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INTRODUCTION :

Insurance may be described as a social device to reduce or eliminate risk of loss to

life and property. Under the plan of insurance, a large number of people associate

themselves by sharing risks attached to individuals. The risks which can be insured

against include fire, the perils of sea, death and accidents and burglary. Any risk

contingent upon these, may be insured against at a premium commensurate with the

risk involved. Thus collective bearing of risk is insurance.

DEFINITION :

General definition:

In the words of John Magee, “Insurance is a plan by which large number of

people associate themselves and transfer to the shoulders of all, risks that attach

to individuals.”

Fundamental definition:

In the words of D.S. Hansell, “Insurance may be defined as a social

device providing financial compensation for the effects of misfortune,

the payment being made from the accumulated contributions of all

parties participating in the scheme.”

Contractual definition:

In the words of justice Tindall, “ Insurance is a contract in which a sum of money

is paid to the assured as consideration of insurer’s incurring the risk of paying a

large sum upon a given contingency.”



What is Insurance

An insurance contract provides risk coverage to the insuree. A purchaser

of insurance pays a fixed premium in exchange for a promise of compensation in

the event of some specified loss. Insurance is bought because it gives peace of

mind to the holders. This comfort level is important in personal and business life.

Though the primary purpose of insurance is to provide risk coverage, when the

contract period extends over a long time, as in the case of life insurance,

premium payments comprise of two components – one for buying risk coverage

and the other towards savings. This bundling together of risk coverage andsavings is peculiar to life insurance and is more common in developing countries

like India. In the industrially advanced countries, this is not necessarily so and

short duration life insurance contracts without a savings component are equally

popular. In the developing economies because of the savings component and

the long nature of the contract, life insurance has become an important

instrument of mobilising long-term funds. The savings component puts the life

insurance in direct competition with other financial institutions and savings

instruments.

The total investment portfolio of the insurers in India as at the end of

March, 2005 was Rs. 4,65,864 crore. The total premium collected by the insurers

both life and non-life in 2004-05 was Rs.1,00,335 crore. The major contribution

came from life insurance. The insurance penetration i.e., premia as percentage

of GDP was 3.17 per cent in 2004. While this ratio is steadily increasing, it is far

below the world average of 8.06 per cent. This shows the vast potential that

exists.



Characteristics of insurance :

Sharing of risks

Cooperative device

Evaluation of risk

Payment on happening of a special event

The amount of payment depends on the nature of losses

Incurred.

FUNCTIONS OF INSURANCE

The functions of Insurance will give you an idea on how to go ahead with the

approach of insurance and what type of insurance to choose. In a layman's

words, insurance means, ‘a guard against pecuniary loss arising on the

happening of an unforeseen event’. In developing economies, the insurance

sector still holds a lot of potential which can be tapped. Majority of the people in

the developing countries remains unaware of the functions and benefits of

insurance and it is for this reason that the insurance sector is still to grow.

Tangible or intangible – an individual can insure anything! Be it a house, car,

factory, or the voice of a singer, leg of a footballer, and the hand of an

author.....etc. It is possible to insure all these as they have the possibility of

becoming non functional by any disaster or an accident.

Basic functions of Insurance

1. 1.Primary Functions

2. 2.Secondary Functions

3. 3.Other Functions



Primary functions of insurance

• Providing protection – The elementary purpose of insurance is to allowsecurity against future risk, accidents and uncertainty. Insurance is in

reality a protective cover against economic loss, by apportioning the risk

with others.

• Collective risk bearing – Insurance is an instrument to share the

financial loss. It is a medium through which few losses are divided among

larger number of people.

• Evaluating risk – Insurance fixes the likely volume of risk by assessing

diverse factors that give rise to risk. Risk is the basis for ascertaining the

premium rate as well.

• Provide Certainty – Insurance is a device, which assists in changing

uncertainty to certainty.

Secondary functions of insurance

• Preventing losses – Insurance warns individuals and businessmen to

embrace appropriate device to prevent unfortunate aftermaths of risk by

observing safety instructions; installation of automatic sparkler or alarm

systems, etc.

• Covering larger risks with small capital – Insurance assuages the

businessmen from security investments. This is done by paying small

amount of premium against larger risks and dubiety.

• Helps in the development of larger industries – Insurance provides an

opportunity to develop to those larger industries which have more risks in

their setting up.

Other functions of insurance

• Is a savings and investment tool – Insurance is the best savings and

investment option, restricting unnecessary expenses by the insured.



• Medium of earning foreign exchange – Being an international business,

any country can earn foreign exchange by way of issue of marine

insurance policies and a different other ways.

• Risk Free trade – Insurance boosts exports insurance, making foreign

trade risk free with the help of different types of policies under marine

insurance cover.

Challenges facing Insurance Industry

• Threat of New Entrants: The insurance industry has been budding with

new entrants every other day. Therefore the companies should carve out

niche areas such that the threat of new entrants might not be a hindrance.

There is also a chance that the big players might squeeze the small new

entrants.

• Power of Suppliers: Those who are supplying the capital are not that big

a threat. For instance, if someone as a very talented insurance underwriter

is presently working for a small insurance company, there exists a chance

that any big player willing to enter the insurance industry might entice that

person off.

• Power of Buyers: No individual is a big threat to the insurance industry

and big corporate houses have a lot more negotiating capability with the

insurance companies. Big corporate clients like airlines and

pharmaceutical companies pay millions of dollars every year in premiums.

• Availability of Substitutes: There exist a lot of substitutes in the

insurance industry. Majorly, the large insurance companies provide similar

kinds of services – be it auto, home, commercial, health or life insurance.



Indian Insurance Industry: New Avenues for Growth 2012

With an annual growth rate of 15-20% and the largest number of life insurance

policies in force, the potential of the Indian insurance industry is huge. Total

value of the Indian insurance market (2004-05) is estimated at Rs. 450 billion

(US$10 billion). According to government sources, the insurance and banking

services’ contribution to the country's gross domestic product (GDP) is 7% out of

which the gross premium collection forms a significant part. The funds available

with the state-owned Life Insurance Corporation (LIC) for investments are 8% of

GDP.

Till date, only 20% of the total insurable population of India is covered under

various life insurance schemes, the penetration rates of health and other non-life

insurances in India is also well below the international level. These facts indicate

the of immense growth potential of the insurance sector.

The life insurance industry in India grew by an impressive 36%, with premiumincome from new business at Rs. 253.43 billion during the fiscal year 2004-2005,

braving stiff competition from private insurers. The market share of the state

behemoth, LIC, has clocked 21.87% growth in business at Rs.197.86 billion by

selling 2.4 billion new policies in 2004-05. But this was still not enough to arrest

the fall in its market share, as private players grew by 129% to mop up Rs. 55.57

billion in 2004-05 from Rs. 24.29 billion in 2003-04.

Though the total volume of LIC's business increased in the last fiscal year (2004-

2005) compared to the previous one, its market share came down from 87.04 to

78.07%. The 14 private insurers increased their market share from about 13% to

about 22% in a year's time. The figures for the first two months of the fiscal year

2005-06 also speak of the growing share of the private insurers. The share of LIC

for this period has further come down to 75 percent, while the private players

have grabbed over 24 percent.



There are presently 12 general insurance companies with four public sector

companies and eight private insurers. According to estimates, private insurance

companies collectively have a 10% share of the non-life insurance market.

Though the focus of this market research report is on the potential growth on the

Indian Insurance Sector, it also talks about the market size, market

segmentation, and key developments in the market after 1999. The report gives

an instant overview of the Indian non-life insurance market, and covers fire,

marine, and other non-life insurance. The data is supplied in both graphical andtabular format for ease of interpretation and analysis. This report also provides

company profiles of the major private insurance companies.

Products and Services offered by Insurance Companies in India:

The insurance companies in India dealing in life insurance are mainly engaged inoffering two categories of life insurance products- the Endowment Assurance

Products and the Money Back Products. The vehicle insurance products rank

next to life insurance product in terms of demand. The up coming products

comprise linked products. The products offer various facilities to the investors as

for example they are available with free look facility so that the investor gets time

to examine the policy within the free look period. They are offered the facility to

return the policy in case it is not able to satisfy his requirements.

INDIAN INSURANCE POLICIES

Insurance Policy India provides the clients with the details required for the

coverages in the policy, date of commencement of the policy and their adopting

organizations. It plays a important role in the Indian insurance sector.



The Insurance Policy India is regulated by certain acts like the Insurance

Act(1938), the Life Insurance Corporation Act(1956), General Insurance Business

(Nationalization) Act(1972), Insurance Regulatory and Development Authority

(IRDA) Act(1999). The insurance policy determines the covers against risks,

sometime opens investment options with insurance companies setting high returns

and also informs about the tax benefits like the LIC in India. There are two types of

insurance covers:

1. Life insurance

2. General insurance

Life insurance – this sector deals with the risks and the accidents affecting the

life of the customer. Alongside, this insurance policy also offers tax planning and

investment returns. There are various types of life Insurance Policy India:

a. Endowment Policy: An endowment policy is a life insurance contract

designed to pay a lump sum after a specified term (on its 'maturity') or on earlier

death. Typical maturities are ten, fifteen or twenty years up to a certain age limit.

Some policies also pay out in the case of critical illness.

b. Whole Life Policy: A typical whole life policy runs as long as the policyholder

is alive. In other words, the risk is covered for the entire life of the policyholder,

which is why they are know as whole life policies.

c. Term Life Policy: Term life insurance or term assurance is life insurance which

provides coverage at a fixed rate of payments for a limited period of time, the

relevant term. If the insured dies during the term, the death benefit will be paid to

the beneficiary. Term insurance is the most inexpensive way to purchase a

substantial death benefit on a coverage amount per premium dollar basis.



d. Money-back Policy: Unlike ordinary endowment insurance plans where the

survival benefits are payable only at the end of the endowment period, money

back policies provide for periodic payments of partial survival benefits during the

term of the policy, of course so long as the policy holder is alive. An important

feature of this type of policies is that in the event of death at any time within the

policy term, the death claim comprises full sum assured without deducting any of

the survival benefit amounts, which may have already been paid as money-back

components. Similarly, the bonus is also calculated on the full sum assured.

e. Joint Life Policy: Joint life policies are similar to endowment policies in as

much as these policies also offer maturity benefits to the policyholders, apart form

covering the risks as all life insurance policies. But these are categorized

separately as these cover two lives together thus offering a unique advantage in

some cases; notable, for a married couple or for partners in a business firm.

f. Group Insurance Policy: Group insurance is an insurance that covers a group

of people, usually who are the members of societies, employees of a common

employer, or professionals in a common group.

g. Loan Cover Term Assurance Policy: Loan cover term assurance policy is an

insurance policy, which covers a home loan. Such a policy covers the individual's

home loan amount in case of an eventuality. The cover on such a policy keeps

reducing with the passage of time as individuals keep paying their EMIs (equated

monthly instalments) regularly, which reduces the loan amount.

h. Pension Plan or Annuities:

The individual plans that look into your futureand helps to foresee the financial stability during the age of retirement is are the

Pension plans. These plans are particularly helpful for those senior citizens and

those who plan for a future with security and safety. The main aim of these

pension plans is that they provide security to the entire family with respect to the

financial support during the productive plan and a happy lifestyle to oneself and

their spouse at the age of retirement.



i. Unit Linked Insurance Plan: Unit Linked Insurance Plan (ULIP) provides for

life insurance where the policy value at any time varies according to the value of

the underlying assets at the time. ULIP is life insurance solution that provides for

the benefits of protection and flexibility in investment. The investment is denoted

as units and is represented by the value that it has attained called as Net Asset

Value (NAV).

General Insurance: this sector covers almost everything related to property,

vehicle, cash, household goods, health and also one's liability towards others.

The major segments covered under general Insurance Policy India are:

a. Home Insurance: is the type of property insurance that covers private homes.

It is an insurance policy that combines various personal insurance protections,

which can include losses occurring to one's home, its contents, loss of its use

(additional living expenses), or loss of other personal possessions of the

homeowner, as well as liability insurance for accidents that may happen at the

home or at the hands of the homeowner within the policy territory. It requires that

at least one of the named insureds occupies the home.

b. Health Insurance: Health insurance, like other forms of insurance, is a form of

collectivism by means of which people collectively pool their risk, in this case the

risk of incurring medical expenses. The collective is usually publicly owned or

else is organized on a non-profit basis for the members of the pool, though in

some countries health insurance pools may also be managed by for-profit

companies. It is sometimes used more broadly to include insurance covering

disability or long-term nursing or custodial care needs. It may be provided

through a government-sponsored social insurance program, or from private

insurance companies.



c. Motor Insurance: Vehicle insurance (also known as auto insurance, car

insurance, or motor insurance) is insurance purchased for cars, trucks, and other

vehicles. Its primary use is to provide protection against losses incurred as a

result of traffic accidents and against liability that could be incurred in an

accident.

d. Travel Insurance: Travel Insurance is insurance that is intended to cover

medical expenses and financial (such as money invested in nonrefundable pre-

payments) and other losses incurred while traveling, either within one's own

country, or internationally. Temporary travel insurance can usually be arranged at

the time of the booking of a trip to cover exactly the duration of that trip, or a more

extensive, continuous insurance can be purchased from travel insurance

companies, travel agents or directly from travel suppliers such as cruiselines or

tour operators. However, travel insurance purchased from travel suppliers tends to

be less inclusive than insurance offered by insurance companies.

Some of the well known Insurance Policy India are:

Social Security Group Scheme – a scheme covering the age group of 18-60

years and an insurance of Rs.5000 for natural death and of Rs.25000 on due to

accidental death.

Shiksha Sahyog Yojana – a scheme providing an educational scholarship of

Rs.300 per quarter per child is given for a period of four years.

Jan Arogya Bima Policy – a scheme for the adults upto the age of 45 years is Rs.

70 and for children it is Rs. 50. The limit coverage is fixed at Rs.5000 per annum.



Mediclaim Insurance Policy – a scheme covering the age group from 5-80 years

with a tax benefit of up to Rs 10,000.

Jana Shree Bima Yojana – this is a coverage of Rs 2,000 on natural death and

Rs 50,000 for accidental death. The premium amount is fixed at Rs. 200 for single

member.

Videsh Yatra Mitra Policy – a scheme covering medical expenses during the

period of overseas travel.

Bhagya Shree Child Welfare Bima Yojana – a scheme covering one girl child in

a family upto the age of 18 whose parents age does not exceed 60 years, with a

premium of Rs.15 per annum.

Raj Rajeshwari Mahila Kalyan Yojana – a scheme providing protection to woman

in the age group of 10 to 75 years with an insurance of Rs. 25,000 and premium

Rs.15 per annum.

Ashray Bima Yojana – a scheme covering workers in case of loss of jobs.

Personal Accident Insurance Scheme for Kissan Credit Card – a scheme covering

all the KCC holders up to an age of 70 years. Insurance coverage includes 50,000

for accidental death and 25,000 for partial disability.



Insurance and Growth

Insurance and economic growth mutually influences each other. As the economy

grows, the living standards of people increase. As a consequence, the demand

for life insurance increases. As the assets of people and of business enterprises

increase in the growth process, the demand for general insurance also

increases. In fact, as the economy widens the demand for new types of

insurance products emerges. Insurance is no longer confined to product

markets; they also cover service industries. It is equally true that growth itself is

facilitated by insurance. A well-developed insurance sector promotes economic

growth by encouraging risk-taking. Risk is inherent in all economic activities.

Without some kind of cover against risk, some of these activities will not be

carried out at all. Also insurance and more particularly life insurance is a

mobilizer of long term savings and life insurance companies are thus able to

support infrastructure projects which require long term funds. There is thus a

mutually beneficial interaction between insurance and economic growth. The low

income levels of the vast majority of population has been one of the factors

inhibiting a faster growth of insurance in India. To some extent this is also

compounded by certain attitudes to life. The economy has moved on to a higher

growth path. The average rate of growth of the economy in the last three years

was 8.1 per cent. This strong growth will bring about significant changes in the

insurance industry.

At this point, it is important to note that not all activities can be insured. If

that were possible, it would completely negate entrepreneurship. Professor

Frank Knight in his celebrated book “Risk Uncertainty and Profit” emphasized

that profit is a consequence of uncertainty. He made a distinction between

quantifiable risk and non-quantifiable risk. According to him, it is non-quantifiable

risk that leads to profit. He wrote “It is a world of change in which we live, and a

world of uncertainty. We live only by knowing something about the future; while

the problems of life or of conduct at least, arise from the fact that we know so



little. This is as true of business as of other spheres of activity”. The real

management challenges are uninsurable risks. In the case of insurable risks,

risk is avoided at a cost.

Indian Insurance – Growth

Such a stupendous growth after along wait was well deserved for the insurance

companies. Sharp and excellent market scheme along with wide product

bandwidth proved to be a winner among the masses. A considerable growth ratewas also recorded by the private companies. The India insurance sector is likely

to put its foot forward towards more competition with growing importance and

recognition.

Assessment of Risks

An important function of an insurer is to assess the average level of risk borne

while offering a product. This assessment depends upon a variety of factors and

actuarial calculations become necessary. This is a highly technical area

involving theories of probability. The premium charged by an insurer is based on

the calculated average risk. Obviously this premium will be high for people who

perceive themselves to be in a low risk category. However, for insurance as an

activity to succeed, the population to which a product is offered must consist of

categories with different degrees of risk. That is why the larger the coverage, the

lower the average risk and lower the premium. Diversification is the way to

reduce the average risk.



Regulatory Framework

As in the case of all financial institutions, insurance is an activity that needs to be

regulated. This is so because the smooth functioning of business depends on

the trust and confidence reposed by the customers in the solvency of the

financial institutions. Insurance products are of little value to customers, if they

cannot trust the company to keep its promise. The regulatory framework in

relation to the insurance companies seeks to take care of three major concerns –

(a) protection of consumers’ interest, (b) to ensure the financial soundness of the

insurance industry, and (c) to help the healthy growth of the insurance market.So long as insurance remained the monopoly of the Government, the need for an

independent regulatory authority was not felt. However, with the acceptance of

the idea that there can be private insurance entities, the need for a regulatory

authority becomes paramount. With the passing of the Insurance Development

and Regulatory Act in 2000, the insurance regulatory authority has become a

statutory authority. Protecting consumer interest involves proper disclosure,

keeping prices affordable, some mandatory products and standardization. Most

importantly, it has to make sure that consumers get paid by insurers. From the

consumers’ point of view, the most important function of the regulatory authority

will be to ensure quick settlement of claims without unnecessary litigation. With

respect to solvency and financial health, regulations will have to be introduced to

ensure that insurance companies follow appropriate prudential norms such as

solvency margins. Large funds are under the custody of the insurers and they

get invested to produce additional returns. The management of these funds is

important to the insurer, the insured and the economy. Entry into the insurance

industry must also be regulated with suitable capital adequacy norms. The third

role should be one of development. The insurance industry in India has a large

potential and the framework of regulation must enable the industry to tap this

vast potential.



FUND MANAGEMENT IN INSURANCE SECTOR

Insurance is a capital-intensive industry. It is also a long-gestation business. In

order to mobilize high rates of household savings the industry needs huge sums

of capital to continue growing at rates seen in the past five years. The law

provides for participation of global insurance firms in the Indian market only

through joint ventures with Indian partners. FDI in these joint ventures can not

exceed 26%. This means the Indian partner of a joint venture will have to bring in

a minimum of 74% of additional capital required to do new business. On the

other hand the foreign partner is unwilling to commit more capital andmanagement resources as they have little say in shaping the business. There is

also a strong case for raising the FDI cap in reinsurance and auxiliary insurance

services such as brokerage and actuarial services. The FDI not only brings in

capital but also insurance 'best practices' and new insurance products, and

innovative distribution channels that help insurers reach a broader spectrum of

the population. India is highly prone to natural catastrophes. In the past decade,

India and China accounted for one-fourth of the global economic losses from

natural disasters. Less than one percent of the economic losses resulting from

these disasters were insured. Insurance for natural catastrophes is almost

negligible. Only an insurance market that has a strong capital base and ample

provisions to handle the inherent risks of a major event can respond to the

disaster mitigation needs. The raising of the FDI cap will go a long way in

facilitating this.



INVESTMENT OF INSURANCE FUNDS :

Any reform of the insurance sector must necessarily consider aspects related to

the investment of insurance funds. Under sec 27A of the insurance act and its

application in the LIC act, the manner in which LIC can deploy its funds is stated.

Under the current guidelines, the LIC is required to invest 75% of the accretions

through a controlled fund in certain approved investments. 25% of accretions

may be invested by LIC for investments in private corporate sectors, loans to

policyholders, construction and acquisition of immovable assets. These

stipulations have resulted in the lack of flexibility in the optimization of its risk andprofit portfolio.

It has been reported that the government is planning to offer

greater autonomy to LIC through the following:

It is proposed that the deployment of the balance of 50% of the funds will be left

to discretion of LIC. Similarly, it is proposed that the GIC will be subject to the

following guidelines:

CAPITAL NORMS FOR NEW INSURANCE COMPANIES :

One of the contentious issues raised by foreign companies seeking an entry into

the insurance sector in India is the minimum paid up capital requirements. The

Malhotra committee (1994) recommended

The Emerging Insurance sector of India.

Rs 100 crores as the norm. The multilateral insurance working group (an industry

forum representing most of the interested foreign and Indian companies seeking

an entry into the insurance sector) has recommended Rs. 50 crore. The IRA is

also reported to considering a graded pattern for capitalization of the companies

keeping in mind the volume of business likely to be handled by them.

The Insurance Potential :



The main reason why the leading insurance companies in the world and

the leading corporate group in India have shown a keen interest in the insurance

sector, is the vast potential for future business. Restricted, as the market has

been, through the operations of the two monopolies (LIC and GIC), it is generally

felt that the sector can grow exponentially if it is opened up. The decade 1987-97

has witnessed a compounded growth rate of marginally more than 10% in life

insurance business. LIC predicts for itself that its business has potential to grow

by 16.27% p.a. in a decade 1997-2007 (LIC, 1997). If we take a look at insurance

coverage index for the age group of 20- 59 years a considerable gap between

India and other countries in Asia can be observed. In this scenario, naturallyinsurance companies see a vast potential.

MARKET SHARE OF INDIAN INSURANCE INDUSTRY

The introduction of private players in the industry has added value to the

industry. The initiatives taken by the private players are very competitive and

have given immense competition to the on time monopoly of the market LIC.

Since the advent of the private players in the market the industry has seen new

and innovative steps taken by the players in this sector. The new players have

improved the service quality of the insurance. As a result LIC down the years

have seen the declining phase in its career. The market share was distributed

among the private players. Though LIC still holds the 75% of the insurance

sector but the upcoming natures of these private players are enough to give

more competition to LIC in the near future. LIC market share has decreased from

95% (2002-03) to 81 %( 2004-05).The following companies has the rest of the

market share of the insurance industry.



NAME OF THE PLAYER MARKET SHARE (%)

Name of the Player Market share (%)

LIFE INSURANCE CORPORATION OF INDIA 82.3

ICICI PRUDENTIAL 5.63

BIRLA SUN LIFE 2.56

BAJAJ ALLIANZ 2.03

SBI LIFE INSURANCE 1.80

HDFC STANDARD 1.36

TATA AIG 1.29

MAX NEW YARK 0.90

AVIVA 0.79

OM KOTAK MAHINDRA 0.51

ING VYSYA 0.37

MET LIFE 0.21



PRESENT SCENARIO OF INSURANCE INDUSTRY

India with about 200 million middle class household shows a huge

untapped potential for players in the insurance industry. Saturation of

markets in many developed economies has made the Indian market even

more attractive for global insurance majors. The insurance sector in India

has come to a position of very high potential and competitiveness in the

market. Indians, have always seen life insurance as a tax saving device,

are now suddenly turning to the private sector that are providing them new

products and variety for their choice.

Consumers remain the most important centre of the insurance sector.

After the entry of the foreign players the industry is seeing a lot of

competition and thus improvement of the customer service in the industry.

Computerisation of operations and updating of technology has become

imperative in the current scenario. Foreign players are bringing in

international best practices in service through use of latest technologies

The insurance agents still remain the main source through which

insurance products are sold. The concept is very well established in the

country like India but still the increasing use of other sources is imperative.

At present the distribution channels that are available in the market are

listed below.

Direct selling •

Corporate agents •

Group selling •

Brokers and cooperative societies •

Bancassurance •

Customers have tremendous choice from a large variety of products from

pure term (risk) insurance to unit-linked investment products. Customers



are offered unbundled products with a variety of benefits as riders from

which they can choose. More customers are buying products and services

based on their true needs and not just traditional moneyback policies,

which is not considered very appropriate for long-term protection and

savings. There is lots of saving and investment plans in the market.

However, there are still some key new products yet to be introduced - e.g.

health products.

The rural consumer is now exhibiting an increasing propensity for

insurance products. A research conducted exhibited that the ruralconsumers are willing to dole out anything between Rs 3,500 and Rs

2,900 as premium each year. In the insurance the awareness level for life

insurance is the highest in rural India, but the consumers are also aware

about motor, accidents and cattle insurance. In a study conducted by

MART the results showed that nearly one third said that they had

purchased some kind of insurance with the maximum penetration skewed

in favor of life insurance. The study also pointed out the private companies

have huge task to play in creating awareness and credibility among the

rural populace. The perceived benefits of buying a life policy range from

security of income bulk return in future, daughter's marriage, children's

education and good return on savings, in that order, the study adds.

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