ESTABLISHMENT AND FUNCTIONS OF THE LIFE INSURANCE CORPORATION OF INDIA[1]:
ABSTRACT:
This short article is aimed at explaining the concept of Establishment & Functions of LIC (The Life Insurance Corporation, Act, 1956). This Act came into existence on 1st July 1956 and started functioning on 1st September 1956. It takes a huge amount of insurance policies which usually invests in various sectors like private, public, co-operative, joint sector etc. Presently, LIC has become the biggest institution which works for lending. The main operation of the act is to provide insurance to the people who are in need. It is made to circulate the awareness in the people i.e. the savings of the general public can be converted into nation-building activities which will help in their need. It is a type of body which has a forever existence and a power to take, hold or dispose of property. Now, LIC has also taken a place in the international insurance market and having its offices in Fiji, England etc.
LIFE INSURANCE CORPORATION OF INDIA:
The Life Insurance Act is established in the year 1956 which started working to provide insurance to the people. Prior to the commencement of L.I.C. Act, 1956, there were 243 insurance companies which used to deal with the concept of insurance. Because of the establishment of this Act the business of them was taken over by this Act. It is an institution of investment under which various people invest their funds in different policies and the savings are spread into different types of securities to protect the interest on a long period of time. This act also helps other institutions which are working for lending money by providing loans. This Act establishes a biggest insurance company or corporation of India.
OBJECTIVES OF LIC OF INDIA:
These are the objectives of LIC:
- It especially works for the rural areas as well so that the people can know about the various insurance policies.
- Convert the savings into activities of nation-building.
- To provide the full security and efficient service to them at reasonable rates.
- To safely handle the money of the holders.
- To act as trustees.
- To fulfill the different needs of the community.
- To indulge all the people who are working in the corporation to protect the interest as well as to provide efficient service.
- To promote the employees to have dedication towards their achievement.
ACTIVITIES OF LIC:
The LIC approves the bonds, debentures and share of various financial companies and to provide long-term loans to them. After providing the loan it creates a relationship between the other lending institutions i.e. UTI, IDBI etc. to make an effective coordination. In India, LIC is regarded as the most competent factor in the security market. It approves the share capital of the companies whether it is equity or preference. It is extended to a huge number of non-financial companies as well. Even the share market is weak the LIC is regarded as a perpetual invasion of funds.
INVESTMENT POLICY:
It is the duty of the LIC investment policy to provide a generous interest to the holders of the policy which should be persistent with safety also. The funds should be utilized properly. The policies which are given by the LIC should be trustworthy so that the value of the securities should not be curtailed and also helps in providing the highest return. In other words, we can say that while investing in any type of insurance funds the principles of safety, circulation etc. should be followed in a well-mannered way. Because of this, it creates a great significance but not only to the policyholders also to the whole economy.
ESTABLISHMENT AND INCORPORATION OF LIFE CORPORATION OF INDIA (SECTION 3):
Section 3 deals with the establishment and incorporation of Life Corporation of India.
- The Central Government appoints a corporation which is called as Life Corporation of India by giving notification in the official gazette.
- It shall be a corporation which acquires perpetual existence and a common seal. It has the power to acquire, dispose and hold the property and if necessary it may be sue and sued by its name[2].
ROLE AND FUNCTIONS OF LIC (SECTION 6):
Section 6 deals with the role and functions of Life Corporation of India. The corporations shall have the following powers:
- To carry on capital redemption business, annuity certain business or reinsurance business in so far as such reinsurance business appertains to life insurance business;
- Subject to the rules in this section, if any, made by the Central Government in this behalf, to invest the funds of the Corporation in such manner as the Corporation may think fit and to take all such steps as may be necessary or expedient for the protection or realization of any investment; including the taking over of and administering any property offered as security for the investment until a suitable opportunity arises for its disposal;
- To acquire, hold and dispose of any property for the purpose of its business
- To transfer the whole or any part of the life insurance business carried on outside India to any other person or persons, if in the interest of the Corporation it is expedient so to do;
- To advance or lend money upon the security of any movable property or otherwise;
- To borrow or raise any money in such manner and upon such security as the Corporation may think fit;
- To carry on either by itself or through any subsidiary any other business in any case where such other business was being carried on by a subsidiary of an insurer whose controlled business has been transferred to an vested in the Corporation under this Act;
- to carry on any other business which may seen to the Corporation to be capable of being conveniently carried on in connection with its business and calculated directly or indirectly to render profitable the business of the Corporation;
- To do all such things as may be incidental or conducive to the proper exercise of any of the powers of the Corporation[3].
CONCLUSION:
Through this article, I would like to conclude that Life Insurance Corporation of India basically deals with the savings of the general public so that it can be converted into a safe investment and which also gives a highest possible return. Under this act there are various policies which are made for the people to invest their savings in a well-mannered way. It is an institution which provides loan to people for their proper use. It also provides house loans. It also supports the various other institutions for the working of loan.
[1] AUTHORED BY: MS. KAJAL KUKREJA, LL.B, FINAL YEAR STUDENT AT NEW LAW COLLEGE, BHARATI VIDYAPEETH DEEMED UNIVERSITY & RESEARCH WRITER AT LAW AUDIENCE: EDITED BY: MS. PRIYA KUSHWAH, B.A.LL.B, STUDENT AT NATIONAL UNIVERSITY OF STUDY AND RESEARCH IN LAW, RANCHI & ASSISTANT EDITOR AT LAW AUDIENCE.
[2] Section 3, The Life Insurance Corporation Act, 1956, No. 31, Acts of Parliament, 1956 (India).
[3] Section 6, The Life Insurance Corporation Act, 1956, No. 31, Acts of Parliament, 1956 (India).
