Life insurance policy

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.
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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.

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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
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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.

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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)

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LIC CORPORATES IN 50 Years…

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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.
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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
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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.

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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
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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
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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
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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,
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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.

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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.

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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.

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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.
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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.
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‘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.

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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
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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.

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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.

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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.

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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.
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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.
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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.

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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.”

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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.”

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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
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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.

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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.

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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.

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For policy term 12 years : 15% of the Sum Assured under Basic Plan
at the end of each 4th & 8th policy year
at the end of each 4th, 8th &12th policy year
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.

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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.

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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.

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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%.
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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.
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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
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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.
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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.

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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.
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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.

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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%.

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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.

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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.

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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
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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
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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
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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:

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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
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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.
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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.

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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.
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T.Y.BFM


BIBLOGRAPHY

www.managementparadise.com
www.licindia.com
www.scribd.com
www.lifeinsurance.com

Book: - 50years of LIC
PROF: - H. S. OBEROI.

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Life insurance policy

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