You are on page 1of 25


The origin and practice of insurance is as ancient as human civilization. Insurance does not protect the asset. It does not prevent its loss due to the peril. The peril cannot be avoided through insurance. The peril can sometimes be avoided, through better safety & damage control management. Insurance only tries to reduce the impact of the risk on the owner of the asset & those who depend on that asset. It compensates the losses (may not be fully). Only economic or financial losses can be compensated. Insurance is a form of risk management primarily used to hedge against the risk of potential financial loss. In general, it is contract in which one party agrees to pay for another partys financial loss resulting from a specified event. In India, insurance business is classified primarily as Life and Non Life or General This Insurance is again classified into 3 Categories: Fire Insurance, Marine Insurance and Miscellaneous Insurance. Life insurance in India made its debut well over 100 years ago. Life insurance is a contract that pledges payment of an amount to the person assured (or his nominee) on the happening of the event insured against. The contract is valid for payment of the insured amount during: The date of maturity, or Specified dates at periodic intervals, or Unfortunate death, if it occurs earlier. By and large, life insurance is civilizations partial solution to the problems caused by death. Life insurance, in short, is concerned with two hazards that stand across the life-path of every person:

1. That of dying prematurely leaving a dependent family to fend for itself. 2. That of living till old age without visible means of support. Buying insurance is extremely useful if you are the principal earning member in the family. In case of your unfortunate premature demise, your family can remain financially secure because of the life insurance policy that you have purchased. The primary purpose of life insurance is therefore protection of the family in the event of death. Today, insurance is also seen as a tool to plan effectively for your future years, your retirement, and for your children's future needs. Today, the market offers insurance plans that not just cover your life and but at the same time grow your wealth too.

Need of Life Insurance

If you have dependants and financial responsibilities towards them, then you certainly need insurance. Imagine what would happen if you were to lose your life suddenly or become disabled and cannot earn. Being insured in a situation like this is a necessity. When you insure your life, in effect what you are doing is insuring your earning capacity. This guarantees that your dependants will be able to continue living without financial hardships even in case of your demise. Most insurance plans available today come with a savings element built into it. These policies help you plan not only for protection against death but also for a financially independent future, which would enable you to have a comfortable retirement. For example, Kotak Preferred Retirement Plans such as Kotak Retirement Income Plan and Kotak Capital Multiplier Plan.

Life Insurance as a social security tool: We call life insurance a social security tool because without the provision of insurance, this human society would consist of helpless old people, helpless widows, and unprotected orphans. The economy would not survive let alone grow. The United Nations declaration of human Rights 1948 provides that everyone has a right to a standard of living adequate for the health and well being of himself and his/her family, including food, clothing, housing and medical care and necessary social services and the right of security in the event of unemployment, sickness, disability, etc. If wishes were horses, beggars. The central government by its directive to Insurance companies has created a social security fund, to extend insurance benefits to economically weaker section of the society in the unorganized sector. The government along with the insurance companies have put forth following objectives before them in providing the social security:
Spread of Insurance more widely to the rural areas. Spread to the socially and economically backward classes. Reach all insurable persons in the country and provide them adequate

financial cover against death at a reasonable cost.

Maximize people's savings by making insurance-linked savings very

Deploy the funds to the best advantage of the investors & the


Conduct business with utmost economy. Act as trustees of the insured public.

Insurance is based upon the universal axiom, "God helps him, who helps himself". There are only three sources of income when calamity has be fallen- savings, charity & insurance. Savings need time to accumulate. Normally, 90% of the income comes from investment of time & only 10% comes from savings. As one grows old, the ratio is reversed & 90% of income comes from savings & 10% comes from investment of time. The second alternative- charity is too demeaning to be even considered as a proper alternative. The only viable alternative therefore is insurance. In case of death of a earning figure of the family, the family members do not have to go to other members of the society begging help, if they have proper insurance for them. Insurance thus creates a society of proud people who know how to take care of themselves even during difficult times. Life Insurance is thus a tool of social security. Principles of Life Assurance:
Life insurance Contract. Principles of utmost Good faith. Insurable interest. Principle of Indemnity. Needs and insurance

Life Insurance Vs. Other Savings :

Contract of Insurance

A contract of insurance is a contract of utmost good faith technically known as uberrima fides. The doctrine of disclosing all material facts is embodied in this important principle, which applies to all forms of insurance. At the time of taking a policy, policyholder should ensure that all questions in the proposal form are correctly answered. Any misrepresentation, nondisclosure or fraud in any document leading to the acceptance of the risk would render the insurance contract null and void. Protection: Savings through life insurance guarantee full protection against risk of death of the saver. Also, in case of demise, life insurance assures payment of the entire amount assured (with bonuses wherever applicable) whereas in other savings schemes, only the amount saved (with interest) is payable. Aid to Thrift: Life insurance encourages 'thrift'. It allows long-term savings since payments can be made effortlessly because of the 'easy installment facility built into the scheme. (Premium payment for insurance is either monthly, quarterly, half yearly or yearly). For example: The Salary Saving Scheme popularly known as SSS, provides a convenient method of paying premium each month by deduction from one's salary. In this case the employer directly pays the deducted premium to LIC. The Salary Saving Scheme is ideal for any institution or establishment subject to specified terms and conditions. Liquidity: In case of insurance, it is easy to acquire loans on the sole security of any policy that has acquired loan value. Besides, a life insurance policy is also generally accepted as security, even for a commercial loan. Tax Relief: Life Insurance is the best way to enjoy tax deductions on income tax and wealth tax. This is available for amounts paid by way of premium for life insurance subject to income tax rates in force. Assesses can also avail of provisions in the law for tax relief. In such cases the assured in effect pays a lower premium for insurance than otherwise.

Money when you need it : A policy that has a suitable insurance plan or a combination of different plans can be effectively used to meet certain monetary needs that may arise from time-to-time. Childrens education, start-in-life or marriage provision or even periodical needs for cash over a stretch of time can be less stressful with the help of these policies. Alternatively, policy money can be made available at the time of one's retirement from service and used for any specific purpose, such as, purchase of a house or for other investments. Also, loans are granted to policyholders for house building or for purchase of flats (subject to certain conditions)(

The story of insurance is probably as old as the story of mankind. The same instinct that prompts modern businessmen today to secure themselves against loss and disaster existed in primitive men also. Though the concept of insurance is largely a development of the recent past, particularly after the

industrial era past few centuries yet its beginnings date back almost 6000 years. Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and these companies were not insuring Indian natives. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. On 19th of January 1956, life insurance in India was nationalized. About 154 Indian insurance companies, 16 non-Indian companies and 75 provident were operating in India at the time of nationalization. Nationalization was accomplished in two stages; initially the management of the companies was taken over by means of an Ordinance, and later, the ownership too by means of a comprehensive bill. The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost. One of the objects of the nationalization of the Life Insurance Industry was channel zing of its funds for the benefit of the community at large. In pursuance of this objective, LIC, over the years, has been investing major parts of its funds in the socially oriented sector. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the year 1956. Since life insurance contracts are long-term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. Re-organization of LIC took place and large numbers of new branch offices were opened. As a result of re-organization servicing functions were transferred to the

branches, and branches were made accounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with re-organization happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies. Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices, 7 zonal offices and the corporate office. LICs Wide Area Network covers 100 divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer on-line premium collection facility in selected cities. LICs ECS and ATM premium payment facility is an addition to customer convenience. LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its own past records. LIC has issued over one crore policies during the current year. It has crossed the milestone of issuing 1,01,32,955 new policies by 15th Oct 2005, posting a healthy growth rate of 16.67% over the corresponding period of the previous year. From then to now, LIC has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business. The same motives which inspired our forefathers to bring insurance into existence in this country inspire us at LIC to take this message of protection to light the lamps of security in as many homes as possible and to help the people in providing security to their families.


1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning.

1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business. 1956: 245 Indian and foreign insurers and provident societies are taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. 1956: The LIC came into being with 5 Zonal, 33 Divisional, 212 Branch offices and 97 sub-offices. 1956: the first Board Meeting was held. 1957: The first master policy for a Group Insurance Scheme was issued by the Mumbai office of LIC, covering 122 employees of a company for a total Sum Assured of Rs. 1,82,000. 1957: Yogakshema the corporate magazine was started. 1957: The Salary Savings Scheme was introduced. About 7,000 firms & institutions participated in the scheme from 1957-1960. 1958: Talni Purna village in Amravati District, Mahashtra, became the first Bima Gram. 1961: The first camp for On the Spot policies was organized on 15th August 1961 in Rohtak district. 1963: First computers were installed each in Mumbai & Kolkata. 1964: The Own Your Home (OYH) scheme was introduced. 1965: Policyholders Council (PHC) was set up in each D.O. in 1965. 1987: Landless Agricultural Labourers Group Insurance (LAAGI) was introduced. 1989: LIC diversified into a multi-dimensional organization Formation of 3 entities Housing Finance, Mutual Fund & LIC (Int) EC. 1997: LIC adopted Citizens Charter.

1997: LICs first MAN inaugurated (in Mumbai by Mr. Chidambaram, FM). 2000: Wide area network inaugurated. 2000: First private sector life insurance company (HDFC Standard Life) issued licence after the sector is once again opened for private participation. 2001: First modern day Unit Linked Plan Bima Plus launched. 2001: Premium payment facility through Internet introduced. 2001: LIC (Nepal) Ltd, inaugurated as a joint venture between LIC of India & Vishal group in Nepal. 2002: LICs first info center inaugurated in Mumbai. 2003: LIC (Lanka) (Ltd. Inaugurated as a joint venture LIC & Bartleet Group of Sri Lanka. 2003: LICs first ever premium payment facility through ATM inaugurated in collaboration with Corporation Bank. 2004: MOU signed for establishing a joint stock company in Saudi Arabia. 2005: LICs Golden Jubilee policy Bima Gold released. 2005: LICs first Satellite Sampark Office inaugurated in Rajindra Nagar, New Delhi. 2005: LIC & IndusInd Bank tie-up for providing first ever group insurance scheme to accountholders of the Bank.

Spread Life Insurance widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country and providing them adequate financial cover against death at a reasonable cost. Maximize mobilization of people's savings by making insurance-linked savings adequately attractive. Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it holds in trust, without losing sight of the interest of the community as a whole; the funds to be deployed to the best advantage of the investors as well as the community as a whole, keeping in view national priorities and obligations of attractive return. Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders. Act as trustees of the insured public in their individual and collective capacities. Meet the various life insurance needs of the community that would arise in the changing social and economic environment. Involve all people working in the Corporation to the best of their capability in furthering the interests of the insured public by providing efficient service with courtesy. Promote amongst all agents and employees of the Corporation a sense of participation, pride and job satisfaction through discharge of their duties with dedication towards achievement of Corporate Objective.


Shri. T.S. Vijayan (Chairman) Shri. D.K. Mehrotra (Managing Director - LIC) Shri. Thomas Mathew T (Managing Director - LIC) Shri. Vinod Rai, Special Secretary (Financial Sector), Department of Economic Affairs, Ministry Of Finance Shri. V.P.Shetty (Chairman, IDBI) Shri. R.K.Joshi (Chairman cum Managing Director, GIC) Shri. Amitav Kothari (Chartered Accountant ) Shri. Sunil Kant Munjal , MD & CEO, Hero Corporate Services Ltd. Dr. Arvind Virmani (Principal Advisor, Planning Commission, Yojana Bhavan) Dr. A.Jayagovind (Director, National Law School of India ) Smt. Pushpa Girimaji (Social Activist) Dr. (Ms.) Swati Piramal ( Director, Nicholas Piramal Ltd.) Dr.Gautam Barua ( Director, IIT, Guwahati)

"Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns, and by rendering resources for economic development."

"A trans-nationally competitive financial conglomerate of significance to societies and Pride of India."


Caring & Courtesy Initiatives & Innovation Integrity & Transparency Quality & Returns Participation & Relationship Trustworthiness & Reliability


Agility Adaptability Collaboration Commitment Discipline Empowerment Sensitivity Excellence

OUR COMMITMENT To the Community: We will

Provide insurance cover & financial security to every insurable

segment including the socially & economically weaker sections of society. Meet its insurance needs in consonance with the changing social & economic environment. Conduct all aspects of our business keeping in view the interest of the community and the national priorities. To our customers: We Will
Provide them prompt, efficient & courteous service. Act as trustees of their funds & invest them to their best advantage. Conduct our business with utmost economy & on sound business

principles. Build & maintain enduring relationships. Keep them informed about our products & services, etc. To our workforce: We will
Promote a sense of participation & make them partners in progress. Work towards ensuring their job satisfaction & sense of pride. Provide an environment & the opportunities for growth to enable them

to realize their full potential. Take steps to develop professional skills to enable them to handle their achievements more efficiently. Standards for fairness in dealing with Customers: We Will
Strive to deal with customers in an open & transparent manner, Explain the rationale behind our decisions, consistent with

requirements relating to business principles. Continuously expand our product line & services to afford wider choice.

LIC Operate All Over India

Before we undergo the product training let us understand some of the trends in product development in recent years. Till 1980 most of the plans, which were offered, were traditional products like Whole Life policies & Endowment policies

Whole Life plans offer a death benefit cover throughout the course of life, provided the insured keeps on paying the premium regularly. Pure Endowment is a savings oriented insurance policy. In this insurance cover money is payable only on the survival of the selected term. Broadly, we can categorize policies into 4 types, namely, Term assurance, Whole-life Assurance, Pure Endowment & Annuity. Term insurance pays a death benefit to the legal heirs if the person insured, dies during the term of the policy. Under pure whole life plan premiums have to be paid until death and the sum assured becomes payable immediately after death. Pure endowment provides for payment only if the assured survives the selected term. Endowment assurance plans provide coverage of death during the term period. Annuity/ Pension is a form of pension in which an insurance company makes a series of periodic payments to a person in return for the money paid to the insurance company either in a lump sum or in installments. Money Back provides the facility of paying back certain some of money at certain interval before the maturity of the life insurance Nearly all life insurance plans are combination of term insurance and pure endowment features in different proportions.

The profit requirement in an insurance policy is a modern concept in order to make life insurance more attractive. Only if the S.A. as it is to be returned after years of paying the premium, the life assured feels cheated. He therefore, wants that his premium amount should also earn some profit & the final sum assured should be much more. The insurance companies charge extra amount from the policyholder for allowing such benefits. This type of policies is called as "With profit Policies" & the extra amount that is charged is called as "Bonus Loading".


As individuals it is inherent to differ. Each individuals insurance needs and requirements are different from that of the others. LICs Insurance Plans are polices that talk to you individually and give you the most suitable options that can fit your requirement. These Insurance plans are under mentioned:

Children Plans
Jeevan Anurag CDA Endowment Vesting At 21 CDA Endowment Vesting At 18 Jeevan Kishore Jeevan Chhaya Marriage Endowment Komal Jeevan Educational Annuity Plan

Plans for the Handicapped Dependants

Jeevan Aadhar Jeevan Vishwas

Endowment Assurance Plans

The Endowment Assurance Policy The Endowment Assurance Policy Limited Payment Jeevan Mitra (Double Cover Endowment Plan) Jeevan Mitra (Triple Cover Endowment Plan) Jeevan Anand New Janaraksha Plan

Plans for High worth Individuals

Jeevan Shree-I

Jeevan Pramukh

Money Back Plans

The Money Back Policy-20 Years The Money Back Policy-25 Years Jeevan Surabhi-15 Years Jeevan Surabhi-20 Years Jeevan Surabhi-25 Years Jeevan Rekha (closed for sale) Bima Bachat

Special Money back plan for Women

Jeevan Bharati

Whole Life Plans

The Whole Life Policy The Whole Life Policy- Limited Premium The Whole Life Policy- Single Premium Jeevan Rekha (closed for sale) Jeevan Anand Jeevan Tarang

Joint Life Plan

Jeevan Sathi

Pension Plans

Pension Plans are Individual Plans that gaze into your future and foresee financial stability during your old age. These policies are most suited for senior citizens and those planning a secure future, so you never give up on the best things in life. Jeevan Nidhi Future Plus Jeevan Akshay-III (closed for sale) Jeevan Akshay-IV New Jeevan Dhara-I New Jeevan Suraksha-I

Unit plans
Unit plans are investment plans for those who realize the worth of hardearned money. These plans help you see your savings yield rich benefits and help you save tax even if you dont have consistent income. Jeevan Plus (closed for sale) Bima Plus (closed for sale) Market Plus

Special Plans
LICs Special Plans are not plans but opportunities that knock on your door once in a lifetime. These plans are a perfect blend of insurance, investment and a lifetime of happiness! Golden Jubilee Plan Bima Gold (closed for sale)

Special Plan Bima Nivesh 2005 Jeevan Saral

Group Scheme
Group Insurance Scheme is life insurance protection to groups of people. This scheme is ideal for employers, associations, societies etc. and allows you to enjoy group benefits at really low costs. Group Term Insurance Scheme Group Insurance Scheme in Lieu Of EDLI Group Gratuity Scheme Group Super Annuation Scheme Group Savings Linked Insurance Scheme Group Leave Encashment Scheme Group Mortgage Redemption Assurance Scheme Gratuity Plus

Social Security Scheme

JanaShree Bima Yojana (JBY) Krishi Shramajik Samajik Suraksha Yojana 2001 Shiksha Sahayog Yojana

Since nationalisation, LIC has built up a vast network of 2,048 branches, 100 divisions and 7 zonal offices spread over the country. The Life Insurance Corporation of India also transacts business abroad and has offices in: Fiji, Mauritius and

United Kingdom. LIC is associated with joint ventures abroad in the field of insurance, namely, Ken-India Assurance Company Limited, Nairobi, United Oriental Assurance Company Limited, Kuala Lumpur and Life Insurance Corporation (International) E.C. Bahrain. The Corporation has registered a joint venture company in 26th December, 2000 in Kathmandu, Nepal by the name of Life Insurance Corporation (Nepal) Limited in collaboration with Vishal Group Limited, a local industrial Group. An off-shore company L.I.C. (Mauritius) Off-shore Limited has also been set up in 2001 to tap the African insurance market.