Formation of Life Insurance Corporation (LIC)

In 1956, the Life Insurance Corporation (LIC) of India was formed by merging more than 245 life insurance companies. The correct answer is option B, which states that 245 life insurance companies collaborated to form LIC.

Here is a detailed explanation of the formation of LIC:

1. Background
Before the formation of LIC, the life insurance industry in India consisted of several independent and fragmented companies. These companies operated individually and had their own policies, practices, and financial structures. This led to inefficiencies and lack of uniformity in the industry.

2. Government Intervention
Recognizing the need for consolidation and regulation in the life insurance sector, the Indian government decided to nationalize the life insurance industry. The Life Insurance Corporation Act was passed in 1956, which provided the legal framework for the establishment of LIC.

3. Merger of Life Insurance Companies
As per the provisions of the LIC Act, all the existing life insurance companies in India were nationalized and merged to form the Life Insurance Corporation. The exact number of companies that were merged to form LIC is 245, as mentioned in option B.

4. Objectives of LIC
The primary objectives of LIC were to spread life insurance to the masses, ensure financial protection for policyholders, mobilize savings for economic development, and promote the growth of the life insurance industry in India.

5. Functions and Operations
LIC took over the assets and liabilities of the merged companies and became the sole provider of life insurance in India. It introduced various innovative policies and schemes to cater to the diverse needs of policyholders. LIC also played a significant role in promoting insurance awareness and literacy in the country.

6. Achievements
Since its formation, LIC has become the largest and most trusted life insurance company in India. It has a vast network of branches and agents across the country, ensuring accessibility and reach to even remote areas. LIC has played a crucial role in the economic development of India by mobilizing long-term savings and channeling them into productive investments.

In conclusion, the Life Insurance Corporation (LIC) of India was formed by merging 245 life insurance companies. The consolidation and nationalization of the life insurance industry through LIC have played a pivotal role in providing financial protection and promoting insurance awareness in India.