As a life insurance company, LIC (Life Insurance Corporation of India) collects premiums from policyholders and manages those funds to fulfill its obligations. Here's what LIC typically does with the money it receives from policyholders:
- Paying
Claims: When a policyholder or their beneficiaries make a claim due to the
occurrence of an insured event, such as the policyholder's death or
maturity of the policy, LIC uses the collected premiums to pay out the
claim amount.
- Investment:
LIC invests a significant portion of the premium money it receives in
various financial instruments and assets. These investments aim to
generate returns and grow the funds available for meeting future
obligations, such as paying out claims and providing policy maturity
benefits.
- Operating
Expenses: LIC uses a portion of the premium money to cover its operating
expenses, including administrative costs, agent commissions, marketing,
and other overheads involved in running the insurance business.
- Reserves
and Solvency Margin: As a responsible insurance company, LIC is required
to maintain statutory reserves and a solvency margin as per regulatory
requirements. These reserves act as a financial cushion to ensure that LIC
can meet its financial commitments to policyholders even in adverse
scenarios.
- Profit
Distribution: LIC is a government-owned corporation, and its profits
contribute to the government's revenue. As a public entity, LIC pays
dividends to the government based on its performance.
- Surplus
Distribution: After fulfilling all financial obligations, meeting
expenses, and maintaining reserves, LIC may distribute surplus or bonuses
to eligible policyholders. Surplus distribution is common in participating
policies, where policyholders share in the profits of the company.
It's important to note that LIC, like any other insurance
company, follows a conservative investment approach, focusing on stable and
relatively low-risk assets to ensure the safety of policyholders' funds. The
investments are closely regulated by the Insurance Regulatory and Development
Authority of India (IRDAI) to protect policyholders' interests.
Overall, the primary goal of LIC is to fulfill its
commitments to policyholders by providing financial protection, generating
returns on investments, and maintaining financial stability.
[Note: This is not lic orginal website.This is the only thing to shear information about lic]
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