arts internships, legal internships, technology internships , PR internships , and
publishing internships.
3. Paid versus unpaid internships. There are legal ramifications—and blurred lines—
regarding whether it is permissible to employ interns without pay (most depend on meeting
the legal definition of "intern")1. For now, however, it's sufficient to say that paid internships
and unpaid internships are other methods of classification.
If you offer an unpaid internship, you will be limited in the amount and type of work that you
can assign to the intern. The primary beneficiary of an unpaid internship must be the intern,
and the intern’s work cannot replace the work of an employee.
 And given the choice between a paid or unpaid internship, it’s not surprising that most interns
would choose the former. They’re also more likely to recommend the internship program to
future interns if they are compensated.

If the company can afford to pay interns, it’s best practice to do so. If not, try to reward the
unpaid interns in other ways (e.g. free food, opportunities to network, a glowing letter of
recommendation, and so on).

4. Credit versus no-credit internships. For-credit internships and not-for-credit internships is

another type of categorization, as it's a common misconception that internships are always in
exchange for college or university credit.

In actuality, internships can be part of academic coursework; however, they can also be part
of an individual's extracurricular plan to gain experience. When an internship is performed in
exchange for college credit, the assigning of credit is strictly between the student and his or
her school.
To be worthy of college credit, an internship must be strongly related to an academic
discipline. Interns may be required by their university to keep a journal, write an essay, or
complete a presentation to demonstrate what they learned from the internship.

If the internship position is clerical or mechanical in nature, it’s unlikely that interns will be
able to earn college credit.

That doesn’t mean the internship position won’t be attractive to quality candidates.  Being
sure to emphasize the experiential benefits the internship program offers. There, you can
connect with millions of college students seeking valuable work experience.
5. On location versus virtual internships. When you post an internship online, students across
the nation will see it. If the internship is location-based, it’s important to identify the location
in the posting. For instance, you may be offering a New York City internship, a San Diego
internship, a Washington D.C. internship, etc.
Another option is a “virtual internships,” which can be completed remotely. This means the
intern can work from home rather than in the office. Virtual internships can be attractive to
interns who value flexibility, and it can broaden the search to include talented interns outside
of the area. This can be a natural fit for a company with many locations or many remote
employees.
6. Externships. Another option is an externship, which is generally shorter than an internship.
Externships provide brief experiential learning opportunities for students, typically consisting
of a day to a few weeks.
Externships are sometimes referred to as job shadowing. They allow students to gain insight
and knowledge in a career field of interest. Students may then determine whether the job’s
day-to-day activities and responsibilities are a good fit for their skills and interests.

If you’d like to test-drive the idea of an internship program, you may want to start by offering
brief externships. Students who enjoy the externship may become future interns or even
future hires.
OBJECTIVE OF THE INTERNSHIP:

1. This study was taken to analyze the awareness on the cattle insurance.

2. To know lot about the cattle insurance.

3. To know how can we apply for the cattle insurance.

4. To know the importance of cattle insurance.

5. To know the eligibility for the term life insurance.

 CHAPTER-2
INDUSTRY PROFILE

INTRODUCTION:
It is a generally acknowledged phenomenon that there are enormous risks in every
sphere of life. For property, there are fire risks; for shipment of goods, there are perils of sea;
for human life, there are risks of death or disability; and so on. The chances of occurrences of
the events causing losses are quite uncertain because these may or may not take place. In
other words, our life and property are not safe and there is always a risk of losing it. A simple
way to cover this risk of loss money-wise is to get life and property insured. In this business,
people facing common risks come together and make their small contributions to the
common fund. While it may not be possible to tell in advance, which person will suffer the
losses, it is possible to work out how many persons on an average out of the group may suffer
the losses.

MEANING AND DEFINITION OF INSURANCE:

Insurance is a means of protection from financial loss. It is a form of risk
management, primarily used to hedge against the risk of a contingent or uncertain loss. An
entity which provides insurance is known as an insurer, insurance company, insurance carrier
or underwriter. A person or entity who buys insurance is known as an insured or as a
policyholder. The insurance transaction involves the insured assuming a guaranteed and
known relatively small loss in the form of payment to the insurer in exchange for the insurer's
promise to compensate the insured in the event of a covered loss.

The loss may or may not be financial, but it must be reducible to financial terms,
and usually involves something in which the insured has an insurable interest established by
ownership, possession, or pre-existing relationship. The insured receives a contract, called the
insurance policy, which details conditions and circumstances under which the insurer will
compensate the insured.
 The amount of money charged by the insurer to the policyholder for the coverage
set forth in the insurance policy is called the premium. If the insured experiences a loss which
is potentially covered by the insurance policy, the insured submits a claim to the insurer for
processing by a claims adjuster. The insurer may hedge its own risk by taking out
reinsurance, whereby another insurance company agrees to carry some of the risks, especially
if the primary insurer deems the risk too large for it to carry.

HISTORY OF INSURANCE THROUGHOUT THE WORLD:

Insurance has a history that dates back to the ancient world. Over the centuries, it
has developed into a modern business of protecting people from various risks. The industry
has been profitable for many years and has been an important aspect of private and public
long-term finance.

FIRST FORMS OF INSURANCE:

In the ancient world, the first forms of insurance were recorded by the Babylonian
and Chinese traders. To limit the loss of goods, merchants would divide their items among
various ships that had to cross treacherous waters. One of the first documented loss limitation
methods was noted in the Code of Hammurabi, which was written around 1750 BC. Under
this method, a merchant receiving a loan would pay the lender an extra amount of money in
exchange for a guarantee that the loan would be cancelled if the shipment were stolen. The
first to insure their people were the Achaemenian monarchs, and insurance records were
submitted to notary offices. Insurance was also noted for gifts of substantial value. These
gifts were given to monarchs. By recording their gifts in a register, givers would receive help
from a monarch by proving the gift’s existence if they were in trouble.

As the ancient world evolved, maritime loans with rates based on favorable seasons
for traveling surfaced. Around 600 BC, the Greeks and Romans formed the first types of life
and health insurance with their benevolent societies. These societies provided care for
families of deceased citizens. Such societies continued for centuries in many different areas
of the world and included funerary rituals. In the 12th century in Anatolia, a type of state
insurance was introduced. If traders were robbed in the area, the state treasury would
reimburse them for their losses.
FIRST DOCUMENTED INSURANCE POLICY:
Standalone insurance policies that were not tied to contracts or loans surfaced in
Genoa in the 14th century. This is where the first documented insurance policy came from in
1347. In the following century, standalone maritime insurance was formed. With this type of
insurance, premiums varied based on unique risks. However, the separation of insurance from
contracts and loans was a major change that would influence insurance for the rest of time.

The first book printed on the subject of insurance was penned by Pedro de
Santarém, and the literature was published in 1552. As the Renaissance ended in Europe,
insurance evolved into a much more sophisticated form of protection with several varieties of
coverage . Until the late 17th century, many areas were still dominated by friendly societies
that collected money to pay for medical expenses and funerals. However, the end of the 17th
century introduced a rapid expansion of London’s importance in the world of trade. This also
increased the need for cargo insurance. London became a hub for companies or people who
were willing to underwrite the ventures of cargo ships and merchant traders. Lloyd’s of
London, one of London’s leading insurers, is still a major insurance business in the city.

INSURGENCE OF MODERN INSURANCE:

Modern insurance can be traced back to the city’s Great Fire of London, which
occurred in 1666. After it destroyed more than 30,000 homes, a man named Nicholas Barbon
started a building insurance business. He later introduced the city’s first fire insurance
company. Accident insurance was made available in the late 19th century, and it was very
similar to modern disability coverage.
In U.S. history, the first insurance company was based in South Carolina and
opened in 1732 to offer fire coverage. Benjamin Franklin started a company in the 1750s,
which collected contributions for preventing disastrous fires from destroying buildings. As
the 1800s arrived and passed, insurance companies evolved to include life insurance and
several other forms of coverage. No type of insurance was mandatory in the United States
until the 1930s. At that time, the government created Social Security. In the 1940s, GI
insurance surfaced. It helped ease the financial difficulties of women whose husbands died
while fighting in World War II. It wasn’t until the 1980s that the need for car insurance grew
enough that steps were taken to make it mandatory. Although insurance is an established
business, it is still changing and will change in the future to meet the evolving needs of
consumers.

HISTORY OF INSURANCE IN INDIA:

In India, insurance has a deep-rooted history. It finds mention in the writings of
Manu ( Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ). The
writings talk in terms of pooling of resources that could be re-distributed in times of
calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor to
modern day insurance. Ancient Indian history has preserved the earliest traces of insurance in
the form of marine trade loans and carriers’ contracts. Insurance in India has evolved over
time heavily drawing from other countries, England in particular. 

1818 saw the advent of life insurance business in India with the establishment of the
Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In
1829, the Madras Equitable had begun transacting life insurance business in the Madras
Presidency. 1870 saw the enactment of the British Insurance Act and in the last three decades
of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India
(1897) were started in the Bombay Residency. This era, however, was dominated by foreign
insurance offices which did good business in India, namely Albert Life Assurance, Royal
Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard
competition from the foreign companies.
 
In 1914, the Government of India started publishing returns of Insurance Companies
in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to
regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the
Government to collect statistical information about both life and non-life business transacted
in India by Indian and foreign insurers including provident insurance societies. In 1938, with
a view to protecting the interest of the Insurance public, the earlier legislation was
consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for
effective control over the activities of insurers.

The Insurance Amendment Act of 1950 abolished Principal Agencies. However,

there were a large number of insurance companies and the level of competition was high.
There were also allegations of unfair trade practices. The Government of India, therefore,
decided to nationalize insurance business.
 
An Ordinance was issued on 19th January, 1956 nationalizing the Life Insurance
sector and Life Insurance Corporation came into existence in the same year. The LIC
absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and
foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was
reopened to the private sector.
 
The history of general insurance dates back to the Industrial Revolution in the west
and the consequent growth of sea-faring trade and commerce in the 17 th century. It came
to India as a legacy of British occupation. General Insurance in India has its roots in the
establishment of Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British.
In 1907, the Indian Mercantile Insurance Limited , was set up. This was the first company to
transact all classes of general insurance business.
1957 saw the formation of the General Insurance Council, a wing of the Insurance
Association of India. The General Insurance Council framed a code of conduct for ensuring
fair conduct and sound business practices.
 
In 1968, the Insurance Act was amended to regulate investments and set minimum
solvency margins. The Tariff Advisory Committee was also set up then.
In 1972 with the passing of the General Insurance Business (Nationalization) Act, general
insurance business was nationalized with effect from 1st January, 1973. 107 insurers were
amalgamated and grouped into four companies, namely National Insurance Company Ltd.,
the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United
India Insurance Company Ltd. The General Insurance Corporation of India was incorporated
as a company in 1971 and it commence business on January 1sst 1973.
 
This millennium has seen insurance come a full circle in a journey extending to
nearly 200 years. The process of re-opening of the sector had begun in the early 1990s
and the last decade and more has seen it been opened up substantially. In 1993, the
Government set up a committee under the chairmanship of RN Malhotra, former Governor of
RBI, to propose recommendations for reforms in the insurance sector. The objective was to
complement the reforms initiated in the financial sector. The committee submitted its report
in 1994 where in , among other things, it recommended that the private sector be permitted to
enter the insurance industry. They stated that foreign companies be allowed to enter by
floating Indian companies, preferably a joint venture with Indian partners.
Following the recommendations of the Malhotra Committee report, in 1999, the
Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous
body to regulate and develop the insurance industry. The IRDA was incorporated as a
statutory body in April, 2000. The key objectives of the IRDA include promotion of
competition so as to enhance customer satisfaction through increased consumer choice and
lower premiums, while ensuring the financial security of the insurance market.
 
The IRDA opened up the market in August 2000 with the invitation for application
for registrations. Foreign companies were allowed ownership of up to 26%. The Authority
has the power to frame regulations under Section 114A of the Insurance Act, 1938 and has
from 2000 onwards framed various regulations ranging from registration of companies for
carrying on insurance business to protection of policyholders’ interests.
 
In December, 2000, the subsidiaries of the General Insurance Corporation of  India
were restructured as independent companies and at the same time GIC was converted into a
national re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July,
2002.
 
Today there are 31 general insurance companies including the ECGC and
Agriculture Insurance Corporation of India and 24 life insurance companies operating in the
country.
 
The insurance sector is a colossal one and is growing at a speedy rate of 15-20%.
Together with banking services, insurance services add about 7% to the country’s GDP. A
well-developed and evolved insurance sector is a boon for economic development as it
provides long- term funds for infrastructure development at the same time strengthening the
risk taking ability of the country.
TYPES OF INSURANCE:
There are two types of insurance:

1) Life Insurance

2) General Insurance

LIFE INSURANCE:

Life Insurance is defined as a contract between the policy holder and the insurance company,
where the life insurance company pays a specific sum to the insured individual's family upon
his death. The life insurance sum is paid in exchange for a specific amount of premium. Life
is beautiful, but also uncertain. Whatever you do, however smart and hard you work, you are
never sure what life has in store for you.

It is therefore important that you do not leave anything to chance, especially ‘life insurance’.
As death is the only certain thing in life, apart from taxes, it pays to insure it well in
advance. In legal terms, life insurance is a contract between an insurance policy holder
(insured) and an insurance company (insurer). Under this contract, the insurer promises to
pay a pre-decided sum of money (also known as “Sum Assured” or “Cover Amount”) upon
the death of the insured person or after a certain period.

TYPES OF LIFE INSURANCE:

1) TERM LIFE INSURANCE:

The term insurance plan is one of the most sought-after types of life insurance policies in
India. This is one of the types of life insurance policy in India that you can buy for a specific
period of 10, 20, 30 or more years, hence the name.

While some other types of life insurance policy offer maturity benefits, term insurance does
not. It is one reason why term insurance, being the best insurance policy in India, is
comparatively cheaper than other types of life insurance schemes. Term insurance is pure life
cover, unlike other types of life insurance policies which have a saving component. You can
also opt for a significant life cover at a lower premium as compared to other types of life
insurance policy which are costlier but have built-in saving components.

2. TERM INSURANCE WITH RETURN OF PREMIUM

A term insurance plan is one of the types of life insurance policy that provides a death benefit
but no maturity benefit.

If you live a healthy lifestyle, the probability that you will outlive the best insurance policy in
India you have bought also increases. For you, term insurance with return of premium is one
of the best insurance policy in India, which also give you maturity benefits.

It is one of the types of term insurance plans that give back the premiums you pay on
surviving the policy period.

3. UNIT LINKED INSURANCE PLAN (ULIP):

You may face a dilemma in life about choosing between any of the two options – investment
or insurance.

A ULIP is one of the types of life insurance policies in India that fulfill both these aspects.
Amongst different types of life insurance, it is the one that offers life cover along with
investment opportunities. Being one of the types of life insurance, it has a lock-in period of
five years, which makes it a long-term investment instrument that comes with risk protection.
ULIPs also allow you to balance your funds as per market dynamics.

4. ENDOWMENT POLICY:

Endowment policies are one of the types of life insurance policies that provide you with the
combined benefit of life insurance and savings. Along with giving you the life cover, these
types of life insurance help you save money regularly over a period to get a lump sum at
maturity.
What makes them one of the most useful types of life insurance policies is that they help
fulfill long-term goals in life. You will also get the maturity amount if you survive the policy
tenure. Endowment policies, being one of the most appropriate types of life insurance plans,
also help you create a financial cushion for your family to meet various financial objectives
in life.

5. MONEY BACK POLICY:

The purpose of investing in the insurance policy in India for your loved ones can be to create
wealth over an extended period. However, most of the types of life insurance do not provide
any provision to get funds before their tenure ends. It is where a money back policy plays a
vital role in solving the problem of liquidity.

As the name suggests, money back policies are one of the popular types of life insurance
policies in India that give money back regularly. It pays a percentage of the assured sum
throughout the policy tenure, unlike other types of life insurance plans that offer no returns
till maturity.

6. WHOLE LIFE INSURANCE:

As a life insurance policyholder, you get the benefits depending on the types of life insurance
plans. What distinguishes a whole life insurance plan from other types of life insurance is that
it provides insurance coverage to the insured for the entire life, up to 100 years of age.

The death benefit is payable to the beneficiary in the case of the untimely demise of the
policyholder. On the other hand, you are eligible to receive a maturity benefit under a whole
life insurance policy if you cross 100 years of age.

Another significant feature of these types of life insurance plans is that some plans offer the
option to pay premium for the first 10-15 years while you get the benefits for the entire life.

7. GROUP LIFE INSURANCE:

Just like group health insurance, group life insurance is one of the types of life insurance that
covers a group of people under one master policy. These types of life insurance are generally
provided as part of an employment benefit.
A unique feature of these types of life insurance products is that you will get the insurance
cover if you remain a part of the group. It is different from the individual types of life
insurance plans in which the coverage continues throughout the chosen policy tenure.

8. CHILD INSURANCE PLANS:

A child plan is an investment + insurance plan that helps you meet your child’s financial
needs. A child insurance plan will help you create wealth for your child’s future needs like
education. You can start investing in these plans from the birth of your child. You get the
flexibility of investing your hard earned money into several funds on the basis of your
financial condition and goals in mind.

9. RETIREMENT PLANS:

Retirement Plans are insurance plans which provides financial security and help you with
wealth creation after your retirement. With Retirement Plan, you will get a sum of money as
pension in the vesting period. In case of your untimely demise during the policy term, your
nominee will get the death benefits. Retirement Plans comes with death benefit as well as
vesting benefit providing protection to you and your family members.

GENERAL INSURANCE:

General insurance or non-life insurance policies, including automobile and homeowners

policies, provide payments depending on the loss from a particular financial event. General
insurance is typically defined as any insurance that is not determined to be life insurance. It is
called property and casualty insurance in the United States and Canada and non-life insurance
in Continental Europe.
TYPES OF GENERAL INSURANCE:

1. HEALTH INSURANCE:
Health insurance is an essential risk mitigating tool, health insurance prevents out-of-pocket
expenses while dealing with a medical emergency. A general health insurance plan is an
indemnity plan that pays for hospitalization expenses up to the sum insured. While you can
avail a standalone health policy, family floater plans provide coverage to all the members of
your family.
On the other hand, critical illness plans are fixed-benefit plans which provide a lump sum
upon diagnosis of a critical ailment, taking care of pre- and post-hospitalization costs. These
plans help take care of astronomical costs associated with the treatment of critical ailments.

2. MOTOR INSURANCE:
Motor insurance covers your vehicles against accidents, damage, theft, vandalism, and so on.
This form of insurance comes in two forms – comprehensive and third-party. A
comprehensive motor insurance policy provides a 360-degree cushion to your vehicle against
damages caused due to flood, fire, riot, etc. Along with this, it also offers you the rider, a
personal accident coverage along with third-party liability. On the other hand, a third-party
motor insurance takes care of the damages suffered by a third-party in case of an accident
caused by your vehicle. It won’t cover any damages to your vehicle. As per the Motor
Vehicles Act, 1988, it’s mandatory for every vehicle plying on the road to have a third-party
insurance.

3. HOME INSURANCE:
As the name suggests, a home insurance policy protects your home and its belongings from
the damages suffered due to man-made or natural disasters. Some home insurance policies
also provide coverage for temporary living expenses in case you are living on rent, due to
your home undergoing renovation.
4. TRAVEL INSURANCE:
In case you are travelling abroad, a travel insurance policy protects you against losses
suffered due to loss of baggage, delays in flight and trip cancellation. In some cases, if you
are hospitalized while travelling, travel insurance may also offer cashless hospitalization.

PRINCIPLES OF INSURANCE:
The concept of insurance is risk distribution among a group of people. Hence cooperation
becomes the basic principle of insurance.

To ensure the proper functioning of an insurance contract, the insurer and the insured have to
uphold the 7 principles of Insurances mentioned below:

a) Utmost Good Faith

b) Proximate Cause
c) Insurable Interest
d) Indemnity
e) Subrogation
f) Contribution
g) Loss Minimization

PRINCIPLE OF UTMOST GOOD FAITH:

The fundamental principle is that both the parties in an insurance contract should act in good
faith towards each other, i.e. they must provide clear and concise information related to the
terms and conditions of the contract. The Insured should provide all the information related to
the subject matter, and the insurer must give precise details regarding the contract.

Example:

Jacob took a health insurance policy. At the time of taking insurance, he was a smoker and
failed to disclose this fact. Later, he got cancer. In such a situation, the Insurance company
will not be liable to bear the financial burden as Jacob concealed important facts
PRINICPLE OF PROXIMATE CAUSE:

This is also called the principle of ‘Causa Proxima’ or the nearest cause. This principle
applies when the loss is the result of two or more causes. The insurance company will find
the nearest cause of loss to the property. If the proximate cause is the one in which the
property is insured, then the company must pay compensation. If it is not a cause the property
is insured against, then no payment will be made by the insured.

Example:

Due to fire, a wall of a building was damaged, and the municipal authority ordered it to be
demolished. While demolition the adjoining building was damaged. The owner of the
adjoining building claimed the loss under the fire policy. The court held that fire is the
nearest cause of loss to the adjoining building, and the claim is payable as the falling of the
wall is an inevitable result of the fire.

In the same example, the wall of the building damaged due to fire, fell down due to storm
before it could be repaired and damaged an adjoining building. The owner of the adjoining
building claimed the loss under the fire policy. In this case, the fire was a remote cause, and
the storm was the proximate cause; hence the claim is not payable under the fire policy.

PRINCIPLE OF UTMOST GOOD FAITH:

This principle says that the individual (insured) must have an insurable interest in the subject
matter. Insurable interest means that the subject matter for which the individual enters the
insurance contract must provide some financial gain to the insured and also lead to a financial
loss if there is any damage, destruction or loss.

Example:

The owner of a vegetable cart has an insurable interest in the cart because he is earning
money from it. However, if he sells the cart, he will no longer have an insurable interest in it.
To claim the amount of insurance, the insured must be the owner of the subject matter both at
the time of entering the contract and at the time of the accident.

PRINCIPLE OF INDEMNITY:

This principle says that insurance is done only for the coverage of the loss; hence insured
should not make any profit from the insurance contract. In other words, the insured should be
compensated the amount equal to the actual loss and not the amount exceeding the loss. The
purpose of the indemnity principle is to set back the insured at the same financial position as
he was before the loss occurred. Principle of indemnity is observed strictly for property
insurance and not applicable for the life insurance contract.

Example:

The owner of a commercial building enters an insurance contract to recover the costs for any
loss or damage in future. If the building sustains structural damages from fire, then the
insurer will indemnify the owner for the costs to repair the building by way of reimbursing
the owner for the exact amount spent on repair or by reconstructing the damaged areas using
its own authorized contractors.

PRINCIPLE OF SUBROGATION:

Subrogation means one party stands in for another. As per this principle , After the insured,
i.e. the individual has been compensated for the incurred loss to him on the subject matter
that was insured, the rights of the ownership of that property goes to the insurer, i.e. the
company.

Subrogation gives the right to the insurance company to claim the amount of loss from the
third-party responsible for the same.

Example:

If Mr. A gets injured in a road accident, due to reckless driving of a third party, the company
with which Mr. A took the accidental insurance will compensate the loss occurred to Mr. A
and will also sue the third party to recover the money paid as claim.
PRINCIPLE OF CONTRIBUTION:

Contribution principle applies when the insured takes more than one insurance policy for the
same subject matter. It states the same thing as in the principle of indemnity, i.e. the insured
cannot make a profit by claiming the loss of one subject matter from different policies or
companies.

Example:

A property worth Rs. 5Lakhs is insured with Company A for Rs. 3lakhs and with company B
for Rs.1lakhs. The owner in case of damage to the property for 3lakhs can claim the full
amount from Company A but then he cannot claim any amount from Company B. Now,
Company A can claim the proportional amount reimbursed value from Company B.

PRINCIPLE OF LOSS MINIMISATION:

This principle says that as an owner, it is obligatory on the part of the insurer to take
necessary steps to minimize the loss to the insured property. The principle does not allow the
owner to be irresponsible or negligent just because the subject matter is insured.

Example:

If a fire breaks out in your factory, you should take reasonable steps to put out the fire. You
cannot just stand back and allow the fire to burn down the factory because you know that the
insurance company will compensate for it.

CHARACTERSTICS OF INSURANCE:

1. It is a contract for compensating losses.

2. Premium is charged for Insurance Contract.
3. The payment of Insured as per terms of agreement in the event of loss.
4. It is a contract of good faith.
5. It is a contract for mutual benefit.
6. It is a future contract for compensating losses.
 7. It is an instrument of distributing the loss of few among many.
8. The occurrence of the loss must be accidental.
9. Insurance must be consistent with public policy
FEATURES OF INSURANCE:

A LARGE NUMBER OF INSURED PERSONS:

To spread the damage easily and easily, a large number of individuals should be
insured. A small number of individuals can also be co-operative insurance, but it is limit to a
small area. The cost of insurance for each member can be high. So, it can be impossible.
Therefore, to make the insurance cheaper, it is important to ensure a large number of
individuals or property because the cost of the insurance company will be the cost and
therefore, the lower premiums will be.

SHARING RISKS:

Insurance is an event that is a person to share a financial event that may occur when
a specific incident occurs on a person or his family. This event may be the death of a
breadwinner for the family in case of life insurance, marine insurance in the fire, fire in fire
insurance and other events in general insurance, for example, theft in theft insurance, accident
in motor insurance, And so on. The loss arising from these incidents , if the insured person is
sharing by all insured persons in the form of premium.

PRICE OF RISK:

The amount of the insured’s share, the risk is evaluated before considering the idea,
consideration or the premium. There are several ways to evaluate risks. If the higher loss is
expected, then a higher premium can be charged. Therefore, the probability of loss is
calculated at the time of insurance.

COOPERATIVE EQUIPMENT:
The most important feature of each insurance plan is the cooperation of a large number of
individuals who in reality agree to share the financial loss arising from any particular risk of
the insured. This group of individuals can be brought through voluntary or publicity or
through the request of agents. An insurer will be unable to fill all the losses due to its loss.
Therefore, by ensuring or underwriting a large number of persons, he is able to pay the
amount of loss. Like all cooperative pieces of equipment, there is no obligation on anyone to
buy an insurance policy.
PAYMENT AT CONTIGENCY:
Payment is made on a certain casualty insured. If contingency happens then
payment is made. Since the life insurance contract is the contract of certainty, because the
termination, death or expiry of the term will definitely be, payment is definitely fixed. In
other insurance contracts, contingency is fire or marine hazard etc., may or may not be.
Therefore, if contingency happens, payment is made , otherwise, no amount is given to the
policyholder. Similarly, in certain types of policies, payment is not guaranteed due to the
uncertainty of any particular contingency within a particular period. For example, in term-
insurance, payments are made only when the death of the assured is within the specified
period, maybe one or two years. Similarly, pure endowment payments are done only in the
existence of the insured at the end of the term.

PAYMENT OF FORTY LOSS:

Another feature of insurance is the cordial loss of payments. An amicable loss is

that which is unpredictable and unpredictable and as a result of opportunity. In other words,
the loss should be casual. The law of a large number is based on the assumption that the
losses are casual and occur randomly. For example, a person can slip on the snowy path and
break a leg. The loss will be lucky. The insurance policy does not deliberately cover issues.

AMOUNT OF PAYMENT:

The amount of payment depends on the value of the loss due to special insured
exposure, provided the insurance is up to that amount. In life insurance, the objective is not
good to face financial loss. The insurer promises to pay a fixed amount upon the occurrence
of an event. If event or accident occurs, the payment fails if the policy is valid and applies at
the time of the incident, such as property insurance, the dependents will not need to prove the
loss of loss and the amount of loss. It is infinite in life insurance what was the amount of loss
at the time of contingency. But in the property and general insurance, the amount of loss, as
well as the event of loss, is required to prove.

IMPORTANCE OF INSURANCE:

1. PROVIDED SAFETY AND SECURITY:

Insurance provide financial support and reduce uncertainties in business and human life. It
provides safety and security against particular event. There is always a fear of sudden loss.
Insurance provides a cover against any sudden loss. For example, in case of life insurance
financial assistance is provided to the family of the insured on his death. In case of other
insurance security is provided against the loss due to fire, marine, accidents etc.

2. GENERATES FINANCIAL RESOURCES:

Insurance generate funds by collecting premium. These funds are invested in government
securities and stock. These funds are gainfully employed in industrial development of a
country for generating more funds and utilized for the economic development of the country.
Employment opportunities are increased by big investments leading to capital formation.

3. LIFE INSURANCE ENCOURAGES SAVINGS:

Insurance does not only protect against risks and uncertainties, but also provides an
investment channel too. Life insurance enables systematic savings due to payment of regular
premium. Life insurance provides a mode of investment. It develops a habit of saving money
by paying premium. The insured get the lump sum amount at the maturity of the contract.
Thus life insurance encourages savings.

4. PROMOTES ECONOMIC GROWTH:

Insurance generates significant impact on the economy by mobilizing domestic savings.

Insurance turn accumulated capital into productive investments. Insurance enables to mitigate
loss, financial stability and promotes trade and commerce activities those results into
economic growth and development. Thus, insurance plays a crucial role in sustainable growth
of an economy.

5. MEDICAL SUPPORT:

A medical insurance considered essential in managing risk in health. Anyone can be a victim
of critical illness unexpectedly. And rising medical expense is of great concern. Medical
Insurance is one of the insurance policies that cater for different type of health risks. The
insured gets a medical support in case of medical insurance policy.

6. SPREADING RISK:

Insurance facilitates spreading of risk from the insured to the insurer. The basic principle of
insurance is to spread risk among a large number of people. A large number of persons get
insurance policies and pay premium to the insurer. Whenever a loss occurs, it is compensated
out of funds of the insurer.

7. SOURCE AT COLLECTING FUNDS:

Large funds are collected by the way of premium. These funds are utilised in the industrial
development of a country, which accelerates the economic growth. Employment
opportunities are increased by such big investments. Thus, insurance has become an
important source of capital formation.

CONCLUSION:

Insurance is a large investment and you will most likely purchase multiple policies
throughout your lifetime. ... People often say they cannot afford insurance, but the reality is
that they cannot afford not to have it. It can save them from thousands or more dollars in
unplanned expenses when unexpected situations arise.
 CHAPTER- 3

COMPANY PROFLIE

3.1 INTRODUCTION

Tata AIA Life Insurance Company Limited (Tata AIA Life Insurance) is a joint venture
company, formed by Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA). Tata AIA Life
Insurance combines Tata’s preeminent leadership position in India and AIA’s presence as the
largest, independent listed pan-Asian life insurance group in the world, spanning 18 markets
in the Asia Pacific region. Tata AIA Life Insurance is one of the leading insurers in the
country, and offers plans in multiple life insurance segments such as protection plans, wealth
plans, child plans, savings plans, group plans, and micro-insurance plans, among others.

Tata AIA Life Insurance has written retail new business weighted premium of Rs. 2,692crore
for the financial year 2019-20. For the same period, the 13th month persistency of the
company was at 89.10%, and the individual death claims settlement ratio was 99.06%. One of
the fastest growing companies in the Life Insurance sector, Tata AIA Life Insurance is now
ranked at no. 5 based on individual weighted new business premium (IWNBP).

3.2 VISION

To enable dreams and inspire healthier, happier lives, and become the pre-eminent insurance
provider in the country.
3.3 MISSION

To provide the best and simplest life and health insurance solutions, that are in sync with the
customer’s individual needs and life goals.
3.4 VALUES
3.4.1 Consumer obsession

 Adopt customer-centric approach, with customer satisfaction being of paramount importance

 Innovate solutions and services to better serve our customers
 Transparently deliver on promise

3.4.2 Passion for excellence

 Set and achieve the highest standards

 Do the Right things in the Right way
 Take accountability and drive results
 Pioneer Change

3.4.3 People - Our core

 Create and take distinctive opportunities for development

 Demonstrate courageous leadership at all times
 Exceptionally reward outstanding performance and right behaviour

3.5 CULTURE
Being a part of the Tata Group, we align our vision to the Tata Group Core Purpose: To
improve the quality of life of the communities we serve through long-term stakeholder value
creation.

At Tata AIA Life Insurance, we firmly believe that our employees are the key to our success.
Our employees share the following strong characteristics: integrity, performance-driven
mindset, share entrepreneurial spirit and deploy market-facing strategies.

3.6 CULTURE

Tata AIA Life wins

Extraordinaire Award
Tata AIA Life wins
 

Extraordinaire Award
Tata AIA Life wins
Extraordinaire Award
 TATA AIA LIFE INSURANCE HAS WON THE EXTRAORDINAIRE AWARD

Tata AIA Life Insurance has won the Extraordinaire Award at the 5th edition of Brand
Vision Summit 2019-20. The award has been conferred upon our MD & CEO, Mr. Rishi
Srivastava, for the role that Tata AIA Life has played in addressing the Life Insurance
Protection Gap in India.
Mr. Anurag Thakur, Hon'ble Minister of State, Finance and Corporate Affairs, Government
of India, who was the Chief Guest at the event, gave away the award which took place in
Mumbai on 20th February.
Some of the other winners of awards were Abbott India, Xiaomi India, Cairn India, Hindware
Appliances and Carl Zeiss.
Every year Brand Vision honours India’s leading achievers across Corporate, Healthcare,
Philanthropy, Education & Entertainment sector, and highlights the strategies and steps
adopted by them for the growth of their brands.
The event is supported by leading English news channel Times Now.
 
 
Tata AIA Life wins two top PR awards

 TATA AIA LIFE INSURANCE HAS WON TWO TOP PR AWARDS

Tata AIA Life has won two top industry awards for its PR campaign for creating
awareness about the need for Life Insurance Protection in India.
The Company won the Best Communication Strategist of the Year award, at the Corporate
communication & PR summit, organized by Morpheus Enterprise. The other award is for the
Best Direct-to-Consumer PR Campaign of the Year, at the 2020 Customer Fest Show,
organized by Kamikaze Media.
To support the vision of Tata AIA Life to become the pre-eminent protection provider in the
country, the Corporate Communications team started the campaign in 2018, which resulted in
a significant increase in brand recall and thought leadership position in Protection solution
space in the industry.

CHAPTER-4

FIELD OF STUDY

INTRODUCTION:

Term insurance will pay a death benefit only if the insured dies within the policy’s term.
Term Insurance has no investment or cash value component. Since it is a temporary contract,
some of the circumstances in which these policies are useful are when the need for life
insurance is temporary, such as a mortgage being paid off or children finishing college. Term
Insurance is also appropriate when the need is long-term, but cash flows are insufficient to
pay the larger permanent insurance premiums. If an individual has a better investment
opportunity for the money he/she will spend on whole life premiums, he/she can buy a term
policy for lower premiums and invest the difference. In this case the individual will be
insured and can pursue the alternative investment.
MEANING AND DEFINITION:

Term life insurance or term assurance is life insurance that provides coverage at a fixed rate
of payments for a limited period of time, the relevant term. After that period expires,
coverage at the previous rate of premiums is no longer guaranteed and the client must either
forgo coverage or potentially obtain further coverage with different payments or conditions.
If the life insured dies during the term, the death benefit will be paid to the beneficiary. Term
insurance is typically the least expensive way to purchase a substantial death benefit on a
coverage amount per premium dollar basis over a specific period of time.

Term life insurance can be contrasted to permanent life insurance such as whole life,
universal life, and variable universal life, which guarantee coverage at fixed premiums for the
lifetime of the covered individual unless the policy is allowed to lapse. Term insurance is not
generally used for estate planning needs or charitable giving strategies but is used for pure
income replacement needs for an individual. Term insurance functions in a manner similar to
most other types of insurance in that it satisfies claims against what is insured if the
premiums are up to date and the contract has not expired and does not provide for a return of
premium dollars if no claims are filed. As an example, auto insurance will satisfy claims
against the insured in the event of an accident and a homeowner policy will satisfy claims
against the home if it is damaged or destroyed, for example, by fire. Whether or not these
events will occur is uncertain. If the policyholder discontinues coverage because he or she
has sold the insured car or home, the insurance company will not refund the full premium.

HISTORY OF TERM LIFE INSURANCE:

Bring up the “term life insurance” and you will probably incite a large number of different
opinions. Some people view life insurance to be a complete waste of money. But, most
people do understand that the purpose of life insurance is to ensure that your family is well
taken care of in the event that you should happen to pass away. There are a variety of
different types of insurance policies available to most people but term life insurance is
considered to be the most pure form of insurance because no cash value is built like in other
policies. If you are not sure what type of insurance would be ideal for your situation, talking
to a term life insurance company may help. Life insurance agents are trained to determine the
best course of action for each situation and may make it easier for you to decide.

One of the first life insurance policies to ever exist was recorded by the ancient Romans.
Roman groups which were known as Fraters or burial clubs would come together to establish
a form of security for their workers. The policies were enacted in order to pay for the funerals
of fellow members of the club as well as to help the surviving family members with their
finances. The first insurance company ever formed in the United States opened its doors in
1735. The Friendly Society, a South Carolina based company lasted for five years. The first
term life insurance company was established in Philadelphia in 1759 in order to benefit the
families of Presbyterian ministers.

TYPES OF TERM LIFE INSURANCE PLAN:

LEVEL TERM INSURANCE:

Level term insurance is the most commonly availed plan in India. The sum assured and
premiums that are payable remain fixed for the entire tenure of the policy. So, whatever
premiums that you and the insurance company agree upon when you buy the plan, will stay
constant for the next 10 years or 20 years (depending on the policy period you have selected).
The younger you are when you buy a level term life insurance plan, the cheaper you will find
the premiums to be. This type of cover is provided by all life insurance companies.

INCREASING TERM INSURANCE:

An increasing term insurance plan is one where the death benefits increase periodically,
mostly every year, during the policy's term. The policy’s premiums do not increase. Some
plans have a limit on the maximum that a sum assured can reach. However, while the
increase in coverage amount will stop on touching the limit, the plan will still be effective.
Such plans are designed to help combat the effects of inflation and/or changing
circumstances. The cost of increasing term insurance plans is normally higher than that of
level term plans.

DECREASING TERM INSURANCE:

Here, the sum assured payable decreases every year until either the policy pays out or the
coverage period comes to an end. Premiums payable in case of decreasing term insurance
remain constant. Such policies are normally availed to cover against a specific debt, which
itself reduces in size over time. Usually, the sum assured comes down to zero when the policy
period comes to an end. Premiums of decreasing term insurance plans are lower when
compared with other types of term insurance.

TERM INSURANCE WITH RETURN OF PREMIUM:

If you opt for a return of premium term plan, the insurance company will return all the
premiums that you've paid over the life of the policy at the end of the term. However, this
shall only apply if you survive the policy period. For example - Mr. X avails a TROP with a
sum assured of Rs. 50lakhs for 20 years. The annual premiums that he is required to pay is
Rs. 5,000. In the event that Mr. X passes away during these 20 years, his beneficiaries will
receive the sum assured amount of Rs. 50lakhs. However, should he outlive the policy period,
the insurance company will return all his premiums i.e. Rs. 1lakh (Rs. 5,000 x 20).

FEATURES OF TERM LIFE INSURANCE:

Features inherent to term life and those that differentiate it from other life insurance types
include:

1. Temporary Coverage
2. Pure Death Benefit
 3. No Capital Build-up
4. Fixed Coverage Amount
5. Increasing Premiums
6. Medical Exam for Qualification
7. Tax-Free Inheritance

1. TEMPORARY COVERAGE:

Term life insurance offers coverage for a limited period of time, typically 10-30 years. Unlike
other types of life insurance, a term policy eventually expires. This can be a positive or
negative feature depending on individual circumstances. On the one hand, temporary
coverage means lower start-up premiums. On other hand, once the policy expires it might be
difficult to secure an extension due to worsening health conditions. If you can accurately
predict the length of time for which you need coverage, term life insurance is most
economical.

2. PURE DEATH BENEFIT:

Permanent forms of life insurance come with savings and investment components that may or
may not be suitable for your needs. Term life offers no such component; think of term life as
life insurance proper, whose aim is to provide a lump-sum payout upon the death of the
policy owner. This benefit can be used to pay for funeral and medical costs or to replace lost
income. If you want to grow wealth in your life insurance policy, consider a permanent type
of insurance life universal or variable.

3. NO CAPITAL BUILDUP:

Term life insurance doesn’t accumulate wealth over time as a whole, universal, or variable
policy would. As with car insurance, term life premiums go directly towards securing
compensation in case the unthinkable should occur. Once you stop making premium
payments or the policy matures (reaches the end of its term), you are left with zero capital.
Premiums are used to solely fund the death benefit, and if no death occurs, the insurance
company never pays out. This is a direct cost of insuring against risk of death.

4. FIXED COVERAGE AMOUNT:

Like all life insurance, term life can be purchased with widely varying death benefits, from as
low as $100,000 to as high at $10,000,000. The amount of coverage desired directly affects
the size of the annual premium, as the insurance company charges policy owners per $1,000
of coverage. One downside of term life policies is that once a coverage amount is set, it
cannot be increased or decreased. This is not a problem in theory if you can accurately
estimate the right level of coverage for the full length of the policy’s term, but in practice
your financial situation will change many times over the course of 10-30 years. If you want a
flexible coverage amount and annual premium, consider universal life or variable universal
life.

5. INCREASING PREMIUMS:

Most term life insurance (non-level term life) comes with premiums that increase every years.
This results from the rising risk of death as the policyholder ages. Fundamentally, all life
insurance faces the grim reality of escalating mortality charges. The difference is, permanent
life insurance averages out later premiums with former ones, enabling the owners to fund
their policies with uniform annual payments. If level premiums are important for you,
consider purchasing level term life or a permanent life insurance policy. If you only need
temporary coverage, a level-premium policy is to your disadvantage.

6. MEDICAL EXAM FOR QUALIFICATION:

Except for guaranteed life, virtually all forms of life insurance force potential policyholders
to undergo a medical examination before issuing a policy. The exam is performed by a
paramedical hired by the insurance company. The paramedical can come to your home or
office to administer the health exam, which typically consists of taking physical
measurements life height and weight, taking a blood and urine sample for analysis, and
asking medical history questions to ascertain hereditary conditions that might put you at
greater risk of death. Based on the test results the insured is given a rating class (Preferred
Plus, Preferred, Standard Plus, Standard) which skews premiums higher or lower.

7. TAX-FREE INHERITANCE:

A great benefit of all insurance types is the ability to pass on wealth tax-free and avoid estate
taxes. Unlike other investments vehicles, life insurance is uniquely designed as a wealth
transfer instrument. Beneficiaries don’t have to pay taxes on any funds coming to them via a
life insurance death benefit.

BENEFITS OF TERM LIFE INSURANCE:

Following is a list of term insurance benefits that a term insurance provide you:

Let’s talk in brief explanation of above term insurance benefits.

1. Whole Life Cover

2. Easy to Understand
3. High Sum Assured With Affordable Premium
4. Critical Illness Coverage
5. Additional Rider Benefits
6. Payout of Sum Insured
7. Return of Premium Option
8. Multiple Death Benefit Payouts
9. Income Tax Benefits
 10. Maturity Benefits
11. Term Insurance for a Secured Family
12. Accidental Death Benefit

1. WHOLE LIFE COVER:

One of the key term insurance benefits is the whole life cover, which offers comprehensive
security wherein the policyholder is covered up to the age of 99 years and more. A term
insurance plan helps to reduce the financial burden on the family members’ case the bread
winner passes away.

2. EASY TO UNDERSTAND:

When purchasing a life cover, it is better to take an in-depth understanding of the specified
terms that are offered within the term insurance policy. Another term insurance benefit is that
it is one of the easiest policies to understand. Moreover, as a term insurance policy is a pure
life cover therefore it has no investment component within it. One needs to pay the premium
on time and the insurance provides a cover for a fixed duration and provides different term
insurance benefits.

3. HIGH SUM ASSURED WITH AFFORDABLE PREMIUM:

When it comes to a term insurance plan, it is the simplest form of life insurance. The prime
term insurance benefit is the pocket-friendly cost. When compared to any other type of
insurance policy undoubtedly a term insurance plan is available at affordable premiums. The
golden rule for buying the plan the earlier you buy, the lower will be the premium. Likewise,
it is better to buy a term insurance policy online as the premiums offered will be low in
comparison to buying it offline. Moreover, it is easier and convenient to check term insurance
benefits online.

4. CRITICAL ILLNESS COVERAGE:

Someone might suffer from any critical illness at any stage of life. Moreover, the treatment
expenses incurred towards these illnesses could easily exhaust the savings. Though this
essential term insurance benefit is life cover, however, one can opt for a critical illness cover,
which is mostly available within additional rider options wherein you will not need to pay for
the incurred medical expenses and drain the savings. It is recommended to avail this term
insurance benefit as you might be healthy now, but nobody knows what will happen
tomorrow.

5. ADDITIONAL RIDER BENEFITS:

In case you are unaware you can strengthen the term insurance policy by opting various
additional rider befits options. These additional rider benefits are available and are offered by
almost every insurance company in India and one can include it in the policy by paying an
additional nominal premium. These term insurance benefits will differ from one insurer to the
other.

6. PAYOUT SUM ASSURED:

In case the policyholder passes away, the family will obtain the sum assured as the payout.
Now, this payout can opt as a lump sum or an income that can either be received on a yearly
or monthly basis. This way it helps the family to take care of the everyday expenses and
manage it accordingly.

7. RETURN OF PREMIUM OPTIONS:

A term insurance policy does not provide any maturity benefit. However, you can avail
maturity benefit within the same only when you have opted for the return of premium option
wherein you need to pay high premiums that will be returned to you when you have survived
the entire policy period. Although, the total amount for the premiums that will be returned
will be excluding the taxes, rider premium, any levies and the modal sum that is paid upon
the premium. You can also use an online term insurance calculator and take an idea of the
estimate with and without the maturity benefits that will help you to make the prudent choice
and likewise assess your needs as well.

8. MULTIPLE DEATH PAYOUTS:

The breadwinner of the family might be having various liabilities and paying EMIs for the
same such as a car loan or a home loan and much more. So when the breadwinner of the
family passes away, the liabilities will come on the family. It is here that this term insurance
benefit will, play a pivotal role. With the multiple payouts, options the nominee will receive a
lump sum amount and then this amount will be used to manage any such liabilities and so
that the family lives in peace. One also has the option to obtain income each month alongside
the lump sum amount that is the death benefit.

9. INCOME TAX BENEFITS:

Last and not the least the term insurance policy also offers tax benefits within two various
sections of the Income Tax Act. Within Section 80 C, you can access tax benefit upon the
premium that is paid towards the term insurance policy. The premium that paid to the highest
limit of Rs 1.5lakh is eligible for tax exemption. Moreover, within Section 10 (10D) a
maturity benefit provided by some of the term insurance plan and with special regards to the
TROP that is Term Return of Premium Plan is also tax exempted.

Section 80C- Under this section of Income Tax Act, you can avail tax benefit on the premium
paid towards the policy. The premium paid towards term insurance, up to maximum limit of
Rs.1.5Lakhs are eligible for tax exemption U/S 80C of IT Act 1961.

Section 10(10D)- The maturity benefit offered by some of the term insurance policy
(specifically Term Return of Premium Plan TROP) are also eligible for tax exemption under
section 10(10D) of Income Tax Act 1961.

10. MATURITY BENEFITS:

A pure term insurance plan only offers insurance coverage in the form of the death benefit to
the beneficiary of the policy. There is no maturity benefit offered by term insurance plan.
However, specific plan such as TROP (Term Return of Premium Plan) offers maturity benefit
in form of premium return in case the insured survives the entire tenure of the policy.

11. TERM INSURANCE FOR A SECURED FAMILY:

It is imperative to have a term insurance plan, if you are the sole bread earner of your family,
as term insurance plan provides life coverage to the family of the insured in case of an
unfortunate event. In case of an unfortunate event. It provides financial protection to family
and take care of the liabilities in your absence. Thus, with a term insurance your family can
be financially secured and maintain a good lifestyle even in your absence.

12. ACCIDENTAL DEATH BENEFIT:

This rider benefit is so significant because it manages a flat out, irreversible misfortune – the
demise of the life assured. This implies his/her family is left to manage the grief and is
currently likewise confronted with gigantic money related pressure. Unexpected medical
costs are a monstrous cost as of now, and on the off chance that it ends up being deadly, the
family needs to manage the death toll and future pay. The blow of this twofold risk of
medical costs and perpetual loss of pay from the demise of the earning member can be
facilitated through the arrangement of the accidental death benefit rider. The rider shields the
family from mishaps/setbacks bringing about death, which can weaken the income of the
family for a while or even years. In case of demise, the safeguarded gets an extra sum -
normally, double the whole guaranteed.

ADVANTAGES OF TERM LIFE INSURANCE:

SIMPLICITY:

Term insurance plans are much easier to understand than insurance plans such as endowment
policies which combine risk cover with savings. Plans which comprise risk cover plus a
savings component are also known as cash value plans. It is not always easy for a layperson
to divide the premium he pays into risk cover cost and the amount actually being invested on
his behalf as savings. Planning financial goals around a cash value insurance plan can get
really complicated. There are rules governing things like thing of your cash value savings
versus the policy death benefit and the repayment of policy loans etc. Term life, on the other
hand, is the essence of simplicity - pay the premium and get covered for the term.
COMPETITIVE PRICING:
Term life policies can be easily compared with each other on the basis of price as they are
structurally similar and also simple to understand. This has led to a very competitive market
in which term life policies are rapidly becoming a "commodity". Buyers suffer fewer
information problems with term insurance, thus rendering the term market more price-
competitive than for cash value policies.

FLEXIBILITY:
Opting out of a term life policy is much easier than getting out of cash value policies. In term
policies if you stop paying the premium the risk cover ceases and the policy ends. Nothing is
payable to you as there is no savings element in the policy. However, cash value policies only
give the full promised survival benefit if they are held for the full tenure of the policy. If you
stop paying premiums mid-term there is a finiancial loss you cannot recoup of your savings
portion of the policy without certain deductions.

Further, many term life policies are "renewable" and "convertible." The former ensures that
you can go in for another term policy without a medical exam at the end of the first term
policy. The latter allows you to convert your term life policy into an endowment policy for
the same sum assured with associated increase in premium, should this make sense during the
term of the policy.

TAX BENEFIT:

It is often argued that if you buy endowment type of insurance, as the premium is more you
get more benefit u/s 80C of the Income Tax Act while investing. Additionally, it also yields
tax-free income when the maturity claim is paid. However, it needs to be pointed out that
while premium paid for term insurance is much less it is also eligible for tax benefit u/s 80C.
Further, the difference in premium between term and endowment insurance can also be
invested in some other tax efficient schemes like PPF, ELSS which also offer front and rear
end tax breaks similar to those offered by an endowment plan.

LOWEST PREMIUMS:
The premium for term insurance is much lower than that for comparative cash value policies.
For example, currently it is possible for a 30-year old person to buy a level term insurance
policy of 20 years for Rs 10lakh sum assured for about Rs 3000 annual premium. For an
endowment policy without profits, with exactly the same death benefit, the premium will be a
little above Rs 30,000 annually. For an endowment policy without profits, with exactly the
same death benefit, the premium will be a little above Rs 30,000 annually. For an endowment
policy with profits, this year it is about Rs. 50,000.

LIMITATION OF TERM LIFE INSURANCE:

1. The premium for term insurance steeply increases with advancing age and hence
insurance needs at higher ages cannot be economically met with term insurance.

2. At older ages, say beyond 65 or 70 it becomes difficult to buy term insurance as most
companies do not offer it beyond these ages. Even in cases where term insurance is
offered at ages beyond this, several conditions disadvantageous to the insured, are
attached.
 3. Term insurance will not serve the purpose if you wish to save money for a specific
need such as education of child, marriage, old age provision like retirement needs etc.

4. It will not help you provide for income or capital needs of your family while you are
living.

5. No surrender values or loans are available under term policy.

6. Term insurance cannot provide a hedge against inflation as they are without profit
plans.

7. In case you become uninsurable at any point of time due to health or other reasons
then new term insurance or renewal of an existing term policy will not be available.

8. Wealth creation is not possible through term insurance.

USES OF TERM LIFE INSURANCE:

1. Term Insurance policies will be most appropriate for the following life situations and
needs:

2. If your budget is tight then term insurance is a better option as cash value insurance
costs much more.

3. Term insurance would also be suitable for a person with low income but requiring a
large cover to protect his family's financial future in case of his demise. For similar
 reasons, this type of insurance would also suit a person who is the sole breadwinner in
the family and has moderate income.

4. Persons on the threshold of new careers or business ventures can save on costs by
buying term insurance instead of a cash value policy so that they can utilize their
balance income or capital to develop their career or business.

5. Term insurance is also suitable if you have taken a large loan such as housing loan,
car loan etc. Further, it is relevant persons who have invested substantially in new
ventures by borrowing at high interest rates or by mortgaging their property. Such
persons can cover the risk of their dying before repaying all loans by taking term
insurance which is cheaper than the other types of insurance.

6. It can be used to cover the risk of business loss due to untimely death of key persons
by cash strapped enterprises as key man insurance at low cost. In fact, today IRDA
stipulates that only term insurance cover should be purchased for Key Man and
partnership insurances.

7. It offers an inexpensive method of providing financial security for your domestic

servants.

8. Term insurance can also be used by employers to provide life cover to their
employees - particularly the labour class - as a welfare measure at low cost. What is
more, companies can claim the premium paid on such policies as a business expense.

9. Term insurance can be used to ensure future insurability. A person who desires large
amount of cash value insurance may be financially unable to pay for it immediately.
Inexpensive term insurance can be conveniently converted to cash value insurance
later on, when the capacity to pay improves. Generally, when a term plan is converted
into an endowment plan, medical check-up is would normally be required and may
 lead to the person being denied insurance.

10. Term insurance can be a supplement to endowment and whole life policies in a well
rounded financial plan designed taking into account the capital and income needs of
an individual. For example, term insurance can be used as a rider to a cash value
insurance policy in order to increase death cover for a specific time period e.g. when a
loan has been taken and has to be repaid.

11. Term insurance is the minimum required to provide financial security for your
dependents in case of your untimely demise. It is the cheapest way to protect your
future income from the risk of your dying before you have earned it.

12. Term insurance will also be useful for those who do not wish to save through cash
value insurance policies and believe in the 'buy term and invest the difference in other
avenues' theory. Such people can buy term insurance for death cover and invest their
savings in other avenues (such as mutual funds etc) to meet their income and capital
requirements while they are alive. However, such an arrangement has to be very
carefully planned and executed in order to yield desired results.

13. Finally, investors need to remember that life insurance is an essential part of a good
financial plan. This is because it is superior to any savings scheme as it gives what
one wanted to save rather what one has actually saved in case death overtakes the
savings plan.
CONCLUSION:

Term Insurance plan is one of the critical investments in person’s life. While
choosing a term insurance plan an individual has to consider his Age, family income,
dependents, liabilities and time period of cover. There are more than 100 term plan available
in the market. While choosing a term plan it is preferred to choose plain vanilla term plan and
online as you get more sum assured and longer coverage time with minimum amount of
money. As the term plan is not an investment for future but it is a product which helps your
family when you are no longer there to protect them financially.
 CHAPTER – 5

OBSERVATION AND CONCLUSION

INTRODUCTION:

Term life insurance is an important insurance it helps many people in our country. I
observe lot of things about Term life insurance when doing internship in TATA AIA.
OBSERVATION:

Things I observed during the internship are

 Term life insurance pay a large part in life insurance.

 Term life insurance provide security for particular time period like 5,10,15,20 years.
 Term life insurance is available in most of insurance companies.
 It will provide a good support after the death of the insured.
 There are lot of add nos and benefits in term life insurance.
 It will mainly help the middle class people in a great way.

CONCLUSION;

Insurance is a large investment and you will most likely purchase multiple policies
throughout your lifetime. It is essential that you know what each type of insurance covers and
how it works so you can make the best decision about what to buy. Do not base your decision
on just what is cheapest, but look at what it provides.

Take the time to shop around and find the right insurance for your situation. People often say
they cannot afford insurance, but the reality is that they cannot afford not to have it. It can
save them from thousands or more dollars in unplanned expenses when unexpected situations
arise. You do not want to waste your money on policies that do not meet your needs, but the
right insurance policy can protect you and your family from unforeseen disasters.