vaskar

Comparative study ofs customer preference for life insurance scheme of LIC & BIRLA SUN LIFE.

CONTAIN

1. THE INSURANCE INDUSTRY IN INDIA (AN OVERVIEW)

2. PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA.

3. COMPANY PROFILE

i. BIRLA SUN LIFE INSURANCE COMPANY LIMITED

ii. LIFE INSURANCE CORPORATIONOF INDIA (LIC)

4. COMPARATIVE ANALYSIS

5. RESEARCH METHDOLOGY

6. FACTS &FINDINGS

7. ANALYSIS & INTERPRETATION

8. SWOT ANALYSIS:

9. CONCLUSION

10. RECOMMENDATION

11. APPENDIX

12. BIBLIOGRAPHY

1

THE INSURANCE INDUSTRY IN INDIAs

AN OVERVIEW

HISTORY OF INSURANCE

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu (

Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ). The writings

talk in terms of pooling of resources that could be re-distributed in times of calamities

such as fire, floods, epidemics and famine. This was probably a pre-cursor to modern day

insurance. Ancient Indian history has preserved the earliest traces of insurance in the

form of marine trade loans and carriers’ contracts. Insurance in India has evolved over

time heavily drawing from other countries, England in particular.

1818 saw the advent of life insurance business in India with the establishment of the

Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In

1829, the Madras Equitable had begun transacting life insurance business in the Madras

Presidency. 1870 saw the enactment of the British Insurance Act and in the last three

decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and

Empire of India (1897) were started in the Bombay Residency. This era, however, was

dominated by foreign insurance offices which did good business in India, namely Albert

Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian

offices were up for hard competition from the foreign companies.

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In 1914, the Government of India started publishing returns of Insurance Companies

in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure

to regulate life business. In 1928, the Indian Insurance Companies Act was enacted to

enable the Government to collect statistical information about both life and non-life

business transacted in India by Indian and foreign insurers including provident insurance

societies. In 1938, with a view to protecting the interest of the Insurance public, the

earlier legislation was consolidated and amended by the Insurance Act, 1938 with

comprehensive provisions for effective control over the activities of insurers.

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

were a large number of insurance companies and the level of competition was high.

There were also allegations of unfair trade practices. The Government of India, therefore,

decided to nationalize insurance business.

An Ordinance was issued on 19th January, 1956 nationalizing the Life Insurance sector

and Life Insurance Corporation came into existence in the same year. The LIC absorbed

154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign

insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was

reopened to the private sector.

The history of general insurance dates back to the Industrial Revolution in the west

and the consequent growth of sea-faring trade and commerce in the 17th century. It came

to India as a legacy of British occupation. General Insurance in India has its roots in the

establishment of Triton Insurance Company Ltd., in the year 1850 in Calcutta by the

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British. In 1907, the Indian Mercantile Insurance Ltd, was set up. This was the first

company to transact all classes of general insurance business.

Following the recommendations of the Malhotra Committee report, in 1999, the

Insurance Regulatory and Development Authority (IRDA) was constituted as an

autonomous body to regulate and develop the insurance industry. The IRDA was

incorporated as a statutory body in April, 2000. The key objectives of the IRDA include

promotion of competition so as to enhance customer satisfaction through increased

consumer choice and lower premiums, while ensuring the financial security of the

insurance market.

The IRDA opened up the market in August 2000 with the invitation for application for

registrations. Foreign companies were allowed ownership of up to 26%. The Authority

has the power to frame regulations under Section 114A of the Insurance Act, 1938 and

has from 2000 onwards framed various regulations ranging from registration of

companies for carrying on insurance business to protection of policyholders’ interests.

In December, 2000, the subsidiaries of the General Insurance Corporation of India were

restructured as independent companies and at the same time GIC was converted into a

national re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in

July, 2002.

Some of the important milestones in the life insurance business in India

are:

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

started functioning.

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1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company

started its business.

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.

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 provident societies are taken over by the

central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act,

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

5

LIBERALIZATION OF INSURANCE SECTOR:

Liberalization commitment of the country to help in disciplining future economic policies

will include the insurance reforms. When world over insurance market has been open up,

Indian market cannot remain in isolation. History has shown that it is very difficult for a

country to remain in isolation.

Globalization is the new economic reality, which is here to stay, heralding a new era of

insurance in India.

With the opening of the insurance industry, India stands to gain with the following major

advantages:

Globalization will provide opportunities to the customers.

Better production with more reasonable and affordable prices.

The customer will get better services.

It will enhance the saving rate.

Long term funds for infrastructure development will be available to the country.

It will secure for India larger inflow of foreign capital need to sustain our GDP

growth.

6

WHY INSURANCE IN INDIA:

We live in the information age. People are becoming more aware of the importance of

insurance in their life. However, there is a paradox in the form of a growing need to

educate people to buy insurance.

Today,natural disasters on a large scale occur regularly and even terrorism is increasing

day by day. Specialized software is used in actuarial science to accurately predict life

expectancy and mortality. But natural disasters are difficult to predict.

This has highlighted to the world that insurance is a basic and fundamental need for the

safety and security of the family. Only a larger insurance cover can guarantee a better

future.

However insurance claims for natural disasters are very low. This is because insurance

coverage was too low, and those who really needed insurance had not taken it. There is

the need to push insurance as a social responsibility for those who really need it.

Business and Social Objectives

When LIC was formed in 1956 through the amalgamation of 225 private companies, its

business objectives complemented its social objectives. The main objective is to spread

life insurance to every nook and corner of the country especially rural areas, to socially

7

and economically backward classes and provide them reasonably-priced financial cover

against death.

Other objectives include encouraging people to save for the future by making insurance

linked savings more attractive and secure. The funds created are then utilized and

invested for nation building. The insurance business is conducted with the full realization

that LIC is only a trustee of the insured public and priority is given to meet the needs that

arise due to change in the social and economic environments.

Even today after 50 years, the core value of social commitment has not changed. What

have changed in recent times are customers’ expectations and the environment in which

the life insurance sector operates. This is due to globalization which has opened up the

insurance sector to private players.

Insurance Business in India:

Insurance is a federal subject in India and has a history dating back to 1818. Life and

general insurance in India is still a nascent sector with huge potential for various global

players with the life insurance premiums accounting to 2.5% of the country's GDP while

general insurance premiums to 0.65% of India's GDP.. The Insurance sector in India has

gone through a number of phases and changes, particularly in the recent years when the

Govt. of India in 1999 opened up the insurance sector by allowing private companies to

solicit insurance and also allowing FDI up to 26%. Ever since, the Indian insurance sector

is considered as a booming market with every other global insurance company wanting to

have a lion's share. Currently, the largest life insurance company in India is still owned

by the government.

8

http://en.wikipedia.org/wiki/FDI

http://en.wikipedia.org/wiki/India

http://en.wikipedia.org/wiki/Insurance

A well-developed and evolved insurance sector is needed for economic development

as it provides long term funds for infrastructure development and at the same time

strengthens the risk taking ability.

Insurance Sector Reforms

In 1993, Malhotra Committee- headed by former Finance Secretary and RBI Governor

R.N. Malhotra- was formed to evaluate the Indian insurance industry and recommend its

future direction. The Malhotra committee was set up with the objective of

complementing the reforms initiated in the financial sector. The reforms were aimed at

creating a more efficient and competitive financial system suitable for the requirements

of the economy keeping in mind the structural changes currently underway and

recognizing that insurance is an important part of the overall financial system where it

was necessary to address the need for similar reforms.

The Government of India liberalized the insurance sector in March 2000 with the passage

of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry

restrictions for private players and allowing foreign players to enter the market with some

limits on direct foreign ownership. Under the current guidelines, there is a 26 percent

equity cap for foreign partners in an insurance company. The opening up of the sector is

likely to lead to greater spread and deepening of insurance in India and this may also

include restructuring and revitalizing of the public sector companies. In the private sector

15 life insurance and 11 general insurance companies have been registered. A host of

9

private Insurance companies operating in both life and non-life segments have started

selling their insurance policies since 2001.

Insurance companies in India:

IRDA has so far granted registration to 12 private life insurance companies and 9 general

insurance companies. If the existing public sector insurance companies are included,

there are currently 13 insurance companies in the life side and 13 companies operating in

general insurance business.Particulars of the life insurance companies and general

insurance companies including their web address is given below:

LIFE INSURERS WebsitesPublic Sector

Life Insurance Corporation of India www.licindia.comPrivate Sector

Allianz Bajaj Life Insurance Company Limited www.allianzbajaj.co.in Birla Sun-Life Insurance Company Limited www.birlasunlife.comHDFC Standard Life Insurance Co. Limited www.hdfcinsurance.comICICI Prudential Life Insurance Co. Limited www.iciciprulife.comING Vysya Life Insurance Company Limited www.ingvysayalife.comMax New York Life Insurance Co. Limited www.maxnewyorklife.comMetLife Insurance Company Limited www.metlife.comOm Kotak Mahindra Life Insurance Co. Ltd. www.omkotakmahnidra.comSBI Life Insurance Company Limited www.sbilife.co.inTATA AIG Life Insurance Company Limited www.tata-aig.comAMP Sanmar Assurance Company Limited www.ampsanmar.comDabur CGU Life Insurance Co. Pvt. Limited www.avivaindia.com

GENERAL INSURERSPublic Sector

National Insurance Company Limited www.nationalinsuranceindia.comNew India Assurance Company Limited www.niacl.comOriental Insurance Company Limited www.orientalinsurance.nic.inUnited India Insurance Company Limited www.uiic.co.in

Private SectorBajaj Allianz General Insurance Co. Limited www.bajajallianz.co.inICICI Lombard General Insurance Co. Ltd. www.icicilombard.comIFFCO-Tokio General Insurance Co. Ltd. www.itgi.co.in

10

http://www.itgi.co.in/

http://www.uiic.co.in/

http://www.niacl.com/

http://www.tata-aig.com/

http://www.sbilife.co.in/

http://www.metlife.com/

http://www.licindia.com/

Reliance General Insurance Co. Limited www.ril.comRoyal Sundaram Alliance Insurance Co. Ltd. www.royalsun.comTATA AIG General Insurance Co. Limited www.tata-aig.comCholamandalam General Insurance Co. Ltd. www.cholainsurance.comExport Credit Guarantee Corporation www.ecgcindia.comHDFC Chubb General Insurance Co. Ltd.

REINSURERGeneral Insurance Corporation of India www.gicindia.com

Indian Insurance Industry: New Avenues for Growth 2012

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.

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.

Though, the existing rule says that a foreign partner can hold 26% equity in an insurance

company, a proposal to increase this limit to 49% is pending with the government. Since

opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have

poured into the Indian market and 21 private companies have been granted licenses.

Innovative products, smart marketing, and aggressive distribution have enabled fledgling

11

http://www.gicindia.com/

http://www.ecgcindia.com/

http://www.tata-aig.com/

http://www.royalsun.com/

http://www.ril.com/

private insurance companies to sign up Indian customers faster than anyone expected.

Indians, who had always seen life insurance as a tax saving device, are now suddenly

turning to the private sector and snapping up the new innovative products on offer.

The life insurance industry in India grew by an impressive 36%, with premium income

from new business at Rs. 253.43 billion during the fiscal year 2004-2005, braving stiff

competition from private insurers. This report, “Indian Insurance Industry: New Avenues

for Growth 2012”, finds that 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

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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 and tabular format for ease of interpretation and analysis.

This report also provides company profiles of the major private insurance companies.

As per a recent report “INDIAN INSURANCE INDUSRTY FORECAST” ( 2007-09)

published by RNCOS, it has been found that “ life insurance market in India will likely

reach around Rs. 1683 billion by the year 2009. Changing consumer demography and

natural calamities occurring from time to time will remain the key contributors in this

growth.

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PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN

INDIA:

The life insurance industry in India grew by an impressive 47.38%, with premium

income at Rs. 1560.41 billion during the fiscal year 2006-2007. Though the total volume

of LIC's business increased in the last fiscal year (2006-2007) compared to the previous

one, its market share came down from 85.75% to 81.91%.

The 17 private insurers increased their market share from about 15% to about 19% in a

year's time. The figures for the first two months of the fiscal year 2007-08 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.

With the opening up of the insurance industry in India many foreign players have entered

the market. The restriction on these companies is that they are not allowed to have more

than a 26% stake in a company’s ownership.

Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7

billion have poured into the Indian market and 19 private life insurance companies have

been granted licenses.

14

Innovative products, smart marketing, and aggressive distribution have enabled fledgling

private insurance companies to sign up Indian customers faster than anyone expected.

Indians, who had always seen life insurance as a tax saving device, are now suddenly

turning to the private sector and snapping up the new innovative products on offer. Some

of these products include investment plans with insurance and good returns (unit linked

plans), multi – purpose insurance plans, pension plans, child plans and money back plans.

KEY PLAYERS IN INDIAN LIFE INSURANCE INDUSTRY:

LIFE INSURANCE CORPORATION OF INDIA:

The Life Insurance Corporation of India was formed after the merger of 229 life

insurance companies operating in India in 1956 after the life insurance nationalization bill

was passed and all private life insurance companies taken over. The company was

initially capitalized at Rs. 5 crores and is fully owned by the govenrnment of India. The

company has been a role player in the field for around 45 years.

ING. VYSYA LIFE INSDURANCE:

The Company is a joint venture between ING group, the largest life insurance group in

the world, the VYSYA bank limited, a south India based bank with 70 years of

experience in banking and GMR group reputed name in the field of manufacturing,

power generation and infrastructure.

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OM KOTAK MAHINDRA LIFE INSURANCE:

Kotak Mahindra is one of India’s premier financial services group, with a range of over

2 dozen highly specialized products and services spread over a number of companies and

with the client list that spans more then 500 Indian and international firms. Old Mutual

plc. is a leading financial services Provider in the world, providing a broad range of

financial services in the area of insurance, asset management and banking. It is a leading

life insurance in South Africa with more than 30% market share .The partnership with

Old Mutual plc.

HDFC STANDARD LIFE:

The Company is a joint venture between HDFC, India’s largest housing finance

company and Standard Life of U.K. HDFC is a majority stake holder with around 81%

share holding with Standard Life

BIRLA SUN LIFE:

Aditya Birla Group Is India’s second largest business house, with a turnover of over

$4.75bn and an asset base of 43.8bn. The group is a well diversified conglomerate with

72,000 strong workforce spanning 40 companies across 17 countries. Sun life is the

largest insurer of Canada with asset under management of over $200bn.

AVIVA:

16

Aviva plc is the largest life and general insurance group of UK and worlds seventh

largest insurer with world wide premium income and retail investment sales of $28bn and

more than $200bn in asset under management. Its partner DABUR is one of India’s

oldest and largest groups of companies with interests in aurvedic specialist,

pharmaceuticals, and personal care and health care products.

TATA-AIG:

The Company is a joint venture between TATA’s of India, the most respected industrial

group of India and AIG of US with asset under management of over $300bn and

operating in 130 countries across the world.

MET LIFE:

It is a joint venture between Met Life International Holding inc., The Jammu & Kashmir

bank and M.Pallonji co. pvt. Ltd. the resultant entity has developed and distributes a

range of life insurance products in India.

Reliance Life Insurance:

It offers you products that fulfill your savings and protection needs. Our aim is to emerge

as a transnational Life Insurer of global scale and standard.

Reliance Life Insurance is an associate company of Reliance Capital Ltd., a part of

Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one of India’s leading

17

private sector financial services companies, and ranks among the top 3 private sector

financial services and banking companies.

Life insurance industry

Life insurance may be defined as a plan under which large groups of individuals can

equalize the burden of loss from death by distributing funds to the beneficiaries of those

who die. From the individual standpoint life insurance is a means by which an estate

may be created immediately for one's heirs and dependents. It has achieved its greatest

acceptance in Canada, the United States, Belgium, South Korea, Australia, Ireland, New

Zealand, The Netherlands, and Japan, countries in which the face value of life insurance

policies in force generally exceeds the national income.

In the United States in 1990 nearly $9.4 trillion of life insurance was in force. The assets

of the more than 2,200 U.S. life insurance companies totaled nearly $1.4 trillion, making

life insurance one of the largest savings institutions in the United States. Much the same

is true of other wealthy countries, in which life insurance has become a major channel of

saving and investment, with important consequences for the national economy.

Life insurance is relatively little used in poor countries, although its acceptance has been

increasing.

Additional benefits of Life Insurance:

Disability benefits:

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Death is not the only hazard that is insured; many policies also include disability benefits.

Typically, these provide for waiver of future premiums and payments of monthly

installments spread over certain time period.

Accidental death benefits: -

Many policies can also provide for an extra sum to be paid (typically equal to the sum

assured) if death occurs as a result of accident.

Tax relief: -

Under the Indian income, tax act, the following tax relief is available

a)Under section 88: - 20% of the premium paid can be deducted from your total income

tax liabilities

b)Under section 80(ccc): - 100%of the premium paid is deductible from your total

taxable income

Types of life insurance:

The following types of plans are available, in general: -

Term life

Whole life insurance

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Endowment type plans

Combination of whole life and endowment type plans

Children assurance plans

Annuity and pension plans

Term life insurance:

In the case of term life insurance contract, the sum assured is payable only in the event of

death during the term. In the case of survival. The contract comes to an end at the end of

this case of term life insurance contract, the sum assured is payable only in the event of

death during the term. In the case of survival. The contract comes to an end at the end of

The term. There is no refund of the premium. These policies are non-participating. Since

only death risk is covered, the premium is low and the contract is simple.

Whole life insurance:

The risk is covered for the entire life of the policyholder. That is why, they are known as

whole life policies. The policies money and bonus are payable only to the nominee or the

beneficiary upon the death of the policyholder.

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Endowment types of plans:

Endowment policies cover the risk for a specified period at the end of which, the sum

assured paid back to policyholder, along with the entire bonus accumulated during the

term of the policy.

Children’s assurance plans:

Children deferred assurance plans provide risk cover on life of the child after it had

attained an age of 18 years.

Annuities and pension plans:-

contract. An annuity is just reverse of the life insurance principle. When a person

purchases a life insurance contract, he agrees to make a series of payments (premium) to

the insurer and, in return, the insurer agrees to pay a specified sum to the beneficiaries

Benefits of General Insurance:

Non-life insurance or general insurance is also lucrative, as its scope of operations is

wide by definition. In practice, however, general insurance premium has been lower than

life insurance. In 1993, total life premium income in India was US $ 3.2 billion while

general insurance premium US $ 1.5 billion. General Insurance premium as a percentage

of GDP was a mere 0.5% in 1994. Clearly, there is ample scope for development of

general insurance in India. However, its market is smaller in comparison with the huge

market for life insurance in this country.

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The history of general Insurance would appear to date back to the Industrial Revolution

in the west and the consequent growth of sea-faring trade and commerce in the 17 th

century. It came to India as a legacy of British occupation. British and other foreign

Insurance companies through their agencies in India transacted this business.

Management of Non-Life insurers was taken over by the Central government in 1971 as a

prelude to nationalization. General Insurance business was nationalized with effect from

1.1.1973 by the General Insurance Business (Nationalization) Act, 1972.

Prior to 1973, general insurance was urban-centric, catering mainly to the needs of

organized trade and Industry. One hundred and seven insurers including branches of

foreign companies operating the country were amalgamated. These were grouped into

four companies, viz. the National Insurance Company Ltd., the Oriental Insurance

Company Ltd., the New India Assurance Company Ltd., and the United India Insurance

Company Ltd. with head offices at Calcutta, New Delhi, Bombay and Madras

respectively. GIC was incorporated as a company in 1972 and it commenced business on

January 1st 1973. The Government of India subscribed to the capital of GIC. GIC, in turn,

subscribed to the capital of the four companies. All the four companies are government

companies registered under the Companies Act.

GIC and its subsidiaries have representation either directly or through branches in 18

countries and through associate/ locally incorporated subsidiaries in 14 other countries. A

subsidiary company of GIC India International Pvt. Ltd. is operating in Singapore and

their joint venture company, Kenindia Assurance Company Ltd. in Kenya. On the whole,

the foreign operations of the general insurance industry have been profitable.

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GIC was designated as the Indian reinsurer under the Insurance Act, to which all the

domestic insurers were obliged to cede 20% of gross direct premium in India. In order to

ensure maximum retention in the country and to secure the best terms from foreign

reinsurers, GIC and its subsidiaries have a common program for reinsurance cessions.

Over the years the Indian Insurance market has done well in achieving the objective of

increasing market retention consistent with safety

PURPOSE, NEED OF THE LIFE INSURANCE:

Life insurance as "Investment"

Insurance is an attractive option for investment. While most people recognize the risk

hedging and tax saving potential of insurance, many are not aware of its advantages as an

investment option as well. Insurance products yield more compared to regular investment

options, and this is besides the added incentives (read bonuses) offered by insurers.

You cannot compare an insurance product with other investment schemes for the simple

reason that it offers financial protection from risks, something that is missing in non-

insurance products. In fact, the premium you pay for an insurance policy is an investment

against risk. Thus, before comparing with other schemes, you must accept that a part of

the total amount invested in life insurance goes towards providing for the risk cover,

while the rest is used for savings. In life insurance, unlike Non-life products, you get

maturity benefits on survival at the end of the term. In other words, if you take a life

insurance policy for 20 years and survive the term, the amount invested as premium in

23

the policy will come back to you with added returns. In the unfortunate event of death

within the tenure of the policy, the family of the deceased will receive the sum assured.

Now, let us compare insurance as an investment options. If you invest Rs 10,000 in PPF,

your money grows to Rs 10,950 at 9.5 per cent interest over a year. But in this case, the

access to your funds will be limited. One can withdraw 50 per cent of the initial deposit

only after 4 years.

The same amount of Rs 10,000 can give you an insurance cover of up to approximately

Rs 5-12 lakh (depending upon the plan, age and medical condition of the life insured, etc)

and this amount can become immediately available to the nominee of the policyholder on

death. Thus insurance is a unique investment avenue that delivers sound returns in

addition to protection.

Life insurance as "Risk cover"

First and foremost, insurance is about risk cover and protection - financial protection, to

be more precise - to help outlast life's unpredictable losses. Designed to safeguard against

losses suffered on account of any unforeseen event, insurance provides you with that

unique sense of security that no other form of investment provides. By buying life

insurance, you buy peace of mind and are prepared to face any financial demand that

would hit the family in case of an untimely demise.

Insurance also provides a safeguard in the case of accidents or a drop in income after

retirement. An accident or disability- can be devastating, and an insurance policy can

lend timely support to the family in such times. It also comes as a great help when you

retire, in case no untoward incident happens during the term of the policy.

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With the entry of private sector players in insurance, you have a wide range of products

and services to choose from. Further, many of these can be further customized to fit

individual/group specific needs. Considering the amount you have to pay now, it's worth

buying some extra sleep.

Life insurance as "Tax planning"

Insurance serves as an excellent tax saving mechanism too. The Government of India has

offered tax incentives to life insurance products in order to facilitate the flow of funds

into productive assets. Under Section 88 of Income Tax Act 196 I, an individual is

entitled to a rebate of 20 per cent on the annual premium payable on his/her life and life

of his/her children or adult children. The rebate is deductible from tax payable by the

individual or a Hindu Undivided Family. This rebate is can be availed up to a maximum

of Rs 12,000 on payment of yearly premium of Rs 60,000. By paying Rs 60,000 a year,

you can buy anything upwards of Rs 10 lakhs of sum assured. (Depending upon the age

of the insured and term of the policy).

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COMPANY PROFILE

LIFE INSURANCE CORPORATIONOF INDIA (LIC):

Introduction

LIC has an excellent money back policy which provides for periodic payments of partial

survival benefits as long as the policy holder is alive. 20% of the sum assured is payable

after 5, 10, 15 and 20 years and the balance 40% is payable at the 20 th year along with

accrued bonus. (www.lic.com)

26

For a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20

years and the balance 40% plus the accrued bonus becomes payable at the 25th year.

An important feature of these types of policies is that in the event of the death of the

policy holder at any time within the policy term the death claim comprises of full sum

assured without deducting any of the survival benefit amounts which have already been

paid. The bonus is also calculated on the full sum assured. HDFC SLIC does not have a

money back policy. It could offer a money back plan and capture some portion of this

market. While marketing insurance products I found that many customers wanted to

purchase these plans.

LIC offers 66 different plans; plans are formulated for specific occasions – whole life

plans, term assurance plans, money back plan for women, child plans, plans for the

handicapped individuals, endowment assurance plans, plans for high worth individuals,

pension plans, unit linked plans, special plans, social security schemes – diversified

portfolio of products. HDFC SLIC could diversify its product portfolio. It could add more

plans for high worth individuals and women.

Objective 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.

27

Bear in mind, in the investment of funds, the primary obligation to its

policyholders, whose money it holds in trust, without losing sight of the interest of

the community as a whole; the funds to be deployed to the best advantage of the

investors as well as the community as a whole, keeping in view national priorities

and obligations of attractive return.

Conduct business with utmost economy and with the full realization that the

moneys belong to the policyholders.

Act as trustees of the insured public in their individual and collective capacities.

Meet the various life insurance needs of the community that would arise in the

changing social and economic environment.

Involve all people working in the Corporation to the best of their capability in

furthering the interests of the insured public by providing efficient service with

courtesy.

Promote amongst all agents and employees of the Corporation a sense of

participation, pride and job satisfaction through discharge of their duties with

dedication towards achievement of Corporate Objective

Mission/vision:

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."

28

Vision

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

Pride of India."

Board of director:

Shri. T.S. Vijayan (Chairman)

Shri. D.K. Mehrotra (Managing Director - LIC)

Shri. Thomas Mathew T. (Managing Director - LIC)

Shri. A.K. Dasgupta (Managing Director - LIC)

Shri. Arun Ramanathan (Finance Secretary & Secretary (Financial Services),

Department of Financial Services, Ministry of Finance, Govt. of India)

Smt. Sindhushree Khullar (Secretary, Sport and Youth Affairs , Ministry of Sports

and Youth Affairs , Govt. of India)

Shri. Yogesh Lohiya (Chairman cum Managing Director, GIC of India)

Shri. T.C. Venkat Subramanian (Chairman & Managing Director. Export Import

Bank of India)

Information technology and lic:

29

LIC has been one of the pioneering organizations in India who introduced the leverage of

Information Technology in servicing and in their business. Data pertaining to almost 10

crore policies is being held on computers in LIC. We have gone in for relevant and

appropriate technology over the year 1964 saw the introduction of computers in LIC. Unit

Record Machines introduced in late 1950’s were phased out in 1980’s and replaced by

Microprocessors based computers in Branch and Divisional Offices for Back Office

Computerization.Standardization of Hardware and Software commenced in 1990’s.

Standard Computer Packages were developed and implemented for Ordinary and Salary

Savings Scheme (SSS) Policies .

FRONT END OPERATIONS:

With a view to enhancing customer responsiveness and services , in July 1995, LIC

started a drive of On Line Service to Policyholders and Agents through Computer. This on

line service enabled policyholders to receive immediate policy status report, prompt

acceptance of their premium and get Revival Quotation, Loan Quotation on demand.

Incorporating change of address can be done on line. Quicker completion of proposals

and dispatch of policy documents have become a reality. All our 2048 branches across the

country have been covered under front-end operations. Thus all our 100 divisional offices

have achieved the distinction of 100% branch computerization. New payment related

Modules pertaining to both ordinary & SSS policies have been added to the Front End

Package catering to Loan, Claims and Development Officers’ Appraisal. All these modules

help to reduce time-lag and ensure accuracy.

METRO AREA NETWORK

A Metropolitan Area Network, connecting 74 branches in Mumbai was commissioned in

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November, 1997, enabling policyholders in Mumbai to pay their Premium or get their

Status Report, Surrender Value Quotation, Loan Quotation etc. from ANY Branch in the

city. The System has been working successfully. More than 10,000 transactions are

carried out over this Network on any given working day. Such Networks have been

implemented in other cities also.

WIDE AREA NETWORK

All 7 Zonal Offices and all the MAN centers are connected through a Wide Area Network

(WAN). This will enable a customer to view his policy data and pay premium from any

branch of any MAN city. As at November 2005, we have 91 centers in India with more

than 2035 branches networked under WAN

.

INTERACTIVE VOICE RESPONSE SYSTEMS (IVRS)

IVRS has already been made functional in 59 centers all over the country. This would

enable customers to ring up LIC and receive information (e.g. next premium due, Status,

Loan Amount, Maturity payment due, Accumulated Bonus etc.) about their policies on

the telephone. This information could also be faxed on demand to the customer.

LIC ON THE INTERNET

Our Internet site is an information bank. We have displayed information about LIC & its

offices . Efforts are on to upgrade our web site to make it dynamic and interactive.The

31

addresses/e-mail Ids of ur Zonal Offices, Zonal Training Centers, Management

Development Center, Overseas Branches, Divisional Offices and also all Branch Offices

with a view to speed up the communication process

.

PAYMENT OF PREMIUM AND POLICY STATUS ON INTERNET

LIC has given its policyholders a unique facility to pay premiums through Internet

absolutely free and also view their policy details on Internet premium payments.There

are 11 service providers with whom L I C has signed the agreement to provide this

service.

INFORMATION KIOSKS

We have set up 150 Interactive Touch screen based Multimedia KIOSKS in prime

locations in metros and some major cities for dissemination information to general public

on our products and services.

INFO CENTRES

We have also set up 8 call centres, manned by skilled employees to provide you with

information about our Products, Policy Services, Branch addresses and other

organizational information .

Awards:

32

Golden Peacock Innovative Product / Service Award - 2009

Loyalty Awards - 2009

Readers Digest Trusted Brand Award 2008 in the Platinum category.

CNBC Awaaz Consumer Awards 2008

NDTV Profit Business Leadership Award 2008

INDY's Silver Award for Best Corporate Film

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INDY's Silver Award for Best in House Magazine

IT USER 2008 NASCOM

Business Superbrand India 2008 ASIA BRAND CONGRESS BRAND LEADERSHIP AWARD 2008

Pitch Award -" Rank 1 " India's Top 50 service Brands

SKOCH Challengers Award 2008 for Jeevan Madhur

34

Products Offered by LIC

1. Children policy:

What is children policy?

Children's insurance includes policies through which parents or legal guardians can

provide for life insurance for their child from birth. The risk cover commences from the

child attaining the age of 12 / 17 / 18 / 21 (known as the Date of Risk), and will vest itself

on the child upon his or her attaining majority on completion of age 21, if the case

demands so.

How is it beneficial to me?

Children’s policies are designed to enable a parent or a legal guardian of the child to

provide insurance cover for the child. With such policies, you as a parent will need to pay

the premium for your child’s policy depending on the plan and the term till your child

attains majority. The risk cover on your child could start from 7 yrs, 12, 18 or 21 years of

age depending on the plan taken.

Who should buy this plan?

Those, who plan to provide their child with life insurance cover for a future date when he

turns a major, can take children’s policies. The policy envisages two stages, one covering

the period from the date of commencement of policy to the deferred date that is the

commencement of the risk. No loans are granted against this policy during the deferment

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period and no risk of death is covered until the child attains the prescribed age as per the

policy document.

Types of children policy:

Komal Jeevan - Plan No. 159

Children Deferred - Plan No.41

Jeevan Kishore - Plan No.102

Jeevan Chhaya - Plan No.103

Marriage Endowment/Educational Annuity - Plan No. 90

Jeevan Anurag - Plan No.168

Komal jevan - plan no. 159

Features:Under this children’s plan, the payment of premium ceases on policy anniversary

immediately after the child attains 18 years of age. The plan, besides offering risk cover,

also offers payment of Sum Assured in installments at age 18, 20, 22, 24 and

Guaranteed and Loyalty additions, if any, at 26 years of age.

Benefits:

The Sum Assured under this plan will be paid in installments at periodic intervals

provided the policy is in force for full sum assured as under:

20 percent of the Sum Assured on the policy anniversary immediately after the Life

Assured attains the age of 18 years.

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Death Benefits:

In the event of unfortunate death during the term, after the commencement of risk but

before policy matures, the Sum Assured together with Guaranteed Additions is payable

without any deduction or adjustment for the amount that may have been paid earlier by

way of installment benefits.

Min Max

Entry Age 0 10

Sum Assured 100000 25,00,000

Term Not Applicable 50

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Mode of Payment Max Maturity Age Policy loan available

Single, Yrly, Half-yly,

Qtly, Salary Savings

Scheme.

26 Years No

Children deferred - plan no. 14:

Features:

This plan of assurance is designed to enable a parent or a legal guardian or any near

relative of the child to provide for the child, by payment of a very low rate of premium,

the risk under which will commence at a selected age.

Benefits-:

The policy will participate in profits from the date of commencement of risk at rates

applicable to Endowment Assurance. The life to be assured for which policy will have to

undergo full medical examination. The policy shall automatically vest in the life assured

as soon as he/ she attains majority. At the request of the proposer, the premium waiver

benefit is available under this plan. Additional premium required for this benefit will be as

per the table applicable to C.D.A plan except that the deferment period should be taken

as the period equal to 18 minus age at entry.

Death Benefits:

If the life assured dies the policy shall stand cancelled before the deferred date, and in

such event provided the policy is then in full force or in force for a reduced cash option, a

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sum of money equal to all the premiums paid without any deduction whatsoever will

become payable to the person entitled to the policy moneys. It should be noted that

payment of premium does not cease on the death of the proposer during the deferment

period but must be continued during the currency of the policy.

Min

Max

Entry Age 0 17

Sum Assured 50000 No limit

Term 25 50


Mnthly, Qtly, Hlf Yly,Yly, SSS 65 years No

Jeevan kishore - plan no. 102:

Features:

High bonus from day one.

Child becomes owner of the policy automatically at the age of 18 years.

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Risk commences after 2 years of policy or on completion of 7 years of age,

whichever is later.

No medical examination of the child if age is less than 10 years.

Jeevan chhaya- plan no .103:

Features:

Ideal for parents having less than a year old child.

Makes provision for education/ marriage of the child.

Extra benefit of waiver of premium in case of death of the policy holder.

Benefits-

Short term needs like family provision in case of premature death of the policyholder

and long term needs like education and marriage of dependents are simultaneously

fulfilled by this policy. This Policy is the right choice if a person wants to provide for the

marriage of his daughter. The term can be fixed so as to receive the maturity benefit at

the marriageable age of the daughter. Example, If the policy is for 20 years then At the

end of 17th year - 25% of Sum assured is payable provided the policy is force. At the

end of 18th year - 25% of Sum assured is payable provided the policy is force. At the

end of 19th year - 25% of Sum assured is payable provided the policy is force.

Death Benefits

Natural:

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Besides the fixed benefits, an additional amount equal to the Sum assured will be paid

on the death of the policy holder. Future premiums, falling due from the policy

anniversary following the date of death will stand waived.

Accidental:

Payment of double the Sum assured + Fixed Benefit. Future premiums falling due from

the policy anniversary following the date of death will stand waived.

Min Max

Entry Age 18 40 (Nearer Birthday)


Term 18 25


Yly, Hlf-Yly, Qtly, Mthly,

SSS

65 (Nearer Birthday) No

Marriage/ Endowment annuity- plan no. 90:Feature:

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The Marriage Endowment/ Educational annuity plan provides a sum assured to be kept

aside for the expenses of marriage or higher education of the policyholder's children.

Premiums payable for selected term or till death of the life Assured. Benefits will be

given only after the selected term.

Benefits: (Sum Assured + Bonus) payable in lump sum. Or (Sum Assured + Bonus) payable in 10

half-yearly installments at the option of the life assured.

Death Benefits: (Sum Assured + Bonus) payable in lump sum or in 10 half-yearly installments at the

option of beneficiary.

Accident: Accident benefit equivalent to basic sum assured would be available by paying

appropriate additional premiums in that behalf. An amount equivalent to Sum Assured

become payable immediately.

Min Max

Entry Age 18 (last birthday) 60


Term 5 25

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Mnthly, Qtly, Hlf Yly,Yly,

SSS

70 years Yes

Jeevan anurag- plan no. 168:

Features:

LIC’s Jeevan Anurag Plan is a with profits plan under which benefits are payable at pre

specified durations irrespective of whether the Life Assured survives to the end of the

policyterm or dies during the term of the policy. In addition, the plan provides for an

immediate payment of Sum Assured under the Basic Plan on death of the Life Assured

during the term of the policy. This plan is therefore suitable to take care of the

educational and other needs of children.

Benefits:

Assured Benefits

Provided policy is in full force, an amount equal to 20% of the Sum Assured under the

Basic Plan at the start of every year during last 3 policy years before maturity shall be

payable. At maturity, 40% of the Sum Assured under the Basic Plan along with

Reversionary Bonuses declared from time to time for the full term and the Terminal

Bonus, if any, shall be payable.

Death Benefits

An amount equal to the Sum Assured under the Basic plan shall be payable immediately

on the death of the life assured during the term of the policy, provided the policy is in full

force.

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Min Max

Entry Age 20 60


Term 5 yrs for Single Premium

10 yrs for Regular Premium.25

2. Endowment Policy:

What Is Endowment Policy?

Endowment policies cover the risk for a specified period at the end of which the sum

assured is paid back to the policyholder along with the entire bonus accumulated during

the term of the policy. It is this feature - the payment of the endowment to the

policyholder upon the completion of the policy’s term - which rightly accounts for the

popularity of endowment policies.


As compared to whole life policies, the premium rates for endowment policies are higher

and the bonus rates lower. The cost of an endowment policy is, typically, double that of a

whole life one. On the plus side, these polices offer you an endowment - representing a

return on your premium payments payable to you in your own lifetime when the policy

comes to an end.

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Who should buy this Plan?

Overall, endowment policies are the most suitable of all insurance plans for covering the

risks to a family breadwinner’s life. Not only do these policies provide financial risk cover

for the family, were the policy holder to die prematurely but the insurance amount is also

repaid once this risk is over. The endowment amount can then be used for meeting

major expenditures such as children’s education and marriage, etc.

Types of endowment policy:

Endowment with Profits - Plan no.14

Limited Payment Endowment with Profits - Plan no.48

Jeevan Mitra - Plan no.88

New JanaRaksha Policy - Plan no.91

Jeevan Anand Plan no. 149

Jeevan Mitra Triple Cover - Plan no.133

Endowment with profits - plan no. 14:

Features

Moderate Premiums

High bonus

High liquidity

Savings oriented

This policy not only makes provisions for the family of the Life Assured in event of his

early death but also assures a lump sum at a desired age. The lump sum can be

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reinvested to provide an annuity during the remainder of his life or in any other way

considered suitable at that time.

Benefits:

Survival Benefits: Payment of full Sum Assured + Vested Bonus + Final Additional

bonus.

Death Benefits: Payment of full sum assured + Vested bonus.

Min Max

Entry Age 12 65


Term 5 55

Limited payment endowment with profits plan no. 48:

Features:

Just as in the case of limited payment whole life polices, here, too, the payment of

premium can be limited either to a single payment or to a term shorter than the policy.

The endowment is, however, payable only at the end of the policy term, or upon death of

the policy holder if it takes place earlier.

Benefits:

46

Death Benefits

This is the most popular form of life assurance since it not only makes provision for the

family of the Life Assured in the event of his early death, but also assures a lump sum at

any desired age. The amount assured, if not paid by reason of his earlier death,

becomes payable at the end of the endowment term when it may be invested to provide

an annuity during the remainder of his life or in any other way he may think most suitable

at the time.

Min Max

Entry Age 12 65


Term 5 50

Jeevan mitra - plan no 88:Features:

The benefits of this policy are considered normally for standard and substandard lives

Class I and II. It cannot be allowed for people engaged in hazardous occupations.

Female lives under Category I & II allowed. Non-medical special is allowed only if the

Sum Assured does not exceed Rs.1, 00,000/-

Benefits:

Survival Benefits

Sum Assured + vested Bonus on the basic Sum Assured

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Death Benefits

Double the Sum Assured + vested Bonuses on the basic Sum Assured O Double

Accident benefits, if taken and paid for will treble the amount of Sum Assured

.

Min Max

Entry Age 18 50


Term 15 30


Yly, Hlf Yly, Qtly, Mnthly,

SSS70 Years Yes

New janaraksha policies - plan no. 91:

Features:

Ideal for Farmers and Workers, since farmers have to depend on the vagaries of the

climate while workers are subject to changes in trade cycles, depressions, strikes, labor

disputes, etc Provides full life insurance cover for 3 years even when the premiums are

not paid. (This benefit is available after at least 2 years premiums are paid). Non-medical

General up to Rs.100, 000/- with declaration of age up to 40 without any extra premium.

48

On-medical Special is allowed up to a limit of Rs.2,00,000/- Accident benefit available

without payment of any extra premium.

Benefits:

Policy loan: Available.

Maturity Benefit

Payment of Sum Assured + Accrued bonus.

Death Benefits

Natural

Payment of Sum assured + Accrued bonus.

Accident/Permanent Disability

Payment of double the Sum Assured + Accrued bonuses on the Sum Assured as

defined on the policy document.

Income-tax rebate

Under section 88 on premiums paid.

100% income-tax free

Permanent disability, Maturity and Death Claims.

Min Max

Entry Age 18 50

Sum Assured (Medical Scheme) 30000 10,00,000

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Sum Assured (Non-medical

(General)

30000 Rs 1,00,000

Sum Assured (Non-Medical

(Special) )

30000 Rs 2,00,000

Term 12 30


Yly, Hlf Yly, Qtly, Mnthly, SSS 70 Yes

Jeevan Andan plan no 149:

Features:

Jeevan Anand is a With Profit Assurance Plan. It is a combination of the Whole Life Plan

and the most popular Endowment Assurance Plan. The plan provides the pre-decided

Sum Assured and Bonuses at the end of the stipulated premium paying term, but the

risk cover on the life continues till death.

Benefits:

Accident Benefit

The double Accident Benefit is available during the premium paying term and thereafter

up to age 70. The premium for this has been built into the tabular premium rates.

50

Maximum Accident Cover available under this plan will be Rs 5 lakh (this limit excludes

accident benefit taken under other plans).

Death Benefits

Sum Assured along with vested bonuses are payable on death during the premium

paying term and policy ceases. An amount equal to the Sum Assured is payable if death

occurs after the premium paying term. Simple Reversionary Bonus accrues during the

premium paying term and is payable at the end of the premium paying term or on earlier

death along with Final Additional Bonus, if any. No Bonus is paid on death after the

premium paying term.

Min Max

Entry Age 18 65

Sum Assured 1,00,000 No limit

Term 5 57


Yly, Hlf Yly, Qtly, Mnthly,

SSS

75 Yes

Jeevan mitra triple cover plan - no. 133:

51

Features:

The benefits of this policy can be considered only for standard and substandard lives

Class I and II. It cannot be allowed for people engaged in hazardous occupations.

Individuals engaged in dangerous pursuits will be rated against the revised tabular

occupational extra rates.

Benefits:

Death Benefit

Three times the basic sum assured together with vested bonuses if any, will be payable

on death of the life assured during the term of assurance.

Accident Benefit

Accident Benefit equivalent to the basic sum assured would also be available as pre

existing rules. This would however, be subject to overall limit of Rs.5,00,000 in the

aggregate including existing policies and also the payment of appropriate additional

premiums in that behalf at the existing rate.

Min Max

Entry Age 18 50


Term 15 30

3. Group Insurance Policy:

52

What Are Group Insurance Plans?

Group Insurance offers life insurance protection under group policies to various groups

such as employer-employee, professionals, co-operatives, weaker sections of society

etc. It also provides insurance coverage to people under certain approved occupations

at the lowest possible premium cost. Besides providing insurance coverage, it also offers

group schemes to employers, which provide funding of gratuity and pension liabilities of

the employers.

How are they beneficial to me?

Group insurance plans have low premiums. Such plans are particularly beneficial to

those for whom other regular policies are a costlier proposition. Group insurance plans

extend cover to large segments of the population including those who cannot afford

individual insurance. As such the premier you need to pay is comparatively lower and at

the same time you can avail of insurance benefits.


Group insurance plans have low premiums. Such plans are particularly beneficial to

those for whom other regular policies are a costlier proposition. Group insurance plans

extend cover to large segments of the population including those who cannot afford

individual insurance. As such the premier you need to pay is comparatively lower and at

the same time you can avail of insurance benefits.

Types of group insurance policy:

Janashree Bima Yojana

Group Insurance Scheme in lieu of EDLI

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Group (Term) Insurance Scheme

Group Savings Linked Insurance Scheme

Group Mortgage Redemption Assurance Scheme

Shiksha Sahayog Yojana

Janashree bima yojana:

Features:

The scheme provides life insurance protection to the rural and urban poor persons

below poverty line and marginally above the poverty line. The premium under the

scheme is Rs.200/-per annum per member. 50% of the premium i.e. Rs.100/- will be

contributed by the member and/or Nodal Agency/State Government and the balance

50% will be borne by the Social Security Fund.

Benefits:

In the event of Death (other than by accident) of the member, an amount of Rs.20, 000/-

is payable. In case of death/total permanent disability, due to accident, an amount of

Rs.50, 000/-is payable. In case of Permanent partial disability, due to accident, an

amount of Rs.25, 000/- is payable.

Person should be below or marginally above poverty line

Person should be a member of any of the approved vocation/occupation groups

Min Max

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Entry age 18 59

Sum Assured Rs.20,000 Rs 50,000

Membership 25 -

Group insurance scheme in lieu of EDLI:

Features:

All employees to whom the Employee's Provident Fund and Miscellaneous Provision

Act, 1952 applies, have a Statutory liability to subscribe to Employee's Deposit Linked

Insurance Scheme, 1976 to provide for the benefit of Life insurance to all their

employees.

Benefits

To The Employer:

The premium payable by the employer is usually less than the total contribution

being paid by the employer to R.P.F.C; particularly when the salary level is high

and average age of the group is low.

Settlement of claim is quicker; LIC requires only the death certificate and the

Claim Form from the employer.

Premium paid by the employer is treated as normal business expenses for

Income-Tax purpose. The contribution @ 0.50% of each employee's salary is

payable by the Employer to the Provident Fund Authorities.

To The Employee:

55

Each employee is covered for a sum assured ranging between 5,000 to 62,000

depending upon the current salary and service put in from day one irrespective of the

actual balance in the Provident Fund. Alternatively every employee/ worker can be

covered for a uniform sum assured of Rs.62, 000.

Minimum Membership Max.Sum Assured Graded

20 Flat-62,000 **(5,000 - 62,000)

Group ( term) insurance scheme :

Features:

Group (Term) Insurance Scheme provides life insurance protection to groups of people.

Administration of the scheme is on group basis and cost is very low. Under Group

(Term) Insurance Scheme, life insurance cover is allowed to all the members of a group

subject to some simple insurability conditions without insisting upon any medical

evidence

Benefits:

Tax Benefits

The premiums paid by the employer are allowed as business expenses and the

amounts are not treated as perquisites in the hands of the employees. The

premiums paid by the members are eligible for income-tax rebate under Section

88. The benefits paid under the scheme are tax-free.

Death Benefits:

56

Double Accident Benefit:

Double Accident Benefit, i.e. payment of double the sum assured on death due to

accident (without permanent disability benefit), may be allowed under Group Insurance

Schemes for an extra premium Rs. 0.75 per Thousand Sum Assured per annum. Double

accident cover under all Group Schemes taken together should not exceed Rs. 4.5

lakhs.

Group saving linked insurance scheme:

Features:

The Group Savings Linked Insurance Scheme (GSLI) offers insurance cover together

with a savings element. The contribution under this scheme is deducted from the

monthly salary of the member. The scheme is govt. bodies, Public Sector Corporations

and reputed companies in public and private sectors who keep accurate records of their

employees. Under the scheme, out of the contribution received in respect of each

employee, a portion is utilized for the insurance cover and the balance, known as

contribution for savings, is accumulated till exit at an attractive rate of interest, For

policies where policy-anniversary falls after 1.1.2000 the current rate is 10% p.a. The

amount apportioned from the monthly contributions towards insurance premium will be

determined on the basis of the nature of the group, occupation, age composition of

members etc. The savings contribution is returned with interest at the time of retirement,

or exit by any other mode. In case of death during service the amount for which the

member was covered at the time of death is also paid along with accumulated saving

Benefits

Accident Benefit:

57

Double accident benefit can be allowed to the extent of the Sum Assured for an extra

Premium @ Rs. 0.75 per thousand Sum Assured per annum. Double accident cover

under all groups Scheme taken together should not exceed Rs. 4.5 lacks.

Tax benefits:

Employees' total contribution, savings as well as risk premium is entitled for income-tax

rebate under Sec. 88 of the Income Tax Act. The entire claim amount including interest

earned payable on retirement or leaving service or on death is free from income tax. The

premium paid by the employer towards insurance cover is treated as business

expenses.

No of eligible employees on date of commencement of Scheme

Minimum participation required

Upto 500 75% of eligible employees

501 - 2500 70% but not less than 375

2501-10000 65% but not less than 1750

10000 & above 60% but not less than 6500

The insurance cover available to them is as below:

Category of employees

Maximim limit of Cover available

Group Size

25-99 100-499 500-1999 2000&above

58

Sr. Management 200000 280000 400000 450000

Middle Management 140000 225000 280000 315000

Clerical Staff 90000 140000 200000 225000

Sub-staff & workers 45000 70000 90000 100000

Group Superannuation Scheme:

Features:

Under such a scheme the employer contributes a certain fixed percentage of salary,

which is, accumulated by LIC and the accumulated amount is utilized to provide various

benefits as mentioned below. The maximum annual contribution that an employer can

make to the Pension Fund and Provident Fund is restricted by the Income Tax

Provisions to 27% of the annual salary (basic plus D.A.) The annual contributions are

treated as deductible business expenses.

Group mortgage redemption assurance scheme:

Features:

Group Mortgage Redemption Assurance Scheme is a Group Insurance Scheme for the

borrowers of Housing/Vehicle Loans from Financial Institutions where Loan is recovered

under EMI.

Benefits:

Insurance cover every year will be equal to the loan outstanding at the anniversary date

of each borrower.

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Existing Borrowers can join the scheme within 6 months of the commencement

of scheme.

No accident Benefit is available under the scheme.

Min Max

Entry Age 18 60

Sum Assured - 50 lakh

Term 3 -

Maturity - 65 yrs

Shiksha sahayog yojana:

Features:

This is a scholarship scheme launched on 31.12.2001 for the benefit of children of

members of Janashree Bima Yojana.

Benefits:

Scholarship of Rs 300/- per quarter per child will be paid for maximum period of 4 years.

The benefit is restricted to two children per member (family) only.

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Students studying in ix to xii standards, whose parents are covered under Janashree

Bima Yojana are eligible. If a student fails and is detained in the same standard, he will

not be eligible for scholarship for the next year in the same standard.

4. Joint Life Policy:

What is 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 from covering the risks as all life

insurance policies.


Under a joint life policy the sum assured is payable on the first death and again on the

death of the survivor during the term of the policy. Vested bonuses would also be paid

besides the sum assured after the death of the survivor. If one or both the lives survive

to the maturity date, the sum assured as well as the vested bonuses are payable on the

maturity date.


Particularly for couples - Joint life policies provide dual-purpose income and risk

protection for both belonging to every income group and class of society. Under a joint

life plan though the premium payment stops after the first life's death, bonuses continue

to accrue on the basic Sum Assured till Maturity Date or till the death of the second life, if

earlier.

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Types of joint life policy:

Jeevan Saathi - Plan no.89:

Features:

This policy is issued on the lives of the husband and wife provided the female's life

belongs to Category I or is actively engaged in her spouse's business.

Benefits:

Survival Benefits:

If one or both the lives survive to the maturity date, the sum assured, along with the

accumulated bonus, is payable.

Death Benefits:

In case either of the couple dies during the policy’s term, two things happen. One, LIC

pays to the surviving spouse the full sum assured. And, two, the policy continues on the

life of the surviving partner without him/her having to pay any further premiums, i.e. the

life cover on the survivor continues free of cost.

The sum assured is again be payable on the death of the other partner in case both the

husband and wife were to die during the term of the policy. Vested bonus would also be

paid along with the sum assured on the second death.

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Min Max

Entry Age 20 50


Term 15 30

5. Money Back Policy:

What is 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.


Under money back policies premiums can be paid as per the insurance company’s

policy. These could be quarterly, half yearly or annually. The premiums for these policies

are payable for the selected term of years, or till death if it occurs earlier. By buying such

policies one can receive income at regular intervals other than the risk cover it provides.

Also a good amount of bonus on the full sum assured is quite a good bargain.


Such plans are particular popular with individuals for whom income at regular intervals is

a necessity in addition to an insurance cover. The minimum age is 12 years to be eligible

for a Money-Back Policy.

Types of money back policy:

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Money Back with Profit - Plan no.75

New Money Back - Plan no.93

Jeevan Surabhi 15 yrs - Plan no.106

Jeevan Surabhi 20 yrs - Plan no.107

Jeevan Surabhi 25 Yrs – Plan no.108

Jeevan Bharti – Plan no. 160

Jeevan Samriddhi - Plan No. 154, 155, 156 157

Bima Bachat- Plan no.175

Money back with profits - plan no. 75:

Features:

holder is alive Unlike ordinary endowment insurance plans where the survival benefits

are payable only at the end of the endowment period, this scheme provides for periodic

payments of partial survival benefits as follows during the term of the policy, of course so

long as the policy.

Benefits:

Survival Benefits:

Period Sum Assured for 20 years'

term

Sum Assured for 25 years'

term

5 Years 20 percent 15 percent


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20 Years 40 percent + Bonus 15 percent

25 Years - 40 percent + Bonus

New money back - plan no. 93:

Features:

Fixed percentage of sum assured paid periodically. This policy enables you to satisfy important

financial needs like children’s education or marriage, long awaited holiday, purchase of car,

scooter, TV etc.

Benefits:

Death Benefits:

Full sum assured + bonus irrespective of survival benefits take

Jeevan surabhi plan - no. 106:

Features:

This plan was introduced in Oct 92 by LIC and is a modified version of other money back

plans offered by LIC. The difference between the other money back plans and Jeevan

Surabhi plans are that

Maturity term is more than premium paying term.

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Early and higher rate of survival benefit payment.

Risk cover increases every five years.

Benefits:

Death Benefits:

If death occurs at anytime during the term of a policy (provided the policy has been kept

in force by payment of all premiums that had fallen due), the basic sum assured along

with the vested bonus will be paid. The survival benefits already paid, if any, will not be

deducted from this claim amount. An additional amount (depending on the duration of

the policy) will also be paid on death under such a policy.

Jeevan surabhi plan - no. 107:

Features:


plans offered by LIC. The difference between the other money back plans and this plan

is as follows


sEarly and higher rate of survival benefit payment.


Benefits:

Death Benefits

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with the vested bonus will be paid. The survival benefits already paid, if any, will not be

deducted from this claim amount. An additional amount (depending on the duration of

the policy) will also be paid on death under such a policy.

Jeevan surabhi - plan no. 108:

Features:


plans offered by LIC. The difference between the other money back plans and this plan

is as follows


Early and higher rate of survival benefit payment.


Benefits:

Death Benefits



with the vested bonus will be paid. deducted from this claim amount.

Jeevan bharati - plan no. 160:

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Features:

This is an exclusive money back plan for women. This plan offers free insurance cover

for three years if first two years premium has been paid.

Benefits:

Survival benefits:

20 % of the Sum Assured at the end of 5/10 /15 years for 20 year term (balance payable

on maturity plus Guaranteed Additions plus bonus, if any) Guaranteed Additions @ 50/-

thousand Sum Assured for first five years. 20 % of the Sum Assured at the end of 5/10

years for 15 year term (balance payable on maturity plus Guaranteed Additions plus

bonus, if any)

Death Benefits:

Full Sum Assured irrespective of all earlier survival benefits paid plus Guaranteed

Additions plus bonus, if any)

Min Max

Entry Age 18 50

Sum Assured 50,000 25,00,000

Term 15 20

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Jeevan samriddhi - plan no. 154 155 156 157:

Features:

Jeevan Samriddhi, a money back plan gives Guaranteed Addition as well as loyalty

addition (if any).

Death Benefits:

On death of the life assured during the term of the policy, the basic Sum assured is

payable irrespective of survival benefits already paid. In addition to the basic Sum

Assured, Guaranteed and Loyalty additions if any, as per provisions herein below are

also payable. On death due to accident during the term of the contract and provided the

policy is in full force on the date of death an additional sum equal to the basic Sum

assured will be payable.

Min Max

Entry Age 14 Plan 154 58

Plan 155 55

Plan 156 50

Plan 157 45


Term 12

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6. Pension Plan and Annuities:

What is Annuity?

An annuity is an investment that you make, either in a single lump sum or through

installments paid over a certain number of years, in return for which you receive back a

specific sum every year, every half-year or every month, either for life or for a fixed

number of years.


By buying an annuity or a pension plan the annuitant receives guaranteed income

throughout his life. He also receives lump sum benefits for the annuitant’s estate in

addition to the payments during the annuitant’s life time.


An individual, who after retiring from service has received a large sum from his Provident

Funds, should invest the proceeds in a pension plan or annuity fund available in the

market since it is the most satisfactory method of providing a safe and secured income

for the rest of his life.

How do I pay for an annuity?

Annuities are paid for:

Either through a single premium OR

Through installment payments that are annual in most cases

How do I receive payments from an annuity?

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Life annuity

The first is a life annuity, which guarantees you a specified amount of income for your

life. On death, the annuity payments cease but your investment is refunded to your

estate.

How do I evaluate an annuity?

Since annuities are not life insurance policies, we cannot evaluate them as we evaluate

other policies. Unlike life insurance policies which cover the risk of the premature death

of a family’s breadwinner, annuities should be evaluated just like any other investment

option, i.e. on the four-fold criteria of safety, profitability, liquidity and ready availability of

your invested capital in case of need, and capital appreciation.

Types of pension plan:

New Jeevan Dhara - Plan no.148

New Jeevan Suraksha - Plan no. 147

Jeevan Akshay II - Plan no. 163

Jeevan Nidhi - Plan no. 169

Jeevan Akshay V - Plan no. 183

New Jeevan Dhara - Plan No. 148:

Features:

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http://www.insuremagic.com/Content/PlanInfo/Life/New_Jeevan_Suraksha_Plan147.asp

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This pension plan is a vehicle for planning a lifelong pension and is also tax deferred.

Not only can you plan a pension for life with the help of these annuities but these

schemes also help you reduce your tax liability.

Benefits:

On vesting:

The Notional Cash Option together with Reversionary Bonuses and Final

additional Bonuses ( if any ) with or without 25% commutation will be

compulsorily converted into annuity having following options.

Annuity for life:

Annuity for life with guaranteed period of 5, 10, 15, 20 years. Joint life and last

survivor annuity to the annuitant and his/her spouse under which annuity payable

to the spouse on death of the purchaser will be 50% of that payable to the

annuitant.

Min Max

Entry Age 18 65

Vesting Age 50 79

Deferment Period 2 years 35 years.

Notional cash option

Single premium Annual premium

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Minimum Rs. 50,000 for regular

premium policies

Rs. 10,000/- Rs. 2500

New Jeevan Suraksha - Plan No. 147:

Features:

This pension plan is a vehicle for planning a lifelong pension and is also tax deferred.

Not only can you plan a pension for life with the help of these annuities but these

schemes also help you reduce your tax liability.

Benefits:

The Notional Cash Option together with Reversionary Bonuses and Final additional

Bonuses (if any) with or without 25% commutation will be compulsorily converted into

annuity having following options.

Min Max

Entry Age 18 70

vesting age 50 79

deferment period 2 years 35 years.

Notional cash option

Single premium Annual premium

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Minimum Rs. 50,000 for regular

premium policies

Rs. 10,000/- Rs. 2500

Jeevan Nidhi - Plan no. 169:

Features:

LIC of India has decided to withdraw the immediate annuity Plan, New Jeevan Akshay-

III (Plan No.170) with effect from 17th March, 2006 and instead replace it with a its new

plan - Jeevan Akshay – IV.

Benefits:

Survival Benefits

the first installment of annuity shall be paid one year, six months, three months or one

month after the date of purchase of the annuity depending on whether the mode of

annuity payment is yearly, half-yearly, quarterly or monthly respectively.

Minimum Age at

entry40 years last Birthday

Maximum Age at

entry79 years last Birthday

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Minimum

Purchase Price

Rs.50,000/- or such amount which may secure a minimum

annuity of Rs.3,000/- p.a.

Minimum Annuity Installment: Rs.250/-per month, Rs.750/- per quarter, Rs.1,500/- per

half-year, Rs.3,000/-per year.

Jeevan Akshay V - Plan no. 183:

Features:

It has been decided to withdraw the Immediate annuity Plan, LIC’s Jeevan Akshay- IV

(Plan No.176) with effect from 20th September, 2006 and introduce a New Plan - LIC’s

Jeevan Akshay – V in its place.

Benefits:

Survival Benefits

The first installment of annuity shall be paid one year, six months, three months or one

month after the date of purchase of the annuity depending on whether the mode of

annuity payment is yearly, half-yearly, quarterly or monthly respectively.

7. Special plans:

What are Special Plans?

Special plans are insurance policy plans available from the national insurance providers

to serve the needs of citizens that cannot be commonly classified or segregated.


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Since special plans are designed for people with diverse and specific needs, the

average citizen may not necessarily need or use them.

Who should buy these plans?

Special plans should be bought by people after carefully scrutinizing their lifestyles and

circumstances.

Types of special plans:

Term Assurance - Plan no.43

Mortgage Redemption - Plan no.52

Jeevan Aadhar - Plan no.114

Market Plus - Plan No. 181

Jeevan Vishwas Plan No. 136

Jeevan Saral Plan no. 165

Jeevan Pramukh Plan No. 167

Bima Nivesh 2005 - Plan No. 171

Money Plus-Plan - No. 180

Term Assurance - plan no. 43:

Features:

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http://www.insuremagic.com/Content/PlanInfo/Life/Jeevan_Vishwas_136.asp

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The Two Year Temporary Assurance policy is designed for the insuring public who

requires risk cover for only two years.

Benefits:

Survival Benefits:

Not applicable

Death Benefits:

Total sum assured

Mortgage Redemption - plan no. 52

Features:

The Mortgage Redemption Assurance policy (without profits) plan is designed to meet

the requirements of the policy holding individual who seeks to ensure that all his

outstanding loans and debts are automatically paid up in the event of his demise.

Benefits:

Survival benefits: Nil

Death benefits:

All outstanding loans declared at the beginning of the financial year would be payable as

per the prepared schedule.

Jeevan adhar - plan no. 114:

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Features:

This Plan has been specially designed to make provision for maintenance of

handicapped dependants. Under the Jeevan Aadhar plan, an individual or member of a

Hindu undivided Family can take an assurance on his/her own life to provide for

payment of a lump sum and an annuity to the handicapped dependant.

The payment will be made to the nominee under the policy, who will be either the

handicapped dependant or any other person or a trust, all for the benefit of the

handicapped dependant.

Benefits:

Survival benefits:

Sum Assured + 10 percent guaranteed addition of the sum assured on an annual basis.

Death benefits:

In the event of handicapped dependant predeceasing the life assured during the term of

the policy the contract ceases and the life assured will have the option of keeping the

policy for a reduced paid-up sum assured or receive a refund of premiums paid

(excluding extra premiums and accident benefit premium if any). The reduced paid up

sum assured including any guaranteed and terminal addition as applicable will be paid

as lump sum to the estate of the life assured on the death of the life assured.

Jeevan vishwas - plan no. 136:

Features:

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This plan is Endowment with guaranteed and loyalty additions. Guaranteed Additions at

the rate of Rs.60 % of basic sum assured will accrue at the end of each completed policy

year while the policy is in force for full sum assured and will be payable on the date of

maturity or on earlier death of the life assured.

Benefits:

Accident Benefit:

This benefit can be allowed only under annual premium policies, subject to underwriting

restrictions. The accident and disability benefits will be paid as per the usual LIC

practice.

Survival benefits:

Basic sum assured together with accrued guaranteed additions and loyalty additions, if

any will be payable on the life assured (proposer) surviving the date of maturity of the

policy.

Death Benefits:

On death of the life assured during the term of the policy, Basic sum assured together

with accrued guaranteed additions and loyalty addition, if any will be payable.

Jeevan saral - plan no. 165:

Plan Details: This plan is appropriate for employees seeking life cover through Salary

Savings Schemes.

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Eligibility:

Minimum Maximum

Age 12 Yrs (completed) 60 Nearest Birthday

Term 10 35

Age at maturity Maximum 70 years

In case of term rider, minimum and maximum age of entry will be 18 and 50 years

respectively. Further minimum sum assured will be Rs.1 lakh.

Death Benefit

On death of the Life Assured during the term of the policy an amount equal to the Sum

Assured along with accrued Guaranteed Additions and vested Simple Reversionary

Bonuses and Terminal Bonus, if any, shall be payable provided the policy is in full force.

Bima Nivesh - Plan no.171

Features:

Bima Nivesh 2005 plan (Plan No.171) will replace Bima Nivesh 2004. This plan is available for

terms 5 and 10 years only. The Single Premium per thousand Sum Assured is Rs.995/- for term 5

years and Rs.976/- for term 10 years.

8. Term Policy:

What is Term Policy?

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Term policies; cover only the risk during the selected term period. If the policyholder

survives the term, the risk cover comes to an end.


Term policies are an ideal option if you are unable to pay the larger premium required for

a Whole Life or Endowment policy, but hope to be able to pay for such a policy in the

near future.


A Term plan is particularly beneficial for people who are initially unable to pay the larger

premium required for a whole life or an endowment assurance policy.

Types of Term Policy:

Convertible Term Assurance - Plan no.58

New Bima Kiran

Term Assurance

Anmol Jeevan I - Plan No . 164

Amulya Jeevan-Plan No.177

Convertible Term Assurance - Plan no.58:

Features:

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This plan of assurance is designed to meet the needs of those who are initially unable to

pay the larger premium required for a Whole Life or Endowment Assurance Policy, but

hope to be able to pay for such a policy in the near future. This plan would be found

useful also in cases where it is desired to leave the final decision as to the plan to a later

date when, perhaps a better choice could be made.

Benefits:

Survival benefits: Nil

Death Benefits:

The sum assured is payable only in the event of death of the Life Assured before the

expiry of the specified term.

New Bima Kiran:

Features:

Maximum risk covers with minimum premium (up to 10 lakhs).

Free insurance cover after maturity for a period of 10 years.

Benefits:

Survival benefits:

Return of total premium + Loyalty Addition + 10 years free insurance cover (both

according to duration of the policy)

Death Benefits:

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If death occurs, full sum assured + Loyalty Addition if policy has completed at least 4 yrs

and kept in force.

Term Assurance:

Features:

This two year temporary Assurance policy is designed for those who need a risk cover

for a maximum of two years.

A single premium is required to be paid at the outset of the policy to cover the entire

period of term.

Benefits:

Survival benefits: Not applicable

Death Benefits: Total sum assured.

Anmol Jeevan I - Plan No. 164:

Features:

This pure Term Assurance plan provides risk cover at a low-cost to the policyholder.This

without profits term plan is also available to female lives (category I and II lives only) and

to physically handicapped persons subject to certain conditions.

Benefits:

Survival benefits on Maturity: Nil

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On Death during the Term of the Policy: Sum Assured If the Policy has lapsed, it may

be revived during the life time of the Life Assured, but before the date of expiry of policy

term, on submission of proof of continued insurability to the satisfaction of the

Corporation and the payment of all the arrears of premium together with interest at such

rate as may be prevailing at the time of the payment.

Amulya Jeevan-Plan No.177

Features:

LIC’s ‘Amulya Jeevan’ Plan (Plan No. 177) is a pure term assurance plan. It provides financial

security to the policyholder's family (nominee) if he fails to survive the term of the policy.

9. Whole life policy:

What is 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 known as

whole life policies.

The policy monies and the bonus are payable only to the nominee of the beneficiary

upon the death of the policyholder. The policyholder is not entitled to any money during

his or her own lifetime, i.e. there is no survival benefit.


Whole Life Policy can be a good initial policy to buy since its cost is very low. That is an

important consideration when one is just starting a career.


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Whole Life Policy can be a good initial policy to buy since its cost is very low. That is an

important consideration when one is just starting a career.

Types of Whole life policy:

Whole Life With Profits – Plan no.2

Limited Payment Whole Life with Profits - Plan no.5

Single Premium Whole Life– Plan no. 8

Jeevan Tarang- Plan no.178

Whole life with profits:

Features:

This policy covers the risk as long as the policyholder is alive. The premium is also

payable throughout your lifetime. If the payment of premiums ceases after three years, a

free paid-up policy for such reduced sum will be automatically secured provided the

reduced sum assured, exclusive of any attached bonus is not less than Rs.250/- Such a

reduced paid-up policy is not entitled to participate in the profits declared thereafter but

the bonuses already declared on the policy will remain attached, provided the policy is

converted into a paid-up after premiums are paid up for 5 years.

Benefits:

Survival Benefits

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Sum assured plus accrued bonuses and the terminal bonuses, if any; on the

policyholder attaining age 80 years or on expiry of term of 40 years from the date of

commencement of the policy whichever is later.

Death Benefits

Sum assured plus accrued bonuses and the terminal bonuses, if any, on the death of the

policyholder are paid to his/her nominees/heirs.

Ltd Payment whole life - Plan no. 5:

Features:

This is the best form of life assurance for family provision since it enables the Life

Assured to pay all the premiums during the ordinarily vigorous and most productive

years of life. He need not pay any premium in the later stages of life if and when his

conditions might become adverse.

Benefits:

Survival Benefits:

If the Life Assured survives the premium paying period and the policy continues in full

force, provided all premiums have been paid, but no further premiums are required to be

paid.

Death Benefits:

Sum Assured plus Bonuses accrued and vested in the policy

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Single premium whole life - plan no. 8:

Features:

This is the best form of life assurance for family provision since it enables the Life

Assured to pay all the premiums during the ordinarily vigorous and most productive

years of life, relieving him from the necessity of making payments later in life when they

might become a burden.

Benefits –

Death Benefits

Premiums are payable one time only. If the Life Assured survives the stipulated term of

the policy, the Policy continues in full force, and full sum assured (with or without bonus)

will be paid on death.

Jeevan trang - plan no. 178:

Features –

This With-Profit plan is a combination of Whole life and Money back plan. The policy

provides for annual survival benefit at a rate of 5.5% of the Sum Assured for lifetime

after the chosen Accumulation Period. Under this policy, Life cover is available up to age

100.

Benefits:

Death Benefit:

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The Sum Assured, along with bonuses is payable in case of death of the Life Assured

during the Accumulation Period.

COMPANY PROFILE

88

Birla Sun Life – A Coming Together Of Values

Birla Sun Life is a joint venture between The Aditya Birla Group, one of the largest

business house in India and Sun Life Financial Inc., a leading International Financial

Services Organization. The local knowledge of the Aditya Birla Group combined with the

expertise of Sun Life Financial Inc. offers a formidable protection for our future.

The Aditya Birla Group is led by its chairman- Mr. Kumar Manglam Birla. The Group has

over 88000 employees across all its units worldwide. Some of the key organizations with

the group are Hindalco, Grasim, Aditya Birla Nuvo, etc.

The group is India's leading business house with a number of key organizations. These

are as follows:

1. Grasim

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2. UltraTech Cement Ltd

3. Hindalco

4. Indian Aluminium Company Ltd

5. Aditya Birla Nuvo

6. Idea Cellular Ltd.

7. Birla Sun Life Insurance Co.Ltd

8. Birla Sun Life Asset Mgmt. Co.Ltd

9. Birla Sun Life Distribution Co. Ltd

10. PSI Data Systems

11. Indo Gulf Fertilizers Ltd.

12. Birla Global Finance Ltd

Sun Life Financial Inc. and its partners today have operations in key markets worldwide,

including Canada, the United States, the United Kingdom, Hong Kong, the Philippines,

Japan, Indonesia, India, China and Bermuda. Sun Life Financial Inc. is a leading player

in the life insurance market in Canada.

Share Holding Pattern:

In Birla-Sun Life, the two companies are having shareholding pattern as follows:

74 %--> Aditya Birla Group

26 %--> Sun Life Financial Inc.

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The group has 3 businesses:

1. Mutual Funds

2. Wealth Management

3. Life Insurance

Birla Sun Life Insurance co ltd. is the Life-Insurance arm of Birla-Sun Life

Birla Sun Life Insurance in its 7 successful years of operations has contributed

significantly to the growth and development of life insurance industry in India. It

pioneered the launch of Unit Linked Life Insurance plans amongst the private players in

India. It was the first player in the industry to sell its policies through the Bancassurance

route and through the Internet. It was the first private sector player to introduce a Pure

Term plan in the Indian market. This was supported by sales practices, which brought a

degree of transparency that was entirely new to the market. The process of getting sales

illustrations signed by customers, offering a free look period on all policies, which are

now industry standards were introduced by BSLI. Being a customer centric company,

BSLI has covered more than a million lives since inception and its customer base is

spread across more than 1000 towns and cities in India. All this has assisted the

company

in cementing its place amongst the leaders in the industry in terms of new business

premium income. The company has a capital base of more than Rs.672 crores.

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Many ONEs with Birla Sun Life Insurance:

BSLI is a company that has a very unique contribution in the history of Insurance sector.

The company not only has varying plans and funds, rather also is a pioneer in many

aspects. These pioneering features of BSLI are as follows:

1. Free Look Period: BSLI offers its policyholders with a free look period of 15

days. Client gets freedom to have an in-depth look over all the terms and

conditions regarding his/her life-insurance policy. If he finds policy not worth

opting for, he can also return the policy, but at BSLI, co. people ensures this not

to happen.

2. Bancassurance: BSLI pioneered Bancassurance in India. Bancassurance

means to include Banks as one of the distribution channels with the company.

BSLI is the first company, which realized that banks, with their huge customer

base and strong customer loyalty, are a readymade platform to acquire new

business on a more cost effective and sustainable basis.

3. Unit Linked Life Insurance Plans: BSLI was the first in India to introduce Unit

Linked Plans. A ULIP is an auspicious coming together of security from life

4. insurance and earnings from investment. Which means, apart from securing the

future they offer efficient returns. These plans provide the customer with a certain

92

number of units, in the same way as a mutual-fund holder gets units. ULIPs offer

market-linked returns to policyholders.

5. Sales Illustrations: BSLI is the first company to introduce Sales Illustrations in

the Insurance Industry. Sales people of BSLI give demonstrations of fund

6. Performance on two points of projections i.e. on 6% and 10%. Now IRDA has

also made it mandatory to have sales illustrations.

BSLI’s has launched Century SIP, a unique systematic investment plan offering an

opportunity to create wealth with as little as Rs 1000 per month plus a life insurance

cover of up to 100 times the monthly installment.

This plan comes along with free term insurance for an individual up to 55 years of age.

The life insurance cover comes at no extra cost to the investor. The cover is hassle

free. The investor need not go thru any medial test to avail of the life cover. All an

investor needs to do is enroll for CSIP & sign a “Declaration of Good Health”. In case of

unfortunate demise of investor the insurance claim will be directly paid to the nominee by

the insurance company (Birla Sun Life Insurance Company).

93

http://www.moneycontrol.com/india/news/mf-news/birla-sun-life-mf-launches-century-sip/17/50/342146


Announcing the launch of Century SIP, Anil Kumar, CEO, and Birla Sun Life MF said,

“This offering touches all aspects of an investor’s financial planning needs. We wish to

encourage the investment habit among investors by providing them life insurance cover.”

Insurance cover to the investor would continue even after the SIP’s minimum maturity

tenor of 3 years. Any individual between 18 to 46 years of age may invest in this plan.

Investment in this plan may be made through Electronic clearing system (ECS), direct

debits or post dated cheques.

7. Others: Some other ONEs with BSLI are:

1st to issue daily NAVs of funds for better transparency.

1st to have a distinct CRISIL benchmark.

1st to disclose portfolio on a monthly basis.

Policyholders can view their policy details online; they can be accessed

from BSLI website using your unique password.

Out of every 100 claims intimated to BSLI 98.28 stands cleared.

Also the average Turn Around Time (TAT) :

(i) From the receipt of the last requirement till dispatch of

cheque is 5 days and

(ii) From intimation of claim till its decision & dispatch of cheque

is 36 days.

94


VISION

To be a world class provider of financial security to individuals and corporates and to be

amongst the top three private sectors life insurance companies in India.

MISSION

To be the first preference of our customers by providing innovative, need based life

insurance and retirement solutions to individuals as well as corporates. These solutions

will be made available by well-trained professionals through a multi channel distribution

network and Superior technology.

Our endeavor will be to provide constant value addition to customers throughout their

relationship with us, within the regulatory framework.

We will provide career development opportunities to our employees and The highest

possible returns to our shareholders.

VALUES

Integrity: Honesty in every action.

Commitment: Deliver on the promise

Passion: Energized action

Seamlessness: Boundary less in letter & spirit

Speed: One step ahead alway

Sales Procedure of Insurance in BSLI:

95

BSLI ensures that its policyholders get the best out of the policy offered to them by their

Advisors. For this, BSLI follows a set procedure of selling Insurance to the clients. The

sales procedure can be diagrammatically presented as follows:

This procedure can be stepped down as follows:

SUSPECTING

PROSPECTING

APPOINTMENT

FIRST SALES CALL

FOLLOW UPS

SALES CLOSED

OFFICE WORK

96

1. Pitching the customer: The first and foremost thing is that, client should be ready to

purchase the Insurance plan. Insurance is not a very preferable product yet in India.

And,

thus, co. has to be very vigilant. Advisors, at BSLI, maintain relationships and make the

most of their Goodwill. Insurance is a Relationship oriented business. Keeping this in

mind BSLI also initiated Bancassurance, where Banks’ image of being loyal to the

customers, plays a major role in pitching the customer to buy Insurance. BSLI uses

following routes for distributing their Product to general public:

a. Direct Personal Contacts (through Advisors)

b. Bancassurance (through Banks)

c. Personal Relations (through co. employees)

d. Existing Policyholders.

2. Sales Illustration : BSLI is the first company to give demonstration of the fund

performance i.e. how a certain policy will perform or will give returns. BSLI Advisors

give sales illustration. Fund performance is shown on 6% and 10% projections. If

client find these projected returns suitable to his/her risk profile, he go for purchasing

the policy.

3. Proposal Form : Now as client is ready to get insured, advisor gives him the

proposal form and asks for all the documents required. Proposal form is a 4 page

document that contains all the necessary information related to the Insured and the

Owner of the policy. Documents required along with the proposal form are:

Date-Of-Birth Proof

Address & ID Proof

97

Income Certificate

Medical Certificates (only if Insurer is a senior citizen)

4. After Sales Service : Now after the Insurance is sold, follow-ups are required.

Advisor needs to maintain good relations with the policyholder. Insurance co. can

Generate further business, only if, existing policyholders are satisfied with the

services being provided by the advisor of the co. Thus, BSLI keeps this in mind and

Business Development Executives continuously track the needs of the policyholders.

BSLI provides the policyholders with monthly updates of the fund performance and

also discloses the asset portfolio of the fund. This assists the policyholders to

manage their policy according to their risk profile. They can, thus, change their fund

allocation as well as the asset allocation in any fund, chosen by them.

COMPANY PRODUCTS / PLANS

1- Flexi Plans

Flexi Plans have three variants. These variants are:

1. Flexi Save Plus (Endowment Plan)

2. Flexi Cash Flow (Money Back Plan)

3. Flexi Lifeline (Whole of Life Plan)

Features:

This is a Unit Linked Plan with guaranteed returns.

Provides flexibility with Top-Up Facility.

98

For Quarterly modal premium less than Rs.5000, payment can be made through

ECS.

Policyholder can attach riders to the plan according to his/her needs.

Liquidity in the form of Partial withdrawals.

Three Investment Fund options are available with the policy and policyholder is

free to switch between funds anytime during the tenure of the policy.

The Sum Assured may be increased once in every 5 policy years, starting from

the 6th policy year.

Premium can be paid annually, semi-annually, quarterly and monthly

Premium Invested: Collected Premium is invested in three Investment Fund Options.

These funds are:

1. Protector

2. Builder

3. Enhancer

Benefits:

1. Maturity Benefits : At maturity, Policyholder gets the higher of the guaranteed

fund value (min. 3% on premium) or the Total Fund value.

2. Survival Benefits :

(i) At the end of every 5th Coverage Benefit Period and the remainder on

maturity, an amount equals to the minimum of (a) or (b) mentioned below will

be reduced from the guaranteed fund value and transferred to the holding

account for the purpose of partial withdrawals, where-

(a) Guaranteed Fund Value

(b) Sum Assured % as stated below:

30% if the Coverage Benefit Period is 10 years.

99




If survival benefits are not withdrawn, they will continue to be a part of the

Fund Value.

(ii) If the life insured is a minor, policyholder can withdraw the survival

benefit payout within one month from the scheduled payout date from

the fund value.

Death Benefits:

Age at time of

DeathDeath Benefits

30 days to 1 year Fund Value Only

Age 1 Year to 60

Year

Higher of Sum Assured less all partial withdrawals made in 24 months

preceeding the death of life insured or the fund value or the

guaranteed fund value.

On or After

attainment of 60

Years

Higher of Sum Assured less all partial withdrawals made since the life

insured attained the age 58 or the fund value or the guaranteed fund

value.

Charges:

100

1. Mortality Charges : These charges are deducted by canceling units on a monthly

basis at the prevailing NAV. The annual mortality charges per 1000 sum assured

for sample ages are as follows:

Age 20 30 40 50 60

Male 1.016 1.171 2.150 5.532 13.732

Female 0.896 1.163 1.657 4.030 10.660

2. Partial Withdrawal Charges : 2 withdrawals in a policy year are free of charge.

Rs100 for every additional partial withdrawal are charged.

2- Classic Life Premier

This is the plan that not only helps to save for the future but also helps to get rich

benefits from the investments, especially at a time when the need for family protection

reduces significantly.

Features:

The plan is a unit linked, non-participating plan.

This plan has the option of seven-investment fund with the flexibility to allocate

the premiums in varying proportions into the different Fund Option.

Top up facility is there. The minimum amount of top ups is 10000.

The plan offers further benefits in the form of additional units, which will be added

to the Fund value at the end of the 10th policy year.

There is high liquidity in the form of Partial Withdrawals and Surrender Benefits.

101

Death Benefits, which will be higher of the Fund value or Sum Assured, reduced

by the applicable partial withdrawals.

Eligibility:

Entry Age:

Minimum: 30 days for 20 & 30 term

8 years for 10 terms

30 years for whole life

Maximum: For 10 years term- 60 years

For 20 years term- 50 years

For 30 years term- 40 years

For Whole Life- 60 years

Duration:

Minimum: 10 years

Maximum: 70 years (assuming whole life to be 100 years)

Maturity Age: 70 years for the term- 10,20,30 years

100 years for whole life

Premium Payment Term: For 10 years term- 3, 5yrs or regular coverage paying

period.

For 20 yrs, 30yrs term and Whole Life- 5yrs, 10 yrs or

regular coverage paying period.

102

Premium Investment: Premium collected is invested in Seven Investment Fund

Options:

1. Assure

2. Protector

3. Builder

4. Enhancer

5. Creator

6. Magnifier

7. Maximiser

Benefits:

1. Guaranteed Addition : It is in the form of additional units, which is added to the

fund value on the 10th policy anniversary and on every 5th policy anniversary

thereafter, while policy is in effect.

2. Partial Withdrawal Options : Partial Withdrawals can be made after 3 policy years

or when the life insured attains maturity, whichever is later. The minimum partial

withdrawal amount is Rs.10000

3. Surrender Benefits : Policy offers the flexibility of surrendering the policy, if the

need arises. There is no surrender charge after 6 completed policy years.

However, if the policy is surrendered within 3 years from inception, the surrender

value is paid after the completion of the third policy anniversary.

103

4. Death Benefits :

Below 5 years: If the death of the life insured take place before 5 years,

only the fund value shall be payable to the policy owner.

Between 5 to 60 years: Higher of the fund value or the sum assured less

all applicable partial withdrawals made in the last 24 months preceding

the death of the life insured.

60 years and Above: Higher of the fund value or the sum assured less all

applicable partial withdrawals made since the life insured attained the age

of 58.

5. Maturity Benefits : On maturity of the policy, the fund value is payable. Under the

whole life option, on maturity of the policy, when the life insured attains the age of

100, then fund value is payable and the policy will be terminated.

6. Tax Benefits : Tax benefits on premium payment are governed by section 80C of

the Income Tax Act 1961. Tax Exemptions on the amount received on maturity in

the unfortunate event of death and the withdrawals are governed by section

10(10D).

7. Addition of Riders : Policy holder can customize the plan by adding any of the

following 6 riders:

1. Accidental Death & Dismemberment Rider

2. Term Rider

3. Critical Illness Rider

104

4. Critical Illness Plus Rider

5. Critical Illness Women Rider

6. Waiver of Premium Rider

Charges:

1. Premium Allocation Charges : These charges during the premium paying term are

as under:

Policy Year

1 2 or 3 Thereafter

Charge 13% 4% 2%

This charge on Top-up and underwriting extra is 2%.

2. Mortality Charge : This charge will be deducted by cancellation of units on a

monthly basis at the prevailing NAV. The Annual Mortality charge per 1000 of the

Sum at risk for sample ages are as follows:

Age 25 35 45 55 65

105

Female 1.023 1.162 2.385 6.441 15.92

Male 1.083 1.363 3.110 8.571 21.06

3. Fund Management Charge : This is charged by adjustment of the daily NAVs.

The charge is:

1% p.a. for Assure, Protector, Builder and Enhancer Fund.

1.25% p.a. for Creator, Magnifier and Maximiser Fund.

4. Policy administration Charge : The charge is deducted by canceling units on a

monthly basis at the prevailing NAV. The annual charge differs according to the

Life Insurance Coverage Sum Assured and Life Insurance Coverage Paying

Period. The maximum charge is 6.10 and the minimum charge is 0.00

5. Surrender Charge : These charges are levied as the percentage of the annual life

insurance coverage Premium payable. Charges are as follows:

Policy Year 1 2 3 4 5 6 7+

Surrender Charge30% 20% 15% 10% 8% 6% NIL

106

6. Rider Premium Charge : If the riders are attached, this charge will be realized by

cancellation of units on a monthly basis based on the equivalent monthly rider

coverage premium payable, when rider coverage payment period equals the

rider coverage benefit period.

3- Gold Plus II Plan

The plan gives much more than a good insurance cover, an opportunity to grow

investment for the medium term. It is worth more than Gold.

Features:

It is a Unit Linked, Non-Participating, Insurance plan.

Duration of plan is 8 years.

Premium paying term of 3 years with the flexibility to reduce premium up to Rs.

10000 from the second policy year.

Plan also has Top-up facility.

Liquidity in the form of Partial Withdrawals and Surrender Benefits.

Plan has 7 fund options.

Free unlimited fund switching and premium redirection

Eligibility:

Entry Age: 18 to 70 years.

Minimum Premium: Rs.50000

Minimum sum Assured: 5 x Annual Premium

107

Premium Investment: Premium collected is allocated in varying proportions in seven

investment fund options. Policyholder can switch between the fund options anytime

during the tenure of the policy. The seven Investment Funds available are:

1. Assure

2. Protector

3. Builder

4. Enhancer

5. Creator

6. Magnifier

7. Maximiser

Benefits:

1. Maturity Benefits :

On maturity fund value will be paid to the policyholder.

2. Death Benefits :

In the Unfortunate event of the Death of the Life Insured prior to the maturity date

of the policy, the nominee gets the greater of

(a) Fund Value

(b) Sum Assured reduced for partial withdrawal as follows:

Before the life insured attains the age of 60, the sum assured

payable on death is reduced by partial withdrawals made in the

preceeding years.

108

Once the Life Insured attains the age of 60, the Sum Assured

payable on death is reduced by all partial withdrawals made

from age 58 onwards.

3. Tax Benefits :

Policyholder is eligible for tax benefits U/S 80C and U/S 10(10D) of the Income

Tax Act 1961.

U/S 80C- Premium up to Rs.100000 is allowed as deduction from taxable

income each year.

U/S 10(10D) - The Benefits received under plan are exempted from tax.

Charges:

1. Premium Allocation Charges:

It is deducted from premium when received and before allocation of units.

Policy

Charges

Policy Years

1 2 3 4+

On Policy

Premium 8% 4% 4%

On top-up

Premium 2% 2% 2% 2%

109

2. Fund Management Charges :

Fund Management charge not exceeding 1.5% per annum of the fund value will

be charged by adjustments of the daily unit price. The charge is

1% p.a.- Assure, Protector, Builder and Enhancer

1.25% p.a. – Creator, Magnifier and Maximiser

3. Policy Administration Charges :

These charges are recovered by canceling units on a monthly basis

proportionately from each investment fund. The annual Rate per 1000 of Sum

Assured is:

Policy

Charges

Policy Years

1 2 3 4+

Policy

Administration

Charge *

19.4 19.4 19.4 14.4

* An additional 5 per 1000 will be charged in the first 3 policy years only on any

excess Sum Assured over Rs. 50000

4. Mortality Charges : These charges are deducted on a monthly basis. These

charges are taken by canceling units proportionately from each of the investment

110

funds at that time. The annual rate per 1000 of Sum Assured less fund value for

sample ages are:

Age 25 35 45 55 65

Female 1.023 1.162 2.385 6.441 15.92

Male 1.083 1.363 3.110 8.571 21.06

5 Surrender Charges:

These charges are applied when the policyholder surrender their policy in the

first 3 policy years. The surrender charge as a percentage of the annual policy

premium chosen at issue is

Policy

Charges

Policy Years

1 2 3 4+

Surrender

Charges15% 12.5% 10% nil

4- Supreme Life Plan

Features:

The plan is a Unit Linked Insurance Plan.

111

It provides the nominee with an increased sum assured and builds savings

faster.

The plan offers more protection of money at supremely low cost.

Provides with Supreme Accidental TPD (Total Permanent Disability).

Policyholder gets freedom to choose premium amount as low as Rs.25000

The plan provides with 6 Investment Fund Options.

The plan is flexible as it provides the policyholder with Top-Up Premium facility to

ensure faster growth in the Fund Value.

Partial Withdrawals, are allowed, after 3 years to meet liquidity needs of the

policyholder

Duration:

Policy Term : 10, 15, 20, 25, 30, 35, 40 Years.

Premium Payment Term : Policyholder can choose to pay premium at short or

regular intervals.

Premium Investment: Premium Collected is investment in six investment fund options.

These funds are:

1. Assure

2. Protector

3. Builder

4. Enhancer

5. Creator

6. Magnifier

Benefits:

1. Death Benefits :

112

Double Death Benefits i.e. Death Benefits= Sum Assured + Savings

Increasing Death benefits i.e. Death Benefit= Sum Assured + 25% every 5 th

year

2. Accidental TPD Benefit :

Policyholder immediately gets the original sum assured up to Rs.50 lac

Co. pays the future premiums up to age 60.

3. Switches & Redirection :

Policyholder gets flexibility to switch between the fund options. Two switches

are free per annum.

Charges:

1. Mortality Charges : Charges are deducted monthly by canceling units from the

associated fund option. The charge is 95%

2. Policy Administration Charges : These charges are deducted monthly by

canceling units from the investment fund. The annual charge is Rs. 720 on the

first 1000 Sum Assured in all years i.e. Rs.3.60 per 1000 Sum Assured p.a. The

additional charges for years 1-5 are as follows:

Term Band 1 Band 2 Band 3

10/15 4.75 4.25 4.00

20+ 3.75 3.25 3.00

113

3. Premium Allocation Charges : These charges are 5% for the 1st policy year and

2% for subsequent policy years.

4. Fund Management Charges : These charges are 1 – 1.25% p.a. for all associated

funds.

5- Platinum Plus Plan

Features:

This plan is a Unit Linked, Non-Participating, Insurance plan.

A policy term of 10 years.

A premium paying term of 3 years.

One Innovative Investment fund, namely Platinum Plus Fund I.

Full Liquidity after three policy years to meet any cash needs.

Unique Guaranteed Maturity Unit Price representing the highest unit plus price of

Platinum Plus Fund I recorded on 88 reset dates starting on March 17, 2008 and

ending on June 15, 2015.

Eligibility:

Entry Age of Life Insured: 18 to 70 Years.

Minimum Annual Premium: Rs. 1,00,000

Minimum Sum Assured: 5xAnnual Premium.

Premium Collected is invested in the Equity & Debt Market according to the preset Asset

Allocation of the Platinum Plus Fund I.

Benefits:

1. Guaranteed Maturity Unit Price

Minimum of Rs. 10 on the first Reset Date

114

At maturity, is the highest Unit Price recorded on 88 Reset Dates

2. Maturity Benefits

Number of units multiplied by higher of Guaranteed Maturity Unit Price or

prevailing Unit Price at maturity

3. Surrender Benefits

Full liquidity after 3 policy years –100% Fund Value*

4. Death Benefits

Higher of Fund Value (as per the then prevailing unit price) or Sum Assured (less

applicable partial withdrawals)

5. Tax Benefits

U/S 80C- Premium up to Rs.100000 is allowed as deduction from taxable income

each year.

U/S 10(10D) - Benefits from the plan are exempted from tax.

Charges:

1. Premium Allocation Charges : 10% of premium in the first year and 4% of

premium in subsequent years.

2. Fund Management Charges : 1.00%-1.50% p.a. for Assure & 1.50%-2.00% p.a.

for Platinum Plus Fund I.

115

3. Policy Administration Charges : These charges are deducted monthly by

canceling units from the investment fund Assure first and then, from Platinum

Plus I, if required. The annual charge is Rs. 720 on the first 1000 Sum Assured in

all years plus Rs.6 per 1000 Sum Assured in years 1 to 3 only.

4. Mortality Charges : Charges are deducted monthly by canceling units from the

associated investment funds. The Annual Charges for sample ages are as

follows:

Attained Age 25 35 45 55 65

Female 1.023 1.162 2.385 6.441 15.920

Male 1.083 1.363 3.110 8.571 21.060

5. Surrender Charges : This charge, as a percentage of the annual premium at

issue, is 16%, 13% and 10% for policy year 1, 2 and 3 respectively.

6. Revival Charge : The charge for policy revival is Rs. 100-1000 per revival

B

FUNDS BY BSLI

116

irla Sun Life Insurance, a leading Life Insurance company, offers its clients with a long

range of Funds. These funds are designed to cater to a variety of needs of people who

are from different life stages. BSLI offers a broad range of 12 funds, each having

differing asset allocations.

12 funds offered are:

1. Individual Protector

2. Individual Assure

3. Individual Balancer

4. Individual Builder

5. Individual Creator

6. Individual Enhancer

7. Individual Life Maximiser

8. Individual Magnifier

9. Individual Multiplier

10. Pension Nourish

11. Pension Enrich

12. Pension Growth

A new fund named Platinum Plus Fund I is also added in this list of funds.

117

Asset Allocation is decided by the Fund Managers of the company. These fund

managers continuously tracks the movements of volatile market and combine this

volatility with the fund requirements of the policyholders. Accordingly he decides

allocation of assets in 5 major investment options:

Government Securities

Corporate Debt

Securitized Debt

Equity

Money Market Instruments

Proportion of allocating the fund in these options, vary according to the needs and fund

requirements of policyholders. The most important thing to be noticed here is that this

portfolio is decided, based on the regulations of IRDA. Performances of these funds are

rated by the rating agency-CRISIL.

All the 12 funds by BSLI are described below along with their respective Asset

Allocations.

Individual Assure

Objective: The primary objective of this fund is to provide Capital Protection, at a high

level of safety and liquidity through judicious investments in high quality short-term debt.

Strategy: Generate better return with low level of risk through investment into fixed

interest securities having short-term maturity profile.

Asset Allocation:

118

SECURITIES HOLDING

Corporate Debt 59.57%

Money Market Instruments 17.97%

TOTAL 100.00%

Individual Balancer

Objective: The objective of this fund is to achieve value

creation of the policyholder at an average risk level over

medium to long-term period.

Strategy: The strategy is to invest predominantly in debt

securities with an additional exposure to equity, maintaining

medium term duration profile of the portfolio.

Asset Allocation:

119

SECURITIES HOLDINGS

Government Securities 10.67%


120

Equity 23.44%


TOTAL 100.00%

Pension Growth

Objective: This fund option is designed to build the capital

and to generate better returns at moderate level of risk, over

a medium or long-term period through a balance of

investment in equity and debt.

Strategy : Generate better return with moderate level of risk

through active management of fixed income portfolio and

focus on creating long term equity portfolio which will

enhance yield of composite portfolio with low level of risk

appetite.

Asset Allocation

SECURITIES

Government Securities

Corporate Debt

Equity

Money Market Instruments

TOTAL

:

121

Pension Enrich

Objective: Helps to grow the capital through enhanced

returns over a medium to long-term period through

investments in equity and debt instruments, thereby providing

a good balance between risk and return.

Strategy: To earn capital appreciation by maintaining

diversified equity portfolio and seek to earn regular return on

fixed income portfolio by active management resulting in

wealth creation for policyholders.

Asset Allocation:

SECURITIES HOLDINGS

Government Securities 14.35%


Equity 32.69%


TOTAL 100.00%

122

123

COMPARATIVE ANALYSIS

BIRLA SUN LIFE UNIT LINKED ENDOWMENT PLUS II v/s LIC LIFE TIME GOLD:

BIRLA SUN LIFE Unit Linked Endowment Plus II LIC Time Gold

Impact of charges on returns:

ROLLING RETURN – BIRLA SUN LIFE v/s LIC Pru Maximis

BIRLA SUN LIFE lic Pru Maximiser II

BIRLA SUN LIFE UNIT LINKED ENDOWMENT WINNER v/s LIC SARAL JEEVAN PAN:Table 1:

FEATURES BIRLA SUN LIFE simplifies

LIC saral jeevan plan

Free switches 24 per policy year Unlimited

Policy Adminstration

Charges^

Rs. 60 per month Rs per month

Min max

1-3 yrs 214 2940

4 yrs 64 440

Free Partial Withdrawals^

6 per policy year unlimited

Premium Allocation

Charge

Yearly Frequency

Year1 20% 0%

Year2 20% 0%

Year3 0% 0%

Fund management charge

1.25% across all funds magnifier 1.25%

Multiplier 1.50%

Impact of charges of returns:

Assumed rate of retuen

10% 6% 10% 6%

15 yeras 6.8% 2.9% 6.2% 2.2%

BIRLA SUN LIFE UNIT LINKED ENDOWMENT WINNER v/s LIC SARAL JEEVAN PAN:Table 2:

FEATURES BIRLA SUN LIFE Unit Linked Endowment Winner

LIC Saral Jeevan Plan

Minimum Annual

Premium

Rs. 20,000* derived from age, policy term & sum assured.

Additional Allocation of

Units^

Bumper Addition on maturity - 70% of Original annualised premium

NA

Top-Ups Allowed Not allowed

Administration Charges 60 per month Rs per month

Min max

Year 1-3

214 2940

Year 4+

64 440

Premium Allocation

Charge

Yearly frequency

Year1 40% NIL

Year2 30% NIL

Yaer3 2% NIL

Fund Management

Charge (p.a.)

1.25 across all fumds magnifier 1.25%

multiplier 1.50%

Impact of charges of returns:

Assumed rate of retuen

10% 6% 10% 6%

15 yeras 7.2% 3.5% 6.4% 2.4%

TERM ASSURANCE PLANS:FEATURES BIRLA SUN LIFE Term

Assurance Plan

LIC Anmol

Jeevan I *

Minimum

Annual

Premium

Rs. 2,000

Minimum Sum

Assured

Rs. 8 Lakhs 5 Lakhs

Policy

Term(yrs)

10 - 30 5 - 25

Age at

Entry(yrs

18 - 55 18 - 55

Max.Age at

Maturity(yrs)

65 65

High Sum

Assured

35% on the excess of

premium over the

NA

Discount premium corresponding

to a Sum Assured of

Rs. 25 Lac

RESEARCH METHDOLOGY

TITTLE OF THE STUDY:Comparative study of customer preference for life insurance

scheme of LIC & BIRLA SUN LIFE.

INTRODUCTION:

Research in Common parlance refers to search for Knowledge. It’s a scientific and

systematic search for pertinent information on specific topic. Research is an art of

Scientific investigation its mean Systematized effort to gain new Knowledge.

According to Clifford woody “Research Comprises defining and redefining

problem formulating hypothesis or suggested solution Collecting, Organizing and

evaluating data making deductions and reaching Conclusion at Carefully testing the

Conclusion to determine whether they fit the formulating hypothesis.

Life insurance schemes, including pensions and life annuity policies, provide payments

depending on the life or the death of a particular person or persons.Life insurance

policies are issued in two basic types: term life and permanent life. This Project Study

intends to competitively analyze the customer preferences for life insurance schemes of

LIC and BIRLA SUN LIFE.

Types of the Research:

THERE ARE TWO TYPE OF RESEARCH DESIGN ARE FOLLOWING:-

http://www.wordiq.com/definition/Permanent_life_insurance

http://www.wordiq.com/definition/Term_life_insurance

http://www.wordiq.com/definition/Annuity

http://www.wordiq.com/definition/Pension

DESCRIPTIVE RESEARCH DESIGN QUANTITATIVE RESEARCH DESIGN

DESCRIPTIVE RESEARCH DESIGN:

Descriptive research includes survey and fact finding enquiries of different Kinds. The

major Purpose of descriptive research is description of State affairs as it exists in

present. In social and business research we quite often use. We have done Survey

found fact by personal interview so it is descriptive.

QUANTITATIVE RESEARCH DESIGN:

Quantitative research is based on the measurement of quantity or amount. It is

applicable to phenomena that can be expressed in term of quantity. We have also found

requirement in quantity so it’s the quantitative research.

OBJECTIVE OF THE STUDY:

The Purpose of research is to discover answer to question through the Application of

scientific procedure. The main aim of research is to find out the truth which is hidden and

which has not been discovered as yet.

To know and apply different market research techniques in our study as follows:

o Sampling Design

o Research

o Questionnaire Design

To highlight the satisfaction level regarding products.

To know the perception regarding BIRLA SUN LIFE and LIC products and services.

To identify the basic function of life insurance of the both company.

To analysis the needs of the life insurance.

To understand the comparative analysis of product of LIC & BIRLA SUN LIFE.

Sample Size and method of Selecting Sample:

SAMPLE DESIGN:

Sample design refers to the technique or the procedure the researcher would adopt in

selecting item for the Sample. Sample design may be well lay down the number of items

to be included in the sample that is the size of the sample design is determined before

data are collected. There are many Sample designs from which a researcher can

choose some designs are relatively more precise and easier to apply than other

researcher must select a sample design which should be reliable and appropriate for his

research study.

Here we have used random sampling and the sample size was 50. We have made a

questionnaire through personal interview filled the questionnaire.

SAMPLING:

To serve the objective and study the scope banks we have designed two set of

questionnaires.

1. The first questionnaire was developed to study the product offering and facilities of

different Insurance companies as to check the level of competition in the market for

Private and public insurance companies.

2. The second quest was developed to check the level of satisfaction the people after

getting policies from their favorable organizations and the factors they consider

important while selecting a insurance companies to getting the policies And what

facilities they require from their insurer or their grievances arising due to non

fulfillment of their needs and what is their opinion regarding different categories of

the insurance companies.

DATA COLLECTION:

Basically there are two main method of data Collection primary data and Secondary

data. Primary data are those which are Collected freshly and the first time and thus

happen to be original in character. Other hand Secondary data are those which have

already been collected by someone else and which have already been passed through

the Statistical granting.

PRIMARY DATA:

QUESTIONNAIRE METHOD

This method of data collection is quite popular, particularly in case of big enquiries. It is

being adopted by private individuals, research workers private and public organization

and even by governments in this method a questionnaire Consists of a number of

question printed or typed in definite order on a form or set of form I have made a

Questionnaire for Survey. The inquiry was done of the respondents through

questionnaire in which the same set of questions were asked to the very respondents

falling within out sample. The advantage is that it is simple to administer easy to tabulate

and analyse.

PERSONAL INTERVIEWS

The interview method of collecting data involves presentation of oral verbal stimuli and

reply in term of oral verbal responses. We have used this method through personal

interview.

SECONDARY DATA:

Secondary data means data that are already available they refer to the data which have

already been collected and analyzed by someone else. We have used for it following

method Internet and journals of company. The search was done on internet and related

magazines, company’s websites to extract relevant information. The other necessary

information regarding HDFC & LIC products and offerings were obtained through printed

sources such as Handouts, Pamphlets, Advertisements and circulars etc.

LIMITATIONS:

Due to the financial & time constraints the study was limited to our place thus the

conclusion arrived in the end rely in short term experience.

Being an opinion survey the personal bases of the respondents might have entered

into their responses.

Time constraints resource constraints were some of the limitations.

The selected sample might have affected the results of the study therefore the

findings & conclusions of the study are only suggestive & not conclusive.

Sample was chosen according to convenience & judgment sampling & not according

to random sampling.

The sampling error that appeared due to the kind of sampling technique adopted.

Indifference and lack of interest disposed by a few respondents leading to

unauthentic responses.

Time proved to be a major constraint as far as collection and analysis of data was

concerned.

FACTS &FINDINGS

As part of the project we had make a survey with the help of questionnaire that has to

taken to different people to get perception towards HDFC and LIC product the

questionnaire is passed on the general public and requested to give their opinion toward

HDFC and LIC product the questionnaire Consists of both open and close ended

question the main motto behind the Study is to find out how people react against the

HDFC and LIC products and aware about the benefits of these products.

In research methodology we have used random sampling and sample size was 50.

Simple random sampling method is followed where every member of population have

equal chance of been selected. The questionnaire is administrated on sample to find out

their perception towards HDFC and LIC insurance product and benefits of product. After

analysis of questionnaire Conclusions were made based on finding from pie charts.

BIRLA SUN LIFESWOT ANALYSIS:

STRENGTHS: .

Strong and well spread network of qualified intermediaries and sales person.

Strong capital and reserve base.

The company provides customer service of the highest order.

Huge basket of product range which are suitable to all age and income groups.

Large pool of technically skilled manpower with in depth knowledge and

understanding of the market.

The company also provides innovative products to cater to different needs of

different customers.

WEAKNESS:

Heavy management expenses and administrative costs.

Low customer confidence on the private players.

Vertical hierarchical reporting structure with many designations and cadres

leading to power politics at all levels without any exception.

Poor retention percentage of tied up agents.

OPPORTUNITIES:

Insurable population –According to ING only 10% of the population is insure

which represents around 30% of the insurable population. This suggests more

than 300m people, with the potential to buy insurance, remain uninsured.

There will be inflow of managerial and financial expertise from the world’s leading

insurance markets. Further the burden of educating consumers will also be

shared among many players.

International companies will help in building world class expertise in local market

by introducing the best global practices.

THREATS:

Reorganization of PSU’s. The all PSU’s have started to redefine their services to

attract customer’s attention.

A few foreign Insurance companies have been permitted to increase their

number branches and its entry has taken away some business of the existing

companies.

Stringent norms by RBI in any time in future can be a threat to private insurance

companies as their activities can be adversely affected.

LIC of INDIA

SWOT ANALYSIS:

STRENGTHS:

India’s top insurance company and best among Public sector company.

Provide better infrastructure than any other Public company.

LIC of India provides various types of insurance policies to the customer.

LIC make good relationship with customers and provide extra unique features for

the customer who wants to take policy from bank

Provide all types of insurance advisories

The transparency is also much better from other insurance companies with least

employee turnover.

WEAKNESSES:

Average waiting time for the customer is 15 to 20 minutes.

No separate customer care unit.

Rude attitude of the employees.

There is no separate marketing cell in jaipur branches.

No other facility such as, multiplicity and free financial advice of the company .

OPPORTUNITIES:

Setup a marketing cell at the local branch.

Ensure that policies are diversified across several customer segments

Introduce robust risk scoring techniques to ensure better quality of policies , as well

as to enable better risk-adjusted returns at the portfolio level.

Raise the share of non-fund income by increasing product offering wherever

necessary by better use of technology

Reduce the impact of operational risks by putting in place appropriate frameworks to

measure risks, mitigate them or insuring them.

THEREATS:

Growth of private players has led to shifting emphasis from public sector companies.

Increase in foreign insurance companies resulted in taking away business from PSU’s

CONCLUSION

The products of BIRLA SUN LIFE & LIC are no doubt very good and it provides the

customized solution to its customer the products offerings are made so very flexible and

adaptable in order to get with the customer requirements. All the products and the

special offering at LIC loaded with lot of benefits for the customer. LIC is always there to

serve its customers with great speed. LIC has a wide network of branches amongst the

private sector insurance companies or BIRLA SUN LIFE to services its customer

efficiently.

Today LIC hold largest market shares in Public sector Insurance companies in India.

This is possible all because of its products and services. In the survey the most of the

customer are prefer the LIC products because of it provide the high return etc.

The LIC faces a large amount of competition. To sustain itself it must promote its

products through advertising and improve its selling techniques. Consumers must be

aware of the new plans available at LIC. The medium of advertising used could be

television since most of its competitors use this tool to promote their products. The

company must be promoted as an Indian company since consumers seem to have more

trust in investing in Indian firms.

LIC could tap the rural markets with cheaper products and smaller policy terms. There

are individuals who are willing to pay small amounts as premium but the plans do not

accept premiums below a certain amount. It was usually found that a large number of

males were insured compared to females. Individuals below the age of 30 (mostly male)

were interested in investment plans. This was a general conclusion drawn during

prospecting client.

RECOMMENDATION

Banks should have extensive advertising to attract potential Customers.

Adequate training improves the skill of employee.

Company should put stress on market Capture.

Adequate transparency in product plan and policies

Maintain proper Customer relationship

Company should publish its weekly review of internal or external Competitive business.

There must be proper management information system in Banks

Monthly NAV statement to provide to the customer.

Time to time banks launched new loan products for the customers with extra unique

features.

Questionnaire:

Dear Sir/Madam,

I am the student of Poornima College of engineering (DMS) and I am conducting a

survey on Comparative study of customer preference for Life Insurance scheme of LIC &

BIRLA SUN LIFE. The following questionnaire has been drafted to make me understand

the needs and expectations of the customers. Therefore I request you to kindly spare

some time and give me the following information. I assure you that the results of the

study will be kept confidential.

Q1. Age group

{A} < 29 {B} 29-39

{C} 40-49 {D} > 50

Q2. Annual Salary / Income

{A} 80,000 -100,000 {B} 100000 - 500000

{C} 500000 -1000000 {D} > 10000000

Q3. Do you have a life insurance policy/investment plan in your name?

{A} Yes {B} No

Q4. If yes which company’s insurance policies do you hold?

{A} HDFC Standard Life Insurance {B} LIC

{C} Max new York {D} Others (specify name)________

Q5. Reasons behind the selection of particular company:-

_______________________________________________________________________________________________________________________________________________________________________________________________________________

Q6. Do you compare the insurance products of one company with another before purchasing them:-

{A}Yes {B} No

Q7. What kind of life insurances would suit you best in your current stage of life?

{A} Term life policy {B} Whole life policy

{C} endowment policy {D} child plan

{E} others

Q8. What motivates you to purchase life insurance plans?

{A} Advertisements {B} High Returns

{C} Advice from friends {D} Family responsibilities

{E} other specify

Q9. From where do you get the knowledge of insurance products:-

{A} Print media {B} electronic media

{C} both {D} others

Q10. No. of life Insurance(s) you already have:-

{A} One {B} Two

{C} Three {D} More

Q11. In which kind of company would you prefer to make a purchase of insurance?

{A} Government owned company {B} Private Company

{C} Foreign based company {D} Public Company

Q12. From how long times have you got this plan?

{A} < 3 years {B} 3 − 5 years

{C} 5− 7 years {D} > 7 years

Q13. What % of your savings goes into investment?

{A} < 25% {B} 25 - 50%

{C} 51-75% {D} > 75 %

Q14. How much amount do you willing to pay as premium?

{A} 5,000−25,000 {B} 25,000−50,000

{C} 50,000−100,000 {D}100,000−500,000

Q15. How do you want to pay your premium?

{A} Annually {B} Semi annually

{C} Quarterly {D} Monthly

Q16 How much would you be willing to spend per annum if you were to go for an investment/insurance plan?

{A} Less than Rs.10,000 {B} Rs.11,001 – Rs.50000 {C} Rs.50,001 – Rs.100,000 {D} Rs.100,000 & more

Q17 Typically what kind of returns would you look at from your investments? (Please note: Higher returns involve greater risk)

{A} Less than 10% {B} 11% - 20 % {C} 21% - 30 % {D} 30% & more

Q18 Which according to you is an ideal policy term? (Number of years you would be willing to pay premium)

{A} 3 to 10 years {B} 11 to 20 years

{C} 21 to 30 years {D} 30 years

Personal Details:

Name:

Address:

Age: ContactNo. :

Profile of respondent:

Student Housewife

Working Professional Business Self – Employed Government

Service Employee

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vaskar

Documents

insurance market

royal insurance

overviewhistory of insurance

insurance regulatory

insurance public

life insurance sector

indian mercantile insurance

returns of insurance