A Summer Placement Report on HDFC Standard Life Insurance Company Limited
Submitted in partial fulfillment for Post Graduate Diploma in Management from Aravali Institute of Management, Jodhpur.
Prof. M. M. Mehta
Ravi Agarwal PGP – 2, PGDM Roll No. - 01
ARAVALI INSTITUTE OF MANAGEMENT
(An institution of Marwar Education Foundation) Marwar Bhawan, Polo No. 2, Paota, Jodhpur (Raj.) EXECUTIVE SUMMARY
HDFC Standard Life insurance is the oldest life insurance company in the world. It is the largest insurer in the UK and is the 28th largest company in the world. In India, the company is marketing life insurance products and unit linked investment plans. From my research at HDFC SLIC, I found that the company has a lot of competition from other private insurers like ICICI, Aviva, Birla Sun Life and Tata AIG. It also faces competition from LIC. To compete effectively HDFC SLIC could launch cheaper and more reasonable products with small premiums and short policy terms (the number of year’s premium is to be paid). The ideal premium would be between Rs. 5000 – Rs. 25000 and an ideal policy term would be 10 – 20 years. HDFC must advertise regularly and create brand value for its products and services. Most of its competitors like Aviva, ICICI, Max, Reliance and LIC use television advertisements to promote their products. The Indian consumer has a false perception about insurance – they feel that it would not benefit them if they do not live through the policy term. Nowadays however, most policies are unit linked plans where a customer is benefited even if their death does not occur during the policy term. This message should be conveyed to potential customers so that they readily invest in insurance. Family responsibilities and high returns are the two main reasons people invest in insurance. Optimum returns of 16 – 20 % must be provided to consumers to keep them interested in purchasing insurance. On the whole HDFC standard life insurance is a good place to work at. Every new recruit is provided with extensive training on unit linked funds, financial instruments and the products of HDFC. This training enables an advisor/sales manager to market the policies better. HDFC was ranked 13 in the Best Places to Work survey. The company should try to create awareness about itself in India. In the global market it is already very popular.
With an improvement in the sales techniques used, a fair bit of advertising and modifications to the existing product portfolio, HDFC would be all set to capture the insurance market in India as it has around the globe.
TABLE OF CONTENTS
Introduction to Insurance Research Design Company Profile of HDFC SLIC Company Profile of Tata AIG LIC POP’s and POD’s Competitive analysis Marketing problems Analysis and Interpretation Future line of research Conclusion References Appendix 5 10 16 29 33 38 43 46 63 65 67 68
Without their help and constant support this project would not have been possible. M. I would like to thank Prof. I would like to dedicate this project to my parents. It was a truly wonderful learning experience. K. Sanjay Diddee for supporting me during this project and providing me an opportunity to learn outside the class room. Lastly I would like to thank all the respondents who offered their opinions and suggestions through the survey that was conducted by me in Jodhpur. New Delhi for guiding me through my summer internship and research project. His encouragement. Mehta and Mr.
. Panda. Prof. Varun Arya. Sales Development Manager HDFC Standard Life Insurance.ACKNOWLEDGMENT
I would like to thank my project guide Mr. M. time and effort are greatly appreciated. B.
INDIAN INSURANCE INDUSTRY “AN OVERVIEW”
Indian lives. A well-developed and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and strengthens the risk taking ability of individuals. it adds about 7% to the country’s Gross Domestic Product (GDP). to some extent. It’s a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 1560. It was the first company to charge the same premium for both Indian and nonIndian lives. Interestingly in those days a higher premium was charged for Indian lives than the non . Insurance happens to be a mega opportunity in India.indiacore. can enable investments in infrastructure development to sustain the economic growth of the country.
The history of life insurance in India dates back to 1818 when it was conceived as a means to provide for English Widows. as Indian lives were considered more risky to cover. The Insurance sector.41 billion (for the financial year 2006 – 2007). The Bombay Mutual Life Insurance Society started its business in 1870. This in itself is an indicator that growth potential for the insurance sector in India is immense. It is estimated that over the next ten years India would require investments of the order of one trillion US dollars. Even so nearly 65% of the Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. A large part of our population is also subject to weak social security and pension systems with hardly any old age income security.THE INSURANCE INDUSTRY IN INDIA
With the largest number of life insurance policies in force in the world. The gross premium collection is nearly 2% of GDP and funds available with LIC for investments are 8% of the GDP. (Source: www. Together with banking services.
nearly 107 insurers were amalgamated and grouped into four companies.The Oriental Assurance Company was established in 1880. The Government of India in 1956. Nationalization was justified on the grounds that it would create the much needed funds for rapid industrialization. The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict State Control over the insurance business. on the other hand. These were subsidiaries of the General Insurance Company (GIC). Oriental Insurance Company and United India Insurance Company. Several frauds during the 1920's and 1930's sullied insurance business in India. With this. By 1938 there were 176 insurance companies. Their operations were restricted to organized trade and industry in large cities. can trace its roots to Triton Insurance Company Limited. The insurance business grew at a faster pace after independence. The non-life insurance business continued to thrive with the private sector till 1972. insurance remained an urban phenomenon. New India Assurance Company.National Insurance Company. The General insurance business in India. brought together over 240 private life insurers and provident societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC) was born. Insurance regulation formally began in India with the passing of the Life Insurance Companies Act of 1912 and the Provident Fund Act of 1912.
. Till the end of the nineteenth century insurance business was almost entirely in the hands of overseas companies. This was in conformity with the Government's chosen path of State led planning and development. Indian companies strengthened their hold on this business but despite the growth that was witnessed. The general insurance industry was nationalized in 1972. the first general insurance company established in the year 1850 in Calcutta by the British.
1956: 245 Indian and foreign insurers along with provident societies were taken over by the central government and nationalized.
Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. 1938: Earlier legislation consolidated and amended by the Insurance Act with the objective of protecting the interests of the insuring public. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck 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. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products.with a capital contribution of Rs. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. 5 crore from the Government of India.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. LIC was formed by an Act of ParliamentLIC Act 1956.
who had always seen life insurance as a tax saving device. The figures for the first two months of the fiscal year 2007-08 also speak of the growing share of the private insurers.91%. child plans and money back plans.7 billion have poured into the Indian market and 19 private life insurance companies have been granted licenses. The restriction on these companies is that they are not allowed to have more than a 26% stake in a company’s ownership.wikipedia.75% to 81. With the opening up of the insurance industry in India many foreign players have entered the market. smart marketing. its market share came down from 85. multi – purpose insurance plans. (www.PRESENT SCENARIO . Since the opening up of the insurance sector in 1999. 1560. Indians. The share of LIC for this period has further come down to 75 percent. Innovative products. Some of these products include investment plans with insurance and good returns (unit linked plans).38%.com)
. while the private players have grabbed over 24 percent. with premium income at Rs.41 billion during the fiscal year 2006-2007. pension plans. and aggressive distribution have enabled fledgling private insurance companies to sign up Indian customers faster than anyone expected. 8. foreign investments of Rs.LIFE INSURANCE INDUSTRY IN INDIA
The life insurance industry in India grew by an impressive 47. Though the total volume of LIC's business increased in the last fiscal year (2006-2007) compared to the previous one. are now suddenly turning to the private sector and snapping up the new innovative products on offer. The 17 private insurers increased their market share from about 15% to about 19% in a year's time.
CHAPTER II RESEARCH DESIGN
the type of company. It is the blue print that is followed in completing the study. The basic objective of research cannot be attained without a proper research design. In effect plans (insurance products) should be flexible to suit individual requirements.”
STATEMENT OF THE PROBLEM
This study was undertaken to identify which type of insurance plans HDFC SLIC should market to beat Tata AIG LIC in India. risk taking ability and the influence of advertising. Solutions and recommendations are made based on qualitative and quantitative analysis of the data. the amount of annual premium payable (capacity and willingness to spend).
. It specifies the methods and procedures for acquiring the information needed to conduct the research effectively. It is the overall operational pattern of the project that stipulates what information needs to be collected. from which sources and by what methods.RESEARCH DESIGN
A Research Design is the framework or plan for a study which is used as a guide in collecting and analyzing the data collected.
TITLE OF THE STUDY
“To Compare the products of HDFC Standard Life Insurance Company Limited and Tata AIG Life Insurance Company Limited for HDFC Standard Life Insurance Company Ltd. A survey was undertaken to understand the preferences of Indian consumers with respect to insurance. This research tries to analyze some key factors which influence the purchase of insurance like the term of the policy. While marketing policies the sole duty of an advisor/ agent is to provide insurance plans as per customer requirements.
newspaper articles etc.
. the company website. Kothari) PRIMARY SOURCES These include the survey or questionnaire method. To find ‘Points of Parity’ and ‘Points of Difference’ of HDFC Standard Life Insurance Company Limited and Tata AIG Life Insurance Company Limited.OBJECTIVES OF THE STUDY
To analysis the product details of HDFC Standard life Insurance Company limited and Tata AIG life Insurance Company Limited. company brochures. the internet. product brochures. They are primary and secondary data. R. SECONDARY SOURCES These include books.
TYPE OF DATA COLLECTED There are two types of data used. (Source: Research Methodology. telephonic interview as well as the personal interview methods of data collection. To find out factors that influence customers to purchase insurance policies and give suggestions for further improvement. Secondary data is data collected from indirect sources. Primary data is defined as data that is collected from original sources for a specific purpose. By C. competitor’s websites etc.
PLAN OF ANALYSIS
Tables were used for the analysis of the collected data. The data is also neatly presented with the help of statistical tools such as graphs and pie charts. Subhash Nagar.
The samples referred to were residing in Jodhpur City. This sample size was taken on 95% confidence level and 6 significant level. SAMPLE SIZE The sample size for the survey conducted was 270 respondents. The areas covered were Shastri Nagar.
SAMPLING TECHNIQUE Random sampling technique was used in the survey conducted.000 which is approx population of Jodhpur excluding people below age of 18 years. City Area and Kamla Nehru Nagar. A sample is a representative of the universe selected for study. Data universe for this sample is 10. Percentages and averages have also been used to represent data clearly and effectively. Masuriya.SAMPLING
Sampling refers to the method of selecting a sample from a given universe with a view to draw conclusions about that universe.00.
Introduction. present scenario in India. deductions and riders available with HDFC SLIC and Tata AIG LIC CHAPTER 6:
. human resource. history. reforms in the industry.
CHAPTER 2: Research Design .An overview of the industry in India.OVERVIEW OF CHAPTER SCHEME
CHAPTER 1: Introduction to insurance . products and services. title of the study. plan of analysis and study area. fees. statement of the problem. organizational structure. products and services. charges. research methodology. vision and core values. The advantages of investing in HDFC SLIC compared to other financial instruments. key milestones. national & international presence of the organization. introduction to unit linked funds. vision and core values. objectives of the study. sampling.
CHAPTER 4: Company profile of Tata AIG – Introduction of Tata AIG. CHAPTER 5: Points of Parity and Points of Difference between HDFC SLIC and Tata AIG LIC – Comparison between different plans.
CHAPTER 3 : Company profile of HDFC SLIC – Introduction of HDFC SLIC.
CHAPTER 8: Analysis and Interpretation – A survey on factors that influence people to purchase Life Insurance Policy. CHAPTER 9: Problems requiring more research – Future line of work CHAPTER 10: Conclusion References Appendices
. Comparisons between the plans to find the most popular and beneficial plans which HDFC SLIC can incorporate into their product portfolio.Competitive analysis – Information about the plans offered by LIC and other private insurers in India.The techniques used to market insurance and their advantages and disadvantages along with suggestions for improvement.
CHAPTER 7 : Marketing problems .
COMPANY PROFILE OF HDFC STANDARD LIFE INSURANCE COMPANY LTD.
Besides the core business of mortgage HDFC has evolved into a financial conglomerate with holdings In: HDFC Standard Life insurance Company. The gross premium income for the year ending March 31.
• • • Incorporated in 1977 as the first specialized Mortgage Company in India.HDFC holds 78. UAE with service associates in Kuwait. 2007. Almost 90% of initial shareholding in the hands of domestic institutes and retail investors.77. India. Intelenet Global (Business Process Outsourcing) – HDFC holds 50%. HDFC Chubb General Insurance Company – HDFC holds 74%.HDFC STANDARD LIFE INSURANCE COMPANY LIMITED
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. HDFC is the largest housing company in India for the last 27 years. The corporation has had a series of share issues raising its capital to Rs. HDFC Asset Management Company – HDFC holds 50. 2.07 %. The company has covered over 8. Oman and Qatar. 119 Crores. 1. HDFC also has an International Office in Dubai.
HDFC operates through almost 450 locations throughout the country with its corporate head quarters in Mumbai.1% HDFC Bank.624 Crores.000 lives year ending March 31. 2007 stood at Rs.856 Crores and new business premium income at Rs. Current 77% of shares held by foreign institutional investors.25%.
.HDFC holds 22.
.30 bn. Prior to this.
Loan Disbursements (up to Dec.5 million. (US $ 18. He joined HDFC Limited in a senior management position in 1978. 2007) Housing Units Financed Distribution Offices Outreach Programs
Mr. He was inducted as a whole-time director of HDFC Limited in 1985 and was appointed as its Executive Chairman in 1993. Mr. He is the Chief Executive Officer of HDFC Limited. Mr. Bombay and a Masters Degree in Business Administration from The American University. He is also the Executive Chairman of Housing Development Finance Corporation Limited (HDFC Limited).) Rs.20 bn) 2. Satwalekar obtained a Bachelors Degree in Technology from the Indian Institute of Technology.669 billion (US $ 15. Parekh is a Fellow of the Institute of Chartered Accountants (England & Wales).
Mr. Deepak S Parekh is the Chairman of the Company. 805 billion. he was the Managing Director of HDFC Limited since 1993. Deepak M Satwalekar is the Managing Director and CEO of the Company since November.SNAPSHOT-II
• Loan Approvals (up to Dec 2007) Rs. Washington DC. 2000.
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.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.
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.Preferred investment manager. CIBIL: Credit Information Bureau India Limited. Standard Life. HDFC Mutual Fund HDFC reality.
. Intelenet Global: BPO services for international customers. The company expanded in the 19th century from kits original Edinburgh premises. HDFC Chubb: Upcoming Private companies in the field of General Insurance.com: Helps to search properties in all major cities in India HDFC securities
Standard Life is Europe’s largest mutual life assurance company. opening offices in other towns and acquitting other similar businesses.
Both the promoters are will known for their ethical dealings and financial strength and are thus committed to being a long-term player in the life insurance industry. Reach of the JV player is highly rated and been conferred with many awards. 600. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Ltd. which offers a range of individual and group insurance solutions.4% staple and Standard of as a staple 18. HDFC is rated ‘AAA ’ by both CRISIL and ICRA.SNAPSHOT
• Founded in 1875. company supporting generation for last 179 years. Similarly.all important factors to consider when choosing your insurer. Deepak Satwalekar is the MD and CEO of the venture. HDFC is the majority stakeholder in the insurance JV with 81. Europe’s largest mutual life insurer. Is one of India’s leading Private Life Insurance Companies. respectively. a leading provider of financial services from the United Kingdom. Currently over 5 million Policy holders benefiting from the services offered.
. These reflect the efficiency with which HDFC and Standard Life manage their asset base of Rs.000 Cr and Rs.
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.6% Mr.000 Cr. HDFC Standard Life Insurance Company Ltd. 15.
HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000.) India’s leading housing finance institution and the Standard Life Assurance Company. Standard Life is rated ‘AAA’ both by Moody’s and Standard and Poor’s.
856 crores and new business premium income at Rs. which can be easily customized to specific needs. 2007 stood at Rs. The company has covered over 8.
Strong Ethical Values:
HDFC SLIC is an ethical and Cultural Organization. HDFC standard Life has the financial expertise required to manage long-term investments safely and efficiently. 2. for the year ending March 31.
Most respected Private Insurance Company
HDFC SLIC was awarded No-1 Private Insurance Company in 2004 by the World Class Magazine Business World for Integrity. These group solutions have been designed to offer complete flexibility combined with a low charging structure. Company also declared our 5th consecutive bonus in as many years for our ‘with profit’ policyholders.000 lives year ending March 31.
. False selling or false commitment with the customers is not allowed.Track Record so far
The gross premium income of HDFC. Innovation and Customer Care. 1.
Range of Solutions
HDFC SLIC has a range of individual and group solutions. 2007.77.624 crores.
As a joint venture of leading financial services groups.
PLANS THAT ARE OFFERED BY HDFC STANDARDS LIFE INSURANCE
. life insurance plans are created keeping in mind the changing needs of family. (Source: www.
'The most obvious choice for all'.
Values . At HDFC SLIC.People Care One for all . Its life insurance plans are designed to provide you with flexible options that meet both protection and savings needs. and set the standards in the industry'. HDFC SLIC products are modern and contemporary unitized products that offer unique customer benefits like flexibility to choose cover levels.Innovation . offer the best value for money.Customer centric .Joy and Simplicity
PRODUCTS & SERVICES
The right investment strategies won't just help plan for a more comfortable tomorrow -they will help you get “Sar Utha ke Jiyo”. which means that we are the most trusted company. indexation and partial withdrawals.hdfcslic. flexible and value for money products. It offers a full range of transparent.'The most successful and admired life insurance company. the easiest to deal with.
Money Back. Investment Plans HDFC SLIC’s Single Premium Whole of Life plan is well suited to meet long term investment needs.Protection Plans A person can protect his family against the loss of his income or the burden of a loan in the event of his unfortunate demise. Unit Linked Pension. disability or sickness. Savings Plans Savings Plans offer a flexible option to build savings for future needs such as buying a dream home or fulfilling your children’s immediate and future needs. Unit Linked Endowment. Unit Linked Young Star.
One-stop shop for employee-benefit solutions
. Pension Plans Pension Plans help to secure financial independence even after retirement. Unit Linked Pension Plus . Unit Linked Young Star Plus. Children's Plan. These plans offer valuable peace of mind at a small price. Unit Linked Enhanced Life Protection II. Unit Linked Young Star Plus II . Pension range includes Personal Pension Plan. Unit Linked Endowment Plus II. This provides attractive long term returns through regular bonuses. Savings range includes Endowment Assurance Plan. Protection range includes our Term Assurance Plan & Loan Cover Term Assurance Plan. Unit Linked Endowment Plus.
Maximum age at the start of policy 50 years last birthday Employees of the Development Agency are not eligible to join the group.Minimum age at the start of the policy 18 years last birthday . It offers different products for different needs of employers ranging from term insurance plans for pure protection to voluntary plans such as superannuation and leave encashment.HDFC Standard Life has the most comprehensive list of products for progressive employers who wish to provide the best and most innovative employee benefit solutions to their employees.
. The group to be covered is only eligible if it contains more than 500 members. Eligibility Members of the development agency and their spouses with: . On the death of any member of the group insured during the year of cover. HDFC SLIC offers the following group products to esteemed corporate clients: Group Term Insurance Group Variable Term Insurance Group Unit. Defined Benefit or Defined Contribution Superannuation or Leave Encashment schemes of your company Also suitable for other employee benefit schemes such as salary saving schemes and wealth management schemes
Development Insurance Plan Development Insurance plan is an insurance plan which provides life cover to members of a Development Agency for a term of one year. a lump sum is paid to those member beneficiaries to help meet some of the immediate financial needs following their loss.Linked Plan An investment solution that provides funding vehicle to manage corpuses with Gratuity.
Premium Payments The premium to be paid will be quoted per member in the group and will be the same for all members of the group. The premium can only be paid by the Development Agency as a single lump sum that includes all premiums for the group to be covered. Cover will not start until the premium and all the member information in our specified format has been received.
Benefits On the death of each member covered by the policy during the year of cover a lump sum equal to the sum assured will be paid to their beneficiaries or legal heirs. Where the death is as a result of an accident, an additional lump sum will be paid equal to half the sum assured. There are no benefits paid at the end of the year of cover and there is no surrender value available at any time. The role of the Development Agency Due to the nature of the groups covered, HDFC Standard Life will be passing certain administrative tasks onto the Development Agency. By passing on these tasks the premium charged can be lower. These tasks would include: Submission of member data in a specified computer format Collection of premiums from group members Recording changes in the details of group members Disbursement of claim payments and the mortality rebate (if any) to group members These tasks would be in addition to the usual duties of a policyholder such as: Payment of premiums Reporting of claims Keeping policy holder information up to date Training and support will be available to give guidance on how to complete the tasks appropriately. Since these additional tasks will impose a burden on the Development Agency, the Development Agency may charge a Rs. 10 administration fee to their members. Prohibition of rebates Section 41 of the Insurance Act, 1938 states
No person shall allow or offer to allow, either directly or indirectly, as an inducement to any person to take out or renew or continue an insurance in respect of any kind of risk relating to lives or property in India, any rebate of the whole or part of the commission payable or any rebate of the premium shown on the policy, nor shall any person taking out or renewing or continuing a policy accept any rebate, except such rebate as may be allowed in accordance with the published prospectus or tables of the insurer If any person fails to comply with sub regulation (previous point) above, he shall be liable to payment of a fine which may extend to rupees five hundred
INTROUCTION TO UNIT LINKED FUNDS
Unit linked plans are based on the component of the premium or the contribution of the customer towards the plan. This contribution can be in different modes like yearly, half yearly, quarterly and monthly. Unit linked plans have multiple benefits like life protection, rider protection, savings, transparency, investment choices, liquidity and planning for taxes. These plans work like mutual funds. The premium is collected from the policy holder. He is allotted a certain number of units based of his contribution. The Net Asset Value is the value of each unit of the fund. It is found by subtracting the charges and current liabilities from the current assets and investments and dividing this number by the total number of outstanding units. Let us take an example. There are 100 investors and each invests Rs. 10 in a fund. The total value of the fund is Rs. 1000 and each person is allotted 1 unit of Rs 10. Now the money (Rs. 1000) is invested in the debt or equity market. Suppose the fund value increased by 20%. As a result the Rs. 1000 invested became Rs. 1200. Hence the value of every investor is now Rs. 12 and not Rs. 10.
UNIT LINKED VERSUS OTHER FINANCIAL INSTRUMENTS
Parameters RBI Bonds Fixed Deposits Mutual Funds Unit linked
Safety Liquidity Returns Life Cover Tax benefits
High None Low 1 time amount Tax free
High High Low 1 time amount Taxed
Medium High High 1 time amount Taxed
High High High 10 times Tax free
We find that life insurance unit linked plans is a good area to invest money in as it provides liquidity, safety, high returns, life cover and tax benefits in a single plan. HDFC SLIC offers the option of indexation to beat inflation. Risk is reduced to a large extent as the company invests in a diversified portfolio of stocks.
INCOME SECTION Sec. 80C TAX GROSS SALARY ANNUAL HOW MUCH TAX CAN YOU SAVE? Rs. HDFC STANDARD
Across All income Upto Slabs saved
33,990 All the life insurance on plans. of
investment Rs. 1,00,000. Sec. 80 CCC Across all income Upto slabs. saved Investment Rs.
33,990 All the pension plans. on of
of Rs.990 under Sec.
Sec.1. 10 (10)D
Under Sec. subject to the conditions laid down therein.389 Rs. 80 CCC .000. 80C and under Sec.000. calculated for a male with gross annual income exceeding Rs. the benefits you receive are completely taxfree. 10(10D). 80 D. 33. 10.00. TOTAL POSSIBLE SAVINGS Rs37. Sec.399 under Sec.399 All the health insurance
on riders available with the conventional plans.00. 10.000.3. 3.Rs. Rs. 80 D Across all income Upto slabs saved Investment Rs.
.CHAPTER IV COMPANY PROFILE OF TATA AIG LIFE INSURANCE COMPANY LTD.
Inc. Tata AIG Life combines the Tata Group’s pre-eminent leadership position in India and AIG’s global presence as the world’s leading international insurance and financial services organization. Tata Motors and Tata Tea . and a shareholder base of over 2 million.118 million). Tata companies together employ some 215. The Group's 32 publicly listed enterprises . The Tata Group holds 74 per cent stake in the insurance venture with AIG holding the balance 26 percent.8 billion (Rs. 2001. formed by the Tata Group and American International Group.000 people. 799.TATA AIG LIFE INSURANCE COMPANY LIMITED Introduction
Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company.
American International Group. Tata AIG Life provides insurance solutions to individuals and corporate. financial services and asset management around the world. The Tata Group has operations in more than 40 countries across six continents. 2001 and started operations on April 1.have a combined market capitalization that is the highest among Indian business houses in the private sector. AIG's common stock is listed on the New York Stock Exchange as well as the stock exchanges in London. Tata AIG Life Insurance Company was licensed to operate in India on February 12. Switzerland and Tokyo. Paris. and its companies export products and services to 140 nations.
THE TATA GROUP
The Tata Group is one of India's largest and most respected business conglomerates. is the leading international insurance organization with operations in more than 130 countries and jurisdictions. In addition.8 per cent of the country's GDP. with revenues in 2004-05 of $17. institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. (AIG).
. Tata Consultancy Services.among them standout names such as Tata Steel. world leaders in insurance and financial services. Inc. AIG companies are leading providers of retirement services. (AIG). AIG companies serve commercial. the equivalent of about 2.
the private players too are having more and more opportunities to tighten their hold of the market. This provides a prospect for the private sector players to increase their share of the market.
. especially with LIC not meeting the needs of its clientele with respect to the services they need.Tata AIG has strong brand name and recall factor which most of its competitors lack in. Companies with a familiarity such as Tata AIG can especially achieve their targets due to the brand image that the Tata group has. Of the private players. The private players have everything to work for. (Source: www. ICICI Prudential comes first with an almost 4.
The survey also revealed that Tata AIG Life had a high recall as a reputed brand name.com) A recent survey conducted by the Voluntary Organization in Interest of Consumer Education (VOICE) revealed Tata AIG Life Insurance Company (Tata AIG Life) as the
clear winner in terms of customer satisfaction in the life insurance category . This is India's first-ever customer satisfaction study for the insurance sector.50% of the market share followed by Tata AIG with about 2.10% of the pie. The ability to provide innovative and customer-focused service such as allowing the maximum grace period for premium payment has not only further distinguished Tata AIG Life from other life insurance companies but also appealed to consumers.tata-aig-life. Other than the public behemoth Life Insurance Corporation (LIC) of India which has a major hold in the market share (of approximately 79%).
Tata AIG Life possesses the philosophy and drive to customize retirement obligations (for the company) which occur in the form of cash outflows. Finance and Compliance. adults. children. Human Resources. Corporate Training.
. Marketing. InvestAssure Gold Shubh life.PRODUCTS & SERVICES:
Corporate life insurance products: • • • • • • • • • Employee Benefits Credit Life Group Pensions Workplace Solutions Health First Health Protector Mahalife InvestAssure II. retirees etc. for the maximum benefit of both the employer and the departing employee. students. Tata AIG has an array of policies to suit the needs and requirements of all age groups viz. Nirbhay life
Individual life insurance products:
With respect to individual life insurance products. The ‘SUPPORT’ arm of Tata AIG Life is constituted of Operations.
POINTS OF PARITY AND
POINTS OF DIFFERENCE
HDFC SLIC AND TATA AIG
equity managed fund. Fixed Interest and Bond Funds Cash Funds
Nature of Investments Primarily invested in company stocks with the general aim of capital appreciation Invested in corporate bonds. Both HDFC SLIC and Tata AIG LIC have 7 types of funds based on combination of Debt– Equity fund. The rate of indexation will be in line with the increase in the Whole Sale Price Index (or in the event that this Index ceases to be published such other index as the Company may select for this purpose). bank deposits and money market instruments Combining equity investment with fixed interest instruments
Risk Category High
Generally all life insurance companies have three types of fund which are Equity fund. balanced managed fund.Points of Parity
Funds available with ULIP Plans
General Description Equity Funds Income. defensive managed fund. Debt fund and Balance fund. The base sum assured and sum assured of any attached rider would also be increased by the corresponding indexation increase. These are liquid fund. Equity fund has high risk but it gives high return. secure managed fund. These fund have different risk profile. stable managed fund. government securities and other fixed income instruments Sometimes known as Money Market Funds — invested in cash. Indexation You have the option to increase your regular premiums by an indexation rate at any policy anniversary to protect the real value of your investment against inflation. growth fund.
. 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.
a. on the 1st of January each year. The Allocation charges are guaranteed for the entire duration of policy term. After deducting this charge from premiums. • Mortality Charge
The Mortality Charge will apply on the Sum at Risk (SAR = Sum Assured less the Fund Value pertaining to regular premiums).a. 1. If premiums are discontinued. PAC will be deducted monthly by cancellation of units from the accumulation unit account.a. on Balanced Fund and 1. It will be deducted by monthly cancellation of units from the accumulation unit account. which will increase by 5% p.25% p.
Policy Administration Charge
Rs. 60 per month. subject to prior approval by the IRDA.a. The Mortality Charge shall remain guaranteed throughout the policy term.a.Charges. 1% p. on With Profits Fund. on Debt Fund.
Fund Management Charge
1% p.50% p. Fees and Deductions in ULIP
• Premium Allocation Charge
This is a premium-based charge. on Growth Fund.a. FMC will be applied on the fund while calculating NAV on a daily basis. The maximum FMC on any fund is 2% p. the remainder is invested to buy units. this charge would reduce to 60% of the charge applicable for the premium paying policies
Free Look Period Reversionary Bonus Terminal Bonus TOP UP Riders Critical Illness (CI) Benefit Additional Term Benefit (ATB) Accidental Death Benefit (ADB) Double Benefit Triple Benefit Payer Benefit Rider (PBR) Waiver of Premium (WOP) Benefit
Gives on diagnosis of anyone of 6 critical illness Provides Provides Provides Provides Does not provide Provides
Gives on diagnosis of anyone of 12 critical illness Provides Provides Does not provide Does not provide Provides Provides
. 100000 per annum and the returns on investment on maturity of the policy are also tax free. It is equal to 50% of the difference between regular premiums expected and those paid in the first year of the contract.
Tax benefits will be as per Section 80C & Section 10(10D) of the Income Tax Act.
Riders and Bonuses HDFC Standard Life Insurance 15 days Based on company's performance Based on company's performance Minimum Rs.36% service tax is applicable on the first premium of life insurance policy. Insurance is tax free up to Rs.This is the charge that applies when the policy is surrendered. • Service Tax Deductions
12. 1961. 5000 Tata AIG Life Insurance 15 days Based on company's performance Based on company's performance Minimum Rs.
80% per annum on the fund value Total 12 free Premium Redirection in a policy after this Rs.1% every year Total 24 free switches in a policy after this Rs.Points of Difference
HDFC Standard Life Insurance 15 days Rs. 250 per switch 30% of all premium paid excluding 1st premium 1. 60 per month Does not give 0. 250 per Premium Redirection 42.75% per annum on the fund value First 2 Premium Redirection in a year is free after this Rs. 100 per Switch 50% of all premium paid excluding 1st premium 0. fees and deductions. There is slightly difference in charges and maximum limits of all charges are fixed by IRDA.25% after every 4th year 4 free switches per year after this Rs.
.70% Tata AIG Life Insurance 31 days Rs. They have same charges. 1000 per Premium Redirection 72%
Grace Period Policy Administration Charge Guaranteed Bonus Loyalty Bonus Fund Switching Charge Guaranteed Surrender value Fund Management Charge Premium Redirection Charge Last Year Return
We see that both the life insurance companies’ products are almost same. 55 per month 10% on sum-assured after 10 year 0. Before buying any life insurance policy one should check charges and fees on policy and company’s overall performance and return given to its consumer.
CHAPTER VI COMPETITIVE ANALYSIS
endowment assurance plans. HDFC SLIC does not have a money back policy. The bonus is also calculated on the full sum assured. plans are formulated for specific occasions – whole life plans.10. child plans. While marketing insurance products I found that many customers wanted to purchase these plans. social security schemes – diversified portfolio of products. 10. pension plans.lic. It could offer a money back plan and capture some portion of this market.com) For a 25 years term .15 and 20 years and the balance 40% plus the accrued bonus becomes payable at the 25th year. plans for the handicapped individuals. money back plan for women.COMPETITIVE ANALYSIS
LIFE INSURANCE CORPORATION OF INDIA (LIC) LIC has an excellent money back policy which provides for periodic payments of partial survival benefits as long as the policy holder is alive. special plans. 15 and 20 years and the balance 40% is payable at the 20th year along with accrued bonus. unit linked plans. ICICI PRUDENTIAL
. HDFC SLIC could diversify its product portfolio. An important feature of these types of policies is that in the event of the death of the policy holder at any time within the policy term the death claim comprises of full sum assured without deducting any of the survival benefit amounts which have already been paid. 20% of the sum assured is payable after 5. term assurance plans. 15% of the sum assured becomes payable after 5. (www. plans for high worth individuals. It could add more plans for high worth individuals and women. LIC offers 66 different plans.
It is a guaranteed plan which ensures the company carefully invests your money. The company is very well advertised. 8000 is charged. magazines. newspapers. television. (Source: www.. It is 35% during the first year.com)
BIRLA SUN LIFE Birla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla Group. It has over 72000
.70% offered by HDFC SLIC.iciciprulife. offers a formidable protection for your future. radio etc.ICICI Prudential is a stiff competitor for HDFC SLIC. His promotion of the company builds trust and faith in the minds of our people. Also a higher minimum premium of Rs. 33000 crores with a market capitalization of Rs. 53400 crores (as on 31st March 2007). However the charges are very high in the plans offered by ICICI Prudential. The advertisements are showcased in movies. The local knowledge of the Aditya Birla Group combined with the expertise of Sun Life Financial Inc. Customers are attracted by higher returns and this is a plus point for Prudential.com) The Aditya Birla Group has a turnover close to Rs. The company is a merger between ICICI Bank which is the biggest private bank in India and Prudential Plc which is a global life insurance company. Amitabh Bacchan. bill boards. The company has an investment plan which is market related – Invest Shield Life. Hence the policies are not accessible to the lower strata of the society. The company has an excellent brand ambassador – Mr.birlasunlife. a leading international financial services organization.28% compared to the 42. 15% in the next year and 3% from the third year onwards. the premium will be returned to investors. (Source: www. The stock market performance of ICICI Prudential is much better than HDFC SLIC. The returns on the growth fund were 46. In this plan even if the market falls.. one of the largest business houses in India and Sun Life Financial Inc.
the United States. the Philippines. Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100 years of age. Together they are committed to offering you financial solutions that provide all the security you need for your family and yourself.Mr. motor insurance. It is led by its Chairman . Being a customer centric company. Sun Life Financial Inc. Bajaj Allianz is the number one private life insurer for the year 2005 – 2006. net of policy charges after every 5 years from the eleventh policy year onwards. home insurance. The company has sold 13. India. All this has assisted the company in cementing its place amongst the leaders in the industry in terms of new business premium income. Hence the fund value is greatly reduced. The company is a leading player in the life insurance market in Canada. Japan. a trusted automobile manufacturer for over 55 years in the Indian market. BAJAJ ALLIANZ Bajaj Allianz is a joint venture between Allianz AG with over 110 years of experience in over 70 countries and Bajaj Auto. Kumar Mangalam Birla. There are guaranteed returns of 3% p.employees across all its units worldwide. 00. It had assets under management of over US$343 billion. Indonesia. 2007. China and Bermuda. including Canada. The initial charges for the first year are 65%.000 policies and is backed by 550 offices across India. health and corporate
. It offers travel insurance. The company has a capital base of 520 crores as on 31st July.a. and its partners today have operations in key markets worldwide. as on 31st March 2007. Some of the key organizations within the group are Hindalco and Grasim. It has experienced a whopping growth of 216% in the last financial year. Hong Kong. BSLI has covered more than a million lives since inception and its customer base is spread across more than 1000 towns and cities in India. BSLI has invested heavily in technology to build world class processing capabilities. the United Kingdom. However the charges are very high. It is leading by 78 crores.
Annual premium is much less (about Rs. Your family can continue to enjoy their current lifestyle even in the case of something happening to you. there is a family of four. He is able to repay the loan with his current salary in 15 years. For example.com)
. He has just taken a loan from a bank of 20 lakhs to purchase a new home. (Source: www.tataaig.5 lakhs in case the person suffers from any critical illness. The entry age could be zero years which allow even new born babies to be insured.bajajallianz. Not only will the family face the emotional and financial loss of their father but they will also have to repay the home loan or risk being homeless. The company offers high coverage plans at low cost.insurance. (Source: www. There is a plan even for a policy term of 1 year. 6712) to avail such a good benefit. Charges are relatively low compared to HDFC SLIC for some policies.com) TATA AIG Tata Aig is a joint venture between the Tata group and American International Group Inc. These plans are very flexible and HDFC SLIC could adopt this idea of insuring individuals for short periods of time.12. The problem arises if something were to happen to him within these fifteen years. The mortality charges are lower than HDFC SLIC. 2500 per day in case of hospitalization and Rs. In one of the plans the company offers hospital cash benefit wherein it will pay Rs. The only earning member is the father.
CHAPTER VII MARKETING PROBLEMS
Some of the advisors skip this vital step and the prospect ends up with a plan they do not appreciate and soon surrender or discontinue. More modern techniques must be adopted. Some of the main problems in marketing the policies are:
Large amount of competition (18 players in the market)
Other brands are well advertised and have higher recall value LIC is considered a safer option Face competition from banks and mutual funds High premium policies are difficult to market Incorrect perception about insurance Interested prospects might have a lack of time and postpone investments Customers get defensive if you cold call Short term plans are available only at large premium Customers do not have risk appetite to invest in shares Some prospects have already invested and are not interested in further investments Consumers don’t want to undertake medical examinations Large amount of documentation Customers do not like their money locked up for many years Lack of awareness about the unit linked funds in the market
. The company must sponsor shows and give presentations in corporate houses.MARKETING PROBLEMS
The old and out dated technique of tele marketing is used to prospect customers. The financial health check must be performed for every prospect to assess his/her true financial position and needs.
No money back plan present in the product portfolio
SUGGESTIONS FOR IMPROVEMENT Advertise about the company and its products – it motivates individuals to purchase insurance Create a positive perception about insurance Speak about the good features a plan offers like high returns. life cover. accident cover while prospecting customers Try to sell the product/plan which the consumer requires and not the plan where the advisors benefit is higher Improve the efficiency in operations Bring out policies with small premiums payable for short periods of time – Rs. 5000 – Rs. indexation. 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 insurance Promote insurance in colleges and corporate houses
Promote HDFC SLIC as an Indian Company to build trust HDFC SLIC could have a brand ambassador or a mascot to promote its services
Should have partial withdrawals from the first year onwards Tap the rural market where there is large potential Diversify product portfolio Make products more straight forward – reduce complexities
. tax benefits.
CHAPTER VIII ANALYSIS & INTERPRETATION
60 years More than 60 years No.35 years 36 .49 years 50 .ANALYSIS & INTERPRETATION
“A SURVEY ON THE LIFE INSURANCE INDUSTRY IN INDIA”
AGE GROUP OF SURVEYED RESPONDENTS TABLE 1:
Age group 18 . of Respondents 127 67 46 24 6
.25 years 26 .
spouse and children (in case the individual is married) who are financially dependent on you. 25% fall in the age group of 26 – 35 years and 17% fall in the age group of 36 – 49 years.Analysis: From the chart above we find that 47% of the respondents fall in the age group of 18 – 25 years. As of now many consumers have a false perception that insurance is only meant for people above the age of 50. Contrary to popular belief the younger you are the more insurance you need as your loss will mean a great financial loss to your family. Insurance could help them with this and this fact has to be conveyed to the consumer. Individuals at this age are trying to buy a house or a car. Therefore most of the respondents are relatively young (below 26 years of age).
GENDER CLASSIFICATION OF SURVEYED RESPONDENTS
. 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.
CUSTOMER PROFILE OF SURVEYED RESPONDENTS TABLE 3: Customer profile
Student Housewife Working Professional Business Self Employed Government service employee
No.Particulars Male Female
No. of respondents
62 5 116 49 24 14
23% are students and 18% are into business.Analysis: From the chart above it can clearly be seen that 43% of the respondents are working professionals. Therefore the target market would be working individuals in the age group of 18 – 25 years having surplus income. interested in good returns on their investment and saving income tax. OF RESPONDENTS WHO HAVE LIFE INSURANCE POLICY IN THEIR NAME TABLE 4: Person who have life insurance policy Yes 103 No 167 CHART 4:
Rest all don’t have a single policy in their name. MARKET SHARE OF LIFE INSURANCE COMPANIES TABLE 5: LIFE INSURER
HDFC STANDARD LIFE BIRLA SUN LIFE AVIVA LIFE INSURANCE BAJAJ ALLIANZ LIC TATA AIG ICICI PRUDENTIAL ING VYSYA BHARTI AXA OTHERS
NUMBER OF POLICIES
4 3 6 7 55 6 12 6 2 2
. So there is a very big scope for life insurance companies to cover these people. So in future business of life insurace will gro further.ANALYSIS : This graph shows that out of total 270 respondents only 103 or 38% respondents have life insurance policy in their name.
the largest life insurance company is Life Insurance Corporation of India.Analysis: In India.
. It has been in existence in India since 1956 and is completely owned by the Government of India. Today the organization has grown to 2048 offices serving 18 crore policies and has a corpus of over 340000 crore INR.
) Rs. 5000 .Rs. 10001 . 25000 . 50001 . 60000 Rs.a. 24900 Rs. of respondents 40 26 18 10 4 2 3
CHART 6: ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE
. 15001 . 15000 Rs.Rs.ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE TABLE 6:
Premium paid (p.Rs. 80001 . 100000
No.Rs. 10000 Rs.Rs. 50000 Rs.Rs. 80000 Rs.Rs.60001 .
12000 as the minimum annual premium amount. 5000 per annum.a. 25% of the respondents pay an annual premium less than Rs.Analysis: From the chart above we find that.6000 p. 12000 p. They should introduce more products like Easy Life Plus and Safe Guard where the minimum premium is Rs. of Respondents 105 122 16 8 19
. and Rs. respectively. 25000. This would definitely increase their market share as more individuals would be able to afford the policies/plans offered. 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. 15001 and 17% pay an annual premium less than Rs. Only 19% of the respondents pay more than Rs. 10001 towards life insurance. 25000 as premium and most products sold by HDFC SLIC have Rs.a.
POPULAR LIFE INSURANCE PLANS TABLE 7:
Type of Plan Term Insurance Plans Endowment Plans Pension Plans Child Plans Tax Saving Plans
No. 39% of the respondents surveyed pay an annual premium less than Rs.
sum assured and accumulated bonus.
.CHART 7 : POPULAR LIFE INSURANCE PLANS
Analysis: From the chart given above we can clearly see that 45% of the respondents hold endowment plans and 39% of the respondents hold term insurance plans. For the returns sensitive investor term plans do not find favor as they do not offer a return in case the individual does not die during the policy term. If the policy holder dies during the policy term the nominee gets the death benefit that is. Term insurance is the cheapest form of insurance and helps the policy holder insure himself for a relatively low premium. Endowment plans are very popular and serve two purposes – life cover and savings. A term plan is a pure risk cover plan wherein the insured pays a lower premium for a higher sum assured. On survival the policy holder receives the survival benefit with a bonus.
of Respondents 154 116
CHART 8: AWARENESS OF UNIT LINKED INSURANCE PLANS
Analysis: From the chart given above we find that 57% of the respondents are aware of unit linked life insurance plans and 43% are not aware of such plans. These plans should be promoted through advertising. bill boards and pamphlets. newspapers.AWARENESS OF UNIT LINKED INSURANCE PLANS TABLE 8:
Awareness of Unit Linked Plans Yes No No.
. The number of units a customer would get would depend on the unit price when they pay the premium. radio. This would increase awareness and arouse curiosity in the minds of the consumer which would enable the company to market its products more effectively. They can be viewed as a combination of insurance and mutual funds. The company can advertise through television. Unit – linked plans are those where the benefits are expressed in terms of number of units and unit price.
001 .When the policy matures the individual gets his fund value. The value of his fund is calculated by multiplying the net asset value and number of units held by them on that day.000 Rs.000 Rs.Rs.000 Rs. 10.000 Rs. 50. 10.Rs.001 .00. 25.001 . 6.
CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM TABLE 9:
Willingness to spend on premium Less than Rs.Rs. of respondents 41 73 110 41 5
Percentage 15% 27% 41% 15% 2%
CHART 9: CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM
. 50.001 .Rs. 6. 1. 25.000
25000 for life insurance. Only 15% would be willing to spend more than Rs.5 years 6 . ICICI Prudential. Birla Sun Life. 10000 per annum. 10001 – Rs. 25000 p. This is further reduced as most customers have already invested with LIC. Hence to capture a larger part of the market the company could introduce more reasonable plans with lesser premium payable per annum.30 years More than 30 years Whole life Policy No. 6001 – Rs. HDFC SLIC is faced with a large amount of competition.9 years 10 . There are 18 insurance companies in India inclusive of LIC. 25000 per annum as life insurance premium. Bajaj Allianz etc. 27 % would be willing to spend between Rs.15 years 16 . we can clearly see that 41% of the respondents would be willing to spend between Rs.25 years 26 .Analysis: From the graph above.a.
CHART SHOWING IDEAL POLICY TERM TABLE 10:
Ideal policy term 3 . We could say that the maximum premium payable by most consumers is less than Rs.20 years 21 . of respondents 51 41 95 38 24 5 3 13
FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE
. tax saving opportunities as well as providing for every milestone in your life like marriage. 19% prefer a term of 3 – 5 years and 15% prefer a term of 6 – 9 years. education. This means that HDFC SLIC could introduce more plans wherein the premium paying term is less than 15 years.CHART SHOWING IDEAL POLICY TERM
Analysis: From the chart given above it can be seen that 35% of the respondents prefer a policy term of 10 – 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. children and retirement.
Parameter Advertisements High returns Advice from friends Family responsibilities Others No. 33% take life insurance to get high returns.
. The main purpose of insurance is to cover the financial or economic loss that occurs to the family in case of the uncertain death of the policy holder. Along with protection (life cover). But now a days this trend is changing. a savings element is being added to insurance. of Respondents 35 84 46 89 16
Analysis: From the chart above it can be seen that 33% of the respondents purchase life insurance to secure their families. 17% purchase insurance on the advice of their friends and 13% purchase insurance because of the influence of advertisements.
PREFERRED COMPANY TYPE OF THE RESPONDENTS TABLE 12:
Type of Company Government Owned Company Public Limited Company Private Company Foreign Company
No.With the introduction of the new unit linked plans in the market. The debt and money markets usually have low risk attached whereas the equity market is a high risk investment option. money market or a combination of these. policy holders get the option to choose where their money will be invested. debt market. They can invest their money in the equity market. of Respondents 127 62 49 32
Percentage 47% 23% 18% 12%
CHART 12: PREFERRED COMPANY TYPE OF THE RESPONDENTS
From the graph above we find that 60% of the respondents preferred to purchase insurance from a government owned company. Heavy advertising through television.40% 41% .15% 16% . MINIMUM EXPECTED RETURN ON INVESTMENT TABLE 13:
Expected Returns Less than 5% 5% . of respondents 5 39 46 49 46 27 22 14 22
. magazines and radio is required.10% 11% . 29% of the respondents preferred to purchase insurance from a public limited company and only 4% of the respondents preferred a foreign based company.20% 21% .50% More than 50% No. newspapers.30% 31% .25% 26% .
Most consumers are willing to adapt to some amount of risk but still want some guaranteed returns. returns are higher (39%) but correspondingly risk borne by the policy holder is also higher. The returns on the Secure Fund are guaranteed as these involve investment is government securities and the debt market. 17% would like returns between 21 – 25% and 17% would like returns of 11 – 15% on their investments. If the company invests in shares. Therefore a good combination of the two instruments is often a wise choice.From the chart above it can clearly been seen that 18% of the respondents would like 16 – 20% returns. But the returns on these instruments are low (8 – 10%).
. Therefore the average return on investment should be at least 16 – 20 %. Therefore the bulk of investment should be made in the balanced fund with 50% debt and 50% equity.
CHAPTER IX FUTURE LINE OF RESEARCH
FUTURE LINE OF RESEARCH
The future topics for research in the organization could be setting up of an appropriate ad campaign. The general perception of insurance as “inauspicious” should be done away with and individuals and corporations accept insurance on power with other investment opportunities. The brand name of HDFC could be used to give a push to HDFC SLIC and its products. They might also include a celebrity. its products and their special features and how insurance in general can help them in their future.
The other area of research could be in the management of funds HDFC SLIC possesses and how it can maximize returns for its investors. It is very vital to the companies’ success that the people of India know about HDFC SLIC. A research project could be undertaken on how to ensure that the money gets invested in the right companies and earns a medium – high return on investment. A large number of changes could be introduced and this would help in saving operating costs and improving the efficiency of the firm. The advertisements have to be emotionally appealing.
. Another area of research could be an analysis of the sales and marketing techniques used by HDFC SLIC.
CHAPTER X CONCLUSION
The company must be promoted as an Indian company since consumers seem to have more trust in investing in Indian firms. The medium of advertising used could be television since most of its competitors use this tool to promote their products.CONCLUSION
HDFC standard life insurance is first life insurance company in India.
. There are individuals who are willing to pay small amounts as premium but the plans do not accept premiums below a certain amount. HDFC SLIC could tap the rural markets with cheaper products and smaller policy terms. Consumers must be aware of the new plans available at HDFC SLIC. Individuals below the age of 30 (mostly male) were interested in investment plans. It currently ranks number 4 amongst the insurers in India (Source: annual premium provided by the company) The company faces a large amount of competition. To sustain itself it must promote its products through advertising and improve its selling techniques. It was registered on 23 rd December 2000. The unit linked concept must be specifically promoted. The general perception of life insurance has to change in India before progress is made in this field. This was a general conclusion drawn during prospecting clients. People should not be afraid to invest money in insurance and must use it as an effective tool for tax planning and long term savings. It was usually found that a large number of males were insured compared to females. It has businesses spread out across the globe.
com www.prulife.tata-aig-life. Jack Kinder
.com www.com Magazine – Insurance World The Outlook Money Secrets of Successful Insurance Sales by Mr.irdaindia.com www.bajajallianz.com www.com www.REFERENCES
www.money control.com www.icici.hdfcslic.lic.
10.A SURVEY ON ‘INSURANCE INDUSTRY’
Dear Sir/Madam. 5. 25. o 25.000 o Rs. 1. 15. Kindly spend a few minutes of your valuable time and fill in this questionnaire.001 – Rs.000 o Rs.000 Rs. 50. 10.000 (specify
o Rs.000 o More than Rs. 80. 80. 1.001 – Rs.001 – Rs.000 o Rs.001 – Rs.000 – Rs.
What kind of insurance policy would suit you best in your current stage of life? o o Life Insurance Life Insurance and Investment Plans o o Pension Plans Child Plans
. As part of the requirements for my Post Graduation Diploma in Management I am required to do a research based project. Jodhpur.001 – Rs. Do you have a life insurance policy/investment plan in your name? o Yes o No policies do you Aviva Insurance Bajaj Allianz Insurance LIC ING Vysya Insurance Bharti Axa Insurance Life Life
If yes which company’s insurance hold? o o HDFC Standard o Life Insurance o Birla Sun Life o Insurance o Tata AIG Life o Insurance o ICICI Prudential o Life Insurance o Others (specify name)
What is the approximate premium paid by you annually (in Rupees)?
o Rs. 60.001 – Rs.00.000 Rs.00. I am a student of Aravali Institute of Management. 50.
001 – Rs.000 1. o Rs.
50. 50.00. 25. 6.
o Rs. o More
o o o o
3 to 5 years 6 to 9 years 10 to 15 years 16 to 20 years
o o o o
21 to 25 years 26 to 30 years More than 30 years Whole life policy
What motivates you insurance/investment plans? o o Advertisements High Returns o o o Others (specify)
Advice from friends Family responsibilities
In which kind of company would you prefer to make a purchase of insurance? o o Government owned company Public Limited Company o o Private Company Foreign based company
.000 10.000 – Rs.000
6.001 – Rs. 25. 10.00.000 Which according to you is an ideal policy term? (Number of years you would be willing to pay premium)
o Rs.001 – Rs.o
Tax saving plans
Are you aware of the new unit linked insurance plans in the market? o Yes o No
How much would you be willing to spend per annum if you were to go for an investment/insurance plan?
1.000 than Rs.
40% 41% .25% 26% .50% More than 50%
Personal Details :
Name: Address: Age: Profile of respondent: • Student • Housewife • Working Professional Date: Contact No.15 % o 16% .Typically what kind of returns would you look at from your investments? (Please note: Higher returns involve greater risk) Less than 5% o 6% .30% 31% .10 % o 11% . : • • • Business Self – Employed Government Service Employee
.20 % o o o o o o 21% .