Life Insurance Business in India was nationalized with effect from January 19, 1956.

On the
date, the Indian business of 16 non-Indian insurers operating in India and 75 Provident
Societies were taken over by Government of India. Life Insurance Corporation of India, Act
was passed by the Parliament on June 18, 1956 and came into effect from July 1, 1956.
Life Insurance Corporation of India commenced its functioning as a corporate body from
September 1, 1956. Its working is governed by the LIC Act. The LIC is a corporate having
perpetual succession and a common seal with a power to acquire hold and dispose of
property and can by its name sue and be sued.

important Provisions of Life Insurance Corporation Act, 1956

 Constitution
 Capital
 Functions of the Corporation
 Transfer of Services
 Set-up of the Corporation
 Committee of the Corporation
 Authorities
 Finance, Accounts and Audit
 Miscellaneous

Life Insurance Corporation of India (LIC)

The LIC of India was set up under the LIC Act, 1956 under which the life insurance was
nationalized. As a result, business of 243 insurance companies was taken over by LIC
on 1-9- 1956.

It is basically an investment institution, in as much as the funds of policy holders are

invested and dispersed over different classes of securities, industries and regions, to
safeguard their maximum interest on long term basis. LIC is required to invest not less
than 75% of its funds in Central and State Government securities, the government
guaranteed marketable securities and in the socially-oriented sectors. At present, it is
the largest institutional investor. It provides long term finance to industries. Besides, it
extends resource support to other term lending institutions by way of subscription to
their shares and bonds and also by way of term loans.

LIC which has entered into its 57th year has emerged as the world’s largest insurance
co. in terms of number of policies covered. The LIC’s total coverage of policies including
individual, group and social schemes has crossed the 11 crore.
Functions of the Corporation.-

1. Subject, to the rules, if any, made by the Central Government in this behalf, it shall be the general
duty of the Corporation to carry on life insurance business, whether in or outside India, and the
Corporation shall so exercise its powers under this Act as to secure that life insurance business is
developed to the best advantage of the community.

2. Without prejudice to the generality of the provisions contained in sub-section (1) but subject to the
other provisions contained in this Act, the Corporation shall have power—

a. to carry on capital redemption business, annuity certain business or reinsurance business in

so far as such reinsurance business appertains to life insurance business;

b. subject to the rules, if any, made by the Central Government in this behalf, to invest the funds
of the Corporation in such manner as the Corporation may think fit and to take all such steps
as may be necessary or expedient for the protection or realisation of any investment;
including the taking over of and administering any property offered as security for the
investment until a suitable opportunity arises for its disposal;

c. to acquire, hold and dispose of any property for the purpose of its business;

d. to transfer the whole or any part of the life insurance business carried on outside India to any
other person or persons, if in the interest of the Corporation it is expedient so to do;

e. to advance or lend money upon the security of any movable property or otherwise;

f. to borrow or raise any money in such manner and upon such security as the Corporation may
think fit;

g. to carry on either by itself or through any subsidiary any other business in any case where
such other business was being carried on by a subsidiary of an insurer whose controlled
business has been transferred to an vested in the Corporation under this Act;

h. to carry on any other business which may seen to the Corporation to be capable of being
conveniently carried on in connection with its business and calculated directly or indirectly to
render profitable the business of the Corporation;

i. To do all such things as may be incidental or conducive to the proper exercise of any of the
powers of the Corporation.

3. In the discharge of any of its functions the Corporation shall act so far as may be on business
principles
Offices, branches and agencies.-

1. The central office of the Corporation shall be at such place as the Central Government may, by
notification in the Official Gazette, specify.

2. The Corporation shall establish a zonal office at each of the following places, namely, Bombay,
Calcutta, Delhi, Kanpur and Madras, and, subject to the previous approval of the Central
Government, may establish such other zonal offices as it thinks fit.

3. The territorial limits of each zone shall be such as may be specified by the Corporation.

4. There may be established as many divisional offices and branches in each zone as the Zonal
Manager thinks fit.
Latest Lic Policy by Lic of India:

Lic's Single Premium Endowment Plan

Lic's New Endowment Plan
Lic's New Jeevan Anand
LIC's Jeevan Rakshak
LIC's Limited Premium Endowment Plan
LIC's JEEVAN SANGAM
LIC's Jeevan Lakshya
LIC's NEW MONEY BACK PLAN - 20 YEARS
LIC's NEW MONEY BACK PLAN - 25 YEARS
LIC's NEW BIMA BACHAT
LIC's NEW CHILDREN'S MONEY BACK PLAN Policy Document
LIC's Jeevan Tarun
LIC's Anmol Jeevan II
LIC's Amulya Jeevan II
LIC's e-Term
LIC's NEW TERM ASSURANCE RIDER

Feature of Lic's New Money Back Plan - 25 Years:

LIC New Money back Plan-20 years offers financial protection against death throughout the term as
well as periodic payment at specified durations during the period. It provides financial cover for the
family of the deceased policy-holder until Maturity and lump sum amount (40% of Basic Sum Assured
along with Simple Reversionary Bonus and Final Additional Bonus) at the time of Maturity in case of
survival. The Death benefit provided by this policy includes the Sum Assured on Death (higher one of
125% of Basic Sum Assured or 10 times of annualized premium) along with Simple Reversionary
Bonuses and Final Additional Bonus.. If the policy holder survives till the end of specified term 15% of
Basic Sum Assured will be paid at each 5th, 10th and 15th and 20th years.

The maximum age at entry must be 30 years while the minimum must be 15 years. The term is 20
years. The minimum Sum Assured is 1, 00,000Rupees and there is no maximum limit. The maximum
Maturity age is 70 years. The policy holder will get a share in the profits of the company through
Simple Reversionary Bonus if the policy is running properly. Final Bonus will be declared at the time of
claiming the policy through death or maturity.In case of accidental death, an optional rider called
Accidental Death Benefit rider can be opted for which provides twice the sum assured, available with
payment of Rs.100 per 1 lakh sum assured every year.
Feature of Lic's Single Premium Endowment Plan:

This is an endowment plan or policy which combines savings and financial protection.In case the
person whose life is insured survives the term of maturity, he/she will get the assured sum along with
the ensued bonus.If the person dies without completing the term of maturity, then the nominee gets
the mentioned total amount. However the tax benefit for this plan is not great; it is only 10% of the
initial sum, no matter how large the amount isIn case the age of policy holder is less than 8 years at
the time of starting policy, the risk will commence either 2 years from the starting date or from the
policy anniversary which coincides with the attainment of 8 years, whichever comes before. If the
policy holder is above 8 years then the risk commences immediately.The minimum age at entry is 90
days while Maximum age at entry is 65 years. Term ranges between 10 years and 25 years. The
minimum age at maturity is 18-75 years. There is no upper limit on the maximum sum assured while
the minimum sum is 50,000 Rupees.

Feature of Lic's New Jeevan Anand:

This plan provides insurance and risk coverage for the entire life of the policy-holder, because this
policy will continue after the end of the policy term. At the end of policy term Sum assured along with
the accumulated bonus and final bonus will be paid to the policy holder. At death or attainment of 100
years of the policy holder (whichever occurs earlier), sum assured will be paid to the nominee. The
policy can be bought between 18 to 50 years. The premium paying modes are yearly, half yearly,
quarterly and monthly (ECS Only).The Policy Term ranges from 15 to 35 Years. The basic sum assured
is 100000 and above (in multiple of 5000). A Loan can be availed after 3 years. The policy holder will
get a share in the profits of the company through Simple Reversionary Bonus if the policy is running
properly. Final Bonus will be declared at the time of claiming the policy through death or maturity.
This plan also provides optional disability benefit in case of permanent disability during policy term,
and the future premiums would be waived off. In case of accidental death, an optional rider called
Accidental Death Benefit rider can be opted for which provides twice the sum assured, available with
payment of Rs.100 per 1 lakh sum assured every year.Service Tax is applicable on the premium paid
at the rate of 3.09% for 1st year and 1.545% from 2nd year onwards.
Feature of Lic's New Children's Money Back Plan:

This is a non-linked plan which is designed to fulfill the educational and marriage needs of growing
children through Benefits of Survival. It can be taken by the parent or grandparent of any child up to
12 years. If the policy-holder dies before Maturity of policy or before commencement of risk, then the
premiums will be returned excluding taxes and extra, rider premium. If the policy holder dies after the
date of commencement of risk, the Death Benefit is payable, which is the Sum Assured (greater than
10 times of annualized premium or Basic Sum Assured). The Death benefit will not be less than 105%
of total premiums paid till death, excluding taxes, extra and rider premium. If the policy holder
survives till the age of 18, 20 and 22 years, 20% of the Basic Sum Assured will be paid on each of the
mentioned years. If the policy holder survives till Maturity of policy, then he/she is entitled to receive
Sum Assured on Maturity which is 40% of Basic Sum Assured, in addition to Reversionary and Final
Additional Bonuses.The age of policy holder must be between 0-12 years and the age of Maturity is 25
years. The term of Policy would be (25- Age at entry) years. The minimum basic Sum Assured is 1,
00,000 Rupees and there is no maximum limit.

The optional benefits provided are the Option to defer the Survival Benefits and the LIC Premium
Waiver Benefit Rider. According to this the policy holder will have the option to claim the Survival
Benefit on or after the due date. If this option is availed, the Corporation will be paying increased
survival benefit which is equal to Survival Benefits % * Sum Assured * (Factor applicable to Survival
Benefit (s)), provided written intimation by policy holder before 6 months of due date. The LIC
Premium Waiver Benefit Rider is available to the proposer (between 18-55 years) with additional
premium payment. If the proposer dies, the premiums after death under the basic policy will be
waived off. However this does not apply to suicide of the proposer in sane or insane conditions within
12 months of issue of first Premium receipt or within 12 months of policy revival, and the cost of
medical and special reports are not covered by the Corporation.
 Objectives of LIC of India
The LIC was established with the following objectives:
 Spread life insurance widely and in particular to the rural areas, to the socially and economically
backward claries with a view to reaching all insurable persons in the country and providing them
adequate financial cover against death at a reasonable cost
 Maximisation of mobilisation of people’s savings for nation building activities.
 Provide complete security and promote efficient service to the policy-holders at economic
premium rates.
 Conduct business with utmost economy and with the full realisation that the money belong to the
policy holders.
 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
interest of the insured public by providing efficient service with courtesy.
 role and Functions of LIC
 It collects the savings of the people through life policies and invests the fund in a variety of
investments.
 It invests the funds in profitable investments so as to get good return. Hence the policy holders
get benefits in the form of lower rates of premium and increased bonus. In short, LIC is
answerable to the policy holders.
 It subscribes to the shares of companies and corporations. It is a major shareholder in a large
number of blue chip companies.
 It provides direct loans to industries at a lower rate of interest. It is giving loans to industrial
enterprises to the extent of 12% of its total commitment.
 It provides refinancing activities through SFCs in different states and other industrial loangiving
institutions.
 It has provided indirect support to industry through subscriptions to shares and bonds of financial
institutions such as IDBI, IFCI, ICICI, SFCs etc. at the time when they required initial capital. It
also directly subscribed to the shares of Agricultural Refinance Corporation and SBI.
 It gives loans to those projects which are important for national economic welfare. The socially
oriented projects such as electrification, sewage and water channelising are given priority by the
LIC.
 It nominates directors on the boards of companies in which it makes its investments.
 It gives housing loans at reasonable rates of interest.
 It acts as a link between the saving and the investing process. It generates the savings of the
small savers, middle income group and the rich through several schemes.