Comparative Study of Term Plan Offered By Life Insurance Companies in India
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Comparative Study of Term Plan Offered By Life Insurance Companies in India

Jyotsna Ratan Karare

Student, Department of Business Management,

Jhulelal Institute of Technology.

Prof. Geetika Bhutani

Assistant Professor, Department of Business Management,

Jhulelal Institute of Technology, Nagpur

Abstract

Life insurance is an agreement between policy holder and insurance company, which gives assurance to the rest of the family members to survive best. Dreams come fulfill in the absence of policy holder when policy holders have taken sufficient insurance of their human life value. There are number of plans with life insurance companies like endowment plan, term plan, pension plan, health plan, retirement plan, child education plan etc. Plan may be taken by an individual based on age criteria and their future planning.

 Key words: Life insurance, Policy, Policy holder.

Introduction

Life Insurance Corporation of India is a statutory Corporation established under Section 3 of LIC Act, 1956. The Life Insurance Corporation of India came into existence on 1st September, 1956, with the objective of spreading life insurance more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost .

From then to now, LIC has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business. LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its own past records. In its 62 years of existence, LIC has grown from strength to strength be its customer base, agency network, branch office network, new business premium and has a significant role in spreading life insurance widely across the country.

Life Insurance Corporation of India is a statutory Corporation established under Section 3 of LIC Act, 1956. The Life Insurance Corporation of India came into existence on 1st September, 1956, with the objective of spreading life insurance more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost .

From then to now, LIC has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business. LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its own past records. In its 62 years of existence, LIC has grown from strength to strength be its customer base, agency network, branch office network, new business premium and has a significant role in spreading life insurance widely across the country.

The story of insurance is probably as old as the story secure themselves against loss and disaster existed in primitive men also. They too sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is largely a development of the recent past, particularly after the industrial era – past few centuries – yet its beginnings date back almost 6000 years.

Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and Indian natives were not being insured by these companies. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism.

Life insurance is a financial tool that can help individuals accomplish a variety of financial goals. The most common use of life insurance is to provide for dependent family members in case of premature death. Life insurance can also be used to fund certain goals, such as a child or grandchild’s future college expenses. As an estate planning tool, life insurance can help pay federal and state death taxes as well as estate settlement costs. The ultimate gift can be given using life insurance by transferring wealth between generations and making charitable bequests.

In order to properly utilize this powerful tool to help an individual reach his/her financial goals, it is important to understand the methods for determining how much insurance is appropriate in a given situation, as well as the various types of policies and riders available. This paper is designed to offer insight into how to calculate an individual’s insurance need, discuss the different types of insurance, and identify how each type of insurance can best help an individual accomplish particular goals or objectives. This paper is not intended to provide advice, but rather general education. Investors should consult with a qualified tax, legal, and insurance professional before purchasing any insurance products.

Literature review

Life insurance (or life assurance, especially in the Commonwealth of Nations), is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person. [1] However, with the good, comes the bad and there are a lot of weaknesses and threats that contradict the strengths and opportunities of the industry, bringing the high down by a considerable notch. Stategoverned insurers dominate the market rampantly and drown the industry into a web of bureaucratic red-tapism that is hard to break out of. Also, in spite of being the largest in the life-insurance sector, the industry lags behind when it comes to the non-life insurance sector with a very minor percentage of the entire Indian population actually insured for their health and lives. The political environment of the country also makes adaptation to change in the industry difficult, leading to stagnation of the insurance sector in the nation. Also, the market for insurance hasn’t been growing as rapidly as expected due to the density of life being low in the country. The rural poor, constituting more than half of the nation’s population still don’t have the monetary means to invest in the luxury of insurance. [2] Due to bad fooding habit and busy life style, life of individual becomes stuck and more dangerous. Life insurance premium depends on how much risk involved in individuals. Advances in technology and regulation have played a major role in transforming the Life Insurance Industry over the past several years. Insurers have had to adapt with new rules and constantly shifting cost models. In this ever-changing environment, it’s difficult to pinpoint a “best practice” scenario and even harder to follow one. This is why customers still see over-complicated and badly designed processes when it comes to taking up life insurance.

Both technology and regulation play an integral role for almost all insurance company operations. These factors change how insurers market their products and rollout strategies. [3] Girish Kumar and Eldhose (2008) in their paper entitled “customer perception on life insurance services: a comparative study of public and private sectors”, published in insurance chronicle ICFAI monthly magazine in august 2008 explained the importance of quality services and its significance in raising customer satisfaction level. Public and private sectors help in understanding the customer perception, satisfaction and awareness on various life insurance services. (4)

Narayan. H. Jai in one research paper has made an emphasis on importance of customer in the business of insurance. This paper has explained growing market competition. Higher efficiencies in customer service require understanding the customer’s needs. Insurance sector focuses around the customer and fair treatment to customers is need of an hour to win their loyalty and trust. In a service based organizations, customer service is the most dominating feature that differentiate and gives good return to the insurers. Proper dealing with customer complaints, effective customer grievances handling mechanism and fast claim settlement procedure are some of the ways through which satisfaction level of customers can be increased. Hence to serve the customers promptly and effectively is the key success of a life insurance business. (5) Jayakar (2003) in his article explained that new products innovation; distribution and better use of technology are helping the new private life insurers to take market share away from Life Insurance Corporation of India, Public Sector Company. With advances in technology and various good schemes provided by private insurance companies, now public sector companies are facing competition with private sector.

Conclusion

LIC enjoys credibility over other private players in the industry People look for security over returns in market linked plans. Lifetime is the most popular product among the people who are aware about HDFC Life Insurance’s products.

  • HDFC LIFE INSURANCE has to counter the distribution network of LIC. The product profile of HDFC LIFE INSURANCE is not very comprehensive
  • It is assumed that settlement of claims and type of Insurance Company are independent.
  • It is assumed that the Policyholders are satisfied with Insurance Consultants and Office Support Staff with regard to services offered.

References

  1. S.Balchandran, IRDA, IC-33 LIFE INSURANCE
  2. Dr Philip Kothaler “Research Methodolgy”
  3. CA. NirmalGhorawat (2013-01-31). “Perspectives on Life Insurance Industry in India.
  4. www.HDFCLifeInsuranceresearchcenter.org
  5. www.HDFCLifeInsuranceprulife.com
  6. www.personalfn.com

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