Largest Life Insurance Company In India Commerce Essay


The Life Insurance Corporation of India (LIC) is the largest life insurance company in India, and also the countrys largest investor. It is fully owned by the Government of India. It also funds close to 24.6% of the Indian Governments expenses. It has assets estimated of 8 Trillion Rupees (or about $170 Billion dollars). It was founded in 1956.

Headquartered in Mumbai, which is considered the financial 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.


"Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns, and by rendering resources for economic development."


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"A trans-nationally competitive financial conglomerate of significance to societies and Pride of India."

Brief History of Insurance:


The Oriental Life Insurance Company, the first corporate entity in India offering life insurance coverage, was established in Calcutta in 1818 by BipinBehariDasgupta 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)

The first 150 years were marked mostly by turbulent economic conditions. It witnessed, IndiaHYPERLINK ""'HYPERLINK ""s 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 worldwide economic crises triggered by the Great depression. The first half of the 20th century also saw a heightened struggle for IndiaHYPERLINK "'s_independence_movement"'HYPERLINK "'s_independence_movement"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.

Objectives of LIC of India

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 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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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.\


The largest segment of the life insurance market in India has been individual life insurance. The types of the policies sold were mainly whole life, endowment and "money back" policies. Money back policies return a fraction of the nominal value of the premium paid by the policyholder at the termination of the contract. Thus, whether we examine the new policies sold or the total number of policies in force, there has been a tenfold increase during that period. Therefore, if we examine the headcount of policies as an indication of penetration, there has been a substantial rise. A part of this rise is directly attributable to a deliberate policy of rural expansion of the Life Insurance Corporation.

LIC Endowment Assurance Plan (Regular Premium)

Endowment Assurance Policy

LIC endowment assurance policy is a traditional endowment plan introduced by the Life Insurance Corporation of India. This plan is suitable for all the people of all the age and social group wishing to defend their family members from the financial problems that might occur in their future life due to their death.

Nature of the Policy

The assured amount if not paid due to his earlier death, it is payable at the end of the LIC endowment assurance policy term. This amount paid at the end can be invested in the annuity provision that might help the rest of the life of the policy holder.


The important features of the LIC endowment assurance policy are listed below.

* Moderate premiums

* High bonus

* High liquidity

* Savings oriented.

The policy makes provisions not only for the folks of the existence assured in the event of early death and also provides a lump sum amount at a desired age.

This lump sum amount can also be invested again in order to provide an annuity for the remaining period of the policy holder's life or at any other suitable time. Premiums can be paid for a selected term of years or up to the death which occurs during the term period of the LIC endowment assurance policy.


Maturity Benefit- On maturity, it provides sum assured along with a bonuses and loyalty additions.

Death Benefit- On death of the policy holder during policy term the sum assured along with a bonuses is payable to the nominee.

Additional Benefit- Additional benefit through Accidental Death & Disability Benefit and Waiver of Premium.

Tax Benefit-Tax benefit under section 80C and 10(10D) of the Income Tax Act,1961.

The Plan Parameters:

Age at entry: 35 years

Policy Term: 20 Years

Mode of premium payment: Yearly

Sum Assured: Rs. 1,00,000 /-

Annual Premium: the rate of annual premium to be paid was very low when LIC was the sole insurer. But in the present scenario LIC has to offer higher premium rates so as to stay in competition.

Endowment Assurance Plans In LIC

1. The Endowment Assurance Policy

2. The Endowment Assurance Policy-Limited Payment

3. Jeevan Mitra(Double Cover Endowment Plan)

4. Jeevan Mitra(Triple Cover Endowment Plan)

5. Jeevan Anand

6. New Janaraksha Plan

7. Jeevan Amrit

Jeevan Mitra:

Jeevan Mitra is one of LIC's endowment assurance plans.  As the name goes, this plan is a friend for your whole life.  It supplies stronger financial security for you and your family against death during the policy term.

Since this a business related plan, the life insured will be given simple reversionary bonuses coinciding with the profits made in the market.  These bonuses become a part of the benefits enjoyed in this plan.  If you have paid your premiums fully for a certain number of years, you will be eligible to receive a final bonus.

LIC's Jeevan Mitra's benefits provide

The death benefit which states that if the life insured dies, the beneficiary will receive double of the sum assured according to table number eighty eight.  The nominee will also receive all the bonuses on the sum assured.

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At the time of maturity, the life insured will receive the sum assured as well as he will receive as a lump sum all the bonuses that have been heaped up during the policy term.This plan also has supplementary benefits for which you have to pay additional premiums.  You will receive additional protection and benefits by opting for these supplementary benefits.  It is very beneficial and highly recommended.You are permitted to surrender your policy if you wish to do so after you have completed three full policy yearss.  On doing so you are eligible to receive the guaranteed surrender value.

LIC's New Janaraksha Policy Plan Table No-91




Sum Assured









Premium Ceasing Age : 70 Premium Ceasing Term : 0

Plan Highlights


•LIC's Jana Raksha Provides full LIC life insurance cover for 3 years even when the premiums are not paid. (This benefit is available after at least 2 years premiums are paid).

• Non-medical General allowed up to Rs.25,000/- with declaration of age up to 40 without any extra premium.

• Non-medical Special is allowed up to a limit of Rs.50,000/-

• Accident benefit available without payment of any extra premium.

Special Features

The non-medical limit is exclusive to this policy. Double Accident benefit and Bonus is also granted. A special feature of the New Jana Raksha Policy is that it continues to provide full life insurance cover to the assured for three years, even when the premium payments are stopped due to certain reasons, provided that at least 2 years premiums have been received.


Survival Benefits:

Payment of Sum Assured plus accrued bonus.

Death Benefits:

Natural Death : Payment of Sum Assured plus accrued bonus

LIC Jeevan Amrit

LIC Jeevan Amrit is particularly for younger ones who want to have high cover at a lower cost. But, many people do not commit to pay premiums for a longer duration. The premium limit for this plan is limited to 3 or 4 years and the premiums that are paid during the first year differ from the subsequent years.


The various types of plan in LIC Jeevan Amrit are:

• Sum assured (S.A),

• Premium paying term,

• Policy term and

• Premium payment.


The benefits of LIC Jeevan Amrit includes death and maturity benefit. During the death benefit, the lump sum which consists of reversionary bonus and final bonus are given immediately after the death of life. In maturity benefit, the total amount of premiums plus final bonuses is given at the end of life term. To pay the premiums the grace period is allocated which will be one calendar month. There are many more benefits associated with this.


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 covered under front-end operations. Thus all our 100 divisional offices have achieved the distinction of 100% branch computerisation. 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.

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, Maturity payment due, Accumulated Bonus etc.) about their policies on the telephone. This information could also be faxed on demand to the customer.

Payment Of  Premium And Policy Status On Internet

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.


Customer service may be provided by a person (e.g., sales and service representative), or by automated means called self-service. Examples of self service are Internet sites. However, In the Internet era, a challenge has been to maintain and/or enhance the personal experience while making use of the efficiencies of online commerce. Writing in Fast Company, entrepreneur and customer systems innovator Micah Solomon has made the point that "Online customers are literally invisible to you (and you to them), so it's easy to shortchange them emotionally. But this lack of visual and tactile presence makes it even more crucial to create a sense of personal, human-to-human connection in the online arena."[2]

Customer service is normally an integral part of a company's customer value proposition. In their book Rules to Break and Laws to Follow, Don Peppers and Martha Rogers, Ph.D. write that "customers have memories. They will remember you, whether you remember them or not." Further, "customer trust can be destroyed at once by a major service problem, or it can be undermined one day at a time, with a thousand small demonstrations of incompetence

Technical support (also tech support) is a range of services providing assistance with technology products such as mobile phones, televisions, computers, or other electronic or mechanical goods. In general, technical support services attempt to help the user solve specific problems with a product-rather than providing training, customization, or other support services.


After telecom and banking, it's the turn of insurance companies to deploy customer relationship management (CRM) solutions. As competition intensifies, insurers are trying every trick in the book to retain existing customers, with a wide range of services driving the market for CRM applications in the process.

LIC Tie-up with banks for distribution of its product. (tie-Tie-up with banks for distribution of its product. (tie-up with Vijaya Bank, Corporation Bank).up with Vijaya Bank, Corporation Bank).

Development of core banking system.Development of core banking system.

Launching of customized focused product for Launching of customized focused product for different target group.different target group.

For customer retention "revival of lapsed policies For customer retention "revival of lapsed policies campaign has been launched.campaign has been launched.

On line payment of premiums.On line payment of premiums.

Promotional activities emphasizing on tax benefit Promotional activities emphasizing on tax benefit attached to different products.attached to different products.

Opening of branches in sub- urban areas and in Opening of branches in sub- urban areas and in small towns to penetrate rural market

While the insurance sector is seeking to maintain a balance between acquiring customers and developing existing ones, customer acquisition is vital, as no retention strategy will entirely stem customer defection.

Insurance companies are experiencing unacceptable levels of customer churn, thanks to which they are focusing on keeping the customers they already have in a bid to ensure a net growth in their customer base.

Today, the focus is on selling more products to existing customers to improve profitability. Customer-focused strategies require CRM (customer relationship management) to help acquire customers thorough various touch points and translate operational data into actionable insights for proactively serving customers.

LIC dominated the insurance market with the help of its sales force and channels and margins were reasonably high.

Insurers have added a plethora of products and services to their kitty. These range from insurance as an investment option to pension plans. They target the younger generation in the 20 to 30 years age group.


IT applications are the tools that allow an organization to implement the CRM strategy. The new IT developments can help an organization regularly adapt its strategies. The main CRM concept is quite simple. Throughout many years, the companies focused their efforts primarily on lowering the costs and improving their internal efficiency. Thus they concentrated more on the internal processes, often automatizing back-office functions elements like manufacturing, logistics and finance. In contrast, the management effort invested in client service, for example selling and marketing, was often relegated in a last place. As the market gets stronger and the providers become more efficient in offering products or services, it becomes more difficult to differentiate between rivals. What is the true difference between two types of toothpaste? In the meantime, as the quality of services and products improves, client expectations increase. As long as the client has the possibility of changing his provider, it becomes harder to keep him loyal. In conclusion, it is highly important for a modern company to own a system that will shorten the reaction time to customers' requests and complaints, thus offering support and quality for its services.

Information Technology Infrastructure is responsible for the planning, deployment, support, and operation of the company information technology infrastructure. This infrastructure is comprised of the company telephone system, card access system, fiber optic backbone, departmental and building networks, the company wireless data network, wide area network connections (including Internet and Internet2), and large scale computer, server, and information resources.

The Information Technology Infrastructure Library (ITIL) is a set of concepts and practices for Information Technology Services Management (ITSM), Information Technology (IT) development and IT operations.ITIL gives detailed descriptions of a number of important IT practices and provides comprehensive checklists, tasks and procedures that any IT organization can tailor to its needs.

The IT Service Management sets:

ICT Infrastructure Management

ICT Infrastructure Management processes recommend best practice for requirements analysis, planning, design, deployment and ongoing operations management and technical support of an ICT Infrastructure. ("ICT" is an acronym for "Information and Communication Technology".) The Infrastructure Management processes describe those processes within ITIL that directly relate to the ICT equipment and software that is involved in providing ICT services to customers.

ICT Design and Planning

ICT Deployment

ICT Operations

ICT Technical SupporT.


In today's scenario every organizations thinks about how they retain their existing consumer and attract new. To retain and attract the customer various type of industries started loyalty programs. Through these loyalty program organizations provides extra benefit to the customer. Like in retail stores they have provide consumer loyalty cards. So LIC should adopt this type of loyalty cards for policy holders, so they become loyal towards the organization.


Insurance companies using crm tools very effectively and they give technical support to their customer. The insurance vertical has crossed the threshold of IT and process maturity beyond which an investment in CRM investments starts yielding good returns. Insurance firms spend close to 12 percent of their IT budgets on CRM software and services. The cost includes operational CRM and spending on BI tools. Insurers can use event triggers to generate leads that can be acted upon quickly, usually within 24 hours," says Tikoo. LIC using various strategy to retain their customer. .  Once simply a label for a category of software tools, today, it generally denotes a company-wide business strategy embracing all client-facing departments and even beyond. ICT Technical Support is the specialist technical function for infrastructure within ICT. Primarily as a support to other processes, both in Infrastructure Management and Service Management, Technical Support provides a number of specialist functions: Research and Evaluation, Market Intelligence (particularly for Design and Planning and Capacity Management), Proof of Concept and Pilot engineering, specialist technical expertise (particularly to Operations and Problem Management), LIC dominated the insurance market with the help of its sales force and channels and margins were reasonably high. On line payment of premiums.On line payment of premiums. But LIC is not using any loyality program for their customer.

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