A training report submitted in partial fulfillment of the requirement for the degree of

MASTERS OF BUSINESS ADMINISTRATION

(2013-2015)

Submitted by:
Name of Student: KARANVEER SIN
Roll No.:



BABA FARID COLLEGE OF MANAGEMENT AND TECHNOLOGY
DEON , BAT HI NDA




CERTIFICATE


This is to certify that the Summer Project work of Mr. / Ms ___________________________ batch 2013-
15, entitled ________________________________________________________ is a bona-fide piece of
work and that this work has not been submitted elsewhere in any form earlier. The project work was
carried out from __ /__ / 2014 to __ /__ / 2014 in _________________________(Name of the
Organisation)___________________________.



Date: __ / __ / 2014
(Name: Project Guide)
(Designation: Project Guide)
Seal of the Organisation

LETTER HEAD OF THE ORGANISATION
ANNEXURE IV

INTRODUCTION


With largest number of life insurance policies in force in the world, Insurance happens to be a
mega opportunity in India. Its a business growing at the rate of 15-20 % annually and presently
is of the order of Rs 450 billion. Together with banking services, it adds about 7 % to the
countrys GDP. Gross premium collection is nearly 2 % of GDP and funds available with LIC
for investments are 8 % of GDP .Yet, nearly 80 % of Indian population is without life insurance
cover while health insurance and non-life insurance continues to be below international
standards. And this part of the population is also subject to weak social security and pension
systems with hardly any old age income security. This itself is an indicator that growth potential
for the insurance sector is immense. A well-developed and evolved insurance sector is needed
for economic development as it provides long term funds for infrastructure development and at
the same time strengthens the risk taking ability. It is estimated that over the next ten years India
would require investments of the order of one trillion US dollar. The Insurance sector, to some
extent, can enable investments in infrastructure development to sustain economic growth of the
country. The growing number of wealthier as well as aging Indian middle class is set to offer a
strong business potential for the countrys untapped life insurance market. Insurance is a federal
subject in India. There are two legislations that govern the sector- The Insurance Act- 1938 and
the IRDA Act- 1999. The insurance sector in India has come a full circle from being an open
competitive. market to Nationalization and back to a liberalized market again. Tracing the
developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period
of almost two centuries.

As the twentieth century has come to a close and we have move into the third millennium, we
can see many developments and changes taking place around us with all the industries and firms
within each industry trying to keep pace with the changes and diverse needs of the people.
Though for decade together, marketers have regarded customer as the king and evolved all
activities to satisfy him or her, giving this concept a momentum it is necessary to understand the
Perception and Expectations of the customer in respect various aspects & attributes so as to
design a successful and an acceptable product or service .This can largely be attributed to the
prevailing market situation. Not only has competition become intense but over and above with
the market being flooded with many me-too products, the challenge before the marketer is to
understand the diversity of consumer expectations and offer goods/services accordingly. Today
the company image is built and made known by its customers. Thus the success of the firm will
be determined by how effective it has been in meeting the diverse consumer needs and wants by
treating each customer as unique and offering products and services to suit his or her needs.
Therefore today all the firms are engaged in a process of creating a lifetime value and
relationship with their customers, a step towards developing knowledge regarding its customers
needs is the utmost important. The current study is an attempt to measure the various parameters
as perceived by the customers and to help the company in serving its customers in a much better
and efficient manner.









1.1 - Scope of the study

The scope of the study lies in finding out the perception of customers in Bathinda city through
responses taken by 300 customers during a period of 60 days and highlighting the key areas
which require some concern on part of LIC of India and improving upon which the company
may strengthen its customer base. The present study, analysis, findings and suggestions proposed
by the present researcher will be of immense use for future researcher with similar studies in
insurance market.

1.2 Significance of the study :

High quality products with quality support services both in terms of international standards and
competitiveness have entered into our country. Customer satisfaction has emerged as the key
differentiator and defining attribute. The study is very much significant because it brings out the
differences in various parameters like awareness, service quality, problems faced and rationale
behind investment between the products of LIC and private sector companies and these are the
main attributes which build up the customer perception and loyalty towards a company. The
study is significant also because it will help LIC to create a positive impact on its customers by
working on its lacking qualities.

1.3 Objectives of the study :

For every problem there is a research. As all the researches are based on some and my study is
also based upon some objective and these are as follows :

I ) To test the awareness of customers on various aspects of life insurance policies offered by
LIC and other private sector insurance companies and find whether there is any relation between
them.

II ) To study the service quality being offered by LIC and private sector insurance companies and
test if any relation exists.

III ) To analyze various problems confronted by the policyholders of LIC and private sector
insurance companies and determine the relation between the two.

IV ) To clearly understand the rationale behind the investment in policies of LIC and private
sector insurance companies.

V ) To analyze the various aspects of LIC and do a complete SWOT analysis of the organization.





1.4 Review of Literature :

1) Retention of the Customers is the essence of Insurance business, Imtiyaz.H Ltd.VASI
DO, Insurance Times (Pg 20).Feb 2007-:
Retaining a customer is four time cheaper than acquiring a new one. The retention of the
customers is of utmost importance in the insurance industry in specification. Insurance business
is of the relationship building process. were one customer leads to the building of other one. A
satisfied customer is like a word of mouth advertisement for the company. The needs of the
existing customers should be identified and satisfied well rather than only concentrating at the
new accounts. All possible measures needs to taken to retain the customers as it is lesser costlier
as well as provides stability to the business .


2) Trends in Life Insurance BusinessUnit Linked Insurance Plans, IRDA annual report
2007-08, box item 1, page no. 15 -:

It wasnt too long back when the good old endowment plan was the preferred way to insure
oneself against an eventuality and to set aside some savings to meet ones financial objectives.
The traditional endowment policies were investing funds mainly in fixed interest Government
securities and other safe investments to ensure the safety of capital. Thus the traditional emphasis
was always on security of capital rather than yield. However, with the inflationary trend
witnessed all over the world, it was observed that savings through life insurance were becoming
unattractive and not meeting the aspirations of the policyholders. The policyholder found that the
sum assured guaranteed on maturity had really depreciated in real value because of the
depreciation in the value of money. The investor was no longer content with the so called
security of capital provided under a policy of life insurance and started showing a preference for
higher rate of return on his investments as also for capital appreciation. It was, therefore found
necessary for the insurance companies to think of a method whereby the expectation of the
policyholders could be satisfied. The object was to provide a hedge against the inflation through
a contract of insurance. Decline of assured return endowment plans and opening of the insurance
sector saw the advent of ULIPs on the domestic insurance horizon. Today, the Indian life
insurance market is riding high on the unit linked insurance policies.

3) Sampada kapse & D.G kodwani, Insurance as an investment option, The Insurance
Time, May
2003
At national as at individual level the excess of income after consumption level savings as funds
for investment. Surplus funds can be invested in either real asset or in financial assets. Purpose of
investment is to protect ones wealth against erosion of value due to inflation and to earn risk
adjusted return. There are three motives which drive people to purchase insurance products in
India.

_ Desire to cover risk
_ Tax benefit
_ Saving motives

It is argued that in this paper that in the changing scenario for the insurance sector there is going
to be a good opportunities for insurance sector to expand its market base. For this purpose there
is need to improve the features of the insurance products to make them more liquid or short term
schemes could be increased. It is shown that although rewards implied by the insurance products
particularly by the tax benefits are quite close to those observed in banks and small saving
scheme of the governments. The performance of mutual funds which come in many different
types is found to be reasonable compared to the risk involved. The survey indicates that it may
not be very difficult to win over the confidence of small investors towards insurance policies if
good marketing techniques are adopted to educate the targeted population about the uses of
insurance policies from investment point of view.

4) Samuel B Sekar, Research associate, Academic wing, The ICFAI University, Customer
driveninnovation in insurance products, Insurance Chronicle, page 33, July 2006-:

Insurance is one product which is not demanded by a customer, but supplied to him by massive
education and drive marketing. Insurance ought to be bought not sold. The new concept of
demand side innovation focuses more on customers social and economic reality striving to
deliver maximum value to the customer at an affordable price. Therefore, when the customer
becomes the primary focus including him in the invention process becomes mandatory. But,
there are certain areas of insurance innovations where the customers cannot be involved. A case
in point is the recent insurance product invention called Telematic Auto Insurance. Its a product
by the Progressive Auto Insurance, which monitors the driving behaviour of its auto insurance
policyholder. The new machine grabs information and automatically. transmits it to the insurer.
This information received is regularly analyzed to judicially conclude the intensity of risk the
person is exposed and the corresponding premium he is eligible to pay. This is an example of
supply side innovation, where it is strictly not possible to include the customer in the innovation
process. Though, there are instances where the customer is involved in the testing phase, his
inclusion in the conception phase makes an innovation demand-driven.















CHAPTER II

2.1 Historical Perspective

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 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 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. LICs 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. LICs ECS and ATM premium payment facility is an addition to customer
convenience. Apart from on-line Kiosks and IVRS, Info Centres have been commissioned at
Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many
other cities. 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 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.

Some of the important milestones in the life insurance business in India are:
1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started
functioning.
1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its
business.
1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life
insurance business.
1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.
1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of
protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers and provident societies are taken over by the central
government and nationalised. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a
capital contribution of Rs. 5 crore from the Government of India.
The General insurance business in India, on the other hand, can trace its roots to the Triton
Insurance Company Ltd., the first general insurance company established in the year 1850 in
Calcutta by the British.
Some of the important milestones in the general insurance business in India are:
1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of
general insurance business.
1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of
conduct for ensuring fair conduct and sound business practices.
1968: The Insurance Act amended to regulate investments and set minimum solvency margins
and the Tariff Advisory Committee set up.
1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised the
general insurance business in India with effect from 1st January 1973.
107 insurers amalgamated and grouped into four companies viz. the National
Insurance Company Ltd., the New India Assurance Company Ltd., the
Oriental Insurance Company Ltd. and the United India Insurance Company
Ltd. GIC incorporated as a company.


The Britishers opened general insurance in India around the year 1700.
The first company, known as the Sun Insurance Office Ltd. was set up in Calcutta in the
year 1710. Insurance companies like Bombay Insurance Company Ltd was established in 1793.
In 1818 it was conceived as a means to provide for English Widows. The Bombay Mutual Life
Insurance Society started its business in 1870. It was the first company to charge same premium
for both Indian and non-Indian lives. The Oriental Assurance Company was established in 1880.
Till the end of nineteenth century insurance business was almost entirely in the hands of overseas
companies. Insurance regulation formally began in India with the passing of the Life Insurance
Companies Act of 1912 and the provident fund Act of 1912.Several frauds during 20's and 30's
sullied insurance business in India. By 1938 there were 176 insurance companies. The first
comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict
State Control over insurance business. The insurance business grew at a faster pace after
independence. The Government of India in 1956, brought together over 240 private life insurers
and provident societies under one nationalized monopoly corporation and Life Insurance
Corporation (LIC) was born. Nationalization was justified on the grounds that it would create
much needed funds for rapid industrialization.

What Is Life Insurance?
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.

Why We Need Insurance:

Life insurance is a contact by which you can protect yourself against specific uncertainties by
paying a premium over a period. Since each one of us during our lives are faced with numerous
risks-falling health, financial losses, accident and even fatalities.


Protection
You need life insurance to be there and protect the people you love, making sure that your family
has a means to look after itself after you are gone. It is a thoughtful business concept designed to
protect the economic value of a human life for the benefit of those financially dependent on him.

Retirement
Life insurance makes sure that you have regular income after you retire and helpsyou maintain
your standard of living. It can ensure that your post-retirement years are spent in peace and
comfort.

Savings and Investments
Insurance is a means to Save and Invest. Your periodic premiums are like Savings and you are
assured of a lump sum amount on maturity. A policy can come in handy at the time of your
childs education or marriage! Besides, it can be used as supplemental retirement income.

Tax Benefits

Life insurance is one of the best tax saving options today. Your tax can be saved twice on a life
insurance policy-once when you pay your premiums and once when you receive maturity
benefits. Money saved is money earned.

Myths of Insurance :

i) Insurance is just meant for saving tax.
ii) Insurance does not give good returns
iii) Insurance products are not flexible



































2.2 Industry Profile :

INDIAN INSURANCE INDUSTRY:

With 36 crore policies, India's life insurance sector is the worlds largest. The life insurance
industry in the country is forecasted to increase at a compound annual growth rate (CAGR) of
1215 per cent in the next five years. The industry aims to hike penetration levels to five per cent
by 2020, and has the potential to touch US$ 1 trillion over the next seven years.
The cap on foreign direct investment (FDI) also looks likely to be increased from 26 per cent to
49 per cent. The Insurance Bill which has been approved by the Government of India and will in
all possibility be cleared by the Parliament is expected to increase FDI inflows to US$ 10 million
in the short term.


Market Size
The total market size of the insurance sector in India was US$ 66.4 billion in FY 13. It is
projected to touch US$ 350400 billion by 2020.
Information technology (IT) services, the biggest spending segment of Indias insurance industry
at Rs 4,000 crore (US$ 666.78 million) in 2014, is expected to continue enjoying strong growth
at 16 per cent. Category leaders are business process outsourcing (BPO) at 25 per cent and
consulting at 21 per cent.
India ranked 10th among 147 countries in the life insurance business in FY 13, with a share of
2.03 per cent. The life insurance premium market expanded at a CAGR of 16.6 per cent from
US$ 11.5 billion to US$ 53.3 billion during FY 03FY 13. The non-life insurance premium
market also grew at a CAGR of 15.4 per cent, from US$ 3.1 billion in FY 03 to US$ 13.1 billion
in FY 13.


Key Investments
The following are some of the major investments and developments in the Indian insurance
sector:
ING Vysya Life Insurance recently changed its name to Exide Life Insurance. For FY
2013 14, the company doubled its profits to Rs 53 crore (US$ 8.83 million) on the back
of renewal premium and better efficiency and product mix.
HDFC Life has launched a participating childrens plan which has money back options.
The plan named 'HDFC Life Youngstar Udaan' enables parents to use the key formative
years of their children to plan for their secure future. The plan caters to critical milestones
such as the childs education, marriage, establishment of business, etc.
Star Health and Allied Insurance Co Ltd on has launched a modified diabetes insurance
policy by the name Star Diabetes Safe. The policy covers regular hospitalisation
expenses, regardless of the number of years the individual has been living with the
condition, as per Mr V Jagannathan, Chairman and Managing Director, Star Health.

About three of every four insurance policies sold by 2020 would be in some way
influenced by digital channels during the pre-purchase, purchase or renewal stages, as per
a new report by Boston Consulting Group (BCG) and Google India. This report,
Digital@Insurance-20X By 2020, forecasts that insurance sales from online channels will
grow 20 times from present-day sales by 2020, and overall internet influenced sales will
touch Rs 300,000400,000 crore (US$ 50.0266.70 billion).

Investment corpus in Indias pension sector is projected to cross US$ 1 trillion by 2025,
following the passage of the Pension Fund Regulatory and Development Authority
(PFRDA) Act 2013, as per a joint report by CIIEY on Pensions Business in India.

Insurance companies in the country will spend about Rs 12,100 (US$ 2.01 billion) crore

On IT products and services in 2014, a 12 per cent increase over 2013, according to
Gartner Inc. The forecast includes spending by insurers on internal IT (including
personnel), software, hardware, external IT services and telecommunications. The Rs
1200-crore (US$ 200.16 million) software segment is predicted to be the fastest external
segment, with overall growth of 18 per cent in 2014.

Insurance companies in India launched awareness initiatives on April 19, 2014 on the
occasion of Insurance Awareness Day. Insurance Regulatory and Development Authority
(IRDA) had earmarked April 19 as Insurance Day, as the sector regulator was formed on
that day. IRDA plans to partner with organisations through its Bima Bemisaal (brand
name for the organisations insurance awareness campaign) campaign to drive home the
significance of insurance among the populace.

Government Initiatives
In a bid to facilitate banks to provide greater choice in insurance products through their branches,
a proposal will likely be made which will allow banks to act as corporate agents and tie up with
multiple insurers. A committee established by the Finance Ministry of India is likely to suggest
this model as an alternative to the broking model.
Public sector banks will soon be offering their customers a choice of insurance products from
different companies as against products from a single company. The Finance Ministry of India
has written to public sector banks, asking them to turn into insurance brokers instead of corporate
agents. "By becoming brokers, banks would now be directly responsible for mis-selling as
against earlier when they were seen to be acting as agents of insurance companies," said Mr Sam
Ghosh, CEO, Reliance Capital.

Life insurance density
Life insurance density expanded from US$ 13.4 in FY04 to US$ 42.7 in FY13 at a CAGR of
13.7 per cent.






Market share of major companies in terms of total life insurance premium collected
LIC is still the market leader, with 72.7 per cent share in FY13.























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.











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."
BOARD OF DIRECTORS:

Members On The Board Of The Corporation

Shri S. K. Roy ( Chairman )

Shri S.B. Mainak ( Managing Director, LIC )

Shri V K Sharma ( Managing Director, LIC )

Smt Usha Sangwan ( Managing Director, LIC )

Shri Arvind Mayaram ( Secretary, Department of Economic Affairs,
Ministry of Finance, Govt. of India. )

Shri Gurdial Singh Sandhu ( Secretary, Department of Financial Services,
Ministry of Finance, Govt. of India. )

Shri A.K. Roy ( Chairman cum Managing Director, GIC. )

Shri Ashwani Kumar ( Chairman and Managing Director, Dena Bank. )

Shri Amardeep Singh Cheema

Smt Manjari Kackar

Shri Sanjay Kallapur








OPERATIONS IN INDIA:













ABOUT LIFE INSURANCE:

Life insurance in India made its debut well over 100 years ago.

In our country, which is one of the most populated in the world, the prominence of insurance is
not as widely understood, as it ought to be. What follows is an attempt to acquaint readers with
some of the concepts of life insurance, with special reference to LIC.

It should, however, be clearly understood that the following content is by no means an
exhaustive description of the terms and conditions of an LIC policy or its benefits or privileges.

For more details, please contact our branch or divisional office. Any LIC Agent will be glad to
help you choose the life insurance plan to meet your needs and render policy servicing.

What Is Life Insurance?

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.
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 civilisation'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 leaving a dependent family to fend for itself.
2. That of living till old age without visible means of support.
Life Insurance Vs. Other Savings
Contract Of Insurance:
A contract of insurance is a contract of utmost good faith technically known as uberrima fides.
The doctrine of disclosing all material facts is embodied in this important principle, which
applies to all forms of insurance.

At the time of taking a policy, policyholder should ensure that all questions in the proposal form
are correctly answered. Any misrepresentation, non-disclosure or fraud in any document leading
to the acceptance of the risk would render the insurance contract null and void.
Protection:
Savings through life insurance guarantee full protection against risk of death of the saver. Also,
in case of demise, life insurance assures payment of the entire amount assured (with bonuses
wherever applicable) whereas in other savings schemes, only the amount saved (with interest) is
payable.

Aid To Thrift:
Life insurance encourages 'thrift'. It allows long-term savings since payments can be made
effortlessly because of the 'easy instalment' facility built into the scheme. (Premium payment for
insurance is either monthly, quarterly, half yearly or yearly).
For example: The Salary Saving Scheme popularly known as SSS, provides a convenient method
of paying premium each month by deduction from one's salary.
In this case the employer directly pays the deducted premium to LIC. The Salary Saving Scheme
is ideal for any institution or establishment subject to specified terms and conditions.

Liquidity:
In case of insurance, it is easy to acquire loans on the sole security of any policy that has
acquired loan value. Besides, a life insurance policy is also generally accepted as security, even
for a commercial loan.

Tax Relief:
Life Insurance is the best way to enjoy tax deductions on income tax and wealth tax. This is
available for amounts paid by way of premium for life insurance subject to income tax rates in
force.
Assessees can also avail of provisions in the law for tax relief. In such cases the assured in effect
pays a lower premium for insurance than otherwise.

Money When You Need It:
A policy that has a suitable insurance plan or a combination of different plans can be effectively
used to meet certain monetary needs that may arise from time-to-time.
Children's education, start-in-life or marriage provision or even periodical needs for cash over a
stretch of time can be less stressful with the help of these policies.
Alternatively, policy money can be made available at the time of one's retirement from service
and used for any specific purpose, such as, purchase of a house or for other investments. Also,
loans are granted to policyholders for house building or for purchase of flats (subject to certain
conditions).

Who Can Buy A Policy?

Any person who has attained majority and is eligible to enter into a valid contract can insure
himself/herself and those in whom he/she has insurable interest.

Policies can also be taken, subject to certain conditions, on the life of one's spouse or children.
While underwriting proposals, certain factors such as the policyholders state of health, the
proponent's income and other relevant factors are considered by the Corporation.

Insurance For Women

Prior to nationalisation (1956), many private insurance companies would offer insurance to
female lives with some extra premium or on restrictive conditions. However, after nationalisation
of life insurance, the terms under which life insurance is granted to female lives have been
reviewed from time-to-time.

At present, women who work and earn an income are treated at par with men. In other cases, a
restrictive clause is imposed, only if the age of the female is up to 30 years and if she does not
have an income attracting Income Tax.

Medical And Non-Medical Schemes

Life insurance is normally offered after a medical examination of the life to be assured.
However, to facilitate greater spread of insurance and also to avoid inconvenience, LIC has been
extending insurance cover without any medical examination, subject to certain conditions.
With Profit And Without Profit Plans

An insurance policy can be 'with' or 'without' profit. In the former, bonuses disclosed, if any,
after periodical valuations are allotted to the policy and are payable along with the contracted
amount.

In 'without' profit plan the contracted amount is paid without any addition. The premium rate
charged for a 'with' profit policy is therefore higher than for a 'without' profit policy.

Keyman Insurance

Keyman insurance is taken by a business firm on the life of key employee(s) to protect the firm
against financial losses, which may occur due to the premature demise of the Keyman.


Admission Of Age:

Age is the main basis of calculation of premium under life insurance policies. The following are
accepted as evidence of age:
Certified extract from Municipal or Local Bodys records made at the time of birth.
Certificate of Baptism or Certified Extract from Family Bible, if it contains age or date of
birth.
Certified Extract from School or College records, if age or date of birth is stated therein.
Certified Extract from Service Register in the case of Govt. employees and employees of
Quasi-Govt. Institutions or
Passport issued by the Passport Authorities in India.
Payment Of Premium:
By cash, local cheque (subject to realization of cheque), Demand Draft at Branch Office.
The DD and cheques or Money Order may be sent by post.
You can pay your premiums at any of our Branches as 99% of our Branches are
networked.
Many Banks do accept standing instructions to remit the premiums. So by providing a
standing instruction to your Bank to debit your account for the premium amount and send
it vide a bankers cheque to LIC, on the due dates and months mentioned on your policy
bond.
Through Internet : Payment of premiums can be made through Internet through Service
Providers viz.HDFC Bank, ICICI Bank, Times of Money, Bill Junction, UTI Bank, Bank
of Punjab, Citibank, Corporation Bank, Federal Bank and BillDesk.
Premium payment can also be made through ATMs of Corporation Bank and UTI Bank.
Premium payment can also be made through Electronic Clearing Service (ECS) which
has been launched at Mumbai, Hyderabad, Chennai, Kolkata, New Delhi, Kanpur,
Bangalore, Vijaywada, Patna, Jaipur, Chandigarh, Trivandrum, Ahmedabad, Pune, Goa
and Nagpur, Secunderabad & Visakhapatnam. A policyholder having an account in any
Bank which is a Member of the local Clearing House can opt for ECS debit to pay
premiums. The policyholders wishing to use this system would have to fill up a Mandate
Form available at our Branches/DO and get it certified by the Bank. The certified
Mandate Forms are to be submitted to our BO/DO.
Policy can be anywhere in India.
Citibank Kiosks at Industrial Assurance Building, Churchgate, New India Building,
Santacruz, Jeevan Shikha Building, Borivili are dedicated for collection of premiums
through cheques.
Days Of Grace:
Policyholder should pay the premiums on due dates. However, a grace period of one
month but not less than 30 days will be allowed for payment of yearly/half-
yearly/quarterly premiums and 15 days for monthly premiums.
When the days of grace expire on a Sunday or a public holiday, the premium may be paid
on the following working day to keep the policy in force.
If the premium is not paid before the expiry of the days of grace, the policy lapses.
Revival Of Lapsed Policy:
If the policy has lapsed, it can be revived during the life time of the life assured, within a
period of five years from the date of the first unpaid premium but before the date of
maturity subject to certain conditions.
The Corporation offers three convenient schemes of revival viz., Ordinary Revival,
Special Revival and Installment Revival. Policies can also be revived under Loan-cum-
Revival and SB-cum-Revival schemes.
Request for revival may be made to the Branch Office servicing the policy.
Change Of Address And Transfer Of Policy Records:
The policyholder should immediately intimate the change of his/her address to the
Branch Office servicing the policy. The correct address facilitates better service and
quicker settlement of claims.
Policy records can also be transferred from one Branch Office to another for servicing, as
requested by the policyholder.
Loss Of Policy Document:
The Policy Document is an evidence of the contract between the Insurer and the Insured.
Hence the policyholder should preserve the Policy Bond till the contracted amount under
it is settled.
Loss of the Policy Document should be immediately intimated to the Branch Office
where it is serviced.
Loans:
Loans are granted on policies to the extent of 90% of Surrender Value of the policies
which are in force and 85% of the Surrender Value in case of policies which are paid-up,
inclusive of the cash value of bonus. The rate of interest charged at present is 9% p.a.
payable half-yearly.
Loans are not granted for a period shorter than six months. The Conditions and Privileges
printed on the back of the Policy Bond states whether a particular policy is with or
without the loan facility.
Relief To Policyholders:
The Corporation generally allows concessions on payment of premiums, settlement of
claims, issue of duplicate policies, etc when the policyholder are affected by natural
calamities such as droughts, cyclones, floods, earthquakes, etc.
Nomination:
Nomination is a right conferred on the holder of a Policy of Life Assurance on his own
life to appoint a person/s to receive policy moneys in the event of the policy becoming a
claim by the assureds death. The Nominee does not get any other benefit except to
receive the policy moneys on the death of the Life Assured. A nomination may be
changed or cancelled by the life assured whenever he likes without the consent of the
Nominee.
Ensure nomination exists in the policy for easy settlement of claims.

Assignment:
Assignment means transfer of rights, title and interest. When an assignment is executed,
all rights, title and interest in respect of the property assigned are immediately transferred
to the Assignee/s and the Assignee/s become the owner/s of the policy subject to any
lawful condition made in the assignment.
Assignment can be either conditional or absolute. On assignment (other than to LIC),
Nomination automatically stands cancelled. Hence, when such a policy is reassigned, the
policyholder will have to make a fresh nomination to avoid delay in settlement of claim.
Survival Benefit/Maturity Claims:
LIC settles survival benefit/maturity claims on or before the due date.
Policyholder are intimated well in advance by the Branch Office which services the
policy regarding the payment, and the necessary Discharge Voucher is also sent for
execution by the assured. In case the policyholder does not get any intimation from the
Branch Office concerned, he/she should contact them, quoting the Policy Number.
Survival Benefit payment up to Rs.60,000/- are settled without insisting for Policy Bond
and Discharge Voucher.
Death Claims:
If the life assured dies during the term of the policy, death claim arises. The death of the
policyholder should be immediately intimated in writing to the Branch Office where the
policy is serviced along with the following particulars:
1. The No./s of the policy/ies
2. The name of the policyholder
3. Death Certificate issued by concerned Authority
4. The date of death
5. The cause of death and
6. Claimants relationship with the deceased
On receipt of the intimation of death, necessary claim forms are sent by the Branch
Office for completion along with instructions regarding the procedure to be followed by
the claimant.
The claims which have arisen after a period of three years are treated as non-early claims
and settled within 30 days from the date of receipt of all requirements.
The claims that have arisen within a period of two years from the date of commencement
of the policy, are treated as early claims and investigation is compulsory in such cases.
The claim is usually payable to the nominee/assignee or the legal heirs, as the case may
be. However, if the deceased policyholder has not nominated/assigned the policy or if
he/she has not made a suitable provision regarding the policy moneys by way of a Will,
the claim is payable to the holder of a Succession Certificate or some such evidence of
title from a Court of Law.
The Corporation grants claims concessions under certain Plans whereby payment of full
sum assured is made, subject to the deduction of unpaid premiums with interest till the
date of death and unpaid premiums falling due before the next anniversary of the policy,
in the event of the death of the life assured within a period of six months or one year from
the date of the first unpaid premium, provided premiums have been paid for at least three
years and five years respectively.
Claim Review Committee:
The Corporation settles a large number of Death Claims every year. Only in case of fraudulent
suppression of material information is the liability repudiated. This is to ensure that claims are
not paid to fraudulent persons at the cost of honest policyholders. The number of Death Claims
repudiated is, however, very small. Even in these cases, an opportunity is given to the claimant to
make a representation for consideration by the Review Committees of the Zonal office and the
Central Office. As a result of such review, depending on the merits of each case, appropriate
decisions are taken. The Claims Review Committees of the Central and Zonal Offices have
among their Members, a retired High Court/District Court Judge. This has helped providing
transparency and confidence in our operations and has resulted in greater satisfaction among
claimants, policyholders and public.

Insurance Ombudsman:
The Grievance Redressal Machinery has been further expanded with the appointment
of Insurance Ombudsman at different centers by the Government of India. At present
there are 12 centres operating all over the country.
Following type of complaints fall within the purview of the Ombdusman
a) any partial or total repudiation of claims by an insurer;
b) any dispute in regard to premiums paid if payable in terms of the policy;
c) any dispute on the legal construction of the policies in so far as such disputes relate to
claims;
d) delay in settlement of claims;
e)non-issue of any insurance document to customers after receipt of premium.
Policyholder can approach the Insurance Ombudsman for the redressal of their
complaints free of cost.
Initiatives In Policy Servicing Areas:
All 2048 Branches of LIC are 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.
Green Channel facility has been introduced for the speedy completion of proposals.
Payment of premiums can be made through internet through service providers, viz.,
HDFC Bank, ICICI Bank, Times of money, Bill Junction, UTI Bank, Bank of Punjab,Citi
Bank, Corporation Bank, Federal Bank and Billdesk.


Grievance Redressal Machinery:
A machinery for redressal of policyholders? grievances exist in all the offices of the
Corporation. These are headed by designated Officers who are available at their
respective Offices every Monday between 2.30 pm and 4.30 pm. except holidays.
Policyholder can approach these officers to get their grievances redressed.
The Designated Officers at the various offices of the Corporation are :
At Branch Office --- Sr./Branch Manager
At Divisional Office --- Marketing Manager
At Zonal Office --- Regional Manager (Mktg)
At Central Office --- Executive Director (Mktg/IO/CRM)

Citizens Charter:
Citizens' Charter was presented to the Nation in November, 1997. In the Charter the
bench marks were prescribed for 30 servicing areas.

















AWARDS RECEIVED IN 2010-2011


CNBC Awaaz Consumer awards 2010
Reader Digest Trusted Brand Insurance
category 2010

OUTLOOK MONEY -- NDTV PROFIT
AWARD 2009 in
" BEST LIFE INSURER CATEGORY "
World Brand Congress Award


Golden Peacock Innovative Product /
Service Award - 2009
ASIA PACIFIC HRM Congress, 2009
Award for INNOVATIVE HR
PRACTICES


Loyalty Award - 2009
NDTV Profit Business Leadership Award
2008


INDY's Silver Award for Best Corporate
Film
NASCOM IT USER Award 2008


Business Superbrand India 2009 ASIA BRAND CONGRESS BRAND
LEADERSHIP AWARD, 2008



INDY's Silver Award for Best Corporate
Film



Reader's Digest Trusted Brand Award, 2009
( Platinum category )
Golden Peacock Innovative Product /
Service Award - 2009


CNBC AWAAZ CONSUMER AWARD
2009 for
" Most preferred insurance company "
Brand Equity Most Trusted Brand 2010
Top in Insurance Category


INDY's Silver Award for best Corporate
Film
NDTV PROFIT BUSSINESS
LEADERSHIP, AWARDS 2009

INDY's Silver Award for Best
" In-house Magazine "
Pitch Award -" Rank 1 " India's Top 50
Service Brands


CNBC Awaaz Consumer Awards 2008 Loyalty Award - 2009

Readers Digest Trusted Brand Award 2008
in the Platinum category.
CNBC Awaaz Consumer Awards 2008

NDTV Profit Business Leadership Award
2008
Golden Peacock Award for Excellence in
Corporate Governance


Web 18 Genius of the web awards 2007 NASCOM IT USER Award 2008


Selected Business Superbrand India 2008 ASIA BRAND CONGRESS BRAND
LEADERSHIP AWARD, 2008


Loyalty Awards 2008 - Insurance Sector SKOCH Challengers Award 2008 for
Jeevan Madhur















CHAPTER III

3.1 Research Methodology :


Introduction :
Being a comparative study of public and private sectors, the researcher selected LIC of India
from thepublic sector and the private sector insurance companies. The study is mainly based on
primary datacollected from field source. The primary data is collected through a comprehensive
interviews, schedulesand discussions with the customers of LIC and customers of private
companies. Secondary data iscollected from various bibliographical sources such as journals,
novels, magazines, publications andvarious websites including the official website of IRDA, LIC
and various other company websites. The
published research reports and market studies also helped the researcher to guage into the
problem.

Research design :
The research is divided into two parts. The first part helps us to understand the level of
awareness, servicequality, problems faced and the investors motive of investment, the second
part deals with extractingimportant findings from this information and analyzing the measures
required to correct problems if any.

Research sample :

A sample of 300 respondents, 151 from LIC and 149 from private sector were identified
randomly for detailed study and analysis. The researcher used stratified random sampling
technique for collecting the primary data. The population of Bathinda city is divided into two
stratums such as city and cantt area and an equal number of samples are drawn from each
stratum.

Statistical tools used :

Statistical tools like weighted averages, percentages, , mean and standard deviation etc are
used for the analysis of data. For the purpose of analyzing the awareness level a two point rating
scale is used. A two point and a three point scale is used to test the various aspects covering the
awareness level, service quality and problems faced by the consumers

3.2 Statement of the Problem :
Customer satisfaction is the true differentiator for the success of any business and is more so in
insurance where the products are perceived to be intangible. it has been found that growth rate as
well as the market share of LIC is constantly decreasing in comparison to the private companies
so to improve on the correctional areas, the four main aspects i.e awareness level, service quality,
problems faced and rationale behind investment has to be known.



Limitations of the study :
In spite of every care taken on the part of the researcher there were certain limitations which
could not be overcome and are as follows :
Some of the persons were not so responsive.

Possibility of error in data collection because many of investors may have not given the actual
answers of my questionnaire.

Sample size is limited to 300 people only. The sample size may not adequately represent the
whole market.

Some respondents were reluctant to divulge personal information which can hinder the
validity of all responses.

The research study was confined to a Bathinda city only.

The above are some of the aspects which posed real problems in the w
ay of completion of the research work but the majority of respondents were cooperative and my
gratitude are due to them.