Introduction

Life insurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a designated beneficiary a sum of money upon the occurrence of the insured individual's or individuals' death or other event, such as terminal illness or critical illness. In return, the policy owner agrees to pay a stipulated amount. Life Insurance is insurance for you and your family's peace of mind. Life insurance is a policy that people buy from a life insurance company, which can be the basis of protection and financial stability after one's death. Its function is to help beneficiaries financially after the owner of the policy dies. It can also be a form of savings in the long run if you purchase a plan, which offers the option of contributing regularly.

Benefits

provide security for your family

protect your home mortgage

take care of your estate planning needs

it reduces the tension and peaceful life to policy holders.

look at other retirement savings/income vehicles

acts as a social security measure

serves as a provision for old age

useful for meeting certian expenses like marriage and education of children

Features

1 !eneral contract "ince life insurance contract is a sort of contract it is governed by the Indian contract act. #ccording to section 1$ of Indian contract act, 1%&' a valid contract must have the following essentials (ffer and acceptance Legal consideration )ompetent to make contract *ree consent Legal ob+ect

' Insurable interest ,he insured must have an insurable interest in the life to be insured for a valid contract. Insurable interest arises out of pecuniary relationship that exists between the policy holder and the life insured Insurable interest in life insurance may be divided into ' categories.insurable interest in own/s life .insurable interest in other/s life

0 1tmost good faith

,he life insurance re2uires that the principle of utmost good faith should be preserved by both the parties. ,he principle of utmost good faith says that both the parties insured and the insurer must be of same mind at the time of contract because only then the risk may be correctly ascertained.

3 4arranties 4arranties are integral part of contract. ,hey form the bases of the contract between the proposer and the insurer and if any statement whether material or non.material, is untrue the contract shall be null and void and the premium paid by him may be forfeited by the insurer.

5 #ssignment and nomination Life insurance policy can be assigned freely for a legal consideration or love and affection. 6otice of the assignment must be given to the insurer who will acknowledge the assignment. 6omination can be cancelled before the maturity, but a notice should be served to this effect.

7 8eturn of premium

In the ordinary course premium once paid cannot be refunded. 9ut in the following cases the premium paid are refundable(n account of misrepresentation or breach of warranty, the insured in the absence of any express condition to the contrary can claim the return of the premium paid. 9ut where the insured is guilty of fraud in obtaining a policy, he will fail in his claim to the sum assured. :e cannot ask for a return of the premium because he will have to allege his own fraud to succeed in his claim.

Types Life insurance may be divided into two basic classes ; temporary and permanent or following subclasses ; term, universal, whole life and endowment life insurance. Term Insurance ,erm assurance provides life insurance coverage for a specified term of years in exchange for a specified premium. ,he policy does not accumulate cash value. ,erm is generally considered <pure< insurance, where the premium buys protection in the event of death and nothing else.

,here are three key factors to be considered in term insurance1. *ace amount =protection or death benefit , '. >remium to be paid =cost to the insured , and 0. Length of coverage =term .

Permanent Life Insurance >ermanent life insurance is life insurance that remains in force =in.line until the policy matures =pays out , unless the owner fails to pay the premium when due =the policy expires (8 policies lapse . ,he policy cannot be canceled by the insurer for any reason except fraud in the application, and that cancellation must occur within a period of time defined by law =usually two years

PROCEDURE OF TAKING OUT LIFE INSURANCE POLICY

1. "ubmission of proposal form

# person who desires to take life insurance policy has to submit a completed proposal form for the consideration of LI). Information must be given correctly clearly and in good faith in the proposal form. ,he proposal form acts as the base of insurance contract

'. "ubmission of proof of age

,he assured has to state his date of birth in proposal form for this birth certificate, school leaving certificate is ade2uate. It is better to submit this proof of age along with the proposal form so as to avoid complication at the latest age.

0. ?edical examination
*or life insurance the proposer has to get himself examined medically from the approved doctor of the insurance company.

3. "crutiny of proposal
,he proposal form and the medical report are examined by the officers of the LI). ,his is necessary before the final approval of proposal.

5. #cceptance of proposal
If the medical report is favorable, the proposal is generally accepted and the decision is communicated to concerned party.

7. >ayment of first premium and issue of policy

,he insured will pay the first premium after the receipt of communication from the LI) office. ,his policy contains insurance contract and all details of the policy holder including his name, age, address, occupation, the amount of the policy and the terms and conditions of insurance contract.

Settlement of claim
"ettlement of claim is necessary in the case of each and every life policy. ,he important steps in the procedure of making claims are as followsa "ubmission of claim form along with the proof of death 4hen the policy becomes mature for payment, the claim for payment must be made either by the assured himself or by his family members in case of death. @eath certificate is not re2uired in case of maturity of policy during life time of policy holder. b >roof of title ,he person claiming the amount has to furnish the proof of his title to the amount of the policy holder c >roof of age ,his proof of age is necessary if the age of the assured was not admitted earlier ie at the time of taking out an insurance policy. "uch certificate can be obtained from the municipal authorities easily. d ?aking payment ,he LI) examines the claims well as the documents and make the final payment to concerned party. If the policy

holder is alive, the claim is settled 2uickly as limited formalities are re2uired to be completed.

LICs pension plus

LI)/s pension plus is a unit linked deferred pension plan, which provides you a minimum guarantee on the gross premiums paid. ,he plan is without any life cover. ,here is a choice of investing the premiums in one of the two types of investment funds available. >remiums paid after deduction of allocation charge will purchase units of the fund type chosen. ,he unit fund is sub+ect to various charges and value of units may increase or decrease depending on the net asset value. =6#A 1. PAYMENT OF PREMIUMS ,he premiums have to be paid regularly at yearly, half early or 2uarterly or monthly intervals over the term of the policy. #lternatively a single premium can be paid. # grace period of 0$ days will be allowed for payment of yearly or half.yearly or 2uarterly premiums and 15 days for monthly premiums. '. BENEFITS i @eath benefits ,he policy holder/s fund value shall be payable either in a lump sum or as an annuity, as desired by the nominee. ,he amount of annuity will depend on the payable lump sum

and the then prevailing immediate annuity rates under the annuity option chosen. ii 9enefit on vesting (n the date of vesting, the higher of policy holder/s fund value and guaranteed maturity proceeds, will compulsorily be utiliBed to provide an annuity based on the then prevailing immediate annuity rates under the relevant annuity option. :owever you may opt to commute up to one.third of the benefit to be paid as a lump sum. *urther, you may choose to purchase annuity from LI) or other life insurance company. 0 ELIGIBILITY CONDITIONS AND OT ER RESTRICTIONS a ?inimum entry age.1%years b ?aximum entry age.&5 years c ?inimum vesting age.3$ years d ?aximum vesting age.%5 years e ?aximum deferment term.1$ years f "um assured.6IL g ?inimum premium-. 8egular premium =other than monthly -8s.15$$$p.a. 8egular premium =for monthly mode -8s.15$$ p.m. "ingle premium- 8s.0$$$$ h ?aximum premium 8egular premium- 8s.1, $$,$$$p.a "ingle premium- no limit #nnualiBed premiums shall be payable in multiples of 8s.1, $$$ for other than C)" monthly. *or monthly C)" the premium shall be in multiples of rs.'5$/.

3 IN!ESTMENT OF FUNDS ,he plan offers following two funds detailed below,he policyholder has the option to choose any (6C out of the above ' funds
FUND IN!T"IN S ORT IN!T" TYPE GO!T"SECURTIES TERM LISTED IN!T" IN E#UITY S ARES @ebt 6ot less than 7$D 6ot 6il fund more than 3$D ?ixed 6ot less than 35D 6ot 6ot less fund more than 15D than E 3$D 6ot less than 05D RISK IN!OL!ED

Low risk

"teady income.lower to medium risk

5 MET OD OF CALCULATION OF UNIT PRICE 1nits will be allotted based on the net asset value =6#A of the respective fund as on the date of allotment. ,he 6#A will be computed on daily basis and will be based on investment performance, fund management charge and

whether fund is expanding or contracting under each fund type and shall be calculated as underA$$r%$riati%n Price Is A$$&ie' ()*en Fun' Is E+$an'in,?arket value of investments held by the fund plus the expenses incurred in the purchase of the assets plus the value of any current assets plus any accrued income net of fund management charges less the value of any current liabilities less provisions, if any, divided by the number of units existing at the valuation date before any new units are allocated. E+$r%$riati%n Price Is A$$i&ie' ()*en Fun' Is C%ntractin,?arket value of investments held by the fund less the expenses incurred in the sale of assets plus the value of any current assets plus any accrued income net of fund management charges less the value of any current liabilities less provisions, if any divided by the number of units existing at the valuation date=before any units redeemed 7 C ARGES UNDER T E PLAN# >8C?I1? #LL()#,I(6 ):#8!C,his is the percentage of the premium deducted towards charges from the premium received. ,he balance

constitutes that part of the premium which is utiliBed to purchase investment units for the policy. ,he allocation charges are as follows-

*(8 "I6!LC >8C?I1? >(LI)IC"- 0.0D *(8 8C!1L#8 >8C?I1? >(LI)IC">8C?I1? #LL()#,I(6 ):#8!C *irst year 7.&5D 'nd to 5th year 3.5$D ,hereafter '.5$D 9 OT ER C ARGES,he following charges shall be deducted during the term of the policy1 >(LI)F #@?I6",8#,I(6 ):#8!C8s.0$/. per month during the first policy year and 8s.0$/.per month escalating at 0D ' *und ?anagement )harge ;It is a charge levied as a percentage of the value of units at following rates$.&$D p.a. of 1nit *und for G@ebtH *und $.%$D p.a. of 1nit *und for G?ixedH *und

0 "witching )harge ;,his is the charge levied on switching of monies from one fund to another. 4ithin a given policy year ' switches will be allowed free of charge. "ubse2uent switches in that year shall be sub+ect to a switching charge of 8s. 1$$ per switch. 3 9id/(ffer "pread ; 6il. 5 @iscontinuance )harge ; ,he discontinuance charge for regular premium policies is as under)*ere t*e $%&ic. is 'isc%ntinue' 'urin, t*e $%&ic. .ear 1 Disc%ntinuance c*ar,es f%r t*e $%&icies *a/in, annua&i0e' $remium u$ t% Rs" 12344456 Lower of 1$D I =#> or *A sub+ect to a maximum of 8s. '5$$/. Disc%ntinuance c*ar,es f%r t*e $%&icies *a/in, annua&i0e' $remium a7%/e Rs" 12344456 Lower of 7D I =#> or *A sub+ect to maximum of 8s. 7$$$/.

'

Lower of &D I =#> or Lower of 3D I =#> or *A sub+ect to a *A sub+ect to maximum of 8s. 1&5$/. maximum of 8s. 5$$$/. Lower of 5D I =#> or Lower of 0D I =#> or *A sub+ect to a *A sub+ect to maximum of 8s. 1'5$/. maximum of 8s. 3$$$/.

3 5 and onwards

Lower of 0D I =#> or Lower of 'D I =#> or *A sub+ect to a *A sub+ect to maximum of 8s. &5$/. maximum of 8s. '$$$/. 6IL 6IL

#> ; #nnualised >remium *A ; >olicyholder/s *und Aalue excluding the fund value in respect of ,op.up premiums paid, if any, on the date of discontinuance. C- Ri,*t t% re/ise c*ar,es- ,he )orporation reserves the right to revise all or any of the above charges except the premium allocation charge, with the prior approval of I8@#. #lthough the charges are reviewable, they will be sub+ect to the following maximum limitIn case the policyholder does not agree with the revision of charges the policyholder shall have the option to withdraw the >olicyholder/s fund value which shall be utiliBed to provide an annuity. 8" Disc%ntinuance %f Premiums9 If you fail to pay premiums under the policy within the days of grace, a notice shall be sent to you within a period of fifteen days from the date of expiry of grace period to exercise one of the following options within a period of thirty days of receipt of such notice1. 8evival of the policy, or '. )omplete withdrawal from the policy

@uring the notice period of 0$ days, the policy shall be treated as in force till the date of discontinuance of the policy =i.e. till the date on which the intimation is received from the policyholder for complete withdrawal of the policy or till the expiry of the notice period and the charges shall be taken, as usual. If you do not exercise any option within the stipulated period of 0$ days, you shall be deemed to have exercised the option of complete withdrawal from the policy. T*ere s*a&& 7e n% c*an,e in $a.ments %f 7enefits 'urin, t*e n%tice $eri%'" T*e 7enefits $a.a7&e :*en .%u e+ercise t*e %$ti%n f%r c%m$&ete :it*'ra:a& %r .%u '% n%t e+ercise an. %$ti%n 'urin, t*e n%tice $eri%' s*a&& 7e as un'er9 If the policy is discontinued within 5 years from the date of commencement of the policy- If you exercise the option for complete withdrawal from the policy, or you do not exercise the option within the period of 0$ days of receipt of notice, then the policy shall be compulsorily terminated. If the policy is discontinued after 5 years from the date of commencement of the policy- If you exercise the option for complete withdrawal from the policy, or you do not exercise the option within the period of 0$ days of receipt of notice, then the policy shall be compulsorily terminated and >olicyholder/s *und value will compulsorily be utiliBed to provide an annuity.

%" Met*%' %f ca&cu&ati%n %f m%netar. am%unt an' Pr%cee's %f t*e Disc%ntinue' P%&ic.T*e c%n/ersi%n t% m%netar. am%unt s*a&& 7e as un'er9 ,he 6#A on the date of application for surrender or as on the date of discontinuance of the policy, as the case may be, multiplied by the number of units in the >olicyholder/s *und Aalue as on that date will be the monetary amount. T*e Pr%cee's %f t*e Disc%ntinue' P%&ic. s*a&& 7e ca&cu&ate' as un'er9 ,he monetary amount calculated as above shall be transferred to the @iscontinued >olicy *und. In case of death of the life assured, the interest shall accrue from the date of discontinuance of the policy to the date of booking of liability. ,he Pr%cee's %f t*e 'isc%ntinue' $%&ic. shall be the monetary amount plus the interest accrued on the @iscontinued >olicy *und. ;" Reinstatement9 # policy once surrendered cannot be reinstated. <4" L%an96o loan will be available under this plan. <<" C%%&in, %ff $eri%'9

If you are not satisfied with the G,erms and )onditionsH of the policy, you may return the policy to us within 15 days. <1" Assi,nment9 #ssignment shall not be allowed under this plan. 10. Ot*er Featuresi- Guarantee' Maturit. Pr%cee's9 If all due premiums are paid till maturity, a guaranteed interest shall accrue on the gross premium, including ,op.up premiums if any, at the end of each financial year. ,he guaranteed interest rate shall be 5$ basis points above the average of the reverse repo rate prevailing as on the last working day of June, "eptember, @ecember and ?arch of the preceding year. ii- Guarantee %f interest rate %n Disc%ntinue' P%&ic. Fun': # guaranteed minimum interest rate of 0.5D p.a. shall be credited to the @iscontinued >olicy *und constituted by the fund value of all discontinued policies. iii- T%$-u$ (A''iti%na& Premium): Fou can pay additional premium in multiples of 8s.1, $$$ without any limit at anytime during the term of policy. ,op.up shall not be allowed during the last 5 years of the contract. i/- S:itc*in,: Fou can switch between the two fund types during the policy term sub+ect to switching charges, if any. /- Partia& )it*'ra:a&: 6o partial withdrawal of units will be allowed under this plan.

/i- Re/i/a&- If due premium is not paid within the days of grace,
a notice shall be sent to you within a period of fifteen days from the date of expiry of grace period to exercise the option for revival within a period of thirty days of receipt of such notice.

13. Ris=s 7%rne 7. t*e P%&ic.*%&'er9 1. LI)/s >ension >lus is a 1nit Linked Life Insurance product which is different from the traditional insurance products and is sub+ect to the risk factors. '. ,he premium paid in 1nit Linked Life Insurance policies are sub+ect to investment risks associated with capital markets and the 6#As of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. 0. Life Insurance )orporation of India is only the name of the Insurance )ompany and LI)/s >ension >lus is only the name of the unit linked life insurance contract and does not in any way indicate the 2uality of the contract, its future prospects or returns. 3. >lease know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document of the insurer. 5. ,he various funds offered under this contract are the names of the funds and do not in any way indicate the 2uality of these plans, their future prospects and returns. 7. #ll benefits under the policy are also sub+ect to the ,ax Laws and other financial enactments as they exist from time to time.

N.G.ACHARYA & D.K.MARATHE COLLEGE

Subject: Innovation In Banking And Insurance Topic: Class: Life Insurance S.Y.Banking & Insurance

Sub itted To! "rof. "rac#i $aut

%roup
&a e $oll no

e bers

'ridula (( Babeeta $a)at (* As#)ini Sable (+ Ab#is#ek Sakpal (,

-iran Sa)ant (.