Table of contents

Preface Executive summary Acknowledgement Introduction Rationale Literature Review Objective Methodology Market Findings Suggestions Conclusion Bibliography Appendix

PREFACE

Insurance is an agreement between the persons insured and the insurer. The word insurance has differed meaning than this legal meaning. It provides peace of mind with respect to uncertainty of future. In India the insurance sector is in nascent stage .only 6%(appx.) population of India is insured .General skepticism about insurance in the Indian society is the primary region for such a low insurance penetration. The another fact is that the risk landscape of different culture differs considerably. In leading people are insuring their assets. Services such as psychotherapy for pets is already being offered . In poor countries including India, basic medical care for people is hard to come by. As concepts of values change so will the attitude towards insurance. Risk is directly related to the values associated with possible loss. We can only lose what is of value to us. Nearly everybody who is buying an insurance policy has the word ULIP on his or her the products is contributing over 50%of market growth .While Unit linked insurance plans provide risk cover, the driving force behind the purchase is investment not risk coverage. Reliance life insurance provides ULIP which works all through the life of consumer and meets changing requirements like addition protection ,liquidity through cash option to invest in different asset class, steady golden years and many more.

EXECUTIVE SUMMARY

everybody who is buying an insurance policy has the word ULIP on his or her the products is contributing over 50%of market growth .While Unit linked insurance plans provide risk cover, the driving force behind the purchase is investment not risk coverage. Reliance life insurance provides ULIP which works all through the life of consumer and meets changing requirements like addition protection ,liquidity through cash option to invest in different asset class, steady golden years and many more. After doing the comparative analysis. Nearly everybody who is buying an insurance policy has the word ULIP on his or her the products is contributing over 50%of market growth .While Unit linked insurance plans provide risk cover, the driving force behind the purchase is investment not risk coverage. Reliance life insurance provides ULIP which works all through the life of consumer and meets changing requirements like addition protection ,liquidity through cash option to invest in different asset class, steady golden years and many more.

ACKNOWLEDGEMENT

The project titled" Comparison of ULIP of various companies which is the best selling ULIP for various companies" has been completed successfully Reliance life insurance at janakpuri branch, New Delhi. I express my sincere thanks and gratitude to all persons who extended their help and co-operation during my practical training and encouraged me in preparing this project. First of all I would like to thank Ms Namita Pathak under whose able guidance the project was done .She guided me how to proceed with and helped me in preparing questionnaire . I extended my sincere thanks to MR. Pradeep Kumar Mishra, sales manager, janakpuri who taught me about the plans and product features of the company. At last I extended my sincere thanks to all the persons of all insurance companies with whom I met.

INTRODUCTION

WHAT IS LIFE INSURANCE?

Life Insurance is an agreement between the persons insured and the insurer. Under the term of a Life Insurance contract, the insurer promises to pay a certain sum on the happening of the event insured against (to a beneficiary), in exchange for premium payment. Usually, the insurance contract provides for the payment of an amount on the date of maturity or at specified dated at periodic intervals; or in the event of unfortunate death, if it occurs earlier. Life Insurance is universally acknowledged as a total to eliminate risk, replace uncertainty with certainty and insure timely aid for the family in the unfortunate event of the death of the bred winner. In other words, it is the civilized world partial solution to the financial problems caused by death. WHY IS LIFE INSURANCE REQUIRED (?) Life Insurance cannot be and should not be compared with any other form of investment. It provides a life long benefit, with returns when it is most required at the right time.

Replacement of income: One prime reason for buying Life Insurance is to replace

the income lost in the event of untimely death of the life insured. When the regular income stops, the proceeds from a life insurance policy can be used to continue to support the family members.

Maintenance of life style: In case of the unexpected death of the Life Insured,

family members are often hard pressed trying to arrange for funds that can maintain the standard of living that they have grow accustomed to Life Insurance offers protection against such an unfortunate eventuality.

Expense due to premature death: Life Insurance can play a crucial role to pay

off any debt left behind by the person insured. For example, car loans, medical bills, mortgages, credit card payments, etc. are often left unpaid in case of sudden death. These obligations can be met with life insurance without any depletion of family assets.

Planning for important events like childrens education, childrens marriage,

etc: With the cost of living going up by the day, prudent people would go for life insurance as the most cost effective means to ensure that the important milestones in their childrens lives are not hampered by the uncertainties of life.

Investment: Life Insurance can also be an investment instrument. Apart from the

tax benefits that are allowable by Government of India for investing in Life Insurance, some Life Insurance policies offer returns on investments along with the cover for life. This can help you with long-term financial goals.

RELIANCE LIFE ISURANCE

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one of Indias leading private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital has interests in asset management and mutual funds, stock broking, life and general insurance, proprietary investments, private equity and other activities in financial services. Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India under section 45-IA of the Reserve Bank of India Act, 1934.

Reliance Capital sees immense potential in the rapidly growing financial services sector in India and aims to become a dominant player in this industry and offer fully integrated financial services.

Reliance Life Insurance is another step forward for Reliance Capital Limited to offer need based Life Insurance solutions to individuals and Corporates.

PRODUCTS OF RELIANCE LIFE INSURANCE

It offers two kinds of insurance plans.

1.

TRADITIONAL PLAN

2. UNIT LINKED INVESTMENT PLAN

TRADITIONAL PLANS: Some of the traditional plans offered by Reliance are as

follows: 1. RELIANCE ENDOWMENT PLAN 2. RELIANCE CASH FLOW PLAN 3. RELIANCE CHILD PLAN 4. RELIANCE TERM PLAN 5. RELIANCE WHOLE LIFE PLAN 6. RELIANCE SPECIAL TERM PLAN 7. RELIANCE CREDIT GUARDIAN PLAN 8. RELIANCE CONNECT 2 LIFE PLAN

UNIT LINKED INVESTMENT PLAN (ULIP)

ULIP is one where A unit linked plan is a part of the premiums you pay is utilized to purchase units in different funds after deducting a small portion towards policy related expenses. The expenses towards cost of insurance and fund management services are deducted from your fund by canceling units a unit linked plan is bought fir its flexibility. One can buy it for any financial needs because it gives liquidity and savings. It can be bought for childs educational expenses/marriage, retirement corpus or any other contingency planning.

This plan gives you age based allocation. This means as your age increases your money is moved to lower risk investment. The idea is to increase the stability for investments as the risk appetite decreases.

The policy offers two plan options:

1. Ready-made plan option 2. Tailor-made plan option

10

Ready-made plan option: It is a life stage based asset allocation. There are three
funds namely Fund A, Fund B, Fund C for the age bands 0 to 40, 41 to 60 and over 61 years. as at last birthday respectively .on commencement of the policy ,depending on age last birth day of the life assured ,the premiums will be invested in one of the three options .the change in the fund option ,if required as the life assured moves from one age band into the next, will be automatically effected at the next policy anniversary .

Tailor-made plan option: Under this option one can decide the fund mix
money Market, corporate bond gilt and equity funds. The maximum allocation towards money market cannot exceed 40% of the premium contribution at any point in time. All the four fund are available irrespective of attained age.

11

TYPES OF ULIP

1.

RELIANCE -GOLDEN YEARS PLAN RELIANCE MARKET RETURN PLAN RELIANCE MONEY GUARANTEE PLAN

2. 3.

3. RELIANCE -AUTO INVESTMENT PLAN

12

1. Reliance Golden Years Plan

Features

Invest systematically and secure your golden years A flexible unit-linked pension product that is different from traditional life insurance products with Vesting Age between 45 and 70 years Choose from two different Investment Funds Flexibility to switch between funds Option to pay Regular, Single as well as Top-up Premiums Choose to prepone I extend your Vesting Age

Tax free commutation up to one third of Fund Value at Vesting Age How does Reliance Golden Years Plan work? The plan works in two parts: Accumulation period (i.e. the Policy Term): The plan builds up funds during this period. This period ends-at the Vesting Date. Annuity 'period: After the Vesting Date, the annuity payments begin. Vesting Date: You are free to choose your age of retirement (Vesting between 45 and 70 years

13

Benefits At Vesting: On vesting, you can purchase an Annuity Plan for the full Fund Value You may commute up to one third of the Fund Value as tax free lump sum and the balance can be used for the purchase of annuity. Open Market Option: you can purchase an annuity either from Reliance Life Insurance Company Limited or from any other registered Life Insurance Company

At Death: In the unfortunate event of your death during the Policy Term, the Beneficiary will get the Fund Value. This amount can be taken as a lump sum or an annuity can be purchased for the entire lump sum or portion of it. The Beneficiary will have the option to purchase an annuity either from Reliance Life Insurance Company Limited or from any other registered Ute Insurance Company.

14

Annuity Options (currently available with Reliance Life Insurance Company Limited): Life Annuity Ute Annuity with return of purchase price on death Life Annuity guaranteed for 5, 10 or 15 years and payable for life thereafter

What are the different fund options? Reliance Life Insurance Company Limited understands the value of your hard earned money and to help you make your wealth grow we offer two different tailor-made Investment Funds. You also have the option to allocate your premium in different funds in the manner you wish. The two different funds offered are: 1. Capital Secure Fund Investment Objective: To maintain the value of all contributions (net of charges) and all interest additions.

15

Returns: Steady return for very little risk. Risk Profile: Low Investments: Your funds are invested 100% in Bank Deposits, Government Bonds and Debt Investments of less than 180 days duration. You may invest a maximum of 20% of the Total Premiums at any point of time during the Policy Period in the Capital Secure Fund. 2. Balanced Fund Investment Objective: To provide you with investment returns which exceed the rate of inflation in the long term while maintaining a low probability of negative investment returns. Risk Profile: Low to medium. Investments: In this fund, a major portion of your funds are invested in Government Securities and Corporate Bonds while a small percentage is invested in the Equity Market, which is exposed to market movements. Investment would be at least 80% in Government Securities and Corporate Bonds and maximum 20% in Equities.

16

Value of Units: The Unit Price of each fund will be the Unit Value calculated on a daily basis. Total Market Value of assets plus/less expenses incurred in the purchase/sale of assets plus Current Assets plus any accrued income net of Fund Management Charges less Current Liabilities less Provision Unit Value = Total Number of units on issue (before any new units are allocated/ redeemed) Flexibilities Flexibility to pay top-ups If you have received a bonus or some lump sum money you can use that as a top-up to increase your investments at any time in your Policy. The minimum top-up amount is Rs 2,500. 95% of any amount paid as top-up is allocated to your funds. Flexibility to pay Single Premium If you do not want to pay premium regularly, you can choose to opt for Single Premium. The minimum Single Premium amount is Rs 10,000.

17

Flexibility to switch between funds Depending upon the performance of your funds you can switch between them. There will be one free switch in a Policy Year and for additional switches, Switching Charge of 1% of amount switched will be levied, subject to a maximum of Rs 10.00 on each such occasion. Flexibility to prepone/extend your Vesting Age You may choose to extend the Vesting Date to any later Policy Anniversary, provided the Policy vests before the attainment of age 70 years. The request for extending the Vesting Date must be made at least one month before the original Vesting Date. After the Vesting Date, the benefit payable at any time will be the Fund Value. The Policyholder may also choose an earlier Vesting Date, after completion of five years of Policy Term or age 45 years, whichever is later. The request for an earlier Vesting Date should be received at least one month before the proposed Vesting Date. On attainment of the new Vesting Date the Policyholder is eligible to purchase Annuity for the full Fund Value or commute up to one third of the Fund Value as tax free lump sum and the balance can be used for the purchase of annuity. The annuity can also be purchased from us or from any other registered Life Insurance Company. 18

What is the Policy Term? Minimum Policy Term: Minimum age at entry: Maximum age at entry: Minimum age at vesting: Maximum age at vesting: 5 years 18 years 65 years 45 years 70 years

1.

Premium Allocation Charge: Year 1 Subsequent years Single premium Top-Up premiums 10% 5% 5% 5%

19

2.

Fund Management Charges Funds Capital Secure Balanced Annual Rate* 1.50% 1.50%

* The Fund Management Charge is levied on daily basis at the time of computation of Unit Price.

3.

Switching Charge: One free switch is allowed in each Policy Year. Subsequent switches will attract a charge of 1% of the amount switched subject to a maximum of Rs 1000 per switch. This charge will be recovered by cancellation of units.

4.

Surrender Charges: The Surrender Charges as percentage of Fund Value are

given below: Year of Policy surrender Surrender Charges as percentage of Fund Value 4 5 6 or more 10% 5% Nil

20

How safe is your investment? The investments made in the funds are subject to market risks that are prevalent at any point in time. The Unit Price' is a reflection of the financial and Equity/Debt Market conditions and can increase or decrease at any time due to this. Benefit payable under the Policy will be made according to the tax laws and other regulations in force at that time.

There are no guarantees for any fund of any kind under this Policy. The benefit payable on maturity will be equal to the value of your units. The name of the funds in no way indicates the returns derived from them.

Please note that Reliance Life Insurance Company Limited is only the name of the Insurance Company and Reliance Golden Years Plan is only the name of the Policy and does not in anyway indicate the quality of the Policy or its future prospects or returns.

21

2. Reliance market return plan

Key Features Twin benefit of market linked return and insurance protection A Unit Linked Plan, different from traditional Life Insurance products with

maximum maturity age of 80 years Option to create your own portfolio depending on your risk appetite

Choose four different investment funds Flexibility to switch between funds Option to pay regular as well as single premium & top-ups

Option to package your Policy with Accidental rider Flexibility to increase the Sum Assured

22

Liquidity through partial withdrawals

How does this Plan work? The premium paid by you, net of Premium Allocation Charges is invested in fund/funds of your choice and units are allocated depending on the price of units for the fund/funds. The Fund Value is the total value of units that you hold in the fund/funds. The Mortality Charges and Policy Administration Charges are deducted through cancellation of units whereas the Fund Management Charge is priced in the Unit Value. Benefits Life Cover Benefit: In case of unfortunate loss of life, the Beneficiary will get Sum Assured or Fund Value, whichever is higher. You can choose the basic Sum Assured within the minimum and maximum levels mentioned below:

Minimum Sum Assured:

Regular Premium: Annualised Premium for 5 years or Annualised Premium for

half the Policy term, whichever is higher

23

Single Premium: 125% of the single premium

Maximum Sum Assured: No Limit (Rs. 500,000 for age up to 12 years) Maturity Benefit: On survival to maturity the Fund Value on Maturity will be paid out. Rider Benefit: You can add the Accidental Death & Accidental Total and Permanent Disablement Benefit Rider (available only with the regular premium option). This benefit doubles the life coverage in case of accidental death or accidental total and permanent disablement at a very nominal additional cost. The maximum cover is Rs 50,00,000 per life. In case of accidental death of the Life Assured during the Policy Term, the Accident Benefit Sum Assured will be paid immediately in a lump sum. In case of accidental total and permanent disablement, 1/10th of the Accident Benefit Sum Assured will be paid at the end of each year for ten years. If the total and permanent disablement has commenced, the Accidental Death Benefit Cover ceases.

In case of maturity or on death of the Life Assured before payment of all installments of Accidental Total and Permanent Disablement Benefit, the remaining unpaid instalments if 24

any will be p-aid in one lump sum along with Death or Maturity Benefit. Accidental total and permanent disablement means disability caused by bodily injury, which causes permanent inability to perform any occupation or to engage in any activities for remuneration or profits. This disability should last for atleast 6 months before being eligible for Accidental Total and Permanent Disablement Benefits. Accidental total and permanent disablement includes loss of both arms or both legs or one arm and one leg or of both eyes. Loss of arms or legs means dismemberment by amputation of the entire hand or foot. Loss of eyes means entire and irrecoverable loss of sight.

What are the different fund options? We understand the value of your hard earned money and in our endeavour to help you grow your wealth, we offer you 4 different tailor-made investment funds. You have the option to allocate your premium in these funds as you wish.

They are: 1. Capital Secure Fund: The investment objective of this fund is to maintain the

25

value of all contributions (net of charges) and all interest additions. This fund offers steady return for little risk. The risk profile of this fund is low. Investments would be 100% in Bank Deposits, Government Bonds and debt instruments that offer financial security. Further, allocation in Capital Secure Fund for a Policy is subject to a maximum limit of 20% at any time. 2. Balanced Fund: The investment objective of this fund is to provide you with investment returns, which exceed the rate of inflation in the long term while maintaining a low probability of negative investment returns. Here, a major portion of your funds are invested in Fixed Securities while a small percentage is invested in the Equity Market, which is exposed to market movements. The risk profile of this fund is low to medium. Investments would be at least 80% in Fixed Interest Securities and maximum 20% in Equities.
4.

Growth Fund: The investment objective of this fund is to provide you with investment returns, which exceed the rate of inflation in the long term while maintaining a moderate probability of negative investment returns. A Greater portion of your funds are invested in Fixed Securities while a small percentage is

5. invested in the Equity Market, which is exposed to market movements. The risk profile of this fund is medium to high.

26

Investment would be at least 60% in Fixed Interest Securities and maximum 40% in Equities. 4. Equity Fund: The investment objective of this fund is to provide Policyholders with high exposure to equities and the possibility of investment returns, which generate a high real rate of return in the long term while recognizing that there is a significant probability of negative investment returns in the short term. This fund offers a totally equity based investment option. Your returns depend entirely upon the performance of the Equity Market. The risk profile of this fund is high. The higher risk of this portfolio means that expected returns would also be higher. Investment would not exceed 30% in Bank Deposits and maybe up to 100% in equities. Value of Units: The Unit Price of each fund will be the Unit Value calculated on a daily basis. Total Market Value of assets plus/less expenses incurred in the purchase/sale of assets plus Current Assets plus any accrued income net of Fund Management Charges less Current Liabilities less Provision

Unit Value=

27

 Total Number of units on issue (before any new units are allocated/ redeemed) Flexibility Pay top ups If you have received a bonus or some lump sum money you can use that as a top-up to increase the investments component 'in your Policy. Top-Ups are allowed only if all premiums due till date are paid. There is no restriction on the maximum amount of top-up. However top-ups made over and above 25% of the basic regular premium paid till date (or above 25% of the Single Premium) will lead to an increase in Sum Assured to the extent of 125% of the excess top-up premiums. The minimum top up amount is Rs. 2,500. 98% of any amount paid as top-up is allocated to your funds. Make partial withdrawals After three years, If your Fund Value is more than the Sum Assured, then the maximum partial

withdrawal can be Rs 5,000 per withdrawal

If your Fund Value is more than the Sum Assured, then the maximum partial 28

withdrawal is the difference between the Fund Value and the Sum Assured plus Rs 5000 Higher amounts of partial withdrawals are allowed, subject to underwriting Two partial withdrawals are allowed every year. Minimum Fund

Value after each partial withdrawal should be Rs 10,000 For the purpose of partial withdrawals, top-ups would have a lock-

in of three years from the date the top- ups are made, and until then no partial withdrawals of units from top-up premiums are allowed. This condition is not applicable if the top-up premiums are paid during the last three years of the Policy term. If the Life Assured is minor, - partial withdrawals are allowed on or

after attainment of age 18 years or after 3 years if later Increase the Sum Assured: You are free to increase the Sum Assured. Once Sum Assured is increased, it remains for the entire outstanding policy term. Increase in Sum Assured is subject to underwriting. Switches between different Unit Linked Funds: You may switch some or all of the Fund Value between different unit-linked funds offered under the Market Return Plan. One free switch is available in a Policy Year.

29

Redirect future premiums: Redirection is retaining the allocation of units you have already invested and purchasing units using subsequent premium payments in an alternative allocation of your choice. The units you have already purchased with your premiums remain as they are while you redirect your future premium payments to other funds of your choice. (applicable with regular premium option only) Who can buy this product? Minimum age at entry: 30 days Maximum age at entry:65 years Maximum age at maturity: 80 years

What is the Policy term? Minimum Policy term: Maximum Policy term: 5 years 40 years

30

Charges under the Plan: For regular premium policies: Term of the Policy Years First Year Thereafter 5-9 10% 5% 10-14 15% 5% 15+ 20% 5%

The Premium Allocation Charge for Single Premium & top-ups is 2%.

2.

Policy Administration Charge: Rs.40 will be deducted from your Unit Account each month.

3.

Fund Management Charges:

31

Unit Linked Funds Capital Secure Balanced Growth Equity

Annual Rate 1.50% 1.50% 1.75% 1.75%

(The Fund Management Charges will be deducted on a daily basis) Revision of Charges: the Fund Management Charges are subject to revision at any time, but they will not exceed 2% p.a. for the Capital Secure Fund and 2.5% p.a. for the other funds. Any changes made to the charges under this Policy will be subject to IRDA approval. 4. Partial Withdrawal Charges: Rs.100 per withdrawal will be deducted from your Unit Account. 5. Switching Charges: 1% of the amount switched, with a maximum of Rs.1,000/per switch. 6. Mortality Charges: The Mortality Charges, based on your attained age, are determined using 1/12th of the charges mentioned in Appendix 1 and are deducted

from the Fund Value monthly. 7. Surrender Charge: This charge is levied on the unit fund at the time of surrender of the policy as under:

32

Regular Premium Number of Years premiums paid Surrender Charge as percentage of Fund Value Less than 1 2 3 and more Single Premium - NIL How safe is your investment? 1. The investments made in the Unit Funds are subject to investment risks associated with Capital Markets and the NAVs of the units may go up or down based on the performance of the fund and the factors influencing the Capital Market, and the insured is responsible for his/her decisions. 2. The Unit Price is a reflection of the financial and equity/debt market conditions and can increase or decrease at any time due to this. 100% 50% NIL

3.

Benefit payable under the Policy will be made according to the tax laws and other regulations in force at that time.

4.

There are no guarantees for any fund of any kind under this Policy. The benefit payable on maturity will be equal to the value of your units.

5.

The name in the funds in no way indicates the returns derived from them.

33

6.

Please note that Reliance Life Insurance Company Limited is only the name of the Insurance Company and Reliance Market Return Plan is only the name of the Unit Linked life Insurance Policy and does not in anyway indicate the quality of the Policy or its future prospects or returns.

What happens if I discontinue paying regular premiums?Within 3 years of the inception: If due premiums have not been paid for the first three consecutive years, the insurance cover will cease immediately. However, you will continue to participate in the performance of Unit Funds chosen by you. The Monthly Administration Charges will be deducted from Fund Value by cancellation of units. You may revive the Policy by re-commencing the premium payment within a period of three years from the date of first unpaid premium but before the II1aturity date of the Policy.

In case the Policy is not revived during Revival Period, the Policy shall be terminated and the Surrender Value, if any, shall be paid at the end of the third Policy Anniversary or at the end of the period allowed for revival. After paying of at least 3 full years' premiums: If premiums have been paid for at least three consecutive years and subsequent premiums

34

are unpaid, the Policy will remain in force with Sum Assured intact. The Mortality and Policy Administration charges will be deducted from your account by cancellation of units. You will continue to participate in the performance of the Unit Funds chosen by you. You may revive the Policy by re-commencing the premium payment within a period of three years from the date of first unpaid premium but before the maturity date of the Policy. At the end of the allowed Revival Period, if the Policy is not revived, it shall be terminated by paying the Surrender Value. However, you may opt to continue the Policy even beyond the Revival Period (but not beyond the maturity date of the Policy). The Mortality and Administration Charges will be deducted from your account by canceling the units. You will continue to participate in the performance of the Unit Funds chosen by you.

This option will be available until the Fund Value does not fall below an amount equivalent to one full year's premium. If at any point of time, the Fund Value reaches an amount equivalent to one full year's premium, the Policy shall be terminated by paying the Fund Value.

35

Tax Benefit Premiums paid are eligible for tax deduction under Section 80C of the Income Tax Act, 1961. Provided the premium in any years during the term of the Policy does not exceed 20% of the Sum Assured, maturity and withdrawals are eligible for tax benefit under Section 10(10D). Death Benefit are tax free under Section 10(10) D of the Income Tax Act, 1961. Under Section 80C premiums up to Rs 100,000 are allowed as deduction from your taxable income.

3. Reliance Money Guarantee Plan

Key Features Reliance Money Guarantee Plan:

Capital Guarantee The sum of all premiums paid is guaranteed on maturity or on death before the maturity. 36

Capital Guarantee is available on both the basic premiums as well as on top-up premiums Unique Return Shield feature to protect your returns. Choice to invest from 3 pre-packaged investment fund options Unmatched flexibility through our Exchange Option to move between the Reliance Money Guarantee suite of products offered, as you grow up the ladder Liquidity in the form of partial withdrawals from top-up fund Option to package with Accidental Death & Disability and Term Insurance riders How does this plan work? The premium contributed by you net of Premium Allocation Charges and Miscellaneous Charge is invested in fund option of your choice for a specified period of time as selected by you and units are allocated depending on the price of units for the fund/funds. The Fund Value is the total value of units that you hold in the fund. The Policy has a minimum Guaranteed Benefit which is equal to total of all premiums paid (excluding any additional and extra premiums if any),to be payable on survival to maturity or death. The amount of top-up premiums paid is also guaranteed on death provided there is no partial withdrawal.The amount of top-ups premiums is guaranteed on maturity provided the top-ups premium was paid at least 10 years before the date of maturity and there is no partial withdrawal. The Sum Assured under the policy is fixed on the basis of the selected annual premium and Policy Term.

The Mortality Charges and Policy Administration Charges are deducted through cancellation of units whereas the Fund Management Charges is priced in the Unit Value. The premiums for riders, if selected, are payable over and above the premium for the basic Policy.

Benefits in Details. Capital Guarantee: The plan offers Capital Guarantee provided the Policy is kept in full force by payment of due premiums on time

37

Capital Guarantee under the Basic Plan: Premiums paid under the Basic Plan are guarantee don the maturity of the Policy or on death during the Policy Term. Capital Guarantee under the Top-Up premiums. Each top-=up premium paid is guaranteed on death during the Policy Term provided there are no partial withdrawals from that top-up. Each top-up premium paid is guaranteed on maturity of the Policy provided the Policy Term is greater than ten years, there are no partial withdrawals from that top-up and the top-up was paid tem years before the maturity date. Life Cover Benefit: The amount of Death Benefit depends on the age of the Life Assured at the time of death I. If the age of the Life Assured at the time of death is more than 12years last birthday while the Policy is force, the Company will pay the sum of: 1. Higher of(Sum Assured, Fund Value as on date of intimation of death under Basic Plan, Premiums paid under the Basic Plan excluding any extra or additional premiums paid.) And 2. Higher of()Fund Value as on date of intimation for death under top-ups and top-up premiums paid provided no partial withdrawals is made from that top-up) II. However if the Life Assureds age at the time of death is less than or equal to 12 years last birthday while the Policy is in force, the Death Benefit will be the sum of :

Higher of (Fund Value as on date of intimation of death under Basic Plan and premiums paid under the Basic Plan excluding any extra or additional premiums paid.
1.

2. Higher of( Fund Value as on date of intimation of death under top-up and top-ups premium paid provided no partial withdrawals is made from that top-up)
III.

The Policy terminates on payment of the Death Benefit.

38

Maturity Benefit:
1.

The Maturity Benefit is the Sum of Higher of (und Value under Basic Plan and Premiums paid excluding any extra or additional premiums paid)

under Basic Plan

2.

And
3.

Maturity Benefit under Top-Up If Policy Term is greater than ten years, the Maturity Benefit under top-up is the

higher of (Fund Value under the top-up and top-up premium paid provided there is no partial withdrawal from that top-up) If Policy Term is tem years, the Maturity Benefit under the top-up is the Fund Value under the top-up. The policy Terminates on payment of the Maturity Benefit.

Sum Assured: The fixed Sum Assured under the Basic Plan will be calculated as the amount of annual premiums payable for half the Policy Term.

Rider Benefit: You can add Accidental Death & Accidental Total and Permanent Disablement Benefit Rider & Term Life Insurance Benefit Rider.

What are the different fund options?

39

A. premium

Funds available in respect of Basic Plan and top-up

The plan offers three funds for Basic Plan and top-ups-Fund D, Fund E and Fund F. You have the option to decide your own fund mix with respect to premiums under the Basic Plan and top-ups.

B.

Funds available in respect of Return Shield Option

Return Shield Fund will be available if Return Shield Option is selected. The returns earned under the Basic Plan and top-ups will be transferred to Return Shield Fund if Return Shield option is selected.

Funds available during settlement period If you have opted for the settlement option, then Fund would apply by default during the settlement period.

Cut-off Timings
a)

Uniform cut-off timings for fro applicability of Net Asset Value: The allotment of units to the Policyholder should be done only after the receipt of premium proceeds as stated below:

b)Allocation (Premium allocations, switch in): In case of new business, units shall be allocated on the day proposal is completed and result into a Policy by adjustments of application money towards premium.

In the case of renewal premiums, the premium will be adjusted on the due date, whether or not it has been received in advance. (This assumes that the full stipulated premium is received on the due date.) Renewal premiums received in advance will be kept in the

40

deposit account and will not earn any returns until the renewal premium due date on which the same will be applied to the Unit Funds. i) In respect of renewal premiums/funds switched received up to 4.15 p.m by the Insure along with a local cheque or a demand draft payable at par at the place where the premium is received, the closing NAV of the day on which premium is received shall be applicable. ii) In respect of renewal premiums/funds switched received after 4.15 p.m by the Insure along with a local cheque or a demand draft payable at par at the place where the premium is received, the closing NAV of the next business day shall be applicable.

iii) In respect of renewal premiums received with outstation cheques/demand drafts at the place where the premium is receive, the closing NAV of the day on which cheques/demand is realized shall be applicable.

iv) due date is applicable.

For advance renewal premium the closing NAV of the

Any amount less than the due stipulated regular/limited premium payable stated in the Contract will not be accepted.

a)

Redemptions:

i) In respect of valid application received (e.g surrender, maturity claim, Switch out etc) up to 4.15 by the Insurer, the same days closing Nave shall be applicable.

ii)

In respect of valid application received (e.g. surrender, maturity claim, switch out etc) after 4.15 p.m by the insurer, the closing NAV of next business day shall be applicable.

41

Fund Valuation: The value of the fund will be equal to the no of units multiplied by the Net Asset Value(NAV) of each unit in the fund. The computation of NAV will be based on whether the Company is purchasing (Appropriation Price )or selling (Expropriation Price) the Assets in order to meet the day to day transaction of Unit Allocations and Unit Redemptions i.e the Company shall be required to sell/purchase the Assets if Unit Redemptions/Allocation exceed Unit Allocation / Redemptions at the Valuation Date. The Appropriation Price shall apply in a situation when the Company is required to purchase the Assets to allocate the units at the Valuation Date. This shall be the amount of money that the company shall put into the fund in respect of each unit it allocates in order to preserve the interests of the existing Policyholders.

The Expropriation Price shall apply in a situation when the Company is required to sell Assets to redeem the units at the Valuation Date. This shall be the amount of money that the company should take out of the fund in respect of each unit it cancels in order to preserve the interests of the continuing Policyholders.

Computation of Net Asset Value(NAV) When Appropriation Price is applied: The NAV for a particular fund shall be computed as: Market Value of investment held by the fund plus the expenses incurred in the purchase of the Assets plus the value of any Current Asset plus any Accrued Income net of Fund Management Charges less the value of any Current Liabilities les Provision, if any. This gives the net Asset value of the fund. Dividing by the number of units existing at the Valuation Date (before and new units are allocated), Gives the Unit Price of the fund under considerations.

42

When Expropriation Price is applied: The NAV for a particular fund shall be computed as: Market Value of investment held by the fund less the expenses incurred in the sale of the Assets plus the value of any Current Assets Value of the fund. Dividing by the number of units existing at the Valuation Date (before any units are redeemed), gives the Unit Price of the fund under consideration. In case the valuation day falls on a holiday, then the exercise will be done the following working day. The Company reserves the right to suspend unit pricing if it is not possible to value some or all of the Assets of a Unit Linked Fund because of closure of stock exchanges or investment markets for the duration of these conditions. Flexibility available under Reliance Money Guarantee Plan Return Shield an innovative way to protect your returns This option is available to you during the term of the Policy. to you during the term of the Policy. You can select or delete this option at any time during the term of the Policy. There will not be any charge for the Return Shield option under following circumstances; If the option is selected under Basic Plan on commencement of the plan If the option is selected under top-up premium at the time of payment of top-up premium

Under all other circumstances, a fixed charge of Rs100 is payable every time the Return Shield option is selected.

If this option is selected, the return earned on Basic Plan and Top-Ups during the month will be transferred to Return Shield Fund at the end of the Policy month. The operation of Return Shield option under Basic Plan is given below:

43

The amount of returns to be transferred to Return Shield Fund will determined separately fro each Policyholder in respect of each of the tree funds D,E and F Fund The method used for determining the return to be transferred is given below: =Fund Value) on the last working day of the Policy month Less Fund Value on last working day of the previous Policy month Less amount of inflows during the month. The operation of Return Shield option under top-up premium(s) will be similar to that Basic Policy. The amount will be transferred to Returns Shield Fund at the prevailing Unit Price.

b)

Exchange Option: This option is available for existing Policyholders after completion of three Policy years from the date of commencement, Under this option, the Policy holder can transfer Policy Benefits (surrender, maturity etc.) either fully or partially to another plan. This option must be exercised at least 30 days before the date of receipt of benefit under the Policy. The Terms and Conditions as specified in the opted Policy Document would apply to the Policy holder opting for the Exchange Option. If a Policyholder is opting for the Reliance Money Guarantee plan under exchange option, the Allocation Charge in year of exchange will be 15% of the annualised premium of Reliance Money Guarantee Plan. If the Exchange Option is used to pay top-ups in the Money Guarantee Policy, the Allocation Charge in the year exchange will be 1% of the top up amount. Pay to-up: If you have received a bonus or some lump sum money you can use that as a tom-up to increase the investments component in your Policy. Topups are allowed only if all basic premiums due till date are paid. At any time, the maximum amount of all top-up premiums allowed is restricted to 25% of the total basic regular premium paid till date.

The minimum top-up premium amount is Rs 2,500. The amount of top-up premiums paid is also guaranteed on death provided there is no partial withdrawal. The amount of top-up premium is guaranteed on maturity provided

44

the top-up premium was paid 10 years before the date of maturity and there is no partial withdrawal made from the top-up fund.

Partial Withdrawals: These are allowed for units created by top- up premiums. There is lock-in period of three years under the top-ups from the date of payment of top-ups during which no partial withdrawal is allowed. The lock-in period is not applicable to Top-ups made during last three years of a Policy. After partial withdrawal, the original Tranche of that particular top-up will lose the Capital Guarantee. Where Life Assured is minor, partial withdrawals will be allowed only after completion of age 18years. No partial withdrawals are allowed for basic regular premium funds. Switching Option: You can switch the whole or part of the funds between funds D,E,F at any time during the Policy Term. You can also switch from Return Shield option to any one fund D,E and F. first four switches in any Policy year are free. If Return Shield option is selected switching from any of the funds D,E and F in to Return Shield option will be done at the end of every Policy month. Such switches will not be counted as part of the four free switch during the Policy year. Premium Redirection: You may instruct us in writing to redirect all the future premiums under a Policy in an alternative proportion to the various Unit Funds available. Redirection will affect the allocation of premium(s) paid prior to the request. Settlement Options: This option enables you to take the maturity proceeds in the for of periodical payments after the Maturity Date instead of a lump sum on the Maturity Date. You can choose to redeem the units in your Unit Fund anytime up to 5 years from the date of maturity. Capital Guarantee is not available during this period. During this period, there will be no Life Cover. The only fund option available during the settlement period is Fund C.. The maturity proceeds will

45

automatically be transferred in to Fund C if settlement options is selected. The Policy will participate in the performance of units of Fund C. The Company will deduct Policy Administration Charges by cancellation of units. The Fund Management Charge will be priced in the Unit Value. In the event of death during settlement period the Fund Value as on the date of intimation at the office will be paid to the nominee.

In order to opt for this option the customer has to give notice of 30 days to the Company before the Maturity Date. During the settlement period, the investments made in the Unit funds are subject to investment risks associated with Capital Markets and the Units Prices may go up or down based on the performance of the fund and the factors influencing the Capital Market, and the Policyholder is responsible for his/her decisions. The investment risk during the settlement period will be bone by the Policyholder Convenient Premium Paying options You can pay the regular premiums in yearly, half yearly, quarterly and monthly mode and pay by cash, cheque, debit/credit card, ECS & direct debit. The minimum regular premium is Rs 10,000 for annual mode, Rs 5,000 for half-yearly, Rs 2,500 for quarterly and Rs 1,000 for monthly s mode. The minimum top-up premium is Rs 2,500.

4. Realiance Automatic Investment Plan

46

Key Features

Two plan options to choose form Ready-made and Tailor-made Life Stage asset allocation to ensure automatic change in investment patterns, under the Ready-made Plan option. Freedom to decide your own fund mix based on your risk profile under the Tailor-made Plan. Allows Systematic Transfer Plan to average out the cost of unit purchases in equity. Regular, limited, single premium paying options. Unmatched flexibility through our Exchange Option Liquidity in the form of partial withdrawal Option to avail of Accidental Death Benefit & Accidental Total and Permanent Disability and Term Insurance riders.

Benefit

47

Life Cover Benefit: On death before 12th birthday the Death Benefit will be the Fund Value relating to Basic Policy as on the date of receipt of intimation of death. On death after 12th birthday but before 60th birthday: Death Benefit will be higher of Sum Assured less all Partial Withdrawals made from the Basic Policy fund in the last 24 months prior to date of death and Fund Value relating to Basic Policy as on the date of receipt of intimation of death. The fund Value relating to the top ups will also be paid in each of the above cases. The Policy terminates on payment of Death Benefit.

NAME OF THE UNIT LINKED INVESTMENT PLANS OFFERD BY VARIUOS COMPANIES

48

There are various companies in the insurance market which offers ULIP . I have taken only five among all those companies and the names of their ULIP alongwith the companies names are as follows:

ICICI PRUDENTIAL BAJAJ ALLIAZ--

LIFE TIME SUPER NEW UNIT GAIN

SBI LIFE INSURANCE-- HORIZON II BIRLA SUN LIFE HDFC SL--FLEXI SAVE PLUS UL ENDOWMENT YOUNG STAR

RATIONALE

49

Insurance sector has a very low penetration in India .This is primarily due to insurance averseness in the society .Adding to this is the risk taking ability of the young demographic structure of the country. They do not feel much insecure about future. They are ready to take any risk which comes in their way.

Therefore, an investment which gives a good return, which is risk inherent attracts today's customers. Another major class of potential consumers perceive that any premium paid is only a hole in the pocket. They depend on other to help them in crisis .

To cover such consumer classes Unit Linked Investment Plans acts as an attractive tool. They provide both insurance cover as well as return on investment made in the form of premium paid.

Hence, a comparative analysis of Unit Linked Investment Plans (ULIPs) offered by various company will help to improve the ULIP offered by Reliance life insurance to stay ahead or at par with the competition.

LITERATURE REVIEW

50

Indians rarely insure their houses or their goods and belongings which may be in transit while they are moving houses. Often, events such as trade fairs, exhibitions and sporting events are either not insured or under insured. Are we an insurance averse nation? In terms of penetration, insurance permia as a percentage of GDP in India are 3.14 per cent(2.53 per cent in life and 0.61 per cent in non-life). This is higher than Brazil at 3.01 per cent (comparable in terms of state of development) and China at 2.7 per cent( comparable in terms of population and development). Therefore, while India cannot be termed being insurance-averse, is it tougher market for insurers? What does this mean for a individuals and insurance providers? What does the future hold?

Culturally, we find the thought of unforeseen death or accident unacceptable enough to show the door to an insurance agent who points out these grim scenarios. The presumption is that insurance is a sire shot loss making proposition. Forget household insurance or travel insurance do people have life and health insurance? There is a tendency to think that any premium paid out is an outgo and it is highly unlikely that anything would go wrong. It is important to analyze if India as a nation is a tougher

Nut to crack, keeping in mind that the sector was opened to private players only in 2000. Nearly everybody who is buying an insurance policy has the word ULIP on his mind (the product is contributing over 50 per cent of market growth). While unit linked 51

insurance plans provide risk cover, the driving force behind the purchase is investment and tax benefit and not risk coverage. The Invest India Market Solutions and Asian Development Bank 2004 survey shows that while 19 per cent of earners in India have bought endowment plans, only 2.7 per cent have bought term insurance.

While this may appear contradictory, the fact is that with better technology, the probability of accidents has come down, be it in aviation, railways, dams or high rise buildings. But when an accident occurs, its chances of assuming the nature of a disaster have also increased. This is corroborated by the Swiss Re study, which says that while the world is witnessing more disasters, there are fewer accidents. Another factor to consider is Indias demography. The population projections for India for 2001-2026, released in May this year, say that an average Indian will be expected to be 31years old in 2026 compared to 23 years old in 2001. young people by nature take higher risks, and while there are no conclusive studies, that might also contribute to insurance aversion.

Over the next decade India would need to factor in the impact of losses if assets and events are not adequately insured. India also needs to increase insurance cover and improve risk management attract more foreign investment in big projects

52

While insurance is a cost, it is a cost effective way to mitigate losses from events occurring unexpectedly. More people will embrace life insurance once they are in the credit cycle, when the cost of death and disability becomes more apparent and when people star thinking in terms of long-term life and financial goals. Industrialized countries form 88 percent of the insurance market while emerging markets account for 12 per cent. That is an opportunity for an insurer

OBJECTIVE
To compare the features of the ULIPs of various companies .

53

METHEDOLOGY

A descriptive research was carried out to do the comparative analysis of Unit Linked Investment Plan (ULIP) of various companies.

METHOD OF DATA COLLECTION PRIMARY DATA Primary data was collected through questionnaire.

SECONDARY DATA Information about the ULIP of Reliance Life Insurance was collected from the website of Reliance Life Insurance.

TOOLS
A simple comparison of ULIP offered by various company was done.

54

MARKET FINDINGS

On the basis of the survey conducted in the various companies the findings have been tabulated as below:
Product Feature Reliance Automatic Investment Plan ICICI Prudenti al Life Time Super No Bajaj Allianz New Unit Gain No HDFC SL UL Endowme nt Young Star NO Birla Sun Life Flexi Save Plus No SBI Life Horizon II The Reliance Automatic Investment Plan

Life stage based plan Free Switches Switching charges

Yes

Yes

A plan that does all while you relax Highest number of free switches Nominal switching charges, at par with competition Only plan to offer investment fund options catering to risk averse and risk lovers Only to offer STP option. Take advantage of rupee-cost averaging

52 100

4 100

3 -

24 100

2 100

0 Not available

Ready-made/ Tailor-made plan option

Yes

No

No

No

No

No

Systematic Transfer Plan

Yes

No

No

No

No

No

55

Product Feature

Reliance Automatic Investment Plan Yes

ICICI Prudenti al Life Time Super No

Bajaj Allianz New Unit Gain No

HDFC SL UL Endowme nt Young Star No

Birla SunLife Flexi Save Plus No

SBI Life Horizon II

The Reliance Automatic Investment Plan

Exchange Option

No

Only plan to offer Exchange with another UL Plan- RAIP Maximum number of funds to choose from Recognizes the strong consumer demand for topups Enables Liquidity. Withdrawals from top-ups are free Low exist charge

Funds Offered Top-ups

Yes

No

Yes

Yes

Yes

Yes

Partial Withdrawals

Yes

Yes

Yes

Yes

Yes

Yes

Surrender Charge

Till 5th year

Till 4th year

Till 3rd year

Till 3rd year

Till 4th year

Entire policy term

56

Feature

Reliance Automatic Investment Plan 3

ICICI Prudential Life Time Super 2

Bajaj Allianz New Unit Gain

HDFC SL UL Endowment Young Star 2

Birla SunLife Flexi Save Plus 2

SBI Life Horizon II

Revival Period Min Premium (Rs) FMC

10000

18000

10000

10000

10000

5000

1.25% to 1.4% 2%

0.75 to 2.25% Not allowed

0.95 to 1.75% 2%

0.8%

1%

0.25 to 1.5 % 2%

Top-up Charges Min/Max entry age

2%

2%

30days/ 65 years

0/65 years

0/60 years

18/65 years

30/60 years

0/60 years

57

SUGGESTIONS

The company more focused towards promoting traditional plans .this has led to inadequate promotional activities for ULIP.The two reasons have led to less awareness among the consumers of ULIP.the Company should focus more on creating awareness about the benefits of ULIP among the people of small towns and cities. So that they start investing their money in unit linked investment plan more than the traditional plans.

58

CONCLUSION

After going through the responses of the various insurance companies:

In context of fund management charges Reliance Automatic investment plan is cheaper than ICICI Prudential's life time super Bajaj Allianz's New unit gain although it is comparable with SBI life's horizon.

Reliance Automatic investment plan provides automatic asset allocation means it allocates asset according to your risk at a particular age. It is a systematic transfer plan which helps average out the cost of units. it gives exchange option ,option to move between in and out of specific Reliance life ULIP. It provides top ups means it can be used to increase the investment component in the policy. Partial withdrawals provides liquidity in case of need, settlement option provide keep the money invested and receive in installments.

59

BIBLIOGRAPHY

ON LINE RESOURSES

www.Reliancelife.co.in www.proquest.com

60

APPENDIX

QUESTIONNAIRE
Dear sir/madam

This is survey on ULIP.The survey will help Reliance in analyzing its ULIP in comparison to others. Please respond the questionnaire below by takingout some minutes from your .valuable time

Q.1 Is it a life stage based plan?

(a)Yes

(b)No

Q.2 How many free swiches do it provide? .. Q.3 What are the swiching charges? . Q.4 Is it a ready-made /tailor-made plan ? (a)Yes (b)No

61

Q.5 Is it a Systematic Transfer Plan? (a)Yes (b)No

Q.6 Does it offer Exchange option? (a)yes (b)No

Q.7 How many funds do it offer? . Q.8 Does it provide Top ups? (a)Yes (b)No

Q.9 Does it offers the facility of partial withdrawal? (a)Yes (b)No

Q.10 What are the surrender charges? . Q.11 What is the amount of Premium(minimum)? .. Q.12 What are the fixed management charges(FMC)? . Q.13 What are the Top- up charges? Q.14 What is the minimum/ maximum age of entry?

62

Q.15 Name: Q.16 Company Name:

Thanks

63