LIC ADO 2023 FULL INTERVIEW NOTES | ABOUT LIC | INSURANCE NOTES

 

LIC [Life Insurance Corporation of India]

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Life Insurance Corporation of India (LIC of India) is a leading life insurance company headquartered in Mumbai. LIC is the largest life insurance company in India with an asset value of over 2,529,390 crores. LIC of India was created on 1st Sept 1956 when the government of India passed the Life Insurance of India Act, nationalising the private insurance industry in India.

The company was established with the merger of over 245 insurance companies and provident societies. LIC offers an array of life insurance plans including a range of ULIPs, (Unit Linked Insurance plan provides a combined benefit of investment and life cover.) pension plans, child plans, term insurance and others. The company is well established in urban as well as rural areas of India and is well abiding by its motto- “Yogakshemam Vahamyaham”, which means “your welfare is our responsibility”. With the advent of technology, the LIC of India has established its brand’s presence online by selling an array of savings and investment products online.

As of today, LIC of India functions with a network of 1,537,064 Individual Agents, 342 Corporate Agents, 109 Referral Agents, 114 Brokers and 42 Banks. LIC has 2,048 fully computerized branch offices, 113 divisional offices, 1,381 satellite offices and over 8 zonal offices with the head office located in Mumbai. LIC was rated as the No. 6  Most Trusted Service Brand of India by the Economic Times Brand Equity Survey 2012. From the year 2006, LIC of India has been regularly winning the ‘Readers Digest Award’. Also, as per the Brand Trust Report, for 4 continuous years, LIC of India was reported to be India’s most trusted brand in the BFSI category.

The mission of the Life Insurance Corporation of India is to enhance the quality of living of the people by providing financial products and services that provide competitive returns.

 

 

 

History of Insurance

·        1818 – The Oriental Life Insurance Company establishment in Calcutta. It was the first life insurance company on Indian soil.

·        1829 - The Madras Equitable had begun transacting life insurance business in the Madras Presidency.

·        1850 - The first general insurance company, Triton Insurance Company Ltd established in Calcutta.

·        1870 - The enactment of the British Insurance Act and the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency.

·        1907 - The Indian Mercantile Insurance Ltd was set up. It was the first company to transact all classes of general insurance business.

·        1912 - The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business.

·        1928 - The Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies.

·        1938 – The Insurance Act amended with a view to protecting the interest of the Insurance public with comprehensive provisions for effective control over the activities of insurers.

·        1956 - Nationalising of the Life Insurance sector.

·        1957 - General Insurance Council framed 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 was set up.

 

Insurance Reforms

⮚ In 1993, the Government set up a committee under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations for reforms in the insurance sector.

⮚ In 1994, the committee submitted its report. The suggestions given by the committee were:

·        ✔ The private sector be permitted to enter the insurance industry.

·        ✔ Foreign companies be allowed to enter by floating Indian companies, preferably a joint venture with Indian partners.

 

⮚ Following the recommendations of the committee, in 1999, the Insurance Regulatory and Development Authority was constituted as an autonomous body to regulate and develop the insurance industry.

The IRDAI is an independent and autonomous statutory body. It was incorporated as a statutory body in April 2000.

● It was constituted under the Insurance Regulatory and Development Authority Act, 1999. It regulates the insurance industry of the country.

● Foreign companies are allowed 49% of investment.

● The Authority has the power to frame regulations under Section 114A of the Insurance Act, 1938 and has framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholders’ interests from 2000.

Functions of IRDAI

 Section 14 of IRDAI Act, 1999 describes the duties, powers and functions of IRDAI, some of them are-

✔ To issue the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration.

✔ Protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policyholders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance.

✔ Calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organizations connected with the insurance business.

✔ Control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938).

✔ Specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents.

✔ Regulating investment of funds by insurance companies.

✔ Regulating maintenance of margin of solvency.

✔ Supervising the functioning of the Tariff Advisory Committee.

✔ Adjudication of disputes between insurers and intermediaries or insurance intermediaries.

✔ Specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations referred to in clause (f)

 ✔ Specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector.

 

Life Insurance Company (Public Sector)

 Life Insurance Corporation of India is the only public sector life insurance company in India. Life Insurance Corporation of India

⮚ The  Parliament  of  India  passed  the  Life  Insurance  Corporation  Act  on  the   19th of June 1956,  and the  Life  Insurance  Corporation  of  India  was  created on 1st September 1956, with a capital contribution of ₹ 5 Crore from the Government of India.

⮚ The objective of LIC is to spread life insurance much more widely and to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost.

⮚ LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the year 1956

 

8 ZONES:

1.    North Zone

2.    South Zone

3.    East Zone

4.    West Zone

5.    Central Zone

6.    North Central Zone

7.    South Central Zone

8.    East Central Zone

 

# SHOULD REMMEMBER YOUR ZONE DIVISIONS

SAY FOR EXAMPLE:

 

·       East Central Zone

          DIVISIONS

1.      Begusarai

2.      Berhamapur

3.      Bhagalpur

4.      Bhubaneshwar

5.      Cuttack

6.      Hazaribagh

7.      Jamshedpur

8.      Muzaffarpur

9.      Patna – I

10.    Patna – II

11.    Sambalpur

 

PRODUCTS

1.   Insurance Plan

2.   Pension Plan

3.   Unit Linked Plans

4.   Micro Insurance Plans

5.   Withdrawn Plans

6.   Health Plans

1. Insurance Plan

 

 

• Endowment Plans

 

How does an Endowment Plan Work?

Endowment plans provide you with life cover and also help you grow your money. The life cover secures your loved ones financially in case of an unfortunate event while the returns from the plan help you achieve your financial goals.

 

Sr. No.		Product Name	Plan No.	UIN No.
1		LIC's Bima Jyoti	860	512N339V02
2		LIC's Bima Ratna	864	512N345V01
3		LIC's Dhan Sanchay	865	512N346V01
4		LIC's Jeevan Azad	868	512N348V01
5		LIC's New Endowment Plan	914	512N277V02
6		LIC's New Jeevan Anand	915	512N279V02
7		LIC's Single Premium Endowment Plan	917	512N283V02
8		LIC's Jeevan Lakshya	933	512N297V02
9		LIC's Jeevan Labh	936	512N304V02
10		LIC's Aadhaar Stambh	943	512N310V03
11		LIC's Aadhaar Shila	944	512N309V03

 

 

• Whole Life Plans

 

Whole Life plan is also called as straight life, ordinary life. It remains throughout the insured whole lifetime provided the premiums are paid. A certain aforementioned amount is paid to the nominee in the event the insured dies. The policyholder at any time withdraws the policy or borrow against it. The maturity age for this policy is 100 years. If the insured lives past the maturity age, the policy will become matured endowment. The death benefit under this plan is tax free

 

Benefits of Whole Life Policy:

1.     Cover For Life: The insured will get cover for his entire life unlike other life insurance plans that is fixed for a certain period. The other life insurance plans will expire and it will be expensive to take another one when you really want one. In the event you die, a lump sum tax free amount is paid to the nominee. If you outlive the term, you will not receive any return. For example, if a 25-year-old takes a whole life plan at the age of 25 years, he will receive a lump sum payment at the age of 45, the age at which his 20-year premium payment term will expire. He can use this money for his retirement and also his cover will continue till he turns 100 or till the date he dies.

 

2.     Assurance Of Coverage, Periodic Payments And Tax Benefits: The survival benefits will be built over time which keeps increasing over time. You will get lifetime coverage along with guaranteed level premiums for a limited premium payment term. The premium is constant throughout the premium payment term. Sum assured is guaranteed and the bonuses are declared based on the performance. Some companies offer survival benefit from the end of the premium payment term till the policy matures. Tax benefits are also available to the insured under Section 80C and Section 10(10D) of the Income Tax Act, 1961.

 

3.     Serves As A Source Of Cash: Financial experts believe that a person must keep six to eight month's living expenses in the form of liquid asset. It is however difficult to reserve such a huge cash while meeting retirement and long-term saving goals. But with a whole life plan, you can get the cash at the end of the premium payment term.

 

4.     Loan Option Available On Your Whole Life Plan Policy: The surrender value of the policy increases over time and you can borrow against the policy's surrender value at any time. This is a better alternative against borrowing against home or retirement accounts.

 

5.     Your Dependents Will Benefit from This Plan: The return will prove to be an additional financial source in the family. This plan is ideal for estate planning individuals who want to pass on their estate to their legal heir as it helps create wealth.

 

Sr. No.	Product Name	Plan No.	UIN No.
1	LICs Jeevan Umang	945	512N312V02

 

 

• Money Back Plans

 

What is the benefit of money back plan?

As the name suggests, these plans offer you money at regular intervals and give out lump sum money in case of an unfortunate event. Such policies also provide you with guaranteed¹ survival benefits through the term of the policy and on maturity

 

Sr. No.	Product Name	Plan No.	UIN No.
1	LIC's Dhan Rekha	863	512N343V01
2	LIC's New Bima Bachat	916	512N284V02
3	LIC's NEW MONEY BACK PLAN - 20 YEARS	920	512N280V02
4	LIC’s NEW MONEY BACK PLAN - 25 YEARS	921	512N278V02
5	LICs Jeevan Umang	945	512N312V02
6	LIC's NEW CHILDREN'S MONEY BACK PLAN	932	512N296V02
7	LIC's Jeevan Tarun	934	512N299V02
8	LIC's Jeevan Shiromani	947	512N315V02
9	LIC's Bima Shree	948	512N316V02

 

• Term Assurance Plans

 

Term insurance provides coverage for a specified number of years, known as the policy term. In case of an unfortunate event during this period, your nominee will receive the sum assured in your policy.

 

Sr. No.	Product Name	Plan No.	UIN No.
1	LIC's New TECH TERM	954	512N351V01
2	LIC's New Jeevan Amar	955	512N350N01
3	LIC's Saral Jeevan Bima	859	512N341V01

 

• RIDER

 

Sr. No.	Product Name	Plan No.	UIN No.
1	LIC's Linked Accidental Death Benefit Rider	-	512A211V02
2	LIC's Accidental Death and Disability Benefit Rider	-	512B209V02
3	LIC's Accident Benefit Rider	-	512B203V03
4	LIC's Premium Waiver Benefit Rider	-	512B204V03
5	LIC’s New Critical Illness Benefit Rider	-	512A212V02
6	LIC's NEW TERM ASSURANCE RIDER	-	512B210V01
7	LIC's Premium Waiver Benefit Rider (With Auto Cover)	-	512B205V01

 

2. Pension Plans

 

Sr. No.	Product Name	Plan No.	UIN No.
2	LIC's Jeevan Akshay - VII	857	512N337V04
3	LIC's New Jeevan Shanti	858	512N338V04
4	LIC's Saral Pension	862	512N342V04

 

3. Unit Linked Plans

Unit plans are investment plans for those who realise the worth of hard-earned money. These plans help you see your savings yield rich benefits and help you save tax even if you don't have consistent income.

 

ULIP (Unit Linked Insurance What Plan)?

Full form of ULIP is Unit linked Insurance Plan. ULIP's are a combination of insurance + investment. A small portion of the money invested goes to securing your life whereas the rest of the money is invested in the market. Policyholders can pay premiums monthly/annually. 

Advantages Of ULIP?

1.     Market Linked Returns

2.     Life Protection Investment and Savings

3.     Flexibility

1.     Market linked returns:

Unit linked insurance plans give you an opportunity to earn market-linked returns as part of the premiums are invested in market linked funds which invest in different market instruments including debt instruments and equity in varying proportions.

2.     Life protection, Investment and Savings

Unit linked insurance plans offer the twin benefits of life insurance and savings at market-linked returns. Thus, you have the opportunity to invest your money to earn higher returns, while taking care of your protection needs. Investing in unit linked Insurance plans helps to inculcate a regular habit of saving and investing, which is important for building wealth over the long term.

3.     Flexibility

HDFC Life offers different ULIPs (Unit Linked Insurance Plans) which are just right for you and can help you meet your specific financial objectives.

·         The option to switch between investment funds to match your changing needs.

·         The facility to partially withdraw from your fund, subject to charges and conditions.

·         Single premium additions to enable the policy holder to invest additional sums of money (over and above the regular premium) as and when desired, subject to conditions.

 

 

 

Sr. No.	Product Name	Plan No.	UIN No.
1	LIC's NIVESH PLUS	849	512L317V01
2	LIC's SIIP	852	512L334V01
3	LIC's New Pension Plus	867	512L347V01
4	LIC's NEW ENDOWMENT PLUS	935	512L301V02

 

4. Micro Insurance Plans

LIC’s Micro Insurance Plans are not plans but opportunities that knock on your door once in a lifetime. These plans are a perfect blend of insurance, investment and a lifetime of happiness.

 

Q1) What is Microinsurance?

 

Microinsurance is a category of insurance policies tailored for the economically vulnerable to insure themselves, their household and other assets at a lower premium.

·         Microinsurance policies, are distributed via Non-governmental Organizations (NGOs), Self-help Groups, and Micro-finance Institutions.

·         The premium for such plans is nominal to widen the reach and ensure engagement at a large scale.

·         Insurers have the freedom to offer composite covers or a packaged product belonging to either the General Insurance or the Life Insurance category.

·         Insurers also offer some Microinsurance Policies in case the sum assured of a policy is within the range specified by the authorities

 

 

  

Sr. No.	Product Name	Plan No.	UIN No.
1	LIC's Bhagya Lakshmi	939	512N292V04
2	LICs New Jeevan Mangal	940	512N287V04
3	LIC’s Micro Bachat Plan	951	512N329V02

 

5. Withdrawn Plan

 

6. Health Plan

 

Sr. No.	Product Name	Plan No.	UIN No.
1	LIC's Cancer Cover	905	512N314V03
2	LIC's Arogya Rakshak	906	512N318V01

 

Q. 1 Why do you want to Join the Insurance sector?

 

Answer Approach: Cover areas like:

1. High career growth potential

2. Love and Passion for Banking sector

3. Job security

4. Reputation and respect it brings for Banking official in society

5. Challenging work environment

6. Interaction with new people

 

Q. 2 How is your degree relevant to the Insurance Industry?

 

Answer Approach: You can answer this question according to your professional degree, suppose you are a computer science graduate, you can say that your education will be useful in the view of digitalisation that is taking place in the insurance sector.

 

Principles of Insurance

The principles of insurance are mentioned below and explained one by one.

1. Law of large numbers

2. Principle of Insurable interest

3. Principle of Utmost good faith

4. Principle of Indemnity

5. Principle of Subrogation (Adhikar Samarpan)

6. Principle of Contribution

7. Principle of Proximate cause (Nikatam karan)

 

 

 

Principle of Insurable interest

Insurable interest is the term used to describe the relationship between the insured and the subject matter of insurance. A person is said to have an insurable interest in something (say A) that he would have benefit from its existence (of A) and loss from its destruction (of A).

Without interest taking insurance is a gamble and fraudulent activity.

What Is Subrogation?

Subrogation is a term describing a right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured. This is done in order to recover the amount of the claim paid by the insurance carrier to the insured for the loss.

• Generally, in most subrogation cases, an individual’s insurance company pays its client’s claim for losses directly, then seeks reimbursement from the other party's insurance company.

The Principle of Proximate Cause

When a property is not insured against all causes, the nearest cause is to be found out. If the proximate cause is one in which the property is insured against, then the insurer must pay compensation.

 

LIC New Endowment Plan Example

To Illustrate the benefits of New Endowment plan,

Lets take an example of a person who is purchasing this Plan with following details.

Sum Assured: Rs. 5,00,000

Policy Term: 21 Years

Policy Purchase Year: 2015

Age: 26 Years

Yearly Premium: Rs. 23717 

Calculate
To Calculate benefits with details other than above, go to Maturity Calculator.