Life Insurance in India

Description
it gives you the information about Indian insurance.
code of conduct for actuary and agents.
also tell about the player in Indian insurance sector.
the study mainly focuses on comparison between LIC of India and Reliance life insurance company, it takes some insurance product to compare with each other

CHAPTER 1 Introduction of Insurance
WHAT IS INSURANCE? Insurance is defined as a co-operative device to spread the loss caused by a particular risk over a number of persons who are exposed to it and who agree to ensure themselves against that risk. Risk is uncertainty of a financial loss. Insurance is a policy from large financial institutions that offers a person, company, or other entity reimbursement or financial protection against possible future losses or damages.

MEANING OF INSURANCE:The meaning of insurance is important to understand for anybody that is considering buying an insurance policy simply understanding the basics of finance. Insurance is a hedging instrument used as a precautionary measure against future contingent losses. This instrument is used for managing the possible risks of the future. Insurance is bought in order to hedge the possible risks of the future which may or may not take place. This is a mode of financially insuring that if such a incident happens then the loss does not affect the present well-being of the person or the property insured. Thus, through insurance, a person buys security and protection. A simple example will make the meaning of insurance easy to understand. A biker is always subjected to the risk of head injury. But it is not certain that the accident causing him the head injury would definitely occur. Still, people riding bikes cover their heads with helmets. This helmet in such cases acts as insurance by protecting him/her from any possible danger. The price paid was the possible inconvenience or act of wearing the helmet; this is equivalent to the insurance premiums paid.Though loss of life or injuries incurred cannot be measured in financial terms, insurance attempts to quantify such losses financially. Insurance can be defined as the process of reimbursing or protecting a
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person from contingent risk of losses through financial means, in return for relatively small, regular payments to the insuring body or insurance company.

TYPES OF INSURANCE:-

Insurance

Non-Life Insurance

Life Insurance

General Insurance

Miscellaneous Insurance

WHAT IS LIFE INSURANCE? Life insurance may be defined as a contract in which the insurer in consideration of a certain premium either in lump sum or other periodical payments, agrees to pay to the assured or to the person for whose benefits the policy is taken, a stated sum of money on the happening of a particular event contingent on the duration of human life. Thus, under a whole-life assurance, the policy is payable at the of the assured and under an endowment policy, the money is payable on the assureds‘ surviving a stated period of years.

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MEANING OF LIFE INSURANCE:According to sec (2) (11) of the Insurance Act, Life insurance business means ?the business effecting contracts upon human life?. It includes: a. Any contracts whereby the payment of money is assured upon death (except death by accident only) or the happening of any contingency dependent on human life. b. Any contract which is subject to the payment of premium for a term dependent on human life. c. Any contract which include the granting of disability and double or triple indemnity, accident benefits, the granting of annuities upon human life, and the granting of super-annuation allowances.

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CHAPTER 2 COMPANY PROFILE

LIC Of India .LTD
The Life Insurance Corporation of India has been a national-builder since its formation in1956. The performance of LIC has been exemplary and has been growing from strength be it customer base, agency network, branch office network, new business premium and the like. It has played a significant role in spreading life insurance widely across the country. True to objectives of nationalization, the LIC has invested the funds mobilized from policyholders for the benefit of the community at large. The other subsidiary companies under LIC are: ? Life Insurance Corporation (LIC) of India International – A joint venture offshore company promoted by LIC which commenced its operations in July, 1989 with the objective of offering policies denominated in US $ to NRIs residing in the Gulf. ? LIC Nepal – Formed in 2001 in joint venture with Vishal Group of Industries, Nepal. ? LIC Lanka – Formed in 2003 in joint venture with Bartleet Group of Companies, Sri Lanka ? LIC Housing Finance – Established in 19th June, 1989 in Dubai with the objective of providing long term finance for construction of houses or apartments. ? LIC Housing Finance Limited Care Homes – A wholly owned subsidiary of LIC Housing Finance which builds ?Assisted Community Living Canters? for senior citizens

Channels of Distribution
? Individual Agent: The individual agent has been the bedrock and
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the lynchpin in the marketing of insurance, especially life insurance. The professional agent has been the strongest link between the life insurer and the customer. The professional agent has the onerous role of explaining the concepts, terms and conditions, benefits and privileges of the insurance contract. He has to analyse the financial requirements and risks faced by the customers and market insurance plans suited to the needs and means of the customers. All insurance companies and life insurance companies in particular, have recognized the paramount importance of this channel. The number of agents has grown at a spectacular rate. The total number of agents on they roll is 11,03,047 as on 31.03.2007 as against 10,52,283 as on 31.03.2006. ? Corporate Agents: The number of corporate agents has grown in recent years. Corporate agent is a concept introduced with a view to taking advantage of the presence of a large number of entities with a sizeable client base, contacts and good will already operating in the market. With multi locations and a network of people assisting them, these entities have a different structure and purpose. Hence their existing network could be utilized to market insurance. The corporate agent could thus be defined as a person meaning a firm or company formed under the Companies Act, 1956 or a banking company or a Bank/RRB or a co-operative society registered under the Co-operative societies Act, 1912 or a panchayat or a NGO/MFI covered under the Coop Societies Act or a NBFC registered with RBI or any other institution. They assist greatly in the spread of insurance through the greater reach of the institutions. ? Brokers: Brokers are permitted to sell products of more than one insurer. Brokers have been very predominant in the non-life arena. Large risks require quite sophisticated expertise. Brokers have played a very key role in this area both in selling products and in servicing of Insurance claims. Brokers have now also entered the Life Insurance market. ? Bancassurance: Bancassurance is developing as an important
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channel in India. This is due to the large reach and customer base of banks in both urban and rural areas in India. The persistency rate in Bancassurance, due to the continuous contact with the client is better than in other channels. The ease of payment of premium and the facility of maturity/claim payments through the bank account make it a customer friendly channel. ? Referrals: This is a new concept very similar to getting a prospecting list and leads to affect sales with customers. It is evident that in addition to banks, there could be various other entities which could act as a referral provider due to the large database of members/clients, like credit cardholders association members, society members etc. In short, such institutions could share or market their database to provide leads to the intermediaries to sell insurance products. The referral provider is not a licensed intermediary, but can be regulated by the insurance Regulator, through approval of the terms of the agreement, between the insurer and the referral provider. ? Direct Marketing: In the new technological environment, new innovative marketing systems have evolved. The use of inter-net, web based sales, e- marketing, telecalling, mobile SMS have made giant strides in reaching out to customers. This is an emerging channel which in future may grow in size and proportion of sales. This channel requires active regulation which should be on issues of transparency, disclosure, privacy, contract, TRAI guidelines etc. It would be necessary to give full complete information through soft copies of proposal forms, schedules, policies etc.100 divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some banks and service providers to offer on-line premium collection facility in selected cities. 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, Ahmadabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access to its policy holders, LIC has launched
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? 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.

Awards Won
Some of the recent awards received by LIC are ? LIC has been ranked :? Number One Trusted Service Brand? in the Economic Times Brand Equity Survey for the year 2008 for the 5th consecutive year, with overall ranking across all categories going up from 27th to 12th. ? Readers Digest ?Trusted Brand?2008 in the platinum category. ? SKOCH Challengers Award 2008 for our Micro Insurance Product Jeevan Madhur. ? Customer & Brand Loyalty Award 2008 in the Life Insurance category from India times Mindscape. ? Rated as the ?Most Preferred Life Insurance Company of the year? at the CNBC Awaaz Consumer Awards 2007 third time in a row. ? ?Conferred Peacock Award ? for Excellence in Corporate Governance ? Conferred Outlook Money NDTV profit-?Best Life Insurer Award 2007? ? ?Web 18- Genius of the Web award -2007 ?For the best website in Insurance Category. ? Adjusted the? Best Life Insurance Company of the year? - at the Second NDTV Profit Business Leadership Awards-2007.

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Reliance Life Insurance .LTD
Reliance Capital Limited announced the launch of its life insurance business on February 1, 2006. This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority. It was in August 2005 that the ball was set rolling when Reliance Capital Limited, the financial arm of Reliance – Anil Dhirubhai Ambani Group (ADAG) – announced the requisition of 100% shareholding in AMP Sanmar Life Insurance Company Limited; and the formal transfer of shares took place in October 2005. The company will issue all policy contracts under the Reliance Life Insurance Company limited name. All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact. They have so many branches and substations in the India. They have around 160 branches in the India. And they have planned to open more branches across the country in the coming months.

Key Events
? Anil Dhirubhai Ambani Group (ADAG) announces the acquisition of 100 per cent shareholding in AMP Sanmar Life Insurance Co Ltd. ? Mr Nandgopal participates in a one-day conference on ?optimising growth opportunities through Distribution Matrix: ?Emerging Bancassurance‘ organized by the Asia Insurance Post at the Taj President, Mumbai. ? Reliance Life Insurance officially launched.

Channels of distribution
Reliance Life Insurance Company Limited is using five types of distribution channel, which are as follows:
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? Agency: Independent insurance agents represent a number of companies and can research these companies‘ products to find the right combination for their clients. Independent agents & insurance producer groups are growing in prevalence. Although producer groups are in their infancy, their emergence may potentially be realignment in the distribution of financial services. Independent shops realized that by pooling production and funding a central support office, they had increased buying power. The one type of distribution channel, which Reliance Life Insurance Co. Ltd is using, is an agency. ? Bank Assurance: While a lot of bank relationships with insurance companies have been established, life insurance sales have been slower than one would expect he primary bank insurance activities have been the distribution of annuities, credit life, and direct marketing insurance. Banks are failing to incorporate successful sales tactics used to sell other financial services like investments. Another type of distribution channel is bank assurance. This channel is tie up with banks. In this channel the advisors using or targeting the bank customers to make a business with them i.e., to sell the policy of the company. ? Corporate:To gain a better understanding of the demand amongst independent advisors for trust services and to gain a better feel for how independent advisors handle trust services, a research was performed with independent advisors across several broker/dealers and custodians. The interviews revealed that demand is greatest for living trusts among independent advisors, followed by demand for corporate trustee services. Another type of distribution channel is corporate, which are for employee benefits. This channel is tie up with corporate or small enterprises. Through these small enterprises, the advisors will sell the products/policy to customers of the small enterprises.

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? Rural Benefits:Brokerage firms have gained much of the institutional and personal trust business lost by the banks. These firms have steadily captured assets, primarily at the expense of the banks. The number of non-bank trust companies has increased in recent years as independent trust companies have emerged and more broker/dealers are integrated services. Insurance companies view full-service brokers as a potentially new distribution channel as well. Another type of distribution channel is rural benefits. This channel works as a dealership. In this channel, the dealers will sell the policy to the target customers. ? Web Worldirect sales of life insurance are growing rapidly, but many of the traditional full-serve players seem to be letting it go. Across all financial services, consumers are expressing a willingness to deal with a variety of providers on the web. Web sites are starting to pop up offering consumer insurance products especially designed for distribution over the web. Another type of distribution channel is web world. This channel is tie up with customer database. In this channel, the advisors will sell the policy to the target customers, which are taken from the customer database, are listed in the website.

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CHAPTER 3 Comparison of products
Life insurance products are designed to suit the requirements of customers. Fundamentally the product provide for: ? Risk cover ? Investment ? Health cover ? Group plans In every product, to a certain degree, risk cover is imperative for it to fall under the category of insurance. Based on the coverage of the product, the premiums are calculated and the customer pays accordingly. In order to suggest the right product, it is essential for an agent to understand the requirements of the customer well. Reliance Life Insurance Company Limited & LIC has offering different products which ,but for the study some of the insurance are taken for comparison basically they are traditional plans Traditional plans of Reliance life insurance & LIC of India which are listed as follows for comparison: Reliance Term Plan Reliance Whole Life Plan Reliance Child Plan Reliance Endowment Plan Reliance Special Endowment Plan Reliance Cash Flow Plan Reliance Group Term Assurance Plan LIC Anmol Jeevan-1 LIC Whole Life Policy LIC Jeevan Kishore LIC Endowment Policy LIC Jeevan Anand LIC Jeevan Surabhi LIC Group Term Insurance Scheme

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LIC Anmol Jeevan-1 Table 164 This is the chipset pure risk plan. This plan is also allowed to physically handicapped persons with standard extra rates. Proposals are considered on the basis of medical report & special report. On maturity no amount will be paid to the policyholder. On the event of death of the policyholder during policy term sum assured will be paid to nominee.

Reliance Term Plan This insurance policy is designed for those who only want life cover for the protection of their family, and do not wish to save for themselves. It can also be useful to business firms that wish to provide financial security to their business against the sudden loss of partners or valuable manpower. Since there is no saving element or bonus provision, the premium is very low. Hence, this is a highrisk plan with a low premium. Features: Features: a) Purely a term plan a) Purely a term plan b) Entry age minimum 18 years b) Entry age minimum 18 years and maximum 55 year and maximum 65 year c) Maximum premium paying c) Maximum premium paying term is 25 year term is 30 year d) Loan facility N.A. d) Loan facility N.A. e) Maturity amount = Sum assured e) Maturity amount = Sum assured Modes allowedremiums can be paid regularly at yearly, half-yearly, quarterly or monthly intervals (through ECS only or through salary deductions) over the Policy Term. However, a grace period of one calendar month but not less than 30 days will be allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums. Modes allowedremiums can be paid regularly at yearly, half-yearly, quarterly or monthly intervals (through ECS only or through salary deductions) over the Policy Term. However, a grace period of one calendar month but not less than 30 days will be allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums.
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LIC Whole Life Policy Table 2 This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create a corpus to protect their family by availing of insurance cover on their life at a very low cost. Features: a) It is a whole life insurance policy with profits b) Low cost life cover c) Maturity age is 80 year d) Maturity amount = Sum assured + Vested bonus e) Tax benefit is available f) It provides high risk cover g) It provides financial security to family h) Bonus declared is substantially high i) Risk is covered throughout the life of policyholder Modes allowedremiums can be paid regularly at yearly, half-yearly, quarterly or monthly intervals (through ECS only or through salary deductions) over the Policy Term. However, a grace period of one calendar month but not less than 30 days will be allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums.

Reliance Whole Life Plan This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost. Features: a) It is a whole life insurance policy with profits b) Low cost life cover c) Maturity age is 85 year or 99 years last birthday as chosen d) Maturity amount = Sum assured + Vested bonus e) Tax benefit is available

Modes allowedremiums can be paid regularly at yearly, half-yearly, quarterly or monthly intervals (through ECS only or through salary deductions) over the Policy Term. However, a grace period of one calendar month but not less than 30 days will be allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums.
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LIC Jeevan Kishore This insurance policy is designed for people who wish to save money for a Future time when there will be a recurring need for substantial amounts of money. This is especially true when it comes to paying large sums of money for higher education as and when your son or daughter is studying to become an Engineer, a Doctor or specialize in some other field, or is perhaps planning to go abroad for higher education.

Features: a) Minimum entry age is 0 year and maximum 12 year b) Minimum sum assured is Rs. 50,000. c) Minimum premium paying term is 15 year and maximum 35 year d) Tax benefit is available e) Maturity amount = Sum assured + bonus f) Loan facility is available g) Policy is given on the life of the child.

Reliance Child Plan This insurance policy is designed for people who wish to save money for a Future time when there will be a recurring need for substantial amounts of money. This is especially true when it comes to paying large sums of money for higher education as and when your son or daughter is studying to become an Engineer, a Doctor or specialize in some other field, or is perhaps planning to go abroad. This money is payable in equal instalments over the last 4 years of the Policy term. Features: a) Minimum entry age is 20 year and maximum 60 year b) Minimum sum assured is Rs. 25,000. c) Minimum premium paying term is 5 year and maximum 20 year d) Tax benefit is available e) Maturity amount = Four equal instalment of sum insured in last four year plus vested bonus in the last year.

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h) Father can propose, Mother can also propose if she has her own income. i) Age of entry is calculated as age at last birthday & not as age nearer birthday. j) life risk will commence from the policy anniversary after completion of 7 years of age or 2 years from the date of commencement of the policy, whichever is earlier Modes allowedremiums can be paid regularly at yearly, half-yearly, quarterly or monthly intervals (through ECS only or through salary deductions) over the Policy Term. However, a grace period of one calendar month but not less than 30 days will be allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums

f) Loan facility is available

Modes allowedremiums can be paid regularly at yearly, half-yearly, quarterly or monthly intervals (through ECS only or through salary deductions) over the Policy Term. However, a grace period of one calendar month but not less than 30 days will be allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums

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LIC Endowment Policy Table-14 is the key to all your financial needs. It is an inexpensive and easy way to protect you, your family or your business. In a nutshell this plan will keep you financially prepared for all the special occasions in your life - your daughter‘s wedding, your child‘s university education or even a new office for your business - by eliminating the burden that a shortage of money creates. In the event of your untimely death, LIC Endowment Policy will also assist your loved ones through this difficult time by the financial support that it provides. LIC Endowment Policy also gives you the additional benefit of participating in the company‘s profits, which you will receive at the end of the policy period. Features: a) Entry age minimum is 12 year and maximum 65 year b) Maturity age maximum 75 year c) Minimum premium paying term is 5 year and maximum 55 d) Most popular plan for fulfilling all long/short term financial needs e) Maturity benefit:- Sum assured + bonus, Final additional bonus is also given, if premium paid is for 15 years or more.

Reliance Endowment Plan Reliance Life Insurance‘s Reliance Endowment Plan is the key to all your Financial needs. It is an inexpensive and easy way to protect you, your family or your business. In a nutshell this plan will keep you financially prepared for all the special occasions in your life - your daughter‘s wedding, your child‘s university education or even a new office for your business - by eliminating the burden that a shortage of money creates. In the event of your untimely death, Reliance Endowment Plan will also assist your loved ones through this difficult time by the financial support. That it provides also gives you the additional benefit of participating in the company‘s profits, which you will receive at the end of the policy period. Features: a) Entry age minimum is 5 year and maximum 65 year b) Maturity age minimum is 18 year and maximum 75 year c) Minimum premium paying term is 5 year and maximum 35 year in case of regular and in case of single 15 year d) Maturity benefit:- Sum assured + bonus

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f) Death benefit: - Sum assured + accrued bonus is given to the nominee. If premium paid is for 15 years or more

Modes allowedremiums can be paid regularly at yearly, half-yearly, quarterly or monthly intervals (through ECS only or through salary deductions) over the Policy Term. However, a grace period of one calendar month but not less than 30 days will be allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums

e) Death benefit: - Sum assured + accrued bonus is given to the nominee. f) Minimum sum assured is Rs. 25,000 or as determined by the minimum premium g) Maximum sum assured is Rs. 5,00,000 (entry age below 18 years and no limit for entry age 18 and above) h) Loan up to 90% of the surrender value of the policy Modes allowedremiums can be paid regularly at yearly, half-yearly, quarterly or monthly intervals (through ECS only or through salary deductions) over the Policy Term. However, a grace period of one calendar month but not less than 30 days will be allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums

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LIC Jeevan Anand This policy is combination of whole life & endowment assurance plan. This insurance policy is designed for people who wish to combine savings with extended security. Even after the premium paying term is over, Risk cover continuous till the death of the policyholder. This plan also participates in the profits.

Features: a) Entry age minimum 18 year and maximum 65 year b) Minimum sum assured is Rs. 1,00,000 c) Minimum premium paying term is 5 year and maximum 57 year d) Tax benefit is available e) Loan facility is available upto age 70 f) Accident benefit is available during the premium paying term & thereafter g) Maturity amount = Sum assured + bonus with final additional bonus if any

Reliance Special Endowment Plan This insurance policy is designed for people who wish to combine savings with extended security. The unique feature of this policy is that life protection continues for five years after you have stopped the payment of premium. Payment of sum assured at the end of premium paying term and extension of life cover thereafter for the full sum assured for a period of 5 years, are characteristics of the policy. This plan also participates in the profits. Features: a) Entry age minimum 12 year and maximum 65 year b) Minimum sum assured is Rs. 25,000 c) Minimum premium paying term is 10 year and maximum 40 year d) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premium e) Tax benefit is available f) Under this policy bonus is compounded yearly g) Loan facility is available

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g) Death amount = 1. If death occurs after the premium paying term an additional amount equal to sum assured is payable & no bonus is payable 2. If death occurs before the premium paying term sum assured plus accumulated bonus is payable. Modes allowedremiums can be paid regularly at yearly, half-yearly, quarterly or monthly intervals (through ECS only or through salary deductions) over the Policy Term. However, a grace period of one calendar month but not less than 30 days will be allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums

h) Maturity amount = Full sum assured before maturity date + Vested bonus at the time of maturity date i)Death amount = sum assured + bonus paid to the nominee

Modes allowedremiums can be paid regularly at yearly, half-yearly, quarterly or monthly intervals (through ECS only or through salary deductions) over the Policy Term. However, a grace period of one calendar month but not less than 30 days will be allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums

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LIC Jeevan Surabhi This insurance policy is designed for those who have a recurring need.it is suitable for businessman & professionals as money is available periodically. The money is payable in instalment. The instalment is paid in every 4 years of completion of policy years. For first & second instalment are same depends on basic sum assured

Reliance Cash Flow Plan This insurance policy is designed for those who have a recurring need for Reinvestment in business or look for short-term investment channels. The advantage of the policy is that they need not part with a sizable amount of money at any one time, but create, through regular premium payments, a periodic return of lump sums which become available for reinvestment at Higher returns, while providing simultaneously, substantial life cover. Alternatively, it can be used to meet any immediate financial crisis in the family like your son's college admission, your daughter's engagement, and renovation of your home or perhaps, a holiday abroad. The money is payable in instalments. The first instalment is paid at the end of the 4th year and thereafter at the end of every 3rd year.

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Features:a) Minimum entry age is 14 year and maximum is 55 year b) Maximum premium paying term is 12 year c) Loan facility is available d) In case of death before maturity sum assured along with bonus is paid to nominee e) The survival benefit already paid will not be deducted from the death claim amount f) The risk cover increases by 50% of the sum assured once in every 5 years Modes allowedremiums can be paid regularly at yearly, half-yearly, quarterly or monthly intervals (through ECS only or through salary deductions) over the Policy Term. However, a grace period of one calendar month but not less than 30 days will be allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums

Features:a) Plan with profits b) Minimum entry age is 15 year and maximum is 63 year c) Maximum premium paying term is 34 year d) Loan facility is not available e) In case of death full sum assured + accrued bonuses up to the date of death is payable immediately f) In case of survival up to maturity date all premium paid g) Rider accident death and critical illness

Modes allowedremiums can be paid regularly at yearly, half-yearly, quarterly or monthly intervals (through ECS only or through salary deductions) over the Policy Term. However, a grace period of one calendar month but not less than 30 days will be allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums

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LIC Group Term Insurance Scheme Group (term) Insurance Scheme is meant to provide life insurance protection to groups of people. Administration of the scheme is on group basis and cost is 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. Scheme offers covers only on death and there is no maturity value at the end of the term. Group (Term) Insurance Scheme is at present offered under One Year Renewable Group term assurance plan (OYRGTA). Every year on Annual Renewal date LIC charges the premium depending upon the changes in size and age distribution of the age group Features:a)Group (term) Insurance Scheme has a number of varieties . The Scheme may provide for a uniform cover to all members of the group or graded covers for different categories of members, cover for all amounts of outstanding housing loans or vehicle advances, or some other benefits (e.g., life cover to supplement pension or PF benefits in case of death). The schemes may have add-ons like Double Accident Benefit,Critical Illness Benefit, Disability benefit etc. b)The premium under such scheme may be wholly paid by the employer or the Nodal Agency. However, the scheme may be contributory i.e. the members may also contribute c)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. d)For Group Insurance Scheme in lieu of EDLIS the insurability condition is that should be a member of the Provident Fund Scheme of the employer. For other GI Schemes of employer-employee groups the insurability condition is that the member should not be absent on ground of sickness on the entry date. For all non-employer-employee Group Schemes the basic insurability condition is that the member should be in good health on the date of entry. e)At the commencement and thereafter on each Annual Renewal Date, the Group Policyholder will have to send all the member's data (and particulars of the new entrants from time to time) to the P & GS unit of
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LIC. Detailed OYRGTA premium calculation will be made on each Annual Renewal Date.

Modes allowedremiums can be paid regularly at yearly, half-yearly, quarterly or monthly intervals (through ECS only or through salary deductions) over the Policy Term. However, a grace period of one calendar month but not less than 30 days will be allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums Reliance Group Term Assurance Plan A non-linked, non-participating, one year renewable group term assurance plan Staying competitive in this market requires a steady focus on your core business. Reliance Life Insurance Company Limited takes on the responsibility of providing a customized protection solution to support and strengthen your core business functions, which, if handled poorly or inefficiently, can undermine your profitability Features:a)Helps the employer to provide comprehensive financial security to the employees at a minimal cost b)Flexibility for new members to join in and existing ones to leave the group c)Simplified procedures for insurability – limited or no medical tests d)Insured members can benefit from free cover limits e)In case of surrender of the Master Policy, individual members of the group have an option to purchase death cover with Reliance Life Insurance Company Limited. f) In case of death full amount of sum assured is payable to nominee g)In case of surrender of the Master Policy, individual members of the group have an option to purchase death cover with Reliance Life Insurance Company Limited, under an individual term, individual endowment or whole of life policy, subject to our premium rates, terms, conditions and availability at that time.

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Modes allowedremiums can be paid regularly at yearly, half-yearly, quarterly or monthly intervals (through ECS only or through salary deductions) over the Policy Term. However, a grace period of one calendar month but not less than 30 days will be allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums.

Tax Benefits
INCOME TAX SECTION GROSS SALARY ANNUAL HOW MUCH TAX CAN YOU SAVE? Upto Rs. 33,990 investment Rs. 1,00,000. saved on of

Sec. 80C

Across All income Slabs

Sec. 80 CCC

Across all income slabs.

Upto Rs. 33,990 saved Investment of Rs.1,00,000. Upto Rs. Investment Rs. 10,000. 3,399 saved

on

Sec. 80 D

Across all income slabs

on of

TOTAL SAVINGS POSSIBLE

Rs37,389 Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399 under Sec. 80 D, calculated for a male with gross annual income exceeding Rs. 10,00,000.

Sec. 10 (10)D

Under Sec. 10(10D), the benefits you receive are completely tax-free, subject to the conditions laid down therein.

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CHAPTER 4 Code of conduct for Agents & Actruty 1. Agents
Insurance Regulatory and Development Authority (Licensing of Insurance Agents) Regulations, 2000 Code of Conduct
(1) Every person holding a licence, shall adhere to the code of conduct specified below:A. Every insurance agent shall, (a) identify himself and the insurance company of whom he is an insurance agent; (b) disclose his licence to the prospect on demand; (c) disseminate the requisite information in respect of insurance products offered for sale by his insurer and take into account the needs of the prospect while recommending a specific insurance plan; (d) disclose the scales of commission in respect of the insurance product offered for sale, if asked by the prospect; (e) indicate the premium to be charged by the insurer for the insurance product offered for sale; (f) explain to the prospect the nature of information required in the proposal form by the insurer,and also the importance of disclosure of material information in the purchase of an insurance contract; (g) bring to the notice of the insurer any adverse habits or income inconsistency of the prospect, in the form of a report (called ?Insurance Agent‘s Confidential Report?) along with every proposal submitted to the insurer, and any material fact that may adversely affect the underwriting decision of the insurer as regards acceptance of the proposal, by making all reasonable enquiries about the prospect;
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(h) inform promptly the prospect about the acceptance or rejection of the proposal by the insurer; (i) obtain the requisite documents at the time of filing the proposal form with the insurer; and other documents subsequently asked for by the insurer for completion of the proposal; (j) render necessary assistance to the policyholders or claimants or beneficiaries in complying with the requirements for settlement of claims by the insurer; (k) advise every individual policyholder to effect nomination or assignment or change of address or exercise of options, as the case may be, and offer necessary assistance in this behalf,wherever necessary; B. No insurance agent shall, (a) solicit or procure insurance business without holding a valid licence; (b) induce the prospect to omit any material information in the proposal form; (c) induce the prospect to submit wrong information in the proposal form or documents submitted to the insurer for acceptance of the proposal; (d) behave in a discourteous manner with the prospect; (e) interfere with any proposal introduced by any other insurance agent; (f) offer different rates, advantages, terms and conditions other than those offered by his insurer; (g) demand or receive a share of proceeds from the beneficiary under an insurance contract; (h) force a policyholder to terminate the existing policy and to effect a new proposal from him within three years from the date of such termination; (i) have, in case of a corporate agent, a portfolio of insurance business under which the premium is in excess of fifty percent of

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total premium procured, in any year, from one person (who is not an individual) or one organisation or one group of organisations; (j) apply for fresh licence to act as an insurance agent, if his licence was earlier cancelled by the designated person, and a period of five years has not elapsed from the date of such cancellation; (k) become or remain a director of any insurance company; (iii) Every insurance agent shall, with a view to conserve the insurance business already procured through him, make every attempt to ensure remittance of the premiums by the policyholders within the stipulated time, by giving notice to the policyholder orally and in writing;

2. Acturies
Legislation or Authority: 1. The Insurance Act 1938 (hereinafter referred to as the Act) and amendments thereto including the Insurance Regulatory and Development Authority Act, 1999. 2. The Insurance Rules 1939 (hereinafter referred to as the Rules). 3. Insurance Regulatory and Development Authority (Appointed Actuary) Regulations 2000 - (hereinafter referred to as AA Regulations).

Application : This APS is applicable to an Appointed Actuary, appointed in accordance with provisions contained under AA Regulations, who is appointed by an Insurer carrying on the business of Life Insurance as defined under Section 2(11) of the Insurance Act 1938, and shall constitute ?Professional Standard‘ within the meaning of Regulation 2(e) of the AA Regulations. This is also applicable to all other actuaries who as a matter of course get associated with a life insurer and have to relate directly or indirectly to the Appointed Actuary of such life insurer.

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1. Legal Framework 1.1. The following regulations and amendments thereto formed under the Insurance Regulatory and Development Authority Act, 1999 define the role of the Appointed Actuary in the management of life insurance companies: 1.1.1. Appointed Actuary, 1.1.2. Registration of Indian Insurance Companies, 1.1.3. Actuarial Report and Abstract, 1.1.4. Assets, Liabilities and Solvency Margin of Insurers, 1.1.5. Investment, 1.1.6. Preparation of Financial Statements and Auditor‘s Report of Insurance Companies, and 1.1.7. Life Insurance - Re-insurance. 1.2. Section 13(1) of the Act requires the Appointed Actuary to perform an annual investigation into the financial condition of the life insurance business 2. Nature of Responsibility 2.1. The responsibilities of an actuary who is appointed under the AA Regulations, are central to the financial soundness of the life insurance company to which he is so appointed. 2.2. An Appointed Actuary should ensure, so far as is within his/her authority, that the life insurance business of the company is conducted on sound financial lines and that he/she has regard to Policyholders‘ Reasonable Expectations (PRE). 2.3. The essence of a profession lies in upholding its standards, technical and ethical, in the public interest. As Actuary, who becomes doubtful as to the proper course to adopt in relation to a potentially significant matter, is strongly advised to seek help and advice from IAI.

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3. Extent of the Appointed Actuary’s responsibility 3.1. Every actuary has a responsibility to the profession and his/her responsibilities to a client must be consistent with this. An Appointed Actuary is however also in a special position as he/she has statutory responsibilities to the IRDA. If these two aspects materially conflict, the Appointed Actuary has to advise the company as soon as he/she feels that the company has initiated action – or a situation has arisen outside the control of the company – that materially threatens its solvency. If the company does not remedy the situation, the Appointed Actuary is required to advise the IRDA – but not before informing the company first. This duty applies, notwithstanding restrict or inhibit discharge of this responsibility. 3.2. The Appointed Actuary has a continuing responsibility to look after the reasonable expectations of the company‘s policyholders, having regard to; i. the broad nature of the company, and ii. Its approach to the treatment of policyholders both individual and as a group vis-à- vis shareholders. If a significant change is likely, the Appointed Actuary must make sure that the company appreciates the implications of this on its policyholder‘s reasonable expectations. 3.3. The Appointed Actuary must take all reasonable steps to ensure that new policyholders are not misled with regard to their expectations, e.g. in connection with illustrations at the point of sales. 3.4. The Appointed Actuary must ensure that his or her conduct and reach and depth of his or her functionalities enable him or her to discharge his or her duties and obligations in letter and spirit in accordance with regulation (8) of AA Regulations. 4. The duties of the Appointed Actuary 4.1. Though Sec 13(1) of Insurance Act 1938 requires an investigation to be made by an actuary into the financial condition of the Life Insurance business every year, the Appointed Actuary must as any provision or provisions contained in the code of
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conduct of the IAI which might seem to Page 4 of 8 Actuarial Practice standard (APS) 1 a matter of duty have processes and methodology in place so as to carry out investigations to satisfy himself/herself that the company is solvent at all times. 4.2. The Appointed Actuary while carrying out the valuation of liabilities for the purpose of schedule II-A of Insurance Regulatory and Development Authority (Assets, Liabilities and Solvency Margin of Insurers), Regulations, 2000 must ensure consistency with the methodology prescribed and valuation carried out in respect of the assets. 4.3. The Appointed Actuary must advise the company keeping in view the provisions contained under Section 49 of the Act as to how much of any surplus be distributed to policyholders or transferred to shareholders and recommend the allocation thereof. 4.4 The Appointed Actuary must take all reasonable steps to ensure that the company‘s constitution or authorised procedures are or will be such that it will not make or undertake to make a specific allocation of surplus (whether to policyholders, shareholders or both) before the Board of Directors have obtained from the Appointed Actuary and duly considered a written report containing the Appointed Actuary‘s observations and recommendations on the subject. 4.5 The Appointed Actuary must have regarded to all aspects likely to affect the financial condition of the company, in particular the following; i. The premium rates on which the company has written existing business and intends writing new business ii. The nature of the contracts in force and currently being sold with particular reference to all options and guarantees iii. The existing investments and continuing investment policy including the use of derivative instruments. iv. The marketing plan, in particular the expected volumes and costs of sales v. The current and likely future level of expenses vi. the extent of the company's free assets vii. The reinsurance and underwriting arrangements

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viii. The company's policy in regard to the nature and timing of allocations of surplus to policyholders and/or shareholders ix. The company's current and likely future taxation position x. the current and likely future level of policy persistency rates, xi. The robustness of the financials in the face of volatile market conditions, and xii. The current and likely future mortality and morbidity experience. xiii. For linked business the Appointed Actuary shall have regard to the pricing policy for segregated linked funds. 4.6 The Appointed Actuary must have the above information made available to him/her and he/she must make sure that the company understands the necessity of this information and makes suitable arrangements to ensure that the information is made available. 5. Premium rates and policy conditions for new products and existing products on sale 5.1. The Appointed Actuary must be satisfied that premium rates for new business are appropriate, that is to say sufficient in due course to enable the company to meet its liabilities. If future new business is being written on inadequate terms, it will require support from the free assets in the shareholders fund, the Appointed Actuary should consider the company's ability to continue to write new business in the context of how much capital is required and should inform the Board of Directors accordingly. 5.2. Whether the premium rates are appropriate is a probability statement and hence the Appointed Actuary must exercise judgement. This judgement needs to be based on the use of sound techniques and the Appointed Actuary must specifically consider; a) the impact of taxation b) the adequacy of the provision for expenses c) the existence of any options, including guaranteed surrender values, and the risk that financial conditions could

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be such that a policyholder could gain by surrender and reentry. 5.3. If the contract is likely to give rise to significant new business strain then the Appointed Actuary must be satisfied that the company can set up the necessary reserves. If need be, he/she should indicate limits on the volume of sales that may prudently be accepted and/or how much capital is Page 5 of 8 required and gain reassurance from the Board of Directors that the required level of capital will be available and not earmarked for other purposes. For this purpose the Appointed Actuary will take into account the shareholders‘ assets, however, it cannot automatically be assumed that they are equivalent to free reserves held as part of the policyholders‘ fund because they can be used for other than life insurance business. 5.4 For linked business, including unitised with profit business the Appointed Actuary must be satisfied that all discretionary elements of unit pricing and fund charges are applied consistently with policyholders‘ reasonable expectations. In addition, the Appointed Actuary must be satisfied that the procedures for determining (a) The prices at which units are allocated to or de-allocated from policies; (b) The prices at which units are created or cancelled; and (c) Compensation where errors of a material size in unit pricing or in the allocation or de-allocation of units to policies have occurred: are equitable to any policyholders affected either directly or indirectly. For these purposes the Appointed Actuary must have regard, inter alia, to the tax position of the business and to the expected future growth or decline of the particular fund, if any 6. Capital Requirements 6.1 One of the important factors that will affect the financial position of a life assurance company is its marketing plan and the projected volume of new business. The Appointed Actuary should form an assessment as to whether the projected volumes are realistic and advise the Board of
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Directors as to the capital requirements associated with writing the required volume of business. 6.2 The Appointed Actuary should be satisfied that, if new business strain is likely to be a problem, the company will be able to meet the necessary reserves and solvency margin requirements from capital within the shareholders‘ funds. 6.3 The Appointed Actuary should as far as possible assess the capital requirements by using a cash flow approach. 7. Insolvency 7.1 Where an Appointed Actuary has to use judgement, this can be based in some circumstances on his/her estimates of the most probable outcome. If, however, the solvency of the company is involved, then the Appointed Actuary must apply much more rigorous standards. The Appointed Actuary shall also ensure that the ratio of the available solvency margin to the required solvency margin is reasonable taking into consideration the risk profile of the assets and liabilities. 7.2 Insolvency - or intervention on the part of the IRDA - can arise either from factors within the control of a company or from factors which are outside its control. Where the factors are within the control of the company, the Appointed Actuary must advise it of the limits within which it must act and why. Where the factors are outside the company's control, the Appointed Actuary must take whatever action he/she considers necessary, including that of communicating to IRDA after due deliberation with the Board of Directors. Guidance to Actuaries who are Directors and Employees of a Life Insurance Company 1. An actuary should make suitable enquiries and satisfy himself or herself about the affairs of a company before and after joining its board, as the public and the other directors will assume that he/she is satisfied with the way the company is being run; 2. Where the Appointed Actuary is also a member of the Board of Directors or the senior management, he/she needs to take all reasonable steps to ensure that other members of the Board of
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Directors or other senior managers know the capacity in which he/she is expressing any views. 3. Any other actuary who is on the Board of Directors owes a special responsibility to the Appointed Actuary and should take care to respect the status of the Appointed Actuary. 4. The requirement of paragraph (3) above also applies to any other actuary holding a managerial or other position of authority in the company. 5. As regards guidance to actuaries - external to a particular company - who are asked either by the company or someone with a legitimate interest in it to comment on either a valuation carried out by the Appointed Actuary or a report he/she has made to the company, the guidance for such actuaries is that, although there is room for differences of opinion with regard to actuarial advice and judgement, they should always take care to respect the status of the Appointed Actuary. This does not though stop them from making properly reasoned comments on the work of the Appointed Actuary, if need be. Guidance to Independent Actuaries 1. From time to time, an actuary may be called upon to act in an independent capacity (for example, to function as an independent actuary in accordance with Section 35(3)(d) of the Act). 2. Such an actuary should exercise an independent judgement in the matters he/she has been asked to work upon. He/she should discuss the matters, where appropriate, with the Appointed Actuary, bearing in mind that there is always a room for differences of opinion with regard to actuarial matters and judgement. 3. Subject to paragraph B (5), the independent actuary should provide advice which in his/her opinion is appropriate.

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CHAPTER 5
MARKETING STRATEGIES IN LIFE INSURANCE BUSINESS

Concept of Marketing There are many definitions of marketing. The better definitions are focused upon customer orientation and satisfaction of customer needs:? According to Philip Kotler - Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. ? According to P.F Drucker - Marketing is not only much broader than selling, it is not a specialized activity at all It encompasses the entire business. It is the whole business seen from the point of view of the final result, that is, from the customer's point of view. Concern and responsibility for marketing must therefore permeate all areas of the enterprise. The Sales Concept of Marketing By the early 1930's however, mass production had become commonplace, competition had increased, and there was little unfulfilled demand. Around this time, firms began to practice the sales concept (or selling concept), under which companies not only would produce the products, but also would try to convince customers to buy them through advertising and personal selling. Before producing a product, the key questions were.3 The sales concept paid little attention to whether the product actually was needed; the goal simply was to beat the competition to the sale with little regard to customer satisfaction. Marketing was a function that was performed after the product was developed and produced, and many people came to associate marketing with hard selling. Even today, many people use the word "marketing" when they really mean sales.

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Modern Concept of Marketing Old concept New concept

Product /service

Identify customers needs

Sales

Product/Service

Profit maximization through sales

Sale

Profit through customer satisfaction

Customer welfare

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4P’s Of Marketing

Product planning

Physical distribution

Customer

Pricing policies

Promotion policies

Figure1. Represents 4 P‘s 4 P’s: ? Product planning. ? Pricing policies. ? Physical distribution. ? Promotion policies

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MARKETING MIX FOR INSURANCE COMPANIES
The marketing mix is the combination of marketing activities that an organization engages in so as to best meet the needs of its targeted market. The Insurance business deals in selling services and therefore due weight age in the formation of marketing mix for the Insurance business is needed. The marketing mix includes sub-mixes of the 7 P?s of marketing i.e. the product, its price, place, promotion, people, process & physical attraction. The above mentioned 7 P?s can be used for marketing of Insurance products, in the following manner: 1. PRODUCT A product means what we produce. If we produce goods, it means tangible product and when we produce or generate services, it means intangible service product. A product is both what a seller has to sell and a buyer has to buy. Thus, an Insurance company sells services and therefore services are their product. In India, the Life Insurance Corporation of India (LIC) and the General Insurance Corporation (GIC) are the two leading companies offering insurance services to the users. Apart from offering life insurance policies, they also offer underwriting and consulting services. When a person or an organization buys an Insurance policy from the insurance company, he not only buys a policy, but along with it the assistance and advice of the agent, the prestige of the insurance company and the facilities of claims and compensation. It is natural that the users expect a reasonable return for their investment and the insurance companies want to maximize their profitability. Hence, while deciding the product portfolio or the product-mix, the services or the schemes should be motivational. The Group Insurance scheme is required to be promoted, the Crop Insurance is required to be expanded and the new schemes and policies for the villagers or the rural population are to be included. The Life Insurance Corporation has intensified efforts to promote urban savings, but as far as rural savings are concerned, it is not that impressive. The introduction of Rural Career Agents Scheme has been found instrumental in inducing the
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rural prospects but the process is at infant stage and requires more professional excellence. The policy makers are required to activate the efforts. It would be prudent that the LIC is allowed to pursue a policy of direct investment for rural development. Investment in Government securities should be stopped and the investment should be channelized in private sector for maximizing profits. In short, the formulation of product-mix should be in the face of innovative product strategy. While initiating the innovative process it is necessary to take into consideration the strategies adopted by private and foreign insurance companies. 2. PRICING In the insurance business the pricing decisions are concerned with: ? The premium charged against the policies, ? Interest charged for defaulting the payment of premium and credit facility, and ? Commission charged for underwriting and consultancy activities. With a view of influencing the target market or prospects the formulation of pricing strategy becomes significant. In a developing country like India where the disposable income in the hands of prospects is low, the pricing decision also governs the transformation of potential policyholders into actual policyholders. The strategies may be high or low pricing keeping in view the level or standard of customers or the policyholders. The pricing in insurance is in the form of premium rates. The three main factors used for determining the premium rates under a life insurance plan are mortality, expense and interest. The premium rates are revised if there are any significant changes in any of these factors. ? Mortality(deaths in a particular area): When deciding upon the pricing strategy the average rate of mortality is one of the main considerations. In a country like South Africa the threat to life is very important as it is played by host of diseases. ? Expenses: The cost of processing, commission to agents, reinsurance companies as well as registration are all incorporated into the cost of instalments and premium sum and forms the integral part of the pricing strategy. ? Interest:
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The rate of interest is one of the major factors which determines people?s willingness to invest in insurance. People would not be willing to put their funds to invest in insurance business if the interest rates provided by the banks or other financial instruments are much greater than the perceived returns from the insurance premiums.

3. PROMOTION The insurance services depend on effective promotional measures. In a country like India, the rate of illiteracy is very high and the rural economy has dominance in the national economy. It is essential to have both personal and impersonal promotion strategies. In promoting insurance business, the agents and the rural career agents play an important role. Due attention should be given in selecting the promotional tools for agents and rural career agents and even for the branch managers and front line staff. They also have to be given proper training in order to create impulse buying. Advertising and Publicity, organization of conferences and seminars, incentive to policyholders are impersonal communication. Arranging Kittens, exhibitions, participation in fairs and festivals, rural wall paintings and publicity drive through the mobile publicity van units would be effective in creating the impulse buying and the rural prospects would be easily transformed into actual policyholders 4. PHYSICAL DISTRIBUTION Distribution is a key determinant of success for all insurance companies. Today, the nationalized insurers have a large reach and presence in India. Building a distribution network is very expensive and time consuming. If the insurers are willing to take advantage of India?s large population and reach a profitable mass of customers, then new distribution avenues and alliances will be necessary. Initially insurance was looked upon as a complex product with a high advice and service component. Buyers prefer a face-to-face interaction and they place a high premium on brand names and reliability. As the awareness increases, the product becomes simpler and they become off-the-shelf commodity products. Today,
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various intermediaries, not necessarily insurance companies, are selling insurance. For example, in UK, retailer like Marks & Spencer sells insurance products. The financial services industries have successfully used remote distribution channels such as telephone or internet so as to reach more customers, avoid intermediaries, bring down overheads and increase profitability. A good example is UK insurer Direct Line. It relied on telephone sales and low pricing. Today, it is one of the largest motor insurance operators. Technology will not replace a distribution network though it will offer advantages like better customer service. Finance companies and banks can emerge as an attractive distribution channel for insurance in India. In Netherlands, financial services firms provide an entire range of products including bank accounts, motor, home and life insurance and pensions. In France, half of the life insurance sales are made through banks. In India also, banks hope to maximize expensive existing networks by selling a range of products. It is anticipated that rather than formal ownership arrangements, a loose network of alliance between insurers and banks will emerge, popularly known as banc assurance. Another innovative distribution channel that could be used is the non-financial organizations. For an example, insurance for consumer items like fridge and TV can be offered at the point of sale. This increases the likelihood of insurance sales. Alliances with manufacturers or retailers of consumer goods will be possible and insurance can be one of the various incentives offered.

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CHAPTER 6 FDI in Insurance & Market share
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. 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. Foreign Direct Investment (FDI) Policy in Insurance Sector s per the current (March 2006) FDI norms, foreign participation in an Indian insurance company is restricted to 26.0% of its equity / ordinary share capital. The Insurance Regulator has stipulated that foreign investment in Indian Insurance companies be limited to 26% of total equity issued (FDI limit) with the balance being funded by Indian promoter entities. The limit to foreign investment includes both direct and indirect investment and has been a cause of significant lobbying by foreign insurance companies for a change in regulations to increase the FDI limit to 49% of equity issued.The Indian government has supported an increase in the FDI limit, which requires a change in the Insurance Act. The Union Budget for fiscal 2005 had recommended that the ceiling on foreign holding be increased to 49.0%. A change in the Insurance Act requires a passage of the bill in both houses of Parliament. The Indian government has tabled the bill in the Upper House of Parliament in August 2010.
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Initial Public Offer (IPO) rules for Indian Life Insurance Companies A key piece of legislation impacting on the Life Insurance industries capital raising abilities is the lock-n period of 10 years for investment to be limited to promoter group equity investments. Under the Insurance Guidelines, Indian Life Insurance companies can opt for a public issue of equity through an Initial Public Offer (IPO) after 10 years of operations. In October 2010, the securities market regulator, Securities and Exchange Board of India (SEBI), issued disclosure norms for Indian Life Insurance Companies seeking to make an initial public offer for sale of equity shares to the public

? Birla Sun Life Insurance Company: Birla Sun Life Insurance Company is a 74:26 joint venture between Birla group and Sun Life Financial. It is a private sector company. The company was registered on 31/1/2001. The market share for FY 2012-13 was 1.72%. ? HDFC – Standard: HDFC standard is a 74:26 joint venture between HDFC and Standard Life. It is a private sector company. The company was registered on 23/10/2000. The market share for FY 2012-13 was 1.66%. ? ICICI Prudential Life Insurance: ICICI Prudential Life is a 74:26 joint venture between ICICI and Prudential. It is a private sector company. The company was registered on 24/11/2000. The market share for FY 2012-13 was 6.91%. ? Life Insurance Corporation of India (LIC): Life Insurance Corporation of India is a 100% government held Public Sector Company. Being the first to be established LIC is the forerunner in the Life Insurance sector. The market share for FY 2012-13 was 76.07%.

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? Kotak Mahindra OLD Mutual: Kotak Mahindra OLD Mutual is a 74:26 joint venture between Kotak Mahindra bank and Old Mutual. It is a private sector company. The company was registered on 10/1/2001. The market share for FY 2012-13 was 0.71%. ? Max New York Life: Max New York Life is a 74:26 joint venture between Max Life Insurance & New York Life Insurance. It is a private sector company. The company was registered on 6/8/2001. The market share for FY 2012-13 was 1.28%. ? Aviva Life Insurance India: Aviva Life insurance is a 74:26 joint venture between Aviva and Dabur. It is a private sector company. The company was registered on 14/5/2002. The market share for FY 2012-13 was 1.08%. ? ING Vysya Life insurance: ING Vysya Life Insurance is joint venture between Exide(50%), Gujarat Cements (14.87%), Enam (9.13%) and ING (26 %). It is a private sector company. The company was registered on 2/8/2001. The market share for FY 201213 is 0.54%. ? PNB Met Life India: Met Life India is a 74:26 joint venture between 74:26 JV between J &K Bank, PNB Bank and MetLife M. Pallonji & Company. It is a private sector company. The company was registered on 6/8/2001. The market share for FY 2012-13 was 0.37%. ? Bajaj Allianz Life Insurance Co.: Bajaj Allianz Life Insurance Company is a 74: 26 Joint venture between Bajaj Auto limited and Allianz AIG. The company was registered on 3/8/2001. The market share for FY 2012-13 was 4.75%.
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? SBI Life Insurance Company Ltd: SBI Life Insurance Company is a 74: 26 Joint venture between SBI and Cardiff S.A. The company was registered on 31/3/2001.It is a private sector company. The market share for FY 2012-13 was 2.98%. ? The TATA AIG Group: TATA AIG group is a 74:26 JV between Tata Group and AIG. It belongs to the private sector. The company was registered on 12/2/2001. The market share for FY 2012-13 was 1.46%. ? Sahara India Life Insurance Company Ltd.: First Wholly Indian Owned Private Life Insurance Company. The Company commenced operations from 30th October 2004. The market share for FY 2012-13 was 0.03 %. ? Shriram life insurance company Ltd: Shriram Life is a recent entrant into the life insurance sector It is a 74:26 joint venture between the Shriram group through its Shriram Financial Holdings and Sanlam Life Insurance Limited, South Africa. The company expects to start operations soon. ? Reliance Life Insurance Co. :Reliance Life has acquired AMP SANMAR in 2001.Reliance Life is a subsidiary of Reliance Capital. From 2011 Nippon Life Insurance has taken joint venture, it has 74:26 holding. ? SAHARA Life :Sahara life is a private player in insurance market in India. It is purely Indian company operating in India without any foreign collaboration.

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Market share of insurance company
Name of the company Life Insurance Corporation of India ICICI Prudential Life Insurance Co Allianz Bajaj Life Insurance Co SBI Life Insurance Co Birla Sun Life Insurance Co HDFC Standard Life Insurance Co TATA- AIG Life Insurance Company Max New York Life Insurance Co. Aviva Life Insurance Om Kotak Mahindra Life Insurance ING Vysya Life Insurance Co. PNB MetLife Insurance Co. Reliance Life Insurance Co. SAHARA LIFE Market share(%) 76.07 % 6.91 % 4.75% 2.98% 1.72 % 1.66 % 1.46 %

1.28 % 1.08 % 0.71 % 0.54 % 0.37 % 0.46% 0.03% *Source: - www. Life insurance .com
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Market Share

Life Insurance Corporation of India ICICI Prudential Life Insurance Co Allianz Bajaj Life Insurance Co SBI Life Insurance Co Birla Sun Life Insurance Co HDFC Standard Life Insurance Co TATA- AIG Life Insurance Company Max New York Life Insurance Co. Aviva Life Insurance Om Kotak Mahindra Life Insurance ING Vysya Life Insurance Co. PNB MetLife Insurance Co. Reliance Life Insurance Co. SAHARA LIFE

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CHAPTER 7 Data Analysis & Interpretation
1) DATA GIVES INFORMATION OF THE INSURED RESPONDENTS OF INSURER COMPANY

SECTOR

NO. OF RESPONDENTS 14

SHARE (%) 70

PUBLIC SECTOR LIFE INSURER PRIVATE SECTOR LIFE INSURER

6

30

Sector

Public sector Private sector

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Interpretation:In this study 70% of respondents like take insurance from public life insurer & only 30% of respondents take insurer from private life insurer. This shows respondents are more prone to take life insurance from public life insurer. It indicates that public life insurer has better goodwill than private life insurer. 2) DATA GIVES INFORMATION OF THE INSURED RESPONDENTS ABOUT PREFRENCE OF INSURER

PREFRENCE

NO. OF RESPONDENTS 8 4

SHARE (%) 40 20

REPUTATION PRICE OF PREMIUM BENEFIT FLEXIBLE PREMIUM PAYMENT

3 5

15 25

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Preference

Reputation Price of Premium Benefits Flexible Premium Payment

Interpretation:This study shows that respondents prefer to take insurance depends on individual‘s preference. Respondents prefer reputation than any other factors. Reputation has 40% share & Flexible premium payment has 25% share. These are the two measure factors that are taken into consideration.

3) DATA GIVES INFORMATION OF THE INSURED RESPONDENTS ABOUT PREMIUM

PREMIUM

NO. OF RESPONDENTS 11 9

SHARE (%) 55 45

YES NO

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Premium

Yes No

Interpretation:This study shows that respondents are more concern with premium of policy. 55% of respondents are satisfied with the payment of insurance premium & 45% of respondents are not satisfied with the payment of insurance premium.

4) DATA GIVES INFORMATION OF THE INSURED RESPONDENTS ABOUT PERIOD SELECTED

PREMIUM PERIOD

NO. OF RESPONDENTS 3 4 5 8

SHARE (%) 15 20 25 40

0-10 YEARS 10-15 YEARS 15-20 YEARS 20 YEARS OR MORE

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Premium Payment Period

0-10 Years 10-15 Years 15-20 Years 20 Years Or More

Interpretation:This study shows that respondents while taking life insurance take into consideration payment premium period. Respondents prefer 20 years or more for taking life insurance & 0-10 years are less preferred. 20 years or more,15-20 years,10-15 years & 0-10 years has 40%,25%,20% & 15% respectively.

5) DATA GIVES INFORMATION OF THE INSURED RESPONDENTS ABOUT MODE OF PREMIUM

MODE OF PREMIUM SINGLE PREMIUM REGULAR PREMIUM

NO. OF RESPONDENTS 3 17

SHARE (%) 15 85

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Mode Of Premium

Single Premium Regular Premium

Interpretation:This study shows that respondents think more about the mode of premium. Respondents are majorly pays the premium on regular basis that can be monthly ,quarterly ,half-yearly ,yearly basis.85% of respondents pays premium on regular basis on the other hand only 15% respondents pays single premium on their life insurance. 6) DATA GIVES INFORMATION OF THE INSURED RESPONDENTS ABOUT BEST OPTION FOR INVESTMENT

INVESTMENT OPTION POST OFFICE LIFE INSURANCE MUTUAL FUND SHARE MARKET BANK DEPOSITS

NO. OF RESPONDENTS 3 4 3 4 6

SHARE (%) 15 20 15 20 30

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Investment Option

Post Office Life Insurance Mutual Fund Share Market Bank Deposits

Interpretation:This study shows that respondents investment option for investing there valuable resources. Most of the respondents are risk averse.30% respondents invests there funds in bank deposit because they have less risk appetite & they are older. Which gives them fixed & regular return .Respondents invest there fund in share markets are 20% because they have high risk appetite & they are younger. Respondents invest in mutual fund has 15% share they are moderate investor. 7) DATA GIVES INFORMATION OF THE INSURED RESPONDENTS ABOUT PROMOTIONAL MEDIA OF INSURER PROMOTIONAL MEDIA TV ADVERTISEMENT HOARDINGS PAPER ADVERTISEMENT BANNERS AGENTS NO. OF RESPONDENTS 6 2 3 1 8 SHARE (%) 30 10 15 5 40

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Promotional Media

TV Advertisement Hoardings Paper Advertisement Banners Agents

Interpretation:This study shows that respondent while taking insurance consider the promotional strategies of companies. Respondents prefer the olden ways like agents for taking insurance because it gives better details of insurance product & helps in further investment related education. Agents has 40% share in this study. TV advertisement has 30% share because easy access to TV‘s. Nowadays all the families have TV sets so it easy to attract potential customers. Hoardings , Banners ,Paper advertisement has little share 10% ,5% , 15% respectively.it shows customer are not so much rely on those type of marketing strategies. 8) DATA GIVES INFORMATION OF THE INSURED RESPONDENTS ABOUT SUGGETION

SUGGETION

NO. OF RESPONDENTS 9 11

SHARE (%) 45 55

YES NO

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Suggetion

Yes No

Interpretation:This study shows that respondents suggests about insurance product and the best company which gives you better services.45% of respondents suggests about product & service offered by insurer, they suggests details to their friends , families .55% of respondents do not suggest to take insurance from any specific company

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RECOMMENDATIONS

There is huge potential market for LIFE INSURANCE companies in India as out of 110 crore population only 8 crore people are insured. The insurance companies should educate people about insurance, its importance, different policies, and benefits of policies. The people opt for policy by taking into consideration price of premium of policy, benefits of policy and least importance is given to brand name. So the life insurance companies should look over the price of premium, benefits of policy and even flexible payment options from the point of untapped potential market in India. The price of premium of a policy must be within the budget of common man and life insurance companies should provide flexible payment options. By doing so, the private insurance companies can surely capture the untapped market along with creating brand name. LIC of India & Reliance life insurance, it has huge past experience around the world. But coming to Indian perspective its positioning is not properly done in the customers mind. The advertisement of LIC of India & Reliance life insurance in TV should contain briefly relevant message about its policy and benefits of a policy. It should formulate strategies for attracting customers though good promotional activities and informative ads, so that common man can have an idea of what Reliance life insurance is offering in a policy. Though people generally to do the savings by various means, like Post Office, Fixed Deposit, Mutual Fund, Gold, Real Estate, and Share Market etc.

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FACTS/FINDINGS 1.As the people think that insurance is a tool to protect their family & a tax saving device. They are aware of the fact & realizing its, importance. The companies should try to expand & build up its infrastructure because there is a large potential for insurance in India. 2.Company should come up with more branches in with the objective and goals to meet the demands & expectations of the public. Because the entrance of private players will increase the competition and it would be a tough task to secure a good position in market. 3.Since , LIC of India & Reliance Life Insurance is leading with several companies‘ policies it should be easy for them to penetrate into the market and secure a good position if they pay greater attention to the service part provided to their customer and thereby forming a long and trusted relationship. 4.As seen from the survey that at present 70% of the customer are having insurance policy out of which 87.5% of the customer are planning for new investments. So it can be a good potential for the company and they should make an attempt to trap these customers. 5. 43% of the customer is even ready to go for insurance if a service provider away from their home is providing it. But intend they should provide good products and services. The company should try to convince these customers and get them in its favor.

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CONCLUSIONS
From the project analysis and interpretation the conclusions are: 1) Most untapped insurance market in India contains mostly middle class and lower class people. 2) The customers give preference more to Brand name and flexible payment. Premium of policy and benefits of the policy options are given less importance. 3) Even though the premium price is not within the customer budget, if the benefits offered by policy are good customers is ready to take the policy. 4) The customers want the premium price to be within the budget, with good benefits. 5) The private insurance companies are unable to tap the untapped insurance market certain strategies should be formulated to grab the market. Most customers feel that setting up of stalls at appropriate locations and providing information regarding various policies and benefits offered by the insurance company and create awareness about the insurance company.

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CHAPTER 9 QUESTIONNAIRE A study of Life Insurance plan as a part of financial planning
Please fill the following details. Name: Age: Gender: Qualification: Designation: Phone No.: Email ID: 1. In which company you have Life Insurance Policy? a) Public Life Insurance b) Private Life Insurance [ [ ] ]

2. Among various insurance companies why did you chose the above mentioned company? a) Due to reputation of the company b) Due to Price of premium of policy c) Due to benefit of the policy d) Flexible premium payment options [ [ [ [ ] ] ] ]

3. Is the premium within your budget? a) Yes b) No [ [ ] ]

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4. Period of plans selected? a) 0-10 years [ b) 10-15 years [ c) 15-20 years [ d) 20 or more [ ] ] ] ]

5. Mode of premium? a) Single premium [ ] ]

b) Regular premium [

6. What is the best option of investment? a) Post Office schemes b) Life Insurance c) Mutual Fund d) Share Market [ [ [ [ ] ] ] ]

7. Which promotional media do you think is the best one to make people educate about an insurance policy a) TV advertisement b) Hoardings c) Paper advertisement d) Banners e) Agents [ [ [ [ [ ] ] ] ] ]

8. Did you suggest your colleagues, relatives or any of your friends about which is the best company to opt for an insurance policy a) Yes b) No [ [ ] ]
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CHAPTER 10 BIBLIOGRAPHY

1.

BOOKS/MAGAZINES REFFERED: ? STUDY GUIDE- PRINCILES & PRACTICES OF LIFE / GENERALINSURANCE, by AIMA. ? Books published by INSURANCE INSTITUTE OF INDIA ? LIFE-INSURANCE, by Mc GILL ? INSURANCEWATCH. ? MONEYOUTLOOK.

2.

WEBSITES REFFERED: ? WWW.RELIANCELIFE.COM ? WWW.CIFAINSURANCE.COM ? WWW.MONEYOUTLOOK.COM ? WWW.INSURANCE.IND.COM ? www.licindia.in

3.

REPORTS/ARTICLES REFFERED: REPORT: ISSUES & CHALLENGES INSURANCE INDUSTRY…. Dec2009. BRIEF PROFILE OF LIC, INDIA…Dec 2012. REPORT: COPING WITH COMPETITION…Jan2012 FACING THE

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