Life Insurance

It’s a liability (of money) the insurer has towards the insured or policy holder till the end of the legal contract (between the insurer and the insured) period. The insured pays a certain fixed amount (premium) of money in intervals (according to their initial agreement) to the insurer in order to curb the prospective risk of either loosing his life, terminal illness or any physically catastrophic occurrences. It’s a legal contract between the two afore mentioned parties abiding which the policy holder keeps paying the money till end of the contract period. After the termination of the contract period, the policy holder can willingly extend the tenure of the contract to gain a personal benefit during the times of mental or physical damage to his body.

In India, there wholly are 22 registered life insurance players as per Insurance Regulatory and Development Authority (IRDA), the governing body of insurance in India. Life Insurance in India was nationalized by incorporating Life Insurance Corporation of India (LIC) in 1956. The only life insurer in public sector is Life Insurance Corporation of India (LIC) and there are 21 private insurance players as of today.

Insurance Regulating Body, IRDA, was formed in 2000 and only then it started issuing licenses to private life insurers before that the only life insurance company existed was LIC of India. All life insurance companies or for that matter all insurance companies in India should strictly abide by the rules and regulations of IRDA. Hence there is no risk in going for private insurance players. Insurance industry in India is said to be one of the most rapidly growing one and may be this is the reason why we see many joint ventures and alliances between different domestic and foreign companies. A few that come under such joint venture or alliance are: IDBI Fortis which is a joint venture between India’s IDBI bank, Federal bank and Europe’s Fortis; Bajaj Allianz, HDFC Standard life insurance and many others.

Foreign Direct Investment (FDI) policy is a key issue to be discussed about in the Indian insurance sector. The government has recently approved the bill which suggested the hike, in ceiling of foreign investments in an Indian insurance company, from 26% to 49%. This decision of government would increase the foreign players in the Indian insurance market.