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A Comparative Analysis of ULIP of Bajaj Allianz Life Insurance

Co. Ltd with Mutual Fund

MINI PROJECT REPORT

Submitted by
RAJEEV JOSEPH
REG.NO:08BA020
1st Year MBA
KARUNYA UNIVERSITY

Under the guidance of

Ms. P.M. ANUSHIA


LECTURER

KARUNYA SCHOOL OF MANAGEMENT


KARUNYA UNIVERSITY
COIMBATORE – 641114

Karunya School of Management, Coimbatore


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2008-2010

DECLARATION

I, Rajeev Joseph, do hereby declare that this project work entitled “A


Comparative Analysis of ULIP of Bajaj Allianz Life Insurance Co. Ltd with
Mutual Fund” is an outcome of my study and is submitted in partial fulfillment of
the requirement for the award of the degree of Master of Business Administration,
Karunya University.

I also declare that this report has not been submitted by me fully or partially
for the award of any degree, diploma, title, recognition or any other fellowship of
any other university before.

Place: Changanacherry

Date: 21-06-2009 RAJEEV JOSEPH

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ACKNOWLEDGEMENT

Initially, let me thank the almighty God for guiding me all through the project
work.

I express my deep and sincere gratitude to Ms. P.M. Anushia, Faculty guide for
providing the necessary assistance for the project.

I sincerely acknowledge my gratitude to Mr. Justin Paul, Branch Manager of


Bajaj Allianz Life Insurance Company Ltd, Changanacherry branch and Mr.
Biju Sebastian ,Sales Manager for giving me an opportunity to do this project.

I also owe my sincere thanks to all the staff in Bajaj Allianz Life Insurance
Company Ltd, Changanacherry branch, and the faculties of the Department of
Business Administration, KARUNYA UNIVERSITY for their valuable
guidance and suggestion in the preparation of this report and completing the
same successfully.

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CHAPTER CONTENT PAGE No:

1 Executive Summary 1

Introduction 2

Objectives 3

Limitation 3

2 Indian Insurance Industry 4

3 Industry Profile 11

Unit Linked Insurance Policy (ULIP) 15

Mutual Fund 22

4 Data Interpretation and Analysis 41

Findings and Suggestion 71

Conclusion and Recommendations 73

Bibliography 74

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5 Annexture 78

EXECUTIVE SUMMARY

“A comparative Analysis of ULIP plans of Bajaj Allianz Life Insurance with mutual funds
in Changanacherry Branch” an analysis to be done be by Rajeev Joseph, student(MBA) of
Karunya University, Coimbatore.

Total Investment scenario is changing, in past people were not interested in investment because
there were no good options available for investment. Now there are many options available for
investment like life Insurance, Mutual fund, Equity market, Real estate, etc.
Today people want more services and more return on their investment. So, most of the insurance
companies are providing more value – added services with the basic insurance operation.
Another option for investment available is Mutual Fund. Mutual Funds are providing good
returns. So while investing people tend more to words mutual fund as they are providing more
returns than Insurance also, with a good investment portfolio. Mutual fund companies are
providing more liquidity.
The project was taken to know about, what are the main aspects in Bajaj Allianz Life Insurance
Company, and its USP (Unique Selling Preposition).Which gives it highest business and

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customers. Customers always prefer to invest in a good option and in a company which is market
leader.
After survey and analysis I came to know that most of the people go for ULIP insurance policies
to cover the risk of life, and invest it in a good Portfolio but there is big portion of customers
have taken the policies to save the taxes. And people are aware about the tax benefits they get for
insurance policies. Therefore, while investing in any Investment option investor checks whether
his money is safe or not, Mutual funds provides good returns but investments are directly
exposed to risk. As in ULIP returns are related to stock market but they are having some
insurance benefit and IRDA regulates the investment.

Many people are getting the tax benefits in ULIP. In Mutual Fund they have to invest their
money in tax saving funds to get the tax benefit.

INTRODUCTION

To make comparison of ULIP plans with Mutual funds in Bajaj Allianz Life Insurance Co. Ltd.
and to Create awareness about Unit Linked Insurance Plan (ULIP) Benefits. The overall goal of
this project was to create awareness about investments. The Above problem arises because every
life insurance company has their products having different positive and negative aspects.

Life Insurance is booming sector in today’s economy. So the responsibilities of the insurance
companies have been increased as compare to the past. Because in past people were taking
insurance policies for protection tool only. In present scenario insurance sector is providing more
services with the basic life insurance. Bajaj Allianz Life Insurance has number of products,
which gives the right way to save the money and earn good profit by invested premium. Today
people want more services and more return on their investment. So this insurance company is
providing more value – added services with the basic insurance operation.

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By doing this type of study in this Insurance sector and looking at the vast scope and opportunity
to study this booming field of Life Insurance and the growing awareness among the public
regarding insuring their life through Life insurance policies as well as the growing contribution
of Insurance in GDP of country with the number of private players making entrance in this
booming industry of Insurance.

A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is then invested in capital market instruments such as
shares, debentures and other securities. The income earned through these investments and the
capital appreciations realized are shared by its unit holders in proportion to the number of units
owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed basket of securities at a
relatively low cost.

OBJECTIVES

✔ To understand the reason for which customers prefer ULIP as one of the best insurance
investment mode rather than Mutual fund.

✔ To find the significance difference between customers of different income with that of
investment mode.

✔ To Compare Investment Options of customers in ULIPs and Mutual Funds.

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LIMITATIONS

✔ The middle class people do not know basic concept of ULIP so creating awareness is a
big challenge for me.

✔ The findings of my research is from a small sample size.

✔ Narrow minded thinking of middle class people as investment is not their cup of tea.

✔ Many customers are thinking that investment in share market is very risky. As ULIP and
Mutual fund both are related to share market.

✔ A general preference to LIC and SBI over private players.

✔ Hesitations on the part of respondents to disclose financial information.

INDIAN INSURANCE INDUSTRY


The history of life insurance in India dates back to 1818 when it was conceived as a means to
provide for English Widows. Interestingly in those days a higher premium was charged for
Indian lives than the non-Indian lives as Indian lives were considered more riskier for coverage.
The Bombay Mutual Life Insurance Society started its business in 1870. It was the first company
to charge same premium for both Indian and non-Indian lives. The Oriental Assurance Company
was established in 1880. The General insurance business in India, on the other hand, can trace its
roots to the Triton (Tital) Insurance Company Limited, the first general insurance company
established in the year 1850 in Calcutta by the British. Till the end of nineteenth century
insurance business was almost entirely in the hands of overseas companies.Insurance regulation

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formally began in India with the passing of the Life Insurance Companies Act of 1912 and the
provident fund Act of 1912. Several frauds during 20's and 30's sullied insurance business in
India. By 1938 there were 176 insurance companies. The first comprehensive legislation was
introduced with the Insurance Act of 1938 that provided strict State Control over insurance
business. The insurance business grew at a faster pace after independence. Indian companies
strengthened their hold on this business but despite the growth that was witnessed, insurance
remained an urban phenomenon.

The Government of India in 1956, brought together over 240 private life insurers and provident
societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC)
was born. Nationalization was justified on the grounds that it would create much needed funds
for rapid industrialization. This was in conformity with the Government's chosen path of State
lead planning and development.The (non-life) insurance business continued to thrive with the
private sector till 1972. Their operations were restricted to organized trade and industry in large
cities. The general insurance industry was nationalized in 1972. With this, nearly 107 insurers
were amalgamated and grouped into four companies- National Insurance Company, New India
Assurance Company, OrientalInsurance Company and United India Insurance Company. These
were subsidiaries of the General Insurance Company (GIC).The general insurance business was
nationalized after the promulgation of General Insurance Business (Nationalizations) Act, 1972.
The post-nationalization general insurance business was undertaken by the General

Insurance Corporation of India (GIC) and its 4 subsidiaries:

Oriental Insurance Company Limited; New India Assurance Company Limited; National
Insurance Company Limited; and United India Insurance Company Limited.

Some of the important milestones in the life insurance business in India are:

1850:

Non life insurance debuts with triton insurance company.

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1870:

:Bombay mutual life assurance society is the first Indian owned life insurer

1912:

The Indian Life Assurance Companies Act enacted as the first statute to regulate the life
insurance business.

1928 :

:The Indian Insurance Companies Act enacted to enable the government to collect statistical
information about both life and non-life insurance businesses.

1938:

Earlier legislation consolidated and amended to by the Insurance Act with the objective of
protecting the interests of the insuring public.

1956:

245 Indian and foreign insurers and provident societies taken over by the central government and
nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital
contribution of Rs. 5 Crore from the Government of India. The General insurance business in
India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first
general insurance company established in the year 1850 in Calcutta by the British.

Some of the important milestones in the general insurance business in India are:

1907:

The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of
general insurance of India.

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1957 :

General Insurance Council, a wing of the Insurance Association of India, frames a code of
conduct for ensuring fair conduct and sound business practices.

1968 :

The Insurance Act amended to regulate investments and set minimum solvency margins and
the Tariff Advisory Committee set up.

1972 :

The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance
business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into
four companies’ viz. the National Insurance Company Ltd., the New India Assurance Company
Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC
incorporated as a company.

1993: Malhotra Committee- headed by former Finance Secretary and RBI Governor R.N.
Malhotra- was formed to evaluate the Indian insurance industry and recommend its future
direction. The Malhotra committee was set up with the objective of complementing the reforms
initiated in the financial sector.
1997 : Insurance regulator IRDA set up.

2000: IRDA starts giving licenses to private insurers:Kotak Life Insurance ,ICICI potential and
HDFC standard Life insurance are the first private insurers to sell a policy.

2001: Royal Sundaram Alliance first non life insurer to sell a policy 2002 Banks allowed to sell
insurance plans.

INSURANCE MARKET –PRESENT

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The insurance sector was opened up for private participation seven years ago. For years now,
the private players are active in the liberalized environment. The insurance market have
witnessed dynamic changes which includes presence of a fairly large number of insurers both
life and non-life segment. Most of the private insurance companies have formed joint venture
partnering well recognized foreign players across the globe.

LIFE INSURANCE COMPANIES

Sl. No. Insurer Foreign Partners

1 HDFC Standard Life Insurance Co. Ltd. Standard Life Assurance, UK


2 Standard Life Assurance, UK New York Life, USA
3 ICICI-Prudential Life Insurance Co. Ltd. Prudential , UK
4 Om Kotak Life Insurance Co. Ltd. Old Mutual, South Africa
5 Birla Sun Life Insurance Co. Ltd. Sun Life, Canada
6 Tata-AIG Life Insurance Co. Ltd. American International Assurance Co.,
USA
7 SBI Life Insurance Co. Ltd. BNP Paribas Assurance SA, France
8 ING Vysya Life Insurance Co. Ltd. ING Insurance International B.V.,
Netherlands
9 Allianz Bajaj Life Insurance Co. Ltd. Allianz, Germany
10 Metlife India Insurance Co. Ltd. Metlife International Holdings Ltd., USA
11 Reliance Life Insurance Co. Ltd.

12 AVIVA Aviva International Holdings Ltd., UK


13 Sahara Life Insurance Co. Ltd.

14 Shriram Life Insurance Co. Ltd. Sanlam, South Africa

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15 Bharti AXA Life Insurance Co. Ltd. AXA Holdings, France
16 Future Generali India Life Insurance Pantaloon Retail Ltd.; Sain Marketing
Company Ltd Network Pvt. Ltd. (SMNPL), Generali,
Italy
17 IDBI Fortis Life Insurance Company Ltd. Fortis, Netherlands
18 Canara HSBC OBC Life Insurance HSBC, UK
Company Ltd.
19 Aegon Religare Life Insurance Company Religare, Netherlands
Ltd.
20 DLF Pramerica Life Insurance Co. Ltd. Prudential of America, USA
21 Life Insurance Corporation of India

TOP 10 LIFE INSURANCE COMPANIES IN INDIA


LIC (Life Insurance Corporation of India) still remains the largest life insurance company
accounting for 64% market share. Its share, however, has dropped from 74% a year before,
mainly owing to entry of private players with innovative products and better sales force.

ICICI Prudential Life Insurance Co Ltd is the biggest private life insurance company in India. It
experienced growth of 58% in new business premium, accounting for increase in market share to
8.93% in 2007-08 from 6.97% in 2006-07.

Bajaj Allianz Life Insurance Co Ltd has reported a growth of 52% and its market share went up
to 6.98% in 2007-08 form 5.66% in 2006-07. The company ranked second (after LIC) in number
of policies sold in 2007-08, with total market share of 7.36%.

SBI Life Insurance Co Ltd in terms of new number of policies sold, the company ranked 6th in
2007-08. New premium collection for the company was Rs 4,792.66 crore in 2007-08, an
increase of 87% over last year.

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Reliance Life Insurance Co Ltd Total collected was Rs 2,792.76 crore and its market share went
up to 2.96% from 1.23% a year back. It now ranks 5th in new business premium and 4th in
number of new policies sold in 2007-08.

HDFC Standard Life Insurance Co Ltd with an income of Rs 2,680 crore in FY2007-08,
registering a year-on-year growth of 64%. Its market share is 2.88% and it ranks 6 th among the
insurance companies and 5th amongst the private players.

Birla Sun Life Insurance Co Ltd market share of the company increased from 1.22% to 2.11%
in 2007-08.

Max New York Life Insurance Co Ltd has reported growth of 73% in 2007-08. Total new
business generated was Rs 641.83 crore as against Rs 387.51 crore.

Kotak Mahindra Old Mutual Life Insurance Ltd the fiscal 2007-08, the company reported
growth of 80%, moving from the 11th position to 9th. It captured a market share of 1.19% in
2007-08. Aviva Life Insurance Company India Ltd ranking dropped to 10th in 2007-08 from 9th
last year. It has presence in more than 3,000 locations across India via 221 branches and close to
40 banc assurance partnerships. Aviva Life Insurance plans to increase its capital base by Rs 344
crore.

MARKET SHARE OF VARIOUS LIFE INSURANCE COMPANIES IN


INDIA

Here is the market share of various Life Insurance Companies in India at the end of FY2008.

Company Name Market Share (in %)

LIC 48.1%

ICICI Prudential 13.7%

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Bajaj Allianz 10.3%

SBI Life 6.2%

HDFC Standard 4.1%

Birla Sunlife 3.4%

Reliance Life 3.4%

Max New York 2.4%

OM Kotak 1.9%

AVIVA 1.8%

Tata AIG 1.5%

MetLife 1.4%

ING Vysya 1.2%

Shriram Life 0.3%

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Bharti Axa Life 0.2%

BOOMING INSURANCE MARKET IN INDIA


With a huge population base and large untapped market, insurance industry is a big opportunity
area in India for national as well as foreign investors. India is the fifth largest life insurance
market in the emerging insurance economies globally and is growing at 32-34% annually. This
impressive growth in the market has been driven by liberalization, with new players significantly
enhancing product awareness and promoting consumer education and information. The strong
growth potential of the country has also made international players to look at the Indian
insurance market. Moreover, saturation of insurance markets in many developed economies has
made the Indian market more attractive for international insurance players

This research report will help the client to analyze the leading-edge opportunities critical to the
success of insurance industry in India. Based on this analysis, the report gives a future forecast of
the market that is intended as a rough guide to the direction in which the market is likely to
move.
Total life insurance premium in India is projected to grow Rs 1,230,000 Crore by 2010-11.

• Total non-life insurance premium is expected to increase at a CAGR of 25% for the
period spanning from 2008-09 to 2010-11.

• With the entry of several low-cost airlines, along with fleet expansion by existing ones
and increasing corporate aircraft ownership, the Indian aviation insurance market is all
set to boom in a big way in coming years.

• Home insurance segment is set to achieve a 100% growth as financial institutions have
made home insurance obligatory for housing loan approvals.

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• Health insurance is poised to become the second largest business for non-life insurers
after motor insurance in next three years.

• A booming life insurance market has propelled the Indian life insurance agents into the
‘top 10 country list’ in terms of membership to the Million Dollar Round Table (MDRT)
— an exclusive club for the highest performing life insurance agents.

COMPANY PROFILE
Bajaj Allianz Life Insurance is a union between Allianz SE, one of the largest Insurance
Company and Bajaj Finserv.
Allianz SE is a leading insurance conglomerate globally and one of the largest asset managers in
the world,managing assets worth over a Trillion(Over INR 55,00,000 Crores).Allianz SE has
over 115 years of financial experience and is present in over 70 countries around the world.

At Bajaj Allianz Life Insurance, customer delight is the guiding principle. Their business
philosophy is to ensure excellent insurance and investment solutions by offering customized
products, supported by the best technology.

VISION

To be the first choice insurer for customers

To be the preferred employer for staff in the insurance industry.

To be the number one insurer for creating shareholder value.

MISSION

As a responsible, customer focused market leader, we will strive to understand the insurance needs of the
consumers and translate it into affordable products that deliver value for money.

Accelerated Growth

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Fiscal Year No. of policies sold New Business in FY

2001-2002(6 mths) 21,37 Rs. 7 cr.

2002-2003 1,15,965 Rs. 63.3 cr.

2003-2004 1,86,443 Rs. 180 cr.

2004-2005 2,88,189 Rs. 857 cr.

2005-2006 7,81,685 Rs. 2,717 cr.

2006-2007 20,79,217 Rs. 4,302 cr.

2007-2008 37,44,742 Rs. 6,674 cr.

Bajaj Allianz General Insurance received the Insurance Regulatory and Development Authority
(IRDA) certificate of Registration on 2nd May, 2001 to conduct General Insurance business
(including Health Insurance business) in India. The Company has an authorized and paid up
capital of Rs 110 crores. Bajaj Finserv Limited holds 74% and the remaining 26% is held by
Allianz, SE.

As on 31st March 2009, Bajaj Allianz General Insurance maintained its premier position in the
industry by achieving growth as well as profitability. The company garnered a premium income
of Rs. 2866 crore, achieving a growth of 11 % over the last year. Bajaj Allianz has made a profit
before tax of Rs. 149.8 crore and has become the only private insurer to cross the Rs.100 crore
mark in profit before tax in the last two years. The profit after tax was Rs.95 crores, which is also
the highest by any private insurer. The company ranked second (after LIC) in number of policies
sold in 2007-08, with total market share of 7.36%.

RESULTS FOR CURRENT FY TILL 31ST DECEMBER 2008


The Gross Written Premiums (GWP) for the nine months ended on 31st Dec 2008, is Rs 6726
crores as compared to Rs 5219 crores in the corresponding period of the previous year - growth
of 29%. New Business premium for the nine months ended on 31st Dec 2008 is Rs. 3003 crores
as compared to Rs. 3780 crores in the corresponding period of previous year.

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Commission on new business premium, which was 27% during nine months ended on 31st Dec
2007, came down to 20% during the current period.

Operating expenses came down to 20% of GWP for the current period of nine months ended on
31st Dec 2008 as compared to 26% for the corresponding period of previous year.

The Company posted a profit of Rs 364 lacs for the period ended 31st Dec 2008 as compared to
a profit of Rs 5358 lacs in the corresponding period of the previous year. The policyholder
surplus is Rs 15514 lacs (corresponding period of previous year Rs 18681 lacs) and the
shareholders’ loss stands at Rs 15150 lacs (corresponding period of previous year: Rs 13323
lacs).

Number of policies underwritten during the nine months ended 31st Dec 2008 were 18,08,495
(corresponding period of the previous year 23,62,496). Policies in force as on 31 st Dec 2008 is
around 70 lacs. The company ranked second (after LIC) in number of policies sold in 2007-08,
with total market share of 7.36%.

The share capital (including share premium) is Rs. 1211 crores as on 31st December 2008. The
solvency as on 31 st Dec 2008 stands at 261% (required solvency is 150%). During the period
ended 31st Dec 2008, no additional capital has been infused. Despite challenging environment,
the company has been able to not only reduce commission but also operating expenses. The
solvency margin of the company continues to be very strong.

As on 31st Dec 2008, the Company employed on roll 22,129 staff as against 20,764 staff at 31st
March 2008.The Company operates out of 1,138 offices as on 31 Dec 2008.

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PRODUCTS PROFILE

Unit Linked Plan


✔ New family gain
✔ New unit gain plus
✔ New unit gain premier

Traditional plan
✔ Invest gain
✔ Cash gain
✔ Child gain

Retirement Solutions
✔ Swarna visranthi
✔ New unit gain easy pension plus

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Health Plan
✔ Care first
✔ Health care

Term Plan
✔ Risk care
✔ Term care

UNIT LINKED INSURANCE POLICY

(ULIP)

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UNIT LINKED INSURANCE POLICY (ULIP)

A unit linked insurance policy is one in which the customer is provided with a life insurance
cover and the premium paid is invested in either debt or equity products or a combination of the
two. In other words, it enables the buyer to secure some protection for his family in the event of
his untimely death and at the same time provides him an opportunity to earn a return on his
premium paid. In the event of the insured person's untimely death, his nominees would normally
receive an amount that is the higher of the sum assured (insurance cover) or the value of the units
(investments).However, there are some schemes in which the policyholder receives the sum
assured plus the value of the investments.

Every insurance company has four to five ULIPs with varying investment options, charges and
conditions for withdrawals and surrender. Moreover, schemes have been tailored to suit different
customer profiles and, in that sense, offer a great deal of choice.

The advantage of ULIP is that since the investments are made for long periods, the chances of
earning a decent return are high.

Just as in the case of mutual funds, buyers who are risk averse can buy into debt schemes while
those who have an appetite for risk can opt for balanced or equity schemes. However, the
charges paid in these schemes in terms of the entry load, administrative fees, underwriting fees,

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buying and selling charges and asset management charges are fairly high and vary from insurer
to insurer in the quantum as also in the manner in which they are charged.

Tax benefits
The premiums paid for ULIPs are eligible for tax rebates under section 80 which allows a a
maximum of Rs. 1,00,000 premiums paid for taxable income below Rs 8,50,000 and Proceeds
from ULIPs are tax-free under section 10(10D) unlike those from a mutual fund which attract
short term capital gains tax.

Key features

Premiums paid can be single, regular or variable. The payment period too can be regular or
variable. The risk cover (insurance cover) can be increased or decreased.As in all insurance
policies, the risk charge (mortality rate) varies with age. However, for an individual the risk
charge is always based on the age of the policyholder in the year of commencement of the
policy. These charges are normally deducted on a monthly basis from the unit value. For
instance, if there is an increase in the value of units due to market conditions, the sum at risk
(sum assured less the value of investments) reduces and so the risk charges are lower. The
maturity benefit is not typically a fixed amount and the maturity period can be advanced (early
withdrawal) or extended.

Investments can be made in gilt funds (government securities), balanced funds (part debt, part
equity), money-market funds; growth funds (equities) or bonds (corporate bonds).

The policyholder can switch between schemes (for instance, balanced to debt or gilt to equity).
The investment risk is transferred to the policyholder.The maturity benefit is the net asset value
of the units. The value would be high or low depending on the market conditions during the
period of the policy and the performance of the fund manager.

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Thus there is no capital protection on maturity unless the scheme specially provides for it. There
could be policies that allow the policyholder to remain invested beyond the maturity period in
the event of the maturity value not being satisfactory.

POINTS TO REMEMBER ABOUT ULIP


First-year charges: Usually, a minimum of 15 per cent. However, high premiums attract lower
charges and vice versa. Charges can be as high as 70 per cent if the scheme affords a lot of
flexibility. Subsequent charges: Usually lower than first-year charges. However, some insurers
charge higher fees in the initial years and lower them significantly in the subsequent years.

Administration charges: This ranges between Rs 15 per month to Rs 60 per month and is
levied by cancellation of units and also depends on the nature of the scheme.

Risk charges: The charges are broadly comparable across insurers.

Asset management fees: Fund management charges vary from 0.6 per cent to 0.75 per cent for a
money market fund, and around 1.5 per cent for an equity-oriented scheme. Fund management
expenses and the brokerage are built into the daily net asset value.

Switching charges: Some insurers allow four free switches in every year but link it to a
minimum amount. Others allow just one free switch in each year and charge Rs 100 for every
subsequent switch. Some insurers don't charge anything.

Top-ups: Usually attracts 1 per cent of the top-up amount. Top-up normally goes directly into
your investment account (units) unless you specifically ask for an increase in the risk cover.

Surrender value of units: Insurers levy certain charges if the policy is surrendered prematurely.
This levy varies between insurers and could be around 75 per cent in the first year, 60 per cent in
the second year, 40 per cent in the third year and nil after the fourth year.

Fund performance: You could check out the performance of similar schemes (balanced with
balanced; equity with equity) across insurance companies.

Look at NAV performance over a period of at least two to three years. This can only give you
some indication about the credibility of the fund manager because past performance is no

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guarantee to future returns, especially in insurance products where the emphasis is on long-term
performance (10 years or more).

Since insurance is a product, which entails a long-term commitment on the part of the insurer, it
is important not to go only by the features or the cost advantages of schemes but by the
parentage of the insurer as well.

Comparing schemes based on costs is a fairly complex exercise. As a rule, the higher the initial
years' expenses the longer it takes for the policy to outperform its peers with low initial years'
costs and slightly higher subsequent year expenses.

Retire unhurt

Pension plans are essentially tailored to meet old age financial requirements. But there are
certain advantages in joining a pension plan.

First of all, contribution to pension funds upto Rs 10,000 is eligible for tax deduction under
section 80CCC. In other words, your pension contribution will get deducted from your taxable
income.

So if you are in the top tax bracket, liable to pay to a 30.6 per cent tax, then your tax savings will
be that much.

All life insurance companies offer pension products - both conventional and unit-linked. In both
cases you pay a certain premium amount for a specified length of time.

Usually, the minimum entry age is 18 years and the maximum age is 60 years. You can choose
to pay the premium for five to 30 years. When the policy matures, you receive one-third of the
value of the accumulated amount as a lump-sum payment.

For the remaining, you can buy annuities either from the existing insurer or any other insurer.

While in a conventional scheme, your money is managed through the insurer's pooled investment
account and you are entitled to bonuses every year, in a ULIP you receive the value of the
investment in your individual account.

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In a ULIP you have the flexibility to choose between a conservative scheme or an aggressive
scheme with high allocation to equities. Pension policy imposes huge penalties for early
termination.

HOW DOES ULIP WORK


Sara is a thirty-year old who wants a product that will give him market-linked returns as well as
a life cover. He wants to invest Rs 50,000 a year for 10 years in an equity-based scheme. Based
on this premium, the sum assured works out to Rs 532,000, the exact amount of premium being
Rs 50,032.
Based on the current NAV of the plan that Sara chooses to invest in, he is allotted units in the
scheme. Then, units equivalent to the charges are deducted from his portfolio.
The charges in the first year include a 14 per cent sales charge, an administration charge (7 per
cent for the first Rs 20,000 and 3 per cent for the remaining Rs 30,000) and underwriting
charges, which are deducted monthly.
Besides, mortality charges or the charges for the life cover are also deducted. For the remaining
nine years a 3.5 per cent sales charge and an administrative charge of 4 per cent (for the first Rs
20,000 and 2 per cent for the remaining Rs 30,000) are levied in addition to mortality charges.
Fund management fee of 1.5 per cent (equity) and brokerage are also charged. This cost is built
into the calculation of net asset value.
On maturity - that is, after 10 years - Sara would receive the sum assured of Rs 532,000 or the
market value of the units whichever is higher.
Assuming the growth rate in the market value of the units to be 6 per cent per annum Sara would
receive Rs 581,500; assuming the growth rate in the market value of the units to be 10 per cent,
Sara would receive Rs 7,24,400.
In case of Sara's untimely death at the end of the ninth year, his beneficiaries would receive the
sum assured of Rs 532,000 or the market value of the units whichever is higher. Assuming the
growth rate in the market value of units is 6 per cent per annum, the value of investment would
be Rs 510,200.
However, his family will get Rs 532,000 as it is the sum assured.
Assuming a growth rate of 10 per cent per annum, the value of units at the end of the ninth year
would be Rs 621,900. Hence, the beneficiaries would get Rs 621,900.

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ADVANTAGES OF ULIP

• Can easily rebalance your risk between equity and debt without any tax implications.

• Best suited for medium risk taking individuals who wish to invest in equity and debt
funds (at least 40% or higher exposure to debt). No additional tax burden for those
investing mainly in debt unlike in MFs.

RISKS ASSOCIATED WITH ULIPS

ULIPS as the name suggests are directly linked with the investments made by the insured.
Though he does not have a direct say in this but he does offer his choice in the form of
investment.

With stock markets soaring high a few months back, ULIPs were offering a good rate of return,
but now with a sudden downfall of the stocks, ULIPs are bound to become negative investments.

At present, a policy-holder cannot understand the growth of his investments vis-à-vis other funds
in the market, since there is no benchmark to measure one fund against the other. Usually a
policy-holder could ask his investment in a ULIP to be, for example, 55 per cent in equity and 45
per cent in debt. These components can be mixed according to his risk-taking ability. An
investor, therefore, would have to look at quarterly statements, where the fund would be
compared with benchmarks. However, this may not be a true representation of the NAV, as the
ULIP could be a mix of debt, liquid and equity investments.

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The reality is that most of the ULIPs take more than 5 years to break even. Policies where the
costs are 65 per cent and upwards have not even recovered the principal despite the strongest
bull market we have ever witnessed.

MUTUAL FUND

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INTRODUCTION OF MUTUAL FUNDS:

A mutual fund is simply a financial intermediary that allows a group of investors to pool their
money together with a predetermined investment objective. The mutual fund will have a fund
manager who is responsible for investing the pooled money into specific securities (usually
stocks or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the
mutual fund and become a shareholder of the fund.
Mutual funds are one of the best investments ever created because they are very cost efficient
and very easy to invest in (you don't have to figure out which stocks or bonds to buy).

By pooling money together in a mutual fund, investors can purchase stocks or bonds with much
lower trading costs than if they tried to do it on their own. But the biggest advantage to mutual
funds is diversification.

ACCORDING TO AMFI (ASSOCIATION OF MUTUAL FUND OF INDIA):

A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is then invested in capital market instruments such as
shares, debentures and other securities. The income earned through these investments and the
capital appreciation realized is shared by its unit holders in proportion to the number of units
owned by them.

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Thus a Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed basket of securities at a relatively
low cost. The flow chart below describes broadly the working of a mutual fund.

CHARACTERISTICS OF A MUTUAL FUND:

• Investors own the mutual fund.

• Professional managers manage the affairs for a fee.

• The funds are invested in a portfolio of marketable

• Securities, reflecting the investment objective.

• Value of the portfolio and investors’ holdings, alters with

• Change in market value of investments.

ADVANTAGES OF MUTUAL FUNDS:

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The advantages of investing in a Mutual Fund are:

1. Professional Management: You avail of the services of experienced and skilled professionals
who are backed by a dedicated investment research team which analyses the performance and
prospects of companies and selects suitable investments to achieve the objectives of the scheme.

2. Diversification: Mutual Funds invest in a number of companies across a broad cross section
of industries and sectors. This diversification reduces the risk because seldom do all stocks
decline at the same time and in the same proportion.You achieve this diversification through a
Mutual Fund with far less money than you can do on your own.

3. Convenient Administration: Investing in a Mutual Fund reduces paperwork and helps you
avoid many problems such as bad deliveries, delayed payments and unnecessary follow up with
brokers and companies. Mutual Funds save your time and make investing easy and convenient.

4. Return Potential: Over a medium to longterm, Mutual Funds have the potential to provide a
higher return as they invest in a diversified basket of selected securities.

5. LowCosts: Mutual Funds are a relatively less expensive way to invest compared to directly
investing in the capital markets because the benefits of scale in brokerage, custodial and other
fees translate into lower costs for investors.

6. Liquidity: In open-ended schemes, you can get your money back promptly at AssetValue
(NAV) related prices from the Mutual Fund itself.With close-ended schemes, you can sell your
units on a stock exchange at the prevailing market price or avail of the facility of repurchase
through Mutual Funds at NAV related prices which some close-ended and interval schemes
offer you periodically.

7. Transparency: You get regular information on the value of your investment in addition to

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disclosure on the specific investments made by your scheme, the proportion invested in each
class of assets and the fund manager’s investment strategy and outlook.

8. Flexibility: Through features such as Systematic Investment Plans (SIP), Systematic


Withdrawal Plans (SWP) and dividend reinvestment plans, you can systematically invest or
withdraw funds according to your needs and convenience.

9. Choice of Schemes: Mutual Funds offer a variety of schemes to suit your varying needs
over a lifetime.

10. Well Regulated: All Mutual Funds are registered with SEBI and they function within the
provisions of strict regulations designed to protect the interests of investors.The operations
of Mutual Funds are regularly monitored by SEBI.

DISADVANTAGES OF MUTUAL FUNDS:

· No Guarantees: No investment is risk free. If the entire stock market declines in value, the
value of mutual fund shares will go down as well, no matter how balanced the portfolio.
Investors encounter fewer risks when they invest in mutual funds than when they buy and sell
stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing
money.
· Fees and commissions: All funds charge administrative fees to cover their day-to-day
expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial
consultants, or financial planners. Even if you don't use a broker or other financial adviser, you
will pay a sales commission if you buy shares in a Load Fund.

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· Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to
70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will
pay taxes on the income you receive, even if you reinvest the money you made.
· Management risk: When you invest in a mutual fund, you depend on the fund's manager to
make the right decisions regarding the fund's portfolio. If the manager does not perform as well
as you had hoped, you might not make as much money on your investment as you expected. Of
course, if you invest in Index Funds, you forego management risk, because these funds do not
employ managers.
A measurement of an option position or premium in relation to the underlying instrument. In
mutual fund also there is certain amount of risk-return factor associated according to the
investment option these are as follows,

RISK RETURN

Equity High High

Balanced Medium Medium

Debt Low Low

TYPES OF MUTUAL FUNDS:

I. Closed-end or Open-end

Open-end Funds: An open-end fund is one that has units available for sale and repurchase at all
time. An investor can buy or redeem units from the fund itself at a price based on the Net Asset
Value (NAV) per unit.

Close-end Funds: A close ended fund makes a one-time sale of a fixed number of unit. It does
not allow investors to buy or redeem units directly from the funds. However, to provide liquidity

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to investors many closed-end funds get themselves listed on stock exchange. Funds do offer
“buy-back of funds/units” thus offering another avenue for liquidity to closed-end fund investor.

II. Load vs. No Load: Marketing of a new mutual fund scheme involves initial expense.
These expenses may be recovered from the investors in different ways at different times. Three
usual ways in which a fund’s sales expenses may be recovered from the investors are:

1. At the time of investor’s entry into the fund/scheme, by deducting a specific amount from his
initial contribution: front-end or entry load.

2. By charging the fund/scheme with a fixed amount each year, during the stated number of
years: deferred load.

3. At the time of the investor’s exit from the fund/scheme, by deducting a specific amount from
the redemption proceeds payable to the investor: back end or exit load These charges made by
the fund managers to the investors to cover distribution/sales/marketing expenses are often called
“loads”. Funds that charge front-end, back-end or deferred loads are called load funds. Funds
that make no such charges or loads for sales expenses are called no-load funds.

In India, SEBI has defined a “load” as the one-time fee payable by the investor to allow the fund
to meet initial issue expenses including brokers’/agents’/distributors’ commissions, advertising
and marketing expenses.

A load fund’s declared NAV does not include load charges

III. Tax-exempt vs. Non-Tax exempt Funds: Generally, when a fund invests in tax-
exempt securities, it is called a tax-exempt fund. In India, after the 1999 Union Government
Budget, all of the dividend income received from any of the mutual funds is tax-free in the hands
of the investors. However, funds other than Equity Funds have to pay a distribution tax, before
distributing income to investors. In other words, equity mutual fund schemes are tax-exempt
investment avenues, while other funds are taxable for distributable income.

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Different types of mutual fund

Types of Mutual Fund:

Once we have reviewed the fund classes, we are ready to discuss more specific fund types.
Funds are generally distinguished from each other by their investment objectives and types of
securities they invest in.

A. Broad Fund Types by Nature of Investments

Mutual funds may invest in equities, bonds or other fixed income securities, or short-term money
market securities. So we have Equity, Bonds and Money Market Funds. All of them invest in
financial assets. But there are funds that invest in physical assets. For example, we may have
Gold or other Precious Metal Funds, or Real Estate Funds.

B. Broad Fund Types by Investment Objective

Investors and hence the mutual funds pursue different objectives while investing. Thus,

Growth Funds invest for medium to long term capital appreciation.

Income Funds invest to generate regular income, and less for capital appreciation.

Value Funds invest in equities that are considered under-valued today, whose value will be
unlocked in the future.

C. Broad Fund Types by Risk Profile

The nature of a fund’s portfolio and its investment objective imply different levels of risk
undertaken. Funds are therefore often grouped in order of risk. Thus, Equity Funds have a
greater risk of capital loss than a Debt Fund that seeks to protect the capital while looking for

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income. Money Market Funds are exposed to less risk than even the For internal use by Training
Department of Prudential ICICI Mutual Fund Bond Funds, since they invest in short-term fixed
income securities, as compared to longer-term portfolios of Bond Funds.

Money Market Funds: Lowest rung in the order of risk level, Money Market Funds invest in
securities of a short-term nature, which generally means securities of less than one-year maturity.

Gilt Funds: Gilts are government securities with medium to long-term maturities, typically of
over one year (under one-year instruments being money market securities).

Debt Funds (or Income Funds): Next in the order of risk level, we have the general category
Debt Funds. Debt funds invest in debt instruments issued not only by governments, but also by
private companies, banks and financial institutions and other entities such as infrastructure
companies/utilities.

Diversifies Debt Funds: A debt fund that invests in all available types of debt securities, issued
by entities across all industries and sectors is a properly diversified debt fund. A diversified debt
fund is less risky than a narrow-focus fund that invests in debt securities of a particular sector or
industry.

Focused Debt Funds: Some debt funds have a narrow focus, with less diversification in its
investment. Examples include sector, specialized and offshore debt funds. Other examples of
focused funds include those that invest only in Corporate Debentures and Bonds or only in Tax
Free Infrastructure or Municipal Bonds.

High yield Debt Funds: There are funds which seek to obtain higher interest rates by investing
in debt instruments that are considered “below investment grade”. e.g. Junk Bond Funds.

Assured Return Funds – an Indian Variant: The SEBI permits only those funds whose
sponsors have adequate net-worth to offer assurance of return. For e.g. MIPs. Investors have
some lock-in period.

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Fixed Term Plan Series – Another Indian Variant: These are essentially closed-end. These
plans do not generally offer guaranteed returns. This scheme is for short-term investors who
otherwise place money as fixed term bank deposits or inter corporate bonds.

Equity Fund: As investors move from Debt Fund category to Equity Funds,

they face increased risk level.

• No guarantee returns
• High potential for growth of capital

Types of Equity Fund

a) Aggressive Growth Fund

• Maximum capital appreciation


• Invests in less researched or speculative shares.

• Very volatile & riskier.

b) Growth Fund

• Growth fund invest in companies whose earnings are expected to


• Rise above average rate. e.g. Technology Fund
• Capital appreciation in 3 – 5 years
• Less volatile then aggressive growth fund.
c) Specialty Fund

They invest in companies that meet predefined criteria.

i) Sector Funds

• Technology Fund

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• Pharmaceutical Fund
• FMCG Fund
ii) Offshore Funds

Invest in equities in one or more foreign countries.

iii) Small-Cap equity Funds

Invest in shares of companies with relative lower market capital.

d) Diversified Equity Funds

A fund that seeks to invest only in equities, except for a very small portion in liquid money
market securities, bur is not focused on any one or few sectors or shares, may be termed a
diversified equity fund. While exposed to all equity price risks, diversified equity funds seek to
reduce the sector or stock specific risks through diversification.

i) Equity Linked Savings Schemes: An Indian Variant

Investment in these schemes entitles the investor to claim an income tax rebate, but usually has a
lock-in period before the end of which funds cannot be withdrawn.

e) Equity Index Funds

An index fund tracks the performance of a specific stock market index. The objective is to match
the performance of the stock market by tracking an index that represents the overall market. The
funds invest in share that constitute the index and in the same proportion on the index.

f) Value Funds

Value Funds try to seek out fundamentally sound companies whose shares are currently under-
prices in the market. Value Funds will add only those shares to their portfolios that are selling at
low price-earnings ratios, low market to book value ratios and are undervalued by other
yardsticks. Fund concentrate on future growth prospect having good potential.

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g) Equity Income Funds

There are equity funds that can be designed to give the investor a high level of current income
along with some steady capital appreciation, investing mainly in shares of companies with high
dividend yields.

• Hybrid Funds – Quasi Equity/Quasi Debt: Many mutual funds mix these (money
market, debt and equity) different types of securities in their portfolios. Such funds are
termed “hybrid funds” as they have a dual equity/bond focus.
• Commodity Funds: While all of the debt/equity/money market funds invest in financial
assets, the mutual fund vehicle is suited for investment in any other- for examples-
physical assets.
• Real Estate Funds: Specialized Real Estate Funds would invest in Real Estate directly,
or may fund real estate developers, or lend to them, or buy shares of housing finance
companies or may even buy their securities assets.

Following are the different products and services Offered by Mutual Fund
Companies

• Open ended schemes

• Close ended schemes

• Growth/Equity oriented Schemes

• Income/Debt oriented Schemes

• Balanced Funds

• Money market or liquid funds

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• Gilt Funds

• Index Funds

• Exchange Traded Funds

• Sectoral Funds

• Thematic Funds

• Commodity Funds

• Real Estate Funds

• Tax Saving Funds

• Hybrid Funds

There are several ways for investment and disinvestments in mutual funds such as :

• Systematic Investment Plans (SIPs)

• Value Averaging

• Systematic Transfer Plans (STPs)

• Systematic Withdrawal Plans(SWPs)

• Automatic Reinvestment Plans.

• Open ended fund


In an open-ended fund, sale and repurchase of units happen on a continuous basis, at
NAV related prices, from the fund itself.
The corpus of open-ended funds, therefore, changes every day.

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• Close ended fund
A closed-end fund offers units for sale only in the NFO. It is then listed in the market.
Investors wanting to buy or sell the units have to do so in the stock markets. Usually
closed-end funds sell at a discount to NAV.
The corpus of a closed-end fund remains unchanged.
• Growth fund
Provide capital appreciation over the medium to long-term
• Investor who does not require periodic income distribution can choose the option, where
the incomes earned are retained in the investment portfolio and allowed to grow, rather
than being distributed to investors.
• Investors with longer investment horizons and limited requirements for income choose
this option.
• The return to the investor who chooses a growth option is the rate at which his initial
investment has grown over a period for which he has invested in the fund.
• The investor choosing this option will vary the NAV with the value of the investments
portfolio , while the no. of units held with remains constant.
• Income fund
Provide regular and steady income to investor
• Balanced fund
Provide both growth and regular income.
• Money market fund
Provide easy liquidity, regular income and preserve the income
• Tax saving scheme
offer tax rebeats to the under specific provisions of the Indian income tax laws
Investment made under some schemes are allowed as deduction U/S 88 of the income tax
act .

• Automatic Reinvestment Plans

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Reinvestment of amount of dividend made by fund in the same fund.
In this option, the no. of units held by the investor will change with every reinvestment.
The value of units will be similar to that under the dividend option
There are four types of plans as follows
• Lump sum Investment
It is one time investment..
Investors can invest particular amount one time for fixed time of period.

• Systematic Investment Plans( SIP) – For regular investment


SIP is investing a fixed sum periodically in a disciplined manner for long term.
It gives benefit of Rupee Cost averaging.
In SIP monthly minimum Rs.500 or Rs.100 are invested.
Interest is calculating compoundly.
Many SIP gives insurance benefits.
VAP is modified version of SIP. It is Voluntary Accumulation Plan. It allows the investor
flexibility with respect to the amount and frequency of investment.
In VAP, investor has to impose voluntary self discipline.

• Systematic Withdrawal Plan ( SWP) – For regular income


The lump sum amount is invested for one time and then fixed percent amount is
withdraw monthly.
Remaining amount will grow continuously.
This plan is suitable for retired person, because it gives regular income.
• Systematic Transfer Plan ( STP) –
Transfer on a periodic basis a specified amount from one scheme to another within the
same fund family.
It gives option to the investor if the current fund performance in not satisfactory.

• Dividend option

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• Investors will receive dividends from the mutual fund , as an and when dividends are
declared.
• Dividends are paid in the form of warrants or are directly credited to the investor’s bank
accounts.
• In normal dividend plan , periodicity of dividends is left to the fund managers, the timing
of the dividend payout is decided by fund manager.
• Mutual funds provide the option of receiving dividends at pre-determined
frequencies,wich can vary from daily,weekly,monthly,quarterly,half-yearly and annual.
Investors can choose the frequency of dividend distribution that suits their requirements.
• Investors choosing this option have a fixed no. of units invested in the fund and earned
incomes on this investment.
• The NAV of this investors holding will vary with changes in the value of portfolio and
the impact of the proportion of income earned by the fund to what is actually distributed
as dividend.

REGULATORS IN INDIA

• SEBI - The capital markets regulators also regulates the mutual funds in India. SEBI
requires all mutual funds to be registered with them. SEBI issues guidelines for all
mutual funds operations - investment, accounts, expenses etc.
• RBI as supervisor of banks owned mutual funds - As banks in India came under the
regulatory jurisdiction of RBI, bank owned funds to be under supervision of RBI and
SEBI.
• RBI as supervisor of Money Market Mutual Funds - RBI has supervisory responsibility
over all entities that operate in the money markets. Hence in the past Money Market
Mutual Funds scheme of Mutual funds had to be abide by policies laid down by RBI.
Recently, it has been decided that Money Market Mutual Funds of registered mutual funds will
be regulated by SEBI through SEBI (Mutual Fund) Regulations 1996.

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COMPARISON OF ULIP VS MUTUAL FUND

Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to mutual funds in
terms of their structure and functioning. As is the cases with mutual funds, investors in ULIPs
are allotted units by the insurance company and a net asset value (NAV) is declared for the same
on a daily basis.
Similarly ULIP investors have the option of investing across various schemes similar to the ones
found in the mutual funds domain, i.e. diversified equity funds, balanced funds and debt funds to
name a few. Generally speaking, ULIPs can be termed as mutual fund schemes with an
insurance component.
However it should not be construed that barring the insurance element there is nothing
differentiating mutual funds from ULIPs

1. Mode of investment/ investment amounts


Mutual fund investors have the option of either making lump sum investments or investing using
the systematic investment plan (SIP) route which entails commitments over longer time
horizons. The minimum investment amounts are laid out by the fund house.
ULIP investors also have the choice of investing in a lump sum (single premium) or using the
conventional route, i.e. making premium payments on an annual, half-yearly, quarterly or
monthly basis. In ULIPs, determining the premium paid is often the starting point for the
investment activity.
This is in stark contrast to conventional insurance plans where the sum assured is the starting
point and premiums to be paid are determined thereafter.

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ULIP investors also have the flexibility to alter the premium amounts during the policy's tenure.
For example an individual with access to surplus funds can enhance the contribution thereby
ensuring that his surplus funds are gainfully invested; conversely an individual faced with a
liquidity crunch has the option of paying a lower amount (the difference being adjusted in the
accumulated value of his ULIP). The freedom to modify premium payments at one's onvenience
clearly gives ULIP investors an edge over their mutual fund counterparts.

2. Expenses
In mutual fund investments, expenses charged for various activities like fund management, sales
and marketing, administration among others are subject to pre-determined upper limits as
prescribed by the Securities and Exchange Board of India.
For example equity-oriented funds can charge their investors a maximum of 2.5% per annum on
a recurring basis for all their expenses; any expense above the prescribed limit is borne by the
fund house and not the investors.

Similarly funds also charge their investors entry and exit loads (in most cases, either is
applicable). Entry loads are charged at the timing of making an investment while the exit load is
charged at the time of sale.

Insurance companies have a free hand in levying expenses on their ULIP products with no upper
limits being prescribed by the regulator, i.e. the Insurance Regulatory and Development
Authority. This explains the complex and at times 'unwieldy' expense structures on ULIP
offerings. The only restraint placed is that insurers are required to notify the regulator of all the
expenses that will be charged on their ULIP offerings.

Expenses can have far-reaching consequences on investors since higher expenses translate into
lower amounts being invested and a smaller corpus being accumulated.

3. Portfolio disclosure

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Mutual fund houses are required to statutorily declare their portfolios on a quarterly basis, albeit
most fund houses do so on a monthly basis. Investors get the opportunity to see where their
monies are being invested and how they have been managed by studying the portfolio.

There is lack of consensus on whether ULIPs are required to disclose their portfolios. During our
interactions with leading insurers we came across divergent views on this issue.

While one school of thought believes that disclosing portfolios on a quarterly basis is mandatory,
the other believes that there is no legal obligation to do so and that insurers are required to
disclose their portfolios only on demand.

Some insurance companies do declare their portfolios on a monthly/quarterly basis. However the
lack of transparency in ULIP investments could be a cause for concern considering that the
amount invested in insurance policies is essentially meant to provide for contingencies and for
long-term needs like retirement; regular portfolio disclosures on the other hand can enable
investors to make timely investment decisions.

4. Flexibility in altering the asset allocation


As was stated earlier, offerings in both the mutual funds segment and ULIPs segment are largely
comparable. For example plans that invest their entire corpus in equities (diversified equity
funds), a 60:40 allotment in equity and debt instruments (balanced funds) and those investing
only in debt instruments (debt funds) can be found in both ULIPs and mutual funds.

If a mutual fund investor in a diversified equity fund wishes to shift his corpus into a debt from
the same fund house, he could have to bear an exit load and/or entry load.
On the other hand most insurance companies permit their ULIP inventors to shift investments
across various plans/asset classes either at a nominal or no cost (usually, a couple of switches are
allowed free of charge every year and a cost has to be borne for additional switches).

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Effectively the ULIP investor is given the option to invest across asset classes as per his
convenience in a cost-effective manner.

This can prove to be very useful for investors, for example in a bull market when the ULIP
investor's equity component has appreciated, he can book profits by simply transferring the
requisite amount to a debt-oriented plan.

5. Tax benefits

ULIP investments qualify for deductions under Section 80C of the Income Tax Act. This holds
good, irrespective of the nature of the plan chosen by the investor. On the other hand in the
mutual funds domain, only investments in tax-saving funds (also referred to as equity-linked
savings schemes) are eligible for Section 80C benefits.
Maturity proceeds from ULIPs are tax free. In case of equity-oriented funds (for example
diversified equity funds, balanced funds), if the investments are held for a period over 12
months, the gains are tax free; conversely investments sold within a 12-month period attract
short-term capital gains tax @ 10%.
Similarly, debt-oriented funds attract a long-term capital gains tax @ 10%, while a short-term
capital gain is taxed at the investor's marginal tax rate.
Despite the seemingly similar structures evidently both mutual funds and ULIPs have their
unique set of advantages to offer. As always, it is vital for investors to be aware of the nuances in
both offerings and make informed decisions.

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REVIEW OF LITERATURE

Mr.Madhu T, made a study on ‘ULIPs hold edge over mutual funds’.The findings shows that
distributors would push unit linked insurance plans (ULIPs) to earn better commission . ULIPs
offer attractive frontend commissions to agents. However, independent financial advisors believe
that though there is a possibility of some distributors favoring ULIPs in the short term, the new
directive would be beneficial for both the industry and investors in the long run.(Mr.Madhu T,
The Economic Times,June2009).

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Mr.Deepak Shenoy ,in his article ‘Comparing ULIP returns to Mutual Funds’, he reveals
that, over the last three years, their growth mutual fund has given better returns than the
"MAXIMISER" option of their ULIPs.(Deepak Shenoy, The Indian Investor’s Blog, August
2006).

Mr.Murthaza and Sony, in their article ‘An Overview on ULIP’, This article is an initiative from
Bajaj Allianz to create better understanding of ULIPs and its benefits so that investors can avail
maximum returns from their investments.

Mr.Bernz Jayma P, made a study on ‘Mutual Fund disadvantages’. He suggested that ,’If you're
new to stock market investing you may have heard that mutual funds would be a good way for
you to get started. That's actually good advice, but mutual funds have their own pitfalls to watch
out for.’

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DATA INTERPRETATION
AND
ANALYSIS

(A) Gender:

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Gender

Cumulative
Frequency Percent Valid Percent Percent

Valid Male 37 74.0 74.0 74.0

Female 13 26.0 26.0 100.0

Total 50 100.0 100.0

INTERPRETATION :

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The above graph shows that , out of 50 customers, 74% of the respondents are male policy
holders and the rest 26% are female policy holders.

(B) Marital Status:

Marital

Cumulative
Frequency Percent Valid Percent Percent

Valid Married 33 66.0 66.0 66.0

Unmarried 17 34.0 34.0 100.0

Total 50 100.0 100.0

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INTERPRETATION :
From a sample of 50 customers, 66% of the policy holders are unmarried and the rest 34% of the
policy holders are married.

(C) Age:

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Age

Cumulative
Frequency Percent Valid Percent Percent

Valid 20-30 6 12.0 12.0 12.0

30-40 14 28.0 28.0 40.0

40-50 17 34.0 34.0 74.0

50-60 11 22.0 22.0 96.0

60-70 2 4.0 4.0 100.0

Total 50 100.0 100.0

INTERPRETATION :

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The graph shows that majority of the sample respondents were in the age group of 40-50 yrs
ie,34%, 12% were in the age group of 20-30 yrs & 28% of them were 30-40 yrs, 22% were in the
age group of 50-60 yrs and 4% were in the age group of 60-70 yrs.

(D) Occupation:

Occupation

Cumulative
Frequency Percent Valid Percent Percent

Valid Government 18 36.0 36.0 36.0

Private service 14 28.0 28.0 64.0

Business 11 22.0 22.0 86.0

NRIs 3 6.0 6.0 92.0

Others 4 8.0 8.0 100.0

Total 50 100.0 100.0

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INTERPRETATION :
The graph shows that majority of the policy holders are working in the Government sector
i.e.36% , 28% of them are engaged in Private service, 22% of them are business field, 6% of
them are NRIs and 8% of them are engaged other works.

(E) Annual Income:

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Annual income

Cumulative
Frequency Percent Valid Percent Percent

Valid Below 2 lakhs 19 38.0 38.0 38.0

2-4 lakhs 23 46.0 46.0 84.0

4-6 lakhs 6 12.0 12.0 96.0

6-8 lakhs 2 4.0 4.0 100.0

Total 50 100.0 100.0

INTERPRETATION :

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The graph shows that 46% of the policy holders get a salary of 2-4 lakhs, 38% of the policy
holders get a salary of below 2 lakhs, 12% of the policy holders get a salary of 4-6 lakhs, 3 of the
policy holders get a salary below 2 lakhs and 4% of them above 6-8 lakhs.

1. Sources that helps you in making investment decision.

Sources that helps you in making the investment decisions.

Cumulative
Frequency Percent Valid Percent Percent

Valid Financial journal 5 10.0 10.0 10.0

Television 2 4.0 4.0 14.0

Brokers/Agent 27 54.0 54.0 68.0

Friends 13 26.0 26.0 94.0

Consultants 3 6.0 6.0 100.0

Total 50 100.0 100.0

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INTERPRETATION :
From the sample of 50 customers, 54% of the customers are strongly agree that the agents or
brokers helps them to make investment decision, 26% of the customers point out their friends
take part in the investment decision. And 10% customers reveal that the financial journals helps
them, Remaining 6% is from consultants, and 4% selects television as the source.

2. Factors that influence your investment decision in a particular company.

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Factors that influence your investment decisions in a particular company.

Cumulative
Frequency Percent Valid Percent Percent

Valid Attractive schemes 2 4.0 4.0 4.0

Tax benefits 27 54.0 54.0 58.0

High reputation 3 6.0 6.0 64.0

Rate of return 14 28.0 28.0 92.0

Variety of products 4 8.0 8.0 100.0

Total 50 100.0 100.0

INTERPRETATION :
54% customers agree that the tax benefit is influence them to buy policy ,28% looks
the rate of return what they will earn, variety of products from the company attracts 8%

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customers, and high reputation of the company attracts 6% of the customers, and remaining 4%
pointing out the attractive schemes.

3. You generally like to invest money in.

You generally like to invest money.

Cumulative
Frequency Percent Valid Percent Percent

Valid Insurance 13 26.0 26.0 26.0

Stock market 1 2.0 2.0 28.0

Mutual fund 6 12.0 12.0 40.0

Bank deposit 28 56.0 56.0 96.0

Both insurance and mutual 2 4.0 4.0 100.0


fund

Total 50 100.0 100.0

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INTERPRETATION :
From a sample of 50 customers, 56% of the customers invest money in bank deposit, 26% in
insurance sector,12% in mutual fund, then 4% in both insurance and mutual fund,and remaining
2% in stock market.

4. According to you who among the following life insurance company is best.

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According to you who among the following life insurance companies is best.

Cumulative
Frequency Percent Valid Percent Percent

Valid Bajaj Allianz 27 54.0 54.0 54.0

HDFC Standard life 5 10.0 10.0 64.0

Tata AIG 4 8.0 8.0 72.0

Aviva Life 3 6.0 6.0 78.0

SBI Life 11 22.0 22.0 100.0

Total 50 100.0 100.0

INTERPRETATION :

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From a sample of 50 customers,54% customers select Bajaj Allianz is the best insurance
company, and 22% customers choose SBI Life,10% select HDFC,8% for Tata AIG and
remaining 6% stands for Aviva life insurance company.

5. How would you rate our products.

How would you rate our products.

Cumulative
Frequency Percent Valid Percent Percent

Valid Excellent 2 4.0 4.0 4.0

Good 37 74.0 74.0 78.0

Fair 9 18.0 18.0 96.0

Poor 2 4.0 4.0 100.0

Total 50 100.0 100.0

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INTERPRETATION :
From a sample of 50 customers,74% customers thinks that the products offered by Bajaj Allianz
Life insurance co. is good,4% thinks its excellent,18% of them select Bajaj Allianz products are
fair, and remaining 4% not satisfied with our products.

6. I would like to invest money in ULIP.

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I would like to invest money in ULIP.

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 2 4.0 4.0 4.0

Agree 33 66.0 66.0 70.0

Neutral 8 16.0 16.0 86.0

Disagree 5 10.0 10.0 96.0

Strongly disagree 2 4.0 4.0 100.0

Total 50 100.0 100.0

INTERPRETATION :

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From a sample of 50 customers, 66% agree, 4% of them strongly supporting that fact, and 16%
has no opinion about it. And 4% strongly disagreed, remaining 10% also disagree with
investment in ULIP.

7. Reason for choosing ULIPs because of insurance


coverage.

Reason for choosing ULIPs because of insurance coverage.

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 14 28.0 28.0 28.0

Agree 32 64.0 64.0 92.0

Neutral 2 4.0 4.0 96.0

Disagree 2 4.0 4.0 100.0

Total 50 100.0 100.0

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INTERPRETATION :
From a sample of 50 customers, 64% of the customers agree, ,28% of them strongly support
it,4% customers didn’t say anything, and remaining 4% disagree with that fact. So we can see
that most of the Customers choose ULIP because of insurance coverage.

8. I would like to invest money in Mutual Funds.

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I would like to invest money in mutual funds.

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 3 6.0 6.0 6.0

Agree 13 26.0 26.0 32.0

Neutral 14 28.0 28.0 60.0

Dsagree 18 36.0 36.0 96.0

Strongly disagree 2 4.0 4.0 100.0

Total 50 100.0 100.0

INTERPRETATION :

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From a sample of 50 customers,26% of the customers agree with that fact,6% of the customers
strongly support it,and 28% customers have no idea about it.And remaining 10% disagreed,out
of this 10%, 4% strongly disagreed with it.

9. Mutual funds are more risky than ULIP products.

Mutual funds are more risky than ULIP products.

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 17 34.0 34.0 34.0

Agree 27 54.0 54.0 88.0

Neutral 4 8.0 8.0 96.0

disagree 2 4.0 4.0 100.0

Total 50 100.0 100.0

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INTERPRETATION :
From a sample of 50 customers,54% of the customers thinks that mutual funds are more risky
than ULIP products,34% strongly agree with this statement.8% customers have no opinion about
it,and remaining 4% disagree with it.

10. ULIPs have advantage over Mutual funds.

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ulip has advantage over mutual funds.

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 12 24.0 24.0 24.0

Agree 31 62.0 62.0 86.0

Neutral 5 10.0 10.0 96.0

Disagree 2 4.0 4.0 100.0

Total 50 100.0 100.0

INTERPRETATION :

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62% of the customers agree with ULIP have advantage over mutual fund statement.24%
customers strongly agree with this fact. And 4% of customers not supporting the statement. And
remaining 10% have no opinion about it.

11. Do you think the safety factor is important in your investment in ULIP.

Safety

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 4 8.0 8.0 8.0

Agree 26 52.0 52.0 60.0

Neutral 2 4.0 4.0 64.0

Disagree 15 30.0 30.0 94.0

Strongly disagree 3 6.0 6.0 100.0

Total 50 100.0 100.0

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INTERPRETATION :
From a sample of 50 customers,52% customers agree,8% strongly agree,30% customers were
disagree with that fact,6% strongly disagree, and remaining 4% have no opinion about safety
factor is important in the investment of ULIP.

12. Do you think the Liquidity factor is important in your investment in


ULIP.

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Liquidity

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 3 6.0 6.0 6.0

Agree 5 10.0 10.0 16.0

Neutral 5 10.0 10.0 26.0

Disagree 30 60.0 60.0 86.0

Strongly disagree 7 14.0 14.0 100.0

Total 50 100.0 100.0

INTERPRETATION :

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From a sample of 50 customers, majority of the customers disagree i.e. 60%, 14% strongly
disagree with that fact. And 6% strongly agree,10% agree,and remaining 10% neither agree nor
disagree with that statement.

13. Do you think the Rate of return factor is important in your investment in
ULIP.

Rate of return

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 6 12.0 12.0 12.0

Agree 21 42.0 42.0 54.0

Neutral 3 6.0 6.0 60.0

Disagree 12 24.0 24.0 84.0

Strongly disagree 8 16.0 16.0 100.0

Total 50 100.0 100.0

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INTERPRETATION :
From a sample of 50 customers, majority of the customers agree i.e. 42%, 12% strongly agree
with that fact. And 24% disagree,16% strongly disagree, and remaining 6% neither agree nor
disagree with that statement

14. Do you think the Tax savings is influence your investment decision in
ULIP.

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Tax savings

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 6 12.0 12.0 12.0

Agree 21 42.0 42.0 54.0

Neutral 5 10.0 10.0 64.0

Disagree 16 32.0 32.0 96.0

Strongly disagree 2 4.0 4.0 100.0

Total 50 100.0 100.0

INTERPRETATION :

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From a sample of 50 customers, majority of the customers agree i.e. 42%, 12% strongly agree
with that fact. And 32% disagree,4% strongly disagree, and remaining 10% neither agree nor
disagree with that statement

15. Past scheme’s performance influence your investment


decision in ULIP.

past scheme's performance

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 8 16.0 16.0 16.0

Agree 8 16.0 16.0 32.0

Neutral 7 14.0 14.0 46.0

Disagree 23 46.0 46.0 92.0

Strongly disagree 4 8.0 8.0 100.0

Total 50 100.0 100.0

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INTERPRETATION :
From a sample of 50 customers, majority of the customers disagree i.e. 46%, 8% strongly
disagree with that fact. And 16% strongly agree,16% agree, and remaining 14% neither agree
nor disagree with that statement

16. Advertisement influence the investment decision in


ULIP.

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Advertisement

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 9 18.0 18.0 18.0

Agree 11 22.0 22.0 40.0

Neutral 19 38.0 38.0 78.0

Disagree 5 10.0 10.0 88.0

Strongly disagree 6 12.0 12.0 100.0

Total 50 100.0 100.0

INTERPRETATION :

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From a sample of 50 customers, 22%agree, 18% strongly agree with that fact. And 10%
disagree,12% strongly disagree, and remaining 38% neither agree nor disagree with that
statement.

17. Do you think the safety factor is important in your investment in mutual
fund.

Safety

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 2 4.0 4.0 4.0

Agree 4 8.0 8.0 12.0

Neutral 8 16.0 16.0 28.0

Disagree 30 60.0 60.0 88.0

Strongly disagree 6 12.0 12.0 100.0

Total 50 100.0 100.0

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INTERPRETATION :
From a sample of 50 customers,8% customers agree,4% strongly agree,60% customers were
disagree with that fact 12% strongly disagree, and remaining 16% have no opinion about safety
factor is important in the investment of mutual fund.

18. Do you think the Liquidity factor is important in your investment in


mutual fund.

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Liquidity

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 7 14.0 14.0 14.0

Agree 19 38.0 38.0 52.0

Neutral 15 30.0 30.0 82.0

Disagree 6 12.0 12.0 94.0

Strongly disagree 3 6.0 6.0 100.0

Total 50 100.0 100.0

INTERPRETATION :

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From a sample of 50 customers, majority of the customers agree i.e. 38%, 14% strongly agree
with that fact. And 12% disagree,6% strongly disagree, and remaining 30% neither agree nor
disagree with that statement.

19. Do you think the Rate of return factor is important in your investment in
mutual fund.

Rate of return

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 2 4.0 4.0 4.0

Agree 7 14.0 14.0 18.0

Neutral 21 42.0 42.0 60.0

Disagree 15 30.0 30.0 90.0

Strongly disagree 5 10.0 10.0 100.0

Total 50 100.0 100.0

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INTERPRETATION :
From a sample of 50 customers, 30% disagree, 10% strongly disagree with that fact. And 14%
agree,4% strongly agree, and remaining 42% neither agree nor disagree with that statement.

20. Do you think the Tax savings is influence your investment decision in
mutual fund.

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Tax savings

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 3 6.0 6.0 6.0

Agree 6 12.0 12.0 18.0

Neutral 23 46.0 46.0 64.0

Disagree 12 24.0 24.0 88.0

Strongly disagree 6 12.0 12.0 100.0

Total 50 100.0 100.0

INTERPRETATION :

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From a sample of 50 customers, 24% disagree, 12% strongly disagree with that fact. And 12%
agree,6% strongly agree, and remaining 46% neither agree nor disagree with that statement.

21. Past scheme’s performance influence your investment


decision in mutual fund.

past scheme's performance

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 6 12.0 12.0 12.0

Agree 22 44.0 44.0 56.0

Neutral 15 30.0 30.0 86.0

Disagree 7 14.0 14.0 100.0

Total 50 100.0 100.0

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INTERPRETATION :
From a sample of 50 customers, 44% agree, 12% strongly agree with that fact. And 14%
disagree, and remaining 30% neither agree nor disagree with that statement.

22. Advertisement influence the investment decision in


mutual fund.

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Advertisement

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 4 8.0 8.0 8.0

Agree 16 32.0 32.0 40.0

Neutral 24 48.0 48.0 88.0

Disagree 4 8.0 8.0 96.0

Strongly disagree 2 4.0 4.0 100.0

Total 50 100.0 100.0

INTERPRETATION :
From a sample of 50 customers, 8% strongly agree,32% agree with that fact. And 8% strongly
disagree,4% disagree, and remaining 24% neither agree nor disagree with that statement.

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23. I would like to reinvest my funds in the same company
again.

Reinvestment in the same company again

Cumulative
Frequency Percent Valid Percent Percent

Valid Strongly agree 23 46.0 46.0 46.0

Agree 15 30.0 30.0 76.0

Neutral 6 12.0 12.0 88.0

Disagree 4 8.0 8.0 96.0

Strongly disagree 2 4.0 4.0 100.0

Total 50 100.0 100.0

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INTERPRETATION :
46% of the customers express their satisfaction level with Bajaj Allianz service. They Strongly
agree with the statement, 30% customers also agree with it. And 12% have neutral situation. And
remaining 12% not satisfied with Bajaj Allianz.

HYPOTHESIS-1

H0: There is no relationship between investment of ULIP and Insurance


coverage.
H1: There is relationship between investment of ULIP and insurance
coverage.

CORRELATIONS

Correlations

Reason for
choosing ULIPs
I would like to because of
invest money in insurance
ULIP. coverage.

I would like to invest money Pearson Correlation 1 .729**


in ULIP.
Sig. (2-tailed) .000

N 50 50

Reason for choosing ULIPs Pearson Correlation .729** 1


because of insurance
Sig. (2-tailed) .000
coverage.
N 50 50

**. Correlation is significant at the 0.01 level (2-tailed).

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INTERPRETATION:

The above table shows that the reason for choosing ULIPs because of insurance
coverage is 0.000 which shows that there is a relationship between investment of
ULIP and insurance coverage.We can choose alternate hypothesis because the
significant value is less than 0.005.Hence it is very clear that most of the customers
choosing ULIP product because which provide insurance coverage over their
investment. So we can conclude that most of the customers prefer ULIP products
than Mutual funds because of insurance coverage.

HYPOTHESIS-2

H0: There is no relationship between the investment pattern and annual


income of the customers.
H1: There is a relationship between the investment pattern and annual income
of the customers.

T-Test

Group Statistics

Annuaincome N Mean Std. Deviation Std. Error Mean

I would like to invest money Below 2 lakhs 19 2.26 .806 .185


in ULIP.
6-8 lakhs 2 2.00 .000 .000

I would like to invest money Below 2 lakhs 19 3.37 .955 .219


in mutual funds.
6-8 lakhs 2 4.00 .000 .000

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Independent Samples Test

Levene's Test for Equality of t-test for Equality


Variances of Means

F Sig. t

I would like to invest money Equal variances assumed 1.428 .247 .451
in ULIP.
Equal variances not assumed 1.424

I would like to invest money Equal variances assumed 3.956 .061 -.914
in mutual funds.
Equal variances not assumed -2.882

Independent Samples Test

t-test for Equality of Means

df Sig. (2-tailed) Mean Difference

I would like to invest money Equal variances assumed 19 .657 .263


in ULIP.
Equal variances not assumed 18.000 .172 .263

I would like to invest money Equal variances assumed 19 .372 -.632


in mutual funds.
Equal variances not assumed 18.000 .010 -.632

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INTERPRETATION:

The above table shows the significance value of the relationship between
investment pattern and annual income is 0.247 for ULIP and 0.061 for Mutual
Funds.Which shows that there is no relationship between the investment pattern
and annual income level of the customers.We can choose Null hypothesis because
the significant value is greater than 0.005.Hence it is very clear that the income
level does not take part in the investment decision.It may be change the premium
of the policy,but not the decision.

FINDINGS AND SUGGESTIONS

After survey there are some findings and suggestions as follows.


✔ As insurance sector is growing rapidly so most of the life insurance players are selling
ULIP plans. And the awareness about ULIP is growing most of the people knows the
ULIP of life insurance. Since last 4-5 years the returns provided by ULIP were very good
so people tend more towords ULIP
✔ Middle class people who are interested in investment but they are not aware of such
options so more awareness should be there, as main target customer are the middle class
peoples.
✔ While investing any insurance company customer prefers for good branded company
Bajaj is India’s one of the most famous and richest family. And second preference is

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given to SBI life as many people perceive that SBI Life is a govt. owned company so
people want security for their investment.
✔ As now till date people in India don’t wanted to invest in share market because then were
thinking that it is a bad thing but as the awareness about Mutual fund is increasing as
more and more private players are entering in the market. So awareness about MF is not
very good and it can be improved.
✔ While survey I found that many all customers had already invested in ULIP and Mutual
Fund some people had invested in both options. 12% of people had invested in Mutual
Fund and 26% people had invested in ULIP and 4% people had invested in both the
options.
✔ While investing in mutual fund 44% of the customers looks their return,42% customers
observe the scheme’s performance in past years.
✔ First reason or preference that why an investor is interested in ULIP is Investment
Purpose, and second is to its returns and after that they investing because they are getting
the tax benefit. Then again there are some people who are investing for pension planning
and security.
✔ In future people will be more preferring to the security of their money means they want a
secured option which should provide good returns. As ULIP are the option in which you
can have the security also and good returns. The second choice of the investors is return
of their money.
✔ 54% of people given Best rating to the Bajaj Allianz Life Insurance ULIP, so from this
we can analyze that Bajaj Allianz Life Insurance is doing good but it is having good
potential in Market. To improve its market share they should improve the awareness level
of the common people.
✔ Innovative Products and good brand name are the main success factor for Bajaj Allianz
Life Insurance. 6% customers are attracted due to the high reputation of the company. So
if BALIC wants to penetrate its market share they should improve the marketing strategy,
improving the distribution channel etc.

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CONCLUSION AND/OR RECOMMENDATIONS

From above analysis and survey we can conclude as follows

✔ Awareness of ULIP is increasing as more number of private players are entering in life
insurance industry.
✔ Mutual Fund is also getting more and more famous in Indian market as many private
companies innovating new funds as the investors demand.

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✔ ULIP differentiate from Mutual fund in respect of Insurance cover.
✔ Investors in Bajaj Allianz Life ULIP will be getting the advantage of life insurance cover.

✔ People are turning towords the ULIP as a good investment option but as ULIP is in its
starting phase so customers are preferring only big brands.
✔ Mutual fund is having good growth but many customers from rural areas don’t have any
knowledge about Mutual fund.They think it is very risky.
✔ Even investors from cities like Changanacherry don’t have that much of Knowledge
about fund selection they all are depend on Brokers.
✔ People in Changanacherry are investing in only good branded companies as they don’t
believe on other financial companies for taking ULIP.
✔ There is a need for insurers to undertake a demand audit in order to understand what the
policyholder wants and needs.
✔ Deriving the right feedback from customers and bringing out innovative products which
cater to customer demands will go a long way in tapping the market potential of the
insurance and Mutual fund sector.
✔ For Bajaj Allianz Life Insurance They should go for creating more awareness about its
ULIP as now also people are just investing because Bajaj is India’s most Known and
Favorite brand in past.
✔ Bajaj Allianz should go for innovating more and more products and improving the
distribution channels as per the area of sales.

BIBLIOGRAPHY

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REFERENCE:
1) Research Methodology, C.R Kothari, 2nd edition

2) Outlook Money, 15 May 2005, “ULIP Mania”.

3) The Business Line, 10 June 2007, “Know all About ULIPS”.

WEBSITE

www.irdaindia.gov
www.bajajallianzlife.co.in
www.quickmba.com
www.amfindia.com

www.mba.com

www.articlebase.com

QUESTIONNAIRE

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I am RAJEEV JOSEPH student of Karunya School of Management,
Coimbatore doing a project on “A COMPARATIVE STUDY OF ULIP
PLANS OF BAJAJ ALLIANZ LIFE INSURANCE WITH MUTUAL FUNDS” and
this questionnaire is a part of the project and the information collected through this
questionnaire would be used only for academic purposes and strictly confidential

PERSONNAL INFORMATION

1. Name:
2. Gender:

(a) Male (a) Female

3. Marital status:

(a) Married (b) Unmarried

4. Age:

(a) 20-30 (b) 30-40

(c) 40-50 (d) 50-60

(e) 60-70

5. Occupation:

(a) Government (b) Private Service

(c) Business (d) NRIs

(e) Others

6. Annual Income:

(a) Below 2 lakhs (b) 2-4 lakhs

(c) 4- 6 lakhs (d) 6-8 lakhs

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(e) Above 8 lakhs

1. Sources that helps you in making the investment


decisions.

(a) Financial journal (b)


Television

(c) Brokers or agents (d)


Friends

(e) Consultants

2. Factors that influence your investment decisions in a


particular company.

(a) Attractive schemes (b) Tax


benefits

(c) High reputation (d) Rate of


return

(e) Variety of products

3. You generally like to invest money.

(a) Insurance (b) Stock


Market

(c) Mutual Fund (d) Bank


deposits

(e) Both insurance and mutual fund

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4. According to you who among the following Life
Insurance companies is best.

(a) BAJAJ ALLIANZ (b) HDFC


STANDARDLIFE

(c) TATA AIG (d) AVIVA LIFE


INSURANCE

(e) SBI LIFE

5. How would you rate our products.

(a) Excellent (b) Good

(c) Fair (d)


Poor

(e) Very poor

6. I Would like to invest money in ULIP.

(a) Strongly agree (b) Agree

(c) Neutral (d)


Disagree

(e) Strongly disagree

7. Reason for choosing ULIPs because of insurance


coverage.

(a) Strongly agree (b) Agree

Karunya School of Management, Coimbatore


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(c) Neutral (d)
Disagree

(e) Strongly disagree

8. I would like to invest money in Mutual Funds.

(a) Strongly agree (b) Agree

(c) Neutral (d)


Disagree

(e) Strongly disagree

9. Mutual funds are more risky than ULIP products.

(a) Strongly agree (b) Agree

(c) Neutral (d)


Disagree

(e) Strongly disagree

10. ULIPs have advantage over Mutual funds.

(a) Strongly agree (b) Agree

(c) Neutral (d)


Disagree

(e) Strongly disagree

Do you view following factors/sources of information


important while investing in ULIP.
Strongly Agree Neutral Disagree Strongly
agree disagree

Karunya School of Management, Coimbatore


103
(11) Safety

(12) Liquidity

(13) Rate of
Return

(14) Tax
savings

(15) past
scheme’s
Performance

(16) Rating of
ULIP by
Agencies

(17)Advertisem
ents

Do you view following factors/sources of information


important while investing in Mutual Funds.
Strongly Agree Neutral Disagree Strongly
agree disagree

(11) Safety

(12) Liquidity

(13) Rate of
Return

(14) Tax
savings

Karunya School of Management, Coimbatore


104
(15) past
scheme’s
Performance

(16) Rating of
ULIP by
Agencies

(17)Advertisem
ents

18. I would like to reinvest my funds in the same company


again.

(a) Strongly Agree (b) Agree

(c) Neutral (d)


Disagree

(e) Strongly disagree

Karunya School of Management, Coimbatore


105