Professional Documents
Culture Documents
ON
Mr. Ramith
Team leader
Bancassurance and Alliances Division
ICICI Prudential Life Insurance Company Ltd
Bangalore.
ACKNOWLEDGEMENTS
I would like to thank Mr. Ramith, Team Leader for his direction, assistance, and guidance.
His recommendations and suggestions have been invaluable for the project. I also wish to thank
Ms. Beena Thomas, Sales Manager, who has given me an opportunity to work with ICICI
Prudential Life Insurance Company Ltd, Bangalore. Thanks are also due to all the Bancassurance
My special thanks to Mr.Y.Lakshman Kumar and the placement committee members for
getting me this Project. I am indebted to Director Prof. Sankaran and all the Faculty Members for
their invaluable academic support throughout the first year, which was really helpful for me in
Regards,
Nirmal J
Batch of 2005
Introduction…………………………………………………………………… 4
Executive Summary…………………………………………………………... 5
Industry Players…………………………………………………………………. 12
Growth Potential……………………………………………………………… 14
Product Portfolio……………………………………………………………… 17
Delivery Channels…………………………………………………………….. 19
Project Objective……………………………………………………………… 20
Questionnaire Preparation…………………………………………………….. 45
Data Analysis………………………………………………………………….. 47
Recommendations………………………………………………………………. 61
Limitations……………………………………………………………………. 62
Conclusion………………………………………………………………………. 63
Annexure……………………………………………………………………… 65
Bibliography………………………………………………………………….. 67
Insurance is a contract between two parties whereby one party called insurer undertakes in
exchange for a fixed sum called premiums, to pay the other party happening of a certain event.
• Life Insurance
• Health insurance and
• General Insurance
Benefits of Insurance
Insurance is the instrument of security, savings and peace of mind. It provide several benefits by
paying a small amount of premium to an insurance company as:
The objective of the study is to analyse the potential of post offices as distribution channels
for selling the pension products of ICICI Prudential.
The data pertaining to the performance of post offices in India, Karnataka and Bangalore in
particular, was collected. Also the household savings and investment patterns over the years has been
collected and analysed.
A questionnaire is prepared to conduct interviews with people visiting the five major post
offices in Bangalore. The five post offices selected for this purpose were GPO, Jaya Nagar HPO,
Basawangudi HPO, Rajaji Nagar HPO and Indra Nagar HPO.
Discussion with the senior postmasters and employees working in key counters such as NSC,
PPF, KVP and POMIS was done. Based on the above study and discussions, it has been found that
post offices offer very good potential for selling the pension schemes.
The following were identified as key parameters for the better performance of this delivery
channel.
And finally, suggestion has been given for improving the performance and participation of post
offices as a delivery channel.
3,000,000
2,500,000
2,000,000
DIRECT
PREMIUMS Non-Life
WRITTEN, 1,500,000
US $ Life
IN MILLIONS
1,000,000
500,000
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
YEAR
% Change % Of total
Non-Life Life
Rank Country Amount from prior world
Premium Premium
year premiums
1 United States 519.9 480.5 1,000.3 10.7 38.08
2 Japan 91.0 354.6 445.6 0.2 16.96
3 United Kingdom 77.0 159.7 236.7 7.9 9.01
4 Germany 74.9 60.9 135.8 9.7 5.17
5 France 44.6 80.4 125.1 8.8 4.76
6 Italy 31.6 52.4 84.1 23.0 3.20
7 South Korea 16.1 39.3 55.4 9.7 2.11
8 Canada 28.5 20.7 49.2 8.6 1.87
9 Spain 20.4 23.8 44.3 21.6 1.68
10 The Netherlands 18.9 20.8 39.8 2.2 1.51
19 India 3.2 12.3 15.5 - 0.59
Source: Swiss Re, sigma, No. 8/2003
40
35
30
25
% OF
TOTAL 20
WORLD
PREMIUM 15
10
0
Kingdom
South Korea
Canada
Netherlands
France
United
Japan
Spain
Germany
India
States
Italy
United
The
1 2 3 4 5 6 7 8 9 10 19
COUNTRY
90,000
80,000
70,000
60,000
50,000
Revenue
in
US$ Million 40,000
30,000
20,000
10,000
0
Nippon Life Insurance
Aegon (Netherlands)
Insurance (Japan)
(Netherlands)
AXA (France)
Prudential (UK)
MetLife (USA)
Generali (Italy)
Aviva (UK)
Insurance (Japan)
Assicurazioni
ING Group
Sumitomo Life
(Japan)
Economy : 5th largest in the world in terms of Purchasing Power Parity (PPP)
GDP Growth Rate : Over 6% per year on an average for the last decade
class population
India is the largest democracy in the world having a population more than one billion. It is
5th largest in the world in terms of purchasing power parity (PPP). India GDP growth rate is over 6
percent per year on average for the last decade and saving rate is around 26 percent of GDP.
The per capita spend on insurance in India is $9, compared with $2,500 in the US and
$50-100 in Southeast Asia. The rise in the number of nuclear families will provide an impetus for
growth. However, this needs to be supported with parallel developments in the industry.
Through India's economic development, it becomes the most lucrative insurance markets in
the world. Before the year 1999 there were monopoly of state run Life Insurance Corporation of
India (LIC) in life insurance sector and General Insurance Corporation of India (GIC) with its four
subsidiaries in general sector. In the wake of reform process and passing Insurance Regulatory
Development Act (IRDA) through Indian Parliament in 1999, Indian Insurance was opened for
private companies. It has been three years since the Indian insurance market has opened up, and the
new entrants into the market have set up shop in every major city.
While the companies have been quite successful in dealing with the first of these challenges using
the existing product features and leveraging the technical know-how of their partners, most are still
grappling with the right channel mix for reaching potential customers.
History
Insurance industries in India have a long history. Life insurance in existing form came in
India from UK in 1818 with Oriental Life Insurance Company. The Indian life Assurance companies
Act, 1912 was the first measure to regulate life Insurance business. Later in 1928 the Indian
Insurance Companies act was enacted, which was amended in 1938. Finally, Government of India
amended this act in 1950. Life Insurance Corporation of India was formed in September 1956 by
passing LIC Act, 1956 in Indian parliament.
The first general insurance company, Triton Insurance Company Ltd. was established in
Calcutta in 1850. In 1957 the General Insurance Council a wing of Insurance Association of India
formed a code of conduct. In 1961 an insurance act was passed to form General Insurance Company
Ltd., which was amended in 1968. General Insurance business was nationalised with effect from
1.1.73 by the General Insurance Business Act. With effect from Dec'2000, the four subsidiaries of
GIC have been de-linked from parent company and made as an independent insurance companies.
The Insurance Act, 1938 had provided for setting up of the Controller of Insurance to act as
a strong and powerful supervisory and regulatory authority for insurance. Post nationalization, the
role of Controller of Insurance diminished considerably in significance since the insurance
companies were owned by the Government.
Tariff Advisory Committee is a statutory body under The Insurance Act, 1938 controls and
regulates the rates, advantages, terms and conditions that may be offered by insurers in respect of
General Insurance Business relating to Fire, Marine (Hull), Motor, Engg. and Workmen
Compensation. Effective 22 July1998, the TAC Board has been reconstituted with seven members
representing the present General Insurance Industry and eight members from government and
Industry. The Controller of Insurance cum Chairman IRDA is the Chairman of TAC.
With the opening up of the insurance industry to the private sector, the need for a strong,
independent and autonomous Insurance Regulatory Authority was felt. As the enacting of legislation
would have taken time, the then Government constituted through a Government resolution an
Interim Insurance Regulatory Authority pending the enactment of a comprehensive legislation.
The Insurance Regulatory and Development Authority Act, 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies, to regulate,
promote and ensure orderly growth of the insurance industry and for matters connected therewith or
incidental thereto and further to amend the Insurance Act, 1938, the Life Insurance Corporation Act,
1956 and the General Insurance Business (Nationalisation) Act, 1972 to end the monopoly of the
Life Insurance Corporation of India (for life insurance business) and General Insurance Corporation
and its subsidiaries (for general insurance business). The act extends to the whole of India and will
come into force on such date as the Central Government may, by notification in the Official Gazette
specify. Different dates may be appointed for different provisions of this Act.
In the first two years of insurance market liberalisation (April 2-December 31, 2001) as much
as 24 private sector companies including joint ventures with leading foreign insurance companies
have entered the Indian insurance sector. Of this, thirteen were under the life insurance category, ten
under general insurance and one in the reinsures category.
Today the Indian general insurance market is valued at Rs 14,000 crore. It is growing at a
rate of 20 per cent and is expected to reach Rs 45,000 crore in about 10 years. Private players have
already gained a 10 per cent share in three years. No mean achievement when compared to the
growth rates of countries like South Korea and Thailand, where the private sector took 15 years to
gain a 15 per cent share of the market.
Life Insurance Corporation, LIC, has lost more than 8% market share after posting a
marginal 1.9% growth in business when compared to the fiscal year 2002-2003, while private
players grew by more than 153% during 2003-04. Despite the flat growth of market leader LIC, the
life insurance industry as a whole grew by a modest 10.5% to mop up Rs 18,710 crore (Rs 187.10
billion) in premium income for new businesses in 2003-04, as against Rs 15,977 crore (Rs 159.77
billion) in 2002-03.
LIC’s market share in terms of premium collection came down to 87% in March end 2004,
from 94.3% in 2002-03, according to data compiled by IRDA. The state-owned insurer mopped up
Rs 16,285 crore (Rs 162.85 billion) in premium from new businesses during 2003-04, which is
marginally higher than Rs 15,977 crore (Rs 159.77 billion) in 2002-03.
LIC mopped up Rs 4,915 crore (Rs 49.15 billion) in March, which is more than one-fourth its
total premium income for the entire fiscal. In contrast to LIC, private players grew by 153% by
mopping up an aggregate Rs 2,425 crore (Rs 24.25 billion) in premium last fiscal and cornered 13%
of the market. The private players had only 5.7% of the market pie in 2002-03.
ICICI Prudential led the chart for private players with a market share of 4% followed by
Birla Sun Life 2.4%, HDFC Standard Life 1.1%, SBI Life 1.1%, Tata AIG, and Allianz Bajaj 1%
each. ICICI Prudential doubled its business to Rs 751 crore (Rs 7.51 billion) last fiscal from Rs 364
crore (Rs 3.64 billion) in 2002-03.
REINSURERS
Asian markets
Asia looks set to continue to deliver some of the world's highest growth rates. With a high
propensity to spend on insurance as income increases, there will be remarkable opportunities for
insurance companies. The changing market landscape suggests competition will further intensify in
Asia's insurance markets, while regulations continue to shift from forms-and-rules-based to
solvency-based regimes. This shift also implies the emergence of financially stronger direct insurers
with more risk taking capability. In addition, Asia's more affluent consumers will demand new
personal lines and investment-linked products, and insurers are now ready to make use of an
efficient mix of distribution channels to reach these customers. While these changing market
dynamics present major challenges, those insurers who are able to see ahead of the game will most
certainly be the winners.
18%
16%
14%
Savings in Provident and Pension
Funds
12%
Savings in Life Insurance Funds
10%
Savings in Shares and Debentures
8%
Net Deposits
6%
Currency
4%
2%
0%
1970-71
1972-73
1974-75
1976-77
1978-79
1980-81
1982-83
1984-85
1986-87
1988-89
1990-91
1992-93
1994-95
1996-97
1998-99
2000-01
The insurance landscape in India is undergoing major change. Closed to foreign competition
since nationalization in 1956, the life insurance industry had been protected from competitive
pressures. Now, with the re-opening of the sector, several new players have entered the scene. The
game is old but the rules are new and still developing. Ensconced in a monopoly run from the
(Nirmal J) (Batch 2003 – 2005) (Bharathidasan Institute of Management - Trichy) 14
nationalization days beginning in 1956, the insurance industry has indeed awakened: to a
deregulated environment in which several private players have partnered with multinational
insurance giants. However, despite its teeming one billion population, India still has a low insurance
penetration of 1.95 per cent, 51st in the world. Despite the fact that India boasts a saving rate of
around 25 per cent, less than 5 percent is spent on insurance.
Competition will surely cause the market to grow beyond current rates, create a bigger "pie,"
and offer additional consumer choices through the introduction of new products, services, and price
options. Yet, at the same time, public and private sector companies will be working together to
ensure healthy growth and development of the sector. Challenges such as developing a common
industry code of conduct, contributing to a common catastrophe reserve fund, and chalking out
agreements between insurers to settle claims to the benefit of the consumer will require concerted
effort from both sectors.
60%
50%
30%
Savings in Physical assets
Financial savings
20%
10%
0%
1970-71
1974-75
1978-79
1982-83
1984-85
1988-89
1990-91
1992-93
1994-95
1996-97
1998-99
2000-01
1972-73
1976-77
1980-81
1986-87
ICICI Prudential Life Insurance Company Limited was incorporated on July 20, 2000. The
authorized capital of the company is Rs.2300 Million. The paid up capital is Rs. 1900 Million. The
Company is a joint venture of ICICI (74%) and Prudential plc UK (26%). ICICI started off its
operations in 1955 with providing finance for industrial development, and since then it has
diversified into housing finance, consumer finance, mutual funds to being a Virtual Universal Bank
and its latest venture Life Insurance.
The Company was granted Certificate of Registration for carrying out Life Insurance
business, by the Insurance Regulatory and Development Authority on November 24, 2000. It
commenced commercial operations on December 19, 2000, becoming one of the first few private
sector players to enter the liberalized arena.
Established in 1848, Prudential plc. of U.K. has grown to be the largest life insurance and
mutual fund company in U.K. Prudential plc. has had its presence in Asia for the past 75 years
catering to over 1 million customers across 11 Asian countries.
Prudential is the largest life insurance company in the United Kingdom. ICICI and Prudential
came together in 1993 to provide mutual fund products in India and today are the largest private
sector mutual fund company in India.
PRODUCT PORTFOLIO
More than 80% of the life insurance business is from Endowment Assurance (Participating),
and Money Back (Participating products). The life insurance products can be broadly classified into
five categories.
Whole life policies cover the insured for life. The insured does not receive money while he is
alive; the nominee receives the sum assured plus bonus upon death of the insured.
Endowment policies cover the insured for a specific period. The insured receives money on
survival of the term and is not covered thereafter.
Pension schemes are policies that provide benefits to the insured only upon retirement. If the
insured dies during the term of the policy, his nominee would receive the benefits either as a lump
sum or as a pension every month.
The following are the latest life insurance products available with ICICI Prudential.
SAVINGS PLANS
• SECUIRE PLUS
• CASH PLUS
• LIFE TIME II
• SAVE 'N' PROTECT
• CASH BAK
PROTECTION PLANS
• LIFE GUARD
PENSION PLANS
• LIFE LINK II
GROUP PLANS
DELIVERY CHANNELS
Insurance has to be sold the world over, and the Asian Market is no exception. The touch
point with the ultimate customer is the distributor and the role played by them in insurance markets
is critical. It is the distributor who makes the difference in terms of the quality of advice for choice
of product, servicing of policy post sale and settlement of claims. In the Asian markets, with their
distinct cultural and social ethos, these conditions will play a major role in shaping the distribution
channels and their effectiveness.
In today's scenario, insurance companies must move from selling insurance to marketing an
essential financial product. The distributors have to become trusted financial advisors for the clients
and trusted business associates for the insurance companies.
The distinction of channels in the developed markets is: personal distribution systems and
direct response systems.
Agents
Brokers
Bancassurance
Work site marketing
Internet
Telemarketing
Direct mail
Call centres
PROJECT OBJECTIVE
To analyse the potential of post offices as a distribution channel for selling the pension
products of ICICI Prudential Life Insurance Company Ltd and providing suggestions for improving
its performance.
The following flow chart briefly depicts the methodology followed to achieve the project
objective.
Data analysis
Interpretations
Conclusion
and Recommendations
Limitations
After the project objective and the methodology were formulated, an exploratory study was
done to identify the key factors that influence a person in pension policy decision-making.
Discussion with industry experts, project guide, bancassurance officials and the general public has
been done. By the end of the discussions, it was found out that the following factors play a major
role for investment in pension schemes.
Life security
Reputation of company
Tax benefits
Income and
Age
National Saving Certificates or NSC as they are more popularly known as is a time-tested tax
saving instrument that combines adequate returns with high safety.
FEATURES
Returns
NSC provides an interest rate of 8.0%, which is compounded half yearly.
Investment Limitation
Min Amount Rs. 100/- and additional investment in multiples of Rs. 100/-
Max Amount No Limit
Denominations Rs. 100/-, 500/-, 1,000/-, 5,000/-, 10,000/-, 50,000/-
Scheme Availability
All through the year.
Tenure of Investment
The NSCs have a maturity period of 6 years.
Premature Encashment
If encashed prematurely, within a year of issue, then only the face value is given. If encashed after a
year but before 3 years, then simple interest on the face value, at the rate applicable from time to
time, will be paid. The difference between the accrued interest and the simple interest is the discount
rate. The Government from time to time specifies the discount rate.
Maturity
The certificate can be encashed from the issuing post office on the due date by simply discharging
the certificates at the back.
Transferability
The certificates are easily transferable from one person to another through the post office. There is a
nominal fee for registering the transfer.
Loans / Withdrawal
One can avail of a loan against the certificates by pledging it to the bank. The bank will have the
NSC assigned in its favour and advance a percentage of up to 75% of face value plus the amount of
accrued interest till the date of taking the loan.
Tax Benefits
Tax benefits are available on amounts invested in NSC under section 88, and exemption can be
claimed under section 80L for interest accrued on the NSC. Interest accrued for any year can be
treated as fresh investment in NSC for that year and tax benefits can be claimed under section 88.
Public Provident Fund or PPF as it is more popularly known is savings cum tax saving
instrument. It also serves as a retirement planning tool for many of those who do not have any
structured pension plan covering them.
FEATURES
Returns
Interest 8.0% p.a. (compounded annually) is credited to the PPF account at the end of each financial
year.
Investment Limitation
Min Amount is Rs. 500/- and additional investment in multiples of Rs 5/-.
Max Amount is Rs. 70,000/-
Scheme Availability
A PPF account can be opened at anytime during the year. It is open all through the year.
Mode of Operation
* Single * Joint (Two or more)
* Minor with parent/guardian * HUF
Nomination
Nomination can be done at the time of opening the account or during the tenor of the account.
Tenure of Investment
15 years from the date of initial investment with a block of 5 years thereafter upto a max of 30 years
incl. 15 years.
Maturity
The PPF account matures after 15 years. One can then exercise on option of continuing the account
for an additional block of 5 years or close it.
Withdrawal
A withdrawal is permissible every year from the seventh financial year of the date of opening of the
account, of an amount not exceeding 50% of the balance at the end of the 4th proceeding year or the
year immediately proceeding the year of the withdrawal, whichever is lower, less the amount of loan
if any.
Tax Benefits
Tax benefits can be availed under sections 88 for the amount invested. Interest accrued is Tax-free.
These are saving instruments that provide interest income similar to bonds and provide better
liquidity by virtue of an exit option after two and half years from the date of allotment. However,
they do not provide any tax relief to the investor.
FEATURES
Returns
KVP Scheme doubles money in eight years and seven months.
Scheme Availability
All through the year.
Mode of Operation
* Single * Joint (Two or more) * Minor with parent/guardian
Tenure of Investment
Money doubles in 8 years & 7 months.
Nomination
Facility is available at the time of opening the account or anytime during the tenure of the
investment.
Premature Encashment
Premature encashment is permitted after 2.5 years from the date of investment. Lower interest
accrued, if prematurely withdrawn.
Maturity
On providing proper identity and by simple discharge of the certificate on the reverse.
Loss of Certificate
If the loss is due to theft, fire or the certificate is mutilated, a duplicate certificate is issued after
proper verification.
Tax Benefits
No Tax benefits are available for investments in this scheme under the Income Tax Act
The scheme is meant for those investors who want to invest a lump sum and earn interest on
monthly basis for their livelihood. The scheme is, therefore, a boon for retired persons.
FEATURES
Returns
P. O. Monthly Income Scheme provides an interest rate of 8.0% per annum, which is paid monthly.
Investment Limitation
Min Amount Rs. 1,000/- and additional investment in multiples of 1,000/-
Max Amount Rs. 3,00,000/- (if Single) or Rs. 6,00,000/- (if held Jointly).
Scheme Availability
All through the year.
Mode of Operation
Single
Joint (Two or more)
Minor with parent/guardian
Minor who has attained age of 10
Depositor can have more than one account in the same post office or in any other.
Tenure of Investment
PO Monthly Income Scheme has an maturity period of 6 years.
Nomination
Facility is there at the time of opening the account or anytime during the tenure of the account.
Maturity
A bonus of 10% is paid at the time of maturity.
Lost of Passbook
A Passbook is issued at the time of opening the account. If the passbook is lost, or it is mutilated, a
duplicate is issued on payment of a charge.
Tax Benefits
Tax benefits can be availed under section 80L. No Tax benefits are provided under section 88.
As the name says it, the RDA is a systematic way of saving money. The scheme is meant for
those investors who want to deposit a fixed amount regularly on monthly basis in order to get a tidy
sum after 5 years on the maturity of the account in his name or jointly with another.
FEATURES
Returns
Amount repayable for an account of Rs. 10 denomination Rs. 728.90 after 5 years.
Investment Limitation
Min Amount Rs. 10/-
Max Amount No Limit
Denominations Rs. 5/-
Mode of Operation
Single
Joint (Two or more)
Minor with parent/guardian
Tenure of Investment
P. O. Recurring Deposit has an investment period of 5 years.
Nomination
Facility is there at the time of opening the account or anytime during the tenure of the account.
Premature Encashment
Is permitted if deposit is more than one year old. The interest rate applicable will be that which is
prevailing at that time.
Maturity
The certificate is to be discharged at the back.
Loss of Passbook
A passbook is issued at the time of opening the account. If there is a loss, theft or the passbook is
mutilated, a duplicate is issued on a charge.
Tax Benefits
Tax benefits can be availed under section 80L. No Tax benefits are provided under section 88.
Just like the bank FDs, these time deposits are meant for those investors who want to deposit
a lump sum for a fixed period. However, one of the major differences from an FD is the option of
getting the interest earned on an yearly basis rather than on maturity.
FEATURES
Returns
Tenure Returns
1 year 6.25%
2 years 6.5%
3 years 7.25%
5 years 7.5%
Investment Limitation
Min Amount Rs. 50/- additional investment to be in multiple of Rs 50/-
Max Amount No Limit
Denominations Rs. 50/-
Scheme Availability
All through the year.
Mode of Operation
Single
Joint (Two or more)
Minor with parent/guardian)
Tenure of Investment
P. O. Time Deposit has an investment option of 1, 2, 3 and 5 years.
Nomination
Facility is available at the time of opening the account or anytime during the tenure of the deposit.
Premature Encashment
(Nirmal J) (Batch 2003 – 2005) (Bharathidasan Institute of Management - Trichy) 31
The account can be closed after 6 months of opening the account. On such closure the amount
invested is returned with/without interest depending on the time the deposit was maintained.
Lost of Passbook
A passbook is issued at the time of opening the account. If the Passbook is lost, or the passbook is
mutilated, a duplicate Passbook is issued on a charge.
Tax Benefits
Exemption within the limits specified under section 80L is available on interest on these deposits.
No Tax benefits are provided under section 88.
A savings deposit in a post office is very similar to a savings account in a bank. It is a safe
instrument to park those funds, which you might need to liquidate fully or partially at very short
notice. Post office savings accounts are especially suited for those living in rural and semi-rural areas
where the reach of banks is very limited.
FEATURES
Returns
P. O. Saving deposit provides an interest rate of 3.5% p.a., which is compounded annually. This is
applicable for individual/joint and group accounts. 3% per annum is rate applicable for public
accounts and Security deposits account.
Investment Limitation
Min Amount Rs. 50/- (for ordinary account)
Rs. 250/- (for account with a cheque book)
Max Amount Rs. 100,000/- (in case of single account holder)
Rs. 200,000/- (in case of a joint account)
Scheme Availability
Mode of Operation
Single
Joint (Two or more)
Minor with parent/guardian
Nomination
Nomination can be done at the time of opening the account or during the running of the account.
Tenure of Investment
The P.O. savings account is a savings account and money can be deposited or withdrawn at any time.
Encashment
Withdrawal can be made at anytime after opening the account. Interest is calculated for each
calendar month on the lowest balance in the credit of the account between the close of 10th day and
the last day of the month. Cheques can be issued when required. The account can be closed anytime
by simply giving a letter.
Loss of Passbook
If the loss is due to theft, fire or the passbook is mutilated; a duplicate is issued through proper
verification. A nominal charge is levied for issue of a duplicate passbook.
Tax Benefits
Interest from P.O. Savings deposit is tax-free.
FEATURES
Returns
8.0% per annum.
Investment Limitation
Min Amount Rs 1000/-
Max Amount Maximum amount cannot exceed the total retirement benefits.
Tenure of Investment
The Scheme has a maturity period of 3 years.
Tax Benefits
Interest is Tax-free.
ICICI Prudential Life Insurance believes in the philosophy of providing meaningful and
comprehensive insurance solutions to plan your retirement. Our insurance solutions are the most
optimal tools to plan your retirement because they give you Safety, Liquidity, Tax benefits, Health
cover and Life protection and thus ensure that you are comprehensively covered.
Under the free look period, you now have the flexibility to review your policy. If, during this
period, you wish to return your policy after reviewing the terms and conditions, you may do the
same, by returning the original policy certificate, the policy document and a letter stating the reasons
for the return. We shall refund the premium paid by you, after deducting certain charges. These
charges include a proportionate risk premium for the period of cover, the stamp duty on the policy
and/ or any expenses borne by the Company on the medical examination. In case of a market-linked
policy, your units will be repurchased by us at the unit value determined on the Valuation Date
following the date of cancellation after deducting the charges
Suitability
This plan provides regular income for your life from a specific date, which can be selected by you.
The amount you are going to receive would completely depend upon the premiums you pay, the
market value of your investment and the option of the annuity chosen.
Salient Features
It is a pension plan that provides the benefit to you to invest your money in market-linked funds.
During the deferment period when, a part of the premium is used to pay for the initial charges and
the rest would be invested in the plan of your choice. Entry into the plan will be based on the Unit
Value applicable on the date of issuance.
Flexibility Options
Choice of Retirement Date: You have the flexibility to start your pension whenever you want after
a stipulated age. A choice that lets you make the best of the market conditions by timing the start of
your pension.
Switch between funds: During the deferment period you can switch between the various plan
options to take advantage of the prevailing market conditions or with the change in your priorities.
You can do one free switch every year.
Top-up of Investments: During the deferment period you have the option of increasing your
investment with top-ups (minimum amount of Rs10, 000).
Minimum Premium
The minimum premium in this plan is Rs10, 000
MODE PREMIUM
Yearly Rs.10,000
Half-yearly Rs.5,000
Quarterly Rs.2,500
Monthly Rs.833
Other Conditions
Term of the product is 3 years.
Minimum age at entry : 18 years
Maximum age at entry : 62 yrs
Vesting age is between 50 and 70 years of age
Suitability
This policy provides continuous flow of income for your life from a date, which can be chosen by
you. The amount you receive would depend upon the premiums you pay, the market value of your
investment and the option of the annuity chosen.
Salient Features
It is a pension plan that provides the benefit to you to invest your money in market-linked funds.
During the deferment period when you pay the premiums, a part of the premium is used to pay for
the death benefit (if any) opted by you and the rest would be invested in the plan of your choice.
Entry into the plan will be based on the Unit Value applicable on the date of issuance.
Benefits
Death Benefit
In case of the unfortunate event of death, your spouse would get the higher of the death benefit
chosen by you or the value of your units as on that date. Your spouse would have the option to either
take the higher of the death benefit or the value of units or opt for an annuity.
Flexibility Options
Choice of Retirement Date: You have the flexibility to start your pension whenever you want after
a stipulated age. A choice that lets you make the best of the market conditions by timing the start of
your pension
Minimum Premium
The minimum premium in this plan is Rs10, 000
MODE PREMIUM
Yearly Rs. 10, 000
Half-yearly Rs. 5, 000
Quarterly Rs 2, 500
Monthly Rs 833
Other Conditions
(Nirmal J) (Batch 2003 – 2005) (Bharathidasan Institute of Management - Trichy) 38
Term of the product is 10 years.
Minimum age at entry : 18 years
Maximum age at entry: 60 yrs
Maximum age of vesting : 50 years
The following features are common to both ICICI Pru Life Time Pension and ICICI Pru Life
Link Pension schemes.
Benefits
Annuity Benefit
On the date of vesting (retirement), you start receiving a regular income for life. This amount would
depend upon the annuity option chosen by you and the value of units as on the vesting date. The
annuity would also depend upon the annuity rates offered by the company as on that date and are not
guaranteed. At vesting, you will have the option of taking up to 25% of the value of units at the time
of vesting as lump sum. The remaining will be used to provide with a regular stream of income for
life.
Tax benefit
Up to Rs10, 000 deducted from your taxable income.
Choice of Plans: You have the option to choose between our Growth Plan, Income Plan or Balanced
Plan.
Maximiser (Growth) Plan: This plan offers you the benefit of long-term capital appreciation from a
portfolio that is primarily invested in equity and equity linked securities.
Protector (Income) Plan: This plan offers you steady returns with a portfolio that primarily
invested in debt and debt related securities.
Balancer (Balanced) Plan: This plan offers you the flexibility of growth and steady returns with the
portfolio being invested in a mix of equity and fixed income securities.
Additional Features
Critical Illness Benefit - in this rider, in the event of the life assured contracting a critical illness an
additional payment equivalent of the sum assured under the rider would be made. The advantage of
this is that it is a standalone rider and the cover is available up to a maximum of 65 years of age.
Claims for critical illness is not admitted for the first 6 months of the policy. This benefit is payable
on the life assured surviving 28 days from such diagnosis.
Major Surgical Benefit - this is a cover available against the Major Surgical Procedures. Depending
upon the surgery 50%, 30% or 20% of the Sum Assured under the rider is been paid. This provides
the cover for the term subject to a maximum of 65 years. Claim for this rider is not admitted for the
first 6 months of the policy.
Accident and Disability Benefit - on death due to accident the nominee gets additional sum assured
under the rider. In case of accident death while travelling by mass surface transport, the nominee will
get twice the sum assured under the rider. Accidents can also temporarily impair one’s capacity to
earn, in such an event of total and permanent disability 10% of the sum assured is paid out every
year for 10 years. Also the premiums for the base policy are waived to the extent of the rider cover.
Charges
The initial administrative charges are linked to the single premium paid. For premium between
Rs.40,000/- and Rs.99,999/- it is 2% of the premium. For premiums between Rs.1,00,000/- and
4,99,999/- it is 1.5% and for Rs. 5,00,000/- and above it is 1.25% of the premium.
Other Charges: Annual administrative charges of 1.00% p.a. of net assets for protector (Income) and
1.25% p.a. for Maximiser (Growth) and Balancer (Balanced) options. Annual investment charge of
0.5% p.a. of the net assets for Protector and 1% p.a. of the net assets for Maximiser and Balanced.
Suitability
The plan is ideal for people who are currently not in any pension schemes but want to provide
regular income for life after a predetermined date. The amount you receive depends on the premium
you pay till the predetermined date and the option you choose. It also offers life cover during the
deferment (i.e., premium paying) phase.
Salient Features
The policy is a deferred pension plan wherein pay premiums during the deferment period to
purchase an annuity at the end of deferment period. The amount you receive depends on the
premium you pay till the stipulated date and the option you choose. It also offers life cover during
the deferment (i.e., premium paying) phase.
The plan provides for 4 annuity options, which can be exercised at any time within 6 months of the
vesting date.
Life annuity: annuity for life
Life annuity certain for 5, 10, 15 years: Annuity is paid for chosen term and for life thereafter
Life annuity with return of purchase price: life annuity with return of purchase price on death to the
beneficiary
Joint Life, last survivor annuity with return of purchase price: life annuity to you and then to your
spouse with return of purchase price to the beneficiary on death of last survivor
Policyholder has the option to pay a single premium or spread the premium payment over the
deferment period.
One or more of the following add ones can be opted along with the policy, at the time of taking the
basic policy, at a marginally incremental cost:
Benefits
On Survival
On vesting date insured has the option of taking 25% of the aggregate of the sum assured,
guaranteed additions and vested bonuses as an immediate lump sum. And utilise the remaining 75%
to provide an annuity. Annuity payment depends on the type of option chosen.
On Death
(Nirmal J) (Batch 2003 – 2005) (Bharathidasan Institute of Management - Trichy) 42
On death during the deferment phase, a regular income stream is automatically provided to the
insured's spouse. If the spouse is not alive a lump sum amount is paid to the nominees. The amount
of annuity payable is determined on the basis of the sum assured plus guaranteed additions plus
vested bonuses (if any) as on the date of death.
Riders
Accident & Disability benefit
Additional SA is payable if death is due to an accident
Waiver of payment of premiums on disability due to accident
10% of amount of cover payable every year for 10 years from date of disability
Additional amount of cover if accidental death occurs while travelling as a passenger in a train or
bus.
Other Conditions
Regular Premium Single Premium Policy
Minimum age to apply 18 32
Maximum age to apply 60 62
Minimum sum assured Rs. 50,000/- Rs. 50,000/-
Minimum term is 5 Years 3 years to max 15 years
Vesting age 45 to 65 years 45 to 65 years
Suitability
Salient Features
It is a single premium policy wherein lump sum amounts as a percentage of single premium are paid
at the end of every year till the date of maturity. The percentage depends on amount of single
premium
No proof of age, bank statements or any other documents required.
Policy can be availed for 5 or 7 years.
Benefits
Survival benefits till maturity
An amount equal to 8.55% to 9.05% of the single premium is paid at the end of every year as
survival benefits till maturity, starting from the end of first year.
On maturity date entire amount of premium is paid back to the policyholder.
On Death
On death occurring after the first policy year, the nominee will receive 110% of single premium
paid.
In case of death during the first policy year an amount equal to single premium is paid, however if
the cause of death is an accident then an amount equal to 110% of single premium is paid.
Other Conditions
Minimum sum assured : Rs. 50,000
Maximum sum assured : Rs. 50,00,000
Minimum age at entry : 07 years
Maximum age at entry : 62 years
Maximum age at maturity : 65 years
The comparison between the two schemes was done based on the following parameters.
Duration of investment
(Nirmal J) (Batch 2003 – 2005) (Bharathidasan Institute of Management - Trichy) 44
Tax benefits
Risk of the investment
Return on the investment
It was identified that the following postal schemes have similar features as that of pension policies of
ICICI Prudential.
NSC
PPF
KVP
POMIS
Initially efforts were made to collect data from the specified post offices on the various postal
schemes over a period of five years. Since the procedure involved to collect the data was
complicated and time consuming, it was decided to get the data from Internet. The data pertaining to
the postal schemes were collected from the website www.indiastat.com.
QUESTIONNAIRE PREPARATION
Based on the findings of the exploratory study, a questionnaire was prepared to get the response
from the postal customers. The following points were kept in mind while framing the questions.
The sample size for the survey was taken as 50 and the target was to get ten samples in each
of the five post offices. The duration of the survey was 3 weeks. The target population was of course,
the walk in customers of the post offices. Randomised sampling procedure was used.
The ICICI Prudential logo was moved from the front page to the flip side of the
questionnaire.
The order of the questions was modified so as to have a sequence.
The survey was conducted over a period of three weeks in all the five post offices. Due care
has been given in selecting the respondents so that the sample represents the total population.
Responses from different age groups and with different income levels were collected.
DATA ANALYSIS
Data analysis was done with the help of the following software packages.
SPSS
The amount invested in the National Savings organisation (NSO) right from 1977 was
collected. A graph was drawn with the data collected and it reveals that the savings in NSO by the
Indian public has made a good progress over the years. Most of the investments in NSO were done
through post offices. This shows that post offices as an investment avenue has a huge potential in the
future.
50000
45000
40000
35000
30000
Rs. in crores
25000
20000
15000
10000
5000
0
1978-79
1979-80
1980-81
1981-82
1982-83
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1993-94
1994-95
1995-96
1996-97
1998-99
1999-00
1977-78
1983-84
1992-93
1997-98
2000-01 (Provisional)
The data collected from 1998-99 to 2000-01 for investments in NSC in various districts of
Karnataka shows that Bangalore Division is the top performer. Bangalore is in the second place and
next comes Mysore division. Belgaum Division stood fourth.
100000
90000
80000
70000
60000
Rs. in Lakhs
50000
40000
30000
20000
10000
Udupi
Koppal
Kola r
Bidar
Haveri
Bellary
Gadag
Kodagu
Mandya
Tumkur
Dharwad
Mysore
Hassan
Bija pur
Bagalkot
Raichur
Belg aum
Shimoga
Gulb arga
Bangalo re
Davanagere
Chit radurga
Chikmagalu r
Uttara Kannada
Bangalo re (R)
Dakshin a Kannada
Mysore Divisio n
Chamaraja Nagar
Belg aum Division
Age profile
The age profile of the customers is broadly classified into three categories.
The pie chart shows the percentage of respondents in each category. The average age of the people
surveyed is thirty-seven.
AGE PROFILE
Age 31 - 45
44%
Average age is 37
Income profile
INCOME
54%
16%
8%
22%
Importance of pension
IMPORTANCE OF PENSION
6%
8%
86%
The bar chart gives the awareness about the various pension players among the post office
customers. Out of the thirteen players in the market, respondents are aware of only six of them. They
are LIC, ICICI Prudential, Tata AIG, HDFC, Alliance Bajaj and OM Kotak. Among the private
players, respondents are more aware of ICICI Prudential than others.
HDFC 8%
Bajaj 2%
Kotak 2%
Tata 12%
LIC 86%
The data collected from the survey tells us that only thirty-six percent of the respondents
were invested in pension. Thirty percent have invested in LIC and only eight percent in ICICI
Prudential. The bar chart for the same is given below.
INVESTMENT IN PENSION
Bajaj 2%
ICICI 8%
LIC 30%
The customers preferred investment was studied and it was found that investment in house
and getting regular rent was the most preferred. The investment option in the order of preference by
post office customers and the bar chart is as follows.
Gold and
108
Ornaments
The data analysis reveals that the post office customers are ready to take moderate to
absolutely risk free investments. This tells us that they are conservative in choosing the investment
option. They are very cautious in preserving the capital from being eroded. The risk taking ability of
the customers can be generalised and can be seen from the bar chart.
18 17 20
18
16 18
14 15
14 16
No. of pe rsons
14
No. of persons
12
12
10 10
8 10
8
6 8
6 5 6
6
4 4
2 2 1
0 0
1 2 3 4 5 1 2 3 4 5
Rank Rank
18 17 25 23
16
14
14 20
12
No. of persons
No. of persons
12
15
10
8 9
10
6 5
6 6 6
4 5
2
2
0 0
1 2 3 4 5 1 2 3 4 5
Rank Rank
25 120
20 100 85 81
80 68
15
60
10 7
4 4 40
5
0 20
0
0
1 2 3 4 5
Absolutely Slightly risky Moderate risk High risk Very high risk
Rank risk free
Data analysis was done to identify the popular postal schemes among the post office
customers. The study reveals that NSC was the most popular investment because of its tax benefits
under section 88 of IT Act and a relatively low investment period of six years. The next popular
scheme was PPF and then POMIS. KVP is the fourth preferred scheme among the postal schemes.
So it is very important for ICICI Prudential to concentrate on the first four schemes and try to attract
those customers.
35
31
30
25
No. of persons
20
20
15
11
10
7
5 3
1
0 0
0
NSC PPF KVP POMIS PORD POTD POSA DSRGE
The analysis of the data tells us that the following factors play a major role for investment in
pension schemes.
• Life security
• Reputation of company
• Tax benefits
• Annual savings
• Income
• Age
350
312
294
300
260
250 228
200 186
Points
170
154
150
93
100
50 35
0
Family size
Tax benefits
savings
Life security
of company
Income
Education
Gender
Reputation
Annual
Age
Factors
The analysis of the survey has given many valuable insights about the profile of the post
office customers and their perception about pension schemes. The findings of the survey were listed
in the form of points below.
Only forty percent of the post office customers have awareness about ICICI Prudential’s
pension products. This is very less when compared to LIC’s eighty-six percent. But the
encouraging aspect is that ICICI Prudential is just three years old in the insurance business
and it is second only to LIC in terms of awareness with post office customers.
Almost eighty-six percentage of the post office customers felt that investment in pension
schemes is very important. The critical fact is that only thirty-six percent have already
invested in pension schemes. This provides room for ICICI Prudential to penetrate in the
segment of post office customers.
The risk taking ability of the customers can be categorised into slightly to moderate risk
taking zone. This shows that they are not too conservative and hence are good prospective
customers for the pension products of ICICI Prudential.
Another encouraging finding is that investment in pension is the second preferred investment
option and is next only to investment in house.
The household income of the people surveyed tells us that seventy-eight percentage of them
have household income greater than one lakh. The pension products are really suitable for
this income class because they can save tax upto a maximum of Rs. 3300/- U/S 80CCC(1)
by investing in pension schemes.
NSC, PPF, POMIS and KVP are the most preferred postal schemes by the majority of the
customers. Out of the four schemes, only NSC and PPF have tax benefits U/S 88. It was
found that most of the people invested in pension schemes have also invested in one of the
above four postal schemes.
The above finding is very important in the sense that the cooperation of the employees at
these counters is very crucial for ICICI Prudential to sell its pension products successfully.
Hence the bancassurance officials should maintain good relationship with these employees of
post offices.
Now comes the important aspect of visibility of banners in post offices. Only forty-six
percent of the people surveyed said that they had seen the banners in post offices. This tells
us that the visibility of advertisement and banners in post offices has to be improved. Due
care should be given while placing the banners, such that it is visible to the persons standing
in the counters of NSC, PPF, POMIS and KVP.
Only twenty-four percent of the customers are aware of the fact that ICICI Prudential Life
Insurance Company has tie-up with India Post for selling their pension schemes. Something
needs to be done to improve this, since awareness about the tie-up creates a positive impact
in the minds of the customers and their perception about the company.
The most disturbing aspect of the finding is that not even a single referral comes from the
postal employees. The contribution from the employee’s side is very important for the
success of this distribution channel.
Life security
Reputation of company
Tax benefits
Annual savings
Income
Age
To improve the performance of post offices as a distribution channel for selling pension
products, the following recommendations will be helpful. The suggestions were made based on three
critical aspects of this distribution model.
The visibility of banners in and around post offices has to be improved. This is obvious from
the findings that only forty-six percent of the people surveyed said that they had seen the banners in
post offices. The following suggestions can be considered to improve on this aspect. Due care should
be given for
• Placing the banners, such that it is visible to the persons standing in the counters of NSC,
PPF, POMIS and KVP.
• The place at which the advisor sits in a post office is very important. He should be seated in a
place where maximum walk-ins are there. The ideal place should be the entrance of the post
office as in the case of Jaya Nagar and Rajaji Nagar.
• Provide other services, for example tax consultation and financial planning, to walk-in
customers of post office.
Product Awareness
The awareness about the pension products and its features among the PO customers are not
satisfactory. It cannot be improved suddenly and has to be done over a period of time through
various promotional tools. Some of the promotional methods are suggested below.
Tie-up with newspaper and magazine agents can be considered. A brief notice about the product
features and the contact number of the advisor can be inserted along with the newspapers and
magazines. This is a very effective tool since the reach is very good and is cost effective.
Tie-Up awareness
The postal schemes are perceived by the customers as highly secured and absolutely risk
free. Thus the tie-up awareness will make the customers to perceive that ICICI Prudential’s products
are trustworthy and risk free, which is already so. Hence the customer awareness about the tie-up
between PO and ICICI Prudential is very crucial for selling the pension products. But according to
the survey, the finding shows that the awareness level is very poor and needs improvement. This can
only be done with the participation of the postal employees, which is absolutely not there at present.
As discussed previously, the participation of the postal employees is very crucial in the
progress of this distribution channel. At present, their participation level is absolutely nothing except
in very few cases. There are a lot of motivational issues involved in this. The following suggestions
can be implemented to improve the employee participation.
Arrange some contest sort of things and send the winners to a holiday resort or compensate
them with money.
Conduct meetings regularly with the postmasters and the employees in the counters of NSC,
PPF, KVP and POMIS. This will make them feel as part of ICICI Prudential team and will
improve there involvement.
The relationship between the ICICI Prudential advisors and the employees of post offices can
also improve their participation level.
The sample size for the survey is less when compared to the total population. The sample
size was reduced keeping in mind the duration of the project, the manpower constraints and
the target population.
The data pertaining to the various postal schemes of the five post offices were not collected
because of some procedural difficulties. Hence, the secondary data was collected through
Internet and the findings might not be latest.
The post office model is the latest distribution model adapted by ICICI Prudential. It was
initiated only on November’2003 and is just seven months old. There is no doubt that the post
offices in Bangalore offer huge potential for ICICI Prudential for selling its pension schemes.
The stakeholders of this channel are employees of both ICICI Prudential and post offices and
the post office customers. As observed from the findings, the participation, involvement and
dedication of the stakeholders are very important.
Finally, the quality of the service provided by the advisors is also very important because
they are the ambassadors of the company. The pension products are long term one and the customers
are associated with the company for a minimum period of four years to throughout their life. Thus
the advisors should not only be focussed in achieving the targets but also in providing after sale
services and maintaining good customer relationship.
1) Name some companies that come to your mind when you think of pension schemes.
--------------------------------------------------------------------------------------------------------------------
2) How important is it for you to allocate a certain amount of your income for the retirement
benefits?
Not important Neutral Very important
1 2 3 4 5 6 7
Yes No
4) Rank (1, 2, 3…) the following risk-return scenarios based on your ability to take risk.
5) Rank (1, 2, 3…) the following investment options based on your priority.
Yes No
9) Please tick the various postal schemes in which you have already invested.
10) Have you seen ICICI Prudential Life Insurance Company’s banner, posters in post offices?
Yes No
11) Are you aware of the fact that ICICI Prudential Life Insurance Company has tie-up with
India Post for selling their pension schemes?
Yes No
12) Does any postal employee referred you to ICICI Prudential Life Insurance Company’s official
sitting at the desk?
Yes No
13) Please rate the relative importance of the following factors you consider in selecting a pension
policy
a) Age 1 2 3 4 5 6 7
b) Gender 1 2 3 4 5 6 7
c) Income 1 2 3 4 5 6
7
d) Family size 1 2 3 4 5 6 7
e) Annual savings 1 2 3 4 5 6 7
f) Tax benefits 1 2 3 4 5 6 7
g) Life security 1 2 3 4 5 6 7
h) Reputation of company 1 2 3 4 5 6 7
i) Education 1 2 3 4 5 6 7
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Websites
www.internationalinsurance.org
www.themanagementor.com
www.timesofmoney.com
www.iciciprulife.com
www.bimaonline.com
www.censusindia.net
www.indiastat.com
www.mib.com
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