study the comparative analysis between lic and private companies 1.doc

7/29/2019 STUDY THE COMPARATIVE ANALYSIS BETWEEN LIC AND PRIVATE COMPANIES 1.doc

1/73

CHAPTER 1

INTRODUCTION

1


2/73

CONCEPT OF INSURANCE

Human life is subject to various risksrisk of death or

disability due to natural or accidental causes. Humans are also

prone to diseases, the treatment of which may involve huge

expenditure. On the other hand, property owned by man is

exposed to various hazards, natural and man-made.

When human life is lost or a person is disabled permanently

or temporarily, there is a loss of income to the household. The

family is put to hardship. Sometimes survival itself is at stake for

the dependants. When it comes to property, loss or damage to

property it results in either whole or partial loss in income to the

person or entity.

Risk has the element of unpredictability. Death/disability or

loss/damage could occur at anytime. Losses can be mitigated

through insurance. Insurance is a commodity which offers

protection against various contingencies.

Insurance products available for life and non-life are many.

In non-life, apart form personal covers such as accident covers

2


3/73


4/73

perils of nature including flood, earthquake etc. Machinery may

be insured for breakdown. Goods in transit can be insured under

a marine cargo insurance cover. Insurance covers are also

available for ships and other vessels. A motor insurance policycovers third party damage as well as damage to the vehicle.

Insurance of property is based on the principle of indemnity.

The idea is to bring the insured to the same financial position as

he /she was before the loss occurred. It safeguards the

investment in the property. Where there is no insurance, losses

can mar a project or an industry. General Insurance offers

stability to the economy and to the society.

Insurance offers security and so peace of mind to the

individual. The concept of insurance is that the losses of a few are

made good by contribution from many. It is based on the law of

large numbers. It stemmed from the need of man to find a

solution for mitigation of losses. It also reflects the nature of man

to find a solution collectively.

It is important for all to understand the various products

that life and general insurance companies offer before they make

a choice as to the product they want to buy.

As per regulations, insurers have to give the various

features of the products at the point of sale. The insured should

also go through the various terms and conditions of the products

and understand what they have bought and met their insurance

needs. They ought to understand the claim procedures so that

they know what to do in the event of a loss.

The concept of insurance is that the losses of a few are

made good by contribution from many. It is based on the law of

4


5/73

large numbers. It stemmed from the need of man to find a

solution for mitigation of losses. It also reflects the nature of man

to find a solution collectively.

The meaning of insurance:Insurance is a policy froma large financial institution that offers a person,

company, or other entity reimbursement or financial

protection against possible future losses or damages.

The meaning of insurance is important to understand for

anybody that is considering buying an insurance policy or simply

understanding the basics of finance.

Insurance is a hedging instrument used as a

precautionary measure against future contingent losses.

This instrument is used for managing the possible risks of

the future.

5
http://www.economywatch.com/insurance-overview/meaning-insurance.htmlhttp://www.economywatch.com/insurance-overview/meaning-insurance.html


6/73

INSURANCE SECTOR IN INDIA

The insurance sector in India has come as a full circle from

being an open competitive market to nationalization and back toa liberalized market again. Tracing the developments in the

Indian insurance sector reveals the 360-degree turn witnessed

over a period of almost 190 years.

The business of life insurance in India in its existing form

started in India in the year 1818 with the establishment of the

Oriental Life Insurance Company in Calcutta.

Some of the important milestones in the life insurance business

in India are:

1818: Oriental Insurance company first insurance company

in India.

1870: Bombay mutual life assurance company first Indian

Insurance company.

1912: The Indian Life Assurance Companies Act enacted as

the first statute to regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to

enable the government to collect statistical information

about both life and non-life insurance businesses.

6


7/73

1938: Earlier legislation consolidated and amended to by

the Insurance Act with the objective of protecting the

interests of the insuring public.

1956: 245 Indian and foreign insurers and providentsocieties taken over by the central government and

nationalised. LIC formed by an Act of Parliament, viz. LIC

Act, 1956, with a capital contribution of Rs. 5 crore from the

Government of India.

India's share in the global life insurance business rose to

1.97% in 2007 as compared to 1.68% in 2006.

However, the business volume in new life insurance

products has slowed down considerably in the 2007 to 2008

period.

But the overall business growth has been more than 36%

(measured in dollar terms). One reason for this has been rupee

appreciation (in terms of the US dollar). Another factor has been

the premium renewal factor.

As per a report from Swiss Re, the global life insurance

market experienced a real growth rate of 5.4%. This is the

inflation adjusted growth. The comparable figure for India was

14.2% for the 2008-09 period. This was two-and-half times over

the global average.

Swiss Re predicts a robust life insurance sector for 2008 but

quite the opposite scenario for the non -life sector. A modest

growth is forecasted for 2008 in view of the stock market and

capital market volatility.

Later on the following companies had thus been granted

licenses:

7


8/73

ICICI -Prudential

Reliance General

Reliance Life

Tata-AIG General

HDFC StandardLife

Royal-Sundaram

Max-New York Life

IFFCO-Tokio Marine

Birla-SunLife

Bajaj-AllianzGeneral

Tata-AIG Life

ING-Vyasa

Bajaj-Allianz Life

SBICardiff Life

All of these companies were either in the life insurance

business or in the non-life insurance business. No license was

granted for reinsurance business.

Registration Of Private Companies With IRDA For LifeInsurance Business.

8


9/73

The Indian insurance industry is governed by the Insurance

Act 1978, the General Insurance Business Act 1972, Life

Insurance Corporation Act 1956 and Insurance Regulatory and

Development Authority Act, 1999. The capital requirement for

starting a general or Life Insurance Company is equity paid-up

Sr.no. Reg.n

o

Date of

reg.

Name of the company

1 101 23.10.2000 HDFC Standard Life Insurance Company Ltd.

2 104 15.11.2000 Max New York Life Insurance Co. Ltd.

3 105 24.11.2000 ICICI Prudential Life Insurance Company Ltd.4 107 10.01.2001 Kotak Mahindra Old Mutual Life Insurance

Limited5 109 31.01.2001 Birla Sun Life Insurance Company Ltd.

6 110 12.02.2001 Tata AIG Life Insurance Company Ltd.

7 111 30.03.2001 SBI Life Insurance Company Limited .

8 114 02.08.2001 ING Vysya Life Insurance Company Private

Limited9 116 03.08.2001 Bajaj Allianz Life Insurance Company Limited

10 117 06.08.2001 Metlife India Insurance Company Ltd.11 121 03.01.2002 Reliance Life Insurance Company Limited.

12 122 14.05.2002 Aviva Life Insurance Co. India Pvt. Ltd.

13 127 06.02.2004 Sahara India Insurance Company Ltd.

14 128 17.11.2005 Shriram Life Insurance Company Ltd.

15 130 14.07.2006 Bharti AXA Life Insurance Company Ltd.

16 133 04.09.2007 Future Generali India Life Insurance Company

Limited

17 135 19.12.2007 IDBI Fortis Life Insurance Company Ltd.

18 136 08.05.2008 Canara HSBC Oriental Bank of Commerce Life

Insurance Company Ltd.19 138 27.06.2008 Aegon Religare Life Insurance Company Ltd.

20 140 27.06.2008 DLF Pramerica Life Insurance Company Ltd.

21 142 Star Union Dai-ichi Life Insurance Co. Ltd.,

9


10/73

capital of Rs. 100 corer and for starting a reinsurance company it

is Rs. 200 corer. The solvency margin requirements have been

laid down in section 64VA of the Act. It has been stated that the

required solvency margin shall be the highest of1) Rs. 50 cr and Rs. 100 cr in case of reinsurance,

2) A sum equivalent to 30% of net incurred claims.

The supervisory controls on insurance companies are

exercised by Insurance Development and Regulatory Authority

(IRDA) and these powers flow from Insurance Act, 1938 as well as

IRDA Act 1999. Regulatory and supervisory powers of the

authority are wide and pervasive. These controls are exercised

through grant of licence to insurance to an insurance company,

approving its product and pricing, guiding deployment of

investment funds, prescribing solvency margin, making it

obligatory to appoint an actuary by the companies and approving

the appointment of chief executives of the companies. The

authority has also got the powers of investigation and inspection,

monitoring the activities of intermediaries, making it obligatory

on the part of insurance companies to prepare a balance sheet, a

profit and loss account, a separate account of receipts and

payments and a revenue account in respect of each class of

business. It also has the power to issue licenses to surveyors and

loss assessors and guiding reinsurance programs to insurance

companies.

Distribution Channels

Till date insurance agents still remain the main sources

through which insurance products are sold. The concept is very

well established in the country like India but still the increasing

10


11/73

use of other sources is imperative. It therefore makes sense to

look at well-balanced, alternative channels of distribution.

LIC has already well established and have an extensive

distribution channel and presence. New players may find itexpensive and time consuming to bring up a distribution network

to such standards. Therefore they are looking to the diverse

areas of distribution channel to have an advantage. At present

the distribution channels that are available in the market are:

Direct selling

Corporate agents

Group selling

Brokers and co-operative societies

11


12/73

WHAT IS LIFE INSURANCE

Life insurance is insurance on human beings. Though

Human Life cannot be valued, a monetary sum could be

determined which is based on loss of income in future years.

Hence in life insurance, the sum assured is by way of a benefit

in the case of life insurance. Life insurance products provide a

definite amount of money to the dependents of the insured in

case the life insured dies during his active income earning period

or becomes disables on account of an accident causing

reduction/complete loss in his income earnings.

An individual can also protect his old age when he ceases to

earn and has no other means of income by purchasing an

annuity product.

There are a number of life insurance products which offer

protection and also coupled with savings.

Life Insurance is insurance for you and your family's peace

of mind. Life insurance is a policy that people buy from a life

insurance company, which can be the basis of protection and

financial stability after one's death. Its function is to help

beneficiaries financially after the owner of the policy dies.

It can also be a form of savings in the long run if you

purchase a plan, which offers the option of contributing regularly.

12
http://www.lifeinsurancewiz.com/http://www.lifeinsurancewiz.com/


13/73

Additionally, a little known function of life insurance is that it can

be tied in with a person's pension plan. A person can make

contributions to a pension that is funded by a life insurance

company. These are considered private pension arrangements.In addition, you should also make a list of what you feel

needs to be protected in your family's way of life. With a life

insurance policy in place, A person can:

provide security for his/her family

protect their home mortgage

take care of their estate planning needs

look at other retirement savings/income vehicles

Life insurance offers a way to replace the loss of income

that occurs when someone dies (usually the person who produces

the majority of income in a family situation). It is a contract

between a person as the insured person and the company or

"carrier" that is providing the insurance. If policyholder dies while

the contract is in force, the insurance company pays a specified

sum of money free of income tax "cash benefits" to the

person or persons you name as beneficiaries.

A good life insurance program does more than just replace

the loss of income that occurs if you die. It should also provide

money to cover the new costs that arise after your death

funeral expenses, taxes, probate costs, the need for

housekeepers and child care, and so on. And these cash benefits

should provide for your family's future needs as well, including

college education for your children and part or all of your

spouse's retirement needs. In almost all cases, your beneficiary

13


14/73

can use the cash benefits in the way he or she sees fit, without

restriction.

14


15/73

NEED FOR LIFE INSURANCE

If there is someone who would suffer economic hardship if a

person died, then the answer is yes... you need life insurance!Families with young children have a clear need for life insurance.

If both spouses work, the loss of one income will cause the family

immediate economic hardship and make it harder for them to

realize future goals, such as paying for the children's' education.

But even if one spouse works "inside the home" and doesn't bring

in a formal income, his or her death will require the surviving

spouse to hire child care, housekeepers and other professionals

to help run the household - and that can be a significant new

expense.

If a person is married; without children or single, then

he/she may need life insurance to protect their partner or

surviving family members against the costs associated with the

persons death. Funeral expenses, probate and administrative

fees, outstanding debts, special obligations to charities, and

federal and state taxes are costs that all of us must consider.

And, they can add up quickly. Unless a person already has

sufficient financial resources, his/her survivors will probably need

life insurance to cover these expenses.

A person needs life insurance if he/she wants to provide

financial protection for their dependents (or to their creditors) in

the event of their death. A business may want to use life

insurance to fund its employee benefit plans, protect against the

premature death of a key person or to provide for business

continuation.

15


16/73

The following are typical examples of family and business

purposes to consider when assessing the need for life insurance:

Dependent children.

Dependent spouse, parent or grandparent. Credit enhancement.

Key person indemnification.

Business continuation.

Employee benefit plans.

16


17/73

ADVANTAGES OF HAVING LIFE INSURANCE

It is a general belief that life insurance is meant only for

those with families. It is true that Life Insurance Policies likewhole-life insurance, joint-life-insurance, pension-life-insurance

etc are essential for family's financial security, but they are

equally important for individuals. Term Insurance policies protect

a persons financial resources against the uncertainties of life so

he/she can protect their family's future.

Some of the life insurance advantages are:

If an estate owner has not accumulated enough assets for

his family. Insurance quote helps create an instant estate

for the sake of the Familys security.

Life Insurance provides the option to pass equal assets to

the children who are not active in the Family business at the

time the family business is passed on.

Life Insurance policies can help secure the future of children

for college/educational purposes as the amount of life

Insurance Policy increases on a minors or parents life.

The growth of a cash-value policy is tax-deferred - you do

not pay taxes on the cash value accumulation until you

withdraw funds from the policy.

Life Insurance can be useful in paying estate taxes, along

with other estate settlement amounts. Federal Estate Taxes

are due nine months after death.

If theres a Business Transfer, life insurance can provide

ready cash to finance a transaction between business

17


18/73

owners who are ready to buy the deceased owners share

from his or her estate after death.

If theres a home mortgage, one can pass the family

residence to their spouse/children to free them of anymortgage if one has a Life Insurance Policy for the same. It

is preferred to have a decreasing term policy that decreases

in face amount as the mortgage balance is paid down.

Life Insurance helps retain your Business from the loss of a

key employee. Untimely death of a key employee can pose

severe financial loss to the business.

The right insurance proceeds can provide liquidity to pay off

personal loans or business loans.

Charitable Remainder Trusts provide tax benefits. Life

Insurance helps replace a charitable gift.

A lot of Insurance products presently provide good returns,

which could be a beneficial way for saving necessary funds

for retirement years.

Benefits are available immediately and may be used to help

pay expenses such as final illness and funeral costs,

eliminating the need to sell estate assets to cover these

costs.

Why is insurance superior to other forms of

savings

Protection

Aid to thrift

Liquidity

Tax relief

18


19/73

Money when you need it

Tax Savings through Insurance

Life insurance may be divided into two basic classes:

Temporary and Permanent or following subclasses Term, Wholelife, Universal, and Endowment life insurance.

Term Insurance

Term assurance provides life insurance coverage for a

specified term of years in exchange for a specified premium. The

policy does not accumulate cash value. Term is generally

considered "pure" insurance, where the premium buys protection

in the event of death and nothing else.

There are two basic types of life insurance: whole life

insurance and term life insurance. Term life insurance policies

have a set duration that limit the coverage period. It is then up to

the term life insurance policy owner to decide whether to renew

the term life insurance policy, or to let the coverage terminate.

Yes, there are quite a few different types of life insurance

policies out there. However, the two most basic and important

that you really need to know about are the one-year renewable

term and the straight life insurance. These two can satisfy the

needs of most buyers.

There are three key factors to be considered in term

insurance:

1. Face amount (protection or death benefit),2. Premium to be paid (cost to the insured), and

3. Length of coverage (term).

Various insurance companies sell term insurance with many

different combinations of these three parameters. The face

19


20/73

amount can remain constant or decline. The term can be for one

or more years. The premium can remain level or increase.

Common types of term insurance include Level, Annual

Renewable and Mortgage insurance.Annual renewable term is a one year policy but the

insurance company guarantees it will issue a policy of equal or

lesser amount without regard to the insurability of the insured

and with a premium set for the insured's age at that time.

Advantages of Term Life Insurance:

It pays a death benefit to the beneficiary you name.

It will cover your final expenses and provide a lump sum

for your dependents.

It covers you for the full amount of life insurance you

choose.

It can be convertible and renewable depending on the

policy.

It gradually increases annual premium as you get older.

It traditionally works well to meet temporary insurance

needs.

Disadvantages of Term Life Insurance:

It doesn't provide a cash value account for some later point

such as retirement.

Mortgage insurance:-

Another common type of term insurance is mortgage

insurance, which is usually a level premium, declining face

value policy. The face amount is intended to equal the amount of

20
http://en.wikipedia.org/wiki/Mortgage_insurancehttp://en.wikipedia.org/wiki/Mortgage_insurancehttp://en.wikipedia.org/wiki/Mortgage_insurancehttp://en.wikipedia.org/wiki/Mortgage_insurancehttp://en.wikipedia.org/wiki/Mortgage_insurancehttp://en.wikipedia.org/wiki/Mortgage_insurance


21/73

the mortgage on the policy owners residence so the mortgage

will be paid if the insured dies.

A policy holder insures his life for a specified term. If he dies

before that specified term is up (with the exception of suicide seebelow), his estate or named beneficiary receives a payout. If he

does not die before the term is up, he receives nothing. However,

in some European countries (notably Serbia), insurance policy is

such that the policy holder receives the amount he has insured

himself to, or the amount he has paid to the insurance company

in the past years. Suicide used to be excluded from ALL insurance

policies, however, after a number of court judgments against the

industry, payouts do occur on death by suicide (presumably

except for in the unlikely case that it can be shown that the

suicide was just to benefit from the policy). Generally, if an

insured person commits suicide within the first two policy years,

the insurer will return the premiums paid. However, a death

benefit will usually be paid if the suicide occurs after the two year

period.

Permanent Life Insurance:-

Permanent life insurance is life insurance that remains in

force (in-line) until the policy matures (pays out), unless the

owner fails to pay the premium when due (the policy expires OR

policies lapse). The policy cannot be canceled by the insurer for

any reason except fraud in the application, and that cancellation

must occur within a period of time defined by law (usually two

years). Permanent insurance builds a cash value that reduces the

amount at risk to the insurance company and thus the insurance

expense over time. This means that a policy with a million dollar

21
http://en.wikipedia.org/wiki/Permanent_life_insurancehttp://en.wikipedia.org/wiki/Permanent_life_insurance


22/73

face value can be relatively expensive to a 70 year old. The

owner can access the money in the cash value by withdrawing

money, borrowing the cash value, or surrendering the policy and

receiving the surrender value.The four basic types of permanent insurance are:-

Whole life

Universal life

Limited pay

Endowment.

Whole life coverage:

As the name implies, whole life insurance covers the

policyholder for his or her whole life. There is no fixed end date

for the policy, as there is with term life insurance. When the

policy holder dies, the face value of the policy, known as a death

benefit, is paid to the person or persons named in the life

insurance policy (the beneficiary or beneficiaries).

The cost of a whole life insurance policy is spread out across

many years, so the premium remains the same. This ensures that

older people on a fixed income will not have to cope with rising

premiums.

Whole life insurance policies are different than term life

insurance policies because the duration extends till the insured

reaches 100 (hence, a whole life).Whole life insurance provides

for a level premium, and a cash value table included in the policy

guaranteed by the company. The primary advantages of whole

life are guaranteed death benefits; guaranteed cash values, fixed

and known annual premiums, and mortality and expense charges

will not reduce the cash value shown in the policy. The primary

22
http://en.wikipedia.org/wiki/Whole_life_insurancehttp://en.wikipedia.org/wiki/Whole_life_insurance


23/73

disadvantages of whole life are premium inflexibility, and the

internal in the policy may not be competitive with other savings

alternatives. Also, the cash values are generally kept by the

insurance company at the time of death, the death benefit onlyto the beneficiaries. Riders are available that can allow one to

increase the death benefit by paying additional premium. The

death benefit can also be increased through the use of policy

dividends. Dividends cannot be guaranteed and may be higher or

lower than historical rates over time. Premiums are much higher

than term insurance in the short term, but cumulative premiums

are roughly equal if policies are kept in force until average life

expectancy.

Cash value can be accessed at any time through policy

"loans" and are received "income-tax free". Since these loans

decrease the death benefit if not paid back, payback is optional.

Cash values support the death benefit so only the death benefit is

paid out.

Dividends can be utilized in many ways. First, if Paid up

additions is elected, dividend cash values will purchase additional

death benefit which will increase the death benefit of the policy

to the named beneficiary. Another alternative is to opt in for

'reduced premiums' on some policies. This reduces the owed

premiums by the unguaranteed dividends amount. A third option

allows the owner to take the dividends as they are paid out.

(Although some policies provide other/different/less options than

these - it depends on the company for some cases)

Universal life coverage:-

23


24/73

Universal life insurance (UL) is a relatively new

insurance product intended to provide permanent insurance

coverage with greater flexibility in premium payment and the

potential for greater growth of cash values. There are severaltypes of universal life insurance policies which include "interest

sensitive" (also known as "traditional fixed universal life

insurance"), variable universal life (VUL), guaranteed death

benefit, and equity indexed universal life insurance.

Universal life insurance offers many features of whole life

insurance, but allows greater flexibility once the policy is in force.

Like whole life insurance, universal life insurance is a permanent

policy. It protects the policyholder until deathhowever long that

may be. Also like whole life insurance, universal life insurance

accrues cash value over time.

A universal life insurance policy includes a cash value.

Premiums increase the cash values, but the cost of insurance

(along with any other charges assessed by the insurance

company) reduces cash values. However, with the exception of

VUL, interest is credited on cash values at a rate specified by the

company and may also increase cash values. With VUL, cash

values will ebb and flow relative to the performance of the

investment sub accounts the policy owner has chosen. The

surrender value of the policy is the amount payable to the policy

owner after applicable surrender charges, if any.

Universal life insurance addresses the perceived

disadvantages of whole life namely that premiums and death

benefit are fixed. With universal life, both the premiums and

death benefit are flexible. Except with regards to guaranteed

24
http://en.wikipedia.org/wiki/Universal_life_insurancehttp://en.wikipedia.org/wiki/Universal_life_insurance


25/73

death benefit universal life, this flexibility comes at a price:

reduced guarantees.

Depending on how interest is credited, the internal rate of

return can be higher because it moves with prevailing interestrates (interest-sensitive) or the financial markets (Equity Indexed

Universal Life and Variable Universal Life). Mortality costs and

administrative charges are known. And cash value may be

considered more easily attainable because the owner can

discontinue premiums if the cash value allows it.

Flexible death benefit means the policy owner can choose

to decrease the death benefit. The death benefit could also be

increased by the policy owner but that would (typically) require

that the insured go through new underwriting. Another example

of flexible death benefit is the ability to choose option A or option

B death benefits - and to be able to change those options during

the life of the insured.

Option A is often referred to as a level death benefit.

Generally speaking, the death benefit will remain level for the life

of the insured and premiums are expected to be lower than

policies with an Option B death benefit.

Option B pays the face amount plus the cash value. If cash

values grow over time, so would the death benefit which is

payable to the insured's beneficiaries. If cash values decline, the

death benefit would also decline. Presumably option B death

benefit policies require greater premium than option A policies.

Limited-pay

Limited-pay life insurance:-

25
http://en.wikipedia.org/w/index.php?title=Limited-pay_life_insurance&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Limited-pay_life_insurance&action=edit&redlink=1


26/73

Another type of permanent insurance is Limited-pay life

insurance, in which all the premiums are paid over a specified

period after which no additional premiums are due to keep the

policy in force. Common limited pay periods include 10-year, 20-year, and paid-up at age 65.

26
http://en.wikipedia.org/w/index.php?title=Limited-pay_life_insurance&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Limited-pay_life_insurance&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Limited-pay_life_insurance&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Limited-pay_life_insurance&action=edit&redlink=1


27/73

Accidental Death:-

Accidental death is a limited life insurance that is designed

to cover the insured when they pass away due to an accident.

Accidents include anything from an injury, but do not typicallycover any deaths resulting from health problems or suicide.

Because they only cover accidents, these policies are much less

expensive than other life insurances.

In anAD&D policy, benefits are available not only for

accidental death, but also for loss of limbs or bodily functions

such as sight and hearing, etc.

Accidental death benefits can also be added to a standard

life insurance policy as a rider. If this rider is purchased, the

policy will generally pay double the face amount if the insured

dies due to an accident. This used to be commonly referred to as

double indemnity coverage. In some cases, some companies may

even offer a triple indemnity cover.

Endowments:-

Endowments are policies in which the cash value built up

inside the policy, equals the death benefit (face amount) at a

certain age. The age this commences is known as the endowment

age. Endowments are considerably more expensive (in terms of

annual premiums) than either whole life or universal life because

the premium paying period is shortened and the endowment date

is earlier.

Endowment Insurance is paid out whether the insured lives

or dies, after a specific period (e.g. 15 years) or a specific age

(e.g. 65).

27
http://en.wikipedia.org/wiki/Double_indemnity_(insurance)http://en.wikipedia.org/wiki/Endowment_policyhttp://en.wikipedia.org/wiki/Double_indemnity_(insurance)http://en.wikipedia.org/wiki/Endowment_policy


28/73

LIFE INSURANCE CORPORATION OF INDIA

The first two decades of the twentieth century saw lot of

growth in insurance business. From 44 companies with total

business-in-force as Rs.22.44 crore, it rose to 176 companies with

total business-in-force as Rs.298 crore in 1938. During the

mushrooming of insurance companies many financially unsound

concerns were also floated which failed miserably. The Insurance

Act 1938 was the first legislation governing not only life

insurance but also non-life insurance to provide strict state

control over insurance business. The demand for nationalizationof life insurance industry was made repeatedly in the past but it

gathered momentum in 1944 when a bill to amend the Life

Insurance Act 1938 was introduced in the Legislative Assembly.

However, it was much later on the 19th of January, 1956, that 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.

28


29/73

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 wasfelt 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-organisation

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 crores mark of new

business. But with re-organisation 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. Apart from on-line Kiosks and IVRS, Info Centres

have been commissioned at Mumbai, Ahmedabad, Bangalore,

Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other

cities.

29


30/73

With a vision ofproviding easy access to its policyholders,

LIC has launched its SATELLITE SAMPARK offices. The satellite

offices are smaller, leaner and closer to the customer. The

digitalized records of the satellite offices will facilitate anywhereservicing and many other conveniences in the future.

MISSION:

"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."

VISION

"A trans-nationally competitive financial conglomerate of

significance to societies and Pride of India.

OBJECTIVES OF LIC

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

30


31/73

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.

VARIOUS POLICIES /SCHEMES OF LIC FOR LIFE INSURANCE

1. Children Plans

Life insurance buying is approached in the proper manner it

can be very beneficial to an individual and his/her family.

Four children policies are given below: Jeevan Anurag

Komal Jeevan

Jeevan Kishore

Jeevan Chhaya

31
http://www.licindias.com/children-insurance-plans.htmlhttp://www.licindias.com/insurance-claim1.htmlhttp://www.licindias.com/insurance-claim2.htmlhttp://www.licindias.com/insurance-claim3.htmlhttp://www.licindias.com/insurance-claim4.htmlhttp://www.licindias.com/children-insurance-plans.htmlhttp://www.licindias.com/insurance-claim1.htmlhttp://www.licindias.com/insurance-claim2.htmlhttp://www.licindias.com/insurance-claim3.htmlhttp://www.licindias.com/insurance-claim4.html


32/73

2. Endowment Plans

Endowment Policy

Endowment Policy 1

Jeevan Mitra (Double) Jeevan Mitra (Triple)

Jeevan Anand

New Janaraksha Plan

3. Money Back Plans

Money Back 20 Years

Money Back 25 Years

Jeevan Surabhi 1

Jeevan Surabhi 2

Jeevan Surabhi 3

Jeevan Rekha

Bima Bachat

Whole life insurance covers the policyholder for his or her

whole life. There is no fixed end date for the policy, as there is

with term life insurance. When the policy holder dies, the face

value of the policy, known as a death benefit, is paid to the

person or persons named in the life insurance policy (the

beneficiary or beneficiaries).

4. Life Plans

Whole Life Policy

Whole Life Policy 1 Whole Life Policy 2

Jeevan Rekha

Jeevan Anand

Loans

32
http://www.licindias.com/endowment-insurance-investment.htmlhttp://www.licindias.com/endowment-insurance.htmlhttp://www.licindias.com/endowment-insurance1.htmlhttp://www.licindias.com/endowment-insurance2.htmlhttp://www.licindias.com/endowment-insurance3.htmlhttp://www.licindias.com/endowment-insurance4.htmlhttp://www.licindias.com/endowment-insurance5.htmlhttp://www.licindias.com/money-back-plans.htmlhttp://www.licindias.com/money-back-investment.htmlhttp://www.licindias.com/money-back-investment1.htmlhttp://www.licindias.com/insurance-investment1.htmlhttp://www.licindias.com/insurance-investment2.htmlhttp://www.licindias.com/insurance-investment3.htmlhttp://www.licindias.com/loan-insurance.htmlhttp://www.licindias.com/loan-insurance1.htmlhttp://www.licindias.com/whole-life-insurance.htmlhttp://www.licindias.com/whole-life-insurance.htmlhttp://www.licindias.com/whole-life-insurance.htmlhttp://www.licindias.com/whole-life-insurance.htmlhttp://www.licindias.com/whole-life-insurance.htmlhttp://www.licindias.com/whole-life-insurance.htmlhttp://www.licindias.com/whole-life-insurance.htmlhttp://www.licindias.com/whole-life-insurance.htmlhttp://www.licindias.com/whole-life-insurance.htmlhttp://www.licindias.com/whole-life-insurance.htmlhttp://www.licindias.com/whole-life-insurance.htmlhttp://www.licindias.com/whole-life-investment-insurance.htmlhttp://www.licindias.com/whole-life-investment-insurance1.htmlhttp://www.licindias.com/whole-life-investment-insurance2.htmlhttp://www.licindias.com/homeloan-insurance.htmlhttp://www.licindias.com/business-loan-insurance.htmlhttp://www.licindias.com/endowment-insurance-investment.htmlhttp://www.licindias.com/endowment-insurance.htmlhttp://www.licindias.com/endowment-insurance1.htmlhttp://www.licindias.com/endowment-insurance2.htmlhttp://www.licindias.com/endowment-insurance3.htmlhttp://www.licindias.com/endowment-insurance4.htmlhttp://www.licindias.com/endowment-insurance5.htmlhttp://www.licindias.com/money-back-plans.htmlhttp://www.licindias.com/money-back-investment.htmlhttp://www.licindias.com/money-back-investment1.htmlhttp://www.licindias.com/insurance-investment1.htmlhttp://www.licindias.com/insurance-investment2.htmlhttp://www.licindias.com/insurance-investment3.htmlhttp://www.licindias.com/loan-insurance.htmlhttp://www.licindias.com/loan-insurance1.htmlhttp://www.licindias.com/whole-life-insurance.htmlhttp://www.licindias.com/whole-life-insurance.htmlhttp://www.licindias.com/whole-life-insurance.htmlhttp://www.licindias.com/whole-life-insurance.htmlhttp://www.licindias.com/whole-life-investment-insurance.htmlhttp://www.licindias.com/whole-life-investment-insurance1.htmlhttp://www.licindias.com/whole-life-investment-insurance2.htmlhttp://www.licindias.com/homeloan-insurance.htmlhttp://www.licindias.com/business-loan-insurance.html


33/73

Many of LIC plans are of endowment type and a person

would be allowed to raise a loan against their policy should

require funds. A person repays the loan with interest or continues

paying the interest and allows the loan to be deducted at thetime of the claim payments.

Further loans on policies are also allowed after deduction of

earlier out standings most financial institutions too allow loans

against LIC policies based on the value LIC quotes on request

from them.

Policy Loans

The Corporation can grant a loan to the policyholder against

his policy as per the terms and conditions applicable to the

policy. The requirements for granting a loan are as under:

a) Application for loan with an endorsement of terms and

conditions of the loan being placed on the policy.

b) Policy to be assigned absolutely in favour of the

Corporation

c) A receipt for the loan amount.

The maximum loan amount available under the policy is

90% of the Surrender Value of the policy (85% in case of paid up

policies) including cash value of bonus. The rate of interest

charged on loans is at 10-1/2% to be paid half-yearly.

COMPETITORS OF LIC

ICICI Prudential Life Insurance Company

HDFC Standard Life Insurance Company

33


34/73

BAJAJ ALLIANZ Life Insurance Company Limited

AVIVA Life Insurance CO. India Pvt. Ltd

SBI Life Insurance Company

ICICI Prudential Life Insurance Company is a joint venture

between ICICI Bank - one of India's foremost financial

services companies-and prudential plc - a leading

international financial services group headquartered in the United

Kingdom. Total capital infusion stands at Rs. 47.80 billion, with

ICICI Bank holding a stake of 74% and Prudential plc holding 26%.

They began their operations in December 2000 after

receiving approval from Insurance Regulatory Development

Authority (IRDA). Now their nation-wide team comprises of 2099branches (inclusive of 1,116 micro-offices), over 276,000

advisors; and 18 banc assurance partners.

ICICI Prudential is the first life insurer in India to receive a

National Insurer Financial Strength rating of AAA from Fitch

ratings. For three years in a row, ICICI Prudential has been voted

as India's Most Trusted Private Life Insurer, by The Economic

Times - AC Nielsen ORG Marg survey of 'Most Trusted Brands'. As

they grow their distribution, product range and customer base,

they continue to tirelessly uphold their commitment to deliver

world-class financial solutions to customers all over India.

34


35/73

The ICICI Prudential edge comes from their commitment to

their customers, in all that they do - be it product development,

distribution, the sales process or servicing. Here's a peek into

what makes them the leaders.

1. The products have been developed after a clear and

thorough understanding of customers' needs. It is this

research that helps them develop Education plans that offer

the ideal way to truly guarantee the child's education,

Retirement solutions that are a hedge against inflation and

yet promise a fixed income after a person retires, or Health

insurance that arms a person with the funds he/she might

need to recover from a dreaded disease.

2. Having the right products is the first step, but it's equally

important to ensure that their customers can access them

easily and quickly. To this end, ICICI Prudential has an

advisor base across the length and breadth of the country,

and also partners with leading banks, corporate agents and

brokers to distribute their products.

3. Robust risk management and underwriting practices form

the core of their business. With clear guidelines in place,

ICICI ensures equitable costing of risks, and thereby ensure

a smooth and hassle-free claims process.

4. Entrusted with helping their customers meet their long-term

goals, ICICI Prudential adopts an investment philosophy that

aims to achieve risk adjusted returns over the long-term.

5. Last but definitely not the least, their team is given the

opportunity to learn and grow, every day in a multitude of

35


36/73

ways. They believe this keeps them engaged and

enthusiastic, so that they can deliver on their promise to

cover their customer, at every step in life.

36


37/73

Vision

To be the dominant Life, Health and Pensions player built on

trust by world-class people and service. ICICI Prudential hopes to

achieve their vision by: Understanding the needs of customers and offering them

superior products and service.

Leveraging technology to service customers quickly,

efficiently and conveniently.

Developing and implementing superior risk management

and investment strategies to offer sustainable and stable

returns to their policyholders.

Providing an enabling environment to foster growth and

learning for their employees.

And above all, building transparency in all their dealings.

The success of the company will be founded in its

unflinching commitment to 5 core values

Integrity

Customer First

Boundary less

Ownership

Passion. Each of the values describes what the company

stands for, the qualities of their people and the way they

work.

ICICI Prudential believes that they are on the threshold of an

exciting new opportunity, where they can play a significant role in

redefining and reshaping the sector. Given the quality of their

parentage and the commitment of their team, there are no limits

to their growth.

37


38/73

HDFC Standard Life Insurance Company

Established on 14th August 2000, HDFC Standard Life

Insurance Co. Ltd. is a joint venture between Housing

Development Finance Corporation Limited (HDFC Limited) -

India's leading housing finance institution, and a Group Company

of the Standard Life Plc, UK. . It has international offices in Dubai,

London and Singapore with service associates in Saudi Arabia,

Qatar, Kuwait and Oman. As of December 2008, the total asset

size has crossed more than Rs. 95,000 crores including the

mortgage loan assets of more than Rs. 82,800 crores. The

corporation has a deposit base of Rs. 17,551 crores, earning the

trust of more than 9,00,000 depositors.

The Company is one of leading private insurance

companies, offering a range of individual and group insurance

solutions, in India. Being a joint venture of top financial services

groups, HDFC Standard Life has adequate financial expertise to

manage long-term investments safely and resourcefully.

HDFC Standard Life Insurance offers a range of individual

and group solutions, which can be easily personalized to specific

needs. Its group solutions have been planned to offer complete

flexibility, together with a low charging structure.

HDFC Limited, Indias premier housing finance institution

has assisted more than 3.3 million families own a home, since its

inception in 1977 across 2400 cities and towns through its

38


39/73

network of over 250 offices Customer Service and satisfaction

has been the mainstay of the organization. HDFC has set

benchmarks for the Indian housing finance industry. Recognition

for the service to the sector has come from several national andinternational entities including the World Bank that has lauded

HDFC as a model housing finance company for the developing

countries. HDFC has undertaken a lot of consultancies abroad

assisting different countries including Egypt, Maldives, and

Bangladesh in the setting up of housing finance companies.

Vision

The most successful and admired life insurance company,

which means that we are the most trusted company, the easiest

to deal with, offer the best value for money, and set the

standards in the industry.

Values

Integrity

Innovation

Customer centric

People Care One for all and all for one

Team work

Joy and Simplicity

HDFC Standard Life Insurance Company Ltd.

Given below is a comprehensive list of policies and products

on offer by HDFC Standard Life Insurance:

1. Children's Plans

HDFC Children's Plan

HDFC Unit Linked Young Star II

39


40/73

HDFC Unit Linked Young Star Plus II

HDFC Unit Linked YoungStar Champion

2. Retirement Plans

HDFC Personal Pension Plan HDFC Unit Linked Pension II

HDFC Unit Linked Pension Maximiser II

HDFC Immediate Annuity

3. Savings & Investment Plans

HDFC Unit Linked Endowment Plus II

HDFC SimpliLife

HDFC Unit Linked Endowment II

HDFC Unit Linked Endowment Winner

HDFC Endowment Assurance Plan

HDFC Money Back Plan

HDFC Assurance Plan

HDFC Savings Assurance Plan

4. Health Plans

HDFC Critical Care Plan

HDFC SurgiCare Plan

5. Protection Plans

HDFC Term Assurance Plan

HDFC Loan Cover Term Assurance Plan

HDFC Home Loan Protection Plan

6. Group Plans

Group Term Insurance Plan

Group Variable Term Insurance Plan

Group Unit Linked Plan - Gratuity

Group Unit Linked Plan - Leave Encashment

40


41/73

AVIVA LIFE INSURANCE CO. INDIA PVT. LTD.

Aviva Life Insurance Company India Ltd. is a private

insurance company, formed by a joint venture between the Aviva

insurance group of UK and the Dabur group of India. In reference

to the government regulations, Aviva holds 26 percent stake and

the Dabur group holds the balance 74 percent share in the joint

venture. Not only largest in the UK, Aviva is also known as the

fifth largest insurance group in the world. Since 1834, Aviva is

ensuring the lives of Indians. At the time of nationalization, Aviva

was the largest foreign insurer in India in terms of thecompensation paid by the Government of India.

Aviva is distinguished for being the first foreign insurance

company to set up its representative office in India, in 1995.

Aviva Life Insurance Company established the concept of

Bancassurance in India, and has leveraged its global expertise in

Bancassurance successfully here. The company boasts of 223

branches in India, supporting its vast distribution network. Aviva

offers various products that are meant to provide customers

flexibility, transparency and value for money. Given here is a

complete list of products & services offered by Aviva Life

Insurance Company India Ltd.

VARIOUS POLOCIES BY AVIVA

1. Whole Life Plans

LifeLong

Aviva Lifeline

2. Pure Term Plans

LifeShield

Aviva LifeShield Plus

41


42/73

3. Endowment Plans

LifeSaver

SaveGuard

LifeSaver Plus Freedom LifePlan

Aviva DhanVriddhi

Anmol Suraksha

Aviva Money Back

Aviva EasyLife Plus

Aviva Wealth Plus

4. Pension Plans

PensionPlus

Secure Pension

Aviva Pension Elite

5. Child Plans

Aviva LittleMaster

Aviva Young Scholar

6. Health Plans

Aviva Health Plus

7. Group Plans

CreditPlus

LoanSuraksha

CorporateLifeGroupShield

8. Rural Plans

Amar Suraksha

Jana Suraksha

BAJAJ ALLIANZ LIFE INSURANCE COMPANY LIMITED

42


43/73

Bajaj Allianz Life Insurance Co. Ltd. is a joint venture

between Allianz SE, one of the world's largest insurance

companies, and Bajaj Finserv. Allianz SE is a leading insurancecorporation globally and one of the largest asset managers in the

world, that manage assets worth over a Trillion. With over 115

years of financial experience, Allianz SE is present in over 70

countries around the world. Bajaj Allianz is into both life insurance

and general insurance. Today, Bajaj Allianz is one of India's

leading and fastest growing insurance companies. Currently, it

has presence in more than 550 locations with over 60,000

Insurance Consultants.

In June 2008, Bajaj Allianz entered into partnership with

Thomas Cook India to provide travel finance. Bajaj Allianz Life

Insurance ensures excellent insurance and investment solutions

by offering customized products, supported by the best

technology. A comprehensive list of policies and products offered

by Bajaj Allianz Life Insurance Co. Ltd. is as follows:

1. UNIT LINKED PLANS

Regular Premium

New UnitGain Super

UnitGain Plus Gold

New UnitGain Plus

New UnitGain

YoungCare

YoungCare Plus

New FamilyGain-R

43


44/73

Single Premium

New UnitGain Premier SP

New UnitGain Plus SP

2. PENSION PLANSAnnuity

Pension Guarantee

Retirement

Future Income Generator

Swarna Vishranti

New UnitGain Easy Pension Plus RP

New UnitGain Easy Pension Plus SP

Future Secure

3. TRADITIONAL PLANS

Endowment

InvestGain

SaveCare Economy SP

Life Time Care

Super Saver

Money Back

CashGain

4. Term Plans

Protector

Term Care

New Risk Care

5. Women Insurance Plans

House Wives

Working Women

44


45/73

6. Health Plans

Care First

Health Care

Family CareFirst7. Children Plans

ChildGain

8. Group Plans

Non Employer Employee

Credit Shield

Group Term Life(Non Employer Employee)

Group Suraksha

Swayam Shakti Suraksha

Group Loan Protector

Group Income Protection

Employer Employee

Group Term Life(Employer Employee)

New Group Gratuity Care

New Group Superannuation Care

Group Save Plus

Group Term Life in lieu of EDLI

Group Leave Encashment Scheme

Group Annuity

Group Gratuity Gold

Other Plans

Family Assure

Fortune Plus

Capital Shield

CenturyPlus II

45


46/73

SBI LIFE INSURANCE COMPANY

SBI Life Insurance is a joint venture between the State Bank

of India and BNP Paribas Assurance. SBI Life Insurance is

registered with an authorized capital of Rs 2000 crores. SBI owns

74% of the total capital and BNP Paribas Assurance the remaining

26%.

State Bank of India enjoys the largest banking franchise inIndia. Along with its 7 Associate Banks, SBI Group has the

unrivalled strength of over 14,500 branches across the country,

arguably the largest in the world.

BNP Paribas Assurance is the insurance arm of BNP Paribas -

Euro Zones leading Bank. BNP Paribas, part of the worlds top 10

group of banks by market value and part of Europe top 3 banking

companies, is one of the oldest foreign banks with a presence in

India dating back to 1860. BNP Paribas Assurance is the forth

largest life insurance company in France, and a worldwide leader

in Creditor insurance products offering protection to over 50

million clients. BNP Paribas Assurance operates in 41 countries

mainly through the bancassurance and partnership model.

SBI Life Insurancesmission is to emerge as the leading

company offering a comprehensive range of Life Insurance and

pension products at competitive prices, ensuring high standards

of customer service and world class operating efficiency. SBI Life

has a unique multi-distribution model encompassing Banc

assurance, Agency and Group Corporate.

46


47/73

SBI Life extensively leverages the SBI Group as a platform

for cross-selling insurance products along with its numerous

banking product packages such as housing loans and personal

loans. SBIs access to over 100 million accounts across thecountry provides a vibrant base for insurance penetration across

every region and economic strata in the country ensuring true

financial inclusion.

Agency Channel, comprising of the most productive force of

more than 63,000 Insurance Advisors, offers door to door

insurance solutions to customers.

Mission:

"To emerge as the leading company offering a

comprehensive range of life insurance and pension products at

competitive prices, ensuring high standards of customer

satisfaction and world class operating efficiency, and become a

model life insurance company in India in the post liberalization

period".

Values :

Trustworthiness

Ambition

Innovation

Dynamism

Excellence

47


48/73

CHAPTER 2

RESEARCHMETHODOLOGY

48


49/73

RESEARCH METHODOLOGY

Research is common refers to a research for knowledge.

One can also define research as a scientific & systematic searchfor pertinent information on scientific topic. In fact it is an art of

scientific investigation. Research is not only concerned to revision

of the facts for building up to data knowledge but also discovers

the new facts evolved through the process of dynamic change in

the society.

Research is the manipulation of the things, concept or

symbol for the purpose of generating to extend, correct or verify

knowledge whether that knowledge adds in the construction of

theory or in practice an art.

This section defines the research methodology, which has

been adopted for the purpose of study. It shows the type of

samples, size and procedure used for handling special problems

during the course of study; it includes the description of the

research design, data, collection, research instruments and

sampling.

SOURCE OF DATA:

Data obtained only from primary source. A primary source

itself collects the data. Data collected through the questionnaire.

RESEARCH INSTRUMENTS

Questionnaire has been used to collect the data from the

respondents.

49


50/73

This is far the first common instrument in collecting the

primary data, which has been used for fulfilling our objectives for

obtaining further information.

SIZE OF SAMPLE

The overall sample involved in the study consisted of 50

individuals. Keeping in view the limited sources of time, a limited

sample of individuals from the local area of city of Ludhiana was

picked up.

COLLECTION OF DATA:

The data was collected with the help of questionnaire that

was administrated on 50 individuals from the local areas of the

city of Ludhiana.

LIMITATIONS

Due to time and resource constraints, the study was

conducted within the city of Ludhiana; therefore the survey

might not present a true picture of the respondents

opinions.

The respondents bias must have crept in while filling the

questionnaire.

A sample size of 100 respondents might not be

representative of the universe.

Questionnaire preparation is prone to researchers basis as

well.

50


51/73

OBJECTIVES OF THE STUDY

Comparative analysis of LIC & private insurance companies.

To study the need and benefits involved in taking Life

Insurance.

Investigation of factors influencing upon choice of particular

sector for insurance investment.

51


52/73

CHAPTER 4

DATA ANALYSISAND

INTERPRETATION

52


53/73

DATA ANALYSIS AND INTERPRETATION

Table 1 : Are you aware of the Life insurance Policies

Particulars No. ofrespondents % age ofrespondents

Yes 94 94%No 6 6%

94%

6%

Yes No

INTERPRETATION

It is clear from above table & pie chart that 94% people

have the awareness of life insurance policies and 4% people have

no information of life insurance policies.

53


54/73

Table 2. Do you have a life insurance policy/investmentplan in your name?

Particulars No. of

respondents

% age of

respondents

Yes 86 86%No 14 14%

86%

14%

Yes No

INTERPRETATION

From the analysis it is clear that 86% people have the

investment plan in insurance policies. While 14% people dont

have any plans.

54


55/73

Table 3. Which sector do you prefer?

Particulars No. of

respondents

% age of

respondents

Public Sector 48 48%Private Players 52 52%

48%52%

Yes No

INTERPRETATION

48% people prefer public sector public sector 52% people would

like to go towards private sector.

55


56/73

Table 4: Which Brand provides you Maximum returns?

Particulars No. ofrespondents

% age ofrespondents

LIC 44 44%ICICI 28 28%HDFC 12 12%Aviva 4 4%Others 12 12%

44%

28%

12%

4%

12%

LIC ICICI HDFC Aviva Others

INTERPRETATION

From the pie chart we conclude that LIC provide the

maximum return, 44% people agree to it, 28% agree with ICICI.

AVIVA, HDFC and other banks also provide better return.

56


57/73

Table 5: Which Brand provides you various schemes for

Insurance?

Particulars No. of

respondents

% age of

respondentsLIC 48 48%ICICI 18 18%HDFC 10 10%Aviva 8 8%Others 8 8%Bajaj Allianz 8 8%

48%

18%

10%

8%

8%

8%

LIC ICICI HDFC Aviva Others Bajaj Allianz

INTERPRETATION

From the analysis, we conclude that LIC provide various

scheme of insurance then other banks 48% people agree to it.

18% people believe in ICICI. Whereas 10% vote for HDFC and 8%

think AVIVA as a good bank. 8% considers BAJAJ Allianz as a

better bank. 8% prefer other banks.

57


58/73

Table 6: What is the main problem faced by employees in

selling the policy ?

Particulars No. of

respondents

% age of

respondentsInadequate Information 36 36%Less Commission 32 32%Late Redemption 22 22%Mistake in Punching 10 10%

36%

32%

22%

10%

Inadequate Information Less Commission

Late Redemption Mistake in Punching

INTERPRETATION

From the study we found that 36% people believe that in

adequate information is main reason for selling the policy. Less

commission is consider a reason by 32%. 22% consider late

redemption as a problem and 10% consider mistake in punching

as reason.

58


59/73

Table 7: What is the approximate premium paid by you

annually (in Rupees)?

INTERPRETATION

This has been found by calculating the average value using

arithmetic mean.

An Average is a figure that represents the whole group. It is

a statistical measure representing a group of individual values in

simple and comprehensive manner.

Findings & Analysis: - About Rs. 23100 is the mean premiums

that from the group of 50 respondents pay annually from their

income for the Life Insurance Policy.

59


60/73


61/73

Table 9: How much would you be willing to spend per

annum if you were to go for an insurance plan?

INTERPRETATION

This has been found by calculating the average value using

arithmetic mean.

Findings & Analysis: - About Rs 31410 is the mean premium

that from the group of 50 respondents is willing to pay annually

from their income for the Life Insurance Policy.

61


62/73

Table 10. What is the opinion on the Insurance policy

provided by LIC?

Particulars No. ofrespondent

s

% age ofrespondent

sGood 46 46%Excellent 28 28%Average 22 22%Poor 4 4%

46%

28%

22%

4%

Good Excellent

Average Poor

INTERPRETATION

46% considers insurance policy by LIC as good, 28%

consider it excellent, 22% consider it average, 4% consider it

poor.

62


63/73

Table 11. How you know about the Schemes?

Particulars No. of

respondent

s

% age of

respondent

sAdvisors of Company 48 48%Management Trainees 16 16%Advertisements 30 30%Others 6 6%

48%

16%

30%

6%

Advisors of Company Management Trainees

Advertisements Others

INTERPRETATION

48% believe that advisors of company provide information

about schemes, 30% considers advertisement as a good source

of information of schemes, 16% considers management trainees

as a good medium. 6% considers other sources as source of

information of schemes.

63


64/73

Table 12. What are the factors you consider while

choosing your Insurance plans?

Particulars No. of

respondents

% age of

respondents

Profit 28 28%Liquidity 14 14%Safety 42 42%

Tax benefits 6 6%

28%

14%

42%

6%

Profit Liquidity Safety Tax benefits

INTERPRETATION

28% considers profit as a main factor while choosing

insurance plans, 42% give value to safety while selectinginsurance plan, liquidity is considered by 14% and 6% considers

tax benefits as a main factor.

64


65/73

CHAPTER 5

FINDINGSAND

CONCLUSIONS

65


66/73

FINDINGS AND CONCLUSIONS

94% people have the awareness of life insurance policies

and 4% people have no information of life insurance

policies.

86% people have the investment plan in insurance policies.

While 14% people dont have any plans.

48% people prefer public sector public sector 52% people

would like to go towards private sector.

From the study we conclude that LIC provide the maximum

return, 44% people agree to it, 28% agree with ICICI. AVIVA,

HDFC and other banks also provide better return.

From the analysis, we conclude that LIC provide various

scheme of insurance then other banks 48% people agree to

it. 18% people believe in ICICI. Whereas 10% vote for HDFC

and 8% think AVIVA as a good bank. 8% considers BAJAJ

Allianz as a better bank. 8% prefer other banks.

We found that 36% people believe that in adequate

information is main reason for selling the policy. Less

commission is consider a reason by 32%. 22% consider late

redemption as a problem and 10% consider mistake in

punching as reason.

66


67/73

46% considers insurance policy by LIC as good, 28%

consider it excellent, 22% consider it average, 4% consider

it poor.

48% believe that advisors of company provide information

about schemes, 30% considers advertisement as a good

source of information of schemes, 16% considers

management trainees as a good medium. 6% considers

other sources as source of information of schemes.

28% considers profit as a main factor while choosing

insurance plans, 42% give value to safety while selecting

insurance plan, liquidity is considered by 14% and 6%

considers tax benefits as a main factor.

67


68/73

BIBLIOGRAPHY

68


69/73

BIBLIOGRAPHY

Research Methodology Kothari C.R.2007, Research

Methodology, Techniques and Methods, New Delhi, 2007

www.licindia.com

www.sbilife.co.in

www.hdfcinsurance.com

www.iciciprulife.com

www.irda.org

www.bajajallianz.com

www.aviva.com

69
http://www.licindia.com/http://www.sbilife.co.in/http://www.hdfcinsurance.com/http://www.iciciprulife.com/http://www.irda.org/http://www.bajajallianz.com/http://www.aviva.com/http://www.licindia.com/http://www.sbilife.co.in/http://www.hdfcinsurance.com/http://www.iciciprulife.com/http://www.irda.org/http://www.bajajallianz.com/http://www.aviva.com/


70/73

ANNEXURE

70


71/73

QUESTIONNAIRE

.

Name : _________________________________ Age : ________ Gender :

_______

Occupation : _________________________________ Income :

________________

1. Are you aware of the Life insurance Policies

a) Yes b) No

2. Do you have a life insurance policy/investment plan in

your name?a) Yes b) No

3. Which sector do you prefer?

a) Public Sector b) Private Players

4. Which Brand provides you Maximum returns?

a) LIC b) ICICI

c) HDFC d) Aviva

e) Others

5. Which Brand provides you various schemes for Insurance?

a) LIC b) ICICI

c) HDFC d) Aviva

e) Others f) Bajaj Allianz

6. What is the main problem faced by employees in selling

the policy ?

a) Inadequate Information

b) Less Commission

c) Late Redemption

d) Mistake in Punching

7. What is the approximate premium paid by you annually

(in Rupees)?

71


72/73

a) Rs. 5,000 Rs. 10,000

b) Rs. 10,001 Rs. 15,000

c) Rs. 15,001 Rs. 25,000

d) Rs. 25,001 Rs. 50,000

e) Rs. 50,001 Rs. 60,000

f) Rs. 80,001 Rs. 1,00,000

8. What kind of insurance policy would suit you best in your

current stage of life?

a) Life Insurance

b) Life Insurance and Investment Plans

c) Pension Plans

d) Child Plans

e) Tax saving plans

9. How much would you be willing to spend per annum if

you were to go for an insurance plan?

a) Less than Rs. 6,000

b) Rs. 6,001 Rs. 10,000

c) Rs. 10,001 Rs. 25,000

d) Rs. 25,001 Rs. 50,000 e) Rs. 50,000 Rs. 1,00,000

f) More than Rs. 1,00,000

10. How will you find the concept of life insurance?

a) Very Good b) New Concept

c) Similar to Others d) Will not work

11. What is the opinion on the Insurance policy provided by

LIC

a) Good b) Excellent

c) Average d) Poor

72


73/73

12. How you know about the Schemes?

a) Advisors of Company

b) Management Trainees

c) Advertisements

d) Others

13. What are the factors you consider while choosing your

Insurance plans?

a) Profits b) Liquidity

c) Safety d) Tax Benefits

study the comparative analysis between lic and private companies 1.doc

Documents