lic overview

7/28/2019 LIC Overview

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OverviewThe Life Insurance Corporation of India (LIC) is the largest state-owned 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 to24.6% of the Indian Government's expenses. It has assets estimated of 9.31 trillion (US$206.68 billion). Itwas 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 Indiacurrently has 8 zonal Offices and 101 divisional offices located in different parts of India, at least 2048branches located in different cities and towns of India along with satellite Offices attached to about some 50Branches, and has a network of around 1.2 million agents for soliciting life insurance business from thepublic.HistoryThe Oriental Life Insurance Company, the first corporate entity in India offering life insurance coverage, wasestablished in Calcutta in 1818 by Bipin Bernard Dasgupta and others. Europeans in India were its primarytarget market, and it charged Indians heftier premiums. The Bombay Mutual Life Assurance Society, formedin 1870, was the first native insurance provider. Other insurance companies established in the preindependence era includedBharat Insurance Company (1896)United India (1906)National Indian (1906)National Insurance (1906)Co-operative Assurance (1906)

Hindustan Co-operatives (1907)Indian MercantileGeneral Assurance Swadeshi Life (later Bombay Life)

Indias first 150 years were marked mostly by turbulent economic conditions. It witnessed, First War ofIndependence, adverse effects of the World War I and World War II on the economy of India, and in betweenthem the period of world wide economic crises triggered by the Great depression. The first half of the 20thcentury also saw a heightened struggle for India's independence. The aggregate effect of these events led to ahigh rate of bankruptcies and liquidation of life insurance companies in India. This had adversely affected thefaith of the general public in the utility of obtaining life cover.The Life Insurance Act and the Provident Fund Act were passed in 1912, providing the first regulatorymechanisms in the Life Insurance industry. The Indian Insurance Companies Act of 1928 authorized thegovernment to obtain statistical information from companies operating in both life and nonlife insuranceareas. The subsequent Insurance Act of 1938 brought stricter state control over an industry that had seenseveral financially unsound ventures fail. A bill was also introduced in the Legislative Assembly in 1944 tonationalize the insurance industry.Some of the important milestones in the lifeinsurance business in India: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 insurancebusiness.1928 : The Indian Insurance Companies Act enacted to enable the government to collect statisticalinformation about both life and non-life insurance businesses.

1938 : Earlier legislation consolidated and amended to by the Insurance Act with the objective of protectingthe interests of the insuring public.1956 : 245 Indian and foreign insurers and provident societies are taken over by the central government andnationalised. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5crore from the Government of India.The General insurance business in India, on the other hand, can trace its roots to the Triton InsuranceCompany Ltd., the first general insurance company established in the year 1850 in Calcutta by the British.

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Some of the important milestones in the general insurancebusiness in India:1907 : The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of generalinsurance business.1957 : General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct forensuring fair conduct and sound business practices.1968 : The Insurance Act amended to regulate investments and set minimum solvency margins and the TariffAdvisory Committee set up.1972 : The General Insurance Business (Nationalisation) Act, 1972 nationalised the general insurancebusiness in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into fourcompanies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the OrientalInsurance Company Ltd. And the United India Insurance Company Ltd. GIC incorporated as a company.NationalizationIn 1955, parliamentarian Amol Barate raised the matter of insurance fraud by owners of private insurancecompanies. In the ensuing investigations, one of India's wealthiest businessmen, Ram Kishan Dalmia, ownerof the Times of India newspaper, was sent to prison for two years.Eventually, the Parliament of India passed the Life Insurance of India Act on 1956-06-19, and the LifeInsurance Corporation of India was created on 1956-09-01, by consolidating the life insurance business of 245private life insurers and other entities offering life insurance services. Nationalization of the life insurancebusiness in India was a result of the Industrial Policy Resolution of 1956, which had created a policyframework for extending state control over at least seventeen sectors of the economy, including the lifeinsurance.SPREAD IN THE COUNTRYOver its existence of around 50 years, Life Insurance Corporation of India, which commanded a monopoly ofsoliciting and selling life insurance in India, created huge surpluses, and contributed around 7 % of India'sGDP in 2006.The Corporation, which started its business with around 300 offices, 5.6 million policies and a corpus of INR459 million (US$ 92 million as per the 1959 exchange rate of roughly Rs. 5 for a US $ , has grown to 25000servicing around 180 million policies and a corpus of over 8 trillion (US$177.6 billion).The recent Economic Times Brand Equity Survey rated LIC as the No. 1 Service Brand of the Country. Theslogan of LIC is "Zindagi ke saath bhi, Zindagi ke baad bhi"in hindi. In english it means "with life also,after

life also. According to The Brand Trust Report 2011, LIC is the 8th most trusted brand of IndiaOBJECTIVESSpread Life Insurance widely and in particular to the rural areas and to the socially and economicallybackward classes with a view to reaching all insurable persons in the country and providing them adequatefinancial 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 holdsin trust, without losing sight of the interest of the community as a whole; the funds to be deployed to the bestadvantage of the investors as well as the community as a whole, keeping in view national priorities andobligations 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 andeconomic environment.Involve all people working in the Corporation to the best of their capability in furthering the interests ofthe insured public by providing efficient service with courtesy. Promote amongst all agents and employees of the Corporation a sense of participation, pride and jobsatisfaction through discharge of their duties with dedication towards achievement of Corporate Objective.

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BRIEF OVERVIEW OF SCHEMES OF LIC

LIC GROUP PLAN | GROUP GRATUITY SCHEME | LIC | OVERVIEW |ADVANTAGES | BENEFITS TAX BENEFIT | FEATURES SPECIAL FEATURESKey to a successful business is keeping your employees motivated. Happy and secured employees workbetter, which in turn reduces the employers tension. Group Insurance is an insurance which covers a group ofpeople (like employees of a common employer or professionals in a common group).LIC brings you LICs GRATUITY PLUS PLAN, a unit linked plan for management of Gratuity Funds. Thisplan is different from the traditional Cash Accumulation Plan as the returns under the Plan are linked to theperformance of the chosen fund. GRATUITY PLUS PLAN is suitable for companies who desire to entrustGratuity Fund management to an insurer and wish to have the flexibility of choice of investments.ADVANTAGES

1. Choice of 4 funds to meet various risk appetites.2. Flexibility in structuring the Gratuity Costs based on performance of Fund.3. Facility of Switching between various funds. One switch every year is free of cost.4. It provides for life insurance cover at a very minimal cost. Cover can be equal to the gratuity payable foranticipated service. Alternatively, the company can also choose for each member a uniform level of coverequal to a minimum of one months salary or more .5. There is no bid offer spread under this scheme.6. Scheme can be surrendered at any time. There is no surrender penalty imposed.7. Hassle Free Administration of Scheme8. Assistance for execution of legal documents and installation of scheme.BENEFITS

1. Gratuity Benefits to Members whenever payable as per Rules of the Scheme shall be paid to the PolicyHolder by debiting the requisite no of units to the Policy Holders Unit Account at NAV applicable at thattime.2. In case of death of member, life insurance cover as opted for by Policyholder will also be paid by theCorporation.3. The policy can be surrendered at any time. The benefit available on surrender of the policy will be the valueof total number of units held in the Policy Holders Unit Account at the time of surrender.At all times the Policyholders unit account should be sufficient to cover the relevant charges and benefitspayable at such point of time, subject to a minimum balance of Rs. Five lacs in the Policyholders Unit

Account. In case the Policyholders Unit Account falls below this limit, the policy shall compulsorily beterminated and the balance amount in the policy holders Unit Account will be refunded to the policy holder.TAX BENEFITS:

The provisions relating to the approved Superannuation Scheme are set out in Part B of the Fourth Schemeof the Income-Tax Act, 1961 and Part XIII of the Income Tax Rules, 1962. The income tax concession will beavailable only if the scheme is approved by the CIT.1. The annual contribution is treated as a deductible business expense in term of Section 36(1) (IV) of the I.T.Act.2. In terms of a Notification issued by the Central Board of Direct Taxes .80% of the contribution (s) towardsthe past service liability are treated as deductible business expenses spread over in the subsequent years ofpayment.

3. The employees contribution, in the case of the Contributions scheme qualifies for exemption under Section80C of the Income-Tax Act.Jeevan AnuragBenefits

LICs Jeevan Anurag is a with profits plan specifically designed to take care of the educational needs ofchildren. The plan can be taken by a parent on his or her own life. Benefits under the plan are payable atprespecified durations irrespective of whether the Life Assured survives to the end of the policy term or dies

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during the term of the policy. In addition, this plan also provides for an immediate payment of Basic SumAssured amount on death of the Life Assured during the term of thepolicy.Assured Benefit

Payment of 20% of the Basic Sum Assured at the start of every year during last 3 policy years beforematurity. At maturity, 40% of the Basic Sum Assured along with reversionary bonuses declared from time totime on full Sum Assured for the full term and the Terminal bonus, if any shall be payable. For example, ifterm of the policy is 20 years, 20% of the Sum assured will be payable at the end of the 17th,18th, 19 th yearand 40% of the Sum Assured along with the reversionary bonuses and theterminal bonus, if any, at the end of the 20th year.Death Benefit

Payment of an amount equal to Sum Assured under the basic plan immediately on the death of the lifeassured.DETAILS OF WHOLE LIFE SCHEME AND ENDOWMENT SCHEMESummary:

Jeevan Anand is the combination of Endowment Assurance and Whole Life plan. The risk cover will continueeven after the maturity, that means Zindagi Ke Saath Bhi Zindagi Ke Bad Bhi Jeevan Anand plan no. 149provides financial protection against death throughout the lifetime of the life assured with the provision ofpayment of a lump sum at the end of the selected term in case of his survival.For Example: Mr. Pankaj, age 25 years, takes Jeevan Anand policy for 25 years for Sum Assured Rs. 1 lakh.Now on Maturity Pankaj will receive Rs. 2,12,500/- (Rs. 1 lakh sum assured Plus Rs.1,12,500/- is theestimated bonus at Rs.45/- per thousand per year.)In case, Mr. Pankaj, dies ( After premium paying term is over) at the age of 60 years, his nominee will getadditional Rs. 1 lakh equal to sum assured amount. Since Mr. Pankaj has already received the bonus, LIC willnot pay second time bonus.In case, Mr. Pankaj dies during the Premium Paying Term, his nominee will get Rs.1 Lakh (sum Assured) +Accrued bonus till Mr. Pankajs death.Key Features:

1. Jeevan Anand is the combination of Whole Life and Endowment Assurance plan.2. Even after the Premium Paying Term (PPT) is over, risk cover continues till the death of the policy holder.3. Accident Benefit is available during the Premium paying term and thereafter upto age 70.

4. Limited premium payments.5. Double accidental cover upto age 70.6. Tax SavingsModes of Premium Payment:

You can pay premium yearly, half-yearly, quarterly, monthly or through salary deductions as opted by youthroughout the selected term of the policy or till earlier death.Jeevan Anand Plan Premiums are limited. You only pay till the selected term of years or until death if itoccurs during the term period. This policy not only makes provisions for the family of the life assured in theevent of early death but also assures a lump sum at a desired age. The lump sum can be reinvested to providean annuity during the remainder of policy holders life or in any other way considered suitable at that time.Premium Stoppage:

If payment of premiums ceases after at least 3 years premiums have been paid, a free paid-up policy for areduced sum assured will be automatically secured provided the reduced sum assured, exclusive of anyattached bonus, is not less than Rs. 250/-. The reduced sum assured will become payable on the event asstipulated in the policy.Bonuses :

Jeevan Anand is a with-profit insurance plan and participates in the profits of the Corporations life insurancebusiness. You will get the profit in the form of Bonuses.

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Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financialyear. Once the bonus is declared, they form part of the guaranteed benefits of the plan. Bonuses will be addedduring the selected term or till death, if it occurs earlier. Final (Additional) Bonus may also be payableprovided the policy has run for certain minimum period.Maturity Benefit:

Sum Assured along with all vested bonuses payable at the end of the term to the policy holder.(Endowmentterm)Death Benefit :

Sum Assured along with vested bonuses are payable on death during the premium paying term. An amountequal to the Sum Assured is payable if death occurs after the premium paying term. Simple ReversionaryBonus accrues during the premium paying term and is payable at the end of the premium paying term or onearlier death along with final additional bonus, if any. No Bonus is paid on death after the premium payingterm.Accident Benefit:

Double Accident Benefit is available during the premium paying term and thereafter up to age 70. MaximumAccident Cover available under this plan will be Rs 5 lakh (this limit excludes accident benefit taken underother plans).In case of permanent disability of the life assured due to accident this additional Sum assured is payable ininstalments.Eligibility Conditions and Restrictions:

a) Minimum Entry Age: 18 Years completedb) Maximum Entry Age: 65 Yearsc) Max. PPT Mat. Age: 75 yearsd) Min. Premium term: 5 yrse) Max Premium term: 57 yrs

f) Minimum Sum Assured: Rs. 1,00,000/-g) Maximum Sum Assured: No Limith) Risk cover: Sum Assured + Bonusi) Loan on policy: Availablej) Housing loan : Available

Surrender Value:

Buying a life insurance contract is a long-term commitment. However, surrender values are available on theplan on earlier termination of the contract.Guaranteed Surrender Value:

The policy may be surrendered after it has been in force for 3 years or more. The guaranteed surrender value

is 30% of the basic premiums paid excluding the first years premium. Any extra premium(s) paid andpremium(s) towards Accident Benefit are also excluded.LICs policy on surrenders:

In practice, the Corporation will pay a Special Surrender Value which is either equal to or more than theGuaranteed Surrender Value. The benefit payable on surrender reflects the discounted value of the reducedclaim amount that would be payable on death or at maturity. This value will depend on the duration for whichpremiums have been paid and the policy duration at the date of surrender. In some circumstances, in case ofearly termination of the policy, the surrender value payable may be less than the total premium paid.Who should buy Jeevan Anand policy?

Since Jeevan Anand is an endowment assurance plus whole life policy, this plan is apt for people of of allages and social groups who wish to protect their families from a financial setback that may occur owing to

their demise. The amount assured if not paid by reason of his death earlier will payable at the end of theendowment term where it can be invested in an annuity provision for the rest of the policyholders life or inany other way he may think most suitable at that timeREASONS WHY LIC IS A MARKET LEADER IN LIFE INSURANCESECTORPositions:

1. Largest insurance Company in the world in Customer Base (23 crore customers)2. No.1 insurance company in the world in terms of agency (about 1.1 Million agents)

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3. LIC is No.1 insurer in the world in Volume & Sold around 3.75 Cr.Policies in 2007- 2008.4. 2nd Biggest Real Estate Owner next to Indian Railways.5. LIC is one of the Highest income tax playing Organization. For Financial Year 2007- 08, LIC has paidadvance Tax Rs.2627. 14 Cr. & Service Tax Rs.1292. 15 Cr.6. Has Highest insurance Professionals ( Club Member agents )7. Only 4 countries in the world have more population that LIC`s policy holders.Award Recognition :

8. Adjudged "The most trusted service Brand" in India, by "Economic Times and AC NEILSEN ORGMARG" for the year 2007 for the 5th consecutive year.9. "Golden Peacock" award for Excellence in "corporate Governance"10.LIC adjudged as "Best life insurance Company of the year" at the "2nd"NDTV Profit Business LeadershipAwards-2007.11.LIC adjudged the "Most Preferred Li fe insurance Company of the year" at the "CNBC AWAAZ"consumer award 2007 for 3rd time in succession.12.Awarded Reader Digest's "Trusted Brand"2006,2007&2008 (Voted by Consumers) 13. "Outlook MoneyNDTV Profit Award 2007"14. "Web 18-Genius of the web Award" Conferred for the best website in insurance Category15. "SKOCH Challengers Award 2008" for "Jeevan Madhur".16. "Loyalty Awards 2008"- insurance Sector.17. Double crown for LIC in corporate Olympics 2008, Most Sporting Corporate Championship AwardWinner-2008Honouring of the Commitment - Settlement of Claims

18.No.1 insurance Company in the world in terms of claims paid.19.LIC Settles 2.21 claims per second, LIC settled 139 lakhs claims during the year 2007-2008.20.Prompt settlement of claims (97% maturity claim settled on or before due date)21.One of the Lowest outstanding Claim Ratio in the world ( Maturity+S B Claim- 0.07%)Advanced Technology-For better Customer Service

22.Computerized and networked 2048 branch offices and 159 satellite offices throughout the country.23.Use of High Tech-WAN,LAN,IVRS & EDMS24.LIC is second largest PC user in the country.25.EDMS to make LIC a paperless office- Enabling Policy servicing & payments through all branchs in the

country.26. Premium Payment Facility extended through networked 2048 branches, ECS, ATM's through internet,online portals, collecting bank (Axis Bank), AP online, through SMS, through selected agents, Now LICPremium can also be paid through."Suvidha info Serve KIOSKS" all over India.

27.Policy Holder's Portal allow on line access to policy status and other details.28.Info centre set up in 12 cities for customers to interact easily. Dial- 1251 for details.29.45 interactive Voice Response System (IVRS) centers all over the country to provide information onpolicy servicing. Facility is available 24 7, Facility can be availed on following phone Nos. 1251 OR 020-25514248.Social Strength

30.LIC - an institution builder promoting many financial and insurance institutes like NSE, NCDEX, LICMutual Fund, Stock Holding Corporation of India, National insurance Academy, insurance institute of Indiaetc.31.LIC has foreign operations in Mauritius, Fiji and London and has joizt venture operating in Sri lanka,Nepal, Bahrain & Saudi Arabia. New offices will be hortly oprned in Australia, USA&Canada.32.LIC is known as "Pension Provider" of the country.33.1st Pension company in India is floated by LIC as "LIC Pension Fund Ltd" on 21 st Nov 2007.34.First to create waves in micro insurance sector by insuring people below the poverty

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line. In year 2007-2008, 8.54 lac policies sold through "Jeevan Madhur"Plan.35.Widest range of plans (about 48) for every need of the customer of 0 to 79 years of age.36.Biggest Portfolio of Group insurance schemes available.37."Jeevan Saral" one of the product of LIC got "Best innovation product " award from I.R.D.A.38.LIC has covered lick Risk of 1.13 crore citizens through "AAM ADMI BIMA YOJANA" & "JANASHREE BIMA YOJANA".39.Very Unique Salary saving Portfolio.40.Highest Number of Corporate Clients in Group insurance Scheme.41.Expending Distribution Channel through Bancassurances, Corporate Agencies, Broker ship & Chief Lifeinsurarance Advisor (CLIA).42. New East - Central Zonal Office opened at patina to caterto the needs of states of Bihar, Jharkhand andOrissa. 5 new Divisional offices were also opened in 2007-08. Pune D.O.was splited in 2 divisions, viz PuneDivision (i) and Pune Division (ii).43. "Golden Jubilee Foundations" established for undertaking charitable activities like education, health, reliefof poverty etc.People's Money for People's Welfare

44.LIC invested more than 11,630 crores, in infrastructure sector is Rs.56,691 crores 45.In socially orientedsector like water, drainage & housing etc, LIC has invested Rs.5,635 crores during 2007-08 & totalinvestment in this sector is Rs.32,321 crores. 46.Total investment in Social Sector Rs.89,000 Crs.47.Different incentive schemes for villages, Schools and Banks under Bima Gram, Bima School and BimaBanks.48.Total investment in Nation Building Activities is 5,76,000 Crs.Financial Strengths

49.LIC's investment income in 2007-08 was Rs.40,655 crores. Out of Total income of Rs, 1,76,559.28 Crs.50.Total Assets of the corporation as on 31.3.07 were Rs. 6,74,514.78 Crs.51.Largest institutional investor in Share Market. On an average Rs.100 crore invested every day. Duringtheyear 2007 LIC earned the profit Rs.10,000 Crs. from the Sale of Equity.52. Largest Financial institutional investor both Equity market & Term House.KEY ACHIEVEMENTSDuring the 2008/09 financial year, LIC sold more than 35.9 million policies generating a first year premiumincome of Rs. 52,953.92 crore (US$ 11 billion) despite the global slowdown (Source: IRDA). During this

period, the corporation settled 577,000 death claims and 1.44 million maturity claims.To its resounding credit,the Corporation was able to settle 97% of all maturity claims on or before the due date signing out Rs.29,105.85 crore (US$ 6.10 billion) in settlement. Additionally, the corporation paid Rs. 5606.90 crore (U S$1.20 billion) in death claims.Current figures show the outstanding claims ratio under the death category at no more than 2.20% and in thematurity segment at an exemplary low of 0.26%. LIC has a proud record of innovative products that findinstant acceptance and success. For example, the Corporations Jeevan Aastha scheme, a close-ended,singlepremium plan sold about 1.84 million policies collecting Rs.10,664 crore (US$ 2.20 billion) inpremiums in 45 days of launch in the year 2009. It is a remarkable achievement that not only has LICcontinued to maintain the trust of consumers during the economic downturn but has also been felicitated withseveral awards.

It was bestowed the Readers Digest Trusted Brand Platinum Award, in both 2008 and 2009, the CNBCAwaaz Consumer Award in 2009 and the Customer and Brand Loyalty Award in 2009. In the same year, LICemerged as the Top Brand in the Insurance Category in the survey conducted by ACNielsen for Brand Equity.In fact, Brand Equity rated LIC as the Most Trusted Service Brand, five years in a row. In the recent past, too,its brand leadership has been on evidence. In 2008, for instance amongst several awards,LIC was felicitated with the NDTV-Profit Business Leadership award as also the Asia Brand Congress- BrandLeadership Award. Even in the field of technology, LICs innovations and practices were recognized when itwon the NASSCOM Award for the Best IT User

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