LIC an investment alternetive

LIC – An Investment Alternative

CHAPTER 1

INSURANCE
1. INTRODUCTION 2. DEFINATION 3. FUNCTION’S OF INSURANCE

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LIC – An Investment Alternative

INTRODUCTION Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk attached to individual. The risks which can be insured against include fire, the peril of sea, death, incident, & burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved. “Insurance is a contract between 2 parties whereby one party called insurer undertakes in exchange for a fixed sum called premium to pay the other party happening of a certain event.”
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LIC – An Investment Alternative

Definition of Insurance
Insurance is a contract whereby, in return for the payment of premium by the insured, the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events. With the help of insurance, large number of people exposed to a similar risk makes contributions to a common fund out of which the losses suffered by the unfortunate few, due to accidental events, are made good. ? General Definition: In the words of John Magee, “Insurance is a plan by which large number of people associate themselves and transfer to the shoulders of all, risks that attach to individuals.” ? Fundamental Definition: In the words of D.S. Hansel, “Insurance may be defined as a social device providing financial compensation for the effects of misfortune, the payment being made from the accumulated contributions of all parties participating in the scheme.” ? Contractual Definition: In the words of Justice Tindal, “Insurance is a contract in which a sum of money is paid to the assured as consideration of insurer’s incurring the risk of paying a large sum upon a given contingency.”

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LIC – An Investment Alternative

FUNCTION OF INSURANCE:

1) Primary Functions: The primary functions of insurance include the
following. i) Provide Protection: The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for the losses of risk. Professor Hopkins observe "Insurance is a protection against economic loss, by sharing the risk with others.” ii) Collective bearing of risk: Insurance is a device to share the financial loss of few among many others. Dinsdale opines, insurance is a mean by which few losses are shared among longer people. Similarly, William Be ridge observes, "The collective bearing of risks is insurance." All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid. iii) Assessment of risk: Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. Risk is the basis for determining the premium rate also. iv) Provide certainty: Insurance is a device which helps to change from uncertainty to uncertainty. This may the reason that John Magee writes that the function of insurance is to provide certainty. Similarly, Riesel and-Miller observe,

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"Insurance is device whereby the uncertain risks may be made more certain".

LIC – An Investment Alternative

2) Secondary functions:
i) Prevention of losses: Insurance cautions individuals and businessmen to adopt suitable device to prevent unfortunate consequences of risk by observing safety instructions; installation of automatic sparkler or alarm systems, etc. Prevention of losses cause lesser payment to the assured by the insurer and this will encourage for more savings by way of premium. Reduced rate of premiums stimulate for more business and better protection to the insured. ii) Small capital to cover larger risks: Dins dale observes, insurance relieves the businessmen from security investments, by paying small amount of premium against larger risks and uncertainty.

iii) Contributes towards the development of larger industries: Insurance provides development opportunity to those larger industries having more risks in their setting up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery.

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LIC – An Investment Alternative

3) Other functions: ? Means of savings and investment: insurance serves as savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured’s For the purpose of availing income-tax exemptions also, people invest in insurance.

? Source of earning foreign exchange: Insurance is an international business. The country can earn foreign exchange ^ by way of issue of marine insurance policies. Promotes exports insurance makes the foreign trade risk free with the help of different types of policies under marine insurance cover.

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LIC – An Investment Alternative

CHAPTER 2

LIFE INSURANCE
1. INTRODUCTION 2. LIFE INSURANCE IN INDIA 2.1 INTRODUCTION 2.2 TYPES OF LIFE INSURANCE 3. LIST OF LIFE INSURERS
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LIC – An Investment Alternative

INTRODUCTION
Life insurance is a contract that pledges payment of an amount to the person assured (or his nominee) on the happening of the event insured against.

The contract is valid for payment of the insured amount during:
? ? ?

The date of maturity, or Specified dates at periodic intervals, or Unfortunate death, if it occurs earlier.

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LIC – An Investment Alternative Among other things, the contract also provides for the payment of premium periodically to the Corporation by the policyholder. Life insurance is universally acknowledged to be an institution, which eliminates 'risk', substituting certainty for uncertainty and comes to the timely aid of the family in the unfortunate event of death of the breadwinner. By and large, life insurance is civilization’s partial solution to the problems caused by death. Life insurance, in short, is concerned with two hazards that stand across the life-path of every person: 1. That of dying prematurely leaves a dependent family to fend for itself.

2. That of living till old age without visible means of support.

LIFE INSURANCE IN INDIA
? INTRODUCTION
Life Insurance is the fastest growing sector in India since 2000 as Government allowed Private players and FDI up to 26% and recently Cabinet approved a proposal to increase it to 49%. Life Insurance in India was nationalized by incorporating Life Insurance Corporation (LIC) in 1956. All private life insurance companies at that time were taken over by LIC.

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LIC – An Investment Alternative In 1993, the Government of India appointed RN Malhotra Committee to lay down a road map for privatization of the life insurance sector. While the committee submitted its report in 1994, it took another six years before the enabling legislation was passed in the year 2000, legislation amending the Insurance Act of 1938 and legislating the Insurance Regulatory and Development Authority Act of 2000. The same year the newly appointed insurance regulator - Insurance Regulatory and Development Authority IRDA—started issuing licenses to private life insurers.

? TYPES OF LIFE INSURANCE IN INDIA
Life insurance products come in a variety of offerings catering to the investment needs and objectives of different kinds of investors. Following is the list of broad categories of life insurance products:
? Term Insurance Policies

The basic premise of a term insurance policy is to secure the immediate needs of nominees or beneficiaries in the event of sudden or unfortunate demise of the policy holder. The policy holder does not get any monetary benefit at the end of the policy term except for the tax benefits he or she can choose to avail of throughout the tenure of the policy. In the event of death of the policy holder, the sum assured is paid to his or her beneficiaries. Term insurance policies are also relatively cheap to acquire compared to other insurance products.
? Endowment Policies

This basically falls into the category of an insurance-cum-investment product. Unlike a regular term insurance policy, an endowment plan provides returns on investment at the end of the policy term. There are several varieties of endowment plans, and the rate of returns and the type of benefits can vary based on the kind of endowment plan an individual has opted for. With an endowment plan, a persona can opt for insurance products that provide both the benefit of insurance as well as investment.
? Money-back Policies

Money back policies are basically an extension of endowment plans wherein the policy holder receives a fixed amount at specific intervals throughout the duration of the policy. In the event of the unfortunate death of the policy holder, the full sum

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LIC – An Investment Alternative assured is paid to the beneficiaries. The terms again might slightly vary from one insurance company to another.
? Unit-linked Insurance Policies (ULIP)

Unit linked insurance policies again belong to the insurance-cum-investment category where one gets to enjoy the benefits of both insurance and investment. While a part of the monthly premium pay-out goes towards the insurance cover, the remaining money is invested in various types of funds that invest in debt and equity instruments. ULIP plans are more or less similar in comparison to mutual funds except for the difference that ULIPs offer the additional benefit of insurance.
? Pension Policies

Pension policies let individuals determine a fixed stream of income post retirement. This basically is a retirement planning investment scheme where the sum assured or the monthly pay-out after retirement entirely depends on the capital invested, the investment timeframe, and the age at which one wishes to retire. There are again several types of pension plans that cater to different investment needs. Now it is recognized as insurance product and being regulated by IRDA.

LIST OF LIFE INSURERS
Apart from Life Insurance Corporation, the public sector life insurer, there are 23 other private sector life insurers, most of them joint ventures between Indian groups and global insurance giants. Life Insurer in Public Sector 1. Life Insurance Corporation of India Life Insurers in Private Sector

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LIC – An Investment Alternative 1. SBI Life Insurance 2. Metlife India Life Insurance 3. ICICI Prudential Life Insurance 4. Bajaj Allianz Life 5. Max Life Insurance 6. Sahara Life Insurance 7. Tata AIG Life 8. HDFC Standard Life 9. Birla Sunlife 10. Kotak Life Insurance 11. Aviva Life Insurance 12. Reliance Life Insurance Company Limited - Formerly known as AMP Sanmar LIC 13. ING Vysya Life Insurance 14. Shriram Life Insurance 15. Bharti AXA Life Insurance Co Ltd 16. Future Generali Life Insurance Co Ltd 17. IDBI Fedaral Life Insurance 18. AEGON Religare Life Insurance 19. DLF Pramerica Life Insurance 20. CANARA HSBC Oriental Bank of Commerce LIFE INSURANCE 21. IndiaFirst Life Insurance Company 22. Star Union Dia-ichi Life Insurance Co. Ltd 23. Edelweiss Tokio Life Insurance Company Ltd

CHAPTER 3
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LIC – An Investment Alternative

LIFE INSURANCE CORPORATION
1. INTRODUCTION 2. HISTORY 3. CHARACTERISTIC OF LIC SERVICES 4. OBJECTIVES OF LIC 5. MISSION & VISION 6. 8 PS OF LIC 7. LIC OPERATES ALL OVER INDIA 8. ORGANIZATIONAL STRUCTURE OF LIC 9. PRODUCTS OF LIFE INSURANCE CORPORATION 10. CORE PRODUCT AND SUPPLEMENTARY SERVICES OF LIC 11. GROWTH OF LIC 12. THE LIC SERVICE TRIANGLE MODEL 13. SERVICE ENCOUNTER CASCADE 14. DATA ANALYSIS & INTERPRETATIONS 15. CONCLUSION 16. BIBLIOGRAPHY

? Revival of lapsed Policy ? Grievance redressed

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? Policy Page | 13 status report ? Post sales services

INTRODUCTION

LIC – An Investment Alternative

The Life Insurance Corporation (LIC) was established in India with a view to provide an insurance cover against various risks in life. A monolith then, the corporation, enjoyed a monopoly status and became synonymous with life insurance. Its main asset is its staff strength of 1.24 lakh employees and 2,048 branches and over six lakh agency force. LIC has hundred divisional offices and has established extensive training facilities at all levels. At the apex, is the Management Development Institute, seven Zonal Training Centers and 35 Sales Training Centers. LIC of India is one of India’s leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking to stock broking to mutual funds to life insurance to investment banking, the group caters to the financials needs of individuals and corporate. The LIC has a net of over Rs. 1,800 crore. With a presence in 82cities in India and it services a customer base of over 20, 00,000. At the industry level, along with the Government and the GIC, it has helped establish the National Insurance Academy. It presently transacts individual life insurance businesses, group insurance businesses, social security schemes and pensions, grants housing loans through its subsidiary; and markets savings and investment products through its mutual fund. It pays off about Rs 6,000 crore annually to 5.6 million policyholders. It has been started with the objectives of spreading Life Insurance widely and in particular to the rural areas, meet the various life insurance needs of the community that would arise in the changing social and economic environment.

HISTORY
The story of insurance is probably as old as the story of mankind. The same instinct that prompts modern businessmen today to secure themselves against loss and disaster

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LIC – An Investment Alternative existed in primitive men also. They too sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is largely a development of the recent past, particularly after the industrial era – past few centuries – yet its beginnings date back almost 6000 years. Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and Indian natives were not being insured by these companies. However, later with the efforts of eminent people like Babu Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian lives were being treated as sub-standard lives and heavy extra premiums were being charged on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance companies. The United India in Madras, National Indian and National Insurance in Calcutta and the Co-operative Assurance at Lahore were established in 1906. In 1907, Hindustan Co-operative Insurance Company took its birth in one of the rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were some of the companies established during the same period. Prior to 1912 India had no legislation to regulate insurance business. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed. The Life Insurance Companies Act, 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary. But the Act discriminated between foreign and Indian companies on many accounts, putting the Indian companies at a disadvantage. The first two decades of the twentieth century saw lot of growth in insurance business. From 44 companies with total business-in-force as Rs.22.44 crore, it rose to 176 companies with total business-in-force as Rs.298 crore in 1938. During the mushrooming of insurance companies many financially unsound concerns were also

floated which failed miserably. The Insurance Act 1938 was the first legislation governing not only life insurance but also non-life insurance to provide strict state control over insurance business. The demand for nationalization of life insurance

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LIC – An Investment Alternative industry was made repeatedly in the past but it gathered momentum in 1944 when a bill to amend the Life Insurance Act 1938 was introduced in the Legislative Assembly. However, it was much later on the 19th of January, 1956, that life insurance in India was nationalized. About 154 Indian insurance companies, 16 non-Indian companies and 75 provident were operating in India at the time of nationalization. Nationalization was accomplished in two stages; initially the management of the companies was taken over by means of an Ordinance, and later, the ownership too by means of a comprehensive bill. The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the year 1956. Since life insurance contracts are long term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. Re-organization of LIC took place and large numbers of new branch offices were opened. As a result of re-organisation servicing functions were transferred to the branches, and branches were made accounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with re-organisation happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies. Today LIC functions with 2048 fully computerized branch offices, 109 divisional offices, 8 zonal offices, 992 satallite offices and the Corporate office. LIC’s Wide Area Network covers 109 divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer on-line premium collection facility in selected cities. LIC’s ECS and ATM premium payment facility is an addition to customer convenience. Apart from on-line Kiosks and IVRS, Info Centres have been commissioned at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access to its policyholders, LIC has launched its SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many other conveniences in the future. LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its own past records. LIC has issued over one crore policies during the current year. It has crossed

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LIC – An Investment Alternative the milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the corresponding period of the previous year. From then to now, LIC has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business. The same motives which inspired our forefathers to bring insurance into existence in this country inspire us at LIC to take this message of protection to light the lamps of security in as many homes as possible and to help the people in providing security to their families.

Characteristic of LIC Services

INTANGIBIL LITY

INSEPARABI LLITY

SERVICE

HETEROGE NEITY

PERISHABI LLITY

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The Life Insurance Corporation’s services can be explained with the help of the following:

LIC – An Investment Alternative

? Intangibility
LIC policies are an example of the way in which the financial services are presented to customers. They can enhance the image of the service and the provider can even bestow status or implied benefits upon the user. Physical reminders of the service product, brand name and value serve to reassure the consumer and help the organizations positioning.

? Inseparability
Many everyday transactions are carried out now via automated services are now very familiar because access to these systems has been broadened to allow use of any particular machine by customers of other institutions, the customer will often not be dealing directly with their own provider.

? Heterogeneity/variability
LIC helps the customer to make simple transaction via MIS – database management, Online Enquiry service, Downloading of Policy forms or via branch counter where they might be fairly standardized but subject to some variation in quality.

? Perishability
An insurance policy becomes perishable the minute it expires, but for the whole of is active duration it represents an ongoing service. LIC sell insurance on the basis that customers have a short‘cooling off’ period, in case the customer changes their mind or to offer them protection if heavy-handed sales pressure has been used. Everything that can be done to tangibilize the services by offering clear and attractive documentation, for example offering reassurance and confidence to the consumer is considered by the company.

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LIC – An Investment Alternative

OBJECTIVES OF LIC

? Spread Life Insurance widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country and providing them adequate financial cover against death at a reasonable cost. ? Maximize mobilization of people's savings by making insurance-linked savings adequately attractive. ? Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it holds in trust, without losing sight of the interest of the community as a whole; the funds to be deployed to the best advantage 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.

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LIC – An Investment Alternative

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."

? Vision

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

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LIC – An Investment Alternative

8 Ps of LIC 1) Product Mix of LIC
LIC has a variety of insurance plans to choose from. These plans cater to all categories of people and to their diverse needs. The plans are simply unmatched in reliability, benefits and in providing happiness and security.

LIC also provide the customer product mix facility where the customer can mix and match the product according to their needs. They may choose one policy at a time or six plans at a time. The customer here has to mention his age profile to the company.

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LIC – An Investment Alternative

2) Place & Time:
LIC has about 2048 branches- fully computerized covering all policy servicing aspects to give prompt computerized services from new policy introduction, acceptance of renewal premium, revivals, loans, etc to final claims settlement. ? LIC’s Wide Area Network covers 100 Divisional Offices connecting about 1500 Branches through network. This helps the customer to pay LIC premium in any of the Branches connected to the network. Green Channel facility has also been introduced for on the spot policy completion. ? Payment of premiums can be made through internet through service providers, viz., HDFC Bank, ICICI Bank, Times of money.com, Bill Junction.com, UTI Bank, Bank of Punjab, GTB Bank, City Bank, Corporation Bank, Federal Bank and Bill desk. ? LIC's website www.licindia.com has several features like product information on LIC’s various plans, ready reckoned for premium, online calculations of Income tax, installment premium and policy bonus, Insurance Advisor, etc. ? LIC has installed Information Kiosks at selected 150 locations which give policy status report, other details about life insurance plans and servicing aspects. Policyholders at the Metro Centers have been provided with toll-free telephone, access to contact the Grievance Redressed Officers for hassle free complaint processing. ? First Policy Service Info Centre was commissioned at Mumbai in March 2002. Info Centers at Pune, Delhi, Kolkata, Chennai, Ahmadabad, Hyderabad and Bangalore were also commissioned. This centre is equipped with state of art technology and manned by trained persons. People desiring any information regarding their life insurance needs and about their policies can get the same by calling the Info Centre Telephone. ? LIC also has Interactive Voice Response Systems in 59 urban centres. Customers can get selected information regarding their policies by calling the prescribed telephone numbers.

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3) Promotion & Education:

LIC – An Investment Alternative

For over 40 years LIC enjoyed total monopoly over the Insurance industry. It was the lone player providing insurance till late 1990s and early 2000- when the Insurance sector was thrown open to the private players. LIC still leverages on the publicity & recognition it earned in its 40 years. The services are still majorly promoted by the LIC agents/advisors, though in the recent years due to the entry of the private players LIC has started with aggressive marketing in the Mass Media. However it is still the LIC agents, who promote the company and communicate its benefit to the customers.

4) Price:
LIC offers a variety of policies, which differ according of the customers. The product of LIC is very relative to the customer and varies individually from customer to customer and as such the policies do not have a fixed price i.e. premium. These premiums vary according to the policies and the amount for which the insurance is taken and various other factors.

5) Physical Evidence:
LIC’s logo depicting an oil lamp covered by two hands is a symbolic portrayal of security and safety. It tangibles the LIC’s commitment of security and safety that are guaranteed by the policies. In addition LIC has made available to the customers the brochures and literatures relating to the services in regional languages so as to make it simple and easy to understand. Moreover the advertisement and other promotions of the LIC emphasize strongly on the safety aspect.

6) People:
LIC interact with two types of customers –internal and external on a regular basis. Internal customers are the agents and advisors who are employees as well as the customers of the company. LIC trains its internal customer and educates them about the various policies. It is these agents who act as an intermediary between the end consumer and the company; hence it required to train them properly. LIC communicates with its external customers through advertisements and various other promotional tools. It is of utmost importance that the agents deliver what the advertisements promise.

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LIC – An Investment Alternative

7) Process:
A consolidated database of registered policies is maintained by LIC. This database is updated at regular intervals on the basis of changes received from the original servicing branches. LIC also sends auto-mailers to the registered policyholders informing the registration status. LIC validates the registration data in case of payment through the service provider and informs the bank/service provider about the registration status. Since LIC’s database is de-centralized, generally it takes a week’s time for confirmation of registration data. ? LIC regularly send the bills/invoices mentioning the due dates, premium amount, late fees, validity date, etc to the service provider/bank of which the customer is a registered member. Information regarding the payment of the premium is displayed in the net banking account page. ? LIC service providers/banks also help the customer to pay the premium through auto pay facility and phone banking facility where the customer can follow the telephonic payment instructions. Customers are then informed through mail regarding the status of the registration or payment.

8) Productivity and Quality:
LIC has lived up to its standards but actually delivering what it has promised. LIC follows a stringent Customer redressed system and actually follows up on Customer feedback to help them serve better. ? For LIC it is not the end of the services once the customer has taken the policy. Services are provided by the company in terms of processing and release of claims. ? Afford the customers, opportunities to provide the organization with feedback about the perception of our services and to suggest improvement through customer surveys and customer needs. ? Providing opportunities to customers to meet the designated grievance redressed officer in all offices of the organization without the prior appointment

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LIC – An Investment Alternative

? In addition to Plan Suggest or the company also provides the customer the ready reckon, suggestion based upon income and suggestion based upon the investible amount. ? Customer service section of LIC guide through the various intricacies of a life insurance contract and the facts that a customer must know to make the best out of their life insurance policy like policy conditions, alteration in policy, if policy is lost, nomination, when to pay the premium, grace period for the payment of premium, surrender value, maturity, death claims etc. ? Enhancing customer conveniences in the communication, simplification of processes etc. areas of information and

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LIC – An Investment Alternative

LIC OPERATES ALL OVER INDIA

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LIC – An Investment Alternative

Organizational Structure of LIC

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LIC – An Investment Alternative

The organization is the form having independent or co-ordinated parts for unit action for the accomplishment of common objectives. As such the organization relating to insurance business is a form having different functional divisional units with the ultimate aim of providing effective services to the customers of the insurance products. An effective organization is essential to share information and effectively execute the managerial decisions. The organizational structure differs for different types of business. The organization structure is based on the objectives or mission of the business organization. The organization should be structured with an aim to coordinate, not only with internal managers or groups, but also with the external world, the customers, authorities and other persons directly or indirectly interested in it. The insurance business is concerned with the functions of marketing of insurance products and its related functions like premium collections and premium fixings, accepting the insurance proposals, issuing policy documents, maintain records relating t the policies issued everyday in chronological order, and also payment of claims. The claims department is associated with the receipt of claims and arrangement of claims investigations. After it is decided whether to make payment to the assured or to defer it, the insurance company may seek guidance from the panel of advocates. The insurance company needs to protect the company from the claims litigations of the clients by defending the claims in the courts and supervise other alternative dispute resolutions. Thus the insurance organization is associated with the marketing of policies, underwriting of policies, claims payment, claims defending and stiff matters. The delegation of duties to each unit with well-defined limitations, responsibilities and decision making are all related to the organizational structure and management.

? Basic structure of LIC
Today, most of functions, nearly 90%, related to the marketing and other related activities of the insurance consumers are dealt and handled at the branch level. The branch office, depending upon its business, is headed by a manager and each function of insurance business like marketing, underwriting of policies, accounts, claims payments, staff and administration matters are identified as departments of the branch office with responsible officials such as Administration and Accounts Officers (AAO). The managerial decisions are based on the information supplied by the AAO, the functional head at root level. All the functions of claims will be settled at the branch level. The AAO of life insurance business will deal with maturity and death claims. If the branch is smaller, all the types of claims will be dealt by one AAO and if the branch is bigger with good number of claims, they will be settled by, separate officials. At branch

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LIC – An Investment Alternative level, these officials have to maintain cordial relations and establish a system of sharing information with the other departments, relating to the policy documents, payment of premium and using the staff or the agents for the settlement of claims disputes. The branches maintain records relating to the claims payment and claims rejections. They wiill submit the reports to the Zonal Officer, who in turn will forward it to the Head Office or Corporate Office. The branches report to their respective divisional office. If any branch gets a claim and there is a problem in identifying the correct claimant among the claimants, or otherwise, a dispute of risk crops up, which will be forwarded to the divisional office with its comments. The divisional office after receiving the papers, verifies them, applies legal knowledge and skills, or seeks advice from skilled persons and tries to solve the problems. The divisional office is responsible to settle the claims referred by the branch office and also report the same to the zonal office, which in turn will consolidate the data and submit the same as required by the statute or otherwise under any law to the government. The government will put the same for the approval of the both the houses. At the division office level, the claims department generally deals with the claims, which are pending with the branches because of some disputes, or some claims which are of high value. The investment portfolio and establishment and maintenance of reserves for the purpose of claims payment or otherwise required under the law is the important function of the central office. Thus the organizational structure of the insurance business is most flexible and decided, based on the above said factors

PRODUCTS OF LIFE INSURANCE CORPORATION
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LIC – An Investment Alternative

? INSURANCE PLANS
As individuals it is inherent to differ. Each individual’s insurance needs and requirements are different from that of the others. LIC's Insurance Plans are policies that talk to you individually and give you the most suitable options that can fit your requirement.

? CHILDREN PLANS
Jeevan Anurag CDA Endowment Vesting At 21 CDA Endowment Vesting At 18 Jeevan Kishore Child Career Plan Jeevan Ankur Komal Jeevan Marriage Endowment Or Educational Annuity Plan Jeevan Chhaya Child Future Plan

? Plans for handicapped Dependend
Jeevan Aadhar Jeevan Vishwas

? Endowment assurance plans
The Endowment Assurance Policy The Endowment Assurance Policy-Limited Payment Jeevan Mitra(Double Cover Endowment Plan) Jeevan Mitra(Triple Cover Endowment Plan) Jeevan Anand New Janaraksha Plan Jeevan Amrit Jeevan Vaibhav (Single Premium Endowment Assurance Plan)

? Plans for high worth individuals

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LIC – An Investment Alternative Jeevan Shree-I Jeevan Pramukh

? Money back plans
The Money Back Policy-20 Years The Money Back Policy-25 Years Jeevan Surabhi-15 Years Jeevan Surabhi-20 Years Jeevan Surabhi-25 Years Bima Bachat

? Special money back plan for women
Jeevan Bharati - I

? Whole Life plans
The Whole Life Policy The Whole Life Policy- Limited Payment The Whole Life Policy- Single Premium Jeevan Anand Jeevan Tarang

? Term assurance plans

Two Year Temporary Assurance Policy The Convertible Term Assurance Policy Anmol Jeevan-I Amulya Jeevan-I

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? Joint life plan
Jeevan Saathi

LIC – An Investment Alternative

? UNIT PLANS
Unit plans are investment plans for those who realise the worth of hard-earned money. These plans help you see your savings yield rich benefits and help you save tax even if you don't have consistent income. Endowment Plus Flexi Plus

? SPECIAL PLANS
LIC’s Special Plans are not plans but opportunities that knock on your door once in a lifetime. These plans are a perfect blend of insurance, investment and a lifetime of happiness!

? Golden Jubilee Plan
New Bima Gold

? Micro Insurance Plans
Jeevan Madhur Jeevan Mangal Jeevan Deep

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? Special Plan
Bima Nivesh 2005 Jeevan saral

LIC – An Investment Alternative

? GROUP SCHEME
Group Insurance Scheme is life insurance protection to groups of people. This scheme is ideal for employers, associations, societies etc. and allows you to enjoy group benefits at really low costs.

? Group schme
Group LIC's Superannuation Plus Group Term Insurance Schemes Group Insurance Scheme in Lieu Of EDLI Group Gratuity Scheme Group Super Annuation Scheme Group Savings Linked Insurance Scheme Group Leave Encashment Scheme Group Mortgage Redemption Assurance Scheme Gratuity Plus Group Critical Illness Rider

? Social security scheme
JanaShree Bima Yojana (JBY) Shiksha Sahayog Yojana Aam Admi Bima Yojana

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LIC – An Investment Alternative

? Withdrawn Plan Jeevan Nischay Wealth Plus Jeevan Aastha Jeevan Varsha Fortune Plus Health Plus Pension Plus Market Plus I Profit Plus Money Plus-I Child Fortune Plus Jeevan Saathi Plus Samridhi Plus Jeevan Nidhi

New Jeevan Dhara-I New Jeevan Suraksha-I Jeevan Vriddhi

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LIC – An Investment Alternative

Core Product and Supplementary Services of LIC

? LIC health line ? Single window system ? Availing loans on policy ? Revival of lapsed Policy ? Grievance redressed system ? Claim settlement ? Online Calculation

? Computeri zed Services ? Instruction Manual ? Brochures in regional languages ? Installment premium ? Insurance Advisor

POLIC Y
? Payment through service providers

? Policy status report ? Post sales services ? Toll Free Phone ? New policy update

? Interactive Voice Response system

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LIC – An Investment Alternative

Growth of lic

Growth in 2008 - 09

Growth in July 2010 - 11

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LIC – An Investment Alternative

THE LIC SERVICE TRIANGLE MODEL

LIC

External marketing Internal marketing “Enabling Promises” “Making Promises”

Service provider

Customers

Interactive Marketing “Keeping Promises”

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LIC – An Investment Alternative

? EXTERNAL MARKETING
In this stage the company has to design the services according to the need and wants of the consumers. This requires the study of the market and knowledge of the consumers. LIC listens to the customers and evolves/develops various insurance policies and communicates the attractiveness and the utility of the policy directly to the customers. Here it (the company) performs external marketing. The company makes promises to the customers. LIC conducts the market survey, make use of business as well as marketing intelligence to tap the potential customer, make consumer aware of their existence through publicity, advertising etc…

? INTERNAL MARKETING
The customer comes to the LIC for availing the service, thus to “Enable the Promise” made; it becomes very essential for the company motivate their salesperson as well as to train them to serve the customer better. Necessary infrastructure, technology, security, facilities, after sales service, online information, claim settlement, easy structure for the payment of premium, flexibility in the policy, insurance advisor, and complaint cell are some of the attributes which form the part of the internal marketing and also enable the company to fulfill the promises made to the customers. The agents of LIC are ready to meet their prospects at their choice of destination, for the purpose of delivering the promise made to them. This also compromises of the internal environment and the mannerism existing in the company.

? INTERACTIVE MARKETING
Here the providers are the only ones who interact with the customers, like the insurance agents interact with the customers and not the company. The advisors interact with their customers and study their financial condition and offers policies accordingly. The agents perform interactive marketing which is on-time, all-time, everytime basis. This is the most crucial aspect of service marketing in the insurance sector. In LIC the agents remain in constant touch with their clients and gets in touch with them according to their convenience. THE MOMENTS OF TRUTH” is the provocative point and also the judgment period where the customer finally gauges the difference between the promises made, the promises kept, thus evaluating the service’s worth. These are called the “Moments of Truth” because what was dreamt is achieved and also if it is not

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LIC – An Investment Alternative achieved this moment gives an insight into the shortcomings and why it could not be achieved.

Service Encounter Cascade

Customer visits the LIC office (receptionist) for initial enquiry

Customer is asked to meet one of the agents, who does his need analysis. A date for next meeting is fixed.

The agent suggests the customer various policies suitable, and if the customer selects a policy the deal is done and other formalities are carried.

This is informal meeting where the agent meets the customer to remind him about payment of premium and other new information about the policies. The agent gets reference through such meetings.

This is also an informal meeting were the agent keeps a track of the customer and informs about the maturity of the polices. The agent does this to ask them to renew their policies.

Here the customer gets his policy money when matured.

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LIC – An Investment Alternative

Service Encounter Cascade:
From the customer’s point of view, the most vivid impression of service occurs in the service encounter, or “the moments of truth”, when the customer interacts with the company. It is in these encounters that the customers receive a snapshot of the organization’s service quality, and each encounter contributes to the customer’s overall satisfaction and willingness to do business with the organization again. From the organization’s point of view, each encounter thus presents an opportunity to prove its potential as a quality service provider and to increase customer loyalty. Some services have few encounters while other services have numerous encounters thus as seen in the above diagram, there exists primarily 6 contact points between the service provider and customer in company. The customer’s perception of quality is influenced in these encounters. Thus it is up to the service provider to deliver a high quality of offerings and thereby increase customer loyalty and satisfaction in these stages. LIC thus trains the agents and its employees to handle the customer in a very efficient manner, customer are suggested the various policies which suit their age, income, family, and other requirements. The providers here are trained in such a way so as to communicate in a best manner with the customer, the providers here are not only trained to sell the policies to the customer but also to handle the customer complaints and to provide after sales service, to inform them the new policies, the benefits of the policies, reminding them for their payment of premium, helping them to design their own policies etc… The company also sees that they can bridge the gap between customer an d the employees in order to achieve customer satisfaction. Interacting with the customer is not only at personal levels but also at the various other providers like when the customer makes the payment of the premium through its bank account affiliated with the LIC or through the ECS system or through telephone etc…

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LIC – An Investment Alternative

DATA ANALYSIS & INTERPRETATIONS

Q.1] Do you think that life insurance is a good investment? Yes No 90% 10%

10%

90% Yes No

As we have seen earlier, in present business scenario peoples are taking insurance as an investment

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LIC – An Investment Alternative

opportunity rather than safety. Therefore 90% gave preference towards investment option.

Q.2] WHICH BRAND WILL YOU PREFER?

Brand ICICI Prudential AVIVA Life Insurance HDFC Standard Life LIC TOTAL

PERCENTAGE 14 13 8 65 100

70% 60% 50% 40% 30% 20% 10% 0% AVIVA life insurance HDFC standard life ICICI 13% 8% 14%

65%

LIC

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LIC – An Investment Alternative

LIC is government sector player therefore people have more faith on LIC. In case of private player ICICI Prudential has largest network that’s why 14% people are giving importance to ICICI and 13% to AVIVA.

Q.3] What are the main considerations while investment in insurance?

MAIN CONSIDERATION Tax Saving & Investment Protection Pension TOTAL

NO. OF PEOPLE 36 16 34 14 100

40 35 30 25 20 15 10 5 0

36

34

Tax Saving & Investment 16 14 Protection Pension

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LIC – An Investment Alternative

Most of people investing in life insurance for Tax benefits and the second thing of their consideration are protection. Some people investing in insurance for pension scheme that’s why only 14% are considering insurance for pension.

Conclusion
Life Insurance Corporation of India (LIC) is the largest insurance group and investment company in India. Its a state-owned where Government of India has 100%stake. Over its existence of around 50 years, Life Insurance Corporation of India, which commanded a monopoly of soliciting and selling life insurance in India, created huge surpluses, and contributed around 7% of India's GDP in 2006. LIC gives the benefits from tax . LIC give the financial support to the family of investor who take the policy. LIC is also good retirement option . LIC is good place to invest your money because LIC is handled by the government there is security. LIC launch various polices according to needs of customer . LIC gives good retunes on investment. As compared to other life insurance companies LIC is give various choice of policies and

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give benefits more as compared to other life insurance companies. LIC is very good option for middle class people to invest their savings.

LIC – An Investment Alternative

BIBLIOGRAPHY
? BOOK REFERENCE
? STRATEGIC MANAGEMENT ? INNOVATION IN BANKING & INSURANCE

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LIC – An Investment Alternative

? MEDIA REFERENCE
? NEWS PAPER ? THE TIMES OF INDIA ? THE ECONOMICS TIME ? WEB SITES ? WWW.GOOGLE.COM ? WWW.WIKIPEDIA.ORG ? WWW.YAHOO.COM ? WWW.LIC.COM

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