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Submitted by: ANU YADAV
FOR PARTIAL FULFILLMENT OF MASTER DEGREE OF HUMAN RESOURCE MANAGEMENT
Submission year 2009-10
For a management student theoretical knowledge as well as practical orientation exposes oneself to experiences, one can again be mastering it is best possible time. The title of my project is : "A Comparative Study on Traditional products & Unit Linked products" During this project report I have tried my best to gain some valuable knowledge & experience & also tried to give some valuable suggestion to the organization.
The company has wide range of products and has driven its growth across a cross-section of people and cities. key challenges future opportunities Of the industry is given Third Chapter covers the background of the company. problems of the organization. methodology. 1 private life insurer in the country and voted India’s most trusted private life insurance brand. These objectives are: • To know the factors influencing the customer decisions while purchasing insurance policies. evolution of insurance. it also includes the products classification of the company with its comparison to the traditional products. SBI Bank has 74% stake in the company and Cardiff has 26 %. existing private insurance players. privatization. need of insurance. Second Chapter Industry profile. First Chapter. returns. Also the rationale of study is given with some points that offers favorable climate. of this report introduction and scope of the project is given. Purpose: The purpose of this report was to analyze and compare the Traditional and Unit Linked products of SBI Life. We intend to give overview of Insurance with its distinctness and needs which includes the background of the organization. The company was amongst the first private sector insurance companies to begin operations after receiving control from IRDA. Fourth Chapter covers the research methodology used to achieve objectives of the project. SBI Life is a joint venture between State Bank of India and Cardiff SA of France. . By the time company has crossed the 3 million policy milestones with a premium income of 1075 crores and a total sum assured of more than 54000 crores.EXECUTIVE SUMMARY This is a project report on the topic "Comparative Study on Traditional Products and Unit Linked Products of SBI Life. and specific findings with suggestions." SBI Life insurance company was established in the year 2001 with a commitment to expand and reshape the life insurance industry in India. benefits. Today. the company has established itself as the No.
The max. 3. LIC and SBI are the two most known brands in the market. Any Time after three year of commencement one can make partial or complete withdrawals as no penalty. Unit Plus II: Other paying the premium for 4 years one can withdrawal whole money with interest after 4 yearns Flexibility (Investment Option) In the Unit Linked plans there are more flexibilities. Maximum of people preferred unit linked plan because of the following reason: • Short Term: It is the best feature of unit-linked plan. • • • • • 2. The company should target the lower segment customers also • . The main findings were: 1. • The advisors should be made aware and educated so that they can extend their services not only in terms of collection of premium cheques from the policy holders but also to educate them about the insurance and the latest Non Traditional products. To know the awareness of Traditional and unit linked products prevailing in the market. Seventh Chapter consist of suggestions & Limitations • All the company should come out of a Unit Linked product that should aid every section of the society. One can increase his death benefit. Through the study it was found that the main purpose of buying insurance is Investment.II.• • To broadly study the insurance market. Sixth Chapter consists of findings which are drawn on the basis of data interpreted in the previous chapter and limitation of the study. Unit plus . Fifth Chapter consists of Data analysis and Interpretation related to customer survey. Flexible Contribution: One can Increase or decrease has annual contribution. For example: In the unit linked plan here are two products like. which was not present in traditional plan. • In the Unit Plus: There is no maturity date. Decrease in contribution can be up to 20% of the Initial contribution.
2 Key Challenges……………………………………………………… 10 CHAPTER 3 . 1 1. 2 CHAPTER 2 .. 12 3.3 Product comparison…………………………………………………. 1 1. 17 CHAPTER 4 .2 Rationale of study…………………………………………………….Organization profile 3.1 Title………………………………………………………………….5 Sources of Data……………………………………………………… 29 CHAPTER 5 .Industry profile 2.2 Objectives…………………………………………………………….CONTENTS CHAPTER 1 – Introduction 1.5 Limitation…………………………………………………………….3 Research Design…………………………………………………….Findings CHAPTER 7 . 29 4.Suggestions APPENDIX 30 ..1 1. 29 4.1 Title………………………………………………………………….1 Introduction to insurance………………………………………….. CHAPTER 6 .1 Charts……………………………………………………………….2 Product………………………………………………………………...Research Methodology 4.4 Scope of the study……………………………………………………2 1. 29 4. 3 2.4 Sample Design……………………………………………………….3 Significance of the study…………………………………………….. 15 3.Data Analysis & Interpretation 5. 29 4.1 Background of company………………………………………….
Chapter – 1 INTRODUCTION
1.1 Title "A Comparative study on Traditional products V/S Unit Linked Products of SBI Life” 1.2 • • • 1.3 Rationale of study To put into practice the tool and technique learned theoretically in the class room. To have practical exposure to the field and face the ground reality To understand the real insurance world Significance of the Study Following is the significance felt by the Researcher while doing this Project. TO THE RESEARCHER • It provided an opportunity to understand the importance of various factor such as type of policy, term of policy, sum assured amount etc. for the sale of life insurance products. It gave a chance to use the conceptual knowledge in actual environment in preparing the researcher to use the knowledge in his future endeavors. It gave an insight on the Topic like policies awareness, policies preference, and type of investment plan, which were of prime importance from the marketing point of view. It helped in assessing the factors, which influence the buying behavior and defining the layer itself.
TO THE COMPANY
• The study provided the present status of the company and its products in the market. • The study provided the base for further assessment and comparative analysis of company's product against other company's products. • It provided the information about the weakness and strengths of the company. 1.4 Scope of the study • The study was conducted among the clients of SBI Life Insurance Co. Ltd., Udaipur. The study was conducted from 1st May to 30th June 2007. 1.5 Limitations of the study • The study was restricted to theoretical ground only so it was difficult to draw the true interpretations of the study. • The conclusion arrived at are based on a very less experience of researcher in this field.
Chapter – 2 INDUSTRY PROFILE .
India's GDP growth rate is over 6 percent per year on average for the last decade and saving rate is around 26 percent of GDP. Before the year 1999 there were monopoly of state run Life Insurance Corporation of Indian (LIC) in life insurance sector and General Insurance Corporation of India (GIC) with its four subsidiaries in general sector.INDUSTRY PROFILE 2. Indian Insurance was opened for private companies. IRDA role comprises of following three functions: • • Protection of consumer’s interest To ensure financial soundness and solvency of the insurance industry and to ensure healthy growth of the insurance market. India also has the highest number of life insurance policies in force in the world and total investible funds with the LIC are almost 8% of GDP .Yet more than three-fourth of India’s insurable population has no life insurance or pension cover. Insurance Regulatory Development Authority (IRA) is one such body. Through India's economic development. and together with banking services adds about 7% to India’s GDP. and opening of the public sector companies. Gross premium collection is about 2% of GDP and has been growing by 15-20% per annum. INDUSTRY PROFILE OF LIFE INSURANCE Insurance is an Rs. and opening up the sector to private players. It is 5th largest in the world in terms of Purchasing Power Parity (PPP). which checks on these tendencies.com . it becomes the most lucrative insurance markets in the world.400 billion business in India. In the wake of reform process and passing Insurance Regulatory Development Act (IRMA) through Indian Parliament in 1999. www.irdaindia. A statutory body needs to be made to regulate the market and promote a healthy market structure. To tab the vast insurance potential and to mobilize long term savings we need reforms which include revitalizing and restructuring of the public sector companies. Health insurance of any kind is negligible and other forms of non life insurance are much below international standards.1 Indian Insurance Industry .Introduction India is the largest democracy in the world having a population more than one billion.
get your children married and even retire comfortably. housing loan or other types of loan. (i) Life Insurance. It provides several benefits by paying a small amount of premium to an insurance company as: • • • • • • • Safeguards oneself and one's family for future requirements. A loss is paid out of this premium collected from the insuring public. women and child. Insurance Companies collect premium to provide for this protection. Insurance is a protection against a financial loss arising on the happening of an unexpected event. to pay the other party on happening of a certain event. agriculture. life insurance acts as a flexible money-saving scheme. saving and peace of mind. . which empowers you to accumulate wealth-to buy a new car. Security against a personal loan. through Insurance Agent of the concerned company or through Intermediaries Benefits of Insurance Insurance is the instrument of Security.What is Insurance? Insurance is a contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums. (ii) Health Insurance and (iii) General Insurance. In addition to serving as a protective cover. Peace of mind in case of financial loss. To get insurance an individual or an organization can approach to an insurance company directly. Tax rebate. Insurance is generally classified in three main categories. Protection from the claim made by creditors. The insurance company acts as a trustee to the amount collected through premium. Encourage saving. Provide a protection cover to industries.
electricity. By paying a small premium in easy installments for a long period a handsome saving can be achieved. safe drinking water. There are some benefits of life Insurance as: Protection: Life Insurance guarantees full protection against risk of death of the assured. which eliminates 'risk' and provides the timely aid to the family in the unfortunate event of death of the breadwinner. On 1st September 1956 all the Insurance Companies were nationalized. By this act an Indian promoter can invest either wholly in. Long Term Saving: Life insurance encourages long term saving. full sum assured is payable. By the year 1956. the Insurance Regulatory Development Act (IRMA) was passed in Indian Parliament. The growth of the debt market will also get a boost. The huge amount of funds that will be at the disposal of Insurance Companies will be directed as desired avenues like housing. Liquidity: Loan can be obtained against a policy assured whenever required. Indian Parliament passed LIC Act and the state run Life Insurance Corporation of India (LIC) has held the monopoly in countries life insurance sector. Tax Benefit: Tax relief in income tax and wealth tax can be availed on the premium paid for Life Insurance. In the year 1999. 154 Indian insurance. if it occurs earlier. primary education and infrastructure. an insurance venture or team up with a foreign insurer. The contract provides for the payment of an amount on the date of maturity or at specified dates at periodic intervals or at unfortunate death. On September 1956. By this act a door was open for private companies with foreign equity Life Insurance. In case of death. Life insurance is universally acknowledged to be an institution. 16 non-Indian insurance and 75 provident societies were carrying on Life insurance business in India. Life Insurance is a contract for payment of a sum of money to the person assured (or nominee) on the happening of the event insured against.In this economic reform process the Insurance Companies will boost the socioeconomic development process. with a . The contract provides for the payment of premium periodically to the Insurance Company by the assured. Above all the policyholders will get better pricing of products from competitive insurance companies.
Ltd. (Foreign players entering the Indian Insurance sector with their Indian partners) Life Insurance List: S. Ltd. ICICI Prudential Life Insurance Company Ltd. 1938. HISTORY: Life Insurance in its present form came to Indian from the United Kingdom with the establishment of a British firm Oriental Life Insurance Company in Calcutta in 1818 followed by Bombay Life Assurance Company 1823. Now as per the latest Finance Bill this Investment of FDI can go up to 49 Percent. with comprehensive provision aimed at exercising effective . 1912 was the first statutory measure to regulate life Insurance business. Ltd.N. Tata Aig Life Insurance Company Ltd. Om Kotak Mahindra Life Insurance Co. The Indian Life Assurance Companies Act. 1 2 3 4 5 6 7 8 9 10 Registration No. PRIVATE PLAYERS' INITIATIVES List of Private Life Insurance Companies Insurance Industry in the year 2000-2001 had 16 new entrants. Metlife Indian Insurance Company Pvt. Allianz Bajaj Life Insurance Company Ltd. earlier legislation was consolidated and amended by the Insurance Act. 101 104 105 107 109 110 111 114 116 117 Date of Reg. Birla Sum Life Insurance Company Ltd. Max New York Life Insurance Co. SBI Life Insurance Company Ltd. 23/10/2000 15/11/2000 24/11/2000 10/01/2001 31/01/2001 12/02/2001 30/03/2001 02/08/2001 03/08/2001 06/08/2001 Name of the Company HDFC Standard Life Insurance Company Ltd.cap of 26 percent of equity for a foreign partner. In the 1938. Ltd. ING Vysya Life Insurance Company Pvt.
Indian is a market of mainly small policies. through restricted to 26 percent of the capital. Privatization in 1990s As part of the wide . promote and ensured orderly development of the insurance industry. N. the insurance industry was opened up for private sector participation. with a capital of Rs. The committee's recommendations to open up the sector to private sector participation were implemented by the Government in 2000.ranging economic reforms initiated in 1991. The key element in the reform process was the participation of overseas insurance companies. By 1956. a rough estimate is that only 20 percent of the insurable population is insured. The main objective of setting up the IRDA was to project the interests of Policyholders and to regulate. 154 Indian insurers. It is. In January 1956. however. recognized that for a long time to come agency domination will be a .control over the activities of insurers of the insuring public. The main concern was to protect the interests The Act was amended in 1950 resulting in far-reaching changes in the insurance sector. Till date the LIC has insured over 120 million individuals and has a vast sales network of over 7 lakh insurance agents. a committee headed by Mr. 245 Indian and foreign insurance and provident societies operating in Indian were taken over by the Central Government by an Act of Parliament. The LIC. 16 foreign insurers and 75 provident societies were carrying on life insurance business in the country. R. building immense and unavoidable pressure among the players. Over four decades the industry has been a State monopoly. The list of insurance as on data is given in Table-I. The average annual life premium is less than the equivalent of $ 100 Indian is also marked by a very low insurance penetration rate. Although no authentic statistics is available. With the Insurance Regulatory and Development Authority Act. the Life insurance Corporation Act 1956. Malhotra examined the structure of the insurance sector. Within the short time since the opening up several insurance companies have been licensed by the IRDA. The industry is witnessing an upsurge in consumer awareness. Business models At present the new entrants are experimenting with different strategies to penetrate the market by developing multiple channel distribution models. 1999 (IRDA) formally coming into force. 5 crores was set up September that year. in keeping with the then prevailing political and economical philosophy of socialism.
Other channels such as banks. • • With the entry of private insurers. Today after nearly fifty years. and also enabled insurers to cross sell with other financial services. some of the early movers adopted by private insurers can be discussed here. This would enable insurers to ensure IRDA Compliance with respect do rural coverage. but offering products with a combination of benefits (riders) which could be bundled /customized to suit an individual's need. Non. money back and annuity are set to rise. the market is already seeing a wide array of products. Distribution modes: • • • Most new entrants are targeting the Indian middle class segment estimated at over 250 million persons. Alliances with banks: Insurance is using branch networks to sell insurance products.Bank Alliances: These are tie-ups with non-governmental organizations (NGOs) mainly to tap the rural market. Insurance is also being promoted as a sound long-terms investment option. High focus on direct selling: The preferred route is the agency network. This enables insurers to leverage on low distribution costs by using existing networks. It is the general perception that life insurance will continue to be sold through face-to-face contract for quite a while. The tax benefits are also attractive. dedicated distribution through alliances and e-trade will take time to make a sizable impact. retirement product. Besides returns when really increases the appeal of insurance is the benefit of life protection from insurance product along with health cover benefits. . Retail financial service Distributors: This involves the tie-ups with NBFCs to act as corporate agents. With Parliament passing the Insurance Amendment Bill. Non-profit Products are likely to become increasingly prevalent. Insurers today are not merely looking at offering the basic life insurance solution.) will remain popular. In terms of returns insurance products today offer a competitive 7-9 percent. term etc. sale of new products such as single premium. products and services. The agency channel constitutes 90-95 percent of the market. While the plain individual insurance (whole life. the insurance sector is a buyers market where there consumer has the choice to select from a variety of insurance. unit-linked.feature of this market. Insurers are also targeting bank employee as per prospective customers and agents to market products.
K) ING New York Life Met Life Old Mutual Cardif AIG Major Local Shareholder Bajaj Auto Sanmar Birla Global Finance Dabur HDFC ICICI Vysya Bank Max India Bank Pallonji Group Kotak Mahindra SBI TATA Business of local Shareholder Auto Manufacture Diversified Conglomerate Diversified Conglomerate Medical & Consumer Products Investment and Finance Investment and Finance Bank and other investors Diversified Conglomerate Conglomerate Investment and Finance Bank Diversified Conglomerate .1: Insurers as on Date Company Bajaj Allianz Life AMP Sanmar Birla Sun Life Dabur AVIVA HDFC Standard Life ICICI Prudential Life ING Vysya Life Max New York Life Met Life India OM Kotak Mahindra SBI Life TATA – AIG Life Foreign Shareholder Allianz AMP Sun Life of Canada AVIVA Standard Life Prudential (U.
4 60.3 .4 32.1 71. Growth Birla Sun Life Growth Returns 115.8 64.1 73.6 45.0 47.5 69.7 82.2 67.Private Companies returns are as follows of their business: II: Last Year Returns Returns based on ULIP plans (equity): Private Insurers SBI Life Horizon Equity HDFC Life Growth Bajaj Allianz UGP Equity Plan OM Kotak Aggressive ICICI Pru Life Link Max Met Life Multiplier Reliance Life Equity AVIVA Save Guard Growth LIC Bima Plus Max New York Life Ins.
requirement was in inexpensive and rather casual. Intermediaries and direct marketing Though the agency channel will definitely remain as the dominant distribution channel. customer's service and expense control.2 Key Challenges faced by Private Insurers: The key challenges. It is estimated that by the time an agent is licensed and becomes productive. Because of this insurers cannot afford to have many non-productive and this will strengthen the market. The new entrants cannot expect to match the extensive distribution network of LIC (of over 7 Lakh agents). The limiting factor for private insurances will be the extensive and expensive distribution structure required for reaching through the segment. Distribution will be a key determinant success for all insurance companies. 20000 would have been incurred by the insurer. The LIC did not mind even if a large part of its agency force remained inactive and / or unproductive. distribution. Of these only a small proportion is meaningfully productive. Since there were no requirements relating to training and passing of examination. about Rs. This is not the case now. which all private insurers will face in the coming months. Private insurers are also engaging in direct marketing to high net worth individuals through channels like work site marketing a relatively inexpensive and easy launch potential distribution charmed . The alternative channels such as banks and other institutions are slowly emerging. alternative channels like corporate agencies. Agents have to be trained for 100 hours and they have to pass an examination. managing investment. Some of these are briefly discussed here: Life insurance in India has traditionally been distributed through the agency channel. It is to hope that a variety of channels will emerge in due course as result of liberalization of this sector. Both of which are now required.2. are in the areas of product innovation. 15000 to Rs. brokers and Bane assurance will play a meaningful role in distribution.
7.New entrants will constantly explore avenues to increase the number of distribution channels through a variety of distribution patterns. Some private insurers have tied up with non-government organization (NGOs) to satisfy the social obligation. 7500 in second and up to 20000 lives in fifth year and beyond. In the social sector. Rural and Social Insurance As per the IRDA regulations all insurers have an obligation to fulfill in the rural and social sectors. It is expected that these rigorous requirements will help increase insurance penetration and provided the much-need insurance protection to the segments that constitute a large percentage of the population. in terms of quality of advice given by the distribution channels (advisors. a key difference in gaining a winning edge is the customer service provided by the insurers. In these areas. Some of them have roped in the village or panchayat heads to comply with the rural obligations. This obligation is expressed as a percentage of total policy sales in the rural sector and number of lives insured in the socially weaker sections of society to the total. banks) or policy processing to settlement of claims. be it. This piece of legislation is seen as a landmark in India. These policyholders protection regulations are comprehensive they ensure transparency and accuracy. . fix responsibility on insurance companies for several areas involving customer service etc. Customer service In this competitive scenario. In short. local partnerships established by private players matter. it is expected that insurance will gradually cease to be more urban phenomenon.5 percent in second year and up to 15 percent in fifth year. The rural obligations are to sell specific percentages of policies to the rural sector 5 percent in first year. insurers are required to insure a specific of lives 5000 in first year. For the first time in four decades the customer is really the focus and companies are vying with one another to perform to very transparent and tight benchmarks of service. It is significant that the IRDA has brought out regulations that prescribe service standards and parameters. given the customer profile.
only 11 percent of the working population is protected by some form of retirement benefits. Future opportunities Opening up of the pension sector: Considerable discussions have taken place on this subject.Role of Technology In the present competitive environment technology will play a definite role in achieving a competitive edge. Life insurance will. The life insurance industry has come alive. It is learnt that a detailed proposal is before the Government to open up the pension sector. Providing coverage through a national pension scheme is challenging but it is necessary. particularly for the non-salaried or self employed workforce and those engaged in agriculture.000 Crores in the life insurance sector. at long last attain its rightful place in the economy. In five years one will be looking at an annual premium income of Rs. Technology will play an increasing role in aiding Design and administering of insurance products as well as in building and maintaining long term customer relationships. Awareness has increased and it is being expected that the market will grow fast. . 100.
Chapter – 3 ORGANIZATION PROFILE .
The company's wide range of products distribution strengths and powerful brand has driven its growth across a cross-section of people and cities. Ambitious. • Leveraging technology to service customers quickly.1 Background / History of the company SBI Life Insurance Company Ltd. • Providing an enabling environment to foster growth and learning for our employees. Today. building transparency in all our dealings.ORGANIZATION PROFILE 3.Trust & reliability. the company has established itself as the No. . and in the time since. has taken several steps towards its realizing its goal. The success of the company will be founded in its unflinching commitment to 5 core values . I Private life insurer in the country and it is the single largest group policy seller among private players and above all SBI Life is the first private insurer to report profit. Developing and implementing superior risk management and investment strategies to offer sustainable and stable returns to our policyholders. the qualities of our people and the way they work. efficiently and conveniently. • And above all. Each of the values describes what the company stands for. The company was amongst the first private sector insurance companies to begin operations after receiving approval from Insurance Regulatory Development Authority (IRDA). Dynamic and Excellence. By the time company has crossed the 3 Million Policy milestones with a premium income of 1075 crores and total sum assured of more than 54000 crores. Innovation. was established in 2001 with a commitment to expand and reshape the life insurance industry in India. Vision Our vision: To be the dominant life and Pensions player built on trust by world-class people and service. This we hope to achieve by: • Understanding the needs of customers and offering them superior products and service.
In France. the two companies joined hands in 2001. an aggregate deposit base of nearly Rs. multi-country specialist. 07. Cardif Cardif is the wholly owned subsidiary of BNP Paribas. and the trend is rapidly catching up in other countries. SBI Bank has 74% stake in the company. Is a joint venture between State Bank of India and Cardiff of France. pensions and insurance protection products to private clients and companies. and it stands as the last word for security and financial protection in the country. It has 9 branches in major metros in the country Cardif is a personal insurance Company founded in 1973. which is the leading bank in Europe. SBI’s illustrious background dates back to the year 1806 when it started business as a presidency bank in the name of Bank of Bengal. excellent quality of service and long term commitment to you. it has a branch network of over 9039 branches. Today. 19. Together with 7 Associate Banks. known for their professionalism..9 billion euros. Riding on the success of this relationship. Cardif sales amounted to 3. . As multipartner. SBI is only bank in India permitted to hold more than 50% of equity in the insurance joint venture. SBI is the strongest and most profitable bank in the country as it has the tangible net worth of Rs. The two companies bring together two of the Strongest financial service brands in the country.* With a paid up capital of Rs. In 2001.* SBI Bank SBI is a household name. to form SBI Life Insurance Company Ltd. with a commitment to provide leading edge life insurance solutions. of which 48% was generated outside France. and Cardiff pie has 26%.231 crores as at March 2004.PARTNERS SBI Life Insurance Co Ltd. 4.815 crores. 20. 3681 crores for the fiscal ending that date.619 crores and a total balance sheet size of Rs. and it earned net profit of Rs. SBI commands about 30% of the market share banking. it has learnt to combine the best of banking practices handed down from the imperial management with the dynamic ways of doing banking in modern India. Over the years. Cardif has operations in 28 countries and has more than 150 institutional partners throughout the world . over 65% of life insurance business is done through banks and financial institutions countries in France. 350 cr.with the Authorized capital of Rs. 3. 500 cr. BNP is one of the oldest foreign banks in India with a presence dating back to 1860. Cardif markets a complete array of individual and collective savings.
NewDelhi. South Indian Bank. It has also tied up with organizations like Dhan for distribution of Salaam Zindagi. simple and based on well .informed judgment. Indore. Ludhiana. Kochi. The company plans to make the insurance buying process quick. Kolkata. DISTRIBUTION SBI Life has one of the largest distribution networks amongst private life insurers in India. SBI Life Insurance became the first company amongst private insurance players to cover 30 lakh lives. Noida. and Punjab & Maharashtra Co-operative Bank. Chandigarh. Bank of India. Meerut. Banglore. Mumbai. having agreements with SBI Bank. as well as some corporate agents. ensuring high standards of customer service and world class operating efficiency. Pune and Vadodara. Nasik. Jaipur. . In 2004. having commenced operations in 69 cities and towns in India. 350 crore. Bank. Chennai. Gurgaon. Lucknow. Further. SBI Life has recruited and trained over 36. Some of the Major Cities are: Ahmedabad. a policy for the socially and economically underprivileged section of society. The company has the largest number of banc assurance tie-ups. 500 crore and a paid up capital of Rs. Hyderabad. it leverages its state-of-the-art IT infrastructure to provide superior quality of service to customers. Madurai. SBI Life Insurance is registered with and authorized capital of RS. Coimbatore. Manglore. and has the highest number amongst private life insurers on the renowned Million Dollar Round Table (MDRT) (550 in the year 2004-2005). Nagpur. SBI owns 74% of the total capital and Cardiff the remaining 26% SBI Life Insurance’s mission is to emerge as a leading company offering a comprehensive range of Life Insurance and Pension products at competitive prices.500 insurance agents to interface with and advise customers.THE COMPANY SBI Life Insurance is a joint venture between the State Bank of India and Cardiff SA of France.
SBI Life Scholar II is an anticipated endowment policy ideal for meeting milestone expenses like a child's marriage. It is safe and hassle free way to get high returns and with a unique feature of Automatic Asset Allocation.3. level term assurance with return of premium and single premium. It is available in 3 Options . Its 26 products can be enhanced with up to 4 riders. Savings Solutions • • SBI Life Sudarshan is a traditional endowment savings plan that offers life protection along with adequate returns. It is a participating plan in order to meet your financial obligations at crucial junctures. SBI Life Horizon II offers customers the flexibility and control to customize the policy to meet the changing needs at different life stages. .2 PRODUCTS Insurance Solutions for individuals SBI Life Insurance offers a range of innovative. Unit-linked Solutions SBI Life Unit Plus II is a Single & Regular premium Unit Linked Insurance Plan. which offers life cover at very tow cost. • Protection Solutions SBI Life Shield is a protection plan. The policy is designed to provide money at important milestones in the child's life. Child Solutions SBI Life Scholar II provides guaranteed educational benefits to a child along with fife insurance cover for the parent who purchases the policy. which combines life insurance cover with the opportunity to stay. customer-centric products that meet the needs of customers at every life stage. SBI Life Money Back is also a traditional plan that offers life cover with cash inflow at regular intervals.level term assurance. to create a customized solution for each policyholder. expenses for a child's higher education or purchase of an asset. invested in the stock market.
Benefits are payable to the insured for medical expenses prior to death.Retirement Solutions SBI Life Long Pensions is a retirement product targeted at individuals in their thirties because everyone needs to accumulate enough savings to meet old age needs.00% 60. the beneficiary receives an additional amount equal to the sum assured under the policy. Level Term Cover: This rider provides the option to increase the risk cover.66% 28. Accident & disability benefit: If death occurs as the result of an accident during the term of the policy. Flexible Rider Options SBI Life offers 3 flexible riders.00% 0. Portfolio Details of SBI Life as on December 2006 Horizon / Unit Plus Bond Fund Portfolio Details as on 31st December’06 70.86% . 3.00% 10.00% 50. the beneficiary will be entitled to twice the sum assured as additional benefit. and look for a reliable and enduring pension payment arrangement. 2.00% 20. Critical Illness Benefit: Protects the insured against financial toss in the event of 9 specified critical illnesses.00% 30. If the death occurs while traveling in an authorized mass transport vehicle. which can be added to the basic policy at a marginal cost. depending on the specific needs of the customer. The cover may be increased for an additional amount up to a maximum of the existing basic sum assured on your policy.00% 40. 1.00% Money Market & Other Instruments Government Securities Corporate Debt Portfolio Horizon / Unit Plus Bond Fund as on 31/12/06 Government Securities Corporate Debt Money Market & Other Instruments 9.48% 61.
However. or on the death of the policyholder occurring earlier. 25 or 30 years. While the policy under which premium are payable throughout life is called the whole life whole term policy. the endowment has the highest premium. Whole Life Insurance The sum assured is payable on the death of the assured whenever it occurs. Although premiums may cease at say age 60 the policy remains in force and the policy would provide the benefits for the dependents on the death of the policyholder as and when it occurs. The premium will be higher than a level or decreasing term assurance policy but the entire loan amount can be paid out of the policy proceeds on completion of the policy term. or before it. Premiums are payable throughout the life of the assured or. Endowment assurance is often used to cover a house mortgage. four or five years and the remaining sum assured along with the accrued bonuses on the full sums assured. These policies are regarded as savings instruments. if the person dies.3 Product Comparison I. the sum assured will also be payable if the life assured survives the stipulated term.3. Endowment Insurance: The endowment Insurance policy is taken for a certain number of years say. the policies where premium paying term is limited are called payment whole life policies. Further. will be payable on the maturity date of the policy. The sum assured is payable in the event of death within the term of the policy. . Pure Endowment insurance provides for payment of the sum assured on the policyholder surviving to the maturity date the premiums paid with or without interest. 20. more normally. 15. the full sum assured together with the accrued bonuses till date would be payable in the event of the policyholder dying during the currency of the policy. TYPES OF ORDINARY LIFE INSURANCE (TRADITIONAL PRODUCTS) Permanent Type of Contracts Typical permanent type policies are Whole Life policy and Endowment policy. would be paid to the dependents. The whole life policy also guarantees payment of the sum assured but only at the time of the assured death as and when it occurs. until the 'maturity date'. There are Anticipated Endowment or Money Back policies under which certain agreed proportion of the sum assured will be payable at an interval of three. because the life insurance company is guaranteed to pay out the sum assured at a given date. For the same amount of cover. if the assured dies earlier. until-retirement of the assured at 60 or 65. The time lag between the commencement of the policy and the date of death is on an average likely to be longer and as such the premium for whole life policy is lower than that for endowment.
Normally. an annuity. the policyholder does not receive any benefit on survival to the end of the stipulated term but he will have enjoyed the protection for death occurring during the policy period. Life Annuity When a person has a reasonably large sum of money and wants to provide an income for him after he retires or at some other time. he can approach a life insurance company and purchase an annuity. These policies could also be endowment type where the sum assured is payable on death during the period selected or on survival to the end of the period selected. No doubt. return of premiums is allowed in the event of survival of the policyholder to the end of the term. . since as the description suggests. Life annuity involves payment of a certain agreed amount annually or more frequently on survival of the life annuitant. Joint Life Insurances or Annuities Life insurances or annuity may be issued to two or more lives such that the assurance/ annuity would be payable on death of one or more lives insured or say break up of the joint life status]. On expiry. which provide basic death risk cover. in return for payment to an insurance company of a sum of money. or in case of annuities.Term Insurance Term Insurance is temporary contracts. Sometimes the joint life policy can provide payment on the death of each of the two joint lives like in the Jeevan Saathi policy in India. Premium may be payable in the form of a single premium or annual premium prior to the date of commencement or vesting date of the annuity. This is the cheapest form of life insurances. a higher premium would be payable to cover the additional survival benefit. The whole life policy in effect is a term insurance policy without the limitation of a period. on death of the survivor. In India. An annuity is a method by which a person can receive a yearly sum. This is not life assurance but it is dealt with by life insurance companies and is based on actuarial principles just like life assurance. it is only for a certain period of time and the policy money is payable on death during the term of the policy. the policy has no value.
health and wealth. ADBR and CIBR. a product that gives the customer the control and flexibility to use it according to differing needs at their different life stages with different human life values. An insurance product with no maturity value. at any time the value of units is what is the value of the product. Life time is: • • • • • A regular premium product that has the option of the yearly. which are issued to the policyholder depending upon the Unit value and the investment done in the form of premium.II. this product works as a long-term market-linked total protection of life. The design of the product is such that it works as a one stop wholesome financial solution for the customers for their lifetime. An insurance product where the Death benefit is a multiple of the Annual Premium paid. NON TRADITIONAL PRODUCTS (UNIT LINKED PRODUCTS) SBI Life Unit Plus II II Product Benefits and features: 1. An insurance product that works in the form of units. This product however. An insurance product where all the three riders are attached namely. . Half-Yearly and Monthly modes of premium. Introduction: SBI Life Unit plus II is an addition to the insurance products offered by SBI Life insurance Company Ltd. Thus. being an insurance product gives the customer a tot of flexibility on the Life cover and also gives the customer a lot over the value of investment that can be generated by the product.
The can be irrespective of when the last increase was done. The value of withdrawal reduces the Death Benefit by the same amount. 1. • Flexibility Options Increase in Death Benefit The policyholder has the flexibility to increase the death benefit by 25% subject to a maximum of Rs. after which there can be partial or full withdrawal of the units.000 every time. • Withdrawal: The withdrawal of the units would be at the unit value on the pricing date following the receipt of the withdrawal request.1. 1. • Decrease in death benefit The policyholder has the option of decreasing the Death Benefit in the multiples of Rs.The features and benefits of the product that would be helpful in understanding the positioning strategy of the product. This can be done for a maximum of three times. In case of death of the policyholder gets higher of death Benefit and the value the units. The product also provides flexibility to increase the death benefit at different stages in life on marriage. The death benefit can also be increased beyond this limit with underwriting. This can be done every third year. Withdrawals are not allowed in the first three policy years. The policyholder has the flexibility to choose the death benefit. 250. 00. birth of first child and birth of second child.000 will have to be maintained. • Benefits: Death benefit: Death Benefit would be a multiple of the yearly premium. However a minimum residual death benefit of Rs. . • Premium Holiday In case the policyholder discontinues the payment of the premium. 00. without further underwriting. the Death benefit and the Riders Benefits cover would continue. The maximum limits of death benefit can be found out Mom a table that gives the multiples for different combination of age and life cover/riders opted by the policyholder. This feature helps in planning for long term financial needs at important points in the life stage. 2.000.
• Top-Ups If the Regular Premiums are paid up to date Single Premium Top-Ups can be made. . Top-Ups give the flexibility to the policyholder of increasing the value of his investments over a long term. PLAN Growth PLAN OBJECTIVE Steady returns over a long – term. Money market and cash : Max 60% Equity and equity related security : Max 60% Equity and equity related security : Max 100 % Debt. Money Market and cash : Nil Govt. Security + Debenture = 100% Cash + Call Market = 20% Balanced Balance of capital appreciation and steady returns over a long term. Four frees witch is allowed each policy year. but the life cover calculations would take into account the increase in the value of the Unit Fund because of the Single Premium Top-Up. Top-ups can be done at a cost of 1% of the top-up premium. Following are the three fund options. Average High Bond Securing money by avoiding risk. Normal • Switch between the Funds The Policyholder would have the control to direct his investments depending upon the market conditions by switching the money between the funds.• Choice of fund There are four fund options available to the policy holders. There would be no increase in the Death Benefit with the Top-Up. RISK Moderat e INVESTMENT PATTERN Debt instruments : Max 100% Money Market and cash : Max 60% Debt. in one single policy. The policyholder has the flexibility of investing in all the three funds in the proportion he wishes. A switching charge of 1% of the value of the units switched would be levied after the policyholder has exercised the free switch. Equity High growth and capital appreciation over a long term.
24000 (Yearly). namely-Accident Benefit. 00. Which is the difference between the Death Benefit and the value of the units. These are deducted by the cancellation of units on a monthly basis. which will be charged by adjusting the unit value of the units accordingly. The sum Assured are as follows: Minimum SA under any Rider: Rs.5% of the Premium 5% of the Premium Insurance charges This charge is basically towards the mortality and the riders. 10. • Eligibility Conditions.Yearly) and Rs.2000 (Monthly) 4. Annual Fund Management Charges This is 1% of the value of units. Half . 5. Age Limits Minimum Age of Entry Maximum Age of Entry Premium Frequency Minimum Premium 0 Years (Risk only commences from age 7 only) 65 Years Yearly. Charges Initial administrative charges 1st Year 2nd Year 3rd Year 25% of the Premium 7. Major Surgical Rider and Critical Illness Rider. which will be charged by adjusting the unit value of the units accordingly. Annual Administrative Charges This is 1. Permanent Disability. 00. 12000 (Half.25% of the value of units.000 Additionally the amount of rider benefit cannot exceed the death benefit. • • • . 000 Maximum SA under any Rider: Rs. 1.Yearly and Monthly Rs.3. Rs. The mortality charges are charged on the Life Cover. Riders All the four riders are available with this product.
5. 6. Customer is free to select premium (doesn't bounded with S. Anticipated Endowment 3. Customer is free for select sum assured 3. premium will be calculated 4. securities. As per Customers age and term and S. Endowment Plan 2. 7. Term Plan Unit Link (Modern) Plan 1. Endowment Plan 2. . 7.A. Fully Transparent (Charges maturity) 6.Comparison Between Traditional & Unit Link Plans Traditional Plan 1. Customer Decide Sum assured 3. Boundation: Premium to be paid same throughout the year (Can't decrease or Increase) 5. No Transparency of Term. No Freedom for Investment rm allocation. Term Plan Traditional 1. Security. Unit Link 1. Returns are going down day by day. No Boundation for premium payment term.A.Customer decide Term 2. or term) 4. Anticipated Endowment 3. Customer is Free for Term (No Boundation to decide term) 2. Customer is Free to Switch his money from Stock market to debenture on Govt. Returns are based on stock Market as well debenture for Govt.
Also he has the option to switch between funds as and when risk profile changes. So. • The Life time policy is more transparent in that the charges are declared up front. The fund objective is clearly laid out and the details of the fund investment would be disclosed to the investor. Lifetime on the other hand allocates the entire amount after deduction of charges into fund chosen by the investor. This is not possible in the Universal Life Plan. A person can switch between fund options. Anytime after 3 years you can make partial or complete withdrawals from your units. Lifetime offers the flexibility to increases the protection as and when required. These riders are available until age 65. • At any point if one wants to increase ones savings. The policyholder has the option to select the amount of rider benefit that he wants. It would be interesting to look at the features comparison of their plan and life time. It increases over time and then decreases. The customer is aware of all the charges up front and also is aware of how his money is invested and how it grows over time. In the case of whole life policy. • The Lifetime policy as compared to a whole life policy is more transport. if for some reason the policyholder is unable to pay the premium the amount will be recovered from the value of units and the policy will continue to remain in force. • Like the whole life policy. • Lifetime policy has several health rider options. the policyholder is unaware of how the money is invested. • Life time policy offers choice of all funds within the same policy. Under the whole life policy the rider benefit is equal to the death benefit amount. • The policy offers 4 Investment options Maximiser. There is no choice of funds available. When one's protection needs decreases over time one can decrease the death benefit and more money can be allocated towards savings. which is not available with other policies. This can be exercised according to the needs. • There are no surrender penalties. . Lifetime policy offers the facility of top-up. Life time as compared to a Universal-Life Plan: We have a Universal Life Plan also in the market.SBI Life Unit Plus II Competitive Positioning Life time as compared to a whole life plan • A person's protection needs follows a cycle depending on the life stage. He has the option to choose the fund into which the money is invested. Protector and Preserver. Life time offers premium waiver benefit. Balancer. The premium paid is eligible under see 80D.
As compared to this the mutual funds are normally used as short-term instruments where the investments turn around time is limited to maximum of 2-3 years. In case of a mutual fund. Anytime after 3 years you can make partial or complete withdrawals from your units. Like the Universal Life policy Lifetime offers premium waiver benefit. So it for some reason the policyholder is unable to pay the premium the amount will be recovered from the value of units and the policy will continue to remain in force. insurance needs and provides protection against the health hazards. if the policyholder dies and the markets are down. Not only this life time. • • • • . also provides the flexibility to control the insurance and savings according to the needs of the individual at different life stages. In case of the death of the policyholder. the family only gets the value as per the NAV.• • • Should your needs change. Life stages are also attached with riders that cover the individual against the health hazards. you can increase or decrease your death benefits. The proceeds from Life time is totally exempt from taxes where as the proceeds from a mutual fund attract capital Gains Tax. the family of the policyholder is secured. Mutual Funds are not comparable products: • Life time is positioned as along term wholesome financial product that takes care of the investment needs. greater of value of units or the Death Benefit is paid to the nominee. In case the markets are down. Life time provides death benefit as a multiple of the Annual premium. There are no surrender penalties. as the value of units may be less than the death benefit. So even in a shorter term. This facility is not provided by the mutual funds. as they would get the Death Benefit. No Mutual funds provide life insurance. Lifetime scores over the Mutual funds. if any. This choice can be expressed according to the needs.
12000/Zero Annual Premium X Term All All Up to original vesting date 1.0 .0 NIL Proposer and Life assured Issue rules Min age at entry Max age at entry Min policy term Max policy term Min vesting age Max vesting age Min premium amount Min Death benefit Death benefit Premium payment modes Premium payments channels Premium payments periods Rating factor increase in death cover with underwriting Rating factor for increase of death cover with out underwriting (Automatic Increase) Riders allowed Rating for riders Only When death benefit is chosen initially ADBR. When initial death benefit is “ZERO” No rider is allowed neither at policy commencing nor at time of addition or increase of death benefit at a later date. ADBR and : NIL CIBT (Stand-Alone) : 1. CIBR (Stand-Alone).SBI Life Horizon II Name of Product Initial requirements SBI Life Horizon II • Proposal Form • ACR • Age proof • Deposit receipt Policy must be proposed on own life 14 Years 60 Years 10 Years 40 Years 45 Years 75 Years Rs.
Joint Life Last Survivor of Annuitant and spouse 4. Allowed as per current jet norms (Non-Medical scheme) Only full withdrawal is allowed for first 3 policy years no withdrawal is allowed. • When death benefit is chosen initially. UW as per current norms at the time of increase on addition of death benefit.Non Medical Scheme • Surrender Value After 1 Year . On withdrawal anytime after the completion of 3 years. Life time or Guaranteed Period whichever is more Benefit Coverage Period .25% After 2 Years . the value of units is payable. Postponement of original vesting date allowed on more than one occasion subject to Max age of 70 Years at postponed (new) vesting date. The Life Assured shall have the option to receive up to 33% of the value of units in lump sum and balance amount in the form of annuity Or To utilize entire value of units in the form of annuity The Life Assured can select any one of the following types of annuity 1.100% Extension of Deferment period Benefits on Vesting date (Original or Postponed) When initial death benefit is ‘NIL’.60% After 4 Years . Life Annuity with Guaranteed period of 5/10/15 years. Joint Life Last Survivor with returns of Purchase Price 4. Life Annuity 2. For type of annuity mentioned above 1.40% After 3 Years . Life Annuity with return of purchase Price 3. Life time of Annuitant 2. Life time of Annuitant 3.
On withdrawal anytime after the completion of first year. 24. 000/Two options available to the Life Assured 1. Death Benefit equal to 105% of the Premium 105% of the Premium Single & Regular ALL NIL None Only full withdrawal is allowed For first policy year no withdrawal is allowed. .SBI Life Unit Plus II Name of Product Initial Requirements SBI Life UNIT PLUS II • Proposal form • ACR • Age proof • Deposit receipt Policy must be proposed on own life 18 Years 60 Years 5 Years 65 Years 45 Years 75 Years Rs. Nil Death Benefit (Can be equal '0') 2. the value of units is payable. Benefits on vesting date (Original or postponed) The Life Assured shall have the option To receive up to 33% of the value of units in lump sum and balance amount in the form of annuity. Proposer and life assured Issue rules Min age at entry Max age at entry Min policy term Max policy term Min vesting age Max vesting age Min premium amount Min Death benefit Max Death benefit Premium payment modes Premium payment channels Rating factor for death Benefit Riders allowed Surrender value Extension on vesting date (Original Postponement of original vesting date or postponed) allowed on more than one occasion subject to max age of 70 years at postponed (new) vesting date.
• If spouse has attained age 50 Last birthday on death assured Higher of death benefit or value of Units is payable. . Life time or Guaranteed Period whichever is More. Joint Life Last Survivor of Annuitant and spouse 4. Life time of Annuitant 2. • If spouse has not attained age 50 last birthday on death of Life assured the spouse shall receive higher of Death benefit or value of units as a lump sum payment. The spouse shall have the option To receive entire amount as lump sum payment Or To receive up to 33% of this amount as a lump sum payment and balance amount in the form of annuity. Or To Utilize entire amount in the form of annuity.Benefit Coverage Period Death Benefits Death before the original Vesting date For type of annuity mentioned above 1. Life time of Annuitant 3. The spouse can select any one of the following types of annuity • • • Life annuity Life Annuity with return of purchase Price Life Annuity with Guaranteed period of 5/10/15 years.
Investing in a Unit Linked Pension Plan would be better than Market.Death after original vesting date but before the postponed vesting date (during the deferment after the original vesting date) • If spouse has not attained age of Last birth on death of life assured The spouse shall receive higher of Death Benefit or value of units as a lump sum payment. If spouse has attained age of last birthday on death of life assured The spouse shall have the option • To receive value of units as a lump sum payment Or To receive up to 33% of value of units as a lump sum payment and balance amount of in the form of annuity Or To utilize entire value of units in the form of annuity The spouse can select any one of the following types of annuity 1. Under the pension products the returns that the company earns are not taxed. Life annuity with return of Purchase Price 3. Market-linked instrument No-Tax breaks would be provided during the investment phase. Life Annuity with Guaranteed period of 5/ 10 / 15 Years. In a mutual fund the returns are taxable in the hands of the investor as dividends. .linked investment product Unit Plus II / Horizon II During deferment a tax advantage under Section 80 CCC (1) would be provided. Life Annuity 2. so more can be passed to the customer.
Siemens Ltd.77% 7.74% 0.55% Network Eighteen Ltd.55% Wire and Wireless (India) Ltd Tata Motors Ltd.04% 0.20% Oil & Natural Gas Corpn.06% 0.44% 4.38% 0.11% Zee Telefilms Ltd.71% Refinery & Petrochemicals Bharat Electronics Ltd. Dabur India Ltd.29% 3. Bharat Heavy Electricals Ltd.40% Hindalco Industries Ltd.32% 4. 2.79% Jyoti Structures Ltd.05% 1.52% 2.61% Hindustan Petroleum Corpn. Ltd. Punjab National Bank 1. Wipro Ltd.48% Bharat Petroleum Corpn.39% 0. Tata Consultancy Services 5. 0.87% 0. Information Technology 22.17% Aventis Pharma Ltd. 3. 1.09% 0. Housing Development Finance 1.46% 0.27% 0.48% Oil & Gas Reliance Capital Ltd. Gujarat Ambuja Cements Ltd.flex Solutions Ltd.04% Cipla Ltd. 3. Maruti Udyog Ltd.34% 4.31% Power Cement 3.33% Jagran Prakashan Ltd.71% Bharti Airtel Ltd.90% Ltd. 1.34% Total 2.68% Others Satyam Computer Services 1. Bajaj Auto Ltd.95% N T P C Ltd.30% 0.16% 2. Engineering A B B Ltd.00% .08% 0.65% 0.16% Mphasis Ltd.39% 0. 2.93% 1.50% Sterlite Industries (India) Ltd. 1. Mahindra & Mahindra Ltd. Infosys Technologies Ltd.27% 0. 1. Bank of India 2.85% Reliance Communications Ltd.07% Metals H D F C Bank Ltd 3.Portfolio Equity Fund as on December 2006 Automobile & Ancillary 7. Electrical Equipment & 11.84% Reliance Energy Ltd.97% Reliance Industries Ltd. 2.77% 7.35% 0. 1. Oriental Bank of Commerce 0.10% 0.53% Telecommunications Suzlon Energy Ltd. Associated Cement Cos.29% 3.80% 2. Corpn I C I C I Bank Ltd.63% Cash Ltd. 0. 0.81% Zee News Limited Banking 12. 7. H C L Technologies Ltd. FMCG 5. 0.52% Videsh Sanchar Nigam Ltd. 4. Ltd. 0. 2.02% 0.38% Tata Steel Ltd.78% Sesa Goa Ltd. 1. 1.30% 3.28% Television Eighteen India Ltd.66% 1.59% 1.13% Glaxosmithkline Pharmaceuticals Ltd I . 1. Larsen & Toubro Ltd.39% 100. Hindustan Lever Ltd.16% Pharmaceuticals / Healthcare I T C Ltd. Ltd. Union Bank Of India 0. Ltd.21% Sun Pharmaceutical Inds.53% Media Ashok Leyland Ltd. Ltd 1. Ltd.70% 5.01% Tata Power Co. 0.
U T I Bank Ltd. Punj Lloyd Ltd.69% 5.89% 2. Reliance Industries Ltd. Tata Consultancy Services Ltd.40% 0.83% 3.60% 11.69% 12.49% 3.14% 0.83% 3. I T C Ltd.10% 0. Tata Power Co.03% 0.75% 2. Electrical Equipment & Engineering A B B Ltd.58% 1.61% 0.44% 4. Dr. Bharat Heavy Electricals Ltd. Tata Steel Ltd.37% 2. Mahindra & Mahindra Ltd. Information Technology Infosys Technologies Ltd.29% 6.33% 1.39% 3.97% 0. Ltd Gujarat Ambuja Cements Ltd.73% 2.19% 1.87% 1. Siemens Ltd. Tata Motors Ltd.45% 1. Indian Petrochemicals Corpn. Union Bank Of India Cement Associated Cement Cos. FMCG Dabur India Ltd. Pharmaceuticals / Healthcare Cipla Ltd.07% 1. 6. Oriental Bank of Commerce Punjab National Bank Reliance Capital Ltd.24% 2.60% 6.56% 2.39% 3. Reddy'S Laboratories Ltd.23% 0.89% 1.73% 0.35% 1. Suzlon Energy Ltd.71% 4.39% 1. Ltd.62% 8. Bharat Electronics Ltd.14% 0.53% 1. Ltd. Oil & Gas Oil & Natural Gas Corpn.20% 0. Reliance Communications Ltd. Banking Bank of India H D F C Bank Ltd Housing Development Finance Corpn I C I C I Bank Ltd. Metals Hindalco Industries Ltd. Larsen & Toubro Ltd.07% 3. Satyam Computer Services Ltd.03% 1.35% 4. N T P C Ltd.14% 2.07% 0.21% 0.48% 0.76% 0.79% 2. Ltd.45% 0.51% 0.11% 3. Sterlite Industries (India) Ltd. Power Jyoti Structures Ltd. Hindustan Lever Ltd.67% 3.25% 1. Refinery & Petrochemicals Hindustan Petroleum Corpn.29% 3.13% 0. Bajaj Auto Ltd.61% Media Jagran Prakashan Ltd. Ltd.67% . Wire and Wireless (India) Ltd Zee News Limited Zee Telefilms Ltd. Reliance Energy Ltd.03% 0. Ltd.19% 0. Glaxosmithkline Pharmaceuticals Ltd Sun Pharmaceutical Inds. Others Cash 1. Maruti Udyog Ltd. Telecommunications Bharti Airtel Ltd.03% 18.38% 1.Portfolio Growth Fund as on December 2006 Automobile & Ancillary Ashok Leyland Ltd. Videsh Sanchar Nigam Ltd.82% 7.87% 1.47% 1.76% 5.54% 0.
Chapter – 4 RESEARCH METHODOLOGY .
The data collection site was Udaipur city 4. Through questionnaire and personal interview. Planning and organizing are part of this systematic approach with a lot of emphasis given to the interdependence of various steps. . Data collection site .300 customers 4. The increasingly complex nature of business and government has focused attention on the use of research in solving operational problems.Sampling procedure used in the project is Systematic Sampling.Of study was the existing customers of SBI Life Insurance Company 3. The scheduled used for the purpose is given in the annexure.The type of research was Descriptive and Exploratory 2.5 SOURCES OF DATA Primary Data The bulk of the primary data was collected from existing customers of SBI Life. Type of research . The project has been divided into a number of procedural steps both the number of steps and the names are arbitrary.RESEARCH METHODOLOGY A systematic approach is essential in any project work. involves loss of time and energy.The data was collected through questionnaire and personal interview Secondary Data . Sample size . Data collection techniques Primary Data . Prevailing in the market. Secondary Data The secondary data began with the process of collecting general information from SBI Life through brochures and literature of the company. Data Collected . The interview schedule was created with the intention of comparing the traditional v/s unit linked products.1 TITLE A Comparative study on Traditional and Unit Linked Products 4. 4. 4. Population .3 RESEARCH DESIGN 1. An incorrect step. • To know the awareness of traditional products and unit-linked products. however the recognition of the sequence is essential.2 OBJECTIVES OF STUDY • To know the factors influencing the customer decisions while purchasing insurance policies.Primary data and Secondary data 4.4 SAMPLE DESIGN Sampling procedure . • To broadly study the insurance market.Brochures and company advisor kit 5. schedule in Udaipur city.
Chapter – 5 DATA ANALYSIS & INTERPRETATION .
CHART – 1 Q.1 Do you have any Insurance policy? YES NO 267 33 300 250 200 150 100 50 0 Yes INTERPRETATION : The question was asked to 300 persons and among them 267 replied positively Series1 No .
.2 In your opinion why Life Insurance is required? Savings Investment Risk Covering/Protection Future Planning 39 136 65 60 Savings 20% 13% Investment 22% 45% Risk Covering/Protecti on Future Planning INTERPRETATION : The Graph shows that maximum persons buy insurance for the investment purpose and only 13% of the people buy insurance for savings.CHART .2 Q.
CHART – 3 Q.3 Which investment instrument do you choose while saving TAX? Mutual Funds Life Insurance Post Office Bank Deposit 87 107 64 42 14% 21% 29% 36% Mutual Funds Life Insurance Post Office Bank Deposit INTERPRETATION : The Graph Shows that most of the persons choose Life Insurance while saving TAX whereas only 14% of them choose to deposit in Bank. .
SB IL ife LI Re C lia nc e Li fe .CHART – 4 Q.4 If you want to take an insurance cover which company would you prefer ? SBI Life Insurance Bajaj Allianz ICICI Prudential LIC Reliance Life 87 24 48 102 39 120 100 80 60 40 20 0 In su ra nc Ba e ja jA IC llia IC nz IP ru de nt ia l 102 87 48 24 Series1 39 INTERPRETATION : The Graph shows that LIC and SBI Life Insurance are the company in which customers prefer to invest rather than any of the other companies.
5 Do you know insurance products offer investment also under ULIP policies? YES NO 196 104 250 200 150 104 100 50 0 YES INTERPRETATION: The above graph shows that out of the sample 196 people are aware that insurance products offer investment under ULIP polices rest 104 are still unaware.CHART – 5 Q. 196 Series1 NO .
CHART .6 In which type of policies you like to invest? Traditional ULIP 67 233 22% Traditional ULIP 78% INTERPRETATION : The Graph shows that 78% peoples like to invest in ULIP policies which show a very high percentage of market acceptance of these products and only 22% would like to invest in Traditional policies. .6 Q.
CHART – 7 Q. Investment in ULIP products are increasing day by day. CHART – 8 .7 Have you ever gone for ULIP products with any of the company? YES NO 136 164 180 160 140 120 100 80 60 40 20 0 YES NO 136 164 Series1 INTERPRETATION : The Graph shows that about 45% of the persons have invested in ULIP products.
Q. CHART – 9 .8 Normally when do you plan to invest for TAX saving? In the end of FY In the beginning of FY Anytime Depends on the availability of funds 105 54 45 96 In the end of FY 32% 35% In the beginning of FY Anytime 15% 18% Depends on the availability of funds INTERPRETATION : The above graph shows that normally people plan to invest for TAX saving in the end of the financial year or on the availability of funds.
10 To what extent the company plays a role in selecting the policy? . CHART – 10 Q.9 Which term would you like to invest? Short term Long term 188 112 37% Short term Long term 63% INTERPRETATION : The Graph shows that 63% of the people like to invest for Short term which is a very high percentage.Q.
Least Strong Very Strong 30 60 210 10% 20% Least Strong Very Strong 70% INTERPRETATION: The Graph shows that 70% believes that the company plays a very vital role in selecting the company to invest and 20% believes that it plays an important role and 10% believes that company doesn’t play any major role. .
So. I .Chapter -6 FINDINGS FINDINGS As my objective was to compare the unit linked plan with Traditional plan. my Target population was the customers and financial advisors of SBI Life.
Any Time after three year of commencement one can make partial or complete withdrawals with out penalty. Unit Plus II and Horizon II In the Unit Plus: There is no maturity date. For that I took the sample size of 300 customers and advisors and I found following results. . • • • • • • • I found that maximum of people preferred unit linked plan to invest in Insurance due to the life cover benefits and majority of people are shifting from traditional plans to unit linked plans because of the following reason: Short Term: It is the best feature of unit-linked plan. which was not present in traditional plan. one can switch between the various investment options at any time. (c) Choice of top up: One can top up his investment any time when he has surplus funds. Flexibility (Investment Option). There is a provision of 4 free switches every policy year. Unit Plus II: After paying the premium for 4 years one can withdrawal whole money with interest after 4 years.analyzed their mind set through questionnaire. For example: In the unit linked plan here are two products. (i) One can increase his death benefit. Transparency: One can always get to know the Charges. • • LIC and SBI are the two most known brands in the market Through the study it was found that the main purpose of buying insurance is investment. The max. High Return More Features: (a) Loan: One can obtain loan against policy. (d) Withdrawals (e) Switches: if at a later stage the financial priorities change. (ii) Flexible Contribution: One can Increase or decrease his annual contribution. In the Unit Linked plan there are more flexibilities like. Decrease in contribution can be up to 20% of the Initial contribution. which are deducted from the Premium. (b) Surrender values: The unit linked plan allowed surrender after 1 year's contribution is paid.
Chapter – 7 SUGGESTIONS RECOMMENDATIONS / SUGGESTION .
In order to survive in this era of cut throat competition. The company should target the lower segment customers also • Which is Better. firstly. the investor . Unit-linked or Traditional? The two strong arguments in favour of unit-linked plans are. it is very important for an organization to give the best to its customers and the most reasonable price. After going through the study on my project. The advisors should be made aware and educated so that they can extend their services not only in terms of collection of premium cheques from the policy holders but also to educate them about the insurance and the latest Non Traditional products. I would like to come up with following recommendations: • • All the company should come out of a Unit Linked product that should aid every section of the society.
. a pension plan of LIC. as premium in Jeevan Suraksha. A traditional ‘with profits. 9. So if you are willing to bear the investment risks in order to generate a higher return on your retirement funds. 4000/. is a black box and a policyholder has little knowledge of what is happening. This eats into his savings. But here the insurance company evens out returns to ensure that policyholders do not lose money in a bad year.knows exactly what is happening to his money and secondly. the returns on the Postal Life Insurance comes close to the returns on ULIPs i.a. The position looks as follows: The cash outflow for the company is 13.000/. He also knows where the insurance company has invested the money. E.p.75% Dangers faced by traditional policies: The source of high returns for companies that dealt with traditional insurance products in the form of assured returns has drained out.’ on the other hand. at the age of 25 is promised an assured pension of 5500/p. In that sense they are safer.and the insurance company gets only 1. management and administration charges. Comparison between Return on ULIPs and Traditional Policies The return on the ULIPs till date has been on an average 11. For this the company will have to earn a return @ 18% p. but he also bears the investment risk. However. The investor gets exactly the same returns that the fund earns. at the age of 55.g. The transparency makes the product more competitive.20. Thus. ULIPs are for you. the return on the ULIPs outperforms the returns on the conventional policies. ULIPs also offer flexibility.(the readers should note that these are in paid till the last year and not at the initial stage). A person who invests Rs. but ensures that the policy will continue to cover his life. Traditional ‘with profits’ policies too invest in the market and generate the same returns prevailing in the market.45% and that on the conventional policies is 6% (both calculated on IRR basis). (compounded quarterly) which in today’s market situation is very difficult. An investor in a ULIP knows how much he is paying towards mortality.20. It will thus be. a policyholder can ask the insurance company to liquidate units in his account to meet the mortality charges if he is unable to pay any premium installment. very difficult for these companies to meet their contractual obligations.e.a.000/. it allows the investor to choose the assets into which he wants his funds invested. For instance.m.
and therefore. is not in a position to explain to the client the risks and dangers associated with ULIPs. The knowledge of the agent of ULIPs is sometimes limited and he is thus. risky. The initial cost of ULIP is high. The returns are lesser in longer term as compared to ULIP. Large positions by the clients to Risky Fund. Perceived Dangers and Points to be kept in Mind While Investing in ULIP • • • • • Investment and returns depend on the performance of the Markets which can get volatile. • • • • . except during the times of Great Depression.The system is opaque. Converting the ULIPs to a Mutual Fund policy and marketing on these terms by some Private Sector Companies. • ULIP is an excellent mix of Insurance & Investments. ULIP allows flexibility to increase returns at higher risk or moderate returns at low risk depending on the risk appetite of the client. The insurer is not aware about where the amount is invested. thus making Mutual Funds a better investment opportunity than any insurance product. CONCLUSION . The long term return (7 yrs & above) on any Equity Market in the world is double digit positive.
Always remain invested for a long term that is typically a time horizon of 7 years and above. The opening up of the sector has also resulted in stiff competition as many private companies are entering in. This company can achieve by offering value added services to the customers by giving them maximum benefits. The risk taken must be inversely proportional to your age. Be well read and well informed. Investing in ULIPs is not investing in Stock Market so don’t get perturbed with short-term volatility. However. it becomes very important to be the best out of the rest in the market. ULIPs are indeed a boon to the investors. Mostly products are based on the NAV or they are unit Linked. The bonus of managing your investment lies on the client. Company is trying to given more assured returns to the investors. Don’t take any insurance policy without riders. knowledge and brand image of the product will be the first priority for the company.Insurance is still a selling product in country like India. So. Insurance is a matter of Prudent Investment. It is the company who has to find the market and go to the prospect rather then the client directly approaching to the company. So awareness. do not expect the company to take prudent decisions on your behalf. so exercise it LIMITATIONS OF THE STUDY . Avoid herd mentality while taking decisions. the investors must keep the following points in mind while investing in ULIPs: • • • • • • • • • Visit a professional Financial Planner to take a well-informed decision.
2.Every research has its own limitations & the present research work is no exception to this general rule. Due to shortage of time & resources sample of whole Udaipur region could not be taken. The conclusion arrived at are based on a very less experience of researcher in this field. The inherent limitations of the study are as under. 1. .
com .BIBLIOGRAPHY Sources: 1.sbilife.com www.onlinesbi. Website: www. 3. 2. Brochures of company products Advisors kit Proposal forms Questionnaire .
Anytime Have you ever gone for ULIP products with any of the company? Normally when do you plan to invest for Tax saving? Q. Strong Q. Chetak Circle. LIC In your opinion why Life Insurance is required? Q. Mutual Funds C. 1st floor. Yes B. In the end of FY C.9 Which term would you like to invest? A.8 In which type of policies you like to invest? A. Life Insurance D.3 Which investment instruments do you choose while saving TAX? A.: Mobile No.: Q. Very strong Q.2 Do you have any Insurance policy? A. Investment D Future Planning B. No B. ULIP B. Opp. Reliance Life Q. Traditional A.Udaipur. Risk Covering/ Protection B. No B. Long term B. In the beginning of FY D. Post Office. Madhav Chambers.5 Do you know insurance products offers investment also under ULIP policies? A. ICICI Prudential E.SBI Life Insurance CO.6 Q.313001 Tel: 0294 – 5103937 / 5103938 Personal Profile Name: Address: Sex: Age: Telephone No. Savings C. SBI Life insurance C. Short term A. No B.4 If you want to take an insurance cover which company would you prefer? A. Least C.7 Q. Bank Deposit B Bajaj Allianz D. Post Office Q. LTD. Yes A.10 To what extent the company plays a role in selecting the policy? . Depends on availability of funds B.1 Q. Yes A.
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