Chapter -1

INTRODUCTION

Life Insurance is one of the underdeveloped sectors in India. Now most of them see there is a potential to earn more in this Industry. Now nearly 23 Life Insurance companies are playing a role in India and more new players are trying to enter the market. There has been a large amount of expansion in the market. This has been due to improved awareness and advertisement campaigns launched by all players. Kotak Mahindra Old Mutual Life Insurance Ltd., concentrates the people from big corporate as they can contribute a lot by up selling. In this regard a study was conducted to find the level of awareness about UNIT LINKED PLAN.

1.1 INDUSTRY PROFILE Life insurance in India existed in India from 1000 BC.There was a form of community insurance which was prevalent during that period and were practiced by the Aryans. The first life insurance company in India was Bombay Mutual Assurance Society, which was formed in 1870. Other companies like Oriental, Bharat and Empire of India were also set up in the 1870-90s. It was during the swadeshi movement in the early 20th century that insurance witnessed a big boom in India with several more companies being set up. As these companies grew, the government began to exercise control on them. The Insurance Act was passed in 1912, followed by a detailed and amended Insurance Act of 1938 that looked into investments, expenditure and management of these companies' funds. By the mid-1950s, there were around 170 insurance companies and in the country scene. However, in the absence of regulatory systems, scams and irregularities spoiled the image of the Life Insurance Industry. As a result, the government decided nationalise the Life Insurance business in India. The Life Insurance Corporation of India was set up in 1956 to take over around 250 life companies. For years thereafter, insurance remained a monopoly of the public sector. It was only after seven years of deliberation and debate - after the RN Malhotra Committee report of 1994 became the first serious document calling for the re-opening up of the insurance sector to private players -- that the sector was finally opened up to private players in 2001. INSURANCE REGULATORY & DEVELOPMENT AUTHORITY The Insurance Regulatory & Development Authority, an autonomous insurance regulator set up in 2000.It has the authority to oversee the insurance business and regulate in a manner that will safeguard the interests of the insured and as whole the Life Insurance Industry. 2

SIGNIFICANCE OF THE LIFE INSURANCE INDUSTRY IN INDIA The Life Insurance Industry has recorded the second highest growth in Asia in 200001.The Life Insurance Industry has achieved an inflation-adjusted growth rate of 21.3%. This is more than double the world's growth rate of 9%.

The total Indian Life Insurance market is currently (2010) valued at Rs 2,61,025 crores Life insurance market is expected to grow at 17-22% between 2010-15. The industry in India has become extremely competitive with the entry of several new private companies, including major multinational insurers. It has opened up a range of untapped opportunities for the new entrants into the industry, as the potential market for buyers is high since the emerging market in India has a low insurance penetration and high growth rates.

Only 33 crores (330 million) of Indians have been introduced to insurance. In India, premiums account for less than 6% of Gross Domestic Savings (GDS). The average annual insurance spending of an Indian is Rs 445 (US$9.9) against Rs 1.87 lakhs (US$4,154) for a Swiss citizen or Rs 1.79 lakhs (US$3,973) for Japanese. Even Thailand with an average insurance spending of US$49.3 per person has insurance per capita nearly five times that of India.

India is ranked 27th in terms of mobilizing savings in the form of insurance. This clearly shows that there is considerable scope to raise per capita premium if the market is effectively tapped.

It is expected that in three years 40% of the population in India would be under some form of insurance cover; a significant increase from the current 28% coverage.

PRESENT SCENARIO The Government of India liberalised the insurance sector in March 2000 with the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership. Under the current guidelines, there is a 26 percent equity cap for foreign partners in an insurance company. There is a proposal to increase this limit to 49 percent. Premium rates of most general insurance policies come under the purview of the government appointed Tariff Advisory Committee.

1.2 COMPANY PROFILE

Kotak Mahindra Old Mutual Life Insurance Ltd is a joint venture between Kotak Mahindra Bank Ltd., its affiliates and Old Mutual. THE KOTAK MAHINDRA GROUP The Kotak Mahindra group is one of Indias leading banking and financial services organizations, with offerings across personal financial services; commercial banking; corporate and investment banking and markets; stock broking; asset management and life insurance. The Kotak Group has over 1,300 offices, and services around 5.9 million customer accounts across India. Kotak also has offices in London, New York, San Francisco, Singapore, Dubai and Mauritius OLD MUTUAL Old Mutual is an international savings and wealth management company based in the UK. Originating in South Africa in 1845, it is among the top 100 largest companies in the FTSE100. The group has a balanced portfolio of businesses offering Asset Management, Life Assurance, Banking and General Insurance Services in over 40 countries, with a focus on South Africa, Europe and the United States, and a growing presence in Asia Pacific. Old Mutual employs approximately 54,000 employees worldwide with its primary listing on the London, secondary listing on the Johannesburg stock exchanges as well as in Namibia, Malawi and Zimbabwe. ABOUT KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE LTD Kotak Mahindra Old Mutual Life Insurance Ltd is a joint venture between Kotak Mahindra Bank Ltd., its affiliates and Old Mutual. A company that combines its international strengths and local advantages to offer its customers a wide range of innovative life insurance products, helping them in taking important financial decisions at every stage in life and stay financially independent. The company is one of the fastest growing insurance companies in India and has shown remarkable growth since its inception in 2001. Kotak Life Insurance employs around 5,565 people in its various businesses and has 197 branches across 141 cities. 5

 The Company issued its first policy on June 12, 2001. The company has a network of about 56,000 advisors as well as 7 bancassurance and 150 corporate agent tie-ups. KLI break event happened during the financial year 2008-2009 with a maiden profit of 14 crores followed by a 70 crore profit in financial year 2009-2010 and a 9 crore profit (till Sep, 2010) for this current financial year (2010 - 2011).

Chapter -2

OBJECTIVES AND SCOPE

2.1 NEED FOR THE STUDY

Life insurance companies are facing stiff competition between them. There are 23 private life insurance companies in the market. Private companies want to know how far they reached in the minds of Coimbatore people. Nowadays peoples behaviors towards the life insurance policies are changing. In the past years, people are taking endowment policies and money back policies. But nowadays, people are shifting to other policies like ULIP. This study is conducted for revealing the reasons behind that. All the life insurance companies trying to attract the people through innovative products. So, the life insurance companies trying to find out the peoples thinking about the life insurance policies. It has been almost 7 years since ULIP was launched. This study will focus on the awareness level of people in ULIP products as an investment avenue & also as a flexible insurance package. This study will also give an insight in to the perception of general public towards insurance & its changing face as an investment solution.

2.2 OBJECTIVES OF THE STUDY

Primary Objective To ascertain the level of awareness of Unit Linked Plan (ULIP) as an investment avenue. To find the proportion of public who has already invested in ULIP.

Secondary Objective To ascertain the risk-taking level of various people & suggest KLI products accordingly based on their risk appetite. To draw a comparison between traditional Vs ULIP product and derive the target audience in insurance industry.

2.3 SCOPE OF THE STUDY

Awareness level plays a major role to capitalize the market. This study helps to ascertain the awareness level of Unit linked insurance plans (ULIP). The company can evaluate their penetration in the market in the area specific to Coimbatore among their target audience. Based on the above study, the company can take innovative initiatives to tap the market further & penetrate competition level at the local branch. Will definitely help the company in their future studies regarding market potential for ULIP in Coimbatore.

Chapter -3

LIMITATIONS

3.1 LIMITATIONS OF THE STUDY

Though the study serves as a basis for carrying out further researches in the same area, it is constrained by the following limitations. Since the size of the sample being relatively small, some of the findings may slightly vary with these of larger universe. Findings are based on assumptions that the respondents reveal the correct information. The busy schedule of the respondents was another reason, which happened in data collection. Answers to certain questions like income of the respondents, policy holding at present and premium may be biased. This study is restricted to Coimbatore city. Therefore the results cannot be generalized. The sample size that was taken for study was 96. This findings may not be applicable for a longer time as this industry shows rapid changes day by day.

10

Chapter 4

METHODOLOGY AND PROCEDURE OF WORK

4.1 Nature of the study The nature of the study undertaken is descriptive. A descriptive study is undertaken in order to ascertain and be able to describe the characteristics of the variable of interest in the situation. Descriptive study attempts to obtain a complete and accurate description of the situation. Formal design is required to ensure that the description covers all the phases required. Precise statement of the problem indicates what information is needed. The study then designed to provide for the collection of this information. 4.2 Sources of the data Primary data Such data gathered for research from the actual site of occurrence of events are called primary data. Primary data regarding the awareness of private life insurance companies are collected through an interview schedule. Secondary data Data gathered through such existing sources are called secondary data. Secondary data regarding the private life insurance industry, company profile, etc., where collected from various websites, magazines and books. 4.3 Sampling Population: Population is defined as the entire group of people, events, or things that the researcher desires to investigate. Here the population in the Coimbatore city, who are living in selected areas in the Coimbatore city.

11

Sample, sampling frame and sample size: A sample is subset of population. Sampling is a process of selecting a sufficient number of elements from the population so that a study of the sample and an understanding of its properties or its characteristics would make it possible to generalize such properties or characteristics to the population elements. The reason for using the sample is self-evident. In research investigations involved several hundreds or even thousands of elements it would be practically impossible to collect data from, or test or examine every element. Even if it were possible, it would be prohibitive in terms of time, cost and other human resources. Sample sizes for the study is 96. 4.4 Sampling technique The sampling design used in this study is simple random sampling. Simple random sampling involves from a finite population refers to the method of sample selection which gives each possible sample combination an equal probability of being picked up and each item in the entire population to have an equal chance of being included in the sample.

12

Chapter - 5 ANALYSIS & INTERPRETATION

Table - 1 Showing Age Group of the Respondents Particulars 22 - 30 31 - 35 36 - 45 46 - 55 Above 55 TOTAL Interpretation: From the above table it is clear that 34% of the respondents are in the age between 46 to 55 years and 33% of the respondents are in the age between 31 to 35,19% are between 36 to 45 years of age.10% are between 22 to 30 years of age and 3% are above 56 years of age. No of respondents 10 32 18 33 3 96 Percentage 10.42 33.33 18.75 34.38 3.13 100

13

Chart 1 Showing age of the respondents

33.33 35 30 25 20 No of respondents 15 10 5 0 1 Age 10.42 3.13 18.75 22 - 30 31 - 35 36 - 45 46 - 55 Above 55 34.38

14

Table - 2 Showing Gender of the Respondents No of respondents 69 27 96

Particulars Male female TOTAL Interpretation:

Percentage 71.87 28.13 100

From the above table it is clear that 72% of the respondents are male and only 28% are female.

15

chart 2 Showing gender of the respondents

71.87 80 60 No of 40 respondents 20 0 1 Gender 28.13 Male female

16

Table - 3 Showing Occupation of the Respondents Particulars Self employed Salaried Housewife Retired Others TOTAL Interpretation: From the above table it is clear that 34% of the respondents are self employed and 53% of the respondents are salaried, 7% are house wife and only 4% are retired. No of respondents 33 51 7 4 1 96 Percentage 34.47 53.13 7.29 4.16 1.05 100

17

Chart 3 Showing the Occupation of the Respondents

60 50 No of 30 Respondents 20 10 0 1 Occupation 40 53.12 34.47 Self employed Salaried 7.29 4.16 Housewife 1.05 Retired Others

18

Table - 4 Showing Qualification of the Respondents

Particulars HSC Graduate Post graduate Others TOTAL Interpretation:

No of respondents 17 55 19 5 96

Percentage 17.71 57.29 19.79 5.21 100

From the above table it is clear that 57% of the respondents are Graduate and 19% of the respondents are post graduate, 13% are higher secondary, 5% are SSLC and 5% are others like diploma etc...

19

Chart 4 Showing qualification of the respondents

57.29 60 50 40
No of respondents 30

HSC 17.71 19.79 5.21 Graduate Post graduate Others

20 10 0 1

Educational qualification

20

Table - 5 Showing Marital Status of the Respondents Particulars Single Married TOTAL Interpretation: From the above table it is clear that 54% of the respondents married and only 46% are single. No of respondents 44 52 96 Percentage 45.83 54.17 100

21

Chart 5 Showing the Marital Status of the Respondents

54.16 55 No of Respondents 50 45 40 Single Married 45.83

1 Marital Status

22

Table - 6 Showing Annual Income of the Respondents

Particulars Below 1 lakh 1-2 lakh 2-5 lakh 5-10 lakh Above 10 lakh TOTAL Interpretation:

No of respondents 19 23 26 17 11 96

Percentage 19.79 23.95 37.08 17.71 11.45 100

From the above table it is clear that 37% of the respondents are earning 2-5 lakh per annum and 24% of the respondents are earning 1-2 lakh per annum, 29% are earning below a lakh per annum and 18% are earning 5-10 lakh per annum and 11% are earning above 10 lakh per annum.

23

Chart 6 Showing Family Annual Income of the Respondents

40 30 No of 20 Respondents 10 0 37.08 23.95 19.79 Below 1 lakh 1-2 lakh 2-5 lakh 5-10 lakh 1 Annual Income Above 10 lakh

17.71 11.45

24

Table - 7 Showing Whether the Respondents Have Insurance Policy

Particulars Yes no TOTAL Interpretation:

No of respondents 77 19 96

Percentage 80.21 19.79 100

From the above table it is clear that 80% of the respondents are already having insurance policy and only 20% are not having policy...

25

Chart 7 showing the Insurance policy holders

80.21

100
No of Respondents

50 0

19.79

Yes no

Opinion

26

Table - 8 Showing What Kind of Insurance Policy the Respondents Have

Particulars Children policy Pension policy ULIP Traditional Others

No of respondents* 34 4 31 45 3

Percentage* 35.42 4.17 32.29 46.88 3.13

* More than one option chosen by each respondent Interpretation: From the above table it is clear that 47% of the respondents are having traditional policy and 35% of the respondents are having children policy, 32% are of the respondents are having ULIP policy, 4% are of the respondents are having pension policy and 3% of the respondents are having other policy.

27

Chart 8 Showing what kind of insurance policy respondents have

46.88 35.42 32.29 Children policy
No of respondents

50 40 30 20 10 0 4.17

Pension policy ULIP 3.13 Traditional Others 1

Policies

28

Table - 9 Showing Whether the Respondents Are Aware About Various Schemes In Life Insurance

Particulars Yes No TOTAL Interpretation:

No of respondents 81 15 96

Percentage 84.38 15.62 100

From the above table it is clear that 84% of the respondents are aware of different schemes in life insurance and 16% are not aware.

29

Chart 9 Showing the respondents awareness on different schemes in life insurance

84.38 100 80 60 No of respondents 40 20 0 1 Schemes 15.62 Yes no

30

Table - 10 Showing the Schemes That the Respondents Are Aware Of

Particulars Endowment policy Children policy ULIP Traditional Pension policy Others

No of respondents* 54 59 44 51 29 1

Percentage* 56.25 61.46 45.83 53.13 30.21 1.04

* More than one option chosen by each respondent Interpretation: From the above table it is clear that 61% of the respondents are aware of children policy and 56% of the respondents are aware of endowment policy, 53% are of the respondents are aware of traditional policy and 46% are of the respondents are aware of ULIP policy, and 30% of the respondents are aware of pension policy and 1% of the respondents are aware of other policy.

31

Chart 10 Showing schemes that the respondent are aware of

No of respondents

70 60 50 40 30 20 10 0

61.46 56.25 45.83 30.21 53.13

Endowment policy Children policy ULIP Traditional Pension policy Others

1.04 1
Schemes

32

Table - 11 Showing Whether the Respondents Have Invested In Any of the following

Particulars Mutual funds Fixed deposits Shares ULIP Post office Others

No of respondents* 20 38 16 31 33 17

Percentage* 20.83 39.58 16.67 32.29 34.38 17.71

* More than one option chosen by each respondent Interpretation: From the above table it is clear that 40% of the respondents are already invested in fixed deposits,34% are in post office ,and 32% of the respondents are invested in ULIP, 20% of the respondents are invested in mutual funds, 17% are of the respondents are invested in shares and 18% in others.

Chart 11 Showing whether the respondents have invested in any of the follwing 39.58 40 35 30 25 No of respondents 20 15 10 5 0 32.29 20.83 34.38
Mutual funds

16.67

17.71

Fixed deposits Shares ULIP Post office Others

1
Investment

33

Table - 12 showing the respondents order of preference for investments Investments Fixed Deposit Post Office Shares ULIP Others Interpretation: From the above table, the No.1 rank has been majority given to fixed deposit 39% & post office 34%. The No.2 rank has been majority given to fixed deposit 34% & post office 23%. The No.3 rank has been majority given to unit linked insurance plan (ULIP) 36% & shares 26%. The No.4 rank has been majority given to shares 35% & post office 30%. And the No.5 rank has been majority given to others 84% & ULIP 8%. But on an average basis, 26% have found fixed deposit to the primary investible instrument, followed by 23% to post office, 19% each to shares & ULIP and 8% to other investible instrument. 1 37 33 13 10 3 2 33 22 19 20 2 3 23 11 25 35 2 4 2 29 34 23 8 5 1 1 5 8 81 Total 96 96 96 96 96 Average 26.07 23 19.27 19.27 8.4

34

Chart 12 showing the order of preference for investment

30 25 20 No of 15 respondents 10 5 0

26.07 23 19.2719.27 Fixed Deposit Post Office 8.4 Shares ULIP Others 1 Investment

35

Table - 13 Showing Whether the Respondents Have Taken Any ULIP Policy

Particulars Yes No TOTAL Interpretation:

No of respondents 31 65 96

Percentage 32.29 67.71 100

From the above table it is clear that 68% of the respondents have not taken ULIP policy and 32% are taken any ULIP policy.

36

Chart 13 Showing whether the respondents have taken any ULIP policy
67.71 80 60 No of 40 respondents 20 0 1 Opinion 32.29 Yes No

37

Table - 14 Showing the Awareness of Various Schemes by the Respondents

Particulars Pension Protection Investment Children Others

No of respondents* 6 10 21 22 0

Percentage* 19.35 10.42 67.74 70.97 -

* More than one option chosen by each respondent Interpretation: From the above table it is clear that 71% of the respondents are aware of children policy, 68% of the respondent are aware of investment policy, 19% of the respondents are aware of pension policy,10% of the respondent are aware of protection policy.

38

Chart 14 showing the awareness of various schemes by the respondents

70.97 Pension 19.35 10.42 0 1 Schemes Protection Investment Children Others

80 70 60 50 No of 40 respondents 30 20 10 0

67.74

39

Table - 15 Showing the Reasons for Taking ULIP Policy

Particulars High returns Advisors Relatives influence Friends Flexibility others

No of respondents* 27 8 1 2 27 1

Percentage* 87.10 25.81 3.23 6.45 87.10 3.23

* More than one option chosen by each respondent Interpretation: From the above table it is clear that 87% of the respondents are have taken policy because of high returns and another 87% of the respondents are taken policy because of flexibility, and 26% are because of advisors, 3% are because of friends and relatives influence, etc.

Chart 15 Showing the reasons for taking ULIP policy

90 80 70 60 No of 50 respondents 40 30 20 10 0

87.1

87.1

High returns Advisors

25.81 3.23 6.45 1

Reasons

Relatives influence Friends Flexibility others

3.23

40

Table - 16 Showing Whether the Respondents Agree With The Fact That Return On Investment Will Be Constant In The Future In ULIP Particulars Yes No TOTAL Interpretation: From the above table it is clear that 100% of the respondents are not confident about the return on investment in future. No of respondents 0 31 31 Percentage 100 100

41

Chart 16 Showing whetherthe respondents agree with the fact that return on investment will be constant in the future in ULIP 100 100 No of 50 respondents 0 Opinion No

42

Table - 17 Who Influences the Investments in ULIP No of respondents* 3 9 3 5 13 6 1

Particulars Parents Friends Tax consultants Chartered accountants Advisors/agent Advertisement Others

Percentage* 9.68 29.03 9.68 38.46 41.94 19.35 3.23

* More than one option chosen by each respondent Interpretation: From the above table it is clear that 42% of the respondents are influenced by advisors, 38% are influenced by chartered accountant, 29% of the respondents are influenced by friends, 19% are influenced by advertisement, and 10% are influenced by parents and another 10% are influenced by tax consultants, etc

43

Chart 17 Showing the factor which influences to take ULIP policy

38.46 41.94 29.03 19.35 9.68 9.68 3.23 Parents Friends Tax consultants Chartered accountants Advisors/agent Advertisement Others

45 40 35 30 No of 25 respondents 20 15 10 5 0

1
Factors

44

Table - 18 Showing Whether the Respondents Are Interested To Know About ULIP

Particulars Yes no TOTAL Interpretation:

No of respondents 68 28 96

Percentage 70.83 29.17 100

From the above table it is clear that 71% of the respondents are interested in knowing about ULIP and 29% are not interested in knowing about ULIP.

45

Chart 18 Showing whether the respondents are interested to know about ULIP

70.83 80 60
No of 40 respondents

29.17 Yes no

20 0 1
Opinion

46

Chapter - 6

FINDINGS

80% of the respondents are holding an insurance policy and only 20% does not have policy. 47% of the respondents have traditional policy and 35% of the respondents have children policy, 32% are of the respondents have ULIPs, 4% are of the respondents have pension policy and 3% of the respondents have other policies. 84% of the respondents are aware of different schemes in life insurance and 16% are unaware. 61% of the respondents are aware of children policy and 56% of the respondents are aware of endowment policy, 53% are of the respondents are aware of traditional policy and 46% are of the respondents are aware of ULIP policy, and 30% of the respondents are aware of pension policy and 1% of the respondents are aware of other policies. 40% of the respondents have already invested in fixed deposits,34% in post office, 32% of the respondents have invested in ULIP, 20% have in mutual funds, 17% have in shares and 18% in other investible instruments. 68% of the respondents have not taken ULIP policy and 32% have taken any ULIP policy. 71% of the respondents are aware of children policy, 68% of the respondent are aware of investment policy, 19% of the respondents are aware of pension policy,10% of the respondent are aware of protection policy. 87% of the respondents have taken policy because of high returns and another 87% of the respondents are taken policy because of flexibility, and 26% have taken due to advisors, 3% are because of friends and relatives influence. 100% of the respondents are not confident about the return on investment in future.

47

42% of the respondents are influenced by advisors, 38% are influenced by chartered accountant, 29% of the respondents are influenced by friends, 19% are influenced by advertisement, and 10% are influenced by parents and another 10% are influenced by tax consultants. 71% of the respondents are interested in knowing about ULIP and 29% are not interested in knowing about ULIP.

48

Chapter 7

RECOMMENDATIONS

Most of the respondents want to go for less riskier investments like fixed deposit, mutual funds, buying lands. If the private life insurance companies create awareness on their products like ULIP & their risk ascertainment, the audience will be more educated to get ULIPs. Awareness about the private companies is not appreciable. They must concentrate to refresh their advertising strategies and also to conduct more advertising campaigns in the local level very frequently. Private companies especially can give more television advertisements so that they can insist their brand name in the minds of people. Because it has more reach, from that we can build the brand image .It will make the advisors job and they need not explain about the company details more. Most of the respondents feel nothing about the security towards the private companies. The basic question is their reliability. For that, private companies should educate general public about IRDA & its implication through local campaign, sales force & advisors. They can do telemarketing, motivating sales through banc assurance, educated corporate agents along with their conventional market strategies like direct selling. Earlier major benefit of taking policies is for life cover, the trend has been changed in the market. Now most of the people seeking return on investments more. So policies like ULIP have a good opportunity. Returns should be highlighted while prospecting a new customer. Each company must conduct surveys periodically, to know the competitors strategies in the market and then concentrate on areas where they have to improve.

49

Financial advisors should have the continuous contact with the policy holders with regard to their instrument & its track record. They must be constantly trained on all angles and updated on frequent market knowledge to sell ULIPs in a better manner.

50

Chapter 8

CONCLUSION

Private companies should keep customer convenience in mind and offer products closer to their door step; thereby they will be able to reach out to a wider base firmly. All their marketing efforts are put in place to clearly differentiate their brand from the other clutter in the market place. For the private life insurance players, the crucial task is to win the customer confidence, as even now people still largely associate life insurance with LIC. It will create the long term opportunity for business growth. This research has also given importance to the factors influencing in holding and selecting a life insurance policy based on risk appetite. It has laid importance to the changing face of life insurance to flexible investment option coupled with insurance. Moreover this study has analyzed how people feel towards private life insurance companies. This study also revealed the hidden opportunities available to the private life insurance companies in terms of investment avenues open for the wide range of customers.

51