Project on Industry Analysis

Analysis on Insurance Industry in IndiaGuided BySubmitted ByDR Haribandhu Panda Alok Mahapatra Indrajit Baliarsingh Gurunarayan Mohanty Rakesh Samal

INTRODUCTION The Insurance sector in India governed by Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and General Insurance Business (Nationalisation) Act, 1972, Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related Acts. With such a large population and the untapped market area of this population Insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15-20 per cent annually. Together with banking services, it adds about 7 per cent to the countrys GDP .In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without Life insurance cover and the Health insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation Malhotra Committee was constituted by the government in 1993 to examine the various aspects of the industry. The key element of the reform process was Participation of overseas insurance companies with 26% capital. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform. Since then the insurance industry has gone through many sea changes .The competition LIC started facing from these companies were threatening to the existence of LIC .since the liberalization of the industry the insurance industry has never looked back and today stand. as the one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today. The use of new distribution techniques and the IT tools has increased the scope of the industry in the longer run. With 36 crore policies, India's life insurance sector is the biggest in the world. The sector consists of 52 insurance companies, of which 24 are in life insurance business and 28 in non-life.The total market size of the insurance sector in India was US$ 66.4 billion in FY 13. It is projected to touch US$ 350-400 billion by 2020. 5 million plus employees are employed in this sector directly or indirectly

HISTORY OF INSURANCE SECTOR The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are given in the table 1. 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 1850In Calcutta by the british. Some of the milestones in the general insurance are given in the table2 Indian Insurance Market HistoryInsurance has a long history in India. Life Insurance in its current form was introduced in 1818 when Oriental Life Insurance Company began its operations in India. General Insurance was however a comparatively late entrant in 1850 when Triton Insurance company set up its base in Kolkata. History of Insurance in India can be broadly bifurcated into three eras: a) Pre Nationalisation b) Nationalisation and c) Post Nationalisation. Life Insurance was the first to be nationalized in 1956. Life Insurance Corporation of India was formed by consolidating the operations of various insurance companies. General Insurance followed suit and was nationalized in 1973. General Insurance Corporation of India was set up as the controlling body with New India, United India, National and Oriental as its subsidiaries. The process of opening up the insurance sector was initiated against the background of Economic Reform process which commenced from 1991. For this purpose Malhotra Committee was formed during this year who submitted their report in 1994 and Insurance Regulatory Development Act (IRDA) was passed in 1999. Resultantly Indian Insurance was opened for private companies and Private Insurance Company effectively started operations from 2001.Insurance Market- Present:The insurance sector was opened up for private participation four years ago. For years now, the private players are active in the liberalized environment. The insurance market have witnessed dynamic changes which includes presence of a fairly large number of insurers both life and non-life segment. Most of the private insurance companies have formed joint venture partnering well recognized foreign players across the globe. There are now 29 insurance companies operating in the Indian market 14 private life insurers, nine private non-life insurers and six public sector companies. With many more joint ventures in the offing, the insurance industry in India today stands at a crossroads as competition intensifies and companies prepare survival strategies in a detariffed scenario. There is pressure from both within the country and outside on the Government to increase the foreign direct investment (FDI) limit from the current 26% to 49%, which would help JV partners to bring in funds for expansion. There are opportunities in the pensions sector where regulations are being framed. Less than 10 % of Indians above the age of 60 receive pensions. The IRDA has issued the first licence for a standalone health company in the country as many more players wait to enter. The health insurance sector has tremendous growth potential, and as it matures and new players enter, product innovation and enhancement will increase. The deepening of the health database over time will also allow players to develop and price products for larger segments of society.

State Insurers Continue To DominateThere may be room for many more players in a large underinsured market like India with a population of over one billion. But the reality is that the intense competition in the last five years has made it difficult for new entrants to keep pace with the leaders and thereby failing to make any impact in the market. Also as the private sector controls over 26.18% of the life insurance market and over 26.53% of the non-life market, the public sector companies still call the shots. The countrys largest life insurer, Life Insurance Corporation of India (LIC), had a share of 74.82% in new business premium income in November 2005. Similarly, the four public-sector non-life insurers New India Assurance, National Insurance, Oriental Insurance and United India Insurance had a combined market share of 73.47% as of October 2005. ICICI Prudential Life Insurance Company continues to lead the private sector with a 7.26% market share in terms of fresh premium, whereas ICICI Lombard General Insurance Company is the leader among the private non-life players with a 8.11% market share. ICICI Lombard has focused on growing the market for general insurance products and increasing penetration within existing customers through product innovation and distribution. PRESENT SCENARIO OF INSURANCE INDUSTRY India with about 200 million middle class household shows a huge untapped potential for players in the insurance industry. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. The insurance sector in India has come to a position of very high potential and competitiveness in the market. Indians, have always seen life insurance as a tax saving device, are now suddenly turning to the private sector that are providing them new products and variety for their choice. Consumers remain the most important centre of the insurance sector. After the entry of the foreign players the industry is seeing a lot of competition and thus improvement of the customer service in the industry. Computerisation of operations and updating of technology has become imperative in the current scenario. Foreign players are bringing in international best practices in service through use of latest technologies The insurance agents still remain the main source through which insurance products are sold. The concept is very well established in the country like India but still the increasing use of other sources is imperative. At present the distribution channels that are available in the market are listed below. Direct selling Corporate agents Group selling Brokers and cooperative societies Banc assuranceCustomers have tremendous choice from a large variety of products from pure term (risk) insurance to unit-linked investment products. Customers are offer dun bundled products with a variety of benefits as riders from which they can choose. More customers are buying products and services based on their true needs and not just traditional money back policies, which is not considered very appropriate for long-term protection and savings. There is lots of saving and investment plans in the market. However, there are still some key new products yet to be introduced - e.g. health products.

The rural consumer is now exhibiting an increasing propensity for insurance products. A research conducted exhibited that the rural consumers are willing to dole out anything between Rs 3,500 and Rs 2,900 as premium each year. In the insurance the awareness level for life insurance is the highest in rural India, but the consumers are also aware about motor, accidents and cattle insurance. In a study conducted by MART the results showed that nearly one third said that they had purchased some kind of insurance with the maximum penetration skewed in favour of life insurance. The study also pointed out the private companies have huge task to play in creating awareness and credibility among the rural populace. The perceived benefits of buying a life policy range from security of income bulk return in future, daughter's marriage, children's education and good return on savings, in that order, the study adds.

Application of information technology in Insurance sectorThere is a evolutionary change in the technology that has revolutionized the entire insurance sector. Insurance industry is a data-rich industry, and thus, there is a need to use the data for trend analysis and personalization. With increased competition among insurers, service has become a key issue. Moreover, customers are getting increasingly sophisticated and tech-savvy. People today dont want to accept the current value propositions, they want personalized interactions and they look for more and more features and add ones and better service The insurance companies today must meet the need of the hour for more and more personalized approach for handling the customer. Today managing the customer intelligently is very critical for the insurer especially in the very competitive environment. Companies need to apply different set of rules and treatment strategies to different customer segments. However, to personalize interactions, insurers are required to capture customer information in an integrated system. With the explosion of Website and greater access to direct product or policy information, there is a need to developing better techniques to give customers a truly personalized experience. Personalization helps organizations to reach their customers with more impact and to generate new revenue through cross selling and up selling activities. Customers can hereby use the knowledge database to manage their products or the company information and invoices, claim records, and histories of the service inquiry. These products also may be able to learn from the customers previous knowledge database and to use their information when determining the relevance to the customers search request.

List of insurance companies in India

1General insurance companies 1.1Public Sector 1.2Private Sector 2Standalone health insurance companies 2.1Private Sector 3Export credit guarantee insurance companies 3.1Public Sector 4Agriculture Insurance Companies 5Life insurance companies 5.1Public Sector 5.2Private Sector 6Re-insurance companiesGeneral insurance companiesPublic Sector Oriental Insurance comp. Ltd. United India Insurance Comp. Ltd. New India Assurance comp. Ltd. National Insurance comp. ltd. The Motor Assurance India comp. LtdPrivate Sector Bajaj Allianz General Insurance Bharti AXA General Insurance Future Generali India Insurance HDFC ERGO General Insurance ICICI Lombard IFFCO Tokio Liberty Videocon General Insurance Co Ltd L&T General Insurance Magma HDI General Insurance Co Ltd Raheja QBE General Insurance Reliance General Insurance Royal Sundaram Shriram General Insurance Tata AIG General Universal Sompo General Insurance Cholamandalam MS General Insurance Company Limited Apollo Munich Health InsuranceStandalone health insurance companiesPrivate Sector Star Health and Allied Insurance company Ltd Apollo Munich Health Insurance Max Bupa Health Insurance Religare Health Insurance Company Ltd CignaExport credit guarantee insurance companiesPublic Sector Export Credit Guarantee Corporation of IndiaAgriculture Insurance CompaniesAgriculture Insurance Company of India Ltd.Life insurance companiesPublic Sector Life Insurance Corporation of IndiaPrivate Sector AEGON Religare Life Insurance Edelweiss Tokio Life Insurance Co. Ltd Aviva India Shriram Life Insurance Bajaj Allianz Life Insurance Bharti AXA Life Insurance Co Ltd Birla Sun Life Insurance Canara HSBC Oriental Bank of Commerce Life Insurance Star Union Dai-ichi Life Insurance DHFL Pramerica Life Insurance Future Generali Life Insurance Co Ltd HDFC Standard Life Insurance Company Limited ICICI Prudential Life Insurance Company Limited IDBI Federal Life Insurance IndiaFirst Life Insurance Company ING Life Insurance Kotak Life Insurance Max Life Insurance PNB MetLife India Life Insurance Reliance Life Insurance Company Limited Sahara Life Insurance SBILife Insurance Ltd. TATA AIA Life Insurance

IRDA GOVERNS THE INDIAN INSURANCE SECTOR Insurance Regulatory and Development Authority (IRDA) Established in 1999 under the IRDA Act Responsible for regulating, promoting and ensuring orderly growth of the insurance and re-insurance business in India

PESTEL ANALYSIS OF LIFE INSURANCE INDUSTRY IN INDIA

A. POLITICAL FACTORS:

1. INCREASED SERVICE TAX ON PREMIUM: The imposition of service tax On the services provided by the insurers has been increased significantly Over past few years by the government.2. ENDING OF GOVERNMENT MONOPOLY: A great revolution in the Insurance sector came in the year 1999 when IRDA passed the bill, lifting All entry restrictions for private players and allowing foreign players to enter The market with some limits on direct foreign ownership.3. INCREASE IN FDI LIMIT: The hike in the insurance foreign direct Investment (FDI) limit to 49 per cent from 26 per cent has proved to be very Beneficial for the insurance industry in India. It has encouraged foreign Investors to invest in Indian insurance industry.4. FAVOURABLE REGULATIONS FOR RURAL INSURANCE: To encourage Insurance sector to increase its spread in rural India, government has made Regulations more favourable for rural people by decreasing the amount of Premiums, introducing new group insurance plans and various other special Plans for farmers.

B. ECONOMIC FACTORS:

1. INCREASE IN GROSS DOMESTIC SAVINGS: The gross domestic Savings of people in India have increased significantly, due to which they Are moving towards new ways of investing money for the future benefits Including various insurance plans. As compared to previous year i.e.2007, The insurance industry thus expected to grow by about 40% during this Fiscal year, i.e.2008.2. CONTRIBUTION TO COUNTRYS G.D.P: According to government Sources, the insurance and banking services contribution to the countrys Gross domestic product is 7% out of which the gross premium collection by various insurance companies forms a significant part.3. ROLE IN GOVT. SECURITIES MARKET: Insurance companies are fest emerging as one of the most prominent players in the govt. Securities market. The share of insurance companies in overall investment in the G sec market has more than doubled to 23% during 2007-08 from 9% during the previous fiscal year.

4. BIGGEST DOMESTIC PLAYER IN EQUITY MARKETS: According to RBIs annual report for 2007-08, the insurance companies invested Rs. 35880 crore in the G-sec market, which is over 173.06% higher than the Rs.13880 crore they invested in 2006-07. Thus insurers have emerged as the biggest domestic institutional players in the equity markets.

C. SOCIAL FACTORS :

1. LOW INSURANCE COVERAGE: In India insurance is considered as which is pushed upon the customers to buy. People are unwilling to buy insurance due to lack of awareness.2. INCREASE IN LIFE SPAN AND RISE IN ELDERLY POPULATION: In India life span has increased over past few years due to which the elderly population in India is rising day by day. To live a happy and independent life, more no. of educated peoples is moving towards investing in insurance to ensure a respectful and independent life even in old age.3. UNCERTAINITY ABOUT LIFE: Due to increasing no. of events of terrorist attacks in various parts of the country, people have started viewing life as more uncertain. It has developed a kind of fear factor in the minds of people leaving them more worried about their family and kids. Due to this reason they are moving more and more towards buying insurance policies in order to secure their familys future.4. CHANGING INDIAN PERCEPTION: In India earlier people used to view Insurance as a tax saving device or as a method of investment. But, nowadays a great change in the perception has come. People have started realizing the importance of getting insured. Now more no. of people is viewing it as a transfer of risk for a good future.5. CHANGE IN FAMILY SYSTEM: Since past, joint family system was the most prevalent in all the stratus of Indian society. At that time, in case of a mans death, there were other people in the family to take care of his wife and kids. But, with thePassage of time, a big change in our culture has come. More no. of people is moving towards nuclear family system. In todays scenario there is no one to help a widow and her kids because everyone is busy with his/her family. In such a situation more no. of people are opting for insurance to secure their spouse and childrens future.6. INCREASE IN LIFE STYLE DISEASES: Due to modernization, the life has become very fast. Many changes have taken place in the life style of people, due to which a large no. of new life style diseases have made their place in our country. Thus, more no. of people is opting for health insurance etc to lead a better and more secured life.

D. TECHNOLOGICAL FACTORS:

1. AUTOMATION OF PROCESSES: Nowadays, with advancement in technology the whole process of insurance has become automated. Earlier it used to take 15days to 45days for the issuance of policy documents. But, nowadays the whole process gets completed within 5 to 7 days.2. INTERNET DRIVEN INFORMATION ERA: With an increase in internet usage and its increasing spread, it has become easier for people to get informed about everything at their home only. Now they dont have to waste time in gathering information before taking any financial step. Every information is now-a-days is available on the net.3. BUSINESS PROCESS MONITORING: It has become easier fo0r people to track every event in a business process. It has resulted in more transparency in every aspect of business processing.4. E-BANKING FACILITY: More no. of people in urban sector are moving towards E-banking and credit card facilities etc, which has made payment of premium much easier, convenient and hassle free for customer.

E. LEGAL FACTORS:

1. REGULATORY BODIES: IRDA (Insurance Regulatory Development Authority) keeps on changing policies related to insurance which makes Difficult for the companies to adopt quickly.2. RENEWAL OF REGISTRATION: An insurer, who has been granted a Certificate of registration, should have the registration renewed annually with each year ending on March 31 after the commencement of the IRDA Act.3. REQUIREMENTS AS TO CAPITAL: The minimum paid up equity capital, excluding required deposits with the RBI and any preliminary expenses in the Formation of the country, requirement of an insurer would be Rs 100 crore to carry on life insurance business and Rs 200 crore to exclusively do Reinsurance business as per Section 6.

Michael Porters Diamond Analysis of Competiveness The model by M. Porter analyzes the industry using four dimensions or attributes of promoting the creation of competitive advantage

Demand conditions: nature of home demand. Factor conditions: nations position in factors of production such as skilled labour force and infrastructure. Firm strategy, structure, and rivalry: how companies are created, organized, managed and the nature of domestic rivalry. Related or supporting industries (RSI): presence or absence RSI that are internationally competitive. Two additional variables: government and chance.

ORGANISATION ANALYSIS

LIFE INSURANCE CORPORATION OF INDIA (LIC) Life Insurance Corporation of India (LIC) was formed in September, 1956 by an Act of Parliament, viz., Life Insurance Corporation Act, 1956, with capital contribution from the Government of India. The then Finance Minister, Shri C.D. Deshmukh, while piloting the bill, outlined the objectives of LIC thus: to conduct the business with the utmost economy, in a spirit of trusteeship; to charge premium no higher than warranted by strict actuarial considerations; to invest the funds for obtaining maximum yield for the policy holders consistent with safety of the capital; to render prompt and efficient service to policy holders, thereby making insurance widely popular. Since nationalisation, LIC has built up a vast network of 2,048 branches, 100 divisions and 7 zonal offices spread over the country. The Life Insurance Corporation of India also Transacts business abroad and has offices in Fiji, Mauritius and United Kingdom. LIC is associated with joint ventures abroad in the field of insurance, namely, Ken-India Assurance Company Limited, Nairobi; United Oriental Assurance Company Limited, Kuala Lumpur and Life Insurance Corporation (International) E.C. Bahrain. The Corporation has registered a joint venture company in 26th December, 2000 in Kathmandu, Nepal by the name of Life Insurance Corporation (Nepal) Limited in collaboration with Vishal Group Limited, a local industrial Group. An off-shore company L.I.C. (Mauritius) Off-shore Limited has also been set up in 2001 to tap the African insurance market.Some Areas of Future Growth Life Insurance The traditional life insurance business for the LIC has been a little more than a savings policy. Term life (where the insurance company pays a predetermined amount if the policyholder dies within a given time but it pays nothing if the policyholder does not die) has accounted for less than 2% of the insurance premium of the LIC (Mitra and Nayak, 2001). For the new life insurance companies, term life policies would be the main line of business. Health Insurance Health insurance expenditure in India is roughly 6% of GDP, much higher than most other countries with the same level of economic development. Of that, 4.7% is private and the rest is public. What is even more striking is that 4.5% are out of pocket expenditure (Berman, 1996). There has been an almost total failure of the public health care system in India. This creates an opportunity for the new insurance companies. Thus, private insurance companies will be able to sell health insurance to a vast number of families who would like to have health care cover but do not have it. Pension The pension system in India is in its infancy. There are generally three forms of plans: provident funds, gratuities and pension funds. Most of the pension schemes are confined to government employees (and some large companies). The vast majority of workers are in the informal sector. As a result, most workers do not have any retirement benefits to fall back on after retirement. Total assets of all the pension plans in India amount to less than USD 40 billion. Therefore, there is a huge scope for the development of pension funds in India. The finance minister of India has repeatedly asserted that a Latin American style reform of the privatized pension system in India would be welcome (Roy, 1997). Given all the pros and cons, it is not clear whether such a wholesale privatization would really benefit India or not (Sinha, 2000).

Market share quality of the insurance. As a result The introduction of private players in the industry has added value to the industry. The initiatives taken by the private players are very competitive and have given immense competition to the on time monopoly of the market LIC. Since the advent of the private players in the market the industry has seen new and innovative steps taken by the players in this sector. The new players have improved the service LIC down the years have seen the declining phase in its career. The market share was distributed among the private players. Though LIC still holds the 75% of the sector but insurance the upcoming natures of these private players are enough to give more competition to LIC in the near future. LIC market share has decreased from 95% (2002-03) to 81 %( 2004-05).The following companies has the rest of the market share of the insurance industry. Table 3 shows the mane of the player in the market.

According to share holding pattern

There are a total of 13 life insurance companies operating in India, of which one is a Public Sector Undertaking and the balance 12 are Private Sector Enterprises. List of Companies are indicated below:-

NAME OF THE PLAYER MARKET SHARE (%)

PRODUCTS OF LIC

Whole Life with Profits Plan 002Features:This plan is mainly devised to create an estate for the heirs of the policyholder as theplan basically provides for payment of sum assured plus bonuses on the death of thepolicyholder. However, considering the increased longevity of the Indian population, the Corporation has amended the above provision, thereby proving for payment ofsum assured plus bonuses in the form of maturity claim on completion of age 80 years or on expiry of term of 40 years from date of commencement of the policy whicheveris later. The premiums under the policy are payable up to age 80 years of the policyholder orfor a term of 35 years whichever is later. If the payment of premium ceases after 3years, a paid-up policy for such reduced sum assured will be automatically securedprovided the reduced sum assured exclusive of any attached bonus is not less thanRs.250/-. Such reduced paid-up policy is not entitled to participate in the bonus declared thereafter but the bonuses already declared on the policy will remain attach,provided the policy is converted in to a paid-up policy after the premiums are paid for5 years.Suitable For: This policy is suitable for people of all ages who wish to protect their families from financial crises that may occur owing to the policyholder's premature death.BENEFITSSURVIVAL BENEFIT: Sum assured plus accrued bonuses and the terminal bonuses, if any; on thepolicyholder attaining age 80 years or on expiry of term of 40 years from the date ofcommencement of the policy whichever is later.

DEATH BENEFIT:Sum assured plus accrued bonuses and the terminal bonuses, if any, on the death ofthe policyholder are paid to his/her nominees/heirs.

LIMITED PAYMENT WHOLE LIFE - PLAN 005 (WITH PROFITS)Features:This is the best form of life assurance for family provision since it enables the Life Assured to pay all the premiums during the ordinarily vigorous and most productive years of life. He need not pay any premium in the later stages of life if and when his conditions might become adverse.With Profits Limited Payments Policies do not cease to participate in profits aftercompletion of the premium paying period but continue to share in the periodical Bonus Distribution until the death of the Life Assured. If the policyholder pays at least 3 years' premiums and then discontinues paying any more premiums, a reducedpaid-up assurance policy comes into force. Such a reduced paid-up Policy will not been titled to participate in the profits declared. Thereafter, but such Bonus as has already been declared on the Policy will remain attached thereto. The premium paying term under this plan is five years minimum and 55 years maximum.BENEFITS Survival benefitsIf the Life Assured survives the premium paying period and the policy continues in full force, provided all premiums have been paid, but no further premiums are required to be paid.BENEFITSDisability Benefit:In case policy holder becomes totally and permanently disabled due to an accidentbefore reaching the age of 70 and the policy is in full force, he will not be required topay further premiums, (the Disability Benefit is available in respect of the firstRs.20000 sum assured on anyone life) and the policy will continue to be in force.Accident Benefit:By paying a small extra premium of Rs. l per Rs. 1000/- sum assured per year he orhis family are entitled to the following benefits on death or permanent disability caused by accident. Even students above the age of 18 years can avail of this benefit.Premium Stoppage:If payment of premiums ceases after at least THREE years' premiums have beenpaid , a free paid-up policy for a reduced sum assured will be automatically securedprovided the reduced sum assured, exclusive of any attached bonus, is not less than Rs. 250/-.The reduced sum assured will become payable on the event as stipulated in the policy.Bonus:Is there anything extra payable besides the sum assured at the time of claim settlement? Yes, but only if it is a 'with profits' policy. Every year the Life Insurance Corporation distributes its surplus among policyholder to 'with profits' polices in the form of bonuses. Substantial bonuses have been declared in the past after each valuation of policy liabilities.

ANMOL JEEVAN - I(WITHOUT PROFITS) BENEFITSOn Death during the Term of the Policy: Sum Assured OnMaturity:NilRESTRICTIONS(A)Minimumageatentry: 18years(completed)(B)Maximumageatentry: 55years(nearer birthday)(C)Maximumageatmaturity: 65years(D)MinimumTerm: 5years

(E)MaximumTerm: 25years(F)MinimumSumAssured: Rs.FiveLakh(G)MaximumSumAssured:Rs.ThreeCrore(Inclusiveofall term Assurance plans)Note: The policy would beissued in multiples of Rs.one lakh for Sum Assuredabove Rs. five lakh.(H)Mode of Premium Payment: Yearly, Half- Yearly and Single premium.(I) Rebates:Sum Assured Rebate:NIL in case of regular premium policies and Re. l Sum Assured for policies of Rs.25 lakh and above in case of singlepremium policies.ModeRebate: 1% of Annual premiumfor yearly mode andnil for half yearly mode.UNDERWRITING, AGE PROOF ANDMEDICAL REQUIREMENTS:The plan is available to Standard and Sub-standard lives (upto Class VI EMR). Thisplan is also available to female lives (category I and II lives only) and to physically handicapped persons subject to certain conditions. Standard age proof will have to be submitted along with the Proposal Form.PAID-UP AND SURRENDER VALUE:The policy will not acquire any paid-up value.No Surrender Value will be available under this plan.

GRACE PERIOD FORNON-FORFEITURE PROVISIONS:A grace period of 15 days will be allowed for payment of yearly or half-yearlypremiums. If death occurs within this period and before the payment of the premium then due, the policy will still be valid and the Sum Assured paid after deduction of the said premium as also unpaid premiums falling due before the next policy anniversary of the Policy. If the premium is not paid before the expiry of the days of grace, the Policy gets lapsed.REVIVAL:If the Policy has lapsed, it may be revived during the life time of the Life Assured, butbefore the date of expiry of policy term, on submission of proof of continued insurability to the satisfaction of the Corporation and the payment of all the arrears ofpremium together with interest at such rate as may be prevailing at the time of thepayment. The corporation reserves the right to accept or decline the revival ofdiscontinued policy. The revival of the discontinued policy shall take effect only afterthe same is approved by the Corporation and is specifically communicated to the Life Assured. The cost of the Medical reports, including Special Reports, if any, required for the purposes of revival of the policy, should be borne by the Life Assured.PAYMENT OF CLAIMS:No Claims concession will be applicable to this Policy.BACK-DATING INTEREST:The policy can be back dated within the financial year. No dating back interest shallbe charged.BENEFITS:Survival benefits:If one or both the lives survive to the maturity date, the sum assured, along with the accumulated bonus, is payable.Death Benefits:In case either of the couple dies during the policy's term, two things happen. One, LICpays to the surviving spouse the full sum assured. And, two, the policy continues on the life of the surviving partner without him/her having to pay any further premiums ,i.e. the life cover on the survivor continues free of cost. The sum assured is again be payable on the death of the other partner in case both the husband and wife were to die during the term of the policy. Vested bonus would alsobe paid along with the sum assured on the second death.NEW INSURANCE SCHEMES:Universal Health Insurance SchemeThe Universal Health Insurance policy is available to groups of 100 or more families. he policy provides for reimbursement of medical expenses upto Rs.30000/-towards hospitalization members of the family, death cover due to an accident 5000 to the earning head of the family and compensation due to loss f earning head of the family @ Rs.50/- per day upto a maximum of 15 days, after awaiting period of three days, when the earning head of the family is hospitalized. Thepremium under the policy is Rs.1! - Per day (i.eRs.365/-per annum) for an individual Rs. 1.5 per day for a family of five limited to spouse and children (i.e.Rs.548 per annum), and Rs.2/- per day (i.e. Rs. 730 per annum) for covering dependent overall family size of seven. A subsidy of Rs. 100 peryear towards annual premium for "Below Poverty Life" families is also provided under the scheme.For purpose of this policy hospital means:Any Hospital/Nursing home registered with the local authorities and under the supervision of a registered and qualified Medical practitioner.Hospital, Nursing Home runs by Government.Enlisted hospitals run by NGOs/ Trusts/ selected private hospitals with fixed schedule of charges.Hospitalization should be for a minimum period of 24 hours. However, this time limit is not applied to some specific treatments and also where due to technological advancement hospitalization for 24 hours may not be required.Main Exclusions:All pre-existing diseases.Corrective, cosmetic or aesthetic dental surgery or treatment.Cost of spectacles, contact lens and hearing aid.Primarily diagnostic expenses not related to sickness/injury.Treatment for Pregnancy, Childbirth, Miscarriage, abortions etc.Age Limitations:This policy covers people between the age of 3 months to 65 years.Floater Basis:The benefit of family' will operate on floater basis i.e. the total reimbursement of Rs.30,000/- can be availed of individually or collectively by members of the family.Unit plans:Unit plans are investment plans for those who realize the worth of hard-earned money. These plans help you see your savings yield rich benefits and help you save tax even if you dont have consistent income.Jeevan plusFuture plusBima plusMarket plusMoney plusProfit plusFortune plus

Fortune plus:It is a unit linked assurance plan where premium payment term (PPT) is 5 years and the premium payable in the first year will be 50% of total premium payable under thepolicy. The level of cover will depend on the level of premium you agree to pay. Four types of investment funds are offered. Premiums paid after allocation charge willpurchase units of the Fund type chosen. The Unit Fund is subject to various charges and value of the units may increase or decrease, depending on the Net Asset Value (NAV). The plan therefore serves the purpose of insurance-cum-investment.1. Payment of Premiums:You may pay premiums regularly at yearly, half-yearly, quarterly or monthly (ECS) intervals for 5 years. The minimum First year premium will be Rs.20,000/- and you may pay any amount exceeding it. From second yearonwards each years premium will be 25% of the first year premium.Other Features: i) PartialWithdrawals:You may encash the units partially after the third policy anniversary subject to the following: In case of minors, partial withdrawals shall be allowed from the policy anniversary coinciding with or next following the date on which the life assured attains majority(i.e. on or after18th birthday).Partial withdrawals may be in the form of fixed amount or in the form of fixed number of units. For 2 years period from the date of withdrawal, the Sum Assured under the Basicplan shall be reduced to the extent of the amount of partial withdrawals made.Under policies where less than 3 years premiums have been paid and furtherpremiums are not paid, the partial withdrawals shall not be allowed.Under policies where at least 3 years premiums have been paid, partial withdrawal will be allowed subject to Policyholders Fund Value being at least Rs. 10,000/-.ii) Switching:You can switch between any fund types for the entire Fund Value during the policy term subject to switching charges, if any.iii) Discontinuance of premiums:If premiums are payable either yearly, half-yearly, quarterly or monthly (ECS) and the same have not been duly paid within the days ofgrace under the Policy, the Policy will lapse. A lapsed policy can be revived during the period of two years from the due date of first unpaid premium. i. Where at least 3 years premiums have been paid, the Life Cover and Accident Benefit rider, if any, shall continue during the revival period. During this period, the charges for Mortality and Accident Benefit cover, if any, shallbe taken, in addition to other charges, by cancelling an appropriate number of units out of the Policyholders Fund Value every month. This will continue to provide relevant risk covers for i.e. two years from the due date of first unpaid premium, orii. Till the date of maturity, oriii. Till such period that the Policyholders Fund Value reduces to Rs. 5,000/-, whichever is earlier. The benefits payable under the policy in different contingencies during this period shall be as under:A. In case of Death: Higher of Sum assured under the Basic Plan or the Policyholders Fund Value. The Sum Assured shall be subject to provisions of Partial Withdrawals made, if any.B. In case of Death due to accident: Accident Benefit Sum Assured in addition to the amount under A above, if Accident Benefit is opted for.C. On Maturity: The Policyholders Fund Value.D. In case of Surrender (including Compulsory Surrender): The Policyholders Fund Value. The Surrender value, however, shall be paid only after the completion of 3policy years.E. In case of Partial Withdrawals: For 2 years period from the date of withdrawal, the sum assured under the basic plan shall be reduced to the extent of the amount ofpartial withdrawals made.II) Where the policy lapses without payment of at least 3 years premiums, the Life Cover and Accident Benefit rider cover, if any, shall cease and no charges for thesebenefits shall be deducted. However, deduction of all the other charges shall continue. The benefits under such a lapsed policy shall be payable as under F. In case of Death: The Policyholders Fund Value.G. In case of death due to accident: Only, the amount as under F above.H. In case of Surrender (including Compulsory Surrender): Policyholders Fund Value / monetary value as the case may be, shall be payable after the completion ofthe third policy anniversary. No amount shall be payable within 3 years from the date of commencement of policy.I. In case of Partial withdrawal: Partial Withdrawals shall not be allowed under such apolicy even after completion of 3 years period.III) Revival: If due premium is not paid within the days of grace, the policy lapses. A lapsed policy can be revived during the period of two years from the due date of first unpaid premium or before maturity, whichever is earlier. The period during which thepolicy can be revived will be called Period of revival or revival period .If premiums have not been paid for at least 3 full years, the policy may be revived within two years from the due date of first unpaid premium. The revival shall be made on submission of proof of continued insurability to the satisfaction of the Corporation and the payment of all the arrears of premium without interest. If at least 3 full years premiums have been paid and subsequent premiums are notpaid, the policy may be revived within two years from the due date of first unpaidpremium but before the date of maturity. No proof of continued insurability shall be required but all arrears of premium without interest shall be required to be paid. The Corporation reserves the right to accept the revival at its own terms or decline the revival of a lapsed policy. The revival of a lapsed policy shall take effect only afterthe same is approved by the Corporation and is specifically communicated in writing to the Propose / Life Assured .Irrespective of what is stated above, if less than 3 years premiums have been paid and the Policyholders Fund Value is not sufficient to recover the charges, the policy shallbe terminated and thereafter revival will not be entertained. If 3 years or more than 3years premiums have been paid and the Policyholders Fund Value reduces to Rs.5000/-, the policy shall terminate and Policyholders Fund Value as on such date shallbe refunded to the Life Assured and thereafter revival will not be allowed.IV) Settlement Option: When the policy comes for maturity, you may exercise Settlement Option and may receive the policy money in installments spread over aperiod of not more than five years from the date of maturity. There shall not be any life cover during this period. The value of installment payable on the date specified shall be subject to investment risk i.e. the NAV may go up or down depending upon the performance of the fund.Reinstatement:A policy once surrendered will not be reinstated.Risks borne bythe Policyholder:i) LICs Fortune Plus is a Unit Linked Life Insurance product which is different from the traditional insurance products and is subject to the risk factors.ii) The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or downbased on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions.iii) Life Insurance Corporation of India is only the name of the Insurance Company and LICs Fortune Plus is only the name of the unit linked life insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns.iv) Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document of the insurer.v) The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.vi) All benefits under the policy are also subject to the Tax Laws and other financial enactments as they exist from time to time.Cooling off period:If you are not satisfied with the Terms and Conditions of the policy, you may return the policy to us within 15 days.Loan:No loan will be available under this plan.Assignment: Assignment will be allowed under this plan.Exclusions: Any amount exceeding it. From second year onwards each yearspremium will be 25% of the first year premium. In case the Life Assured commits suicide at any time within one year, the Corporation will not entertain any claim by virtue of the policy except to the extent of the Policyholders Fund Value on death.MARKET PLUSIN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER"LICs MARKET PLUS:This is a unit linked deferred pension plan. You can take the plan with or without riskcover. You can also choose the level of cover within the limits, which will depend on whether the policy is a Single premium or Regular premium contract and on the level of premium you agree to pay. The allocated premiums will be applied to purchase units as per the Fund type chosen. Your Unit Account will be subject to deduction of charges as specified in the Policy Conditions. The value of the units in the Unit Fund may increase or decrease, depending on the investment return of the assets representing the chosen Fund i.e.Payment of Premiums:You may pay premiums regularly at yearly, half-yearly or quarterly intervals over the term of the policy. The minimum annualpremium will be Rs.5, 000/- increasing thereafter in multiples of Rs.1, 000/-.Alternatively, a Single premium can be paid subject to a minimum ofRs.10,000 and thereafter in multiples of Rs.1, 000.ii.

Benefits:A) Death Benefit:If the Life cover is opted for, the Sum Assured under the Basic Plan togetherwith the Fund Value of units either as a lump sum or as pension. In case thepolicy is taken without life cover, then the Fund Value of the units held in the Policyholders Unit Account shall be payable either as a lump sum or as apension. The amount of pension will depend on the then prevailing immediate annuity rates under the annuity option chosen.B) Benefit on Vesting:On your surviving to the date of vesting, the Fund Value of the units held in your Unit Account will compulsorily be utilized to provide a pension based on the then prevailing immediate annuity rates under the relevant annuity option. However, you may opt to commute up to one-third of the Benefit to be paid asa lump sum. Further, you may choose to purchase pension from LIC or otherlife insurance company.Accident Benefit Option:If you have opted for life cover, you may opt forAccident Benefit equal to life cover subject to minimum Rs. 25,000 and maximum Rs. 50 lakh (taken all policies with LIC of India and other insurers).In case of death by Accident, an additional sum equal to Accident benefit willbe payable.Eligibility Conditions AndOther Restrictions:Basic PlanMinimumAgeatentry: 18yearscompletedMaximum Age at entry: 70 years(age nearer birthday). Howeveriflife cover is opted for, then 65 yearsMinimum Ageat vesting: 40 years(age lastbirthday)MaximumVestingAge: 75years(agelastbirthday)MinimumDefermentTerm: 5yearsMinimum Sum Assured: Rs. 25,000 for Single premium Rs. 50,000 for Regular premiumMaximumSumAssured: SinglePremium-Equaltosinglepremium Regular Premium - 20 times of the annualizedpremium.i) Investment of Funds:The premiums allocated to purchase units will be strictly invested according to the investment pattern committed in various fund types.Various types offund and their investment patternwill be asunder:FundType Short-terminvestments such as money market instruments (including Govt. Securities & Corporate Debt) Investment in Listed Equity Shares:Bond FundNotlessthan80%100%NilSecured FundNotlessthan65%notmorethan85% notlessthan15% & not more than 35%.Balanced FundNotlessthan50%notmorethan70% notlessthan30% & not more than 50%.Growth Fundi. Notlessthan20%notmorethan40% notlessthan60% & not more than 80%.ii.ThePolicyholder has the optionto choose any ONEof the above4 funds.Incase no fund has been opted for, the allocated premiums shall, by default, be invested in the SECURED FUND.iii. Method of Calculation of Unit price:Units will be allotted based on the Net Asset Value (NAV) of the respective fund as on the date of allotment. There is no Bid-Offer spread (the Bid price and Offer price of units will both be equal to the NAV). The NAV will be computed on daily basis and will be based on investment in Government / Government Guaranteed Securities /Corporate Debt not Performance, Fund Management Charge and whether fund is expanding or contracting under each fund type.iv. Charges under the Plan:Units will be allotted based on the Net Asset Value (NAV) of the respective fund as on the date of allotment. There is no Bid-Offer spread (the Bid price and Offer price of units will both be equal to theNAV). The NAV will be computed on daily basis and will be based on investment performance, Fund Management Charge and whether fund is expanding or contracting under each fund type.(A) Premium Allocation Charge: This is the percentage of the premium appropriated towards charges from the premium received. The balance known as allocation rate constitutes that part of the premium which is utilized topurchase (Investment) units for the policy.For Single premium policies: 3.3%v. Allocation charge for Top-up: 1.25%(B) Charges for Risk Covers:Mortality Charge:This is the cost of insurance cover. These are age specific and will be taken every month.Accident Benefit charge:This is the cost of Accident Benefit rider and willbe levied every month at the rate of Rs. 0.50 per thousand Accident Benefit Sum Assured per policy year.(C) Other Charges: Policy Administration charge Rs. 60/-per month during the first policy year and Rs. 20/- per month thereafter, throughout the term of the policy.

Fund Management Charge:This is the charge levied as a percentage of the value of units and shall be appropriated by adjusting NAV at following rates:0.75% p.a. of Unit Fund for Bond Fund 1.00% p.a. of Unit Fund for ?Secured? Fund 1.25%p.a. of Unit Fund for Balanced Fund 1.50% p.a. of Unit Fund forGrowth Fund.Switching Charge:This is the charge levied on switching of monies from one fund to another. Within a given policy year 4 switches will be allowed free ofcharge. Subsequent switches in that year shall be subject to a switching charge of Rs. 100 per switch.Bid/Offer Spread:NilSurrender Charge:NilService Tax Charge:A service tax charge shall be levied on the Mortality and Accident Benefit rider charge, if any, on a monthly basis. The level of this charge will be as per the rate of service tax as applicable from time to time. Presently, the rate of Service Tax is 12% with an educational cess at the rate of2% thereon and hence effective rate is 12.24%.Miscellaneous Charge:This is a charge levied for an alteration within the contract, such as reduction in policy term, change in premium mode, etc. An alteration may be allowed subject to a charge of Rs. 50/-.(D) Right to revise charges:The Corporation reserves the right to revise all or any of the above charges except the premium allocation charge and charges for risk covers, with the prior approval of IRDAWHOLE LIFE PLANSuitabilityPeople who wish to provide for their dependants huge sums at comparatively low contribution as premium can take this policy. Under this plan an individual gets life coverage for almost whole of his life.Salient FeaturesSum assured is payable only on the death of the life assuredPremiums have to be paid for 35 years or till age 80 years whichever is morePremiums cease on death of the life assuredBenefitsOn DeathSum assured + vested bonuses are payable to nominees/beneficiaries on death of life assured only.Other ConditionsMinimum sum assured: Rs 20000Minimum premium must be Rs.800 per annumMinimum age at entry: 18 yearsMaximum age at entry: 60 years Statement made by LICVision: A trans-nationally competitive financial conglomerate of significance to societies and Pride of India. Mission: To explore and enhance the quality of the life of people through financial security by providing products and services of aspired attributes with competitive returns and by rendering resources for economic development.

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 itspolicyholders, 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 ofthe investors as well as the community as a whole, keeping in view nationalpriorities 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 inthe 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 ofparticipation, pride and job satisfaction through discharge of their duties with dedication towards achievement of Corporate Objective.

IT to boost life market growth

THE LIFE Insurance Corporation of India (LIC) has turned to information technology in a bid to shed its image as a dinosaur among more nimble private sector companies. LIC, India's dominant life insurer, is encouraging policyholders to use its web site topay premiums and make claims. Last- month, it announced new mobile phone SMS(testing) services to alert policyholders of news about their plans. These moves, unmatched by most of LIC's smaller private sector rivals, are part of an effort to open new channels to increase the speed and quality of customer service -long seen as LIC's weakness after decades as India's monopoly life insurer. LIC'sperformance in the year to March 2004 suggests that these efforts are working. It sold 27 million new policies generating Rs.85.7 billion (US$1.9 billion) in premium income - an annual growth of about 11 percent. LIC's deployment of information technology may have helped it maintain its 88 percent market share of premium sales. Yet few believe that technology alone will drive the company's - and in effect, the Indian life industry's expansion. "Ultimately the growth of life insurance depends on growth of the economy," said TK. Banerjee, a board member of the Insurance Regulatory Development Authority. India's economic growth rate in March 2004 hit double-digit figures to become Asia's fastest-growing economy. Most economists forecast growth to stabilize at around 7percent to 2005. Banerjee said that this climate of rising economic prosperity is encouraging consumers to think more about insurance. Nonetheless, most life companies believe consumers still need Sanmar: "People still don't think that insurance is important. Most sales happen after personal interaction. "AMP Sanmar, a two-year old joint venture between south.-Indian based conglomerate Sanmar and Australia's AMP, has employed some 3,000 sales agents are targeting small and medium-sized towns that have low penetration rates of life insurance. India's life insurance penetration is less than three percent. "We're focused on places where there is no other company - not even LIC," Subramaniam said,-remarking that unlike LIC, AMP Sanmar regards the internet and mobile phones as channels for promotion, not sales. He said that the internet is not widespread as a channel to sell consumer products in India, but Subramaniam has not ruled out deploying such technology in the future. Whatever the merits of new distribution channels, the industry fears a decline in sales following new taxes levied on singlepremium products. Single premium life insurance has been popular in India mainlybecause guaranteed returns were tax-free. This encouraged policyholders to pay largepremiums with minimal risk cover, for payments at maturity that often exceeded the returns of more sophisticated financial products such as mutual funds. But last October, the government decided to tax premiums that paid above 20 percent of the sum assured. The decision has reduced sales of single premium products, which is likely to restrain the overall growth of India's life industry. The industry regulator has forecast growth of life premiums to be around 20 percent to March -2004, about the same level as 1999, down from a burst of sales in 2002 of 43.5 percent. India's life insurers have rallied to persuade the government to rescind the ruling later this year,but any decision must wait for the end of parliamentary elections currently underway.

SWOT ANALYSIS of LIC

Strategic Business Unit (SBU) LICThree SBUs are their under LIC1. International operation2. Pension & Group business3. Real estateDifferentiation based policy is used by LIC The differentiate their service Variety of policies