Professional Documents
Culture Documents
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DESCRIPTION
CERTIFICATES
DECLARATION
ACKNOWLEDGEMENT
TABLE OF CONTENTS
LIST OF ABBREVIATIONS
LIST OF DIAGRAMS
CHAPTER I
CHAPTER II
CHAPTER III
CHAPTER IV
CHAPTER V
BIBLIOGRAPHY
PAGE
NO
I
II
III
IV
V
VI
1-4
5-8
9 - 23
24 - 47
48 -49
50
LIST OF ABBREVIATIONS
LIC
JBY
OYRGTA :
GLES
EPS
EPF
GPF
CPF
PPF
EDLIS
Scheme
EPFO
FPS
PF
Pension Fund
EMI
HIV
NGO
LIST OF DIAGRAMS
DIAGRAM
TOPICS
PAGE NO
NO
4.1
GROUP SCHEMES
24
4.2
25
CHAPTER 1
AN INTRODUCTION
opportunities
as
well
as
threats.
The
immediate
10
ii.
iii.
iv.
11
For the purpose of the present study, both primary and secondary
data were used. Primary data collected from insurance company
visit, interviewing staff etc. Secondary data collected for books,
internets, etc.
5) CHAPTER LAYOUT :
The present study is arranged as follows:
a) Chapter 1: AN INTRODUCTION gives an introduction of title
and the report.
b) Chapter 2: Gives profile of Life Insurance Corporation of
India.
c) Chapter 3: Deals with Group Insurance A Theoretical view.
d) Chapter 4: Group Insurance A Case Study.
e) Chapter 5: Summarizes the result of the study.
12
CHAPTER 2
LIFE INSURANCE CORPORATION OF INDIA
A PROFILE
The Life Insurance Corporation of India (LIC) is the largest stateowned life insurance company in India, and also the country's
largest investor. It is fully owned by the Government of India. It
also funds close to 24.6% of the Indian Government's expenses. It
has assets estimated of 9.31 trillion (US$202.03 billion). It was
founded in 1956 with the merger of more than 200 insurance
companies and provident societies.
Headquartered in Mumbai, financial and commercial capital of
India, the Life Insurance Corporation of India currently has 8 zonal
Offices and 101 divisional offices located in different parts of India,
at least 2048 branches located in different cities and towns of India
along with satellite Offices attached to about some 50 Branches,
and has a network of around 1.2 million agents for soliciting life
insurance business from the public.
History:
The Oriental Life Insurance Company, the first corporate entity in
India offering life insurance coverage, was established in Calcutta
in 1818 by Bipin Behari Dasgupta and others. Europeans in India
were its primary target market, and it charged Indians heftier
13
Nationalization:
In 1955, parliamentarian Amol Barate raised the matter of
insurance fraud by owners of private insurance companies. In the
ensuing investigations, one of India's wealthiest businessmen,
14
Current status:
Over its existence of around 50 years, Life Insurance Corporation
of India, which commanded a monopoly of soliciting and selling life
insurance in India, created huge surpluses, and contributed around
7 % of India's GDP in 2006.
The Corporation, which started its business with around 300
offices, 5.6 million policies and a corpus of INR 459 million (US$
92 million as per the 1959 exchange rate of roughly Rs. 5 for a US
$, has grown to 25000 servicing around 180 million policies and a
corpus of over 8 trillion (US$173.6 billion).
The recent Economic Times Brand Equity Survey rated LIC as the
No. 1 Service Brand of the Country. The slogan of LIC is "Zindagi
ke saath bhi, Zindagi ke baad bhi" in hindi. In english it means
"with life also, after life also.
15
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
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CHAPTER 3
THEORETICAL VIEW
Group
insurance
offers
insurance
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19
20
Master Contract:
In group insurance, large number of employees, belonging to
a homogeneous unit are insured collectively, under a master
policy or a contract for the whole group. The master contract
is issued to the employer, while the employees receive
certificate of insurance.
Premium Payment:
On the basis of premium payment, group insurance is
divided
into
two
categories,
contributory
and
non-
21
Determination of benefits:
The insurance company has to decide the method of
determining the benefits in a way that individual selection
both by the employer and the employee does not generate
conflicts. Thus, the employer needs to determine a formula
or a specific level of salary or position that forms the basis for
determination of benefits.
insurance
companies but the following are the more common kind of plans
available in India and abroad:
22
The
Group
Accident
Insurance
plan
is
modified
is
provided.
The
coverage is
usually
23
lend huge money and the credit risk assumed by them. The
member under the policy is usually the creditor who takes
loans from the lender. The lender can take a group credit life
insurance plan on the lives of his debtors, and the premium
is borne by lender on non-sharing basis.
24
to
provide
post-retirement
income
to
the
An
advantage
of
the
scheme
is
that
are
offered
by
public
and
private
insurance
companies.
Group Mediclaim Scheme:
The
group
mediclaim
scheme
is
available
to
any
SOCIAL SECURITY:
Social security has emerged as a sequel to the society from
agricultural to industrial that changed the very social fabric as the
people who migrated to the big cities found themselves to be
financially insecure as they could find very few people around to
share their uncertainties/emotional needs with. This change
occurred first in Europe during the 19 th century. Although industrial
revolution brought with it increased material benefits, it also led to
unsuitable
living
conditions,
increased
working
hours
and
26
Provident Fund
Gratuity
PROVIDENT FUND
27
of
service
of
employee,
and
is
paid
on
28
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EMPLOYEES
DEPOSIT
LINKED
INSURANCE
SCHEME:
Though in the Employees Provident Fund Scheme monthly
contributions of the employees and employer to accumulate
with interest, these accumulations take time to become
sizeable amounts. Meantime, if the employee dies while in
service, the payment of contribution will cease and only
accumulated balance standing to his credit at that point of
time will become payable to his family. If this happens in the
early part of his employment, the amount outstanding in the
account will be meager to fulfill needs of family of deceased.
A need was felt to provide financial help to the members of
the family on the unfortunate death of the employee. Hence,
the Employees Deposit Linked Insurance Scheme was
30
GRATUITY BENEFIT:
The Payment of Gratuity Act is one of the legislations passed
by the Indian government for providing old age income
security for both organized and unorganized sector working
population. The foremost purpose of the Act is to provide a
minimum amount to the workers depending on the number of
years of service rendered by them to their employer. Gratuity
i.e., a lump sum is paid to the employees/workers on their
leaving the services due to retirement, resignation, disability
or death.
CHAPTER 4
GROUP INSURANCE
- A CASE STUDY
Group Insurance Scheme is life insurance protection to groups of
people. This scheme is ideal for employers, associations, societies
etc. and allows you to enjoy group benefits at really low costs.
Following are the different types of group schemes:-
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Group Term
Insurance Sche
mes
Group Insurance
Scheme in Lieu
of EDLI
Group
Mortgage
Redemption
Assurance
Scheme
Group Gratuity
Group
Schemes
Scheme
Group Super
Group Leave En
cashment Schem
e
Annuation
Group Savings
Scheme
Linked
Insurance
Scheme
33
Social Security
Schemes
JanaShree Bima
Shiksha Sahayog
Yojana
Yojana
Yojana
34
of
members,
cover
for
all
amounts
of
may be allowed
under
Group
35
3. ELIGIBILITY:
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 nonemployer-employee
Group
Schemes
the
basic
36
ACCIDENT BENEFIT:
Double accident benefit can be allowed to the extent of the
Sum Assured for an extra Premium.
3)
37
Fund management:
Critical issues
Safety:
Liability on account of gratuity experiences sharp increase
every year due to its nature of its computation. Apart from
increase in service, increase in salary also contributes to
increase in liability substantially as the benefits are payable on
last drawn salary. Hence funds have to be invested in a
conservative way with a consistent growth and insulated from
market
risks.
The
unique
advantage
with
LIC
is
the
Liquidity:
A fund available with LIC is a single account for investment and
claim settlement. Hence 100% liquidity is ensured for the
purpose of claim settlement.
Yield:
LIC has been offering very competitive and consistent interest
rates over the years. For the year 2009-10, LIC has offered
9.00% - 9.65% depending on fund size. The interest declared is
net of administrative expenses incurred, hence no separate
charges are charged after crediting the interest. Interest rate
offered by LIC is on daily balancing method. Hence, there is no
idle time for earning interest, hence effective rate of interest is
much higher. Another significant aspect is interest gets
compounded annually, hence no reinvestment issues and no
time lags.
No responsibility on trustees on Investment decisions:
Trustees are free from all investment risks and hassles in cash
accumulation system. Advantage of real outsourcing can be
derived by associating with LIC.
No hidden charges:
The scheme is focused on a long term association in
compliance with investment regulations and statutory payment
obligations and no charges are levied on the transactions for
which the fund is meant for.
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reimbursement
40
4)
41
3. We
conduct
free
actuarial
valuations
of
the
funds
Insurance
in
conjunction
with
the
Group
44
a)
b)
SAVINGS :
45
age are eligible to join the scheme. All future employees have to
join the scheme compulsorily.
TAX BENEFITS:
Employees' total contribution, savings as well as risk premium is
entitled for income-tax rebate under Sec. 80C of the Income Tax
Act. The entire claim amount including interest earned payable
on retirement or leaving service or on death is free from
income-tax. The premium paid by the employer towards
insurance cover is treated as business expenses.
6)
leave
encashment
facility
available
to
The Features:
Group Leave Encashment Schemes (GLES) of LIC helps the
employers in funding of their lave encashment liability.
The salient features of the scheme are as follows:-
46
1. The Company will submit the employees' data and rules for
Leave Encashment. LIC will make actuarial valuation and
find out the funding requirements which shall be quoted to
the company. The company will contribute as per the advice
of LIC.
2. A uniform life cover per employee or graded cover will be
provided under One Year Renewable Group Term Assurance
Plan of LIC. A small term insurance premium will be charged
in addition to contributions for funding.
3. A Running Account will be maintained under the scheme and
the contributions (excluding term assurance premium) will be
credited to this account and all claims except term assurance
cover will be settled out of the Running Account. Interest at
the rate declared by LIC from time to time will be credited to
the Running Account at the end of the financial year.
Benefits:
1. On the exit of an employee or encashment of leaves during
47
FEATURES:
1. The Group critical illness rider benefit to employees is
given as an add on benefit to the Group policy which
has an element of life cover.
2. The Group Critical Illness rider allowable for each
member shall be a minimum of 20 % of sum assured
under the base plan and shall not exceed 100% of the
sum assured under the base plan subject to minimum
of Rs. 50 Thousands and maximum of Rs 20 lac per
member.
49
1.
2.
3.
4.
1.
2.
51
3.
4.
5.
6.
practitioner.
7.
8.
or
52
use
of
breathing
apparatus
or
not,
hunting,
53
A person who is
54
BENEFIT:
Scholarship of Rs 300/- per quarter per child will be paid for
maximum period of 4 years. The benefit is restricted to two
children per member (family) only.
PREMIUM:
No premium is charged for the scholarship.
Bima
Yojana
whose
child
is
eligible
for
LIC,
P&GS
Unit
for
disbursement
of
55
NODAL AGENCY :
The Nodal Agency shall mean the State / Union Territory
Government
appointed
to
administer
the
scheme.
The Nodal Agency shall act for and on behalf of the insured
members in all matters relating to the Scheme.
IDENTIFICATION OF BENEFICIARIES:
The State / Union Territory Government in consultation with
the Panchayats will identify the persons to be covered under
the scheme. All the members will be provided with an identity
card by LIC with an unique identity number.
ELIGIBILITY:
The member should be aged between 18 and 59 years.
The member should be the head of the family or one earning
member in the family of rural landless household.
AGE PROOF:
Ration Card
56
Voters list
Identity Card
57
CHAPTER 5
CONCLUSION
excess
longevity.
Group
Insurance
has
become
an
BIBLIOGRAPHY:
1) GROUP INSURANCE
- THE ICFAI UNIVERSITY
WEBLIOGRAPHY:
1) www.ask.com
2) www.licindia.in