INTRODUCTION- WHAT IS LIC?

With such a large population and the untapped market area of this population
Insurance happens to be a very big opportunity in India. Today it stands as a business
growing at the rate of 15-20 per cent annually. Together with banking services, it adds
about 7 per cent to the countrys GDP .In spite of all this growth the statistics of the
penetration of the insurance in the country is very poor. Nearly 80% of Indian populations
are without Life insurance cover and the Health insurance. This is an indicator that growth
potential for the insurance sector is immense in India. It was due to this immense growth
that the regulations were introduced in the insurance sector and in continuation; Malhotra
Committee was constituted by the government in 1993 to examine the various aspects of
the industry. The key element of the reform process was Participation of overseas insurance
companies with 26% capital. Creating a more efficient and competitive financial system
suitable for the requirements of the economy was the main idea behind this reform. Since
then the insurance industry has gone through many changes .The competition LIC started
facing from these companies were threatening to the existence of LIC. Since the
liberalization of the industry the insurance industry has never looked back and today stand
as the one of the most competitive and exploring industry in India. The entry of the
private players and the increased use of the new distribution are in the limelight today. The
use of new distribution techniques and the IT tools has increased the scope of the industry
in the longer run.

The Life Insurance Corporation of India (LIC) is an Indian organization created in

September 1956 with the charge to help provide insurance to people in India. Its policies
are long-term contracts, and the company offers different services for the life of the policy.
LIC also tries to incentivize savings, which is why its policies are usually linked to savings.
LIC does operate in English, offering services in the international market.
Life insurance is a contract between an insurance policy holder and an insurer, where
the insurer promises to pay a designated beneficiary sum of money (the "benefits") upon
the death of the insured person. Depending on the contract, other events such as terminal

illness or critical illness may also trigger payment. The policy holder typically pays a
premium, either regularly or as a lump sum.

Life insurance is a contract that pledges payment of an amount to the person assured (or
his nominee) on the happening of the event insured against.
The contract is valid for payment of the insured amount during:

The date of maturity, or

Specified dates at periodic intervals, or

Unfortunate death, if it occurs earlier.

Among other things, the contract also provides for the payment of premium periodically to
the Corporation by the policyholder. Life insurance is universally acknowledged to be an
institution, which eliminates 'risk', substituting certainty for uncertainty and comes to the
timely aid of the family in the unfortunate event of death of the breadwinner. By and large,
life insurance is civilizations partial solution to the problems caused by death. Life
insurance, in short, is concerned with two hazards that stand across the life-path of every
person:
1. That of dying prematurely leaves a dependent family to fend for itself.
2. That of living till old age without visible means of support.

Contract of Insurance :
A contract of insurance is a contract of utmost good faith technically known as Uberrima
fides. The doctrine of disclosing all material facts is embodied in this important principle,
which applies to all forms of insurance.
At the time of taking a policy, policyholder should ensure that all questions in the proposal
form are correctly answered. Any misrepresentation, non-disclosure or fraud in any
document leading to the acceptance of the risk would render the insurance contract null
and void.

Protection:
Savings through life insurance guarantee full protection against risk of death of the saver.
Also, in case of demise, life insurance assures payment of the entire amount assured (with
bonuses wherever applicable) whereas in other savings schemes, only the amount saved
(with interest) is payable.

Aid To Thrift:
Life insurance encourages 'thrift'. It allows long-term savings since payments can be made
effortlessly because of the 'easy installment' facility built into the scheme. (Premium
payment for insurance is monthly, quarterly, half yearly or yearly).
For example: The Salary Saving Scheme popularly known as SSS provides a
convenient method of paying premium each month by deduction from one's salary.
In this case the employer directly pays the deducted premium to LIC. The Salary Saving
Scheme is ideal for any institution or establishment subject to specified terms and
conditions.

Liquidity:
In case of insurance, it is easy to acquire loans on the sole security of any policy that has
acquired loan value. Besides, a life insurance policy is also generally accepted as security,
even for a commercial loan.

Tax Relief:
Life Insurance is the best way to enjoy tax deductions on income tax and wealth tax. This
is available for amounts paid by way of premium for life insurance subject to income tax
rates in force.
Assesses can also avail of provisions in the law for tax relief. In such cases the assured in
effect pays a lower premium for insurance than otherwise.

Money When You Need It:

A policy that has a suitable insurance plan or a combination of different plans can be
effectively used to meet certain monetary needs that may arise from time-to-time.
Children's education, start-in-life or marriage provision or even periodical needs for cash
over a stretch of time can be less stressful with the help of these policies. Alternatively,
policy money can be made available at the time of one's retirement from service and used
for any specific purpose, such as, purchase of a house or for other investments. Also, loans
are granted to policyholders for house building or for purchase of flats (subject to certain
conditions).

Who Can Buy A Policy?

Any person who has attained majority and is eligible to enter into a valid contract can
insure himself/herself and those in whom he/she has insurable interest. Policies can also be
taken, subject to certain conditions, on the life of one's spouse or children. While
underwriting proposals, certain factors such as the policyholders state of health, the
proponent's income and other relevant factors are considered by the Corporation.

Insurance For Women:

Prior to nationalization (1956), many private insurance companies would offer insurance
to female lives with some extra premium or on restrictive conditions. However, after
nationalization of life insurance, the terms under which life insurance is granted to female
lives have been reviewed from time-to-time.
At present, women who work and earn an income are treated at par with men. In other
cases, a restrictive clause is imposed, only if the age of the female is up to 30 years and if
she does not have an income attracting Income Tax.

Medical And Non-Medical Schemes:

4

Life insurance is normally offered after a medical examination of the life to be assured.
However, to facilitate greater spread of insurance and also to avoid inconvenience, LIC has
been extending insurance cover without any medical examination, subject to certain
conditions.

With Profit And Without Profit Plans:

An insurance policy can be 'with' or 'without' profit. In the former, bonuses disclosed, if
any, after periodical valuations are allotted to the policy and are payable along with the
contracted amount.
In 'without' profit plan the contracted amount is paid without any addition. The premium
rate charged for a 'with' profit policy is therefore higher than for a 'without' profit policy.

Key man Insurance:

Key man insurance is taken by a business firm on the life of key employees to protect the
firm against financial losses, which may occur due to the premature demise of the Key
man.

HISTORY OF LIFE INSURANCE

5

The origin of insurance is very old .The time when we were not even born; man
has sought some sort of protection from the unpredictable calamities of the nature. The
basic urge in man to secure himself against any form of risk and uncertainty led to the
origin of insurance. The insurance came to India from UK; with the establishment of the
Oriental Life insurance Corporation in 1818.The Indian life insurance company act 1912
was the first statutory body that started to regulate the life insurance business in India. By
1956 about 154 Indian, 16 foreign and 75 provident firms with effect from 1st January 1973. It
was after this that 107 insurers amalgamated and grouped into four were been established in India. Then the
central government took over these companies and as a result the LIC was formed. Since then LIC has
worked towards spreading life insurance and building a wide network across the length and the breath of the
country. After the liberalization the entrance of foreign players has added to the competition in the market.
The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance
Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the
British. In 1957 General Insurance Council, a wing of the Insurance Association of India, frames
a code of conduct for ensuring fair conduct and sound business practices. In 1972 The General Insurance
Business (Nationalization) Act, 1972 nationalized the general insurance business in India companies viz. the
National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance
Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.

INSURANCE SECTOR REFORMS

In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor was formed
to evaluate the Indian insurance industry and give its recommendations. The committee came up with the
following major provisions

Private Companies with a minimum paid up capital of Rs.1bn should be allowed to enter the
industry.

Foreign companies may be allowed to enter the industry in collaboration with the domestic
companies.

Only one State Level Life Insurance Company should be allowed to operate in each state it was after this
committee came into affect the regulatory body for insurance sector was formed with the name of IRDA.

IRDA:
The IRDA since its incorporation as a statutory body has been framing regulations and registering the
private sector insurance companies. IRDA being an independent statutory body has put a framework of
globally compatible regulations

OBJECTIVES OF LIC

Spread Life Insurance widely and in particular to the rural areas and to the
socially and economically backward classes with a view to reaching all
insurable persons in the country and providing them adequate financial cover
against death at a reasonable cost.

Maximize mobilization of people's savings by making insurance-linked savings

adequately attractive.

Bear in mind, in the investment of funds, the primary obligation to its

policyholders, whose money it holds in trust, without losing sight of the interest
7

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.

Promote amongst all agents and employees of the Corporation a sense of

participation, pride and job satisfaction through discharge of their duties with
dedication towards achievement of Corporate Objective.

LIC INSURANCE POLICIES/PLANS

Insurance Plans:

The broadest type of policy offered by LIC is its Life Insurance Plan. LIC life
insurance plans are general personal policies adapted to each individual's situation and
needs. LIC Insurance Plans are divided in several categories, such as plans for children,
8

plans for handicapped dependents, plans for high-worth individuals, money-back plans,
whole life plans, term assurance plans and joint life plans. Most of these policies or plans
cover death, protecting the beneficiaries who are usually family. Some policies include
other benefits.

1) Jeevan Arogya Policy:

Health has been a major concern on everybodys mind, including yours. In these days of
skyrocketing medical expenses, when a family member is ill, it is a traumatic time for the
rest of the family. As a caring person, you do not want to let any unfortunate incident to
affect your plans for you and your family. So why let any medical emergencies shatter your
peace of mind.
LIC has launched LICs Jeevan Arogya, a unique non-linked Health Insurance plan which
provides health insurance cover against certain specified health risks and provides you with
timely support in case of medical emergencies and helps you and your family remains
financially independent in difficult times.

LICs Jeevan Arogya gives you:

Valuable financial protection in case of hospitalization, surgery etc
Increasing Health cover every year
Lump sum benefit irrespective of actual medical costs
No claim benefit
Flexible benefit limit to choose from
Flexible premium payment options
Very easy to choose your plan
Step 1 Choose the level of Health cover you need
Step 2 Work out the premium payable along with our Representative

Step 1: Choose the level of Health cover you need:

You in the first year of the policy as per your need from out of the following choices:
`1000 per can choose the amount of Initial Daily Benefit (i.e. the daily Hospital Cash
Benefit applicable day ` 2000 per day ` 3000 per day '4000 per day.
This is the amount that will be payable to you in the event of hospitalization in the first
year on a per day basis. The Major Surgical Benefit that you will be covered for will be 100
times the Initial Daily Benefit you have chosen. Thus the initial Major Surgical Benefit
Sum Assured will be Rs.1 lakh, 2 lakh, 3 lakh, 4 lakh respectively. Other benefits such as
Day Care Procedure Benefit, Other Surgical Benefit and Premium waiver Benefit (PWB)
mentioned below shall also be payable depending upon the daily Hospital Cash Benefit
chosen.

Step 2: Work out the premium payable along with our representative:
Your premium will depend on your age, gender, and the Health cover option you have
chosen, whether you are Principal Insured or other insured life and the mode of payment.
Tables below give an indicative annual premium, payable yearly, for all health benefits
corresponding to an Initial Daily Benefit of ` 1000 per day, for some of the ages in respect
Of various lives that can be covered under a single policy

PRINCIPAL INSURED (Male)

Age at entry

Premium (`)

20

1922.65

30

2242.90

40

2799.70

50

3768.00

10

SPOUSE (Female) / PARENT (of PI/Spouse) (Female)

Age at entry

Premium (`)

20

1393.15

30

1730.65

40

2240.60

50

2849.10

CHILD
Age at entry

Premium (`)

792.00

794.75

10

812.35

15

870.75

Who can be insured?

You (as Principal Insured (PI)), your spouse, your children, your parents and parents of
your spouse can all be insured under one policy. Quite a relief isnt it, to have all insured
less than one policy.
The minimum and maximum age at entry is as under:
Minimum age at entry

Maximum age at entry

Self / spouse

18 years

65 years (last birthday)

Parents / parents-in-law

18 years

75 (last birthday)

Children

91 days

17 years (last birthday)

How long are each insured under this policy?

Each of the insured are covered for Health risks up to age (80). Children are insured up to
age 25 years.

2)Bima Account Policy:

As the name explains LICs Bima Account I is a simple non-linked plan under which
11

you can be covered without undergoing any medical examination subject to certain
conditions.
This plan offers you everything you think of an insurance plan should provide:
1. Simplicity
2. Liquidity
3. Guaranteed minimum return
4. No medical examination
5. Transparent charges
6. Risk cover

Under this plan, the premiums paid by you, after deduction of charges, will be credited to the
Policyholders Account maintained separately for each policyholder. The risk cover will be
provided by deduction of mortality charges from the Policyholders Account.
If all due premiums are paid, the amount held in your Policyholders Account will earn an
annual interest rate of 6% p.a. which will be guaranteed for whole of the policy term. In
addition to this guaranteed return, if all due premiums are paid; your account may earn an
additional return depending upon the experience under this plan.
You will also have an option to pay additional (Top-up) premiums without any increase in
risk cover.
Loan facility will also be available immediately after first policy anniversary.

PAYMENT OF PREMIUMS:
You may pay premiums regularly at yearly, half-yearly, quarterly or monthly (through ECS
mode only) intervals over the term of the policy.
Policyholders Account shall consist of 2 parts:
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1. Policyholders Regular Premium Account - to which regular premiums, net of

charges, shall be credited.
2. Policyholders Top-up Premium Account - to which Top-up premiums, net of charges,
shall be credited.
ELIGIBILITY CONDITIONS AND OTHER RESTRICTIONS:
(in year)
1. Minimum Entry Age

11 (completed)

50 (nearest birthday)

3. Policy Term

5 to 7

4. Minimum Maturity Age

18 (completed)

5. Maximum Maturity Age

57 (nearest birthday)

2.

Maximum Entry Age

Minimum Premium:
Regular premium:

Mode

Installment premium (in Rs.)

Yearly

7,000

Half-yearly

4,000

Quarterly

2,000

Monthly (ECS)

600

Maximum Premium
Regular premium:

Mode

Installment premium (in Rs.)

13

Yearly

14,000

Half-yearly

7,000

Quarterly

3,500

Monthly (ECS)

1,100

Top-up premium: Sum total of Regular Premiums paid up to the date of payment
of top-up.
Annualized Premiums shall be payable in multiple of `1000 for all modes other than ECS
monthly. For monthly (ECS), the premium shall be in multiples of `100/-.
1. Minimum Sum Assured: 10 times the annualized premium.
1. Maximum Sum Assured:
20 times of the annualized premium up to age 35 years
14 times of the annualized premium for age between 36 to 45years
10 times of the annualized premium for age between 46 to 50 years
The maximum Sum Assured shall be subject to maximum non-medical limit applicable for
the life to be assured.
CHARGES UNDER THE PLAN:

A) Expense Charge: This is the percentage of the premium appropriated towards charges
from the premium received. The balance part of the premium will be credited to the
Policyholders Regular Premium Account or Policyholders Top-up Premium Account, as the
case may be.

14

The expenses charges are as below:

Regular premium:
Expenses charge (including commission)
First Year

2nd & 3rd Years

Thereafter

27.5%

7.5%

5%

Expense charge for top-up Premium:

2.5%

B) Other Charges:
1. Mortality Charge This is the cost of life insurance cover which is age specific and
will be taken every month from the Policyholders Regular Premium Account
appropriately. This charge shall depend upon the Sum Assured.

The charges per `1000/- life insurance cover for some of the ages in respect of a healthy life
are as under:

Age

20

30

40

50

Rs.

1.25

1.46

2.57

6.56

2. Service Tax Charge - A service tax charge, if any, shall be levied on Mortality charge
deducted from the Policyholders Regular Premium Account on a monthly basis as
and when the corresponding Mortality charges are deducted.
15

3. Alteration Charge This is a charge levied for an alteration within the contract, such
as change in mode of payment to higher frequency and decreases in sum assured and
shall be a flat amount of `50/- which will be deducted from the Policyholders
Account and the deduction shall be made on the date of alteration in the policy.

OTHER FEATURES:

Top-up Premium: You can pay top-up premiums in multiple of `1000/-. The
additional premiums paid shall be credited into the Policyholders Top-up Premium
Account after deducting the expense charge. However, there would not be any increase
in the sum assured under the policy. The total of top-up premium at any point of time
shall not exceed the sum total of regular premiums paid up to that point of time. Such
additional premiums can be paid only if all due premiums have been paid under the
policy.

Decrease in benefits: This plan offers you the flexibility of reducing the sum
assured during the term of the contract subject to the minimum limit. When the sum
assured is reduced, such change will be effective from the policy anniversary
coinciding with or next following the date of request.

Grace Period: A grace period of one-month but not less than 30 days will be

16

allowed for payment of premiums under all modes of premium payment.

17

3) Endowment plus
In this policy, the investment risk investment portfolio is borne by the
policyholder. This is a unit linked Endowment plan which offers investment cum
insurance cover during the term of the policy. You can choose the level of insurance
cover within the limits, which will depend on the mode and level of premium you
agree to pay.
You have a choice of investing your premiums in one of the four types of
investment funds available. Premiums paid after deduction of allocation charge will
purchase units of the Fund type chosen. The Unit Fund is subject to various charges
and value of units may increase or decrease, depending on the Net Asset Value
(NAV).
1. Payment of Premiums: You may pay premiums regularly at yearly, half-

yearly, quarterly or monthly (through ECS mode only) intervals over the term
of the policy. Alternatively, a Single premium can be paid. A grace period of
30 days will be allowed for payment of yearly or half-yearly or quarterly
premiums and 15 days for monthly (through ECS) premiums.
Eligibility Conditions And Other Restrictions:
(a) Minimum Age at entry

7 (age last birthday)

(b) Maximum Age at entry

60 years (age nearer birthday)

(c) Minimum Maturity Age

18 years (completed)

(d) Maximum Maturity Age

70 years (age nearer birthday)
Where the policy is Discontinuance charges for Discontinuance charges for
(e) Policy Term
10 to 20 years
discontinued during the policies having
the policies having
(f) Minimum Premium
the policy year
annualized premium up to
annualized premium above
Regular premium (other than monthly (ECS) mode): Rs. [20,000] p.a.
Rs. 25,000/Rs. 25,000/Regular premium (for monthly (ECS) mode): Rs. [1,750] p.m.
Lower of 10% * (AP or FV)
Lower of 6% * (AP or FV)
Single premium: Rs. [30,000]
1
subject to a maximum of Rs.
subject to maximum of Rs.
(g) Maximum Premium
2500/6000/Regular premium: Rs. [1,00,000] p.a.
Lower of 7% * (AP or FV)
Lower of 4% * (AP or FV)
Single premium: No Limit
2
subject to a maximum of Rs.
subject to maximum of Rs.
(h) Sum Assured under the Basic Plan 1750/5000/Minimum Sum Assured:
Lower of 5% * (AP or FV)
Lower of 3% * (AP or FV)
Regular Premium policies: (Policy Term +1) times the annualized premium
3
subject to a maximum of Rs.
subject to maximum of Rs.
Single Premium:
1250/4000/For age at entry Lower
of below
45
years:
1.25
times
of
the
single
premium
of 3% * (AP or FV)
Lower of 2%
* (AP or FV)
18 1.10 times of the single premium
For
of 45 years
and above:
4 age at entrysubject
to a maximum
of Rs.
subject to maximum of Rs.
Maximum Sum Assured: 750/2000/-

5 andRegular
onwardsPremium policies: NIL

NIL

25 times of the annualized premium if age at entry is 46 to 60 years

Single Premium Policies:
If Critical Illness Benefit Rider is opted for:
5 times the Single premium if age at maturity is up to 55 years.
Pension
Plans
3 times the Single premium if age at maturity is 56 to 60 years.

LIC also offers Pension Plans. These plans are usually individual plans that help the
individual to prepare for the future---more specifically, for the years of retirement, offering
financial stability to the owner of the policy. There are five different plans offered, and they
usually involve investment of funds. These policies are intended for older people or those
planning on saving for the future. The minimum age to start a pension plan is 18, and the
maximum age is 75. Payments can be made annually, semiannually, quarterly or monthly,
depending of the policy holder's economic conditions and preferences.

h) Pension Plus

19

IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT

PORTFOLIO IS BORNE BY THE POLICYHOLDER.
LICs Pension Plus is a unit linked deferred pension plan, which provides you a
minimum guarantee on the gross premiums paid. The plan is without any life cover.
You have a choice of investing your premiums in one of the two types of investment
funds available. Premiums paid after deduction of allocation charge will purchase
units of the Fund type chosen. The Unit Fund is subject to various charges and value
of units may increase or decrease, depending on the Net Asset Value (NAV).
1. Payment of Premiums: You may pay premiums regularly at yearly, half-yearly or
quarterly or monthly (through ECS mode only) intervals over the term of the policy.
Alternatively, a Single premium can be paid.
A grace period of 30 days will be allowed for payment of yearly or half-yearly or
quarterly premiums and 15 days for monthly (through ECS) premiums.
2. Eligibility Conditions And Other Restrictions:
a) Minimum Entry Age - 18 years (last birthday)
b) Maximum Entry Age - 75 years (nearest birthday)
c) Minimum Vesting Age - 40 years (completed)
d) Maximum Vesting Age - 85 years (nearest birthday)
e) Minimum Deferment Term - 10 years
f) Sum Assured - NIL
g) Minimum Premium Regular premium (other than monthly (ECS) mode) : Rs. [15,000] p.a.
Regular premium (for monthly (ECS) mode) : Rs. [1,500] p.m.
Single premium: Rs. [30,000]
h) Maximum Premium Regular premium : Rs. [1,00,000] p.a.
Single premium: No Limit
Annualized Premiums shall be payable in multiple of Rs. 1,000 for other than ECS
monthly. For monthly (ECS), the premium shall be in multiples of Rs. 250/-.

3. Charges under the Plan:

A) Premium Allocation Charge: This is the percentage of the premium deducted
towards charges from the premium received. The balance constitutes that part of the
premium which is utilized to purchase (Investment) units for the policy. The
20

allocation charges are as below:

For Single premium policies: 3.3%

 Special plans
Special plans unite the protection qualities of insurance policies and the returns of
investment instruments. These policies pay the amount insured in case of death during the
term of the policy, but when the policy holder is still alive at the end of the term of the
policy---depending on how many years of insurance the individual bought---there is a
return of the total amount assured. Depending on the policy term, the insurance company
will make payments for a percentage of the amount assured for a specified number of years
while the policy is in force. Clients must be between 18 and 57 years of age to apply.

21

1. Vital Information :

j) Health Plan
Principal
Health Protection Plus

1.Age

Insured

Spouse
Insured

Child Insured

Min Policy Entry Age

18
18
3months
In this
policy, the investment risk in investment portfolio is borne by the policyholders.
Last
Birthday
Min
Ageis HCB
Cover
Health
a concern
on Age
everybody's mind these days. With skyrocketing medical expenses,
18
18
3months
Last
Birthdayleading to hospitalization or surgery is a constant source of anxiety unless the family
the chances
Min Age MSB Cover Age
has adequate funds to meet such
18 an eventuality. Most families
18 rarely provide for healthcare.
Last Birthday
LIC has launced LIC's health protection plus plan, a unique long term health insurance covers
Maximum Entry Age
55 wife and the children)
55
17 cash benefit and major surgical
For the entire family (husband,
hospital
Nearest Birthday
benefit along with a tulip component (investment in the form of units) specially designed to
Domiciliary
Treatment Benefit (DTB) / Out Patient Department (OPD) expenses.
3. meet
Premium
Payment:
Mode of Payment: Yearly, Half-Yearly & Monthly (ECS Mode only)
This is an Endowment Assurance plan where the proposer has simply to choose the amount
and mode of premium payment. The plan provides financial protection against death
throughout the term of the plan. The death benefit is directly related to the premiums paid.
Minimum Annual Premium Conditions
The Maturity Sum Assured depends on the age at entry of the life to be assured and is
Number of Lives Higher of the two conditions in each category listed below:
covered
payable on survival to the end of the policy term. It also offers the flexibility of term and a
Single Life
6 times the HCB of the Principal Insured OR Rs.5000 p.a.
lot ofLives
liquidity. The arithmetic sum of 6 times the HCB of PI and 3 times the
Two
More than two

HCB of the second insured. OR Rs.7500 p.a.

The arithmetic sum of 6 times the HCB of PI and 3 times the

Lives
HCB of each of the others insured OR Rs.10,000 p.a.
Premiums:
Annualized Premiums are payable in multiples of Rs.500.
Premiums are payable yearly, half-yearly, quarterly, or monthly through salary deductions
4. Sum Assured: The Principal Insured must first choose the respective levels of HCBB for each member to

as opted by you throughout the term of the policy or till earlier death.
be covered under the policy. The sum assured for major surgical benefits will be 200 times of the HCB
you choose.
Loyalty Additions:
Major
Principal

Spouse Insured

Child Insured

This is a Surgical
with-profits plan
and participates in the profits of the Corporations life insurance
Insured
business.Sum
It gets a share of the profits in the form of loyalty additions which are terminal
200 times the HCB applicable to
bonuses payable
Assured along with death benefit or maturity benefit. Loyalty Additions may be
each insured life under the policy.
payable from the 10th year onwards depending upon the experience of the Corporation.
.
6. Increase/Decrease of Premiums: Increase or decrease of premiums is allowed during the term of the policy.
22

Increase in premium must be in multiples of Rs.500. In case of decrease, the minimum premium conditions must
be satisfied. However, increase/decrease in premiums does not affect the level of health cover and HCB and
MSB benefits.

II. CONDITIONS & RESTRICTIONS

Premium Discontinuance and Revival: The policy will lapse if the premiums are not paid
within the days of grace. The PI shall have the option to revive the policy any time within a
period of two years from the due date of first unpaid premium by payment of arrears of premiums or by availing
Premium Holidays. During the period of discontinuity, the charges for HCB and MSB covers will continue to be
deducted (even beyond two years) from the policy fund till:
i. the policy fund has sufficient balance, or
ii. The lives covered reach the benefit ceasing age, or
iii. Maximum lifetime benefits are exhausted, or
iv. Policy is terminated due to death or any other reason, if any,
whichever is earlier. In case the policy is not revived during the revival period and the
balance in the Policy Fund is not sufficient to recover the charges i.e. if the Policy Fund
Exhausts, the policy shall compulsorily be terminated with a notice to the PI. All other
Charges will also continue to be deducted from the Policy Fund till the fund exhausts.
2. Premium Holidays: If the policy lapses after at least 3 years premiums have been
paid the Principal Insured has the option of either paying all the due premiums in full
or avail of premium
holiday GUIDELINES
by just paying the latest
installment
premium.QUALITY
The premium
POLICY
AND
SERVICE
holidays can be availed only as long as the policy fund has a balance of at least one
annualized premium at the time of revival.
Your Policy Bond And Its Safety
3. Surrender: No surrender will be allowed.
The policy bond is the document that is given to you after we accept your proposal for
insurance. The risk coverage commences after acceptance of your proposal and the
4. Policy Loans: No policy loan will be available under this policy.
conditions and privileges of your policy are mentioned in the policy bond.
This is an important document which would be referred to for various servicing interactions
5. Assignment: No assignment will be allowed under this policy.
with you Keep the policy bond safe. It will be required at the time of settlement of claims
on the policy. You will also require it if you are availing a loan or want to assign the policy.
6. Tax Benefit: The premium payable under this product is eligible for Section 80(D)
Inform your spouse/Parents/Children as to where the policy is kept.
Benefit of Income Tax Act, 1961.
In case you are handing over the policy bond to any person or office, please take a written
acknowledgement. Keep a Photostat copy of the policy for your reference.
7. Risks borne by the Policyholder:
i) LICs Health Protection Plus is a Unit Linked Health Insurance product which is
23is subject to risk factors.
Different from the traditional insurance products and

ii)The premium paid in Unit Linked Life Insurance policies are subject to investment risks

associated with capital markets and the NAVs of the units may go up or down based on the performance of fund a

insured is responsible for his/her decisions.

iii) Life Insurance Corporation of India is only the name of the Insurance Company and LICs Health Protection Pl
insurance contract and does not in any way indicate the quality of the contract, its future
prospects or returns.
Yourknow
Policy
iv) Please
theNumber
associated risks and the applicable charges, from your Insurance agent
policy number
is consisting
and can be found at the top left hand corner
or theThe
Intermediary
or policy
documentofofnine
the digits
insurer.
the offered
scheduleunder
of your
bond.
v) Theoffund
thispolicy
contract
is the name of the fund and do not in any way
indicate the quality of these plans, their future prospects and returns.
vi) All benefits under the policy are also subject to the Tax Laws and other financial
enactments as they exist from time to time.
This is a unique identification number that distinguishes your policies from other policies

8. Cooling off period: If you are not satisfied with the Terms and Conditions of the

and
policy,
will you
remain
mayunchanged
return the throughout
policy to usthe
within
lifetime
15 days.
of the policy.
Remember to quote the policy number every time in your correspondence, as it helps us to
locate your records for reference.
Policy Conditions
Every policy is taken for different types of needs; therefore the conditions for your policy
will vary according to the Plan and Term of the policy.
The policy schedule contains on the first page of your policy, like the ones mentioned
above as well as other information like nominee, your address etc. It also shows the date of
commencement of your policy, date of birth, date of maturity, due dates and months in
which the renewal premiums are to be paid etc. The second page onwards carries the
various policy conditions like risk coverage, additional risks coverage if opted for, standard
benefits that are available for all policies, accident benefit if opted for, exclusion of risks if
any and other conditions that govern the contract of insurance.
Alterations in Policy
There may be instances when you would like to make alterations in your policy like change
of premium payment mode, reduction in premium paying term etc. Your applications may
be given in writing to the branch that services your policy for our further action.
There are different types of alterations that are allowed on our life insurance policies.

If Your Policy Is Lost

Kindly make a thorough search before concluding that you have lost the policy bond. Look
for the same within your residence, among your investment papers, at your office and even
24

with your agent to whom you might have entrusted the document for some reason.
It could have been even pledged with LIC/any other financial institution for availing a loan
by you. LIC retains the policy bond when you go in for a loan against the policy. Make sure
that the document you are searching is not one that has already been assigned to LIC, or to
another financial institution. If the policy bond is partially destroyed due to natural causes
like, fire, flood, etc, the remaining portion may be returned as evidence of loss of policy to
LIC, while applying for a duplicate policy. In case you are sure that the policy bond is
untraceable due to unknown causes, there is a simple procedure to comply with while
applying for the duplicate policy at the branch that services your policy.

Nomination

Ensure that the nominees name is correctly incorporated in the policy bond.
You may change the nomination in your policy any time during the lifetime of the policy
In case you have not included the name of the nominee till now, please do not delay;
inform us your nomination immediately. Kindly note that the change of nomination has to
be done in the branch that services your policy. The nominee is the person to whom the
insurance claim amounts would be payable, in case anything unfortunate within the
purview of the policy conditions happens to you. The policy is usually taken by you to
benefit your family nominate the persons wholl have the welfare of your family in your
absence; the usual preferences being spouse and children.

When To Pay the Premiums

remember to pay your premium in time, even if our notices do not reach you. There may be
a postal delay. LIC usually sends premium notices one month in advance to the due month
of the premium. The months in which premiums are due are given on the first page of the
Policy bond.
Grace Period For Premium Payment

25

In case you have not paid the premium within the due date there is still time for you to
make the payments without payment of interest on the premium. This period is called the
grace period. (With the exception of some plans)
The grace period for policies where the premium payment mode is monthly is 15 days from
the due date.
The grace period for policies where the premium payment mode is quarterly, half-yearly or
yearly is one month but not less than30 days.

How and Where To Pay the Premiums

By cash, local cheque (subject to realization of cheque), Demand Draft at Branch

Office.

The DD and cheques or Money Order may be sent by post.

You can pay your premiums at any of our Branches as 99% of our Branches are
networked.

Many Banks do accept standing instructions to remit the premiums. So by providing

a standing instruction to your Bank to debit your account for the premium amount
and send it vide a bankers cheque to LIC, on the due dates and months mentioned
on your policy bond.

Through Internet : Payment of premiums can be made through Internet through

Service Providers viz. HDFC Bank, ICICI Bank, Times of Money, Bill Junction,
UTI Bank, Bank of Punjab, Citibank, Corporation Bank, Federal Bank and Bill
Desk.

Premium payment can also be made through ATMs of Corporation Bank and UTI
Bank.

Premium payment can also be made through Electronic Clearing Service (ECS)
which has been launched at Mumbai, Hyderabad, Chennai, Kolkata, New Delhi,
Kanpur,

Bangalore,

Vijayawada,

Patna,

Jaipur,

Chandigarh,

Trivandrum,

Ahmadabad, Pune, Goa, Nagpur, and Secunderabad & Visakhapatnam. A

policyholder having an account in any Bank which is a Member of the local
26

Clearing House can opt for ECS debit to pay premiums. The policyholders wishing
to use this system would have to fill up a Mandate Form available at our
Branches/DO and get it certified by the Bank. The certified Mandate Forms are to
be submitted to our BO/DO.

Policy can be anywhere in India: Citibank Kiosks at Industrial Assurance Building,

Churchgate, New India Building, Santacruz, Jeevan Shikha Building, Borivili are
dedicated for collection of premiums through cheques.

Surrender Value
This is the value which is the amount payable to you should you decide to discontinue the
policy and encash the same from LIC.
Surrender value is payable only after three full years premiums are paid to LIC. More over
if it is a participating policy the Bonus gets attached to it as per prevalent rules.
Surrender of policy is not recommended since the surrender value would always be
proportionately low.
Should you decide to go in for another insurance at this stage further insurance would be
available to you at a much higher premium because your age would have advanced since
taking out the earlier policy. Therefore retention of earlier policies and continuation of all
policies without allowing them to lapse is the best strategy for continuing life insurance
protection.

CASE STUDY
IRDA slaps Rs 5 lakh fine on HDFC Standard Life
Insurance
A complaint lodged by Ms.Kunti Devi, was received by IRDA on 14th April, 2009
regarding non receipt of death claims. The complaint was forwarded to the Life Insurer on
28/07/2009.The Life Insurer vide its letter dated February 05, 2010 informed the
27

repudiation of the death claim due to non disclosure of material facts which was material
to disclose. From the submissions of the life insurer it is noticed that the claim was
repudiated after a gap of around 12 months from the date of receipt of claim intimation.
An investigation carried out by IRDA on 18th June, 2010 revealed that the time line
adhered by the life insurer to decide on the death claim is on a higher side. It was also
noticed during the course of investigation that more than 6 months was elapsed in respect
of a few more individual death claim cases without deciding the admissibility of the death
claims and in respect of a group insurance policy one claim is outstanding for more than
one year.
Decision
Wherever delays have taken place in taking decisions on the settlement of death claims, it
is considered that the Insurer has failed to adhere to the within referred regulations. The
violation of the referred regulations invites a penalty under Section 102(B) of the Insurance
Act 1938 and the Authority is empowered to impose a penalty not exceeding Rs.5 lakhss
for each such violation and punishable with fine. Considering the nature of the violation,
the Authority has come to the conclusion that it is just and proper to impose a penalty of
Rs.5 lakhs. Accordingly, a penalty of Rs 5 lakhs is imposed on the HDFC Standard Life
Insurance Co Ltd.
The Life Insurer is also directed to put in place effective claim settlement procedures and
take all such measures that deem fit for both pro-active and timely settlement of all types of
claims. The procedures and measures shall fully comply with the regulations referred
above. The Life Insurer shall confirm the action taken towards this direction within 15 days
from the date of receipt of this order.

QUESTIONAIRE
1. How to change nominee in LIC policy?
A nominee in a LIC policy is a person recognized statutorily to be the payee to provide a
valid discharge for the payment of policy moneys to the corporation. At the time of issue,
the nomination would be incorporated in terms of text of policy.
28

2. What are the benefits of LIC policy?

This is like a post office R.D. scheme. You can deposit yearly, half yearly, Quarterly
or Monthly (ECS) in LIC scheme.

Maturity received In LIC scheme is tax free under section 10-10D of income tax
act.

You can continue LIC scheme after 10 years. You cannot continue Post Office
scheme after 10 years.

LIC policy gives Maturity Benefit to the customer.

LIC policy gives you a Death Benefit with the investment.

Company gives Assured Benefit to the customers.

LIC policies give Tax Benefits to the policy holders.

It gives a good Surrender Value to the clients.

LIC provide Accidental Death and Disability Benefit to policy holders.

3. How can I see my LIC current balance by giving my policy no.?

If you are a LIC INDIA policy holder, it is most important for you to check your all LIC
policy status online regularly. You can check all of your LIC Policy status by registering
yourself at http://www.licindia.in/NewUserRegistration.htm. After registering yourself,
check

your

Life

Insurance

Corporation

(LIC)

of

India

policy

status

at

https://customer.onlinelic.in/epslo gin.htm.
On left side click on View Enrolled Policies link on Policy tool section. After this
click on policy number. You will see all details of your LIC India Policy; it also gives the
due date for next premium payment.

4. How to pay LIC premium online?

Premium Online to see a list of policies whose premium is due. You have a choice to
select the policies for which you want to pay premium. You will be directed to a page
29

where you can choose from to login with your net banking username/password. On
successful login, the total amount to be paid by you towards LIC will be displayed. Please
verify your balance displayed and confirm the transaction.

1. How And Where To Pay The Premium?

By cash, local cheque, Demand Draft at Branch Office.

The DD and cheques or Money Order may be sent by post.
You can pay your premiums at any of our Branches as 99% of our Branches are

networked.
Many Banks do accept standing instructions to remit the premiums. So by providing
a standing instruction to your Bank to debit your account for the premium amount
and send it vide a bankers cheque to LIC, on the due dates and months mentioned

on your policy bond.

Through Internet : Payment of premiums can be made through Internet through
Service Providers i.e. HDFC Bank, ICICI Bank, Times of Money, Bill Junction,
UTI Bank, Bank of Punjab, Citibank, Corporation Bank, Federal Bank and Bill

Desk.
Premium payment can also be made through ATMs of Corporation Bank and UTI
Bank

CONCLUSION
After analyzing the situation that boosted a number of Pvt. Companies associated with
multinational in the Insurance Sector to give befitting competition to the established 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 attract a number of customers.
2)

LIC is not left behind in the present race of insurance sector has expanded the product

segment to meet the different advertisement.

30

3) The entry of the Pvt. Players in the level of the requirement of the customers. It has
brought about greater choice to the customers.
4) Private insurers have restricted reach to the customers.
5) LIC has vast market and very firm grip on its traditional customers and monopoly of
life insurance products.
6) 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. 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.

BIBLIOGRAPHY
Websites:
http://www.licindia.in/objectives.htm
http://www.licindia.in/know_lic.htm
http://www.licindia.in/policy_guidelines.htm
31

 www.wikipedia.com
Reference Books:
Wings, Ready Reckoner, 2003.
Prerana, Kalesh Gurbuxani, 2010.

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