Life insurance policy


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Life insurance policy

  1. 1. T.Y.BFM 50 GOLDEN YEARS OF LIC INTRODUCTION In the history of life insurance in India,The Life insurance Corporation of India has indeed written a golden chapter. Conceived brilliantly by visionaries in 1956, it was brought together amalgamating 245 insurance companies into a National Institution to spread the message of life insurance to every nook and corner of this vast country. The stirring messages from the then prime minister Pandit Nehru and the then finance minister Shri C.D.Deshmukh heralded the start of a glorious saga of security. The organization was well directed to work on business principles. The motto aptly chosen from the Bhagavad-Gita, „Yogakshemam Vahamyaham‟, set the tone for service to the numerous staff, agents, development officers and officers spread all over the country. Despite teething troubles, a strong institution gradually emerged with a great family spirit of working together in the offices and in the field. In the initial years, the organization drew on the best practices of the various companies and soon set new norms and standards. Manuals and standard procedures infield all the offices, and contributed for efficient work practices. A great spirit of service before self did permeate the organization, due to the tall leadership and the very sincere and dedicated work of all concerned in the office and in the field. Good standards in recruitment of staff and field workers ensured high growth momentum. Page 1
  2. 2. T.Y.BFM 50 GOLDEN YEARS OF LIC Now LIC is one of the best brands in the country. It has won praise from all quarters for its outstanding growth of Life insurance and for its contributions to social and economic infrastructure. It has become a household name and powerhouse of economic growth. A Life fund of a few hundred crores rupees has now grown to around four hundred thousand crores rupees, making a very vital contribution to the Indian economy. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the year 1956. Since life insurance contracts are long term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. Re-organization of LIC took place and large numbers of new branch offices were opened. As a result of re-organization servicing functions were transferred to the branches, and branches were made accounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crores mark of new business. But with re-organization happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crores Sum Assured on new policies.e business. Page 2
  3. 3. T.Y.BFM 50 GOLDEN YEARS OF LIC HISTORY Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and Indian natives were not being insured by these companies. However, later with the efforts of eminent people like Babu Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian lives were being treated as sub-standard lives and heavy extra premiums were being charged on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism. The Swadeshi movement of 19051907 gave rise to more insurance companies. The United India in Madras, National Indian and National Insurance in Calcutta and the Cooperative Assurance at Lahore were established in 1906. In 1907, Hindustan Co-operative Insurance Company took its birth in one of the rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Page 3
  4. 4. T.Y.BFM 50 GOLDEN YEARS OF LIC Calcutta. The Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were some of the companies established during the same period. Prior to 1912 India had no legislation to regulate insurance business. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed. Life Insurance Companies Act, 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary. But the Act discriminated between foreign and Indian companies on many accounts, putting the Indian companies at a disadvantage. The first two decades of the twentieth century saw lot of growth in insurance business. From 44 companies with total business-in-force as Rs.22.44 crores, it rose to 176 companies with total business-in-force as Rs.298 crores in 1938. During the mushrooming of insurance companies many financially unsound concerns were also floated which failed miserably. The Insurance Act 1938 was the first legislation governing not only life insurance but also non-life insurance to provide strict state control over insurance business. Page 4
  5. 5. T.Y.BFM 50 GOLDEN YEARS OF LIC MEMBERS OF THE BOARD OF THE CORPORATION Shri. T.S. Vijayan (Chairman) Shri. D.K. Mehrotra (Managing Director - LIC) Shri. Thomas Mathew T. (Managing Director - LIC) Shri. A.K. Dasgupta (Managing Director - LIC) Shri. Ashok Chawla (Finance Secretary, Ministry of Finance, Govt. of India) Shri. R. Gopalan (Secretary, Department of Financial Services, Ministry of Finance, Govt. of India.) Shri. Yogesh Lohiya (Chairman cum Managing Director, GIC of India) Page 5
  7. 7. T.Y.BFM 50 GOLDEN YEARS OF LIC 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 insurancelinked savings adequately attractive. Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it holds in trust, without losing sight of the interest of the community as a whole; the funds to be deployed to the best advantage of the investors as well as the community as a whole, keeping in view national priorities and obligations of attractive return. Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders. Act as trustees of the insured public in their individual and collective capacities. Meet the various life insurance needs of the community that would arise in the changing social and economic environment. Involve all people working in the Corporation to the best of their capability in furthering the interests of the insured public by providing efficient service with courtesy. Page 7
  8. 8. T.Y.BFM 50 GOLDEN YEARS OF LIC FROM CREATING IDENTITY TO FORTERING UNITY. (Flash Back 1957). Down the ages Kings and Governments, Communities and individuals, have ever tried to fulfill this responsibility. They have endeavored to protect the welfare of their subjects, their families. Some were more successful than others. In present day India, a Welfare State has pledged itself to protect the interests of its people and to improve the lot of the common man. And one of the many ways in which it is putting its promise into effect is through the nationalization of Life Insurance Corporation of India. Life Insurance holds out a golden promise which the LIC, backed by the government of India, is bound to fulfil. “Your welfare is my responsibility”. These are the words which the corporation has adopted for its motto. And these sacred words are in themselves an irrevocable pledge. Soon after the enactment of the LIC bill, the question of choosing a motto for LIC was considered by Shri H.M. Patel. When Shri S. Ananthachari, senior stenographer to the last quadrant of verse 22 of chapter IX of the Gita, everybody appreciated it. The protective hands of life Insurance and assuring continuance of the glow of life (symbolized by the luminous flame of a lamp) from insignia of the Life Insurance Corporation of India. This was designed Page 8
  9. 9. T.Y.BFM 50 GOLDEN YEARS OF LIC by Advertising and Sales Promotion Associates, a leading advertising agency. The corporation has a corporate flag and a Corporate Anthem. Traditionally, flags and Anthem are powerful symbols of nations and organizations it is hoped that the new Flag and the Anthem would prove a unifying force and a rallying point for all connected with the Corporation. The success of an organization is by and large ensured when there is an overall commitment to the aims and objectives of the organization. A corporate Flag plays an important role in bringing and commitment amongst members of the organization. With this objective in mind it was decided to have a Corporate Flag for the Life Insurance Corporation of India and keeping in mind the abundant talent available within the organization itself, a competition for the 1991. The design of the Corporation Flag selected was given some finishing touches by the Arts section at LIC‟s Corporate Office and the Corporate Flag was finalized. The Corporate Flag is sky blue in colour, depicting the pure clear sky, its vast expanse; serene; majestic and beautiful. The spectrum of rainbow colours on the left depicts the unity in diversity, the bright hues of life, hopes and aspirations of humankind. The LIC emblem appears in the centre, soaring high in the blue expanse and helping people shape their hopes and aspirations. Page 9
  10. 10. T.Y.BFM 50 GOLDEN YEARS OF LIC FROM ‘INVESTING FUNDS’ TO ‘EMPOWERING NATIONAL DEVELOPMENT’ (Flash back 1957) Life Insurance Investments Securities taken over by the Corporation from the former insurers on the 1st September, 1956 were worth Rs.307.85 crores. Of these Government Securities accounted for Rs.215.02 crores (69.8%), Approved Securities Rs. 14.66 crores (7.3%), Foreign Government Securities Rs. 14.66 crores (4.8%) and investments in Debentures and Preference and Ordinary Shares Rs. 55.72 crores (18.1%).In the seven months ended 31st march 1957, the Corporation invested Rs. 19.86 crores in Securities in the following proportions: Investments made from 1-9-56 to 31-3-57 Book value % to the In Crores Total Of Rupees Government Securities 13.05 65.7 Approved Securities 1.25 6.3 Foreign Investments 0.03 0.2 5.53 27.8 Rs. 19.86 100.0 Debentures and Preference And Ordinary Shares India is on the brink of a revolution in terms of economic and social growth. On a global scale, India‟s potential is on a par with the Page 10
  11. 11. T.Y.BFM 50 GOLDEN YEARS OF LIC moat technological, innovative and resourceful countries in the world. At LIC, we understand our country‟s need of the hour – building a strong foundation for big drams to be launched. It is in accordance with this scene of responsibility that the corporation has deployed its funds to the best advantage of its policy holders as well as the nation at large, ensuring the nation‟s growth in terms of infrastructure, technology, housing, water supply, etc. For 49 years, LIC has not only been excelling in its primary job of insurance, but it has also taken the centre stage in encouraging India‟s social and industrial development. To put a figure to fact, LIC‟s total contribution towards the benefit of the community amounts to Rs. 3, 85, 639.07 crores as on 31st March, 2005. LIC has extended its horizon to encompass diverse fields of social welfare. LIC‟s investments are regulated by the Government from time to time, to provide basic amenities like potable water, drainage system, housing, electrification and transport to the people of India. Not less than 75% of our accretions to the fund are invested in central Government Securities, Government Guaranteed Marketable Securities, Loans in the Socially Oriented Sector for approved purposes such as power (electricity), housing, water supply and sewerage, road transport and cooperative industrial estates. The LIC has always been a major source of funds for housing development projects in the country. Millions of people today dream of Page 11
  12. 12. T.Y.BFM 50 GOLDEN YEARS OF LIC a permanent shelter that they can call their own. The LIC, in its mission of social uplift, pledges to convert these dreams into reality. The Corporation currently provides financial assistance to state governments for social housing schemes for economically weaker sections, lowincome groups, middle-income groups, state government employees and rural population. The total contribution of LIC up to 31st March, 2005 to housing development activities by way of loans/bonds to state governments, state-level apex societies, HDFC, HUDCO, NHB, LICHFL, etc. and loans under mortgage housing schemes amounted to Rs. 21,436 crores. Water is the most essential of life‟s necessities. LIC takes care that all Indians citizens have their fair and regular share of it. LIC‟s total investments to the tune of Rs. 10, 346 crores (up to 31 st March, 2005) speak volumes about its endeavour in this field. For instance, under the Corporation‟s scheme of providing financial assistance for piped water supply and drainage schemes, 44 urban/local bodies in 5 states and the union territory of Chandigarh have already been benefited during the year. In addition, 164 schemes in four states have also received financial assistance from the Corporation for rural piped water supply schemes during the year. While our nation works towards progress, LIC supplies the energy to sustain its ambitions. LIC is the single largest contributor in the progress of electrification schemes in the country. Its financial assistance to state electricity boards/power corporations for power generation Page 12
  13. 13. T.Y.BFM 50 GOLDEN YEARS OF LIC projects had grossed a whopping Rs. 25 727 crores up to 31 st March, 2005. Constantly expanding our nation‟s transport system, LIC has been plying new roads for the future. It is difficult for a nation to move ahead on the path of progress without a stable transport why LIC has been assisting this vital determination. Transport infrastructure projects pertaining to rail, road, sea and air, have all been receiving due support from the Corporation in the form of its investment to the tune of Rs. 2, 463 crores (up to 31 st March, 2005). The Corporation has been assisting development of road transport by providing financial assistance State Road Transport Corporations for augmenting their fleet of buses. The total investment in this sector up to 31st March, 2005, amounted to Rs. 1, 387 crores. In 1997-98, the scope of the socially-oriented sector was widened to accommodate infrastructure projects pertaining to ports, railways and airports. It‟s well understood by all that the crux of the nation‟s economic growth lies in its industrial development. Be it assisting big finance corporations like IDBI, IFCI, ICICI bank, etc. or helping small scale and medium scale industries, the LIC has been in the forefront to boost industrial growth ib the country. The total investment in the corporate sector made by way of loans as on 31st March, 2005 was Rs. 9, 963 crores and by way of subscription to shares/debentures on the same date was Rs. 1, 04,568 crores. Thus, Page 13
  14. 14. T.Y.BFM 50 GOLDEN YEARS OF LIC the corporation has made a distinct contribution towards growth in industrialization and generation of skilled and unskilled employment opportunities in the country. With a strong focus on industrial development, LIC helps the Indian economy become self-sufficient and stable. The life Insurance Corporation of India has been touching people‟s lives in more ways than one, simple because we respect this glorious nation, in which we have witnessed immense growth since LIC‟s formation in 1956. And so, our policy of people‟s money for people‟s welfare is in essence our way to thank the nation. LIC‟s investments lead our nation to a brighter, better tomorrow, boosting our nation‟s passion to surpass world standards and arise to the top. We can make it happen and we will transform India into the next Supper Power. Page 14
  15. 15. T.Y.BFM 50 GOLDEN YEARS OF LIC FROM THE FIRST VALUATION TO THE THIRTY-FIFTH VALUATION (Flash back 1959). The Sunday Statesman Three years after nationalization, the LIC has made its first big gift to the old policyholders, indicating that its management of life funds will not reduce the benefits which they normally expected from the companies taken over. Such apprehension was felt mainly by those whose policies gave them a right to share in profits on payment of higher rates of premium. Rates of bonus have been determined by the financial position of the 245 companies at the time of nationalization; though some of the rates are lower, they compare well on the whole with those given by the companies. The policyholders have thus gained satisfaction on two points. The first is that the extra premium he is charged for policies with profits will not be lost through nationalization resulting in little or no profits to share, and the second, that the wholesale merger of good and bad companies will not obliterate the distinctions between the benefits formerly provided. This is consistent with the terms of the LIC Act, 1956 and the assurances given at the time of nationalization. It should certainly enhance the LIC‟s reputation. Page 15
  16. 16. T.Y.BFM 50 GOLDEN YEARS OF LIC The Hindu The grouping of the various insurers and the fixation of bonuses on the basis of indices are no doubt sound in principle. But it should be made sure, when the final declarations are made, that the bonus additions to policies in force happen to be larger and not less. There could have probably been two or three more groups with suitable indices in order that the stronger financial position of particular units was not whittled down considerably by their being grouped with a large number of units. Hindustan times Meanwhile the majority of policyholders whose business naturally has been with well-conducted and leading life offices will be relieved to find that their interests have not been unduly sacrificed to the cushioning of losses to others who have been less happy in their choice of insurers. In some cases, however, the bonus rates are lower than what the same units had been able to announce under private management at the preceding valuation and where the reduction is not justified on actuarial grounds the corporation and the central Government will do well to consider whether the reasonable expectations of policyholders should not be fulfilled by such adjustments as it is possible to make in the scheme now announced. Page 16
  17. 17. T.Y.BFM 50 GOLDEN YEARS OF LIC Ultimately the Corporation will have to switch over to a uniform rate, but the process has to be gradual and effected through the progressive reduction in the differences between the various rates from one valuation to another. Once the Corporation has had time to regularize the valuation of assets and record investments to the best advantage, the basis for imputing differences to the bonus capacities of the various units must dwindle and disappear. Hindustan standard With the announcement by LIC of India‟s tentative scheme of differential bonuses for holders of with profits policies, a long period of suspense may be said to be over. The final scheme will not in all probability materially differ from the one now published; nor is the Government likely to withhold approval. The long period of waiting might have been exasperating to the policyholders but it was not altogether unnecessary. The bonus scheme involved an important policy decision, how to distribute the profits, at a uniform rate or on differential bases reflecting the financial position of the insurers. The LIC has after long cogitation opted for equity and has decided to reward those who had the prudence to go in for sound concerns. This is not, however, an unexpected departure. The LIC Act had, in fact, provided for this and the Corporation is authorized to make, with the prior approval of the Central Government, regulations for the purposes of declaring differential bonuses. Page 17
  18. 18. T.Y.BFM 50 GOLDEN YEARS OF LIC NON – MEDICAL SCHEMES: FROM AN EXPERIMENT TO A SUCCESS The life Insurance Corporation of India has, as an experimental measure, decided to extent transaction of non-medical business to all areas. As a result, no medical examination would be required for consideration of proposals under certain plans of assurance for sums assured up to a specified maximum. Adequate safeguards, which include a detailed report based on enquiries made and an interview of the applicant by the LIC‟s development staff, have been provided. The sum for which one or more policies could be taken out under this scheme would be limited to Rs. 2000. Policies will be issued only to persons aged 40 years and under. Insurance cover will be offered under a number of tables such as endowment Assurance, Fixed Term (Marriage) Endowment, Educational annuity and Anticipated Endowment. The maximum term of insurance will be 25 years and the maximum premium-ceasing or maturity age 60 years. In the case of illiterate lives, a lien will apply, generally for one year. Page 18
  19. 19. T.Y.BFM 50 GOLDEN YEARS OF LIC ‘ON THE SPOT POLICY’ TO ‘GREEN CHANNEL’ Addressing the officers and staff in Delhi Division spot-policy camps towards the end of last year, the then Chairman pointed out that, although the southern Zone had started the experiment of issuing spotpolicies in respect of non-medical business secured during the field publicity van‟s operations, it was the northern Zone which had advanced the technique. It was they who had made it an all-round method of issuing policies to eligible lives who presented themselves for insurance (following upon new business drivers by the field force) ready with the payment of the necessary premium. “This kind of issuing of spot-policies,” he said,” has not been tried by any insurance institution in the world. We are the first to do so, and if we can continue to make a success of it, the innovation will not only rebound to our credit, but will help the millions of our people all over the country who would like to get their policies as soon as they pay their premiums.” In dealing with those who have no experience of baking or insurance – with those who part with money only when the object of their purchase can be placed within their hands – it is necessary to root out the suspicion which delays in delivery may tent to foster. Page 19
  20. 20. T.Y.BFM 50 GOLDEN YEARS OF LIC Ordinarily, proposals, when received, are forwarded through a Branch Office, examined there and then sent on to the Divisional Office for issue of the policy. Despite the highest efficiency, a week, and often more, may elapse before the policy reaches the hands of the assured. Then again, shortcomings and omissions detected in the papers cannot be rectified on the spot. Any omission or negligence – whether by the party, the agent or the doctor – therefore, leads to references being made and incidental correspondence, which results in further delays. With the spot – policy, you have the entire team present on the spot – everyone working with a team spirit and at high pressure because the reality of achievement is there to be seen, believed and understood. The gents and field staff are there, the medical examiner is there, the understanding officer if there and so are those who prepare the policies on their machines, which are ready at hand. In consequence, anyone who is found eligible and pays his premium in a matter of minutes. It can, therefore, be said that by this method, we have achieved a great revolution in the life insurance business. It is an experiment which, if it develops and improves, will be found worthy of emulation by other countries that have a considerable rural population, and that face problems similar to the ones we are trying to overcome rapidly. The Mobile Team The bhajan mandalis or staff of the Field Publicity Van has done their job. The agents, field officers and even development officials have Page 20
  21. 21. T.Y.BFM 50 GOLDEN YEARS OF LIC CHANGING GEOGRAPHY OF GLOBAL BUSINESS Flash – back (1959) Many insurance companies of Indian origin were operating in foreign countries before the appointed day, mainly in British Easted Africa, Pakistan, Burma, Ceylon and Malaya. Some companies also wrote business in Aden, Fiji, Mauritius, Hong Kong, Indonesia, British West Indies and miscellaneous small centers. The organization differed from the same company; it differed from one country to another. On the one hand, hand, some companies maintained full-fledged branch offices, which issued acceptance letters and policies and attended to most of the serving locally, and at the other extreme, there were stray agents working in various territories on behalf of a few companies which did not maintain any office outside India. Such agents used to send the proposals to the head office in India all the work was attended to at the work was attended to at the head office, except, perhaps, collection of premium, for which arrangements were sometimes made local banks. Many of the companies had Chief Agents for certain territories, but the status and caliber of these Chief Agents differed vary widely. All in all, the field organization of India insurers in foreign countries was far from uniform and first task was to build up a homogenous organization out of these diverse elements. Page 21
  22. 22. T.Y.BFM 50 GOLDEN YEARS OF LIC Having regard to the difficulties, particularly in respect of foreign exchange, it was decided to discontinue writing new business in Pakistan, Burma, Ceylon, Indonesia and South Africa. In some other places where formerly business was done through stray agents or without proper servicing arrangements, and where it was not economical to maintain our own office, we decided not to entertain any new business. This left us with British East Africa, Malaya and Singapore, Fiji, Mauritius, Aden and Hong Kong, where we write new business at present. It will be seen that the area of our operations I much more restricted now than it was before nationalization. To some extent, this accounts for the fall in foreign although that is not the only reason. In 1955, the total foreign business written by Indian companies was of the order of Rs. 20 crores. Of this almost Rs. 10 crores came from Burma, Pakistan and Ceylon. The territories where we operate at present accounted for Rs. 10 crores of business was Rs. 5.40 crores in 1957 and Rs.5.85 crores in 1958. This fall can be explained by the dislocation that took place immediately after nationalization. Problems of integration and field organization of the various units took considerable time and it became necessary to send trained officers from India in order to reorganize the branches. Page 22
  23. 23. T.Y.BFM 50 GOLDEN YEARS OF LIC Fast Forward (2005) The geography of LIC‟s foreign operations contracted as demanded in accordance with the corporation directly operates through its Branch offices in Mauritius at Port Louis, Fiji at Suva and Laukota and United Kingdom at Wembley. The Overseas subsidiary of the Corporation, LIC (International) BSC, which was established in Bahrain in 1989, caters to the Life Insurance needs of NRIs in the Gulf by issuing policies in US Dollars. The company operates in the states of Bahrain, Saudi Arabia, Kuwait and UAE through Chief Agents and through a broker arrangement in Qatar. The company set up its first full fledged branch office in Muscat, Oman from 23rd December, 2003. With this the company has achieved its cherished objectives of spreading its wings to all the six GCC countries. With the opening up of the insurance sector in the Kingdom of Saudi Arabia, the Corporation has applied for a license for the setting up of a Joint venture Company in Saudi Arabia. LIC (Nepal) Ltd., a joint venture between the LIC of India and M/s. Vishal Group of companies in the Kingdom of Nepal was launched on 3rd December, 2001. The LIC (lanka) Ltd., a joint venture company between LIC of India and M/s Barleet Group of Co. Ltd. was launched on 1st March, 2003. Page 23
  24. 24. T.Y.BFM 50 GOLDEN YEARS OF LIC A BOUQUET OF UNIT LINKED PLANS Unit – linked Insurance Plan Shri Y.B. Chavan, Union Finance Minister, inaugurated, on September 10, the unit-linked Insurance Plan at the Bhulabhai Desai Auditorium, Bombay, which was packed to capacity. The function, which had been organized by the Unit Trust of India, proved to be a spectacular success. Speaking on the occasion, Shri Y.B.Chavan said that the Plan carried the unit savings scheme a step further by providing insurance cover also on the life of the saver so that the savings target envisaged by a person during a period of ten years would be available to his dependants in the event of death. It marked a new stage of co-operative approach by two premier national organizations for mobilization of resources. Shri P.S.Bhatt, Chairman, UTI, in his welcome speech, explained the salient features of the Unit-linked Insurance Plan which, he hoped would provide a further incentive for savings through units. Shri S.Jagannathan, Governor of the reserve Bank, said that the UTI and the LIC were complementary to each other. Compared to the Progress achieved by similar institutes abroad, they had still a long way to go, he felt. Page 24
  25. 25. T.Y.BFM 50 GOLDEN YEARS OF LIC Fast Forward (2001-2005) Bima-Plus, Future plus, Jeevan-Plus In the current millennium LIC has introduced till date three unit linked life insurance plans to satisfy the needs of discerning customers who look for attractive returns, risk cover, flexibility and liquidity all packed together. Introduced on 12th February, 2001, „Bima Plus‟ was the first modern day unit linked plan of LIC. Slowly but surely the sales of Bima – Plus picked up and by the end of the financial year 2003-04 it created a record in volume of sales. One of the highlights of LI‟C business performance in 2003-04 was undoubtedly the astounding success in the sale of Bima Plus. The sales of Bima Plus that picked up during the last few months of the financial year managed to get 1.70 lac policies with a premium collection of over Rs.373 crores as compared to Rs.1.5 crores in 200203. South Zone led the way by occupying top position in the sale of Bima Plus in 2003-04 and Lukhnow Division blazed the path on all counts in the sale of Bima Plus by completing 24, 056 policies, followed by Coimbatore with 14, 338 policies and Cuttack with 6, 573 policies. Bima Plus stands withdrawn as on date. „Future Plus‟, LIC‟s unit linked pension plan, earned over Rs. 2000 crores within a month of its launch on 5th March, 2005. LIC launched its latest unit linked plan, LIC‟s Jeeavan Plus, in October 2005. Page 25
  26. 26. T.Y.BFM 50 GOLDEN YEARS OF LIC It is a unit linked Whole Life plan which offers investment cum insurance life. A customer can also choose the level of cover within some limits; which will depend on whether the policy is a Single premium or regular premium contract and on the level of premium he agrees to pay. The allocated premiums will be applied to purchase units as per the Fund type chosen. 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. The minimum annual premium will be Rs. 5, 000/increasing thereafter in multiples of Rs.1, 000/-. Alternatively, a single premium can be paid subject to a minimum of Rs. 25, 000 and thereafter in multiples of Rs. 1, 000. In the case of the death of the Life Assured when the cover is in full force, the nominee will get the Sum Assured under the basic Plan together with the Bid Value of units held in the Policyholder‟s Unit Account. On the Life Assured serving the policy anniversary on which the age nearer birthday is 100 years, an amount equal to the Bid value of the units held in the Policyholder‟s Unit Account is payable. Page 26
  27. 27. T.Y.BFM 50 GOLDEN YEARS OF LIC A VISION IN ELEGANCE. (Flash – back 1963). „Yogekshema‟, the new imposing building for the central office of the Life insurance Corporation of India, gives the impression of the giant widescreen. Resting on an intricately woven stone foundation and giving a dual impression of strength and elegance, this latest edition to Bombay‟s foreshore Road occupies one of the very prominent sites in the southern part of Bombay city, the busy commercial sector. It is a clear crisp morning – but how different it all is out at foreshore road. After days, and even nights, of feverish activity – giving the last moment touches which so massive an edifice a the new central office building calls for – there is quiet, calm and order and a hush of expectancy… for today, December 26, 1963, many will witness the opening of „Yogekshema‟ by the prime minister himself. The union finance minister, shri T.T. krishnamachari said, “Security cannot be had in a small umbrella – a lady‟s umbrella might be very pretty one to look at, but it does not give the necessary protection. The protection which life insurance has to afford to the people of the country has to be a large one and, only a big umbrella can give the entire protection. And so, it is inevitable that an organization like this which aims at security for 450 million of people in a country which is almost a sub-continent, is a monolithic organization.” Page 27
  28. 28. T.Y.BFM 50 GOLDEN YEARS OF LIC The Prime minister, with the silver key that is handed to him, opens the doors of „Yogekshema‟ amidst thunderous applause, so that the LIC can move to its home. Declining a mute appeal to speak from his seat, Shri Jawaharlal Nehru goes to the speaker‟s stand and makes his opening remarks: “I am very happy to inaugurate this great building. However, I think I am not a very suitable person to perform the ceremony as I have never insured in my life” – This sets the audience laughing. Explaining why he never insured although he recognizes its value, he says, because most of his life was spent in conflict and it did not strike him to insure himself and safeguard his personal future. The future for him was that the Independence of India should be assured. “Nevertheless, I am fully aware of the security that life insurance provides way”, he added. “This Corporation has a large family of people serving in it and I hope it will live as a happy family – a contented family. A feeling of contentment is so necessary for such an organization and I wish them a successful future as in the past. I hope that the scope will grow ever wider and will cover a greater part of our population.” Page 28
  29. 29. T.Y.BFM 50 GOLDEN YEARS OF LIC INFORMATION TECHNOLGY AND LIC LIC has been one of the pioneering organizations in India who introduced the leverage of Information Technology in servicing and in their business. Data pertaining to almost 10 crores policies is being held on computers in LIC. We have gone in for relevant and appropriate technology over the years. In 1964, saw the introduction of computers in LIC. Unit Record Machines introduced in late 1950‟s were phased out in 1980‟s and replaced by Microprocessors based computers in Branch and Divisional Offices for Back Office Computerization. Standardization of Hardware and Software commenced in 1990‟s. Standard Computer Packages were developed and implemented for Ordinary and Salary Savings Scheme (SSS) Policies. FRONT END OPERATIONS With a view to enhancing customer responsiveness and services, in July 1995, LIC started a drive of On Line Service to Policyholders and Agents through Computer. This on line service enabled policyholders to receive immediate policy status report, prompt acceptance of their premium and get Revival Quotation, Loan Quotation on demand. Incorporating change of address can be done on line. Quicker completion of proposals and dispatch of policy documents have become a reality. All our 2048 branches across the country have been Page 29
  30. 30. T.Y.BFM 50 GOLDEN YEARS OF LIC covered under front-end operations. Thus all our 100 divisional offices have achieved the distinction of 100% branch computerization. New payment related Modules pertaining to both ordinary & SSS policies have been added to the Front End Package catering to Loan, Claims and Development Officers‟ Appraisal. All these modules help to reduce time-lag and ensure accuracy. METRO AREA NETWORK A Metropolitan Area Network, connecting 74 branches in Mumbai was commissioned in November, 1997, enabling policyholders in Mumbai to pay their Premium or get their Status Report, Surrender Value Quotation, Loan Quotation etc. from ANY Branch in the city. The System has been working successfully. More than 10,000 transactions are carried out over this Network on any given working day. Such Networks have been implemented in other cities-also. WIDE AREA NETWORK All 7 Zonal Offices and all the MAN centers are connected through a Wide Area Network (WAN). This will enable a customer to view his policy data and pay premium from any branch of any MAN city. As at November 2005, we have 91 centers in India with more than 2035 branches networked under-WAN. Page 30
  31. 31. T.Y.BFM 50 GOLDEN YEARS OF LIC INTERACTIVE VOICE RESPONSE SYSTEMS (IVRS) IVRS has already been made functional in 59 centers all over the country. This would enable customers to ring up LIC and receive information (e.g. next premium due, Status, Loan Amount, and Maturity payment due, Accumulated Bonus etc.) about their policies on the telephone. LIC ON THE INTERNET Our Internet site is an information bank. We have displayed information about LIC & its offices. Efforts are on to upgrade our web site to make it dynamic and interactive. The addresses/e-mail Ids of Zonal Offices, Zonal Training Centers, Management Development Center, Overseas Branches, Divisional Offices and also all Branch Offices with a view to speed up the communication-process. PAYMENT OF PREMIUM AND POLICY STATUS ON INTERNET (You have to register for these services). LIC has given its policyholders a unique facility to pay premiums through Internet absolutely free and also view their policy details on Internet premium payments. There are 11 service providers with whom L I C has signed the agreement to provide this service. Page 31
  32. 32. T.Y.BFM 50 GOLDEN YEARS OF LIC LIC’s Golden Jubilee Policy - Bima Gold (Plan No. 174) It has been decided to introduce LIC‟s Golden Jubilee Policy Bima Gold (Plan no.174) with effect from 1st September, 2005. It is a closed ended plan and shall be available for sale up to 31st March, 2006. 1. INTRODUCTION: This is a money back type plan where total premiums paid under the policy shall be paid back to the policyholder in installments at the specified durations in case of survival and Sum Assured shall be paid in case of death during the term of the policy irrespective of whether or not any survival benefits have been-paid-earlier. 2. BENEFITS: Death Benefit: On death of the Life Assured during the term of the policy, an amount equal to Sum Assured under the Basic Plan shall be payable provided the life cover is in force. Survival Benefit: In case the life assured is surviving to the end of the specified durations, the following benefits shall be payable provided the policy is-in-full-force. Page 32
  33. 33. T.Y.BFM 50 GOLDEN YEARS OF LIC For policy term 12 years : 15% of the Sum Assured under Basic Plan at the end of each 4th & 8th policy year For policy term 16 years : 15% of the Sum Assured under Basic Plan at the end of each 4th, 8th &12th policy year For policy term 20 years : 10% of the Sum Assured under Basic Plan at the end of each 4th, 8th, 12th & 16th policy year Maturity Benefit: Total amount of premiums (excluding extra/optional rider premiums, if any) paid plus Loyalty Additions, if any, less the amount of survival benefits paid earlier, shall be payable in case of Life Assured surviving to the end of the term provided the policy is in full force. 3. LOYALTY ADDITIONS: This is a with profits Plan and the policy shall participate in the profits of the Corporation‟s with-profits assurance business. The policy shall, however, be eligible to a share of profits in the form of Loyalty Addition (one time) only payable on maturity. On the Life Assured surviving the stipulated date of maturity, the policy may be eligible for payment of Loyalty Addition, if any, depending upon the experience of the Corporation at such rate and on such terms as may be declared by the Corporation. Page 33
  34. 34. T.Y.BFM 50 GOLDEN YEARS OF LIC 4. OPTIONS: Accident Benefit Rider shall be available as an optional benefit for a premium at the rate of Rs.1 per thousand Accident Benefit Rider Sum Assured. Accident Benefit Rider shall be available for an amount not exceeding the Sum Assured under the Basic Plan subject to an overall limit of Rs.50 lakh taking all existing policies of the Life Assured under individual as well as group schemes including policies with in-built accident benefit taken with Life Insurance Corporation of India and other insurance companies and the Accident Benefit Rider Sum Assured under the new proposal into consideration. 5. AUTO-COVER: If at least two full years‟ premiums have been paid in respect of this policy, any subsequent premium is not duly paid, full death cover shall continue for a period of two years from the date of First Unpaid Premium (FUP). This period of 2 years from FUP shall be called Auto – Cover period. During the Auto-Cover period, one or more installments of premiums can be paid along with interest without any revival requirements. On revival or payment of part/full arrears of premiums during Auto-Cover period, the date of FUP will shift and accordingly the AutoCover facility shall again be available for two years from the date of revised FUP. Page 34
  35. 35. T.Y.BFM 50 GOLDEN YEARS OF LIC 6. LOAN: Loan facility is available under this plan after the policy acquires paidup value. The rate of interest to be charged for loan amount would be determined from time to time by the Corporation. Presently the rate of interest is 9% p.a. Payable half-yearly. 7. REBATES / INCENTIVES FOR HIGH SUM ASSURED: Mode Rebate / Extra: Rebates are available at the following rates: Yearly mode : 2% of tabular premium Half-yearly mode : 1% of tabular premium Quarterly and SSS mode : NIL Monthly mode : 5% extra on tabular premium High Sum Assured Rebates: Less than Rs. 50,000 : NIL Rs. 50,000 and Less than Rs.1 Lac : Rs. 2.5 per thousand Sum Assured Rs. 1 Lac and Less than Rs.2 Lac : Rs. 7.5 per thousand Sum Assured Rs. 2 Lac and above : Rs.10 per thousand Sum Assured. 8. CEIS REBATE: The rebate for eligible employees of the Corporation shall be @ 10% of the Tabular Premium for the basic plan. Page 35
  36. 36. T.Y.BFM 50 GOLDEN YEARS OF LIC 9. MODES OF PREMIUM PAYMENTS: Premiums are payable regularly during the policy term with modes of premium payment Yearly, Half-Yearly, Quarterly, Monthly or through salary deductions. 10. ELIGIBILITY CONDITIONS AND RESTRICTIONS: Minimum age at entry : 14 years (completed) Maximum age at entry : 63 years nearer birthday Maximum age at maturity : 75 years nearer birthday Term : 12, 16 or 20 years. Minimum Sum Assured : Rs. 40,000 /Maximum Sum assured : No limit Sum Assured will be in multiples of Rs.5,000 /- only. 11. PREMIUM RATES: As enclosed in Annexure 1. 12. EXTRA PREMIUM RATES: As enclosed in Annexure 2. 13. COMMISSION FOR AGENTS / CORPORATE AGENTS / BROKERS AND D.O. CREDIT: Commission rates (as percentage of premium) payable to Agents, Corporate Agents during the term are as under: 1st Year, 2nd and 3rd Year Renewal 15%, 7.5%, 5%. Page 36
  37. 37. T.Y.BFM 50 GOLDEN YEARS OF LIC Bonus Commission: 40% of 1st year commission. Commission rates (as percentage of premium) payable to Brokers during the term are as under: 1st Year Renewal 20% 5% No Bonus Commission shall be paid to the Brokers. Development Officer's Credit: For term 12 years : 60% For terms 16 and 20 years : 100% 14. UNDERWRITING, AGE PROOF AND MEDICAL REQUIREMENTS: Same as for Endowment Plan. 15. PAID-UP & SURRENDER VALUES (GSV, SSV): If after at least three full years‟ premiums have been paid in respect of this policy, any subsequent premium be not duly paid, this policy shall not be wholly void after the expiry of two years Auto Cover Period from the due date of First Unpaid Premium, but shall subsist as a paid up policy for an amount equal to the total premiums paid (excluding any extra/optional premium) less the survival benefits paid earlier, if any. This amount shall be called as Paid up Value. This paid up value shall be payable on the date of maturity or at Life Assurer‟s prior death. No survival benefit shall be payable under paid up policies. The policy thereafter shall be free from all liabilities for payment of the within mentioned premiums. Page 37
  38. 38. T.Y.BFM 50 GOLDEN YEARS OF LIC The Guaranteed Surrender Value shall be available after completion of at least three policy years and at least three full years‟ premiums have been paid. The Guaranteed Surrender Value is equal to 30 per cent of the total amount of premiums paid excluding the premiums for the first policy year, all extra premiums paid, the premiums paid for Accident Benefit Rider and the amount of Survival benefits paid earlier.Special Surrender Value will be calculated using the surrender value factors as applicable in the case of Endowment Plan and paid-up value as defined above. Surrender value will not be available on Accident Benefit Rider Option premiums. 16. GRACE PERIOD FOR PAYMENT OF PREMIUM: A grace period of one month but not less than 30 days will be allowed for payment of yearly or half yearly or quarterly premiums and 15 days for monthly premiums. 17. REVIVALS OR REINSTATEMENTS OF LAPSED POLICIES: If the Policy has lapsed, it may be revived during the lifetime of the life assured, but within a period of 5 years from the date of first unpaid premium and before the date of maturity, on submission of proof of continued insurability to the satisfaction of the Corporation and the payment of all the arrears of premium together with interest (compounding half-yearly) at such rate as may be prevailing at the time of the payment. The Corporation reserves the right to accept at original terms or accept at revised terms or decline the revival of discontinued policy. The revival of the discontinued policy shall take effect only after the same Page 38
  39. 39. T.Y.BFM 50 GOLDEN YEARS OF LIC is approved by the Corporation and is specifically communicated to the Life Assured. Revival of Accident Benefit Rider will only be considered along with revival of the Basic Policy, and not in isolation. 18. NORMAL REQUIREMENTS FOR CLAIM: The normal documents which the claimant shall submit while lodging the claim in case of death of the policyholder shall be the claim forms, as prescribed by the Corporation, accompanied with original policy document, proof of title, proof of death, proof of accident/disability, medical treatment prior to death, employer‟s certificate, whichever is applicable, to the satisfaction of the Corporation. If the age is not admitted under the policy, the proof of age of the Life Assured shall also be submitted. Where the policy results into a maturity claim or in case of surrender of the policy, The Life Assured shall submit the discharge form along with the original policy document besides proof of age. 19. COOLING-OFF PERIOD: If a policy holder is not satisfied with the “Terms and Conditions” of the policy, he/she may return the policy to the Corporation within 15 days from the date of receipt of the policy. 20. BACK DATING INTEREST: The policies can be dated back within the financial year, as usual. Backdating interest will be charged at the prevailing rate at the time of completion of policy for dating back in excess of one month. The interest shall be charged even where the policy is back dated to a lean month. Page 39
  40. 40. T.Y.BFM 50 GOLDEN YEARS OF LIC LIC AIMS Rs 5,000cr NEW PREMIUM VIA BANK TIEUPS ALTERNATE CHANNELS. New Delhi, Aug 17 : Life Insurance Corporation (LIC) today said it targets to increase its new business income to Rs 5,000 crores in the current fiscal through alternate channels and bank tie-ups from Rs 1,140 crores generated last fiscal. ''Last year, we had a first year premium of Rs 1,140 crores from bancassurance and alternate channels...we are targeting Rs 5,000 crores in this fiscal,'' LIC Executive Director A K Sahoo told reporters on the sidelines of a conference here.He said the company has tied up with 39 banks and 510 corporate agents, besides having 125 insurance brokers. Mr. Sahoo said LIC would focus on increasing its number of partnership tieups and bancassurance network to distribute its products.He said the company, which had sold 3.88 crores policies last year, targets to sell about 4.66 crores policies in the current year.The company's total first-year premium during last year stood at Rs 70,891 crores, witnessing a growth of 34 per cent over the previous fiscal.LIC today tied up with a financial services distribution company Net Ambit, which has set a target of generating Rs 500 crores business over next three years for the life insurer.Net Ambit will hire 700 people to sell various products such as insurance plans, pension plans, unit plans, special plans and group schemes in tier 2/3/4 towns. Page 40
  41. 41. T.Y.BFM 50 GOLDEN YEARS OF LIC LIC GETS 79pc PREMIUM MARKET SHARE Mumbai, Sept 29: Life Insurance Corporation of India (LIC), the largest insurer in the world with more than 28 crores customers, has got 79pc new premium market share in August, the company said on Wednesday. In the figures published by IRDA for the month of August, the Corporation had a 79.21pc market share in the New Premium Income. As against this, all the 22 private insurance companies put together could muster only 20.79pc. The Corporation could not have expected a better birthday gift from its customers. It may be mentioned that LIC is celebrating its 54th anniversary this month. During the year, its market share in New Premium Income has risen from 64.86pc as on March 31 to 74.09pc as on August 31, showing a growth rate of 87.80pc and covering more than 1.22 crores new lives. Its two ULIP policies, viz. Market Plus I (Pension Plan) and Money Plus I (ULIP) have met with a huge public response. In Pension and Group Schemes New Premium, the Corporation's market share has gone up to 85.81pc. With the entry of the new ULIP regime, LIC is the only life insurer to have introduced a Unit Linked Pension Product "Pension Plus" on September 2 itself and thereafter the Unit Linked Insurance Plan "Endowment Plus" on September 20, which has again met with a huge public response, said the company. Page 41
  42. 42. T.Y.BFM 50 GOLDEN YEARS OF LIC LIC HOUSING FINANCE 1989 The Company was incorporated on 19th June as a public limited company. It was promoted by LIC of India. The Company provides housing loans to individuals, builders, development authorities, employer‟s organization etc. The Company has started various schemes: Griha Prakash a general scheme, Griha Tara under which it accepts only Bima Sandesh Plan as Life Insurance Corporation, Griha Shobha for NRIs and Griha Lakshmi for people to have a second house. 1994 3, 00, 57,900 No. of equity shares were issued at a premium of Rs 50 per share through public issue on 15th November 1994. The allotment was as follows; 10, 82,000 shares to LIC on firm allotment basis and the balance 189,75,900 shares to public (all were taken up). 1996 The Company has decided to carry out fund based and onefund based activities, viz., debt securitization, lease and hire purchase, renting of properties and giving guarantee to co-operate bodies. Page 42
  43. 43. T.Y.BFM 50 GOLDEN YEARS OF LIC 2000 CRISIL has assigned a AAA rating to the issue of mortgage backed pass through certificate backed by mortgages originated by the company. 2001 The Company has launched its new scheme, "Griha Vikas". 2002 LIC Housing Finance Ltd has informed BSE that the Company has forfeited 1,25,300 equity shares due to nonpayment of allotment/call monies. LIC Housing Finance has approved for the takeover of Individual Housing loan portfolio of GLFL Housing Finance. Around 25 investors subscribed to the issue of confidentially placed debentures for a total amount of Rs.392 crores of LIC Housing Finance Ltd. LIC Housing Finance Ltd has decreased its interest rates on housing loans by 25-50 basis points.Financial Institutions have increased their stake from 0.01% to 1.96% and Mutual Fund companies have increased their stake from 0.35% to 1.06% in LIC Housing Finance. LIC Housing Finance Ltd has decreased the floating rate of interest under individual loan scheme to 9.5% from 11%. Page 43
  44. 44. T.Y.BFM 50 GOLDEN YEARS OF LIC LIC Housing Finance signed a deed of assignment to take over individual housing loan portfolio of Citibank N A. UTI and IFCI have been removed from the list of promoters of LIC Housing Finance. 2003 LIC Housing Finance has unveiled a new project for elderly people called 'LIC HFL Care Homes'. LIC Housing Finance Ltd has sanctioned 84,126 loans worth Rs.3265.78cr and disbursed 76,663 loans worth Rs.2941.24cr under its Individual Loan Scheme. LICHFL has mobilized Rs.280cr for 15 years at 7% rate of interest through private placement. LIC Housing Finance Ltd has informed that the shares of the company have been delisted from The Stock Exchange Ahmedabad December 08, 2003. 2004 Merill Lynch Capitat acquires LIC housing stake of 0.39% Templeton Asset Management buys 37,52,362 equity shares, representing 5.01% of LIC Housing's total paid-up capital of Rs 74.9 crores LIC Housing Finance Ltd has informed that the shares of the Company have been voluntarily delisted from the Delhi Stock Exchange January-23,-2004. Page 44
  45. 45. T.Y.BFM 50 GOLDEN YEARS OF LIC LIC HOUSING EYING BANKING AND OTHER FINANCIAL SERVICES. Chennai, Sep 24: Housing mortgage lender LIC Housing Finance is keen to diversify into various financial services, including banking, a top company official said Friday. "We have applied for a banking license. We are planning to float one subsidiary a year for the next five years," R.R. Nair, Director and Chief executive, told reporters here. He said the company is looking at financial services, venture capital fund, property service development and others. "The company's Rs.500 crores venture capital fund is set to become operational next month. We will participate in real estate projects," Nair said ,Speaking about LIC Housing's business, he said the company targets to disburse Rs.20, 000 crores as against Rs.14,853 crores logged the previous year. Page 45
  46. 46. T.Y.BFM 50 GOLDEN YEARS OF LIC A STORY OF DEVELOPMENT AND DEDICATION The Life Insurance Corporation of India has stepped into the much vaunted Golden Jubilee year from 1st September, 2005 and the yearlong celebrations are already on with an accent on customers‟ loyalty and reward programmes, introduction of new products, introduction of new technological applications and organizational restructuring aimed at market penetration and customers‟ convenience, employees‟ competence building and skill up gradation courses with a view to retaining the existing customers and wooing energetic and trendy youngsters. The Golden jubilee celebrations were flagged off by Honorable Prime Minister Shri Manmohan Singh himself in the presence of Honorable Finance Minister Shri P. Chidambaram on 01/09/2005 at luhknow. Both the Prime Minister and the Finance Minister spoke highly of the tremendous contribution made by the LIC ever since its inception. The ordinance nationalizing 245 life insurance companies was signed by the President of India on 19th January, 1956. Since then LIC has traversed a long distance surpassing many milestones and greeting numerous new landmarks along the way. LIC is perhaps the single largest financial institution with a total life fund of over Rs. 3,85, 000/crores, 17 crores policies and a total annual income of Rs. 1,07, 969/crores on 31st March, 2005. There was an accretion of Rs. 64, 000/crores to the life fund after meeting the claim liabilities, which is nearly 4% of the GDP of the country. During the year 2004-2005, LIC settled a Page 46
  47. 47. T.Y.BFM 50 GOLDEN YEARS OF LIC staggering 115 lacs claims, maturity and death, with a pay-out of nearly Rs. 25, 000/- crores. The founding fathers of LIC both Dr. C.D.Deshmukh, the then Finance Minister and Pt. Jawaharlal Nehru, the then Prime Minister, had conceived and dreamt that LIC would play a pivotal role in giving an impetus to the economic development of the country by mobilizing the savings of the people for contributing to the five year plans of the country. LIC would also provide financial and social to the people throughout the country. On both these counts, LIC has very well served the purpose by its immense contribution to the five year plans and also by spreading the message of life insurance to every nook and corner of the country. In the tenth five year plan alone the contribution was over Rs. 1, 80,000 crores. It is quite evident that LIC started the journey at a very difficult time when awareness of life insurance was almost non-existent. It is with the untiring and dedicated efforts of all those who served it at different points of time and in different positions that it has now become the most popular and visible service brand in the country. It is a matter of great pride that LIC has become synonymous with life insurance and it is used as a generic term for life insurance by the common man. The growth of LIC over the years has been multi-faceted. Geographically, it is established in every nook and corner of the country. It has its operations beyond the boundaries of the country. LIC has made Page 47
  48. 48. T.Y.BFM 50 GOLDEN YEARS OF LIC notable contributions in the development of the capital market which is so essential for the economic development of the country. Apart from participating directly in the growth of the equity market of institutions such as the National Stock Exchange, NCDEX, Stock Holding Corporation of India, Clearing Corporation of India, IDBI Trusteeship Company, UTI, UTI Bank, LIC Mutual Fund, LIC Housing Finance Corporation Ltd., National Insurance Academy, etc. With the passage of the IRDA Act, 1999 and the opening up of the life insurance sector in the year 2000 the life Insurance Industry completed a full circle i.e., nationalization of private companies and the opening up of the life insurance business to private companies. It is unexceptionable that the policy decisions taken at a particular point of time are meant to serve the purpose and interest of the country at a specific point of time. In a dynamic world where changes take place constantly, the policy requirements also undergo simultaneous changes and erstwhile goals become redundant and obsolete, requiring complete change and restatement of objectives. In the context of globalization and dismantling of all barriers, opening up of life insurance sector has become an essential adjunct of the new economic policy of the Government. It is quite gratifying to know that since the opening up of the life insurance sector, LIC has shown unprecedented growth in every facet of its working such as new business growth, introduction of new products, adoption of new Page 48
  49. 49. T.Y.BFM 50 GOLDEN YEARS OF LIC technology applications, up gradation of manpower skills, marketing of insurance policies both in the urban and rural areas, improvement in the customer services and improvement in investment management. LIC has shown unprecedented resilience and tenacity in pursuing its avowed objectives with vigor and alacrity. It has been quick to adapt itself to the changing demands of the market economy by pruning the existing product line which was not in sync with the market returns and capitalizing on the opportunities in the equity and bonds market with active trading. It was quite an effort to conform the existing balance sheet to new IRDA norms, maintaining the solvency margin, retaining growth momentum and continue to be the market leader. In a new environment, growth of new business is of paramount importance. All these underscore the fact that the organization has been alive to the market demands and it has well accepted the changes which will catapult it to a new position of incomparable excellence and growth. In a competitive environment, there is no room for rest of complacency. It is of importance to state that despite the initial success of the organization, there is no respite from the challenges to the organization in this fact growing life insurance market. The greatest challenges to my mind will be: Page 49
  50. 50. T.Y.BFM 50 GOLDEN YEARS OF LIC FIFTY YEARS OF PROGRESS The newspapers of 19th January, 1956 carried in one of their middle pages a small news item stating that the then Finance Minister Dr. C. D. Deshmukh would broadcast over the All India Radio that night at 8-45 P.M. None, not even the newsmen, the financial pundits or the Insurance companies suspected that the speech was going to reveal a measure which had a far reaching consequence on the economic horizon of the country. Dr. Deshmukh announced in his broadcast that the president had issued an ordinance earlier in the day taking over the management of the life insurance companies in India as a prelude to nationalization of life insurance business. Earlier to this a lot of preparatory work had to be done and that too within a tight timeframe. This onerous task of preparing for the event fell on the shoulders of the Controller of Insurance, Shri A. Rajagopaln. As a member of his staff during this period I had the excitement of watching the manner in which he planned the entire operation resulting in a takeover that was smooth and without any hitch. The background in which the decision was taken to nationalize life insurance business is set out in the speech of Shri Deshmukh. For a planned development of the country‟s economy, it was necessary to mobilize savings and utilize them to the best advantage of the community. The rural sector was largely neglected and it was necessary to extend insurance benefits far and wide, incidentally making a wider Page 50
  51. 51. T.Y.BFM 50 GOLDEN YEARS OF LIC section of the population to participate in the savings program and consequently in the economic development of the country. The Government was therefore considering the nationalization of life insurance business. As they were deliberating the matter, a few cases of mismanagement of funds had occurred and this hastened the decision. The LIC was established on 1st September, 1956 and in the words of the then Finance Minister, it was another milestone on the road the country had chosen in order to reach its goal of a socialistic pattern of society. I had the privilege to be associated with this great institution almost from its inception till my retirement 20 years ago. It is with great interest that I have been watching the Corporation grow from strength to strength. Prior to nationalization, there were as many as 245 companies transacting life insurance business. Strange as it would seem today, then had branches only in 97 centers and all of them were in urban areas. Soon after the LIC was established, it ensured that at least one development officer with a band of agents was posted in each revenue block. The network has been further widened over time with the result that the Corporation now has 2048 branches spread all over the country. Savings are the prime movers of a nation‟s economic development. The LIC has played a vital role in mobilizing savings. The Life Fund has from around Rs. 400 crores at the time of nationalization to a figure of over Rs.3, 85, 000 crores. The growth is phenomenal. Page 51
  52. 52. T.Y.BFM 50 GOLDEN YEARS OF LIC From this, the vital role played by the LIC to help the capital formation of the country can be readily imagined. By promoting social and industrial advancement, it provides requisite infrastructure for development. Thus the growth of the Corporation not only brings the much-needed security to individuals, it helps in the economic growth of the nation and consequently leads to a better standard of living for the people. I am happy that the Corporation has never rested on its laurels but has been constantly introducing innovative schemes to fulfil its objectives of identifying the needs of the policyholders and giving them better returns. Side by side, innovative schemes were being developed to help the economically weaker sections of the population. As I watch the success story of the LIC, I am proud that I was once associated with this institution. In this Golden Jubilee year, I have great pleasure in congratulating the Corporation for its achievements and wish it more and more successes in the years to come. Page 52
  53. 53. T.Y.BFM 50 GOLDEN YEARS OF LIC CONCLUSION After overhauling the all situation that boosted a number of Pvt. Companies associated with multinational in the Insurance Sector to give befitting competition to the established behemoth LIC in public sector, we come at the conclusion that : 1. There is very tough competition among the private insurance companies on the level of new trend of advertising to lull a major part of Customers. 2. LIC is not left behind in the present race of advertisement. 3. LIC has vast market and very firm grip on its traditional customers and monopoly of life insurance products. 4. Bank assurance - that allows life insurers to leverage on the risk product through bank network, was adopted by private players. But LIC was also not left behind as picking up majority stake in the corporation Bank and large equity stake in the Oriental Bank of Commerce. 5. IRDA is also playing very comprehensive role by regulating norms mandating to private players in this sector, that increases the confidence level of the customers to the private players. Page 53
  54. 54. T.Y.BFM 50 GOLDEN YEARS OF LIC BIBLOGRAPHY Book: - 50years of LIC PROF: - H. S. OBEROI. Page 54