CHAPTER 1

INDUSTRY PROFILE

Meaning Of Insurance:

Insurance is a form of risk-management which spreads risk of many people in exchange for
Small payments from each. Specifically, insurance transfers some type of risk (accident, theft,
natural disaster, illness, etc) from one person or group to a more financially-sound entity in
exchange for a payment (also known as a premium). Premiums are often annual or monthly, but
depending on the type of insurance they can be at other intervals.

India insurance is a booming industry, with several national and international players
Competing to excel. With several reforms and policy regulations, the Indian insurance sector has
witnessed tremendous growth in the recent past.

Historical Perspective

Insurance in India has its history dating back till 1818 started by Anita Bhavsar, when
Oriental Life Insurance Company was started by Europeans in Kolkata to cater to the needs of
European community. Pre-independent era in India saw discrimination among the life of
foreigners and Indians with higher premiums being charged for the latter. It was only in the year
1870, Bombay Mutual Life Assurance Society, the first Indian insurance company covered
Indian lives at normal rates. The Oriental Assurance Company was established in 1880. The
General insurance business in India, on the other hand, can trace its roots to Triton Insurance
Company Limited, the first general insurance company established in the year 1850 In Calcutta
by the British. Till the end of the nineteenth century insurance business was almost entirely in the
hands of overseas companies.

Insurance regulation formally began in India with the passing of the Life Insurance
Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the 1920's
and 1930's violated insurance business in India. By 1938 there were 176 insurance companies.
The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided
strict State Control over the insurance business. The insurance business grew at a faster pace
after independence. Indian companies strengthened their hold on this business but despite the
growth that was witnessed, insurance remained an urban phenomenon.
The Government of India in 1956, brought together over 240 private life insurers and
provident societies under one nationalized monopoly corporation and Life Insurance
Corporation (LIC) was born. Nationalization was justified on the grounds that it would create the
much needed funds for rapid industrialization. This was in conformity with the
Government's chosen path of State led planning and development. The non-life insurance
business continued to thrive with the private sector till 1972. Their operations were restricted To
organized trade and industry in large cities. The general insurance industry was nationalized in
1972. With this, nearly 107 insurers were amalgamated and grouped into four companies-
National Insurance Company, New India Assurance Company, Oriental Insurance Company and
United India Insurance Company.

KEY MILESTONES

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the
life insurance business.
1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.
1938: Earlier legislation consolidated and amended by the Insurance Act with the objective
of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers along with provident societies were taken over by the
government and nationalized. LIC was formed by an Act of Parliament- LIC Act
1956- with a capital contribution of Rs. 5 crore from the Government of India

Indian Insurance: Sector Reform

Formation of the Malhotra Committee in 1993 initiated reforms in the Indian insurance sector.
The aim of the Malhotra Committee was to assess the functionality of the Indian insurance
sector. This committee was also in charge of recommending the future path of insurance in India.

The Malhotra Committee attempted to improve various aspects of the insurance sector,
making them more appropriate and effective for the Indian market. The recommendations of the
committee put stress on offering operational autonomy to the insurance service providers and
also suggested forming an independent regulatory body.

The Insurance Regulatory and Development Authority Act of 1999 brought about several
crucial policy changes in the insurance sector of India. It led to the formation of the Insurance
Regulatory and Development Authority (IRDA) in 2000. The goals of the IRDA are to safeguard
the interests of insurance policyholders, as well as to initiate different policy measures to help
sustain growth in the Indian insurance sector.

Current scenario of India Insurance Industry

India is the fifth largest life insurance market in the emerging insurance economies
globally. The market size of Indian insurance sector went up to US $47.89 billion in 2007,
from US $21.71 billion in 2000, increasing at the rate of 120 percent. Between 2000 and
2007, overall premiums sustained an average growth rate of 11.96 per cent. This was one of most
steady growth pattern witnessed amongst emerging economies in Asian as well as global
markets. Increasing from just one company a decade ago, there are 22 life insurance
companies in the country. With increasing competitiveness amongst these, the players are
bringing out newer products to attract more customers into their pool. Foreign direct
Investment (FDI) up to 26 per cent is permitted under the automatic route subject to obtain a
License from the official regulator, Insurance Regulatory and Development Authority (IRDA).
As major portion of the business come from urban market, the next step for these firms would be
to tap semi-urban and rural markets.

Market share of various Life Insurance Companies in India at the end of

FY2008
Insurance Company Market Share(in per cent)
LIC 48.1%
ICICI Prudential 13.7 %
Bajaj Allianz 10.3%
SBI Life 6.2%
HDFC Standard Life 4.1%
Birla Sun life 3.4%
Reliance Life 3.4%
Max New York 2.4%
OM Kotak 1.9%
AVIVA 1.8%
Tata AIG 1.5%
Met Life 1.4%
Insurance Regulatory and Development Authority (IRDA)

Reforms in the Insurance sector were initiated with the passes of the IRDA Bill in Parliament in
December 1999. The IRDA since its incorporation as a statutory body in April 2000 has
fastidiously such to its schedule of framing regulations and registering the private sector
insurance companies.

The other decision taken simultaneously to provide the supporting systems to the insurance
sector and in particular the life insurance companies was the launch of the IRDA online service
for issue and renewal of licenses to agents.

Review of the annual report of the IRDA

The Indian economy continued to exhibit robust growth even though global economy
experienced many uncertainties. The real GDP growth emanating from the industry and
Services sector declined slightly during 2007-08. The continued acceleration in saving and
Investment rates and sustained productive growth were the underpinnings of the growth
momentum in the Indian economy during 2007-08. The real GDP growth in 2007-08 though
High at 9 per cent was lower than the 9.6 per cent recorded in 2006-07. Services sector
Continued to grow at double digit level. The deceleration in the industry sector was also reflected
in the Index of Industrial Production. Gross domestic savings as per cent of GDP at Current
market prices increased from 34.3 per cent in 2005-06 to 34.8 per cent in 2006-07 Contributed
mainly by increase in the savings of private corporate sector and the public sector.

The saving preference of the households had slightly shifted away from the bank deposits in
2007-08 from that of 2006-07.According to the preliminary estimates released by RBI on
Household financial savings for 2007-08, insurance funds constituted 17.5 per cent of the total
Gross financial savings of the households in 2007-08. This has resulted in an increase in the
Share of insurance funds in the total household savings. The above shift in the preferences

Towards insurance sector was mainly on account of the households preferring to invest in Unit
Linked Insurance Products (ULIPs) of life insurers in the back ground of bullish stock market As
the returns of a part of ULIPs depend on the behavior of the stock market. It may be noted that
during 2007-08, the BSE Sensex has shown abnormally high levels and the gains were across all
sectors of the index.

CHAPTER 2

COMPANY PROFILE

HDFC Standard Life Insurance Company Ltd.

HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has since emerged as
the largest residential mortgage finance institution in the country. The Corporation has had a
series of share issues raising its capital to Rs. 119 crores. The gross premium income for the year
ending March 31, 2007 stood at Rs. 2, 856 crores and new business premium income at Rs.
1,624 crores. The company has covered over 8, 77,000 lives year ending March 31, 2007.

HDFC operates through almost 450 locations throughout the country with its corporate head
quarters in Mumbai, India. HDFC also has an International Office in Dubai, UAE, with service
associates in Kuwait, Oman and Qatar.

HDFC is the largest Housing Company in India for the last 27 years.

INCORPORATION OF HDFC STANDARD LIFE INSURANCE CO. LTD.:

The company was incorporated on 14th August 2000 under the name of HDFC Standard Life
Insurance Company Limited. Their ambition from the beginning was to be the first private
company to re-enter the life insurance market in India. On the 23rd of October 2000, this
ambition was realized when HDFC Standard Life was the first life company to be granted a
certificate of registration.HDFC are the main shareholders in HDFC Standard Life, with 81.4%,
while Standard Life owns 18.6%. HDFC Standard Life Insurance Company Ltd. is one of India’s
leading private life insurance companies, which offers a range of individual and group insurance
solutions. It is a joint venture between Housing Development Finance Corporation Limited
(HDFC Ltd.), India’s leading housing finance institution and one of the subsidiaries of Standard
Life plc, leading
providers of financial services in the United Kingdom.

CORPORATE OFFICE
HDFC Standard Life Insurance Company Ltd.
‘Trade Star’, 2nd Floor, ‘A’ Wing,
Junction of Kondivita and
M. V. Road, Andheri-Kurla Road,
Andheri (East), Mumbai - 400 059.
Tel. No. : 022-6751 6666
Fax No. : 022-2822 2414
Email: response@hdfcinsurance.com
Website: www.hdfcinsurance.com

AUDITORS
Haribhakti & Co.
Chartered Accountants
Kalyaniwalla & Mistry
Chartered Accountants
BANKERS
HDFC Bank Ltd.
Union Bank of India
Indian Bank
The Saraswat Co-op. Bank Ltd.
Federal Bank
State Bank of India
State Bank of Travancore
State Bank of Indore

REGISTERED OFFICE
Ramon House, H. T. Parekh Marg,
169, Backbay Reclamation,
Church gate, Mumbai 400 020.
BOARD OF DIRECTORS
Mr. Deepak S. Parekh
Chairman
Directors
Sir Alexander M. Crombie
Mr. Keki M. Mistry
Ms. Marcia D. Campbell
Ms. Renu Sud Karnad
Mr. Norman K. Skeoch
Mr. Gautam R. Divan
Mr. Ranjan K. Pant
Mr. Ravi Narain
Mr. Gerald E. Grimstone
Alternate to Sir Alexander M. Crombie
Mr. Michael G. Connarty
Alternate to Mr. Norman K. Skeoch

SNAPSHOT-I

• Incorporated in 1977 as the first specialized Mortgage Company in India.

• Almost 90% of initial shareholding in the hands of domestic intuitions and retail
investors. Current 77% of shares held by foreign institutional investors.
• Besides the core business of mortgage HDFC has evolved into a financial conglomerate
with holdings In:
• HDFC Standard Life insurance Company- HDFC holds 78.07 %.
• HDFC Asset Management Company – HDFC holds 50.1%
• HDFC Bank- HDFC holds 22.25%.
• Intel net Global (Business Process Outsourcing) – HDFC holds 50%.
 SNAPSHOT-II

• Loan Approvals Rs. 805 billion.

(Up to Mar 2009) (US $ 18.30 bn.)

• Loan Disbursements Rs.669 billion

(Up to Dec. 2007) (US $ 15.20 bn)

• Housing Units financed 2.5 million.

• Distribution
• Offices 254
• Outreach Programs 137

ABBREVIATIONS

1. HDFC- Housing Development Finance Corporation.

2. SLIC- Standard Life Insurance Company.
3. FC- Financial Consultant.
4. SDM- Sales Development Manager.
5. BDM- Business Development Manager.
6. CFC- Certified Financial Consultant.
7. LA- Life Assured.
8. SA- Sum Assured.
9. TERM- No. of Years.
10. ADB- Accidental Death Benefit.

11. CI- Critical Illness.

GROUP COMPANIES
HDFC Bank: World Class Indian Bank- among the top private banks in India.

HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager.

Intel net Global: BOP services for international customers

CIBIL: Credit information services bureau.

HDFC Chubb: Upcoming Private companies in the field of General Insurance.

STANDARD LIFE

Standard Life is Europe’s largest mutual life assurance company. Standard Life, which has been
in the life insurance business for the past 175 years is a modern company surviving quite a few
changes since selling its first policy in 1825. The company expanded in the 19 th century from
kits original Edinburgh premises, opening offices in other towns and acquitting other similar
businesses.

Standard Life Currently has assets exceeding over £ 70 billion under its management and has the
distinction of being accorded “AAA” rating consequently for the six years by Standard and Poor.

SNAPSHOT

• Founded in 1875, company supporting generation for last 179 years.

• Currently over 5 m. Policy holders benefiting from the services offered.
• Europe’s largest mutual life insurer.
 JOINT VENTURE

HDFC Standard Life Insurance Company Limited was one of the first companies to be granted
license by the IRDA to operate in life insurance sector. Reach of the JV player is highly rated and
been conferred with many awards. HDFC is rated ‘AAA’ by both CRISIL and ICRA. Similarly,
Standard Life is rated ‘AAA’ both by Moody’s and Standard and Poor’s. These reflect the
efficiency with which HDFC and Standard Life manage their asset base of Rs. 15,000 Cr and Rs.
600,000 Cr. Respectively.

HDFC Standard Life Insurance Company Ltd was incorporated on 14 th August 2000. HDFC is
the majority stakeholder in the insurance JV with 81.4 %stale and Standard: of as a staple pf
18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture.

HDFC Standard Life Insurance Company Ltd. Is one of India’s leading Private Life Insurance
Companies., which offers a range of individual and group insurance solutions. It is a joint
venture between Housing Development Finance Corporation Limited (HDFC Ltd.) India’s
leading housing finance institution and the Standard Life Assurance Company, a leading provider
of financial services from the United Kingdom. Both the promoters are well known for their
ethical dealings and financial strength and are thus committed to being a long-term player in the
life insurance industry- all important factors to consider when choosing your insurer.
BUSINESS GROWTH

Track Record so far

The gross premium income of HDFC, for the year ending March 31, 2007 stood at Rs. 2, 856
crores and new business premium income at Rs. 1,624 crores.

The company has covered over 8, 77,000 lives year ending March 31, 2007. Company also
declared our 5th consecutive bonus in as many years for our ‘with profit’ policyholders.

GRAPH 1.1 SHOWS THE LOAN APPROVALS & DISBURSEMENTS.

VISION STATEMENT

“The most successful and admired life insurance company, which means that we are the
most trusted company, the easiest to deal with, offer the vest values for money, and
easiest the standards in the industry, In short, The most obvious choice for all”

MISSION STATEMENT

“To reach out an influence our target customer so as to provide them. World class

Competitive insurance solution .HDFCSLIC focuses long term strategy".

VALUES
 Value that we observe while work …

• Integrity

• Innovation

• Customer centric

• People Care “One for all and all for one”

• Team work

• Joy and simplicity

PRODUCTS OF HDFC SLIC

HDFC Standard Life offers a bouquet of insurance solutions to meet individuals need,
the company has a range of protection, investment, pension and savings plans that assist and
nurture dreams apart from providing protection. The customers can choose from a range of
products to suit their life-stage and needs.

At HDFC Standard Life realize that not everyone has the same kind of needs. Keeping
this in mind, varied range of products that customer can choose from to suit all needs. These will
help secure customer future as well as the future of family. The products of the company are
categorized into various sections which are as follows:

Protection Plans

· HDFC Term Assurance Plan.

· HDFC Loan Cover Term Assurance Plan.
· HDFC Home Loan Protection Plan.

Children's Plans

· HDFC Children's Plan.

· HDFC Unit Linked Young Star II.
· HDFC Unit Linked Young Star plus II.
· HDFC Unit Linked Young Star Champion.

Retirement Plans

· HDFC Personal Pension Plan.

· HDFC Unit Linked Pension II.
· HDFC Unit Linked Pension Maximiser II.
· HDFC Immediate Annuity.

Rural Products

· HDFC Garmin Bima Mitra Yojana.

· HDFC Bima Bachat Yojana.
· HDFC Development Insurance Plan.

Savings & Investment Plans

· HDFC Unit Linked Endowment plus II.

· HDFC Simple Life.
· HDFC Unit Linked Endowment II.
· HDFC Unit Linked Enhanced Life Protection II.
· HDFC Unit Linked Wealth Maximiser Plus.
· HDFC Unit Linked Wealth Multiplier.
· HDFC Unit Linked Endowment Winner.
· HDFC Endowment Assurance Plan.
· HDFC Money Back Plan.
· HDFC Single Premium Whole of Life Insurance Plan.
· HDFC Assurance Plan.
· HDFC Savings Assurance Plan.

Health Plans
· HDFC Critical Care Plan.
· HDFC Surgi Care Plan.

Group Plans

· Group Term Insurance Plan.

· Group Variable Term Insurance Plan.
· Group Unit Linked Plan - Gratuity.
· Group Unit Linked Plan – Superannuation.
· Group Unit Linked Plan - Leave Encashment.

INFRASTRUCTURAL FACILITIES:

• All the branches of HDFC SLIC are well furnished with a good décor which induces a
suitable work environment.

• The branches are computerized and all transactions of insurance policies are done with
ease of operation.

• There is an accessible intranet facility which caters to the needs of the employees in
communicating with peers, superiors and subordinates and to exchange valuable
information.

• There is a database maintained of all the people involved in the insurance process from
the financial consultant to the customers for easy communication and reach.

• The branches are located in the heart of every locality and thus a customer will not find it
difficult to visit the nearest branch.

ORGANIZATION STRUCTURE AND ORGANIZATION CHART

HR Executive

Operation Manager

Team Manager

Channel Executive
 Branch Manager

Territory Manager

Sales Dev. Mgr.

Business Dev. Mgr.

Asst. B.M.

Branch Manager

Territory Manager

Zonal Manager

Regional Manager

Human Resource

Operation Chanel

Alternative Chanel

Retail Marketing MMMarkeMMarke

MD

Chairman

The design of an organization at structure is a critical task of the top management of an

organization. It is the selection of whole organization. It refers to organizational arrangement and
relationships. It prescribes formal relationship among various positions and attitudes.
Arrangement about reporting relationship, how an organization members are all part of
organization structure.

MAJOR COMPETITORS FOR HDFC

LIFE INSURANCE CORPORATION

Life insurance made its debut in India well over 100 years ago. Its salient features are not as
widely understood in our county, as they ought to be. What follows is an attempt to acquaint
readers with some of the concept of life insurance, with special reference to LIC. It should,
however, be clearly understood that the following narration is by no means an exhaustive
description of terms and conditions of LIC policy or its benefits or privileges.

For more details, please contact our branch or divisional office. An LIC it will be glad to help
you choose the life insurance plan to meet your needs and render policy servicing.

ICICI PRUDENTIAL

ICICI Prudential Life Insurance Company is a joint venture between ICICI bank, a premier
financial powerhouse and prudential plc. A leading international financial service group
headquartered in the United Kingdom. ICICI prudential was amongst the first private sector
insurance company to being operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA). ICICI Prudential equity base 74% and
26% stake respectively. In the period April-December 2004, the company earned Rs. Billion of
new business premium for a total sum assured of over Rs 73.6 billion and wrote nearly 345000
policies.

The company has a network of over 50000 advisor; as well as 7 bank assurance tie-ups. Today,
ICICI Prudential has emerged as the No -1 Private Life insured in the country. With a wide range
of flexible products that meet the needs of the customer at every step in life.

BAJAJ ALLIANZ:

A household name in India teams up with a global conglomerate… Bajaj Auto Ltd, the flagship
company of the Rs. 8000 corers Bajaj group is the largest manufacturer of two- wheelers and
three-wheelers in Indian and one of the largest in the world.

A household name in India, Bajaj Auto has a strong brand image and locality synonymous with
quality and customer focus. With over 15000 employees, the company is a Rs. 4000 crores auto
giant. It is the largest 2/3 wheelers manufactured in India and the 4 th in the world .AAA rated by
crises, Bajaj auto has in an operation for over 55 years. It has joined hands with Allianz to
provide the Indian consumer with a distance option in term of life insurance products. As a
promoter of Bajaj Allianz Life Insurance Co. Ltd. Bajaj auto has following to offer-

Key strength of Bajaj Allianz

• A Strong brand-equity.

• A good market reputation as a world class organization

• Adequate experience of running a large organization

• Financial strength and stability to support the Insurance Business.

WHY HDFC IS BETTER …?

Investment returns:
Investment returns and business growth provided by HDFC is validated by Bajaj Capital
report. HDFC pacify the need of invertors up to healthy level and make the strong relationship
with them.

Financial Background and Experience:

HDFC existing in the market since 1977. It has a very handsome experience in the field
of finance because it completely involved in finance Sector only where as the others are running
in many other field also like Reliance (Petroleum, Textile, Telecom etc.).

Ethics and Values:

HDFC is an ethical and cultural organization which prevents the false selling and prohibits the
false commitment to the customer.
Sales Force:
Properly trend licensed and Educated People are the strength of the company. So that they could
give the best customer service. Huge branch network HDFC is having 450 branches in all over
the country.

Online accessibility:
It makes the process faster and makes the customer to do transactions throughout the world from
internet which keep in touch with his investments.

AREA OF OPERATION

HDFC SLIC has been operating all over India 8 incredible years and still going strong, It has
literally made the mark with footprints over 600 cities & towns in India . The growth engine is
driven by more than 16,000 committed employees who take pride in working for HDFC
Standard Life, a distribution channel with over 2,00,000 customer centric financial consultants
and equally strong channel partners in private and public sector banking.

The head office is located in
Trade Star’, 2nd Floor, ‘A’ Wing,
Junction of Kondivita,
M. V. Road, Andheri-Kurla Road,
Andheri (East), Mumbai - 400 059.
The branch office which I did my project is
# 1,20th main 100 feet Ring road,
BTM 1st stage, B’lore-560068

AWARDS & ACCOLADES:

Awards received in 2008:

• Received 2008 CIO Bold 100 and CIO Security Awards in Sept, 2008.
 • Received PC Quest Best IT Implementation Award 2008 in May, 2008.

• Silver Abby at Goa fest 2008 in March, 2008.

• Unit Linked Savings Plan Tops Mint Best TV Ads Survey in March, 2008.

• Deepak M Satwalekar Awarded QIMPRO Gold Standard Award 2007 in Feb, 2008.

• Sar Utha Ke Jiyo Among India’s 60 Glorious Advertising Moments in Jan, 2008.

• HDFC Standard Life has received the Diamond EDGE Award 2009 for its mobile
workforce portal - Consultant Corner. EDGE - Enterprises Driving Growth and
Excellence (using IT) is an initiative by the ,Network Computing magazine to identify,
recognize, and honor end-user companies in India that have demonstrated the best use of
technology to solve a business problem, improve business competitiveness, and deliver
quantifiable ROI to stakeholders.

Other rewards and honors:

“Best New Insurer” Award from Outlook Money – 2003.

“Most Respected Private Insurance Company” Award from Business World – 2004.

“Best New Insurer” Award from Outlook Money – 2006.

First Private Life Insurance Co. to get license from IRDA.

WORK FLOW MODEL IN HDFC SLIC

Life insurance is a mechanism for pooling the resources by issuing policy to the investors and
investing funds in securities in accordance with objectives as disclosed in offer document.
Investments in securities are spread among a wide cross-section of industries and sectors thus
the risk is reduced. Diversification reduces the risk because all stocks may not move in the
same direction in the same proportion at same time. Hence through diversification the
insurance company earns return through their investment and which is passed back to the
investors. This is just like a” LIFE CYCLE” which repeats in nature.

CHAPTER-3

MCKENSY’S 7 S FRAME WORK

• It is a management model that describes 7 factors to organize a company in a holistic

and effective way.

• Together these factors determine the way in which a corporation operates. Managers
should take into account all seven of these factors, to be sure of successful
implementation of a strategy. Large or small.

They're all interdependent, so if you fail to pay proper attention to one of them, this may
affect all others as well. On top of that, the relative importance of each factor may vary over
time.

STRATEGY:

It is the plan or course of action in allocating resources to achieve identified goals over
time.

Strategies Employed to achieve the target are as follows:-

• Telecalling.
• Contacting the person directly (interview).
• Collect references.

STRUCTURE:

The way people & work/ tasks are organized. For proper utilization of the Structure the
following steps can be followed in HDFC SLIC.

• Tasks define jobs.

 • Jobs define skills required.

• Skills (and other considerations) define staff.

• Collection of jobs basis for structure.

SYSTEMS:

All the processes & information flows that links the organization together.

• Communications practice and system.

• Management reporting system.

• Approval process.

• Planning/budgeting system.

• Rewards system including appraisal.

SHARED VALUES:

These are the core values of the company that are evidenced in the corporate culture &
the general work ethic. The values followed by HDFC SLIC are:

• Integrity
• Innovation
• Customer centric
• People Care “One for all and all for one”
• Team work
• Joy and Simplicity

STYLE:

The way the managers behave.

Sales officer is reporting to resident manager or sales manager in turn the resident
manger is reporting to regional manager in turn he /she reports to zonal manger in turn he
/she reports to general manager sales and marketing in turn he /she reports to chief
executive officer (CEO).
 STAFF&SKILLS:

The employees & their general capabilities.

• Human Resource Development at HDFC SLIC has been an integral part of the Company
since its inception. It has had a significant strategic role in the Company's growth process
and continues to do so. It is a function that has contributed to the bottom line of the
Company profiling system for its employees.

• Proper HR management processes is used to develop new managers who can lead the
organization.

CHAPTER-4
SWOT ANALYSIS

STRENGTH WEAKNESS

• TEAM WORK. • LACK OF MAN POWER IN

• BEST COST TO CUSTOMERS. TECHNICAL TEAM.
• SKILLED MANPOWER. • LATE SERVICE.
• HIGH QUALITY PRODUCTS OR • OLIGOPOLY PLAYER IN THE
SERVICES. MARKET.
• APPROPROATE FINANCIAL • HIGH COST.
RESOURCES.
 OPPURTUNITIES THREATS

• A DEVELOPING MARKET. • A LOCAL COMPETITOR’S IN

• THE FIRM FACING REPAID HOME MARKET.
GROWTH IN MARKETS. • PRICE WARE WITH
• SECOND MONOPOLY PLAYER IN COMPETITORS.
THE MARKET • TAXATION ON THE PRODUCT
• A MARKET VACATED BY IN AND SERVICE.
INEFFECTIVE COMPETITOR. • COMPETITORS HAVE SUPERIOR
ACCESS TO CHANNELS OF
DISTRIBUTION.

CHAPTER-5
HIGHLIGHTS OF FINANCIAL YEAR 2008-09

• Total Premium Income is up by 15% at Rs. 5564.69 crores as against Rs.

4858.56 crores in FY2007-08.
• Renewal premium collected increased to Rs. 2913.58 crores from Rs.
2173.19 crores in the previous year, registering a growth of 34%.
Effective Premium Income (EPI) in respect of retail business increased by
5%, growing from Rs 2,425 crores in 2007-08 to 2,552 crores in 2008-09.
• Alternate Channels, including bank assurance, contributed about 45% to
the Effective Premium Income (EPI).
• A well balanced product portfolio with pension comprising over 40%
Children plans around 25% and the remaining constituting protection and
savings plans,
• Total assets under management increased to Rs. 10,595 crores, registering
a growth of 24% over FY2007-08.
• Assets under management for the Group business have increased to Rs.
1075 crores, registering a growth of 12% over FY2007-08.
• Company products and services are now available through a network of
595 offices serving over 700 cities and towns across the country. This is
further complemented by corporate agency relationships with public, private
and co-operative banks.
• Strength of Financial Consultants reported year-on-year growth of 43% to
over 2, 07,000 in FY2008-09 compared to 1, 45,000 last financial year.

CHAPTER-6

LEARNING EXPERIENCE

The organizational study has given us a good corporate exposure & a great learning
experience. We were able to learn some of the theoretical aspects which are applied in
the day to day activities of the organization and those are as follows:
• We had a very good corporate exposure and learnt about
• Industry (in depth).
• Company’s business.
• Work flow.
• Stress management.
• Organization Behavior.
• Investment alternatives.
• Financial management.
• We attended various discussions and meetings with the Channel development
manager (CDM) on behalf of the company.
• We had been appointed as a FINANCIAL CONSULTANT (F.C).
• We had given a target to appoint 5 people as financial consultants for which each
appointment I would earn RS 1300/- as commission.
• We wrote I.R.D.A (insurance regulatory development authority) exam.
• We learnt how to motivate the people and make use of the benefits of the
organization.
• We have obtained all the information and explanations which, to the best of my
knowledge and belief were necessary for the purposes of my project and have found
 them to be satisfactory.

CHAPTER-1
A STUDY ON UNIT LINK INSURANCE PLAN (ULIP)
AS AN INVESTMENT ALTERNATIVE

INTRODUCTION TO ULIP:

In India, ULIP insurance policies are on the top in the popularity chart because it offers more
Benefits than traditional life insurance plans. There are many benefits are available such as
higher returns on investment, partial withdrawal, flexibility to choose life cover, wider fund
options, top up facility, free switches, tax benefits, etc.

If you are looking for long term investment and better returns, ULIP is a right option to
achieve your goal. But, you may find difficulties while purchasing the ULIP, because there are
single and regular premium option. You have to choose the right option for you.
In single premium ULIP, you need to pay a single payment and you will enjoy the benefits
throughout the policy term. In case of regular premium, you need to pay premium on regular
basis, it can be paid by annual, half annual, quarterly and monthly mode.
In terms of investment, both products offer similar options like equity, debt and liquid.
Under regular premium option you may ask for commitment to pay more. But, under single
premium product nobody will ask you to pay more as a matter of commitment.
In the initial years of ULIP, single premium product offer better returns than regular premium
product. But, its balance power shifts down latter. But this is not in effect, the product is sold
very aggressively due to IRDA norms. Regular premium ULIP products are also good in various
factors such as affordability, tax benefit and large return.
There are also ULIP charges to consider than single and regular premium. It is also important to
take an overview of different charges are under ULIP plans. It includes premium allocation
charge, risk cover charges, policy administration charges, fund management charges, service tax
charge, miscellaneous charge, etc.

At the end, ULIP is a good mixture of life cover and investment. But don't buy it for
investment purpose only, there are another good options available for the investment. Unit
Linked insurance plan (ULIP) is a life insurance solution that provides the client with the
benefits of protection and flexibility in investment.

WHAT IS ULIP?

ULIP stands for Unit Linked Insurance Plans. As we know that insurance is for protecting
our life from the any uncertain events like death or accident. The purpose of the normal
insurance plan is just protecting the life but not ensuring any savings for the future. Many
people wanted plan which gives protection also gives the returns for their investment. So,
insurance companies come up with the ULIP plan where the premium about is invested in the
share market and returns better income on the maturity period.

Unit-linked insurance plans, ULIPs, are distinct from the more familiar ‘with profits’ policies
sold for decades by the Life Insurance Corporation. ‘With profits’ policies are called so because
investment gains (profits) are distributed to policyholders in the form of a bonus announced
every year. ULIPs also serve the same function of providing insurance protection against death
and provision of long-term savings, but they are structured differently. In ‘with profits’ policies,
the insurance company credits the premium to a common pool called the ‘life fund,’ after setting
aside funds for the risk premium on life insurance and management expenses.

Every year, the insurer calculates how much has to be paid to settle death and maturity
claims. The surplus in the life fund left after meeting these liabilities is credited to
policyholders’ accounts in the form of a bonus. In a ULIP too, the insurer deducts charges
towards life insurance (mortality charges), administration charges and fund management
charges. The rest of the premium is used to invest in a fund that invests money in stocks or
bonds. The policyholder’s share in the fund is represented by the number of units.
The value of the unit is determined by the total value of all the investments made by the fund
divided by the number of units. If the insurance company offers a range of funds, the insured can
direct the company to invest in the fund of his choice. Insurers usually offer three choices an
equity (growth) fund, balanced fund and a fund which invests in bonds.
In both ‘with profits’ policies as well as unit-linked policies, a large part of the first year
premium goes towards paying the agents’ commissions.

WHICH IS BETTER, UNIT-LINKED OR ‘WITH PROFITS’?

The two strong arguments in favor of unit-linked plans are that — the investor knows exactly
what is happening to his money and two; it allows the investor to choose the assets into which he
wants his funds invested. A traditional ‘with profits,’ on the other hand, is a black box and a
policyholder have little knowledge of what is happening. An investor in a ULIP knows how
much he is paying towards mortality, management and administration charges. He also knows
where the insurance company has invested the money. The investor gets exactly the same returns
that the fund earns, but he also bears the investment risk. The transparency makes the product
more competitive. So if you are willing to bear the investment risks in order to generate a higher
return on your retirement funds, ULIPs are for you.

Traditional ‘with profits’ policies to invest in the market and generate the same returns
prevailing in the market. But here the insurance company evens out returns to ensure that
policyholders do not lose money in a bad year. In that sense they are safer. ULIPs also offer
flexibility. For instance, a policyholder can ask the insurance company to liquidate units in his
account to meet the mortality charges if he is unable to pay any premium
installment. This eats into his savings, but ensures that the policy will continue to cover his
life.

CHARGES UNDER ULIP

1. Contribution Related Charges

These are the charges that are represented as a percentage of the regular or single contribution
paid. In case of a regular contribution plan, it is usually high in the first year to pay for the
distribution cost. This charges pays for the issuance and for distribution commissions. This
charges are running for the policy.

2. Administrative Charges

These are charges that are levied for the administration of the policy and the related cost of
Administration of the insurance company, itself. They are more related to the cost like IT,
operational, etc cost of continuing the policy.
3. Fund Management Charges

These are the charges for buying and selling debt and equity. These are the charges are
adjusted in NAV itself.

4. Mortality Charges

This covers the cost of providing life protection for the insured and may be paid once at the start
of the policy for a recurrent manner for example this charges levied to provide the
insurance cover under the plan. normally these charges are one year charges as per the age of the
holder.

5. Rider charges

Rider charges are similar in nature to the mortality charges as they are levied to pay for the
other protection benefits that the policy holder has chosen for- like the critical illness benefit Or
the accident benefit, etc.

6. Surrender Charges

When the policy holder decides to surrender the policy or partially withdraw some of the
units for cash, a surrender charge may apply. Surrender charges are used to cover initial expenses
that have been incurred by the company but not yet recovered from the policyholder yet.

7. Bid offer Charges

In ULIP specifically certain insurers might create a difference in the price at which they sell the
unit and the price at which they buy the units. Investor’s contribution are used to buy units in the
investment fund at the offer price and are sold when benefits are required at the bid price. The
difference between the offer and bid prices Is known as the “bid-offer spread", this is used to
cover expenses when setting up the policy.

8. Transactional specific Charges

These charges are levied when the client does some specific transaction like changing funds,
Topping up the investment component or withdrawals.

BENEFITS OF UNIT LINKED PLAN

ULIP distinguishes itself through the multiple benefits that it provides to the consumer. The plan
is a one stop solution providing:

1. Life protection.
2. Investment and Savings.
• Market linked fund based on risk profile.
• Switch option.
• Premium redirection.
• Automatic transfer plan (ATP).
3. Flexibility of cover continuance.
4. Transparency.
5. Extra protection with riders.
• Death due to accident
• Disability
• Critical illness
6. Liquidity
• During the term partial withdrawals
• At Maturity.
7. Tax planning.

HOW TO SELECT THE RIGHT ULIP

For a product capable of adding significant value to investors' portfolios, ULIPs have far too
many critics. We at Personal have interacted with a number of investors who were very
disillusioned with their ULIPs investments; often the disappointment stemmed from poor and
inappropriate selection.
We present a 5-step investment strategy that will guide investors in the selection process and
enable them to choose the right ULIP.
1. Understand the Concept of ULIPs

Do as much homework as possible before investing in an ULIP. This way you will be fully
Aware of what you are getting into and make an informed decision. More importantly, it will
ensure that you are not faced with any unpleasant surprises at a later stage. Our experience
suggests that investors on most occasions fail to realize what they are getting into and
unscrupulous agents should get a lot of 'credit' for the same. Gather information on ULIPs, the
various options available and understand their working. Read ULIP-related information available
on financial Web sites, newspapers and sales literature circulated by insurance companies.

2. Focus On Your Need And Risk Profile.

Identify a plan that is best suited for you (in terms of allocation of money between equity and
debt instruments). Your risk appetite should be the deciding criterion in choosing the plan. As a
result if you have a high risk appetite, then an aggressive investment option with a higher equity
component is likely to be more suited. Similarly your existing investment portfolio and the
equity-debt allocation therein also need to be given due importance before selecting a plan.

3. Compare ULIP Products from Various Insurance Companies

Compare products offered by various insurance companies on parameters like expenses,

Premium payments and performance among others. For example, information on premium
payments will help you get a better picture of the minimum outlay since ULIPs work on
premium payments as opposed to sum assured in the case of conventional insurance products.
Compare the ULIPs' performance i.e. find out how the debt, equity and balanced schemes are
performing; also study the portfolios of various plans. Expenses are a significant factor in ULIPs,
hence an assessment on this parameter is warranted as well.
Enquire about the top-up facility offered by ULIPs i.e. additional lump sum investments
which can be made to enhance the policy's savings portion. This option enables policyholders to
increase the premium amounts, thereby providing presenting an opportunity to gainfully invest
any surplus funds available.

Find out about the number of times you can make free switches (i.e. change the asset
allocation of your ULIP account) from one investment plan to another. Some insurance
companies offer multiple free switches every year while others do so only after the
completion of a stipulated period.

4. Go for an Experienced Insurance Advisor

Select an advisor, who is not only conversant with the functioning of debt and equity markets,
but also independent and unbiased. Ask for references of clients he has serviced earlier and
Cross-check his service standards. When your agent recommends a ULIP from a given company,
put forth some product-related questions to test him and also ask him why the products from
other insurers should not be considered.

Insurance advice at all times must be unbiased and independent; also your agent must be
willing to inform you about the pros and cons of buying a particular plan. His job should not be
restricted to doing paper work like filling forms and delivering receipts; instead he should keep
track of your plan and offer you advice on a regular basis.

5. Does Your ULIP Offer A Minimum Guarantee?

In a market-linked product, protecting the investment's downside can be a huge advantage.

Find out if the ULIP you are considering offers a minimum guarantee and what costs have to be
borne for the same.

ARE ULIPS SIMILAR TO MUTUAL FUNDS?

In structure, yes; in objective, no. Because of the high first-year charges, mutual funds are a
better option if you have a five-year horizon. But if you have a horizon of 10 years or more, then
ULIPs have an edge. To explain this further a ULIP has high first-year charges towards
acquisition (including agents’ commissions).

As a result, they find it difficult to outperform mutual funds in the first five years. But in the
long-term, ULIP managers have several advantages over mutual fund managers.
Since policyholder premiums come at regular intervals, investments can be planned out more
evenly. Mutual fund managers cannot take a similar long-term view because they have bulk
investors who can move money in and out of schemes at short notice.

WHY DO INSURERS PREFER ULIPS?

Insurers love ULIPs for several reasons. Most important of all, insurers can sell these policies
with less capital of their own than what would be required if they sold traditional policies. In
traditional ‘with profits’ policies, the insurance company bears the investment risk to the extent
of the assured amount. In ULIPs, the policyholder bears most of the investment risk. Since
ULIPs are devised to mobilize savings, they give insurance companies an opportunity to get a
large chunk of the asset management business, which has been traditionally dominated by mutual
funds.

ADVANTAGE

1. The accretion to the fund invested can be checked on daily basis unlike the traditional
Policies.
2. There is lot more flexibility like partial withdrawal, switching, redirection, early
withdrawal, Sum Assured reduction, top up contribution, etc.
3. Charges are transparent in nature, with the latest AML guidelines insisting on common
nomenclature of charges for all insurance companies.
4. The customer can time the market by exercising switch options and make
the most when markets are zooming or choose to be conservative when
markets are falling. It’s thus win-win situation
5. He gets a life cover at a nominal cost unlike mutual funds,
6. Almost all companies provide riders like accidental death and disability/dismemberment
riders, critical illness rider, hospital cash benefit rider, income loss rider, etc
7. Stages in one life like education of children, marriage, and retirement needs
can be soundly planned by the help of ULIPs.
8. Tax advantages are also offered by the ULIPs.

DISADVANTAGES
1. Investors find it difficult to understand the nuances of capital market and
therefore go by the herd mentality. i.e., they invest because their friends and
family is investing without understanding how ULIPS are designed.
2. ULIPS are attractive for risk taking people and less attractive for risk adverse people.
3. Some consider taking term insurance and a mutual fund as a combination to
beat the ULIP.
4. Some consider charges levied exorbitant and not commensurate to the returns offered
5. The complicated design of the polices make them less aware of the product features and
chances of misspelling by agents are very high.

ULIP AND MUTUAL FUNDS DIFFERENCE?

In structure both ULIP and Mutual Funds looks similar. But, in objective they are different.
Because of the high first-year charges, mutual funds are a better option if you have a five-year
horizon. But if you have a horizon of 10 years or more, then ULIPs have an edge. To explain this
further a ULIP has high first-year charges towards acquisition (including agents’ commissions).
As a result, they find it difficult to outperform mutual funds in the first five years. But in the
long-term, ULIP managers have several advantages over mutual fund managers. Since
policyholder premiums come at regular intervals, investments can be planned out more evenly.
Mutual fund managers cannot take a similar long-term view because they have bulk investors
who can move money in and out of schemes at short notice.

Unit Linked Insurance Plan, popularly called ULIP, it is to be borne in mind that ULIP’s
being a market linked instrument will fetch good returns on a long term basis. The basic
advantage of a ULIP over other investment instruments is that it offers the twin benefits of
life insurance as well as an investment. Apart from that, there are a number of ways in which
ULIP’s can prove to be advantageous over Mutual Funds, Regular Insurance Policies and Fixed
Deposits. Let’s analyze:

ULIP VS MUTUAL FUND

1. Flexibility on Mode of Investment/investment amounts

ULIP provide the flexibility to alter the premium amounts during the policy’s tenure. Surplus
funds can be used to enhance the contribution thereby ensuring that the funds are gainfully
invested. Alternatively, lower payments can be made when faced with a liquidity crunch (the
difference being adjusted in the accumulated value of the ULIP). This option of modifying
premium payments at one’s convenience clearly give ULIP an edge over Mutual Funds.

2. The cost factor for altering Asset Allocation

In Mutual Funds, shifting the corpus into a debt from the same fund house will involve an exit
load and/or entry load. On the other hand, in a ULIP, the option to invest across asset classes as
per your convenience is very cost-effective Most insurance companies allow shifting the
investments across various plans/asset classes either at a nominal or no cost. This can prove to be
very useful. For example, in a bull market when the ULIP investor’s equity component has
appreciated, he can book profits by simply transferring the requisite amount to a debt oriented
plan.

3. Tax Benefits

ULIP’s qualify for tax benefits under Section 80C of the Income Tax Act. This holds good
for any kind of plan chosen by the investor. In Mutual Funds, only investments in tax-saving
funds (also referred to as equity-linked savings schemes) are eligible for Section 80C benefits.

ULIP VS REGULAR INSURANCE POLICY

ULIP’s and Traditional policies both work alike. A part of the premium is set aside for life
cover and the rest are invested in a fund after deducting charges.
The main advantage of a ULIP is that the investor knows exactly about the break-up of his
Premium into life cover, the fees being paid and the amount being invested in a fund. The
performance of the funds can also be tracked as the returns are linked to the market
performance. On the other hand, in traditional policies, no information about the break-up of a
charge is shared with the investor. He also does not know whether the bonuses paid to him every
year is all that his fund has made or whether the company is giving him only a share of the
profits. Policies encourage savings whereas ULIPs take the investment path and hence have
higher growth options.

ULIP VS FIXED DEPOSIT

There is always a degree of risk, however small, involved in a ULIP. Traditionally, investors
preferred investing in safer instruments like Fixed Deposits, despite the lower returns. But Fixed
Deposits are able to only beat the inflation. On the other hand a ULIP is a market linked plan
with an equity exposure. A plan with an equity exposure for a long term usually consistently
gives better returns than any other asset like Fixed Deposit or Bonds.

ULIP AN BETTER INVESTMENT OPTION FOR YOUR MONEY

Maximiser:

If high growth is your priority, this is the plan for you. You can enjoy long-term
Capital appreciation from a portfolio that is invested primarily in equity and equity-related
Securities.

Protector:

If on the other hand, your priority is steady returns, you can opt for the protector
Plan. Plan, you can accumulate a steady income at a low risk across a medium to long-term
Period from a portfolio, which is primarily, invested in fixed income securities.

Balancer:

If you prefer a balance of growth and steady returns, choose our balancer plan.
This would ensure that your portfolio is invested in equity-linked securities, as well as in
fixed income securities.

Preserver:

The objective of this plan is not ensuring capital protection by investing in very
Low risk investments like the cash and call money markets. However, the returns generated may
also be on the lower side due to the investment pattern. At inception, investments up to 20% can
be allocated to this fund.
 POTENTIAL
FUND TYPE ASSET MIX RISK /REWARD

Maximiser Equity& Related securities:

Max 100%
High
Debt, Money market & Cash:
Max 25%

Debt. Money market & Cash: Moderate

Balancer Min 60%
Equity & Related securities:
Max: 40%

Debt Instruments, Low

Money market & Cash: Max
Protector
100%:

Debt Instruments: Max 50% Capital

Money market & Cash: Min preservation
Preserver
50%

ARE UNIT-LINKED INSURANCE PLANS GOOD?

Most insurers in the year 2004 have started offering at least a few unit-linked
plans. Unit-linked life insurance products are those where the benefits are
expressed in terms of number of units and unit price. They can be viewed as a
Combination of insurance and mutual funds.

The number of units that a customer would get would depend on the unit price
when he pays his premium. The daily unit price is based on the market value of
the underlying assets (equities, bonds, government securities, et cetera) and
computed from the net asset value.

The advantage of unit-linked plans is that they are simple, clear, and easy to
understand. Being transparent the policyholder gets the entire upside on the
performance of his fund. Besides all the advantages they offer to the
customers, unit-linked plans also lead to an efficient utilization of capital.
Unit-linked products are exempted from tax and they provide life insurance.
Investors welcome these products as they provide capital appreciation even as
the yields on government securities have fallen below 6 per cent, which has
made the insurers slash payouts.

According to the IRDA, a company offering unit-linked plans must give the
investor an option to choose among debt, balanced and equity funds. If you
opt for a unit-linked endowment policy, you can choose to invest your
premiums in debt, balanced or equity plans.

If you choose a debt plan, the majority of your premiums will get invested in
debt securities like gilts and bonds. If you choose equity, then a major portion
of your premiums will be invested in the equity market. The plan you choose
would depend on your risk profile and your investment need.

The ideal time to buy a unit-linked plan is when one can expect long-term
growth ahead. This is especially so if one also believes that current market
values (stock valuations) are relatively low. So if you are opting for a plan that
invests primarily in equity, the buzzing market could lead to windfall returns.
However, should the buzz die down, investors could be left stung.

If one invests in a unit-linked pension plan early on, say when one is 25, one
can afford to take the risk associated with equities, at least in the plan's initial
stages. However, as one approaches retirement the quantum of returns should
be subordinated to capital preservation. At this stage, investing in a plan that
has an equity tilt may not be a good idea.

Considering that unit-linked plans are relatively new launches, their short
history does not permit an assessment of how they will perform in different
phases of the stock market. Even if one views insurance as a long-term
commitment, investments based on performance over such a short time span
may not be appropriate.

ULIPS- SYSTEMATIC INSURANCE CUM INVESTMENT PLAN

Any individual who has purchased a life insurance policy in the last year or so surely would have
a Unit Linked Insurance Plan (ULIP). ULIPs have been selling like Wonder Products in the
recent past and they are likely to continue to outsell their plain vanilla counterparts going Ahead.

A ULIP is a market-linked insurance plan. The difference between a ULIP and other
insurance plans are the way in which the premium money is invested. Premium from, say, an
Endowment plan, is invested primarily in risk-free instruments like government securities (gsecs)
and AAA rated corporate paper, while ULIP premiums can be invested in stock markets in
addition to corporate bonds and gsecs. So what else apart from this reason makes ULIPs so
attractive to the individual? Here, we have explored some reasons, which have made ULIPs so
irresistible.

Transparency

However, ULIPs offer a transparent option for customers to plan their various life stage needs
through market-led investments as compared to traditional investment plans.

Insurance cover plus savings

ULIPs serve the purpose of providing life insurance combined with savings at market-linked
returns. To that extent, ULIPs can be termed as a two-in-one plan in terms of giving an individual
the twin benefits of life insurance plus savings. This is unlike comparable
instruments like a mutual fund for instance, which does not offer a life cover.

Multiple investment options

• ULIPs offer variety than traditional life insurance plans. So there are multiple options at
the individual's disposal. ULIPs generally come in three broad variants
• Aggressive ULIPs (which invest 80%-100% in equities, balance in debt)
• Balanced ULIPs (invest around 40%-60% in equities)
• Conservative ULIPs (invest up to 20% in equities),
Although this is how the ULIP options are generally designed, the exact debt/equity
allocations may vary across insurance companies. A ULIP policyholder has the option to
invest in a variety of funds, depending on his risk profile. If one does not have the appetite
to invest in equity, they can choose a debt or balanced fund.

Flexibility
Individuals can switch between the ULIP variants outlined above to capitalize on
investment opportunities across the equity and debt markets. Some insurance companies
allow a certain number of free' switches. For instance, when stock markets were on the brink of
7,000 points (Sensex), the informed investor could have shifted his assets from an Aggressive
ULIP to a low-risk Conservative ULIP.They can shift from an Aggressive to a Balanced or a
Conservative ULIP as they approach retirement.

Works like a SIP

Rupee cost-averaging is another important benefit associated with ULIPs. Individuals have
Probably already heard of the Systematic Investment Plan (SIP), this is increasingly
being advocated by the mutual fund industry. With an SIP, individuals invest their monies
regularly over time intervals of a month/quarter and don't have to worry about `timing' the
stock markets. These are not benefits peculiar to mutual funds. Not many realize that
ULIPs also tend to do the same, albeit on a quarterly/half-yearly basis. As a matter of fact,
even the annual premium in a ULIP works on the rupee cost-averaging principle.

VARIOUS ULIP PLAN PROVIDED BY HDFC:

Protection-
Need for a sound income protection in case of your unfortunate demise.

Investment-
Need to ensure long-term real growth of your money.

Saving-
Save for the milestones and protect your savings too.

Pension-
Need to save for a comfortable life Post retirement.

Once you have analyzed your needs as per above classification, you need to
then ascertain important factors such as type of cover, insurance amount as
per one's income, life stage and dependents. It is difficult to arrive at all these
Figures yourself. Our financial consultants can help you with all analysis to offer
a customized solution by doing a thorough need analysis. So contact financial
consultants to help you choose the right plan for you. Your insurance need will
change as your life does, from starting to work to enjoying your golden years
and all the stages in between. Each one of these stages may pose a different
insurance need/cover for you. In this section, we have drawn up the basic life
stages and help you analyze various insurance needs accordingly.

STAGE 1
Young and Single-
An important Stage where one lays down the foundation of a successful life ahead. Take
advantage of the time and power of compounding to ensure that you build up your dreams. Start
saving early;

You’re Needs -
1 Save for a home and wedding.
2 Tax Planning.
3 Save for Golden years.

STAGE 2
Just Married - Marriage brings about a significant change. New dreams and new opportunities
also bring in additional responsibilities. While both of you look forward to a happy and secure
life, it is equally important to ensure that eventualities don't come in the way of shaping your
dreams.
You’re Needs -
1 Planning for home/securing your home loan liability
2 Save for vacation
3 Save for your first child

STAGE 3
Proud Parents - Once you have children, your need for life insurance is even more. You need to
protect your family from an untoward incident. Ensure your protection umbrella takes into
Account the future cost of securing your child's dream. You will want life to go on for your loved
ones, and having enough life insurance is a way to help ensure that.
Your needs -
1 Provide for children's education.
2 Safeguarding family against loan liabilities.
3 Savings for post-retirement.

STAGE 4
Planning for Retirement - While you are busy climbing the ladder of success today, it is
important for you to take time and plan for your life after retirement. Having an early start for
retirement planning can make a significant difference to your savings. Think about your golden
years even before you have reached them. The Key is to think ahead and plan well using your
time and money.
Your needs -
1 Provide for regular income post retirement.
2 Provide for regular income post retirement.
3 Lead a secure, independent and comfortable life style in your retirement year.

POINTS OF PARITY
FUNDS AVAILABLE WITH ULIP PLANS

Generally all life insurance companies have three types of fund which are Equity fund, Debt fund
and Balance fund. These funds have different risk profile. Equity fund has high risk but it gives
high return, Debt fund has low risk so it gives low return and balanced fund is combination of
both Equity and Debt fund so risk is medium and return is also low.

FUND OPTIONS AND MANAGEMENT OF ULIP:

Understand the various fund options available to you and the fund management philosophy and
objectives of each of them. Examine the track record of the funds and how they are performing
in comparison to benchmarks. Who manages the funds and what experience do they have? Are
there adequate controls? Importantly, look at how easily you can access information about your
fund's performance when you need it -- are their daily NAVs? Is the portfolio disclosed
regularly?

FEATURES:

Most ULIPs are rich in features such as allowing one to top-up or switch between funds,
increase or decrease the protection level, or premium holidays. Carefully understand the
conditions and charges associated with each of these. For instance, is there
A minimum amount that must be switched? Is there a charge on the same? Must you go
through medical underwriting if you want to increase the sum assured?

COMPANY:
Last but not least, insure with a brand you can trust to honor its commitment and service you
according to your requirements.

First and foremost, investors need to understand that a ULIP is a bundled product of their
investments and their insurance proceeds. Since privatization in 2000 and the introduction of
ULIPs as a life insurance product category, the overall insurance penetration in the country has
grown from around 2% to 4%. Today, more than 70 per cent of the new business premium for
life insurers comes from Ulips.

All Ulips have several funds in which your money can be put to work, much like a mutual
fund. Assuming that you choose the growth or the equity plan, ask for the NAV
performance for the last two years at least. Choose three with the highest performance
track record vis-a-vis the benchmark. Now choose the best performing policy in terms of
returns with the lowest cost.

Here's a 5-step investment strategy that will guide investors in the selection process and
enable them to choose the right unit-linked insurance plans (ULIPs).

But before we get there, let's understand what ULIPs are all about?

For the generation of insurance seekers who thrived on insurance policies with assured
returns issued by a single public sector enterprise, unit-linked insurance plans are a
revelation.

Traditionally insurance products have been associated with attractive returns coupled with tax
benefits. The returns part was often so compelling that insurance products competed with
investment products for a place in the investor's portfolio. Perhaps insurance policies then were
symbolic of the times when high interest rates and the absence of a rational risk-return trade-off
were the norms.

The subsequent softening of interest rates introduced a degree a much-needed rationality to

insurance products like endowment plans; attractive returns at low risk became a thing of the
past. The same period also coincided with an upturn in equity markets and the emergence of a
new breed of market-linked insurance products like ULIPs.
TITLE OF THE STUDY

A STUDY ON “ULIP AS AN INVESTMENT ALTERNATIVE”

A Study has been conducted in the area of “ULIP AS AN INVESTMENT ALTERNATIVE” at
HDFC STANDARD LIFE INSURANCE CO LTD.

STATEMENT OF THE PROBLEM

It is always very difficult to make investment decisions in this world of insurance business. It
demanded investors to be knowledgeable and tact full regarding the insurance market. Since,
many ULIP products are introduced with in a very short span of time; people even having lot of
money are confused to invest their hard earning money in effective manner in insurance sector,
because they need their own preferred ULIP policies to invest.

Unit linked insurance plan (ULIP) of HDFC standard life to know the investment pattern in
insurance market. Because there are lots of insurance companies offering a number of insurance
policies with different schemes and benefits these policies have to frame considering interest and
preferences of the different kinds of people. The insurance companies has to know which type of
the policies can satisfy the needs and preferences of the different people in the society, so that the
investor can invest his/ her savings in those policies which are most suitable & beneficial.

Therefore the study emphasizes on:

• Investors’ preferences and awareness regarding ULIP products.

• ULIPs a better investment option for investor money.

• Mobilization of savings of investors.

OBJECTIVES OF THE STUDY

The Objective of the study is to determine the extent of awareness of financial

 planning in India and the understanding of insurance among the masses. The

Scope of the study involves:

• To understand the concept of financial planning.

• To compare traditional investment instruments (Mutual Funds etc.) with

investment in Insurance.

• To study the growth pattern and reasons for growth of INSURANCE (ULIP)

market in India.

• To study ULIP as an investment alternative.

• To know how the people make investment decisions.

RESEARCH METHODOLOGY / DESIGN

Type of Study:

The study at HDFC SLIC is a combination of analytical and practical study. It is based on data
collected from records of the company and is administered to various departmental heads
connected with Fund Management.

Types of Data:

• Primary Data:

This data was collected from discussions and interactions with our respective mentor by:
 • Observation method.
• Interviewing method.
• Through questionnaires.

2. Secondary Data:
Secondary data means data that are already available that is they
refer to the data which have already been collected and analyzed by
someone else. The sources of secondary data can be given as under.

• Various publications of the central, state and the local governments.

• Various publications of foreign government or of international

bodies and their subsidiary organizations.

• Technical trade journals.

• Books, magazines and newspapers.

• Reports and publications of various associations connected with

business and industry banks stock exchanges etc.

• Public records and statistics, historical documents and other sources

of published information.

In my study we have used both primary and secondary data. For

primary data collection we have prepared a questionnaire consisting of
open end questions. Questions are prepared in such a way maximum
information can be obtained from the respondents.

In the secondary data we have used the information available

 with the branch and from the organization website
www.hdfcinsurance.com

1: PLANNING OF THE SURVEY:-

Preplanning is sine-guenon for any kind of survey. Their must be some preliminary
Preparation. first and foremost we decided the topics to works on and then prepared some
question related to the topic considering every possible point of view .finally, we framed
the questionnaire and we used simple words and easy sentences to be fairly
understood.

2:-OBJECTIVE OF THE SURVEY:-

The objective of any survey is to study the opinion of the respondent about the chosen
items. The opinions are drawn in the form of answer given to the set of question in the
questionnaire.
The topic of the present survey is
“THE STUDY ON ULIP AS AN INVESTMENT ALTERNATIVE”

SAMPLING DESIGN:-
1).Type of research-Descriptive and Conclusive.
2)-Data type –Primary data and secondary data.
3)-Sampling size -50.
4) Data collection method –Questionnaire (multiple choice, open-ended, dichotomous),
interview and observation.
5)-Data collection instruments-structured questionnaire.
6)-Sample unit-Investors visiting at HDFC SLIC Btm layout, Bangalore
7)-Sample technique –Random.
8)-Sampling method-Non-probability sampling.
9)-Period of study-6 weeks.
10)-Data analysis Tools and techniques – Bar and Pie Charts.

LIMITATIONS OF STUDY:
1. Lack of financial assistance caused the study to be limited over a confined area.
2. Lack of awareness among people about insurance as an investment product remained
the cause for not getting proper responses from some of the people.
3. As the Unit Linked plans are market dependent and have certain amount of risk
associated with them, people do not easily trust them.
4. Aggressive sales strategy of Public insurance players may cause inconvenience
to some people. Thus they do not furnish correct information in the
Questionnaire filled by them.
5. The project was constrained by time limit of two months.
6. Mindset of people may vary depending upon their age, gender, income etc.
7. Getting appointment from the concern person was very difficult.
8. Respondents were very busy in their schedule. So it was very less time taken in every
Questionnaire response by them.
9. The sample size is restricted within Bangalore. So we cannot generalize the result of the
universe.

10. The information revealed by the respondents may be biased. Some of the respondents were
not willing to disclose certain facts. This may have affected the accuracy of the data.

CHAPTER-2
ANALYSIS AND INTERPRETATION
2.1 Age group of surveyed respondents
Table: 1
AGE GROUP NO OF RESPONDENTS PERCENTAGE
18-25 Years 26 52%
26-35 Years 10 20%
36-49 Years 10 20%
Above 50 years 4 8%
Total 50 100%

INTERPRETATION:
From the chart above we find that 26 of the respondents fall in the age group
of 18 – 25 years, 10 fall in the age group of 26 – 35 years, 10 fall in the
age group of 36 – 49 years and 4 fall in age group of above 50 years.
Therefore most of the respondents are relatively young (below 30 years of
age). These individuals could be induced to purchase insurance plans on the
basis of its tax saving nature and as an investment opportunity with high returns.

2.2 PROFILE OF RESPONDENT

TABEL: 2

PROFILE NO OF RESPONDENTS
STUDENT 10
HOUSE WIFE 8
WORKING PROFESSIONAL 14
BUSS/SELF-EMPLOYED 8
GOVT.EMPLOYEE 10

INTERPRETATION:

Above chart shows that the 28% respondents are working professional can put their money as
investment and tax savings, 16% are house wife will invest their money for the family
responsibility, 20% students work as financial consultants and invest their funds for building
there career, 20% are government employees who plan their investments as pension schemes and
finally 16% are business and self employed who are in least who ultimately look for high returns.

2.3 AWARENESS ABOUT ULIPS IN THE MARKET

TABEL: 3

AWARENESS ABOUT ULIPS IN THE MARKET

YES 40

NO 10
INTERPRETATION:

This graph shows that out of total 50 respondents only 40 or 80% respondents
Know ULIPs. Rest all don’t know about ULIPs so there is a very big scope for life insurance
companies to cover these people. So in future business of life insurance will grow further.

2.4 PREMIUM (P.A) PAID BY INDIVIDUALS FOR LIFE INSURANCE

TABEL: 4
PREMIUM PAID (RS) NO OF RESPONDENTS
Rs. 5000-Rs.15000 24
Rs.15001-Rs.50000 12
Rs.50001-Rs.80000 4
Rs.80001-Rs.100000 6
More than 100000 4

INTERPRETATION:
From the chart above we find that, 48% of the respondents surveyed pay an
Annual premium less than Rs. 15000 towards life insurance. 24% of them pay an annual
premium less than Rs. 50000 and 8% pay less than Rs. 80000. Hence we can safely say that
HDFC SLIC would be able to capture the market better if it introduced products/plans where the
minimum premium starts at Rs. 5000 per annum. Only 8% of the respondents pay more than Rs.
100000 as premium and most products sold by HDFC SLIC have Rs.12000 as the minimum
annual premium amount. They should introduce more products like Easy Life Plus and Safe
Guard where the minimum premium is Rs.6000 p.a. and Rs. 12000 p.a. respectively. This would
definitely increase their market share as more Individuals would be able to afford the
policies/plans offered.

2.5 POPULAR LIFE INSURANCE PLANS

TABEL: 5
TYPE OF PLAN NO OF RESPONDENTS
Life insurance 10
Life insurance & investment plan 24
 Pension plans & child plans 6
Tax savings plans 10
Total 50

INTERPRETATION:

From the chart given above we can clearly see that 10 or 20 % of the respondents
hold life insurance plans and 24 or 48% of the respondents hold life insurance cum investments
plans. If the policy holder dies during the policy term the nominee gets the death benefit that is,
sum assured and accumulated bonus. On survival the policy holder receives the survival benefit
with a bonus, 6 or 12% hold pensions plans so that they can led the life after retirement and
finally 10 or 20% of respondents hold tax savings plans so that the ensure safety for their money.

2.6 CONSUMER WILLINGNESS TO SPEND ON PREMIUM

TABEL: 6
WILLINGNESS TO SPEND ON PREMIUM NO OF RESPONDENTS
< Rs.6000 8
Rs.6001-Rs.10000 14
Rs.10001-Rs.25000 14
Rs.25001-Rs.50000 8
Rs.50000-Rs.100000 6

INTERPRETATION:

From the graph above, we can clearly see that 16% of the respondents would
Be willing to spend < Rs. 6001 for life insurance. 28 % would be willing to spend between Rs.
6001 – Rs. 10000 per annum. Only 28% would be willing to spend Rs.10001- Rs. 25000 p.a
premium. We could say that the maximum premium payable by most consumers is less than Rs.
25000 p.a. HDFC SLIC is facing with a large amount of competition. There are 18 insurance
companies in India inclusive of LIC. Hence to capture a larger part of the market the company
could introduce more reasonable plans
with lesser premium payable per annum.

2.7 CHART SHOWING IDEAL POLICY TERM

TABEL: 7
 IDEAL POLICY TERM NO OF RESPONDENTS
3-5 YEARS 22
10-15 YEARS 10
16-20 YEARS 4
21-30 YEARS 8
WHOLE LIFE POLICY 6

INTERPRETATION:

From the chart given above it can be seen that 22 or 44% of the respondents prefer a
policy term of 3– 5 years, 10 or 20% prefer a term of 10 – 15 years and 4 or 8% prefer a
term of 16 – 20 years. This means that HDFC SLIC could introduce more plans
Where in the premium paying term is less than 15 years. The outlook of insurance as a product
should be changed from something which you pay for your whole life (whole life policy) and do
not receive any benefit (the nominee only receives the benefit in case of your death) to an
extremely useful investment opportunity with the prospects of good returns on savings, tax
saving opportunities as well as providing for every milestone in your life like marriage,
education, children and retirement.

2.8 FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE

INSURANCE
TABEL: 8
PARAMETER NO OF RESPONDENTS
ADVERTISEMENTS 8
HIGH RETURN 28
ADVICE FROM FRIENDS 8
FAMILY RESPONSIBILITY 6
TOTAL 50

INTERPRETATION:

From the chart above it can be seen that 12% of the respondents purchase life
insurance to secure their families, 56% take life insurance to get high returns,
16% purchase insurance on the advice of their friends and 16% purchase
insurance because of the influence of advertisements. The main purpose of insurance is to cover
the financial or economic loss. But now days this trend is changing. Along with protection (life
cover), a savings With the introduction of the new unit linked plans in the market is playing
major role.

2.9 PREFERRED COMPANY TO PURCHASE INSURANCE

TABEL: 9
TYPE OF COMPANY NO OF RESPONDENTS
GOVT.OWNED 16
PUBLIC LTD CO 10
PRIVATE CO 16
FOREIGN CO 8

INTERPRETATION:

From the graph above we find that 32% of the respondents preferred to purchase insurance from
a government owned company and private company, 20% of the respondents preferred to
purchase insurance from a public limited company, and only 16% of the respondents preferred a
foreign based company. Heavy advertising through television, newspapers, magazines and radio
is required.

2.10 MINIMUM EXPECTED RETURN ON INVESTMENT

EXPECTED RETURN NO OF RESPONDENTS

LESS THAN 5% 4
10%-20% 24
21%-30% 12
31%-40% 6
MORE THAN 50% 4
TABEL: 10

INTERPRETATION:

From the chart above it can clearly been seen that 8% of the respondents would like < 5%
returns, 48% would like returns between 10 – 20% and 24% would like returns of 21 – 30% on
their investments. Therefore the average return on investment should be at least 10 – 30 %. Most
consumers are willing to adapt to some amount of risk but still want some guaranteed returns.
Therefore the bulk of investment should be made in the balanced fund with 50% debt and 50%
equity. The returns on the Secure Fund are guaranteed as these involve investment in government
securities and the debt market. But the returns on these instruments are low (8 – 10%). If the
company invests in shares, returns are higher (39%) but correspondingly risk Borne by the policy
holder is also higher. Therefore a good combination of the two instruments is often a wise
choice.

CHAPTER-3
FINDINGS

• There is a great future of the life insurance sector in India as 80% of the Indian
population is still without life cover and people are just now coming in response to the
awareness campaigns being carried out by almost all the insurance companies.

• We have found out that age plays a major role in deciding the investment patterns of
people as generally the younger class of people tend to take more risk and invest in the
older class of people.

• Life insurance corporation (LIC) of India is still the undisputed market leader as 32% of
the respondent surveyed owned a policy in it and it has also got a tremendous rating of 3
out of 5 in the survey conducted.

• All the products of HDFC SLIC are really very good and have an edge over most of the
products of other major life insurance companies as the plans offered by the company are
very flexible.

• ULIP has its own brand equity in the insurance sector because most of the people invest
in Ulips for the tax and savings purpose.

• Private companies have a great scope in insurance market cause majority of the people
like their savings to invest in private sector and as in the survey nearly 40% have invested
 in private owned companies.

• HDFC SLIC have about 15-20 ULIPS plans staring from children plan to retirement and
pensions plans which has a wider scope for the investor to invest their money according
to their needs

RECOMMENDATIONS:

• Bring out ULIPS policies with small premiums payable for short periods of time Rs.
5000 – Rs. 10000 per annum for 10 years.

• Attract the youth of India with higher returns on investment as returns are the motivating
factor which influence purchase of ULIPS.
• HDFC SLIC could tap the rural markets with cheaper products and smaller policy terms.
There are individuals who are willing to pay small amounts as premium but the plans do
not accept premiums below a certain amount. It was usually found that a large number of
males were insured compared to females. Individuals below the age of 30 (mostly male)
were interested in investment plans. This was a general conclusion drawn during
prospecting clients.
• HDFC Standard Life insurance should establish their Branches in Rural areas where they
can capture a good market.
• The company faces a large amount of competition. To sustain itself it must promote its
products through advertising and improve its selling techniques. Consumers must be
aware of the new plans available at HDFC SLIC. The medium of advertising used could
be television since it is the most effective tool to promote their products.
• The edge of the ULIPs over the products like mutual funds and investment in equities
should be appropriately promoted and should be made known to the people.
• Customer should be informed beforehand about the fluctuating returns from the market.
• HDFC SLIC should introduce other additional ULIP products which give high return, tax
saving, accident benefits etc.

CONCULSIONS
• There are still large number of people who do not invest their savings and keep them idle.

• Around 80% of the people consider ULIPs as a good area for investing their funds.

• Even being a late entrant in highly competitive insurance market HDFC SLIC is well
aware among the customers.

• Tax planning is the major objective for the purchase of ULIPs followed by Investment
and Child education/pension plans.

• In India people prefer to invest their funds for long terms especially for period above 5
years.

• The survey has shown that customers are quite concerned about their funds and thus take
financial consultant’s (F.C) advice before making investment.

• Indian investors are conservative and invest in FDs and traditional plans.

• There are majority of investors who are switching towards Mutual Funds and ULIPs.

• Today’s investor is educated and invests in ULIP after considering a number of factors
like Fund’s objective, reputation of the fund, past returns etc.

• Safety returns and tax saving ability of a ULIP influence the decision making ability of
the customers.

CHAPTER-4
BIBILIOGRAPHY & REFERENCES

BOOKS REFERRED:

1. Kothari, C.R., Quantitative Techniques, 2nd edition, New Delhi, Vikas

Publishing House Pvt. Ltd. 1984.
 2. Khan, M.Y., Financial services, 3rd edition, New Delhi, TATA McGraw Hill
Publishing Company Ltd., 2004.
3. Saunders, Anthony & Cornett, Millon, Marcia, Financial Markets and
Institutions-A Modern Perspective, 2nd edition (International edition), New York,
Mc Graw Hill/Irwin an imprint of the Mc Graw Hill Companies, Inc., 2003.
4. Peraswamy, P., Principles and Practices of Insurance, 1st edition,
Himalaya Publishing house 2003.

INTERNET SITES:

1. www.moneycontrol.com
2. www.indiacore.com
3. www.personalfn.com
4. www.myiris.com
5. www.thehindu.com
6. www.hdfcinsurance.com
7. www.icici.com
8. www.Bajajallianzlife.com
9. www.tata-aig-life.com
10. www.sbi-insurance.com
11. www.google.com
13. www.scribd.com
14. www.management pardise.com