The Life Insurance Corporation of India (LIC) is the largest and oldest insurance company in India, playing a pivotal role in the country’s financial sector since its establishment in 1956.
The functions of LIC are multifaceted, encompassing various aspects of life insurance, investment, and social security. Here is an in-depth look at the primary functions of LIC:
Provision of Life Insurance Policies
The core function of LIC is to offer a wide range of life insurance products to cater to the diverse needs of the population. These include:
Term Insurance Plans: Providing high-risk coverage for a specific period.
Endowment Plans: Combining savings with insurance coverage, maturing after a fixed term or on the death of the policyholder.
Whole Life Policies: Offering coverage for the entire life of the policyholder.
Money Back Policies: Providing periodic returns during the policy term along with coverage.
Unit Linked Insurance Plans (ULIPs): Combining investment with insurance where the returns are market-linked.
Pension Plans: Ensuring a regular income for the insured post-retirement.
Investment of Policyholders’ Funds
LIC manages a substantial amount of funds accumulated from policy premiums. The corporation invests these funds in various sectors to ensure the security and profitability of the investments. The investment portfolio includes:
Government Securities: Ensuring safety and stable returns.
Corporate Bonds and Debentures: Offering higher returns while maintaining a balanced risk.
Equities and Mutual Funds: Participating in the stock market to maximize returns.
Infrastructure and Social Sector Investments: Supporting nation-building activities like housing, healthcare, and education projects.
Mobilization of Savings
LIC encourages the habit of saving among Indians by offering life insurance products that serve dual purposes: risk coverage and savings. These savings contribute to the economic development of the country as LIC reinvests them in various public and private projects.
4. Social Security Schemes
LIC plays a significant role in providing social security in India. It administers various schemes targeted at the economically weaker sections of society, such as:
Pradhan Mantri Vaya Vandana Yojana (PMVVY): A pension scheme for senior citizens.
Aam Aadmi Bima Yojana (AABY): Offering insurance coverage to rural landless households.
Jeevan Madhur: A micro-insurance product aimed at low-income groups.
Claim Settlement
A critical function of LIC is the timely and efficient settlement of claims. This includes:
Death Claims: Providing financial support to the beneficiaries of the deceased policyholder.
Maturity Claims: Paying out the sum assured plus bonuses on the maturity of the policy.
Rider Claims: Covering additional benefits like accidental death, disability, and critical illness.
Policy Servicing
LIC is responsible for the ongoing management of policies, ensuring customer satisfaction through:
Premium Collection: Facilitating various modes of premium payment.
Loan Against Policies: Offering loans to policyholders against their policies.
Policy Renewals: Reminding and assisting policyholders in renewing their lapsed policies.
Customer Support: Providing support through a widespread network of branches, agents, and online services.
Promoting Financial Literacy
LIC undertakes initiatives to educate the public about the importance of life insurance and financial planning. This is done through:
Awareness Campaigns: Conducting campaigns to highlight the benefits of life insurance.
Training Programs: Providing training to agents and policyholders on various aspects of insurance and investment.
Economic Development
By channeling funds into infrastructure and development projects, LIC significantly contributes to the economic growth of India. This includes investments in sectors like:
Real Estate: Developing housing projects.
Healthcare: Funding hospitals and healthcare facilities.
Education: Investing in educational institutions and scholarships.
Regulatory Compliance
LIC operates under the regulatory framework established by the Insurance Regulatory and Development Authority of India (IRDAI). It ensures compliance with:
Policy Issuance Norms: Following guidelines for issuing and managing insurance policies.
Financial Reporting: Maintaining transparency in financial statements and investment disclosures.
Customer Protection: Adhering to regulations designed to protect policyholders’ interests.
Corporate Social Responsibility (CSR)
LIC engages in various CSR activities to contribute to the welfare of society. These include:
Healthcare Initiatives: Funding medical camps and health awareness programs.
Educational Support: Providing scholarships and financial assistance for education.
Environmental Conservation: Supporting initiatives aimed at environmental sustainability.
Conclusion
The Life Insurance Corporation of India serves as a cornerstone of the Indian insurance sector, not only providing essential life insurance products but also playing a crucial role in the country’s economic and social development. Its functions extend beyond insurance to encompass investment management, social security, financial literacy, and corporate social responsibility, making LIC an indispensable institution in India’s financial landscape.