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8/6/2019 The Life Insurance Corporation of India
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BANKING AND FINANCIAL
INSTITUTIONS
LIFE INSURANCE
CORPORATION OF INDIA
SUBMITTED TO: SUBMITTED BY:
Mr. Rajneesh Mishra Manisha sharma 05
Lecturer ASB Surbhi sharma 20
Simranpreet singh 37
Isha Sachdeva 03
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1.OVERVIEW
The Life Insurance Corporation of India (LIC ) is the largest state-owned
life insurance company in India, and also the country's largest investor. It is
fully owned by the Government of India. It also funds close to 24.6% of the
Indian Government's expenses. It has assets estimated of 9.31 trillion
(US$206.68 billion). It was founded in 1956 with the merger of more than
200 insurance companies and provident societies.
Headquartered in Mumbai, financial and commercial capital of India, the
Life Insurance Corporation of India currently has 8 zonal Offices and 101
divisional offices located in different parts of India, at least 2048 branches
located in different cities and towns of India along with satellite Offices
attached to about some 50 Branches, and has a network of around 1.2
million agents for soliciting life insurance business from the public.
“Every day we wake up to the fact that more than 250 million lives are part
of our family called LIC.
We are humbled by the magnitude of the responsibility we carry and realise
the lives that are associated with us are very valuable indeed.
Though this journey started over five decades ago, we are still conscious of the fact that, while insurance may be a business for us, being part of millions
of lives every day for the past 52 years has been a process called TRUST.”
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2. History
The Oriental Life Insurance Company, the first corporate entity in India
offering life insurance coverage, was established in Calcutta in 1818 by
Bipin Bernard Dasgupta and others. Europeans in India were its primary
target market, and it charged Indians heftier premiums. The Bombay Mutual
Life Assurance Society, formed in 1870, was the first native insurance
provider. Other insurance companies established in the pre-independence era
included• Bharat Insurance Company (1896)
• United India (1906)
• National Indian (1906)
• National Insurance (1906)
•
Co-operative Assurance (1906)• Hindustan Co-operatives (1907)
• Indian Mercantile
• General Assurance
• Swadeshi Life (later Bombay Life)
India’s first 150 years were marked mostly by turbulent economic
conditions. It witnessed, First War of Independence , adverse effects of the
World War I and World War II on the economy of India , and in between
them the period of world wide economic crises triggered by the Great
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depression . The first half of the 20th century also saw a heightened struggle
for India's independence . The aggregate effect of these events led to a high
rate of bankruptcies and liquidation of life insurance companies in India.
This had adversely affected the faith of the general public in the utility of obtaining life cover.
The Life Insurance Act and the Provident Fund Act were passed in 1912,
providing the first regulatory mechanisms in the Life Insurance industry.
The Indian Insurance Companies Act of 1928 authorized the government to
obtain statistical information from companies operating in both life and non-
life insurance areas. The subsequent Insurance Act of 1938 brought stricter state control over an industry that had seen several financially unsound
ventures fail. A bill was also introduced in the Legislative Assembly in 1944
to nationalize the insurance industry.
Some of the important milestones in the life insurance business in India
are:
1818: Oriental Life Insurance Company, the first life insurance company on
Indian soil started functioning.
1870: Bombay Mutual Life Assurance Society, the first Indian life insurance
company started its business.
1912: The Indian Life Assurance Companies Act enacted as the first statute
to regulate the life insurance business.
1928: The Indian Insurance Companies Act enacted to enable the
government to collect statistical information about both life and non-life
insurance businesses.
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1938: Earlier legislation consolidated and amended to by the Insurance Act
with the objective of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers and provident societies are taken over
by the central government and nationalised. LIC formed by an Act of
Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore
from the Government of India.
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.
Some of the important milestones in the general insurance business in
India are:
1907: The Indian Mercantile Insurance Ltd. set up, the first company to
transact all classes of general insurance business.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.
1968: The Insurance Act amended to regulate investments and set minimum
solvency margins and the Tariff Advisory Committee set up.
1972: The General Insurance Business (Nationalisation) Act, 1972
nationalised the general insurance business in India with effect from 1st
January 1973.
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107 insurers amalgamated and grouped into four 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.
Nationalization
In 1955, parliamentarian Amol Barate raised the matter of insurance fraud
by owners of private insurance companies. In the ensuing investigations, one
of India's wealthiest businessmen, Ram Kishan Dalmia , owner of the Times
of India newspaper, was sent to prison for two years.
Eventually, the Parliament of India passed the Life Insurance of India Act on
1956-06-19, and the Life Insurance Corporation of India was created on
1956-09-01, by consolidating the life insurance business of 245 private lifeinsurers and other entities offering life insurance services. Nationalization of
the life insurance business in India was a result of the Industrial Policy
Resolution of 1956 , which had created a policy framework for extending
state control over at least seventeen sectors of the economy, including the
life insurance.
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3. SPREAD IN THE COUNTRY
Over its existence of around 50 years, Life Insurance Corporation of India,which commanded a monopoly of soliciting and selling life insurance in
India, created huge surpluses, and contributed around 7 % of India's GDP in
2006.
The Corporation, which started its business with around 300 offices, 5.6
million policies and a corpus of INR 459 million (US$ 92 million as per the
1959 exchange rate of roughly Rs. 5 for a US $ , has grown to 25000servicing around 180 million policies and a corpus of over 8 trillion
(US$177.6 billion).
The recent Economic Times Brand Equity Survey rated LIC as the No. 1
Service Brand of the Country. The slogan of LIC is "Zindagi ke saath bhi,
Zindagi ke baad bhi"in hindi. In english it means "with life also,after life
also. According to The Brand Trust Report 2011, LIC is the 8th most trusted
brand of India
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4 . OBJECTIVES
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 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 inthe changing social and economic environment.
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* 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.
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5. BRIEF OVERVIEW OF SCHEMES OF LIC
LIC – GROUP PLAN | GROUP GRATUITY SCHEME | LIC |
OVERVIEW | ADVANTAGES | BENEFITS – TAX BENEFIT |
FEATURES – SPECIAL FEATURES
Key to a successful business is keeping your employees motivated. Happy
and secured employees work better, which in turn reduces the employer’s
tension. Group Insurance is an insurance which covers a group of people
(like employees of a common employer or professionals in a commongroup).
LIC brings you LIC’s GRATUITY PLUS PLAN, a unit linked plan for
management of Gratuity Funds. This plan is different from the traditional
Cash Accumulation Plan as the returns under the Plan are linked to the
performance of the chosen fund. GRATUITY PLUS PLAN is suitable for companies who desire to entrust Gratuity Fund management to an insurer
and wish to have the flexibility of choice of investments.
ADVANTAGES
1. Choice of 4 funds to meet various risk appetites.
2. Flexibility in structuring the Gratuity Costs based on performance of
Fund.
3. Facility of Switching between various funds. One switch every year is
free of cost.
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4. It provides for life insurance cover at a very minimal cost. Cover can
be equal to the gratuity payable for anticipated service. Alternatively,
the company can also choose for each member a uniform level of
cover equal to a minimum of one months salary or more .
5. There is no bid offer spread under this scheme.
6. Scheme can be surrendered at any time. There is no surrender penalty
imposed.
7. Hassle Free Administration of Scheme
8. Assistance for execution of legal documents and installation of
scheme.
BENEFITS
1. Gratuity Benefits to Members whenever payable as per Rules of the
Scheme shall be paid to the Policy Holder by debiting the requisite no
of units to the Policy Holder’s Unit Account at NAV applicable at thattime.
2. In case of death of member, life insurance cover as opted for by
Policyholder will also be paid by the Corporation.
3. The policy can be surrendered at any time. The benefit available on
surrender of the policy will be the value of total number of units held
in the Policy Holder’s Unit Account at the time of surrender.
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At all times the Policyholder’s unit account should be sufficient to cover the
relevant charges and benefits payable at such point of time, subject to a
minimum balance of Rs. Five lacs in the Policyholder’s Unit Account. In
case the Policyholder’s Unit Account falls below this limit, the policy shallcompulsorily be terminated and the balance amount in the policy holder’s
Unit Account will be refunded to the policy holder.
TAX BENEFITS:
The provisions relating to the approved Superannuation Scheme are set out
in Part ‘B’ of the Fourth Scheme of the Income-Tax Act, 1961 and Part XIII
of the Income Tax Rules, 1962. The income tax concession will be available
only if the scheme is approved by the CIT.
1. The annual contribution is treated as a deductible business expense in
term of Section 36(1) (IV) of the I.T. Act.
2. In terms of a Notification issued by the Central Board of Direct
Taxes .80% of the contribution (s) towards the past service liability
are treated as deductible business expenses spread over in the
subsequent years of payment.
3. The employee’s contribution, in the case of the Contributions scheme
qualifies for exemption under Section 80C of the Income-Tax Act.
Jeevan Anurag
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Benefits
LIC’s Jeevan ANURAG is a with profits plan specifically designed to take
care of the educational needs of children. The plan can be taken by a parent
on his or her own life. Benefits under the plan are payable at prespecifieddurations irrespective of whether the Life Assured survives to the end of the
policy term or dies during the term of the policy. In addition, this plan also
provides for an immediate payment of Basic Sum Assured amount on death
of the Life Assured during the term of the policy.
Assured BenefitPayment of 20% of the Basic Sum Assured at the start of every year during
last 3 policy years before maturity. At maturity, 40% of the Basic Sum
Assured along with reversionary bonuses declared from time to time on full
Sum Assured for the full term and the Terminal bonus, if any shall be
payable. For example, if term of the policy is 20 years, 20% of the Sum
assured will be payable at the end of the 17th,18th, 19th year and 40% of theSum Assured along with the reversionary bonuses and the terminal bonus, if
any, at the end of the 20th year.
Death Benefit
Payment of an amount equal to Sum Assured under the basic plan
immediately on the death of the life assured.
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6. DETAILS OF WHOLE LIFE SCHEME AND
ENDOWMENT SCHEME
Summary:
Jeevan Anand is the combination of Endowment Assurance and Whole Life
plan.
The risk cover will continue even after the maturity, that means Zindagi Ke
Saath Bhi Zindagi Ke Bad Bhi… Jeevan Anand plan no. 149 provides
financial protection against death throughout the lifetime of the life assuredwith the provision of payment of a lump sum at the end of the selected term
in case of his survival.
For Example: Mr. Pankaj, age 25 years, takes Jeevan Anand policy for 25
years for Sum Assured Rs. 1 lakh. Now on Maturity Pankaj will receive Rs.
2,12,500/- (Rs. 1 lakh sum assured Plus Rs.1,12,500/- is the estimated bonusat Rs.45/- per thousand per year.)
In case, Mr. Pankaj, dies ( After premium paying term is over) at the age of
60 years, his nominee will get additional Rs. 1 lakh equal to sum assured
amount. Since Mr. Pankaj has already received the bonus, LIC will not pay
second time bonus.
In case, Mr. Pankaj dies during the Premium Paying Term, his nominee will
get Rs.1 Lakh (sum Assured) + Accrued bonus till Mr. Pankaj’s death.
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Key Features:
1. Jeevan Anand is the combination of Whole Life and Endowment
Assurance plan.
2. Even after the Premium Paying Term (PPT) is over, risk cover continues
till the death of the policy holder.
3. Accident Benefit is available during the Premium paying term adn
thereafter upto age 70.
4. Limited premium payments.
5. Double accidental cover upto age 70.
6. Tax Savings
Modes of Premium Payment:
You can pay premium yearly, half-yearly, quarterly, monthly or through
salary deductions as opted by you throughout the selected term of the policy
or till earlier death.
Jeevan Anand Plan Premiums are limited. You only pay till the selected
term of years or until death if it occurs during the term period. This policy
not only makes provisions for the family of the life assured in the event of
early death but also assures a lump sum at a desired age. The lump sum can
be reinvested to provide an annuity during the remainder of policy holders
life or in any other way considered suitable at that time.
Premium Stoppage:
If payment of premiums ceases after at least 3 years premiums have been
paid, a free paid-up policy for a reduced sum assured will be automatically
secured provided the reduced sum assured, exclusive of any attached bonus,
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is not less than Rs. 250/-. The reduced sum assured will become payable on
the event as stipulated in the policy.
Bonuses:
Jeevan Anand is a with-profit insurance plan and participates in the profits
of the Corporation’s life insurance business. You will get the profit in the
form of Bonuses. Simple Reversionary Bonuses are declared per thousand
Sum Assured annually at the end of each financial year. Once the bonus is
declared, they form part of the guaranteed benefits of the plan. Bonuses will
be added during the selected term or till death, if it occurs earlier. Final
(Additional) Bonus may also be payable provided the policy has run for
certain minimum period.
Maturity Benefit:
Sum Assured along with all vested bonuses payable at the end of the term to
the policy holder.(Endowment term)
Death Benefit:
Sum Assured along with vested bonuses are payable on death during the
premium paying term. An amount equal to the Sum Assured is payable if
death occurs after the premium paying term. Simple Reversionary Bonus
accrues during the premium paying term and is payable at the end of the
premium paying term or on earlier death along with final additional bonus, if
any. No Bonus is paid on death after the premium paying term.
Accident Benefit:
Double Accident Benefit is available during the premium paying term and
thereafter up to age 70. Maximum Accident Cover available under this plan
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will be Rs 5 lakh (this limit excludes accident benefit taken under other
plans).
In case of permanent disability of the life assured due to accident this
additional Sum assured is payable in instalments.
Eligibility Conditions and Restrictions:
a:) Minimum Entry Age: 18 Years completed
b:) Maximum Entry Age: 65 Years
c:) Max. PPT Mat. Age: 75 years
d:) Min. Premium term: 5 yrs
e:) Max Premium term: 57 yrs
f:) Minimum Sum Assured: Rs. 1,00,000/-
g:) Maximum Sum Assured: No Limit
h:) Risk cover: Sum Assured + Bonus
i:) Loan on policy: Avaialable
j:) Housing loan : Avaialable
Surrender Value:
Buying a life insurance contract is a long-term commitment. However,
surrender values are available on the plan on earlier termination of the
contract.
Guaranteed Surrender Value:
The policy may be surrendered after it has been in force for 3 years or more.
The guaranteed surrender value is 30% of the basic premiums paid
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excluding the first year’s premium. Any extra premium(s) paid and
premium(s) towards Accident Benefit are also excluded.
LIC’s policy on surrenders:
In practice, the Corporation will pay a Special Surrender Value – which is
either equal to or more than the Guaranteed Surrender Value. The benefit
payable on surrender reflects the discounted value of the reduced claim
amount that would be payable on death or at maturity. This value will
depend on the duration for which premiums have been paid and the policy
duration at the date of surrender. In some circumstances, in case of earlytermination of the policy, the surrender value payable may be less than the
total premium paid.
Who should buy Jeevan Anand policy?
Since Jeevan Anand is an endowment assurance plus whole life policy, this
plan is apt for people of of all ages and social groups who wish to protect
their families from a financial setback that may occur owing to their demise.
The amount assured if not paid by reason of his death earlier will payable at
the end of the endowment term where it can be invested in an annuity
provision for the rest of the policyholder’s life or in any other way he may
think most suitable at that time
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7. REASONS WHY LIC IS A MARKET
LEADER IN LIFE INSURANCE SECTOR
Positions:
1. Largest insurance Company in the world in Customer Base (23 crore
customers)
2. No.1 insurance company in the world in terms of agency (about 1.1
Million agents)
3. LIC is No.1 insurer in the world in Volume & Sold around 3.75
Cr.Policies in 2007-2008.
4. 2nd Biggest Real Estate Owner next to Indian Railways.
5. LIC is one of the Highest income tax playing Organization. For
Financial Year 2007-08, LIC has paid advance Tax Rs.2627. 14 Cr. &
Service Tax Rs.1292. 15 Cr.
6. Has Highest insurance Professionals ( Club Member agents )
7. Only 4 countries in the world have more population that LIC`s policy
holders.
Award - Recognition
8. Adjudged "The most trusted service Brand" in India, by "Economic
Times and AC NEILSEN ORG MARG" for the year 2007 for the 5th
consecutive year.
9. "Golden Peacock" award for Excellence in "corporate Governance"
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10.LIC adjudged as "Best life insurance Company of the year" at the
"2nd"NDTV Profit Business Leadership Awards-2007.
11.LIC adjudged the "Most Preferred Life insurance Company of the
year" at the "CNBC AWAAZ" consumer award 2007 for 3rd time in
succession.
12.Awarded Reader Digest's "Trusted Brand"2006,2007&2008 (Voted
by Consumers)
13. "Outlook Money NDTV Profit Award 2007"
14. "Web 18-Genius of the web Award" Conferred for the best website in
insurance Category
15. "SKOCH Challengers Award 2008" for "Jeevan Madhur".
16. "Loyalty Awards 2008"- insurance Sector.
17. Double crown for LIC in corporate Olympics 2008, Most Sporting
Corporate Championship Award Winner-2008
Honouring of the Commitment - Settlement of Claims
18.No.1 insurance Company in the world in terms of claims paid.
19.LIC Settles 2.21 claims per second, LIC settled 139 lakhs claims
during the year 2007-2008.
20.Prompt settlement of claims (97% maturity claim settled on or beforedue date)
21.One of the Lowest outstanding Claim Ratio in the world ( Maturity+S
B Claim-0.07%)
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Advanced Technology-For better Customer Service
22.Computerized and networked 2048 branch offices and 159 satellite
offices throughout the country.
23.Use of High Tech-WAN,LAN,IVRS & EDMS
24.LIC is second largest PC user in the country.
25.EDMS to make LIC a paperless office- Enabling Policy servicing &
payments through all branchs in the country.
26. Premium Payment Facility extended through networked 2048
branches, ECS, ATM's through internet, online portals, collecting
bank (Axis Bank), AP online, through SMS, through selected agents,
Now LIC Premium can also be paid through.
"Suvidha info Serve KIOSKS" all over India.
27.Policy Holder's Portal allow on line access to policy status and other
details.
28.Info centre set up in 12 cities for customers to interact easily. Dial-
1251 for details.
29.45 interactive Voice Response System (IVRS) centers all over the
country to provide information on policy servicing. Facility is
available 24 7, Facility can be availed on following phone Nos. 1251
OR 020-25514248.
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Social Strength
30.LIC - an institution builder promoting many financial and insurance
institutes like NSE, NCDEX, LIC Mutual Fund, Stock Holding
Corporation of India, National insurance Academy, insurance institute
of India etc.
31.LIC has foreign operations in Mauritius, Fiji and London and has joint
venture operating in Sri lanka, Nepal, Bahrain & Saudi Arabia. New
offices will be hortly oprned in Australia, USA&Canada.
32.LIC is known as "Pension Provider" of the country.33.1st Pension company in India is floated by LIC as "LIC Pension Fund
Ltd" on 21st Nov 2007.
34.First to create waves in micro insurance sector by insuring people
below the poverty line. In year 2007-2008, 8.54 lac policies sold
through "Jeevan Madhur"Plan.
35.Widest range of plans (about 48) for every need of the customer of 0
to 79 years of age.
36.Biggest Portfolio of Group insurance schemes available.
37."Jeevan Saral" one of the product of LIC got "Best innovation product
" award from I.R.D.A.
38.LIC has covered lick Risk of 1.13 crore citizens through "AAM
ADMI BIMA YOJANA" & " JANASHREE BIMA YOJANA".
39.Very Unique Salary saving Portfolio.
40.Highest Number of Corporate Clients in Group insurance Scheme.
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41.Expending Distribution Channel through Bancassurances, Corporate
Agencies, Broker ship & Chief Life insurarance Advisor (CLIA).
42. New East - Central Zonal Office opened at patina to caterto the needs
of states of Bihar, Jharkhand and Orissa. 5 new Divisional offices
were also opened in 2007-08. Pune D.O.was splited in 2 divisions, viz
Pune Division (i) and Pune Division (ii).
43. "Golden Jubilee Foundations" established for undertaking charitable
activities like education, health, relief of poverty etc.
People's Money for People's Welfare
44.LIC invested more than 11,630 crores, in infrastructure sector is
Rs.56,691
crores
45.In socially oriented sector like water, drainage & housing etc, LIC has
invested Rs.5,635 crores during 2007-08 & total investment in thissector is Rs.32,321 crores.
46.Total investment in Social Sector Rs.89,000 Crs.
47.Different incentive schemes for villages, Schools and Banks under
Bima Gram, Bima School and Bima Banks.
48.Total investment in Nation Building Activities is 5,76,000 Crs.
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Financial Strengths
49.LIC's investment income in 2007-08 was Rs.40,655 crores. Out of
Total income of Rs, 1,76,559.28 Crs.
50.Total Assets of the corporation as on 31.3.07 were Rs. 6,74,514.78
Crs.
51.Largest institutional investor in Share Market. On an average Rs.100
crore invested every day. During theyear 2007 LIC earned the profit
Rs.10,000 Crs. from the Sale of Equity.
52. Largest Financial institutional investor both Equity market & TermHouse.
KEY ACHIEVEMENTS
During the 2008/09 financial year, LIC sold more than 35.9 million policies
generating a first year premium income of Rs. 52,953.92 crore (US$ 11
billion) despite the global slowdown (Source: IRDA). During this period, the
corporation settled 577,000 death claims and 1.44 million maturity
claims.To its resounding credit, the Corporation was able to settle 97% of all
maturity claims on or before the due date signing out Rs. 29,105.85 crore
(US$ 6.10 billion) in settlement. Additionally, the corporation paid Rs.
5606.90 crore (US$ 1.20 billion) in death claims. Current figures show the
outstanding claims ratio under the death category at no more than 2.20% and
in the maturity segment at an exemplary low of 0.26%. LIC has a proudrecord of innovative products that find instant acceptance and success. For
example, the Corporation’s Jeevan Aastha scheme, a close-ended, single-
premium plan sold about 1.84 million policies collecting Rs.10,664 crore
(US$ 2.20 billion) in premiums in 45 days of launch in the year 2009. It is a
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remarkable achievement that not only has LIC continued to maintain the
trust of consumers during the economic downturn but has also been
felicitated with several awards. It was bestowed the Readers’ Digest Trusted
Brand Platinum Award, in both 2008 and 2009, the CNBC AwaazConsumer Award in 2009 and the Customer and Brand Loyalty Award in
2009. In the same year, LIC emerged as the Top Brand in the Insurance
Category in the survey conducted by ACNielsen for Brand Equity. In fact,
Brand Equity rated LIC as the Most Trusted Service Brand, five years in a
row. In the recent past, too, its brand leadership has been on evidence. In
2008, for instance amongst several awards, LIC was felicitated with the
NDTV-Profit Business Leadership award as also the Asia Brand Congress-
Brand Leadership Award. Even in the field of technology, LIC’s innovations
and practices were recognized when it won the NASSCOM Award for the
Best IT User
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