Life insurance may be defined as a contract in which the insurer, inconsideration of a certain premium, either in a lump sum or by other periodical payments, agrees to pay the assured, or to the person for whose benefit the policy is taken, the assured sum of money, on the happening of a specified event contingent on the human life. Life insurance is a contract under which the insurer (Insurance Company) inconsideration of a premium paid undertakes to pay a fixed sum of money on the death of the insured or on the expiry of a specified period of time Whichever is earlier.
In case of life insurance, the payment for life insurance policy is certain. The Event insured against is sure to happen only the time of its happening is not known. So life insurance is known as ‘Life Assurance’. The subject matter of insurance is life of human being. Life insurance provides risk coverage to the life of a person. On death of the person insurance offers protection against loss of income and compensate the titleholders of the policy.
4 ROLE OF LIFE INSURANCE
Life insurance as an investment: Insurance products yield more than any other investment instruments and it also provides added incentives or bonus offered by insurance companies. Life insurance as risk cover: Insurance is all about risk cover and protection of life. Insurance provides a unique sense of security that no other forms of invest can provide. Life insurance as tax planning: Insurance serves as an excellent tax saving mechanism too.
IMPORTANCE OF LIFE INSURANCE: Protection against untimely death:
Life insurance provides protection to the dependents of the life insured and the family of the assured in case of his untimely death. The dependents or family members get a fixed sum of money in case of death of the assured. Saving for old age: After retirement the earning capacity of a person reduces. Life insurance enables a person to enjoy peace of mind and a sense of security in his/her 5 Promotion of savings: Life insurance encourages people to save money compulsorily.
When life policy is taken, the assured is to pay premiums regularly to keep the policy in force and he cannot get back the premiums, only surrender value can be returned to him. In case of surrender of policy, the policyholder gets the surrendered value only after the expiry of duration of the policy. Initiates investments: Life Insurance Corporation encourages and mobilizes the public savings and canalizes the same in various investments for the economic development of the country. Life insurance is an important tool for the mobilization and investment of small savings.
Credit worthiness: Life insurance policy can be used as a security to raise loans. It improves the credit worthiness of business. Social Security: Life insurance is important for the society as a whole also. Life insurance enables a person to provide for education and marriage of children and for construction of house. It helps a person to make financial base for future. Tax Benefit: Under the Income Tax Act, premium paid is allowed as a deduction from the total income under section 80C.
6 ABOUT THE COMPANY
SBI Life Insurance Company Ltd SBI Life Insurance is a joint venture between State Bank of India and BNP Paribas Assurance SBI owns 74% of the total capital and BNP Paribas Assurance the remaining 26%. SBI Life Insurance has an authorized capital of Rs. 2,000 crore and a paid up capital of Rs. 1,000 crore. State Bank of India enjoys the largest banking franchise in India. Along with its 6Associate Banks, State Bank Group has the unrivalled strength of over 16,000 branches across the country, arguably the largest in the world.
BNP Paribas is the 1st largest French company and ranks 5th in the banking industry worldwide, 1st bank in Euro Zone as per Global 2000 Forbes’ 2008. it is 6th most valuable international banking brand as per Brand Finance2008. BNP Paribas Assurance is the insurance arm of BNP Paribas – Euro Zone’s leading Bank. BNP Paribas, part of the worlds top 10 groups of banks by market value and part of Europe top 3 banking companies, is one of the oldest foreign banks with a presence in India dating back to 1860.
BNP Paribas Assurance is the fourth largest life insurance company in France, and a worldwide leader in Creditor insurance products offering protection to over 50 million clients. BNP Paribas Assurance operates in 41 countries mainly through the Bancassurance and partnership model. 13 Multi-distribution Model SBI Life has a unique multi-distribution model encompassing vibrant Bancassurance, Retail Agency, Institutional Alliances and Corporate Solutions distribution channels.
SBI Life extensively leverages the State Bank Group relationship as a platform for cross-selling insurance products along with its numerous banking product packages such as housing loans and personal loans. SBI’s access to over 100 million accounts across the country provides a vibrant base for insurance penetration across every region and economic strata in the country, thus ensuring true financial inclusion. Agency Channel, comprising of the most productive force of over 68,000 Insurance Advisors, offers door-to-door insurance solutions to customers.