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TABLE OF CONTENTS Sr. No. 1 2
2.1 2.2 2.3 2.4 2.5
Contents Executive Summary Introduction
Introduction to Topic Company Profile Introduction to Insurance Research Methodology Role of IRDA in Indian Insurance Sector
Page No. 3 5
6 8 14 19 20
3.1 3.2 3.3
ULIPs (Unit Linked Insurance Plans)
About ULIPs Distinction Between ULIPs and Mutual Funds Role of ULIPs in current market
24 34 39
Analyze of Study
Comparative analysis of ULIPs Understanding the working of ULIPs of Kotak Mahindra Life Insurance Market Survey on ULIPs Integrated Financial Planning for Life Insurance
5 6 7
Findings Recommendations Bibliography
76 79 81
Institute of Management & Computer Studies, Thane
Kotak Mahindra Life Insurance
Institute of Management & Computer Studies, Thane
Kotak Mahindra Life Insurance
1. Executive Summary
Institute of Management & Computer Studies, Thane Page 3
Kotak Mahindra Life Insurance
The project aims at comparative study of Unit Linked Insurance Plans and also a detail study of some of the major plans of Kotak Mahindra Life Insurance Limited. It also analyse insurance as an investment opportunities/Avenue. The project had a detailed study of Unit Linked Insurance Plans (ULIPs) with reference to Kotak Mahindra Life Insurance Limited, The role of private insurance companies comparison to public sector companies. It also reflect the basic distinction between Mutual Funds and ULIPs, in form of structure as well as return. It provides the role Insurance Regulatory Development Authority (IRDA) as a regulator and its functions. The above project also signifies the recent dispute between Market regulator SEBI and IRDA with relate to Unit Linked Insurance Plan products. The project aims to help and understand the consumer behaviour towards insurance as an investment purpose with life cover, perception of consumers towards ULIPs investment. At the atmost the project also provides the knowledge about detailed investment of fund under ULIPs in various sectors including Equity and Debt. It provides the detailed knowledge about various charges implemented under ULIPs scheme. The internship is a bridge between the institute and the organization. This made me to be involved in a project that helped me to employ my theoretical knowledge about the insurance sector both in public as well as private, with reference to ULIPs Investment. The internship period of two month in Kotak Mahindra Life Insurance provided me a opportunity to learn some basic concepts of insurance which was not up to date for me. By preparing the project I also got a chance to recommend my opinions and views regarding ULIPs investment for a better future and necessary changes in it.
Institute of Management & Computer Studies, Thane
1 INTRODUCTION TO TOPIC Institute of Management & Computer Studies. Thane Page 5 . Introduction 2.Kotak Mahindra Life Insurance 2.
some. This project is about studying the insurance industry which is on the boom. To get experience of corporate scenario.Kotak Mahindra Life Insurance The insurance plays a major role in the life of the humanity. This can be done through Unit Linked Insurance Plans (market linked Plans) introduced by the Insurance Players. its popularity and a market survey. The project deals the comprehensive analysis of the ULIP schemes. Institute of Management & Computer Studies. As Indian investors are now more exposed to the capital markets and have started understanding its working. its evolution. Also many people have a notion that Insurance is very good form of an investment. its working. Insurance is just creating a protection for you and your family. In fact insurance is not restricted for any category neither of the society nor in term of cast. The introductory part contains the meaning of insurance. its NAV performance. which is not right. Statistics of Indian insurance Industry. Slowly people stared to realize the necessity of the insurance and these needs are unending as long as life exists. performance of the policies since their inception. what is ULIP all about. the Growth. ages or life styles. they want to multiply their money rapidly. Thane Page 6 . Therefore the only reasons for selecting this topic are To get more knowledge about insurance sector in India To undergo a comprehensive study of ULIPs.
2 COMPANY PROFILE Institute of Management & Computer Studies. tables and questionnaire to further. Thane Page 7 . Elaborate on the explanations. 2.Kotak Mahindra Life Insurance The project contains various graphs.
Old mutual plc is a world class international financial services company. It was established in South Africa before 160 years. Under this distribution kotak act as an active partner and Mahindra as a sleeping partner respectively. Old mutual is the largest financial services in South Africa. Thane Page 8 .Kotak Mahindra old mutual life insurance ltd is a joint venture between Kotak Mahindra bank ltd (76 %) and Old mutual plc. Kotak group was established in 1985. Kotak Mahindra bank is a parent company of the group. The remaining 76% which is retained with kotak is again distributed into two parts between kotak (70%) and Mahindra (30%). About Kotak and Mahindra what we understand the mutual partnership between these two. through its life insurance. banking and general insurance operations. (24%). Institute of Management & Computer Studies. Growth has been the main objective of the company and will continue to be the driving force in the years to come by spreading the wings wider in India and contribute in the economic and social development.Kotak Mahindra Life Insurance Getting associated with a brand like Kotak Insurance for just 2 months was really a Prestigious and a memorable period in my MBA tenure. Asset management. Kotak group entered into life insurance business in 2001.
we aim to help customers take important financial decisions at every stage in life by offering them a wide range of innovative life insurance product. Kotak Mahindra Old Mutual Life Insurance Headquartered in Mumbai. term plans. child plan. Kotak Mahindra Old Mutual Life Insurance is private insurance company established in year of 2000. its affiliates and Old Mutual – wealth Management Company based in UK. savings & investment plans. to make them financially independent‖. Better known as Pension plan. it‘s absolutely necessary to make provisions for the future which makes retirement plan an important financial decision. We aim to improve the long term value in our relationships by continuous innovation and improvements. Retirement Plan With rising inflation. Kotak Mahindra Old Mutual Life Insurance is a joint venture between Kotak Mahindra Bank. PRODUCT PORTFOLIO Kotak Mahindra Old Mutual Life Insurance has humble portfolio which includes retirement plans. VISION Kotak Life insurance has deep rooted commitment to improve the quality of life of its customer. Thane Page 9 . employees and stakeholders.Kotak Mahindra Life Insurance MISSION ―At Kotak life insurance. this plan takes Institute of Management & Computer Studies.
marriage etc. e-Term. Endowment Plan. Surakshit Jeevan. Thane Page 10 . DISTRIBUTION NETWORK Kotak Life Insurance employs around 5. By investing small portion of your savings you secure the financial end of your child. Money Back Plan. ePreferred term Plan and Eternal Life Plan. Child Plan is a plan specifically designed to take care of financial needs of your child. A term life insurance plan provides good cover at relatively nominal cost and has no survival benefits. Child plan of Kotak Life is called Child Advantage Plan. Secure Invest Insurance.565 people in its various businesses and has 197 Institute of Management & Computer Studies. Gramin Bima Yojana. an investment plan invests part of your savings in equity or debt market as per your preference. Child plan provides with necessary funds that will take care of child‘s education. Kotak Life term plans are Term. Investment Plan Popularly known as ULIP.Kotak Mahindra Life Insurance care of financial needs after retirement by investing a part of your savings for limited period. The pension plans offered by Kotak Life are Capital Multiplier Plan and Retirement Income plan Child Plan Parenthood brings responsibilities and no one is better judge of that than you. Platinum and Single Invest Advantage. Pension plan provides steady income after retirement and takes care of daily needs. Preferred term Plan. Premium Return Plan. ULIP‘s offered by Kotak Life are Ace Investment. The objective of investment plan is to give you returns which easily beat the rising costs since the usual returns in a bank are extremely low. Term Plan A risk plan which provides comprehensive cover for your family in the unfortunate event of untimely demise. Wealth Insurance.
925 million.Kotak Mahindra Life Insurance Branches across 141 cities. MARKETING CAMPAIGNS Kotak Life launches different campaigns from time to time. Recently. term plan online. the campaign was changed to “Faidey ka Insurance” which reflects that investments made in Kotak Life will have good returns because of their expertise in finance. Kotak Life also distributes its products like e-Preferred. FINANCIAL INFORMATION The total premium earned for the half year ended September 30. radio. There have been 1414 death claims reported during the period out of which 971 claims were settled and 32 claims were rejected. The profit after tax for the same period is Rs 102 million. Initially their campaign was around the theme “Zindagi se ek kadam aage” which implied being ahead of uncertainties with well thought out financial planning. Thane Page 11 . print and other outdoor mediums. MANAGEMENT Institute of Management & Computer Studies. This idea will be projected through TVC. 2010 was Rs 12.
Andrew Cartwright is the Appointed Actuary of Kotak Life Insurance. Website 022 – 66056825 022 – 67257452 www.kotak. Off. Fax No.21 Infinity Park.Sudhakar Shanbag is the CIO of Kotak Life Insurance. Western Express Highway General A K Vaidya Marg Malad (East) Mumbai 400 097 India Tel No. Registered Office 9th Floor. 5th Floor Zone – 2 Bldg No. Mr.kotaklife insurance.Kotak Mahindra Life Insurance Mr.com Various Plans in Kotak Mahindra Life Insurance Institute of Management & Computer Studies. Mr. Thane Page 12 . Pankaj Desai is the Managing Director of Kotak Life Insurance . Godrej Coliseum Behind Everard Nagar Sion (East) Mumbai 400 022 India Corporate Office Kotak Infiniti.Mr.Gaurang shah is the Director of Kotak Life Insurance.com Email Clientservicedesk@kotak. G Muralidhar is the CEO of Kotak Life Insurance Mr.com http://insurance.
Kotak Mahindra Life Insurance PRODUCT Retirement/Pension Plan Retirement/Pension Plan Child Plan Child Plan Term Plan Term Plan Term Plan Term Plan Savings & Investment Plan Savings & Investment Plan Savings & Investment Plan Savings & Investment Plan Savings & Investment Plan Savings & Investment Plan Savings & Investment Plan Savings & Investment Plan Savings & Investment Plan Savings & Investment Plan PLAN Kotak Capital Multiplier Plan Kotak Retirement Income Plan Kotak Child Advantage Plan Kotak Head start Child Assure Kotak Term/Preferred Plan Kotak e-Term/e-Preferred Plan Kotak Loan Protection Plan Kotak Eternal Life Plan Kotak Ace Investment Kotak Wealth Insurance Kotak Secure Invest Insurance Kotak Endowment Plan Kotak Money Back Plan Kotak Surakshit Jeevan Kotak Premium Return Plan Kotak Gramin Bima Yojana Kotak Platinum Kotak Single Invest Advantage 2. Thane Page 13 .3 INTRODUCTION TO INSURANCE Institute of Management & Computer Studies.
That‘s why insurance industry occupies a very important place among financial services operative in the world. In simple words it is spreading of risks amongst many people. trade and commerce. essentially.” “AN INSURANCE POLICY IN HAND KEEPS THE TENSION Insurance. is an arrangement where the losses experienced by a few are extended over several who are exposed to similar risks. Thane Page 14 . Insurance is a protection against financial losses arising on the happening of an unexpected event. individuals as well as business firms are turning to insurance to manage various risks. So it‘s rightly said. Owing to growing complexity of life. Living death and Living too long ii) BENEFITS : Institute of Management & Computer Studies. which affects all walks of life. Priorities = Children‘s education and marriage Probabilities = Dying too soon. Insurance companies collect premium to provide security for the purpose. is insurance business. AWAY. i) LIFE INSURANCE: It is a fundamental part of a sound financial plan which helps to insure your loved ones Life insurance – the only instrument that takes care of These 3 probabilities and 2 priorities.Kotak Mahindra Life Insurance Today. The future is never certain. Therefore a proper knowledge of what insurance is and what purpose does it serve to individual or an organization is therefore necessary. only one business.
Oriental Life insurance Company. in 1818 The 1st Indian insurance company was the Bombay Mutual Assurance Society Ltd. Institute of Management & Computer Studies. wherein they had agreed to insure their ships in transit.Kotak Mahindra Life Insurance 1) SAVINGS For unforeseen circumstances. The 1st Life Insurance Policy was issued on 18th June. iii) INSURANCE ------------a Flash back: The earliest transaction of insurance as practiced today can be traced back to the 14th century AD. 1583. Life Insurance in its current form came in India from the UK. Thane Page 15 . 3) RETIREMENT Facilitates adequate savings for worry free retired life. 2) EDUCATION For child‘s education and for higher studies. formed in 1870. with the Establishment of British firm. on the life of William Gibbons for a period of 12 months. The business of insurance started with marine business by Traders who used to gather in the Lloyd‘s coffee house in London.
1956 and there were 245 companies existing at that time in India. –Times of India.2002. Institute of Management & Computer Studies. eleven new insurers had been registered and had begun to transact Life insurance business in India. Source – IRDA Journal (April 2010 3) Global Life Insurance Market: $1. 2)The Life Insurance Industry has grown by 36% p. Thane Page 16 . By 31. Global Non-Life Insurance Market: $922 billion 4) India is 11th largest in insurance business with 2.a.521 billion. iv) INSURANCE CLASSIFICATION Life Term Endowment Unit-linked Money-back v) INSURANCE INDUSTRY POTENTIAL 1) India is developing nation where still 20% of population are covered under various life insurance policies as on 2011. with a premium business of Rs 1.3.29 lakh crores in FY 2010-2011 over Rs1.09 lakh crores in FY 20092010.Kotak Mahindra Life Insurance By the year 1956.7 % world market share as on 2011. when the life insurance business was nationalized and the Life Insurance Corporation Of India ltd (LIC) was formed on 1st September. from last five consecutive years.
6) India‘s life insurance premium as a percentage of GDP is just 2.Private companies also showing negative growth rate in range of 20-50%. Thane Page 17 . Life Insurance Corporation of India Institute of Management & Computer Studies. as people are showing faith in government sector insurance companies.$400 billion by 2020. 7) Indian insurance market is set to touch $350. only 35 million people are covered by insurance. Growth Rate of Insurance sector in India Private Sector insurance company has shown a decline percentage from 40% in 2008-2009 to 20% up to May 2011. LIFE INSURANCE COMPANIES IN INDIA 1.5% as on 2011. with assumption of 8% of GDP.Kotak Mahindra Life Insurance 5) Out of one billion people in India.
ING Vysya Life Insurance 13. Aviva Life Insurance 7. Tata AIG Life Insurance Company Ltd 4. HDFC Standard Life Insurance 15. Kotak Mahindra Old Mutual Life Insurance Ltd 3. Thane Page 18 . Bharti Axa Life Insurance 10. Birla Sun Life Insurance 5.4 RESEARCH METHODOLOGY Institute of Management & Computer Studies. Reliance Life Insurance 12. ICICI Prudential Life Insurance 6. Sahara India Life Insurance 14. Shriram Group 2.Kotak Mahindra Life Insurance PRIVATE PLAYERS 2. Max New York Life Insurance 9. SBI Life Insurance 11. Bajaj Allianz 8.
5 ROLE OF IRDA IN INSURANCE INSUSTRY Institute of Management & Computer Studies. individual depth interview Research instrument –questionnaire.Kotak Mahindra Life Insurance Research design –descriptive Data sources. Secondary Data: 1) Books 2) Newspapers 3) Magazines 4) Newsletter 5) Internet 6) Television 7) Booklet 8) Policy Brochures 2. Data Collection: Primary Data: 1) Use of a Questionnaire for carrying out a survey 2) Presentation given by the Advisors of Tata AIG life.primary data and secondary data Research approach – face to face interview. 3) Data explaining the working of the ULIPs. Thane Page 19 . observation.
fair dealing and competence of those it regulates. To ensure speedy settlement of genuine claims . clear and correct information about products and services and make them aware of their duties and responsibilities in this regard. for the benefit of the common man. monitor and enforce high standards of integrity. Role of IRDA in insurance sector To protect the interest and secure fair treatment to policyholders. Functions of IRDA Institute of Management & Computer Studies.Kotak Mahindra Life Insurance IRDA is Insurance Regulatory Development Authority. To ensure that insurance customers receive precise. To bring about (speedy) and orderly growth of the insurance industry (including annuity and superannuation payments). To bring about optimum amount of self regulation in day to day working of the industry consistent with the requirements of prudential regulation. To set promote. that has been set up to protect the interests of the policy holders. promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental there to. to regulate. to prevent insurance frauds and other malpractices and put in place effective grievances redressal machinery. and to provide long term funds for accelerating growth of the economy. transparency and orderly conduct in financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players. financial soundness. To promote fairness. To take action where such standards are inadequate or ineffective enforced. Thane Page 20 .
insurable interest. undertaking inspection of. Institute of Management & Computer Studies.Kotak Mahindra Life Insurance Protection of the interests of the policy holders in matters concerning assigning of policy. Promoting efficiency in the conduct of insurance business. 1938 (4 of 1938). Levying fees and other charges for carrying out the purposes of the Act. nomination by policy holders. Calling for information from. Regulating investment of funds by insurance companies. terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act. Specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries. insurance intermediaries and other organizations connected with the insurance business. Promoting and regulating professional organizations connected with the insurance and reinsurance business. advantages. code of conduct and practical training for intermediary or insurance intermediaries and agents. Control and regulation of the rates. Specifying the code of conduct for surveyors and loss assessors. settlement of insurance claim. intermediaries. Regulating maintenance of margin of solvency. conducting enquiries and investigations including audit of the insurers. surrender value of policy and other terms and conditions of contracts of insurance. Thane Page 21 . Specifying requisite qualifications.
Exercising such other powers as may be prescribed. Specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organizations. Specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector.Kotak Mahindra Life Insurance Adjudication of disputes between insurers and intermediaries or insurance intermediaries. Institute of Management & Computer Studies. Thane Page 22 . Supervising the functioning of the Tariff Advisory Committee.
Kotak Mahindra Life Insurance 3. Unit Linked Insurance Plans 3. Thane Page 23 .1 About ULIPs INTRODUCTION Institute of Management & Computer Studies.
It wasn‘t too long back. Thane Page 24 . ULIPs were one of the most significant innovations introduced by private insurers. including the ULIPs. First was the arrival of private insurance companies on the domestic scene. The result was the launch of a wide variety of insurance plans. Then insurance was thrown open to the private sector. These were the two factors most instrumental in marking the arrival of ULIPs. it is believed that ULIPs have some fundamental positives like enhanced flexibility and merging of investment and insurance in a single entity that have really endeared them to individuals. when the good old endowment plan was the preferred way to insure oneself against an eventuality and to set aside some savings to meet one‘s financial objectives. Two factors were responsible for the advent of ULIPs on the domestic insurance horizon. but another factor that has helped their cause is a booming stock market. ULIPs came to play in the 1960s and became very popular in Western Europe and Americas. MEANING OF ULIPS Institute of Management & Computer Studies. While this now appears as one of the primary reasons for their popularity.Kotak Mahindra Life Insurance ULIPS also known as UNBUNBLED VARIABLE INSURANCE PLANS has possibly been the single largest innovation in the field of life insurance in the past several decades. The other factor that saw investors take to ULIPs was the decline of assured return endowment plans.
Surgeries· Liquidity· Tax benefits. In today‘s times.Death due to accident. The Sum Assured is expressed in units whose price is linked to an inflation related index.Disability. ULIP is life insurance solution that provides for the benefits of protection and flexibility in investment. Thane Page 25 .Kotak Mahindra Life Insurance A policy. financial needs. ULIP provides solutions for insurance planning. ULIPS VERSUS ENDOWMENT Institute of Management & Computer Studies. ULIPS are introduced. In order to offset the erosion of money. which provides for life insurance where the policy value at any time varies according to the value of the underlying assets at the time. Today many individuals are adding ULIPs to their portfolios to generate wealth and protection over a long time. financial planning for children‘s future and retirement planning.Features of ULIPs distinguish itself through the multiple benefits that it provides to the customer which are as follows Life protection Investment and Savings Flexibility Adjustable Life Cover Investment Options Transparency Options to take additional cover against.Critical Illness. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV).
Kotak Mahindra Life Insurance The following points help us to get a better idea how ULIPs differ from Traditional (Endowment Plans) 1) SUM ASSURED This is the most fundamental difference between ULIPs and the traditional plans. In case of ULIPs you are asked “HOW MUCH PREMIUM CAN YOU PAY?” & accordingly the Sum Assured is estimated. In case of endowment the agent will ask you “HOW MUCH INSURANCE COVER DO YOU NEED?” & the premium is calculated as per the estimated sum assured. 3) FLEXIBILITY Institute of Management & Computer Studies. 2) INVESTMENTS Endowment plans investment in: Government Securities Corporate bonds Money market instruments (No investment in the stock market) ULIPs invest in Equities Bonds G-secs Money market. Thane Page 26 .
Usually Free switches are given during the year. or a combination of debt equity. 4) TOP UP FACILITY A top up is a one time additional investment in the ULIP over and above the annual premium. The investor also has the option of switching from one fund to another. . the insurance company sends you an annual statement of bonus declared during the YEAR. Thane Page 27 . This feature is not for Endowment. which gives us an idea how our plan is performing. depending on his requirements. He can go for pure Equity. This feature works well when you have a surplus that you are looking to invest in a market linked avenue. 6) LIQUIDITY Institute of Management & Computer Studies. rather than keeping in an FD or Savings account. As a result you can know how your ULIP has performed. In case of Endowment. 5) TRANSPARENCY ULIPs are more transparent than Endowment Plans as their NAV is declared EVERYDAY.Kotak Mahindra Life Insurance In case of ULIPs the investor can choose the fund in which he wants to Allocate his portfolio. This option is not available in case of Endowment.
Kotak Mahindra Life Insurance Since ULIPs investments are NAV based it is possible to withdraw a portion of your investments before maturity (after 3yrs lock in period is over). A Risk Averse person may go for an Endowment. you can only surrender your policy. The Surrender Value is much less than the Sum Assured and the Bonus is also not paid. Therefore we can say that investing in ULIPs is the best in a growing Economy as compared to the TRADITIONAL PLANS. Thane Page 28 .The withdrawal is possible provided the minimum fund value is maintained. but you won‘t get everything that you have earned on your policy in terms of premium and bonus. THUS investing in ULIPs or in ENDOWMENT depends on the person‘s RISK taking ability. In case of Endowment. ULIPS AND YOU Institute of Management & Computer Studies. whereas a person who wants his corpus to appreciate and is ready to take risks can go for ULIPs.
ULIPs Child plan ------------. Over here I have outlined how ULIPs can help you to fulfill that responsibility. marriage. 1.for helping you to meet investment objectives like buying a house or setting up a business. Remember .3) If you are above 45 years of age In this age bracket. marriage. ULIPs Endowment plan------------.unlike Endowment . do not turn out to be expensive.Kotak Mahindra Life Insurance IRDA has played a part in making ULIPs more investor friendly. ULIPs Pension plan-------------------for your retirement.2) If you are between 35 –45 years of age If you haven‘t invested in ULIPs. etc. A long term retirement planning could be done with an Equity push. it is not too late even now. taking into consideration the changes of your life style.4. ULIPs because of the way they are .4. You can opt for some ULIPs as mentioned earlier. as it is necessary to build up a strong corpus to face your rigorous retirement.4.which gets really expensive at an advanced age. Today more individuals are opting for ULIPs to create wealth over a long term.--------for your child‘s education. 1. IRDA and ULIPs Institute of Management & Computer Studies. planning for your retirement and providing for your family in case of your absence. 1. By this time your ULIP pension plan must have matured. income needs. you have to review your insurance cover.1) If you are between 25 –35 years of age ULIPs help you to save for your child‘s education. Thane Page 29 . so now you can opt for an Annuity (immediate or deferred) depending on your need.
Residuary payments for policies arising out of policies which are lapsed. According to the new norms. Thane Page 30 . They are as follows Lock-in period for all ULIPs was changed from three years to five years. Unit Linked guidelines were notified by IRDA on 21st December 2005. The circular specified certain clauses to be incorporated in all ULIPs to be sold from 1 September 2010. which are not present in other types of life insurance such as whole life policies. Institute of Management & Computer Studies. surrendered or discontinued would be made during this period. It is the endeavor of IRDA to enable the buyer to make the most informed decision possible when planning for financial security. the investors who wish to prematurely withdraw now have a reason to be happy as their investments would have some protection. some 8 to 9 years back. The IRDA capped charges from the sixth year. The main intent of the guidelines was to ensure that they lead to greater transparency and understanding of these products among the insured.Kotak Mahindra Life Insurance Unit Linked Insurance Plans were first started by Unit Truat of India. The Insurance Regulatory and Development Authority (IRDA) issued circulars on 28 June 2010 outlining fresh guidelines for ULIPs. The charges would be applicable from 1 September 2010. It allows protection and flexibility in investment. The premium paid is used to purchase units in investment assets chosen by the policyholder. especially since the investment risk is borne by the policyholder. including topup premiums and no residuary payments on policies which are lapsed. A unit-linked insurance plan (ULIP) is a type of life insurance where the cash value of a policy varies according to the current net asset value of the underlying investment assets. Investments are made majorly in mutual funds and risk-free instruments like government securities . surrendered or discontinued during the lock-in period would be paid on the expiry of the lock-in period.
5 % of the total premiums paid. to provide a minimum mortality cover or a health cover and the annual health cover at no time would be less than 10. Institute of Management & Computer Studies.5% per annum or as specified by IRDA from time to time. All ULIPs. All limited premium ULIPs with the exception of single premium products will have a premium paying term of at least 5 years. other than pension and annuity products. All ULIPs pension or annuity products would offer a minimum guaranteed return of 4. Thane Page 31 .Kotak Mahindra Life Insurance Regular premium and limited premium ULIPs would have uniform and level paying premiums and any additional payments made would be treated as single premium for the purpose of insurance cover.
which ultimately finds its way into the equity markets. These products are increasingly gaining popularity among the investors on account of its multi-purpose catering of life cover and equity market linked returns both. they also provide Tax savings. so they could very call All-in-One Policies.Kotak Mahindra Life Insurance IRDA on Unit Linked Insurance Plans Banned By SEBI ULIP is saving-cum-investment product that offers the option of life cover along with market liked returns. Additionally. Thane . Limited Metlife India Insurance Company Limited Reliance Life Insurance Company Limited SBI Life Insurance Company Limited TATA AIG Life Insurance Company Limited Page 32 Institute of Management & Computer Studies. However. is in the nature of mutual funds which falls under the jurisdiction of SEBI‘s governance. SEBI has banned the following 14 Private Insurance companies form selling Unit Link Insurance Plans Aegon Religare Life Insurance Company Limited Aviva Life Insurance Company India Limited Bajaj Allianz Life Insurance Company Limited Bharti AXA Life Insurance Company Limited Birla Sun Life Insurance Company Limited HDFC Standard Life Insurance Company Limited ICICI Prudential Life Insurance Company Limited ING Vyasa Life Insurance Company Limited Kotak Mahindra Old Mutual Life Insurance Limited Max New York Life Insurance Co. SEBI‘s contention is that ULIPs are not pure insurance products and such products are coupled with investment products which fall under its purview of regulation. The investment component of the ULIPs.
Insurance Act 1938.An amendment favoring Irda over the Securities and Exchange Board of India was signed by President Pratibha Patil on June 18. The two regulators have been warring over the jurisdiction over Ulips after Sebi on April 9 barred 14 life insurance companies from selling or renewing Ulips unless they registered with it. balanced funds. clarifying that life insurance business will include any unit-linked insurance policy or scripts or any such instruments. the premiums are invested in equity funds. Institute of Management & Computer Studies. This resulted in the government intervention and the finance minister asked both the regulators to file a joint application with an appropriate court to resolve the matter. The law ministry issued an ordinance amending the RBI Act 1934.Kotak Mahindra Life Insurance CONTROVERSY RESULT Government settles issue by issuing ordinance and it was settled in favour of IRDA as unit Link Insurance Plans are basically life insurance products and provide nature of insurance with risk. However. The money collected is invested in equities. Thane Page 33 . SEBI Act 1992 and Securities Contract Regulations Act 1956. IRDA struck back telling insurers to ignore the Sebi order on the grounds that the capital markets regulator had no jurisdiction over insurance companies. debts funds etc. Ulips account for more than 50 per cent of the life insurance business in the country. A day later. The government has brought down curtains on the two-month long tussle between two regulators by ruling that Unit-linked Insurance Products (Ulips) will be governed by the Insurance Regulatory and Development Authority (IRDA). SEBI issued a clarification saying that insurance companies need to register with SEBI. This has thus settled the issue of regulating Ulips.
It is important for an investor to understand his financial goals and horizon of investment in order to make an informed investment decision. Institute of Management & Computer Studies. with the product differentiation between them becoming more pronounced. in contrast. insurance provides benefits that no investment can offer. As an instrument of protection. they offer protection against the risk of dying too early. there will be separate playing fields for ULIPS and MFs. the first and foremost purpose of insurance is and will always be ‗protection‘. not likely to cannibalize each other in the long run. therefore. and it‘s about time the industry and customer realize it. ULIPs. are now positioned as long-term products and going ahead. ULIPs now do not seek to replace mutual funds.Kotak Mahindra Life Insurance 3. Insurance has to be an integral part of one‘s wealth management portfolio. The value that it provides cannot be downplayed or underestimated. The decision to invest in either a mutual fund or a ULIP should depend on the time period of investment. individual financial goals as well as risk taking appetite. The liquidity that these products offer is valuable for investors. While ULIPs as an investment avenue is closest to mutual funds in terms of their functioning and structure. ULIPs and mutual funds are. and also help people save for retirement.2 Difference between Mutual Funds and ULIPs Mutual funds are essentially short to medium term products. Thane Page 34 .
Page 35 Institute of Management & Computer Studies. expenses charged for relatively free hand in levying various activities like expenses on their ULIP sales/marketing. ULIPs after netting out the risk premium for life risk cover and administrative expenses. net of expenses. 2) Primary Objective :Its main objective is Its objective is only investment & protection 3) Investment Duration:- Investments. objective of collecting funds from various segments of people and investing the same in a variety of securities. Risky for short term investors. investment only. long term. & short term. It works out for long term It works out to medium term. Thane . gets with/ without risk cover) and invested as per the Investment from the amount invested in objective of the scheme. the insurer invests the balance as per the objective of the specific ULIP product 5) Expenses :Insurance companies have a In MFs. 4)Insurance Cover :- ULIPs cover provide (except insurance MF schemes do not cover the annuity life risk and the amount products which may be issued invested.Kotak Mahindra Life Insurance Points of Difference ULIPS(Unit Linked Insurance Plans) MFs(Mutual Funds) 1) Meaning :- These are the Insurance It is an with investment a main policies which are linked to organization units of Mutual Fund.
8) Investment Objective:ULIPs can be used for MFs can be used as vehicle for to achieve achieving only long term investments objectives education. 7) Liquidity :Limited liquidity . Any wrong investment Correcting mistakes can turn decisions are made. Similarly funds usually charge their investors entry (at the timing of making an investment) and exit (at the time of sale) loads. MF units can be stay invested for minimum sold any time(except ELSS). Buying a car three years from now.It need to Very liquid. 6) Flexibility :Flexibility is limited to Very flexible. funds from one ULIP to another ULIP of a different fund house can be expensive. Plenty of scope moving across different funds to correct mistakes if offered with policy. per annum) as per the guidelines of the Securities and Exchange Board of India (SEBI). Retirement planning). Insurance example in equity oriented Regulatory and Development mutual funds. (Children different objectives.Kotak Mahindra Life Insurance products with no upper limits administration being prescribed the by and fund the management are capped (for regulator. Moving can be easily shuffled in MFs.(E. Portfolios out to be expensive.5%.: marriage. expenses are Authority (IRDA) capped at 2. years before redeeming. Down payment for a home five years from now. Thane Page 36 . Institute of Management & Computer Studies.g.
Kotak Mahindra Life Insurance
Children‘s education 10 years from now. Children‘s marriage 15 years from now. Retirement planning 25 years from now. Medical Expenses after retirement 25 years from now).
9) Flexibility of Switchovers Insurance companies permit In MFs an investor usually is :their ULIP investors usually subjected to exit load 3-4 switch overs free of And/or entry load when he/she charge and thereafter every exercises a switch over option. additional switch over beyond the permissible limit is
permitted at some cost. 10) Minimum Lockin ULIPs currently are with a MF schemes (except ELSS minimum lock-in of three which has a lock-in of years. three years) do not have any such lock in. 11) Investment styles and Portfolio Disclosures :Insurance companies declare Most MFs usually declare their their portfolios once in a portfolios on monthly basis quarter and their investment and MFs are generally known style are less aggressive and to be more active in fund they resort to less churning. 12) Tax benefits and implications :management
Irrespective of the nature of In the case of mutual funds, the plan chosen by the investor, investments all qualify only investments in taxsaving ULIP funds i.e Equity-linked savings for schemes (ELSS) are eligible
deductions up to one lakh for Section 80C benefits.
Institute of Management & Computer Studies, Thane Page 37
Kotak Mahindra Life Insurance
under Section 80C of the On the other hand, in the case Income Tax Act. In the case of equity-oriented of ULIPs the maturity mutual funds, if the
proceeds are tax-free.
investments are held for a period over 12 months, the gains are tax free and if sold within a 12-month period they attract short-term capital gains tax @ 10 percent. Similarly, debt-oriented funds attract long-term capital gains tax @ 10 percent while short-term capital gain is taxed at the investor‘s marginal tax rate.
Institute of Management & Computer Studies, Thane
Kotak Mahindra Life Insurance
3.3 Role of ULIPs in Current market
The current market scenario is leaving a great impact and has changed many things in our lives. During the last bear market, the impact of market weakness was limited to stock market and hence the worst affected were those who took a bet on stocks. In the current edition of market weakness, the numbers of affected by equity are many more, thanks to the popularity of unitlinked plans.
Technically, insurance sector should have little to worry about as investors in the policy are long term investors. However, due to the wrong selling strategy of investors and advisors, insurance, in recent times, particularly the ULIPs, have been sold on the basis of shorter tenure. In fact, many insurance companies even launched policies with shorter tenure of as little as 3 years on the premise that policyholders had shrunk their commitment towards their premiums.
While one could get away with shorter tenures during 2003-07, it may not be the case for the coming year and hence, those who signed up for ULIPs may have to hold on to their policies for more than three years. Besides staying invested, ULIP policyholders can also make a better use of their investment through some changes in their investment strategies. Here are some tips for managing your existing ULIPs:
Switch to monthly from annual: if you are an investor with long term focus for your insurance policy, continue with your equity allocation. However, monthly mode for premium may work better than annual premium mode as stock market has been volatile. In the case of monthly premium, investor gets to enjoy the benefits of volatility like SIP (systematic investment plan). The good thing with ULIP is that there is plenty of flexibility with premium payment and investor can change from one mode to another at any time.
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Kotak Mahindra Life Insurance
Increase allocation for debt: ULIP, often, is associated with equity though in reality, every insurance company offers at least 4-5 investment options for the premium. As a result, investors who signed up for ULIP more than 4-5 years can look at the option of reducing equity exposure for the next one year. The logic is simple. When these investors signed up for ULIP, the stock market was closer to the present level or slightly lower than the current level. If you have made some gains from your ULIP, protection of profits can be an option and hence reduce your equity exposure. The ratio between equity and debt can be according to your comfort. Those with medium risk appetite can look at 30-40% in favour of debt. If you can't decide for yourself, look at the option of balanced funds which allocate up to 35-40% in favour of debt. You can revert to 100% equity once the stock market stabilises.
Now the question is should everyone review their ULIP premium strategy? The answer is yes if you are not a long term investor. On the other hand, if ULIP is an option to build corpus for your medium term needs or children's education with tenure of over 10 years, you need not worry much about the market volatility. In fact, insurance companies themselves do value picking with their funds as they don't have the pressures of redemptions when compared with mutual funds. That is also the reason why insurance companies managed to post better returns with their ULIPs during the market meltdown.
Hence although in this current market situation it seems more preferable to go in for ULIP's and those who have existing policies to review them.
Institute of Management & Computer Studies, Thane
Thane Page 41 . Analysis of the study Institute of Management & Computer Studies.Kotak Mahindra Life Insurance 4.
Insurance has to be an integral part of one‘s wealth management portfolio. As an instrument of protection. not likely to cannibalize each other in the long run. and it‘s about time the industry and Customer realize it.Kotak Mahindra Life Insurance 4. ULIPs now do not seek to replace mutual funds. are now positioned as long-term products and going ahead. Institute of Management & Computer Studies. it is necessary to do a through comparison to choose the right one for you. in contrast. Thane Page 42 . there will be separate playing fields for ULIPS and MFs. It is important for an investor to understand his financial goals and horizon of investment in order to make an informed investment decision. they offer protection against the risk of dying too early. ULIPs and mutual funds are. The value that it provides cannot be downplayed or underestimated. The decision to invest in either a mutual fund or a ULIP should depend on the time period of investment.1 Comparative Analysis of ULIPS Initially ULIPs were started by a few private players way back in 2001-02. therefore. While ULIPs as an investment avenue is closest to mutual funds in terms of their functioning and structure. But now almost every Insurance company has got ULIPS suiting the varied requirements of the customers. with the product differentiation between them becoming more pronounced. the first and foremost purpose of insurance is and will always be „protection‟. insurance provides benefits that no investment can offer. If one has to choose among the ULIP schemes provided by the insurance. individual financial goals as well as risk taking appetite. ULIPs. and also help people save for retirement.
Money market instruments in varied proportions. Growth Fund Balanced Fund Debt Fund Money Market Fund 100 % Equity 60 % Equity and 40 % Debt 100 % Debt 100 % money market instruments for period of one year Equity Balance Risks Debt Money Market Debt Returns Institute of Management & Computer Studies. Thane Page 43 . bonds. They invest their monies in Shares. Government Securities.Kotak Mahindra Life Insurance HOW ULIPS MANAGE MONEY ULIPs are different from traditional plans. Insurance companies usually maintain 4 types of funds.
Thane Page 44 . And ULIPS are the best to invest in. Institute of Management & Computer Studies. STEPS FOR ULIP SELECTION Understand what ULIPs are all about.000 points). followed by booming stock market (SENSEX soaring as high as 20. the higher the risks you take . the higher the return you get. the risk and return is the highest.Kotak Mahindra Life Insurance In case of equity. with a high GDP growth and a low inflation rate. and vice verse for Money market instruments. It is a principle of Financial management. Focus on your need and risk profile Compare ULIP products from various insurance companies Go for an experienced Insurance advisor It is estimated that India‘s economy will become the 3rd largest economy within a few years. So right time to increase your wealth and become rich starts from today.
Thane Page 45 . b) Administration Charges: charged by the company to cover the daily expenses. e) Top up Charges: A certain % is deducted from the Top up amount to recover the expenses incurred on managing the same.Kotak Mahindra Life Insurance EXPENSES IN ULIPs Following expenses have to be incurred for ULIPs: a) Mortality charges: charged by the company to cover the risk of an eventuality to an individual. c) Fund Management charges: are levied by Insurance companies to cover the expenses incurred by them in managing ULIP monies. d) ULIP Fund switch charges: Such are borne by the individuals when they decide to switch their money form one type of find to another. Institute of Management & Computer Studies. agent‘s commission etc. Charges are high for managing monies in an Equity Fund. overhead costs. Cancellation/ Surrender charges: It is charged when an individual wishes to surrender his ULIP policy.
by holding a significant portion in a diversified and flexible mix of large / medium sized company equities.Kotak Mahindra Life Insurance Study of some ULIPs plan of Kotak Mahindra Life Insurance Kotak Classic Opportunity Fund Fund Strategy: Aims to maximize opportunity for you through long-term capital growth. on maturity you receive 110% to 104% of Basic Sum Assured. You also enjoy life cover for the entire policy term thereby protecting your family should something happen to you. for 20 years provided the policy is in force. Kotak Classic opportunity fund guarantees you an additional income every year. Thane Page 46 .Provide protection to your family for 30 years Avail of policy loan to meet sudden expenses Boost your protective cover through optional rider benefits Tax Benefits Institute of Management & Computer Studies. Advantages Enjoy Assured Annual Income for 20 years Receive lump sum on maturity Provide protection to your family for 30 years Avail of policy loan to meet sudden expenses Boost your protective cover through optional rider benefits Key Features Enjoy Assured Annual Income for 20 years Maturity Benefit .Receive lump sum on maturity Death Benefit . In addition.
.8 % -4.9% n.a.a. n. 3. n.3% n. Thane Page 47 . n.1.Kotak Mahindra Life Insurance As on 31st Aug 2011.2% 3. n.a.3% 9.5% -2.0 % .a.a. n.a. n.a.2% 2.0. Performance Meter Kotak Opportunities Fund Inception(16-09-10) 5 years 4 years 3 years 2 years 1 years 6 month 3 month 1 month -1.5% Classic Benchmark Equity Debt Institute of Management & Computer Studies.0 % -1.a.
05 % 2. Ltd Bharti Airtel Ltd Oil & Natural Gas Corporation Ltd Bharat Petroleum Corporation Ltd IndusInd Bank Limited Sun Pharmaceuticals Ltd Coal India Ltd Axis Bank Ltd Mahindra & Mahindra Ltd National Thermal Power Corporation Ltd Idea Cellular Ltd % to Fund 6. Thane .62 % 1.81 % 1.59 % 4.16 % 3.14 % 4.25% 5.55 % 2.64 % 2.63 % 1.54 % Page 48 Institute of Management & Computer Studies.60 % 1.00 % 1.Kotak Mahindra Life Insurance Equity Infosys Ltd I T C Ltd ICICI Bank Ltd Tata Consultancy Services Ltd HDFC Bank Ltd Larsen And Toubro Ltd Reliance Industries Ltd Housing Development Finance Corp.71 % 1.48 % 4.48 % 2.39 % 5.53 % 2.
90% Kotak Dynamic Floor Fund Fund Strategy: Aims to provide you with stable long-term inflation beating growth over medium to long-term and defend your capital against short-term capital shocks. You choose the Basic Sum Assured. You can further opt for rider benefits to enhance the protective cover of your plan Premiums paid by you. A great combination of 8 funds and loyalty additions. Advantages Maximize your wealth through a plan with low charges Capitalize on a wide array of funds to build a substantial corpus Enhance your long term savings through loyalty additions Enjoy liquidity through policy loans and partial withdrawals How Does the Plan Work? You may decide your premium based on how much and for how long you wish to invest.37 % 35. this plan helps you build substantial wealth for yourself. depending on your existing insurance cover and need.5% (Nifty).Kotak Mahindra Life Insurance Cummins India Ltd Others Total 1. Institute of Management & Computer Studies. are invested in the funds of your choice. Benchmark Details: Equity .38 % 93.5% Kotak Platinum is a unit linked investment plan with low charges along with convenient premium payment options. net of premium allocation charges.37. Thane Page 49 .62. Debt .
n. 4.a. n.9% 1.1% -0. n.0% -0.7% -0.7% Asset class Distribution Benchmark 5.a. n.5% n. 4.a.a.3% n. n. n. Thane Page 50 .6% Institute of Management & Computer Studies. Performance Meter Inception (17-Dec-09) 5 years 4 years 3 years 2 years 1 year 6 mth 3 mth 1 mth Kotak Dynamic FloorFund 4.a.9% -0. Our investment experts will ensure that your plan earns you handsome returns.a.Kotak Mahindra Life Insurance Now you can sit back and relax.a.1% 2.a.
04.16.2016 8.2016 9.45% 1.16 1.2014 9.00% 0.45% 1.04.28% 12.31.10% SBH Bank FD .56% 2.26% GOI .2026 Call 16.10.04.12.75% Tata Sons .2016 9.55% NABARD 12.80% GOI .03.04.48% 1.00% Tata Motors .04.02.85% SBI Upper Tier II .08.Kotak Mahindra Life Insurance Debt Portfolio 7.40% NABARD .15% PNB .86% 1.09.60% HDFC .12 9.98% 0.03.2015 9.02.41% 1.19.2016 9.78% 04.2021 Call 1.29% P/C 1.07.35% OMC GOI BOND .07.2013 6.2024 IDBI Bank CD .12.03.2014 8.2013 6.15.2021 1.19.05.23.07.95% SBI 2026 .2026 10.84% 8.96% Institute of Management & Computer Studies.27.03.07.2014 1.45% EXIM Bank . Thane Page 51 .2021 18.104.22.168% LIC Housing Finance .07.50% 1.09.08.27 % to Fund 1.10.90% OIL SPL .39% 1.41% 1.
03.08. that provides you with investment growth to take care of your family's goals and comprehensive protection to help your family and you meet unplanned events head on.59% GOI 2016 Current Asset/Liabilities Others Total 0.91% 0.09.85% REC .28. Kotak Wealth Insurance is a unit-linked insurance plan . Debt .05.50% Kotak Balanced Fund Fund Strategy: Aims for moderate growth for you by holding a diversified mix of equities and fixed interest instruments.2012 9.89% 0.87% 4.10% 33. Advantages O Comprehensive triple benefit to secure your family's future O Wide array of fund options to suit your investment needs O Liquidity to take care of contingencies O Convenience of shorter payment term O Optional rider benefits to boost protection Institute of Management & Computer Studies.07.26% LIC Housing Finance .17 7. Benchmark Details: Equity .94% 0.16% 63.60% (BSE 100).2015 Indian Overseas Bank CD .Kotak Mahindra Life Insurance 8. Thane Page 52 .40%.
a. n.8% 0.a. n. n.a. n. 1. n.0% n.a. Thane Page 53 .9% Benchmark 4.1% n. n.6% -0.7% -2.a.a.1% -1.2% -0.Kotak Mahindra Life Insurance Key Features O Maturity Benefit O Death Benefit O Rider Benefits for boosted protection O Invest surplus capital as Top-Up Premiums Performance Meter Inception (21-Dec-09 5 years 4 years 3 years 2 years 1 year 6 mth 3 mth 1 mth Kotak Balanced Fund 7.a.a.4% 2. 3.3% Institute of Management & Computer Studies.
19 % Allocation By Sector in Equity Banking & Finance Information Tech Oil & Gas FMCG Capital Goods Others Pharma Auto & Auto Ancillary Telecom Metal Utilities 0.00% Series1 8.07% 10.00% Institute of Management & Computer Studies.CP.00% 6.17 % Equity FD.17 % 53.00% 12.CD.00% 4.00%10.Kotak Mahindra Life Insurance 13.00%14. Thane Page 54 .00% 2.T BILLS NCD G SEC 23.
7% Benchmark Institute of Management & Computer Studies.80% (BSE 100).8% 15. Benchmark details: Equity . Thane Page 55 .8% 9.Kotak Mahindra Life Insurance Kotak Dynamic Growth Fund Fund Strategy: Aims for a high level of capital growth by holding a significant portion in large sized company equities.20% This plan would like to protect your family in the eventuality of you not being around yet receive all your premiums back on maturity.4% 3. Debt .1% 10.6% 4. Advantages Twin benefit of risk cover and savings Affordable premiums Hassle free premium payments No medical examinations Key Features Return of premiums Hassle-free Death Benefit Maturity Benefit Performance Meter Kotak Dynamic Growth Fund Inception (27-Jun-03) 5 years 4 years 17.
3% -2.1% 3.0% -2.7% -0.7% 9.00% 60.1% -3.1% 7.Kotak Mahindra Life Insurance 3 years 2 years 1 year 6 mth 3 mth 1 mth 6.00% 40.9% -2.1% 0. Tbills Series1 Institute of Management & Computer Studies.00% 50.00% 20.1% 0.4% 6. CD.00% 30.00% 80.00% Equity G sec NCD FD.00% 70.0% Asset Class Distribution 90.00% 10.00% 0. Thane Page 56 .
Benchmark details: Equity . Debt .00% 0.3 year 3 . ensuring that you are able to meet any of your financial obligations which arise from time to time. which increases every year.00% 35. Thane .7 year 7 year .0% (NA).100%. The Kotak Money Market Fund offers the key benefit of cash lump sums at periodic intervals of five years. but it also gets you a substantial life cover.00% 15.00% < 1 year 1 .00% 10.00% 20.00% 30.above Series1 Kotak Money Market Fund Fund Strategy: Aims to protect your capital and not have downside risks. Advantages Guaranteed additions on maturity Earn bonuses on the plan Death benefit increasing at 7% of sum assured at the end of each year Page 57 Institute of Management & Computer Studies.00% 25.00% 5. This money back plan not only lets you enjoy regular cash flows during the policy term.Kotak Mahindra Life Insurance Debt Maturity Profile 40.
Thane Page 58 .a. n. n.a.5% 3.4% n.a.a.a. n.a.7% 2.2% n.9% 1. n.a.3% 3. n.a.7% 6.9% 0. 7.6% Institute of Management & Computer Studies.Kotak Mahindra Life Insurance Cash lump sums at intervals of 5 years Key Features Bonus Maturity Benefit Increasing Death Benefit Automatic Cover Maintenance Performance Meter Kotak Money Market Fund Benchmark Inception (5-Jan-10) 5 years 4 years 3 years 2 years 1 year 6 mth 3 mth 1 mth 5. 6. n.0% 0.
CD. CP. Debt Maturity Profile 120% 100% 80% 60% Series1 40% 20% 0% < 1 year 1-3 year 3-7 year 7 year & Above Institute of Management & Computer Studies. MF 1 100 % money invested in Short term Debt market.Kotak Mahindra Life Insurance Asset Class Distribution FD. Thane Page 59 . T BILLS.
Dinesh Behera Age of the policyholder: 25 yrs Proposal No: 1577 Date: 15/7/11 Currency: Rupees Payment Mode: Annual Institute of Management & Computer Studies. Here is an illustration which explains how a ULIP makes your money work. SAMPLE SALES ILLUSTRATION OF KOTAK CLASS OPPURTUNITY FUND (KOTAK MAHINDRA LIFE INSURANCE LTD). Dinesh Behera Age of the proposed insured: 25 yrs Name of the policy holder: Mr.2 Understanding working of ULIPs of Kotak Mahindra Life Insurance ULIPs are said to be the most lucrative from of investment. Thane Page 60 . and also secures the livelihood of your loved ones even after your death. which not only give you high market returns but also protection from risk. Name of the Proposed Insured: Mr.Kotak Mahindra Life Insurance 4.
KOTAK CLASS OPPURTUNITY FUND 30 Years Policy Min Return on units=10% CHARGES: 1st year= 50% of premium 2nd year= 25% of premium 3rd year= 1 %of premium Balance invested in the Equity fund 50% 75% 99% Institute of Management & Computer Studies.33= 5.000 2) Additional coverage given as Accident Death Benefit Rider taken by the policy holder.Kotak Mahindra Life Insurance Insurance plan Benefit period Premium Paying period Premium Multiple Annual premium Modal premium Sum Assured (SA) Additional coverage Fund KOTAK CLASS OPPURTUNITY FUND 30 years 30 years 33.00. 3) Investment in Equity is 100%.33 15000 15000 500000 500000 Equity 100 % Note : 1)SA is the multiple of annual premium: 15000*33. Thane Page 61 .
00. Dinesh Behera continues with his policy for 30 years. Institute of Management & Computer Studies. He will get a Maturity benefit = existing Fund Value which is the sum of the Regular premium fund value · On death = SA Rs 5. of units = Rs20625/ 20= No of units= Rs 36960/ 1031 units 30=1232 units TOTAL UNITS IN HAND: 825+1031+1232=3088 UNITS AFTER 3 YEARS Therefore the units keep on increasing with the change in the NAVs. NAV was Rs 30. & As the NAVs fall. of Units. 20 15000 premium 1% 99%= Rs 14850 Return= Rs 1485 Total = Rs 16335 NAV =RS 30 (16335+20625)=Rs 36960 No. of units =Rs 8250/10= (12375+8250)=Rs20625 825units No. On Death due to Accident= Double the SA. the No of Units increase. as your no of units decrease.000 or NAV whichever is higher.: In the 3rd year. E. of Units would have been 1848.Kotak Mahindra Life Insurance YEAR 1 YEAR 2 YEAR 3 15000 premium 50% 50%= Rs 7500 Return =Rs 750 Total =Rs 8250 NAV =RS 10 15000 premium 25% 75% = Rs 11250 Return= Rs 1125 Total = Rs 12375 NAV=RS. Then the no. Therefore if Mr. of Units was 1234 Now if the NAV Falls to Rs 20. Therefore the rising trend of NAV is not always a good sign. There is an inverse relation between the NAVs and the No. Thane Page 62 . As the NAVs rises the no of units decrease. So the no. the investment was Rs 36960.g.
retired e. ULIPS Institute of Management & Computer Studies. salaried b. self employed d.Kotak Mahindra Life Insurance 4. Traditional b. pensioner 10 % salaried 50 % 40 % self employed housewife Q 2) Which policies the client opts for? a. Questionnaire for Advisors Q 1) What type or class of customers visits your office? a. The reason for carrying out a market survey was to know the opinion of the Advisors and the popularity of ULIPs in the market.3 Market Survey on ULIPs A questionnaire was prepared. Thane Page 63 . wherein 10 advisors of Kotak Mahindra Life Insurance were asked to fill it. housewives c.
Thane Page 64 . No c.Kotak Mahindra Life Insurance 10 % Traditional 90 % ULIPS Q 3) Are ULIP schemes popular? a. Yes b. Can‘t say 80% 70% 60% 50% 40% 30% 20% 10% 0% Yes No Series1 Institute of Management & Computer Studies.
0--.10% b.30 % 1 30 % .Kotak Mahindra Life Insurance Q 4) Are the clients aware of ULIP schemes? a. 10% --. 31--. how many clients opt for ULIPs? ANS) on an average 6 clients out of 10 opt for ULIPs. Thane Page 65 .60% d. 11—20% c.40% Institute of Management & Computer Studies. less than 10% b.30% c. 30%---. 21---30% d. Q 6) How much commission do you get from the company on ULIP policy? a. Above 60% 10 % .60 % 60 % and Abov e 2 3 Q 5) Out of ten.
Demand Draft c.30 % and above 30 % Non Financial 70 % Financial Q8) Mode of payment of premium. Cash Institute of Management & Computer Studies. 0 – 30 % b. Thane Page 66 .Kotak Mahindra Life Insurance 60% 50% 40% 30% 20% 10% 0% 0-10% 11-20% 21-30% 31-40% Series1 Q 7) How many clients have the background of finance? a. Cheque b. a.
1 0 As a tax saving plan As a retirement plan As a child education plan As a Security cum profitable plan Institute of Management & Computer Studies.3 0.4 0.5 0. Thane Page 67 .Kotak Mahindra Life Insurance 120% 100% 80% 60% 40% 20% 0% Cheque Cash Credit Series1 Q9) what is the better positioning for ULIP? a.6 0. as a retirement plan c. as a tax saving plan b.7 0. 0. as a security cum profitable plan.8 0.2 0. as a child education plan d.
Institute of Management & Computer Studies.Kotak Mahindra Life Insurance Q 10) Qualifications a. Graduate c. sometimes are reluctant to buy due to financial problems.‖ Q 12) how does a client respond. Usually the client shows positive signs of buying the product. the client‘s reaction depends upon the presentation that is by the Advisor. Thane Page 68 . According to most of the advisors the 1st quest asked by the client is about the guarantee and returns. if any new policy is suggested to him? ANS: According to the survey. HSC Pass b. Post Graduate 60% 50% 40% 30% 20% 10% 0% HSC GRADUATE POST GRADUATE 50 % 30 % 20 % Q 11) how is ULIP different from the other policies? Please refer to pg 24 ―ULIPs v/s Endowment. They want to know about the popularity of the policy as well as the insurance company.
Thane Page 69 .Kotak Mahindra Life Insurance Questionnaire for Investors 1) What is your occupation? Ans) a) Self Employed c) Student 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Self Employed Service Student Retired b) Service d) Retired 2) What is your opinion about insurance about investmnent ? Ans) a) Agree c) disagree b) Strongly agree d) Strongly disagree 10 % 20 % 45 % Agree Strongly agree 25 % disagree Strongly disagree Institute of Management & Computer Studies.
Kotak Mahindra Life Insurance 3) Are you aware about Kotak Mahindra Life Insurance Limited ? Ans) a) Yes 120% 100% 80% 60% 40% 20% 0% Yes no b) No 4) Are you aware about Unit Linked Insurance Plans? Ans) a) Yes b) No 70% 60% 50% 40% 30% 20% 10% 0% Yes No Institute of Management & Computer Studies. Thane Page 70 .
Thane Page 71 .3 0.1 0.4 0.2 0.Kotak Mahindra Life Insurance 5) Which Insurance Company you are familiar about ? Ans) a) LIC c) Kotak b) ICICI d) Others 20 % LIC ICICI KOTAK OTHERS 60 % 15 % 6)Your Perception towards investment in ULIPs ? Ans) a) Better Investment c) Safe Investment b) Quite Same as Mutual Fund d) Poor Investment Poor Investment 5% 55% Safe Investment 10% Same as Mutual fund 30% Better Investment 0 0.6 Institute of Management & Computer Studies.5 0.
Thane Page 72 .1 0.25 0.35 0.Kotak Mahindra Life Insurance 7) In which Sector would you like to invest ? Ans) a) Equity Market b) Debt Market 60% 50% 40% 30% 20% 10% 0% Equity Market Debt Market 8) Towards which neccesity you look ULIPs as an better investment ? Ans) a) Child Education c) Retirement b) Future Needs d) Others 0.15 0.3 0.05 0 Child Education Future Needs Retirement Others Institute of Management & Computer Studies.4 0.2 0.
Thane Page 73 .Kotak Mahindra Life Insurance 9) How do you rank ULIPs compare to Traditional plans? Ans) a) Good c) Average b) Excellent d) Poor 20% 40% Good Excellent Average 30% 10% Poor 10) Are You aware about Kotak ULIPs Plan ? Ans) a) Yes b) No 70% 60% 50% 40% 30% 20% 10% 0% Yes No Institute of Management & Computer Studies.
Married. Considerably lower life insurance as The dependencies have decreased. marriage Lump sum money for education. high on asset Creation but steadier expenses. Institute of Management & Computer Studies. Kids going to school. still high on Asset creation. high asset creation and accumulation. still high on asset creation but steadier options. Recently married.3 yrs for these extra expenses Children independent.Kotak Mahindra Life Insurance 4. Facility to stop premium for 2. options. Marriage. Safe accumulation for the golden Years. college Higher Protection. Single individual Low protection. increase Savings for child. no kids Reasonable protection. Thane Page 74 . with kids Higher protection.4 Integrated Financial Planning for Life Insurance Your Need Starting a Job. liquidity for education Higher studies for child. nearing the Golden years.
Kotak Mahindra Life Insurance Flexibility Starting a Job. Choose the income investment Option. Premium holiday-to stop premium for a Period without lapsing the policy. Higher studies for child. Married. marriage Withdrawal from the account for Higher education/marriage expenses of the child. Children independent. choose Balanced option for asset creation. college Withdrawal from the account for The education expenses of the child. nearing the Golden years. Choose riders for enhanced protection. Decrease the death benefit reduce It to the minimum possible. with kids Increase death benefit. choose growth/balanced option for asset Creation. Use top-ups to increase your accumulation. Institute of Management & Computer Studies. no kids Increase death benefit. Recently married. Thane Page 75 . Single individual Choose low death benefit. Top ups form the Accumulation (with reduced expenses) for the golden Yrs cash accumulation. Choose growth/balanced option for Asset creation. Kids going to school.
Thane Page 76 . Findings Institute of Management & Computer Studies.Kotak Mahindra Life Insurance 5.
transparency. Synergy. durable tax advantages. Thane Page 77 . I would point out that the insurance industry is growing at a very fast pace . However there are also some classes of consumers in society who are still unaware of investment plans and strongly rely upon traditional plans. flexibility. major percentages of investors still trust on LIC of India. who if understand the plan properly. Life Insurance Corporation of India still plays a major role in market. capital appreciation makes ULIPs structurally more effective for achieving long term financial goals. Ultimately its client. subjected to market conditions.The Insurance needs of the people are increasing. in case of death due to accident or on death. Therefore insurance has and should be a part of every person‘s portfolio which satisfies twin objectives of protection against risks & to increase your wealth. will invest in plan only if they are provided with lucrative returns and risk cover. top up facility. Life advisor plays a crucial role under private insurance companies. as it is totally depend upon the presentation how he or she presents to investor or client.equity ratio. flexibility in debt. unwillingness to take or bear risk. ULIPs are simple combination of Term assurance and investment. They should also be made to understand the importance of Insurance Regulatory Institute of Management & Computer Studies. Only consumers having some prior knowledge about market and investment opportunities and simultaneously returns are ready to willing to invest in private insurance companies. This might be due to unawareness. As it is government oriented. There is no other investment avenue which provides double the amount invested. Putting your money in the ULIP equity fund will give you a good return and capital appreciation.Kotak Mahindra Life Insurance Findings From the above project.
So relax and enjoy your life as ULIPs is there behind you. Switch option is a option where investor can willingly order to diversify fund. ULIPs are different from Mutual Funds not in Structure but in terms of returns.Kotak Mahindra Life Insurance Development Authority (IRDA). Institute of Management & Computer Studies. ULIP is excellent means to securely invest your savings. ULIP is also flexible as you can manage your systematically manage the invested amount in any type of fund. ULIP provides insurance cover. As ULIPs provide risk cover and death benefit which is unavailable in mutual fund. if he or she feels insecure in the particular sector. The charges of ULIPs like Fund Management Charges. If you are considering long term investment. ULIP is transparent by nature as you can daily track the net asset value of your fund. Thane Page 78 .As IRDA as a watch dog will regulate the insurance companies and will protect the interest of the investors. ULIP does not require your constant attention as your premium is managed by industry professionals. investment and tax benefits. Mortality charges and Administrative charges are transparent including transaction. So Investor need not have to worry as industry people will manage the premium amount and they will provide switch option too. Allocation Charges.
Thane Page 79 .Kotak Mahindra Life Insurance 6. Recommendations Institute of Management & Computer Studies.
The investment style should be more aggressive. 9. (as in the case of death benefit. Reduction in the charges. Institute of Management & Computer Studies. Thane Page 80 . 6. Increase the number of Switch options. the policy holder should receive the Fund value or the Sum Assured whichever is higher. For the changes in ULIPs: 1. Remove the charges on surrender or partial withdrawal. 7. Design ULIPs for meeting short term investment goals. 1) The company should now target pensioners & housewives as they constitute less percentage in the selection of ULIPs. As four is not enough. 4. and also give some lessons on understanding the basics of FINANCE. On maturity.) 3.Kotak Mahindra Life Insurance Recommendations For the Company based on the above market survey. The amount of premium should be reduced in order to cater to the lower income groups. Commission structure to be revised 5. 2) The company can arrange a seminar for the existing clients informing them about the progress made by the company. Give a Pure traditional plan along with the ULIPs. 8. 2.
Kotak Mahindra Life Insurance 7. Thane Page 81 . Bibliography Institute of Management & Computer Studies.
insurance.com www.irda.google.com www.com www. News Paper The Economic Times The Times of India The Business Standard The Wealth Brochures Policy Brochures of Kotak Mahindra Life Insurance Internet www.gov.myinsuranceclub.sebi.et.investopedia.gov.com www.in www.com Page 82 Institute of Management & Computer Studies.com www. Thane .kotaklifeinsurance.kotak.Kotak Mahindra Life Insurance BIBLIOGRAPHY Books Insurance Institute of India.in www.com www.bimadeal.
Thane Page 83 .Kotak Mahindra Life Insurance 8. Questionnaire Institute of Management & Computer Studies.
how many clients opt for ULIP? Institute of Management & Computer Studies.Kotak Mahindra Life Insurance Questionnaire QUESTIONNAIRE FOR ADVISORS Q 1) What type or class of customers visit your office? Ans· salaried · housewives · self employed · retired · pensioner Q 2) Which policies the client opts for? Ans · Traditional · ULIPS Q 3) Are ULIP schemes popular? Ans · Yes · No · can‘t say Q 4) Are the clients aware of ULIP schemes? Ans · less than 10% · 10% --. Thane Page 84 .30% · 30%---.60% · Above 60% Q 5) Out of ten.
if any new policy is suggested to him? Institute of Management & Computer Studies. Ans · cheque · Demand Draft · Cash Q9) What is the better positioning for ULIP? Ans · as a tax saving plan · as a retirement plan · as a child education plan · as a security cum profitable plan. Q8) Mode of payment of premium. 21---30% · 31--.10% · 11—20% . Q 10) Qualifications · HSC pass · Graduate · Post Graduate Q 11) How is ULIP different from the other policies? Q 12) How does a client respond.40% Q 7) How many clients have the background of finance? Ans · 10—20% · 20—40% · 40% & above.Kotak Mahindra Life Insurance Q 6) How much commission do you get from the company on ULIP policy? Ans · 0--. Thane Page 85 .
Kotak Mahindra Life Insurance Questionnaire for Investors. Thane Page 86 . Name: Date of Birth: Address: Contact No: Email Id: 1) What is your occupation? Ans) a) Self Employed c) Student b) Service d) Retired 2) What is your opinion about insurance about investmnent ? Ans) a) Agree c) disagree b) Strongly agree d) Strongly disagree 3) Are you aware about Kotak Mahindra Life Insurance Limited ? Ans) a) Yes b) No 4) Are you aware about Unit Linked Insurance Plans? Ans) a) Yes b) No 5) Which Insurance Company you are familiar about ? Ans) a) LIC c) Kotak b) ICICI d) Others Institute of Management & Computer Studies.
Kotak Mahindra Life Insurance 6) Your Perception towards investment in ULIPs ? Ans) a) Better Investment c) Safe Investment 7) In which Sector would you like to invest ? Ans) a) Equity Market b) Debt Market b) Quite Same as Mutual Fund d) Poor Investment 8) Towards which neccesity you look ULIPs as an better investment ? Ans) a) Child Education c) Retirement b) Future Needs d) Others 9) How do you rank ULIPs compare to Traditional plans? Ans) a) Good c) Average b) Excellent d) Poor 10)Are You aware about Kotak ULIPs Plan ? Ans) a) Yes b) No Institute of Management & Computer Studies. Thane Page 87 .
Annexure Institute of Management & Computer Studies.Kotak Mahindra Life Insurance 9. Thane Page 88 .
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