A

PROJECT REPORT
ON
Organization study & study of problem related to
Recruitment, Training & Motivation level of Emloyees
In the partial fulfillment of the
Master of Business Administration Program
2010-2011

Undertaken at

HDFC Standard Life Insurance

ADVENT INSTITUTE OF MANAGEMENT STUDIES UDAIPUR

(Affiliated to Rajasthan Technical University, Kota)

SUPERVISED TO:

SUBMITTED BY:

Dr. Dipin Mathur

Bharti Tank
MBA lIIrd Semester

CERTIFICATE

TO WHOM SOEVER IT MAY CONCERN

This is to certify that Miss Bharti Tank student of MBA III-sem , Advent
institute of management studies , Udaipur has successfully undergone the
training on Organization study & study of problem related to recruitment,
training &motivation level of employees in our organization for the period
from 25thJune to 9th Aug,2010.
During the tenure of training, we found him sincere and hardworking.
We wish him every success for his bright future career.

Manoj Tailor
Branch Manager
HDFC SLIC
Udaipur

PREFACE
Man has found out himself many things to make himself and his near dear ones happy.
Insurance is one such invention of man. Insurance is many splendid things. It is not just
the reluctant entry and the periodical reminders for paying the premium and the last
receipt of the claim money which may look large or a mere pittance depending upon whether
the policy was in force earning handsome bonus or had been languishing in a state of
suspended animation. insurance is a wonderful world of mortality rates, utmost good faith,
medical examinations with ECG and treadmill exercises, bonuses and no claim
discounts and a host of other science and arts which the insurance people learn in order to
provide what they call financial security and peace of mind which no other invention of man
can match.
In this project I try to show the performance of the various funds of the HDFC standard
life insurance company limited. In the first chapter of this project I have focus on the
introduction, history, needs, importance of the insurance and along with this I also focus on
the insurance industry in the India. In the second chapter I have focus on the insurance
players in India and types of the plans.
In the third chapter of this project I have discuss on the various research
methodologies and objectives of this study and the limitation of the study.
In the fourth chapter of the project give introduction about the HDFC standard life
insurance company limited and its vision, mission and value. It focuses on various ULIP
plans. In the fifth chapter I have focused that how to design a Unit linked plan and types of
the unit linked plans.
The sixth chapter is very important because this chapter is the main part of my study
in this chapter I have show the performance of the various funds of the HDFC standard life
insurance company. what is the current position of the fund in market and what is the current
rate of return of the fund all this shows by the various charts and data and the last chapter is
related to the conclusion of this project.
The following research work takes a look on such persuasion of the insurance companies
and the way they deal with people regarding the support of life in old age- The Pension
Plans.
3

ACKNOWLEDGEMENTS
I would like to thank Dr. Dipin Mathur for supporting me during this project
and providing me an opportunity to learn outside the class room. It was a
truly wonderful learning experience.
I would like to thank Mr.Ravi Khabya Head of the department for providing me this opportunity
to work on this project.
I would like to thank my project guide Mr. B.K. Panda, Sales Development
Manager

HDFC

Standard

Life

Insurance,

Vinimay

commercial

c o m p l e x u d a i a p o l e , U d a i p u r for guiding me through my

summer

internship and research project. His encouragement, time and effort are
greatly appreciated. I wish to extend my sincere gratitude to the branch manager of
HDFC SLIC, V i n i m a y c o m m e r c i a l c o m p l e x u d a i a p o l e , U d a i p u r
Mr. Praveen jha for his insight.
I extend my sincere thanks to Director Prof. N.S Rao and I would also like to thank the
supporting staff of ADVENT INSTITUTE OF MANAGEMENT STUDIES, for their help and
co-operation throughout my project.

I would like to dedicate this project to my parents. Without their help and
constant support this project would not have been possible.
Lastly I would like to thank all my friends for their help in completion this project and
the respondents who offered their opinions and suggestions through the
survey that was conducted by me in U d a i pur.

Thanking You

Bharti tank

DECLARATION

I hereby declare that this project work Organization study

& study of problem related to Recruitment, Training & Motivation level
of Employees has been carried out by me in partial fulfillment of Master
of Business administration(MBA) is an own record carried out by
me under the supervision of Mr. Dipin Mathur, Project Head.
I also declare that this project is originally prepared by me and not been
submitted to any University for the award of any degree.

Place: Udaipur
Date:

Signature
Bharti Tank

EXECUTIVE

SUMMARY

HDFC Standard Life Insurance is the oldest life insurance company in the world. It is the
largest insurer of U.K. and is 28

th

largest company of the world. In India, the company is

dealing in the marketing of life insurance products and unit linked investment plans. The
company faces competition from all private players in insurance industry but its major
competitor is ICICI Prudential Life Insurance Company Limited.
To compete with its rival HDFC SLIC have to come up with products at cheaper prices with
the same kind of services which they are providing to their esteem customers. They can try to
increase their market share by coming up with the products which are of short term period
and with small premium.
HDFC SLIC has now being started to advertise on different media as its competitors do. But
the drawback which I feel is that they are focusing on few of their popular products only. Till
date Indian customer has a false perception about the insurance they feel that it would
benefit them if they do not live through the policy term. Family responsibilities and high returns
are the two main reasons for the people to invest in insurance. Optimum return of 15-20%
must be provided to consumers to keep them interested in purchasing insurance.
On the whole HDFC SLIC is a good place to work at. Every new recruit is provided with
extensive training on unit linked funds and product of HDFC SLIC. With an improvement in the
sales techniques used, a fair bit of advertising and modifications to the existing product
portfolio. HDFC is set to capture the insurance market in India as it has around the globe.

Content
Acknowledgement
Declaration
Certificate
Preface
Executive summary

Chapter

Page No.

CHAPTER 1 :Introduction of insurance

Role of insurance

10

Classification of insurance

11

History of life insurance business

12

Needs of life insurance

12

Benefits of life insurance

13

Role of life insurance

15

Law and regulations

17

Insurance industry in India

21

What is human life value

25

What is contract of insurance

26

CHAPTER 2 :The insurance player

28

Types of plan

31

CHAPTER 3 :7

Research methodology

33

Objectives of research

34

Data collection

34

Techniques used in this study

37

Sources of data

37

Objectives of the study

38

Limitation of the study

38

CHAPTER 4 :Organizational profile

40

Why HDFC standard life

46

Vision, mission, values

47

CHPTER 5 :Product portfolio

51

Introduction to unit linked product

54

Benefits of unit linked plan

56

Design of a unit linked plan

60

Types of unit linked plan

63

CHAPTER 6 :Introduction of fund

80

Performance Statistics

87

Individual pension portfolio

CHAPTER 7 :Conclusion
Recommendation
Appendix
Bibliography

INTRODUCTION OF INSURANCE
WHAT IS INSURANCE
Insurance is basically risk management device. The losses to assets resulting from natural
calamities like fire; flood, earthquake, accident etc. are met out of the common pool
contributed by large number of persons who are exposed to similar risks. This contribution
of many is used to pay the looses suffered by unfortunate few. However the basic principle is
that loss should occur as a result of natural calamities or unexpected events, which are
beyond the human control. Secondly insured person should not make any gains out of
insurance.
It is natural to think of insurance of physical assets such as motor car insurance or fire
insurance but often be forget that creator all these assets is the human being whose effort
have gone along way in building up to assets. In that scene human life is a unique income
generating assets. Unlike physical assets, which decrease with the passage of time, the
individual become more experienced and mature as he advances in age. This raises his
earning capacity and the purpose of life insurance is to protect the income to individual
and provide financial security to his family, which is dependent on his income in the
event of his pre-mature death. The individual also himself also needs financial security for
the old age or on his becoming permanently disabled when his income will stop. Insurance
also has an element of saving in certain cases.
Insurance is rupees 400 billion business in India and yet its spread in the country is relatively
thin. Insurance as a concept has not being able to make headway in India. Presently LIC
enjoys a monopoly in Life Insurance business while GIC enjoys it in general insurance
business. There has been very little option before the customer to decide the insurer. A
successful passage of the IRA bill has clear the way of private sector operators in
collaboration with their overseas partners. It is likely to bring in a more professional and
focused approach. More over the foreign players would bring sophisticated actuarial
techniques with them, which would facilitate the insurer to effectively price the product. It is
very important that the trained marketing professionals who are able to communicate specific
features of the policy should sell the policy. In the next millennium all these activities would
play a crucial role in the overall development and maturity of the insurance industry.

GENERAL DEFINITION: In the words of John Magee, Insurance is a plan by which large
numbers of people associate themselves and transfers to the shoulders Of all risks that
attach to individuals

FUNDAMENTAL DEFINITION: In the words of D S Hansell, Insurance may be defined as a social device
providing financial compensation for the effects

of

misfortune,

the

payments

being made from the accumulated contributions of all participating in the scheme.

CONTRACTUAL DEFINITION: In the words of justice Tindall Insurance is a contract in which a sum
of money is paid to the assured as consideration of insurers incurring the risk of paying
a large sum upon a given contingency.

CHARACTERISTICS OF INSURANCE
Sharing of risk
Co-operative device
Evaluation of risk
Payment on happening of special event
The amount of payment depends on the nature of losses incurred

Role of Insurance in Economic Development

For economies development, investment is necessary. Investment is made out of

savings. A life insurance company is a major instrument for the mobilization of savings
10

of people, particularly from the middle and lower income groups. These savings are
channeled into investment for economic growth.

As on 31.3.2002,the total investment of LIC exceed rs.245, 000 corers, of which more
than rs.130, 000 corers were directly in government related securities, more than
rs.12000crores in hosing loan and Rs.4000 corers in water supply and sewerage
systems.

The LIC is not an exception. All good life insurance companies have huge funds,
accumulated through the payment of small amount of premium of individual. These
funds are invested in ways that contributed substantially for the economic development
of the countries in which they do business.

A life insurance company will have large funds. These amounts are collected by way of
premiums. Every premium represents a risk that is covered by that premium. In effect,
therefore, these vast amounts represent pooling of risks. These fund are collected and
held in trust for the benefit of the policyholders.

Without insurance, trade and commerce will find it difficult to face the impact of
major perils like fire, earthquake, floods, etc.

11

Classification of insurance business:

The insurance is broadly classified as:
1 .Life insurance business
2. Non-life insurance business/General Insurance business.

Life insurance business:

It is the business of effecting contracts of insurances upon human life including any
contract whereby the payment of money is assured on death or on the happening of any
Contingency to the dependent on human life and any contract which is subject to the
payment of premiums for a term and shall be deemed to include:
The granting disability and double and triple indemnity accident benefits, if so provided in
the contract of insurance.
The granting of annuties of human life. The granting of super-annuation allowance and
annuities payable out of any fund applicable solely to the relief and maintenance of the
person engaged or who have been engaged in any particular profession, trade or
employment or of the dependents of such persons.

Non life insurance business :

Conventional classification of insurance business:
1. Fire insurance
2. Marine insurance
3. Miscellaneous insurance (accident)
Modern classification of general insurance
1. Insurance of person
2. Insurance of property
3. Insurance of interest
4. Insurance of liability

12

History of Life Insurance

Life insurance or life assurance is a contract between the policy owner and the insurer, where
the insurer agrees to pay a sum of money upon the occurrence of the insured individual's
or individuals' death or other event, such as terminal illness or critical illness. In return, the
policy owner (or policy payer) agrees to pay a stipulated amount called a premium at
regular intervals or in lump sums. There may be designs in some countries where bills and
death expenses plus catering for after funeral expenses should be included in Policy
Premium. In the United States, the predominant form simply specifies a lump sum to be
paid on the insured's demise.
As with most insurance policies, life insurance is a contract between the insurer and the policy
owner (policyholder) whereby a benefit is paid to the designated Beneficiary (or
Beneficiaries) if an insured event occurs which is covered by the policy. To be a life policy
the insured event must be based upon life (or lives) of the people named in the policy

NEED OF THE LIFE INSURANCE: The original, basic intention of life insurance is to provide for ones family and
perhaps others in the event of death. Originally, polices were to provide for short periods of
time, covering temporary risk situations, such as sea voyages. As life insurance became
more established. It was realized what a useful tool it was in a number of situations, including:

1. Temporary needs/ threats:

The original purpose of Life Insurance remains an important element, namely providing for
replacement of income on death etc.

13

2. Regular Saving:

Providing ones family and oneself, as a medium to long term exercise (through a series of
regular payment of premiums). This has become more relevant in recent times as people
seek financial independence from their family.

3. Investment:
Put simply, the building up of saving while safeguarding it from ravages of inflation. Unlike
regular saving products are traditionally lump sum investments, where the individual makes
are one time payment.

4. Retirement:
Provision for ones on later years has become increasingly necessary, especially in
changing culture and social environment. One can buy a suitable insurance policy, which will
provide periodical payments in ones old age.

BENEFITS:
1. It is superior to traditional saving machine
As well as providing a secure vehicle to build up saving etc. it provides piece of mind to the
policy holder. In the event ultimately death, of say the main earner in the family, the policy
will pay out guaranteed sum assured, which is likely to be significantly more then the total
premiums paid. With more traditional saving vehicles, such as fixed deposits, the only return
would be the amount invested plus any interested accrued.

14

2. It encourages saving and forces thrift:

Once an insurance contract has been entered into, the insured has an obligation to continue
paying premiums, until the end of the term of policy, otherwise the policy will lapse. In other
words, it becomes compulsory for the insure to save regularly and spend wisely. In contrast
savings held in a deposit account can be accessed or stop easily.
3. It provides easy settlement and protection against creditors
Once a person appointed for receiving the benefits or a transfer of rights is made
(assignment), a claim under the life insurance contract can be settled easily. In addition,
creditors have no right to any mommies by the insurer, where the policy is written under trust.
Under the married womans act the money available from the policy forms a kind of trust
which creditors can not claim on.

4. It can be encased and facilities borrowing:

Sum contracts may allow the policy can be surrendered for a cash amount, if policy holder is
not in a position to pay the premium. A loan, against certain policy, can be taken for a
temporary period to tide over the difficulty. Presence of life insurance policy facilitates credit
for personal or commercial loans as it can be offered as collateral security.

5. Tax relief :
The policy holder obtains income tax rebates by paying the insurance premium. The specified
form of saving which enjoys a tax rebate u/s
88 of the income tax act. Include Life Insurance premiums and contribution to a recognized
PF etc.

15

ROLE OF LIFE INSURANCE

========================

Role 1: Life Insurance as investment

Insurance is an attractive option for investment. While most people recognize the tax
hedging and tax saving potential of life insurance, many are not aware of its advantages as an
investment option as well as. Insurance products yield more compared to regular investment
option as this is besides the added incentives (read bonuses) offered by insurers.
You can not compare an insurance product with other investment schemes for simple
reason that it offers financial protection from risks, something that is the missing in noninsurance products.
Infect, the premium you pay for a investment against risk. Thus, before comparing with
other scheme, you must accept that a part of total amount invested in life insurance goes
towards providing for the risk cover, while the rest is used for savings.
In life insurance, unlike non-products, you get maturity benefits on survival at the end
of the term. In other words, if you take a life insurance policy for 20 years and survive the
term the amount investor as premium in the policy will come back to you with added returns.
In the unfortunate event of death within the tenure of the policy, the family of the deceased
will receive the sum assured.
Now, let us compare insurance as an investment options. If you invest Rs.10000/in PPF, year money grows to Rs.10950 at 9.5% interest over a year. But in this case, the
access to your funds will be limited. One can withdraw 50% of the initial deposit only after
four years.
The sane amount of Rs. 10000/- can give you an insurance cover of up to
approximately Rs. 5 to 12 lacks. (Depending upon the plan, age and medical condition of life
insure etc.) And this amount can become immediately available to the nominee of the policy
holder on death. Thus insurance is a unique investment avenue that delivers sound returns in
addition to protection.

16

Role 2: Life Insurance as Risk Cover

First and foremost, insurance is about risk cover and protection financial protection,
to be more precise-to help out last once unpredictable losses. Designed to safe guard against
losses suffered on account of an unforeseen events. Insurance provide you with that
uniqueness sense of security that no other form of investment provides. By buying life
insurance, you buy peace of mind and are prepared to face any financial demand that
would hit the family incase of an untimely demise.
To provide such protection, insurance firms collect contributions for many people who
face the same risk. A loss claim is paid out of the total premium collected by the insurance
companies, who act as trustees to the monies.
Insurance also provides a safeguard in the case of accident or a drop in income after
retirement. An accident or disability can be devastating and an insurance policy can lend
timely support to the family in such time. It also comes as a great help when you retire, in
case untoward incident happens during the term in the policy.
With the entry of private sector player in insurance, you have a wide range of products
and services to choose from. Further, many of these can be further

customized to fit

individual/group specific needs considering the amount you have to pay now; its worth
buying some extra sleep.

ROLE 3: Life Insurance as Tax Planning

Insurance serves as an excellent tax saving mechanism too. The Govt. of India has
offered tax incentives to life insurance products in order to facilitate the flow of funds into
productive assets. U/S 88 of Income Tax Act 1961, an individual is entitled to rebate 20% on
the annual premium payable on his/her life and life of his/her children or adult children. The
rebate is reducible from tax payable by a individual or Hindu undivided family. This rebate is
can be availed up to a maximum of Rs 12000/- on payment of yearly premium of Rs
60000/- a year, you can buy anything upward of Rs 100000/- in sum assured. This means
that you get Rs 12000/- tax benefit. This rebate is deductible from the tax payable by an
individual or a Hindu undivided family.
17

LAW AND REGULATIONS

Insurance act 1938

The insurance act 1938, which came into effect from 1 st July 1938, and was amended in
1950 and later in 1999, is the principle enactment related to the business of insurance
in India. The act contains provisions regarding licensing of agents and their
remuneration, prohibition of rebates, and protection of policyholders interest. It also has
provision placing limits on the expenses of insurer, use of funds and patterns of
investments, maintaining solvency levels, and constitution of insurance association and
insurance council and the tariff advisory committee foe general insurance.

Section 2(5A) defines chief agent as a person who, not being a salaried employee of
an insurer, in consideration of commission (I) perform any administrative and organizing
function for the insurer and (ii) procures life insurance business for the insurer by
employing or causing to be employed, insurance agents on behalf of the insurer.
Section 2(17) defines a special agent as one who procures life insurance business, in
consideration of commission, employing or causing to be employing insurance agents
on behalf of the insurer. He only procures business through agents but dose not
perform administrative functions like a chief agents. Special agents can work in the life
insurance business, not in a general insurance business.

Individuals companies or firm can be appointed as chief agents or special agents. The
individuals, the director of companies or partners of firms, wanting to become chief
agents or special agents must be free of the disqualification specified in connection with
agents.

Section 42A provides for the registration of chief agents and special agents. Certificates
to functions as such are to be insured after registration. The certificates are valid for 12
month and may be renewed. The provision also stipulated the number of insurance
agents that chief agents may employ directly or through special agents and the
minimum business they have to do. Similarly, there are stipulations about the number of
agents to be employed by a special agents and the minimum business to be done.

18

Renewal of certificate is subject to compliance with these requirements. No chief agents

or special agents were registered till the end of 2001.

The act vest the IRDA with powers to inspect documents, to appoint add- itional
director, to issue direction, to take over the management of an insurer and to appoint
administration. The IRDA has powers to adjudicate on disputes between insurer and
intermediaries or between intermediaries and to decide on disputes relating to
settlement of claim of amount and exceed Rs 2000. not may disputes are likely to be
referred to the authority under this section, as the amount of Rs 2000 is very small.

Life Insurance Corporation Act, 1956

This act was the basis for the establishments of the L.I.C as a body corporate consisting
of not more than 16 members appointed by the central government, one of them being
the chairmen. The corporations duty was to carry on life insurance business to the best
advantage of the community. Section 30.gave the L.I.C exclusive privilege to transact
life insurance business in India. This exclusive privilege ceased as a result of the
amendment made in 1999. These amendments were made in pursuance of the
governments policy of economic reforms and 11 insurance companies were registered
and had commenced life insurance business till 31.3.2002.

Insurance Regulatory and Development Authority Act 1999

This act, passed in December 1999, provided for the establishment of the IRDA to
protect the interest of holders of insurance policies, to regulate, promote and ensure
orderly growth of insurance industry and for matter connected therewith or incidental
there to. It also sought to amend the insurance act, 1938 the life insurance corporation
act 1956 and the general insurance business act, 1972.

19

The IRDA is a corporate body. It is advised by an insurance advisory committee

consisting of not more than 25 member to represent the interest of commerce, industry,
transport, agriculture, consumer forums, surveyors, agents, intermediaries, organization
engaged in safety and loss prevention, research bodies and employees association in
the insurance sector. It replaces the controller of insurance to administer the provision
of the insurance act. That includes registration, licensing, and laying down regulations
for the proper conduct of the business and the protection of the interest of policyholders.

The regulations framed by the IRDA, in so far as they affect the working of the agents,
are reproduced in full at the end of this course.

OMBUDSMAN

In exercise of the powers conferred by sub-section (1) of section 114 of the insurance
act, the central government has framed rules known as Redressal of public grievances
rules, 1998 whereby Ombudsmen are appointed. The governing body of the insurance
council appoints ombudsmen. Their function is to resolve complaints in respect of
disputes between policyholders and complaints in respect of disputes between
policyholders and insurers in cost effective, efficient and impartial manner.

The complaints to the Ombudsman may relate to (a) partial or total repudiation of claims
(b) any dispute regarding premium paid or payable in terms of the policy (c) any
disputes on the legal construction of the policy relating to claims (d) delay in settlement
of claims (e) non- issue of any insurance document to customers after receipt of
premium.

The Ombudsman shall act as counsel and mediator in matter within its terms of
reference. It is not a judicial authority. It has no right to summon witnesses. It has to
make its decision on the basis of document submitted to it. The complaints and the
insurer are allowed to make personal submission. But lawyers are not permitted to
argue the case.

Complaints to the Ombudsman lie only when the insurer had rejected the complaint or
no reply was received within one month of the complaint or the reply was not
satisfactory. A complaint can be made within one year after the insurer had rejected the
20

representation. The subject matter should not be already before any court or
consumers forum or arbitration.

The Ombudsman is expected to make a recommendation with in one month from the
date of receipt of complaint. If the complaint accepts this recommendation, the insurer
had to comply within 15 days and inform the Ombudsman accordingly. If the complaints
dose not accept the Ombudsmans recommendation, the Ombudsman shall pass an
award an in writing, starting the amount awarded which shall not be in excess of what is
necessary to cover the loss suffered by the complaint as a direct consequence of the
insured peril or for an amount not exceeding Rs20, 00,000, whichever is lower. The
award has to be passed within 3 month. the complaint has to intimate his acceptance of
the award within one month by a letter of acceptance to the insurer and the insurer has
to comply within 15 days and inform the Ombudsman. If the complaint dose nit intimate
acceptance, the award cannot be implemented.

GOVT. ROLE:
Govt. keen to reduce the dependency on the state via private pension provisions.
They have a choice between using compulsion and incentives. Most of the govt. chooses
the later method. Tax relief is guaranteed in the pension plants and is extremely generous,
reflecting the value that the govt. and the society and large place on the provision of
retirement benefits. Tax treatments of the benefit vary by country and by benefits.
In India, the proceeds of gratuity and provident fund are tax free in the hand of the
members. In UK, a certain amount of the proceeds can be taken as tax lump sum and
reminder as taxable income. Benefits due on withdrawal from schemes are generally
taxed unless they are transferred to another scheme or approved pension plan.

21

Insurance industry in india

Brief History
The insurance sector in India dates back to 1818, when Oriental Life Insurance Company
like Bombay life Assurance Company, in 1823 and Tritons Insurance Company, for
General Insurance, in 1850 were incorporated. Insurance ACT was passed in 1928 but it
was subsequently reviewed and comprehensive legislation was enacted in 1938.
The nationalization of life insurance business took place in 1956 when 245 Indian and
Foreign insurance societies were first merged and then nationalized. It paved the way
towards the establishment of life insurance Corporation (LIC) and since then it has
enjoyed a monopoly over the life insurance business in India. General Insurance business.
Subsequently in 1973, non-life insurance business was nationalized and the General
Insurance

Business

(Nationalization) ACT,

1972

was

promulgated. The

General

Insurance Corporation (GIC) in its present form was incorporated in 1972 and maintains a
very strong hold over the non-life insurance business in India. Due to concerns of relatively
low spread of insurance in the country.
The efficient and quality functioning of the Public Sector Insurance Companies. The
untapped potential for mobilizing long-term contractual savings funds for
infrastructure.
The (Congress) government set up Insurance set u an Insurance Reforms committee in April
1993. The committee submitted its report in January 1994, recommended a phased program
of liberalization, and called for private sector entry and restructuring of the LIC and GIC.

EVALUATION OF INSURANCE INDUSTRY IN INDIA:

Life Insurance in its modern form is a western concept. The Indian insurance
industry is as old as it is in other part of the world. Although life insurance business has
been taking shape for the last 300 years, it came to India with the arrival of Europeans. First
Life Insurance Company was established in 1818 as Oriental Insurance Company, mainly
to provide for widows of Europeans.
Europeans

The companies that follow mainly catered to

and charged extra premium on Indian Lives. The first insurance company

insuring Indian Lives at standard rates was BOMBAY MUTUAL LIFE INSURANCE
22

COMPANY which was formed in 1870. This was also the year when 1st Insurance act
was passed by the British Parliament. The years subsequent to the Swadeshi movement
saw the emergence of several insurance companies. At the end of the year 1955 there
were 245 insurance companies. All the insurance companies were nationalized in 1956 and
brought under one umbrella- LIFE INSURANCE CORPORATION OF INDIA (LIC) which
enjoyed a monopoly of the Life Insurance business until near the end of 2000. By
enacting the IRDA act 1999, the Govt of India effectively ended LICs monopoly and
opened the doors for private Insurance companies.

Indian Scenario:
Unfortunately the concept of insurance is not popular in our country .As per the latest
estimates, the total premium income generated by life and general insurance in India is
estimated at around a meager 1.95% of GDP. However India's share of world insurance
market has shown an increase of 10% from 0.31% in 2004-2005 to 0.34% in 2005-2006
India's market share in the life insurance business showed a real growth of 11 % thereby out
performing the global average of 7.7% Non-life business grew by 3.1% against global
average of 0.20%. In India insurance spending per capita was among the lowest in the world
at $7.6 compared to $7 in the previous year. Amongst the emerging economies, India is one
of the least insured countries but the potential for further growth is phenomenal, as a
significant portion of its population is in services and the life expectancy has also
increased over the years.

Insurance Sector
The practice of insurance in the world is quite old infect. How ever, life insurance business,
as it is known today, is a much later development. It evolved from the great transformation in
life, which began with the decline of the agrarian society in the western countries in the 19th
century.
Industrialization with its cities, factories, cash economy and an urban saving
class set the stage for life insurance as a large scale national institution. It can truly be that
life insurance is a product of modern industry. Growth of life insurance Company in any
country will illustrate introduced modern life insurance business didnt make much headway.
23

The business started taking its deeper roots only when in the late 19 th century India
insurance companies appeared on the scenes and started accepting India lies freely on
the same terms as European lives in India. The growth of India life insurance business
continued to remain restricted till the Swedish movement gathered momentum. The business
passed through the period of ups and downs with the political and economic situation in the
country.

Need for Association

With the rise in the number of Indian life insurance companies occasioned by the growth in
the national spirit as a result of the independent movement a need was felt by the
companies for an organization to assist them in solving the problems faced by them. With a
view to meeting this need and also to providing a representative body for expression of a
common viewpoint of Indian insurance before the government regarding insurance
legislation and Indian life Assurance offices association was established in 1928. The
association played companies forum for expression of representative views on insurance
and taxation legislation and imparting insurance education.

Nationalization
Even

during

days

of

the

freedom

struggle

there

was

occasional

demand

for

nationalization of life insurance industry. The demand naturally gathers mare momentum
after independence. Mismanagement had lead to liquidation of as many as 25 life insurance
companies in the decade after independence. Another 25 insurance companies had during
the same period so frittered away their resources that their business had to be transferred to
other companies. All these cost financial losses and consequent suffering to several
policyholders who had entrusted their hard earned saving to the care of the company
management. This misuse of power, position and privilege by these companies in the private
sector was one of the most compelling reasons that influenced the decision of the
government of India to nationalize the life insurance industry in 1956. The life insurance
industry in India had to be geared up for raising resources for execution national
24

programs. One of the objectives of the national plans was to build a pay welfare state. It
was therefore, essential that benefits of life insurance were made available to every
family in the country and that the business should be conducted with utmost economy by the
management acting in a spirit of trusteeship to enable maximization of the

peoples

saving that could be analyzed through the life insurance into the development
programs.

Objectives of nationalization:
The decision of the Government of India to nationalize life insurance industry was
implemented by the passage of the life insurance Corporation Act, 1956, by Parliament.
The objectives of nationalization of life insurance industry that emerged out of the
discussion and speeches in the parliament in the time passage of the act were:
Spread of message of life insurance as far and wide as possible reaching out beyond the
more advanced urban areas well into hitherto neglected areas.

Effective mobilization of the peoples savings.

Complete security to policyholders.

Prompt and efficient services to the policyholders.

Conducting of the business with the utmost economy and with the full
realization that the money. Belonged to the policyholders.

Investment of funds in such a way as to secure maximum yield consistent

with safety of capital.

Economic premium rates.

Development of a dynamic and vigorous organization under a

management conducted in sprit of Trusteeship.

Formulation of scheme of insurance to suit different section of the community.

25

How big is the insurance market?

Insurance is a Rs.400 billion business in India, and together with banking services adds
about 7% to India's Gap. Gross premium collection is about 2% of Gap and has been
growing by 15-20% per annum. India also has the highest number of life insurance policies
in force in the world, and total investible funds with the LIC are almost 8% of GDP. Yet more
than three-fourths of India's insurable population has no life insurance or pension cover.
Health insurance of any kind is negligible and other forms of non-life insurance are much
below international standards.

What is Human Life Value (HLV)?

Human life value is:

Capitalized value of the net earnings

Present value of the total income lost to the family in the event death.

These points will be more cleared with this example:

Suppose an individual earns Rs. 10000/month.

The personal expense is Rs.2000/month

Therefore the income provided to his family is Rs. 8000/month.

The annual income provided to his family works out to Rs. 96000

Now if he were not to earn it for them , the family would have to Rs.1600000 in a
bank so that they get Rs. 96000 yearly at 6% interest.(96000*100/6)

Therefore the HLV of the person is Rs. 1600000.

Ps. Note that we have not taken into account the future income growth of the person. Hence
this is not the exact human life value but only a representation to give the customer
a fair idea of how it works.

26

What is a contract of insurance?

A contract of insurance is a contract of utmost good faith, technically known as uberrima
fides. The doctrine of disclosing all material facts is embodied in this important principal that
applies to all forms of insurance. The purpose, who is one of the parties to the contract, is
presumed to have means of knowledge that are not accessible to the corporation who is the
other party to the contract. Therefore, the purpose is bound to tell the insurer everything
affecting the judgment of the insurer. In all the contracts of insurance the proposes is bound
to make full disclosure of all material facts and not merely, those which he thinks material
Misrepresentation non-disclosure or fraud in any document leading to the acceptance of the
risk automatically discharges the corporation from all liability under the contract. Although
Section 45 of the Insurance Act, 1938 provides that no policy can be called in question after
a period of two years from the date of its issue on the ground that any statement in proposal
or a related document was false or inaccurate (making the policy indisputable), This
provision is not applicable if the corporation can prove that misrepresentation or nondisclosure was on a material fact and was fraudulently made and that the policyholder
knew at the time that statement he made was false. It is, therefore, in the interest of the
would be policyholder to disclose all the material facts to the corporation to avoid any
complication when the claim arises. It is equally obligatory on an agent to see that the
assured doesn't obtain the contract by means of untrue representation or concealment in
any respect. It is the duty that the agent owes both to his client and to the corporation.

The Insurance Players

27

 HDFC Standard Life Insurance Company Limited

Birla Sun Life Insurance Company Limited
TATA AIG Life Insurance Company Limited
Max New York Life Insurance Company Limited
Kotak Mahindra Old Mutual Life Insurance Limited
SBI Cardiff Life Insurance Company Limited
ING Vysya Life Insurance Company Limited
Bajaj Allianz Life Insurance Company Limited
ICICI Prudential Life Insurance Company Limited
MetLife Life Insurance Company Limited
Aviva Life Insurance Company Limited
Reliance Life Insurance Company Limited
Sahara India Life Insurance Limited
_ Shriram Life Insurance Company Limited

28

THE FOLLOWING COMPANIES HAS THE REST OF THE MARKET

SHARE OF THE INSURANCE INDUSTRY.

NAME OF THE PLAYER (%)

MARKET SHARE

LIC

82.3

ICICI PRUDENTIAL

5.63

BIRLA SUN LIFE

2.56

BAJA ALLIANZ

2.03

SBI LIFE

1.80

HDFC STANDARD

1.36

TATA AIG

1.29

MAX NEW YORK

0.90

AVIVA

0.79

OM KOTAK MAHINDRA

0.51

ING VYASA

0.37

AMP SANMAR

0.26

METLIFE

0.21

29

30

Types of Plan..

Conventional
ULIP

Conventional:-

Conventional plans are those plans in which returns are known and are fixed. Example: Childrens Plan. In this plan the customer has knows how much return he will get after
maturity or any miss happening occurs. Here risk is low and returns are also low, because it
is not dependent on the market risk and is a rigid policy.
It is seen that people also invest less in such type of policies as returns are less
and there is a compulsion attached is of compulsory premium submission till the policy
matures.
Illustration: Premium for 10 yrs is 20000
20000+20000+20000+20000+20000+20000+20000+20000+20000+20000= 2lks
Return described was 2.5 times
So the customer will get approx 5 lakhs after deducting all charges.
Insurance is always of the parent and beneficiary is the child. There are 2
types of loss that occurs on any type of miss happening i.e. emotional loss and monetary loss
company cant full fill emotional loss but can help in monetary loss by giving the 2lks Rs. At
the miss happening and will give the rest premium by its own and will give the bonus at
maturity again to the child.

ULIP

ULIP stands for UNIT LINK INSURANCE PLAN. As it is said higher risk higher return

31

RESEARCH METHODOLOGY

MEANING OF RESEARCH METHODOLOGY

A Research is a careful investigation or inquiry, especially through search for new facts in any
branch of knowledge. It is a systemized effort to gain more knowledge.

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically. We study the various
steps that are generally adopted by a researcher in studying his research problem along with
the logic behind them. It is necessary for the researcher to know not only the research
methods or techniques but also the methodology. Researcher always needs to understand the
assumptions underline various technique and they need to know the criteria by which they can
decide that certain technique and procedures will be applicable to certain problems and other
will not.

Research is an organized enquiry designed and carried out to provide information for solving
a problem.
Research methodology is a way to systematically solve the research problem. It may be
understood as a science of studying how research is done scientifically.

32

OBJECTIVES OF RESEARCH

1. Research extends knowledge of human beings, social life and environment. Scientists
and researchers search answers for various types of questions: what, where, when,
how and why.

2. Research unravels the mysteries of nature, brings to light hidden information that might
never be discovered fully during the ordinary course of life.

3. Research verifies and tests existing facts and theory and these help improving our
knowledge and ability to handle situation and events.

4. Research aims to analyze inter-relationships between variables and to derive causal

explanations and thus enables us to have a better understanding of the world in which
we live.

5. Research also aims at developing new tools, concepts and theories for a better study of
unknown phenomena.

DATA COLLECTION

The task of data collection begins after a research problem has been defined.
While deciding about the method of data collection to be used for the study, the researcher
should keep in mind two types of data viz ,primary and secondary.

33

Primary data may be described as those data that have been observed and recorded by
the researchers for the first time to their knowledge.
Primary data can be classified into two types:

Data classified by their nature.

Data classified according to function.

Primary

data

can

be

collected

through

several

methods.

Some

of

the

important ones are:

1. Observation method
2. Interview method
3. Questionnaires
4. Schedules
5. Other methods

Secondary data are statistics not gathered for the immediate study at hand but for some
other purposes.
Secondary data can be classified into two types:
Internal data which include

sales analysis.

Investor annual report.

Earlier research done in the company.

34

External data which include

Encyclopedias.

Text books.

Magazines.

Published research.

Other Source of data collection

Index.

Internet search engines.

35

TECHNIQUES USED IN THIS STUDY

Consultation and personal observation.

Collection classification, compilation, tabulation analysis and figure relevant to fund

performance of the company.

Analysis of funds of the various plans of the HDFC standard life insurance company.

Taking the help of the various broachers.

SOURCES OF DATA

The analysis was based on following document and related Information.

The annual financial statements of the concern i.e. balance sheet, profit & loss account,
annual report.

The company publication includes booklets, templates, Broachers etc.

Secondary data from various mutual funds.

Getting the various documents on websites, books, newspapers etc.

Various documents relating to the performance of the fund.

Data published by the CRICIL (Credit Rating company).

36

OBJECTIVES OF THE STUDY

1. To study the performance of the fund of the HDFC standard life insurance company in
various ULIP plans.
2. To study the investment structure of HDFC standard life insurance company in ULIP
plans.
3. To study the return on the various funds of HDFC standard life insurance company
limited under the various plans.
4. To know the awareness of the customer about various plans and their funds of HDFC
SLI company.

LIMITATION OF THIS STUDY

1. There is general paucity of adequate database.
2. The study is totally based on secondary data because the primary data relating to this topic
is very difficult to get from the general public.
3. The secondary data are not sufficient for this study.

37

ORGANIZATIONAL PROFILE

HOUSING DEVELOPMENT FINANCE CORPORATION:

HDFC was started by Hasmukh Bhai Parekh in1977 with the formation of Malhotra
Committee. HDFC was incorporated with the primary objective of meeting a social need that of
promoting home ownership by providing long-term finance to households for their housing
needs. HDFC was promoted with an initial share capital of Rs. 10 crores.
HDFC has since emerged as the largest residential mortgage finance institution in the
country. The corporation has had a series of share issues raising its capital to Rs. 119 crores.
The net worth of the corporation as on March 31, 2000 stood at Rs. 2,096 crores.
HDFC operates through 75 locations throughout the country with its Corporate
Headquarters in Mumbai, India. HDFC also has an international office in Dubai, U.A.E., with
service associates in Kuwait, Oman and Qatar.
HDFCs main goals are to:
a) Develop close relationships with individual households.
b) Maintain its position as the premier housing finance institution in the country.
c) Transform ideas into viable and creative solutions.
d) Provide consistently high returns to shareholders.
e) To grow through diversification by leveraging off the existing client base.

38

INTRODUCTION
Founded in 1977, HDFC is today the market leader in housing finance in India and has
extended financial assistance to more than 15 lacks homes. HDFC has more than 110
offices in India presently. It has also one international office in Dubai and 3 more services
associate in Kuwait, Qatar and sultanate of OMAN. HDFCs assets base amount to over
15,000 crore. Its financial strength is reflected in highest safety rating of FAAA and MAAA
awarded by CRISIL and ICRA two of Indias leading credit rating agency respectively, for
the last 6 year consecutively. It has a depositor base of over 11 lacks customer and a
deposit agents force of over 46,000 of the total deposit, 73% are sourced from individual
and trust depositors, which demonstrates the tremendous confidence that retail investors
have in the company.
HDFC- promoted companies have emerged to meet the investors and
customers needs. HDFC bank for commercial banking, HDFC Mutual Fund for mutual fund
products, to be followed very shortly by HDFC Standard Life Insurance Company for the life
insurance and pension products. Being an institution that is strongly committed to the highest
standards of quality and excellence, HDFC has won several accolades in the past few years.
One such award is the Ramakrishnan Bajaj National Quality Award for the year 1999. this
award was instituted to award recognition to Indian companies for business excellence and
quality achievement. HDFC is the only company so far to receive this award in the service
category.
HDFC Standard Life Insurance Company Ltd. is one of Indias leading private life insurance
companies, which offers a range of individual and group insurance solutions. It is a joint
venture between Housing Development Finance Corporation Limited (HDFC Ltd.), Indias
leading housing finance institution and one of the subsidiaries of Standard Life plc, leading
providers of financial services in the United Kingdom. Both the promoters are well known for
their ethical dealings and financial strength and are thus committed to being a long-term
player in the life insurance industry all-important factors to consider when choosing your
insurer.
STANDARD LIFE:
39

The Standard Life Assurance Company ("Standard Life") was established in 1825 and the first
Standard Life Assurance Company Act was passed by Parliament in 1832. Standard Life was
reincorporated as a mutual assurance company in 1925.
Standard Life is Europe's largest mutual life assurance company. Standard Life, which
has been in the life insurance business for the past 182 years, is a modern company surviving
quite a few changes since selling its first policy in 1825. The company expanded in the 19th
century from its original Edinburgh premises, opening offices in other towns and acquiring
other similar businesses.
Standard Life currently has assets exceeding over 70 billion under its management
and has the distinction of being accorded "AAA" rating consequently for the past six years by
Standard & Poor.
Banking, Healthcare & Investments The group set up Standard Life Bank, its UK mortgage and retail savings banking subsidiary,
in 1998 and Standard Life Investments, which had previously been the in-house investment
management unit of the groups life assurance and pensions business, was separated into a
distinct legal entity in the same year, with the aim of establishing it as an independent
investment management business providing services to both the group and third party retail
and institutional clients. The group acquired Prime Health Limited (subsequently renamed
Standard Life Healthcare) in the United Kingdom in 2000. Standard Life Healthcare expanded
in March 2006 with the acquisition of the PMI business of First Assist. Standard Life Asia
Limited/Joint ventures The groups Hong Kong subsidiary, Standard Life Asia Limited (SL Asia), was incorporated
in 1999 as a joint venture and became a wholly-owned subsidiary of Standard Life in 2002.
The groups operations in Hong Kong were established to give the group a presence in the
Far East from which it could expand into China. The groups joint ventures in India with
Housing Development Finance Corporation Limited (HDFC) were incorporated in 2000 (in
relation to the life assurance and pensions joint venture) and 2003 (in relation to the
investment management joint venture). The groups joint venture in China with Tianjin
Economic Development Area General Company (TEDA) became operational in 2003.
40

Standard Life international Limited - The group also incorporated Standard Life International
Limited (SLIL) in 2005 for the purposes of providing the group with an offshore vehicle,
based in Ireland, through which it could sell tax-efficient investment products into the United
Kingdom. Sales of these products commenced in 2006.
Service company
Following the groups strategic review in 2004, the group established a service company
structure for the provision of central corporate services to the groups business units.
Standard Life Employee Services Limited (SLESL) supplies a wide range of central
services to the rest of the group, including IT, facilities, legal and human resources services,
and employs staff working in the groups UK and Irish operations (other than SLI, SLB and
SLH,which employ their staff directly). This service company structure was created to enable
Standard Life to comply with regulatory restrictions on the provision of non-insurance
services and to exploit group-wide synergies.
STANDARD LIFE ASIA LIMITED/JOINT VENTURES:
The groups Hong Kong subsidiary, Standard Life Asia Limited (SL Asia), was
incorporated in 1999 as a joint venture and became a wholly-owned subsidiary of Standard
Life in 2002. The groups operations in Hong Kong were established to give the group a
presence in the Far East from which it could expand into China. The groups joint ventures in
India with Housing Development Finance Corporation Limited (HDFC) were incorporated in
2000 (in relation to the life assurance and pensions joint venture) and 2003 (in relation to the
investment management joint venture). The groups joint venture in China with Tianjin
Economic Development Area General Company (TEDA) became operational in 2003.

Demutualization of Standard Life

On 31 May 2006, Standard Life's voting members voted in favor of the Special Resolution for
the demutualization of The Standard Life Assurance Company and the flotation of Standard
Life plc on the London Stock Exchange.
STANDARD LIFE GROUP:

41

The Standard Life group has been looking after the financial needs of customers for
over 182 years

It currently has a customer base of around 7 million people who rely on the company
for their insurance, pension, investment, banking and health-care needs

Its investment manager currently administers 125 billion in assets

It is a leading pensions provider in the UK, and is rated by Standard & Poor's as
'strong' with a rating of A+ and as 'good' with a rating of A1 by Moody's

Standard Life was awarded the 'Best Pension Provider' in 2004, 2005 and 2006 at

the

Money Marketing Awards, and

It was voted a 5 star life and pensions provider at

the Financial Adviser Service

Awards for the last 10 years running.

The '5 Star' accolade has also been awarded to Standard Life Investments for the last
10 years, and to Standard Life Bank since its inception in 1998.

Standard Life Bank was awarded the 'Best Flexible Mortgage Lender' at the Mortgage
Magazine Awards in

2006.

INCORPORATION OF HDFC STANDARD LIFE INSURANCE CO. LTD.:

The company was incorporated on 14th August 2000 under the name of HDFC
Standard Life Insurance Company Limited.
Their ambition from the beginning was to be the first private company to re-enter the life
insurance market in India. On the 23rd of October 2000, this ambition was realized when
HDFC Standard Life was the first life company to be granted a certificate of registration.
HDFC are the main shareholders in HDFC Standard Life, with 81.4%, while Standard
Life owns 18.6%. Given Standard Life's existing investment in the HDFC Group, this is the
maximum investment allowed under current regulations.
42

HDFC and Standard Life have a long and close relationship built upon shared values
and trust. The ambition of HDFC Standard Life is to mirror the success of the parent
companies and be the yardstick by which all other insurance companies in India are
measured.
HDFC Standard Life Insurance Company Ltd. is one of Indias leading private life
insurance companies, which offers a range of individual and group insurance solutions. It is a
joint venture between Housing Development Finance Corporation Limited (HDFC Ltd.), Indias
leading housing finance institution and one of the subsidiaries of Standard Life plc, leading
providers of financial services in the United Kingdom.
Both the promoters are well known for their ethical dealings and financial strength and
are thus committed to being a long-term player in the life insurance industry.
HDFC Standard Life Insurance Co. Ltd was incorporated on 14th august 2000. It is a joint
venture between Housing Development Finance Corporation Limited (HDFC Ltd.) India and
UK based Standard Life Company. Both the joint venture partners being one of the leaders
in their respective areas came together in this 81.4:18.6 joint venture to form HDFC
Standard Life Insurance Company Limited.

The MD and CEO of HDFC Standard Life Mr. Deepak Satwalekar, has given the company
new directions and has helped the company achieve the status it currently enjoys. HDFC
Standard Life brings to you a whole range of insurance solutions be it group or individual or
NAV services for corporations, they can be easily customized as per specific needs.

The Banc assurance partners of HDFC Standard Life Insurance Co Ltd are HDFC, HDFC
Bank India Limited, Union Bank of India, Indian Bank, Bank of Baroda, Saraswat Bank and
Bajaj Capital.

43

Why HDFC standard life

There are many reasons why people should choose HDFC Standard Life
Insurance Company Ltd. as their partner in meeting their insurance need:
a) Innovative products to meet customers needs.
b) Efficient customer service team.
c) Good financial track record of both parents HDFC & Standard Life.
d) Certified Financial Consultants to advice prospective customers.
e) Professional approach in managing customers investments.
f) Income Tax benefits for their insurance products.
g) Innovative products to meet customers needs.
h) Efficient customer service team.
i) Good financial track record of both parents HDFC & Standard Life.
j) Certified Financial Consultants to advice prospective customers.
k) Professional approach in managing customers investments.

44

VISION
The most successful and admired life insurance company, which means that we are the
most trusted company, the easiest to deal with, offer the best value for money, and set the
standards in the industry. In short, The most obvious choice for all.

MISSION
We aim to be the top new life insurance company in the market. This does not just mean
being the largest or the most productive company in the market; rather it is a combination of
several things likeCustomer service of the highest order Value for
money or customers Professionalism in carrying out
business
Innovative products to cater to different needs of different customers
Use of technology to improve service standards
Increasing market share

VALUE
INTIGRITY
What is it?

Honest and Truthful in every action.

Transparency

Stick to principles irrespective of outcome.

Be just and fair to everyone.

Why?

Integrity is the bedrock on which the company and the expectations of the
customers and employees are built.

Integrity establishes the credibility of the person, defines the character and
empowers one to do justice to the job.
45

Enables building confidence and trust, achieving transparency and laying a

strong foundation for a binding relationship.

Guiding principle for all walks of life.

INNOVATION
What is it?

Building a store house of treasures through experiences.

Looking at every product and process through fresh eyes everyday.

Why?

To exceed customer expectation and maximise customer retention.

To achieve competitive advantage.

To promote growth and upgrade standards in the industry.

To foster creativity amongst employees and partners

To open a world of new possibilities.

CUSTOMER CENTRIC
What is it?

Understand his expectations by keeping him as the centre - point

Listen actively

Understand customer needs and deliver solutions.

Customer interest always supreme.

Why?

Reinforce brand loyalty by complete transparency.

Customer is the source of revenue for the company.

Customer is the reason for our existence.

Ensure that customer chooses our company to do business with.

Customers goodwill alone can bring more business and more customers.

Will contribute to customer retention.

46

PEOPLE CARE
What is it?

Genuinely understanding the people we work with.

Guiding their development through training and support

Helping them develop requisite skills to reach their true potential.

Know them on a personal front.

Create an environment of trust and openness.

Respect for the time of others.

Why?

People are the most valuable assets of the company.

Motivate individual to give his / her best.

Establish a valuable relationship with them to create a joyful working

environment .

Job
satisfaction

TEAM WORK One for all and all for one

What is it?

Whole team takes the ownership of the deliverables

Consult all involved , understand and arrive at a common objective

Co-operate and support across departmental boundaries

Identify strengths and weaknesses accordingly allocate responsibility to

achieve common objectives.

Why?

Together Everyone Achieves More :- TEAM

It adds joy at work place

Team work generates synergy and provides a focussed approach.

An idea or activity performed in a group has greater acceptability

One for all and all for one

47

JOY AND SIMPLICITY

48

PRODUCT PORTFOLIO
HDFC offers products as per the life stages of the customers and their respective needs.

Your insurance need will change as your life does, from starting to work to enjoying your
golden years and all the stages in between. Each one of these stages may pose a different
insurance need/cover for you. In this section, we have drawn up the basic life stages and help
you analyze various insurance needs accordingly.

49

LIFE STAGES & NEEDS IN HAT STAGES

STAGE 1: YOUNG & SINGLE

An important stage where one lays down the foundation of a successful life ahead. Take
advantage of the time and power of compounding to ensure that you build up your dreams.
Start saving early.
NEEDS:
Save for Home & Wedding
Tax Planning
Save for Golden Years

STAGE 2: JUST MARRIED

Marriage brings about a significant change. New dreams and new opportunities also
bring in additional responsibilities. While both of you look forward to a happy and secure life, it
is equally important to ensure that eventualities dont come in the way of shaping your dreams.
NEEDS:
Planning for home / securing your home loan liability.
Save for vacation.
Save for your first child.

50

STAGE 3: PROUD PARENTS

Once you have children, your need for life insurance is even more. You need to protect
your family from an untoward incident. Ensure your protection umbrella takes into account the
future cost of securing your childs dream. You will want life to go on for your loved ones, and
having enough life insurance is a way to help ensure that.

NEEDS:
Provide for children's education
Safeguarding family against loan liabilities
Savings for post-retirement

STAGE 4: PLANNING FOR RETIREMENT

While you are busy climbing the ladder of success today, it is important for
you to take time and plan for your life after retirement. Having an early start for retirement
planning can make a significant difference to your savings. Think about your golden years
even before you have reached them. The key is to think ahead and plan well using your time
and money.
NEEDS
Provide for regular income post retirement
Immediate Tax benefits
Lead a secure, independent and comfortable life style in your retirement years.

51

INTRODUCTION

TO UNIT LINKED

PRODUCTS

What is Unit Linking?

UNIT-LINKED POLICIES ARE UNBUNDLED
Unbundling means the separate identification of the constituent parts of the insurance policy.
That is the investment element, expense and administration charges, and benefit charges (e.g.
mortality charge), as well as the benefits themselves, are clearly identified to the client.
Until the 1960s , most life insurance policies was conventional policies, whereby the client was
not aware of what portion of the premium covered expenses of benefits, nor indeed, of now
investment returns were allocated to the policy. The first step to unbundling was to identity the
investment element separately from the other elements of the product. Because this was
explained to the client and formed a legal part of the policy, it was the real start of unbundling.
Some more years passed before the level of unbundling that HDFC Standard Life see today
was achieved.
As time went on in the 1960s and 1970s, the other major parts of life insurance policies
(mortality and expenses) also became unbundled. Product designers did this by setting
out the way that expense and mortality costs would affect the policy.
Unbundled products are also said to be transparent because the client can see the progress
of the policy. This is aided by an annual report on the status and performance of the policy,
including explicit reporting of charges taken from, and investment returns allocated to, the
policy.
In practice, however, the details of unbundled policies are quite complicated and whether
transparency is achieved from the clients point of view depends primarily on the clarity
of the communication from the insurer and the extent to which the client is interested in such
detail.

52

UNIT LINK POLICY MAKE USE OF UNIT LINK FUNDS

In the UK, unbundled policies are generally referred to as being unit-linked because the
investment element of the policy is housed in funds that are divided into units of equal value.
A unit-linked policy is one whose underlying investments are identifiable and determine its
cash values.
It is important to recognize that the assets of the funds may not be shares they may be fixedinterest securities, money market instruments, property, derivative instruments, as well as
shares. Indeed, the assets of a particular fund may consist of a mixture of these asset types.
The client normally has a choice of funds having different characteristics to which
premiums can be allocated. Capital by reducing new-business strain.

THE UNDERLYING FUNDS THE UNITS

At HDFC Standard Life, the client has a choice of funds in which to invest.
Our unit linked funds have different investment objectives and give the customer the
opportunity to be exposed to different types of assets.
As a result, the customer can choose his fund according to his own attitude to risk and desire
of investment return.

UNIT-LINKED POLICIES ARE LINKED

Linking implies matching. The value of the policy is linked to the value of the net assets
(assets less liabilities) of the fund. The investment risk and reward are

therefore

transferred from the insurer to the client. This is the real distinguishing feature of unit linking.
Of course, the policy might offer some investment guarantees but in many countries this is
now the exception rather than the rule.

53

Our unit linked funds have different investment objectives and give the customer the
opportunity to be exposed to different types of assets.As a result , the customer can choose his
fund according to his own attitdew to risk and desire of investment return.

BENEFITS OF UNIT LINKED PLANS

To the client
-

Flexibility of premium, sum assured and benefit

Transparency

Control over investment strategy

Control over the degree of investment risk

To the insurer
-

Product demanded by the market

Retention of existing client and attracting new client

Unit-Linked Policies Have Explicit Charges:

With all insurance products we allow for the expenses, the cost of benefits incurred and a
profit margin to the company.
In HDFC standard lifes unit-linked policies the customer sees the charges being deducted
explicitly from their policy in respect to these expenses.
Some of these charges are charges deducted from the premium and some are deducted from
the fund.

54

The charges on a unit linked plan of HDFC Standard Life:

The charges under this policy are deducted to provide for the benefits and the
administration provided by HDFC standard life charges when taken together, are among
the lowest in the industry and are structured to the give the better returns over the long
term.
Investment Content Charge: This is a premium based charge. After deducting this
charge from the premiums, the remainder is invested to buy units. The following table
shows how much is used to buy units.
This percentage is called the investment content Rate.

1st
Up to 200000
From 200000 to
Regular
Premiums

500000
From 500000 to

1000000
Above 1000000
Additional single premiums

INVESTMENT
CONTENT RATE (ICR)
& 2nd years
3rd year
73.00%

99.00%

80.00%

99.00%

85.00%

99.00%

90.00%
97.50%

99.00%
99.00%

Other Charges
Reduced ICR

Explanation
A reduced percentage of the policy holders premium is
added to the fund.
These charges are intended to cover
distribution

(including

commission)

administrative costs relating to the policy.

55

and

the marketing
some

other

Fund Management

Deducted as a percentage of the customers fund on a daily

Charge (FMC)

basis.
These are intended to cover the ongoing costs of managing
the investments of the policy.
The daily unit price already includes a low fund management
charge of 1.25 % per annum of the funds value.
In the long term, the key to building
is low FMC.

reat maturity values

Administration

A charge of Rs. 6 0 per month is charges to cover regular

Charges

administration costs.
HDFC SL make the charge by canceling units in each of the
funds customer have chosen, in the proportion customer have
chosen.

Policy Fee

A fixed monetary deduction done from the customers fund

on a monthly basis.
This charge is taken

to

cover

the

ongoing costs of

administration of the policy and for any renewal commissions.

Risk Charges

Deducted from the customers fund on a monthly basis.to

cover the cost of lie cover critical illness and accidental death
depending on the option the customer has chosen. Every
month HDFC SL customers make a charge or providing
customer with the death or f critical illness customer with the
death or critical illness cover they have selected. The amount
of charges taken each month depend on customer age.

56

Miscellaneous
However you may come across other charges, which are used by other companies else
where in the market. Here are few examples:

Surrender Charges
Are applied when a policy is surrendered.
They are used to recover costs and lost profits.
On cancellation or surrender of the policy before 3 years of regular premiums
have been paid.
The company will make a charge of 25% of the outstanding premiums due for
the remainder of this 3 year period.

Switch or Redirection Charges

These cover the additional administration costs associated with switching
investments between funds and redirecting premiums. Companies also sometimes
use them to discourage excessively frequent switches are premium redirections.
Premium alterations include stopping and restarting the regular premium after 3
years.
The Co. HDFC SL does not charge for any of these options currently.
The HDFC SL reserves the right to introduce such charges after approval from the
IRDA

WHY BUY A UNIT LINKED PLAN

A unit linked plan offers the benefits of market linked returns. It give flexibility in
o Premium paying g
o Withdrawals
o Protective elements.

57

DESIGN OF AN UNIT LINKED PLAN

The product specification would include (where relevant):

CLASS OF PRODUCT
The technical class of product e.g. whole, endowment, pension. Versions available
single life, joint life (first death, last survivor), and business.
Premium options single, regular, flexible. Allowable insurance benefit add-ons.

INVESTMENTS
Fund links available and investment objectives of each fund. Investment guarantees
(or lack of investment guarantees) Methods and frequency of unit pricing. The
investment accounting and management system to be used.

MARKETING AND DISTRIBUTION

The distribution channels through which the product is available. Variations of product
design by distribution channels, if any.
The initial and renewal commission payable rules Capabilities of illustration system to
be used. Marketing material to be available, Training and qualification standards of
anti linked insurance intermediaries.

ADMINISTRATION
Business processing rules new and ongoing business. Policy and endorsement
wordings.Cash processing rules allocation of cast to policies, late processing
rules.Permitted policy changes (by the insurer and by the client) Availability of loans
and / or partial withdrawals and the rules for administering them Non-forfeiture
provisions.

58

PRICING
This means the level and type of charges that the insurer can take under the policy.
The types of charge, which can be levied, are initial charges, surrender charges,

renewal

charges, fund management charges, and switch or redirection charges. In addition, charges
are taken for add-on benefits if the premium for such benefits is not included in the
total premium payable.

INITIAL CHARGES
Initial charges are intended to cover the marketing, distribution and other new
business costs relating to the policy. There are many different variations of initial charges,
but essentially, whatever method is used; the effect is that less money is actually allocated
to the policy than is received from the client for a period of time. Some possible way
of doing this are:
Allocate no money to the policy for a period of months.
Allocate only a proportion of each premium to the policy for a period of months.
Allocate money received in the early months of a policy to units that have a higher fund
management charge than these purchases by later premiums.
In the event of the policy being surrendered, the future excess fund management charges,
in excess of the regular charges that would have been levied on these units, are levied at
the point of surrender. As such, the excess fund management charges will be received
regardless of whether the policy runs its full term or not, and only the amount of
money required to purchase the units net of the excess fund management charges needs to
be allocated to the policy.

ADD-ON BENEFITS CHARGES

These are usually calculated using a current cost method (unless the premium for add-on
benefits is included in the total premium). This means that risk premium rate are applied
each month the sum at risk under each benefit. Any charge over and above the pure risk
premium charge will help offset expenses.
59

CHOOSING A CHARGING STRUCTURE

The pattern of expenses incurred for a life insurance policy will always be high acquisition
costs followed by much lower but steadily increasing renewal costs. There will also usually
be a high initial commission followed by a much lower renewal commission. Ideally,
therefore, the charging structure should match this incidence of expenses with a high initial
charge followed by a much lower level of renewal charges. For marketing reasons, this may
be unacceptable and the insurer may have to either recoup initial expenses over a period of
time by taking charges that (Significantly) exceed there renewal expenses or disguise the
high initial charges. It was this latter approach that gave rise to the concept of initial units
(units that have a high fund management charge.

The alternative approach of taking higher renewal charges makes the insurer vulnerable to
early lapses, particularly if no surrender penalty is applied. Taking charges more evenly
can be accomplished in a variety of ways, but the main ones are:

A high bid/offer spread.

An allocation rate of (significantly) less than 100%. This may be increased after a period of
years to 100% or more and can be marketed as a loyalty bonus.
An investment fee (often expressed as a percentage of the premium)

This is effectively an additional bid/offer spread.

A high fund management fee on all units. This could be reduced after a period of
years (for example by allocating bonus units) to bring the fund management charge
into line with the market more. These can be used either in isolation or in
combination.

60

Types of Unit linked plan

There are many unit linked plan of HDFC standard life insurance company.

1. Unit Linked Young Star Plus II

2. Unit Linked Pension II
3. Unit Linked Endowment II
4. Unit linked enhanced life protection
5. children plan
6. Money back plan
7. Single premium whole of life plan
8. Saving assurance plan
But in this project I have discuss only three plans because these three plans have the
maximum share in the total business of the HDFC Standard life insurance company limited.
These plans are as follows:
1. Unit Linked Young Star Plus II
2. Unit Linked Pension II
3. Unit Linked Endowment II

61

1. Unit linked Young Star Plus II

As a parent, your priority is your childrens future and being able to meet their dreams and
aspiration. Today, we need more money for providing a good education, establishing a
professional career or even a modest wedding because these are expensive. Costs are
increasing fast. Just imagine how much we need when our children take these important steps
in life when institute like IIM is increasing their fees for education by leaps and bound.
This plan ensures us a bright future for your children. It makes your child able to lead a
life of respect and dignity with a secured financial future.

Benefits of this plan

The HDFC unit linked Young star Plus II gives us:

Valuable protection to your child in case you are not around.

An outstanding investment opportunity by providing a choice of thoroughly researched

and selected investments.

Regular loyalty units to boost your fund value every year.

Flexible benefit combinations and premium payment options.

Flexible additional benefit options such as critical illness cover.

Flexible benefit payment preferences- Double and Triple Benefit.

Three steps to own your plan

Step1: CHOOSE YOUR REGULAR PREMIUM
IN this policy you will continue to pay each year of the policy. You can pay monthly, half-yearly
or annually. The minimum regular premium is Rs. 12,000 per year for annual and half yearly
policies. For monthly mode, the minimum regular premium is Rs 1500 per month.

62

Step2: CHOOSE YOUR LEVEL OF PROTECTION

we can choose any amount of sum Assured with, a minimum of 5 times your chosen annul
regular premium and a maximum of 40 times your chosen annul regular premium.

Step3: CHOOSE ADITIONAL PLAN BENEFIT

It offers a range of valuable protection options to secure the future for whole family.

Benefit

Benefit payment

Summary of the

Types

Preference

benefits
1.It will pay the sum assured to the beneficiary.
2. Our family need not pay any further premiums. it will

Double
Benefit

pay 100% of all the future regular premiums at the

original level towards the beneficiary policy as and when
due, on an annual basis.
3. Any Critical illness cover terminates immediately.

Death

1. It will pay the Sum Assured to the beneficiary.

Benefit

2. Our family need not pay any further premiums. it will

Triple
Benefit

pay 50% of all the future premiums at the original level

towards our policy and 50% of the premiums will be paid
to the beneficiary as and when due, on an annual basis.
3. Any critical illness cover terminates immediately.
1. We will pay the sum Assured to the beneficiary.
2. our family need not pay any further premiums. It will
63

pay 100% of all the future regular premiums at the

Double
Benefit

original level towards your policy as and when due, on an

annual basis.
3. The death benefit cover terminates immediately.
1. it will pay the sum assured to the beneficiary.

Critical
Illness
Benefit

2. our family need not pay any further premiums it will

Triple
Benefit

pay 50% of all the future premiums at the original level

towards your policy as and when due, on an annual
basis.
3. The death benefit cover terminates immediately.

Step4: CHOOSE YOUR INVESTMENT FUNDS

The most significant part of the Unit Linked Plan is that investor can choose the mode of
investment. In this plan the investment risk in your chosen investment portfolio is borne by the
investor. This means that the premiums you pay in this plan are subject to investment risks
associated with the capital markets. The unit prices of the funds may go up or down, reflecting
changes in the capital markets.
So to balance investors level of risk and return, making the right investment choice is
very important and you are responsible for the choices you make.
It has 7 funds that give investor:a) The potential for higher but more variable returns over the term of your policy; or
b) The more stable returns with lower long-term potential.
Your investment will buy units in any of the following 7 funds designed to meet your risk
appetite.
Table of funds are given below:Asset Class
64

Risk &

Fund

Money

Bank

Govt.

market++

Deposit++

securities

Liquid Fund
Stable Managed

Equity

Return Rating

+ Composition
&bonds
Fund
100%

Low

70-100%

Low

Low-

0-30%

Fund
Secure Managed

0-5%

0-20%

75-100%

Fund
Defensive Managed

Moderate
0-5%

0-15%

50-85%

15%-30%

Moderate

0-5%

0-15%

20-70%

30%-60%

High

Equity Managed Fund

0-5%

0-10%

0-40%

60%-100%

Very high

Growth Fund

0-5%

95%-100%

Very high

Fund
Balanced Managed
Fund

+ note on the funds shows will manage the investment in each fund so that the proportion of
each Asset class is always with the ranges. + + shows Money market instruments. It include
liquid Mutual Funds, commercial papers, commercial bills, treasury bills, government securities
having an unexpired maturity up to one year. Bank deposits means deposits issued by any
primary dealer or non Banking and banking financial company approved by the reserve by the
reserve bank of India or any other public Financial institutions or by Housing Finance
Companies approved by the National Housing Bank. The past performance of any of the funds

is not necessarily an indication of future performance. Unit prices can go up and down. No
fund offers an assured return. The names of the fund it offer under this plan do not, in any way,
indicate the quality of the plan, its future prospects or returns.

65

ELIGLBILTY
The age and term limit for taking out a HDFC unit linked young star plus II are as show below:

BENEFIT OPTION

TERM PERIOD (Yrs.)

AGE AT ENTRY (Yrs.)

Minimum

Minimum

Maximum

Maximum

MAXIMUM AGE
AT MATURITY
(Yrs.)

Life option

10

25

18

65

75

Life and health option

10

25

18

55

65

Single Premium top up Allocation:

The allocation rate for single premium top up are given below:

PRIMIUM PAID DURING YEAR (Rs.) /

ALLOCATION RATE

PRIMIUM FREQUENCY

YEARLY

HALF YEARLY

MONTHLY

Single premium top up (s) -Year 1

97.50%

97.50%

97.50%

Single premium top up (s) -Year 2+

98.00%

98.00%

98.00%

2. Unit Linked Pension II

The masses of Unit linked Pension is live a life of dignity and self respect. Today we are busy
climbing the ladder of success and realizing your dreams. Today, time is with you. Just take a
moment and think. It will make you able to continue at the same pace.

66

The HDFC Unit Linked Pension is an insurance policy that is designed to provide a
retirement income for life with the freedom to maximize your investment returns. Stride into
your golden years of retirement with dignity and pride.

Benefits of this plan

The HDFC unit linked pension gives you

An outstanding investment opportunity by providing a choice of thoroughly researched

and selected investments.

It gives a post retirement income for life

Flexibility to plan your retirement date and

Freedom to invest premiums as per your preference

Steps regarding this Plan

Step1: CHOOSE YOUR RETIREMENT AGE
You can select any age you wish to retire at vesting age, between 50 years and 75 years.
Step2: CHOOSE YOUR PREMIUM YOU WISH TO INVEST, BASED ON YOUR
RETIREMENT NEED
You can choose either a single premium policy or a regular premium policy

For a regular premium policy, you continue to pay your chosen premium each year of the
policy. The minimum regular premium is Rs.10,000 per year. You can pay monthly (using
standing instructions or ecs Mandate), quarterly, half yearly or annually.

67

The minimum premium for a single premium policy is Rs.25,000. you may choose to
pay a hoc single premium top-up or additional regular premiums depending on the policy type
you have chosen and your convenience.

Step3: CHOOSE YOURT INVESTMENT STRATEGY

The most significant part of the Unit Linked Plan is that investor can choose the mode of
investment. In this plan the investment risk in your chosen investment portfolio is borne by the
investor. This means that the premiums you pay in this plan are subject to investment risks
associated with the capital markets. The unit prices of the funds may go up or down, reflecting
changes in the capital markets.
So to balance investors level of risk and return, making the right investment choice is
very important and you are responsible for the choices you make.
It has 7 funds that give investor:a) The potential for higher but more variable returns over the term of your policy; or
b) The more stable returns with lower long-term potential.
Your investment will buy units in any of the following 7 funds designed to meet your risk
appetite.
Table of funds are given below:-

68

Asset Class
Money

Bank

Govt.

market++

Deposit++

securities

Fund
Liquid Fund
Stable Managed

Risk &
Equity

Return Rating

+ Composition
&bonds
Fund
100%

Low

70-100%

Low

Low-

0-30%

Fund
Secure Managed

0-5%

0-20%

75-100%

Fund

Moderate

Defensive Managed

0-5%

0-15%

50-85%

15%-30%

Moderate

0-5%

0-15%

20-70%

30%-60%

High

Equity Managed Fund

0-5%

0-10%

0-40%

60%-100%

Very high

Growth Fund

0-5%

95%-100%

Very high

Fund
Balanced Managed
Fund

.
ELIGIBILITY
The age and term limit for taking out the HDFC unit linked pension II are as below:

TERM PERIOD (Yrs.)

AGE AT ENTRY (Yrs.)

AGE AT VESTING (Yrs.)

Minimum

Maximum

Minimum

Maximum

Minimum

Maximum

10

40

18

65

50

75

Premium allocation charges

69

This is the premium based charge. After deducting this charge from your premium, the
remainder is invested to buy unit. The allocations are guaranteed for the entire duration of the
policy term.

PRIMIUM PAID DURING YEAR (Rs.) /

PREMIUM ALLOCATION RATE

PRIMIUM FREQUENCY

YEARLY

HALF YEARLY

MONTHLY

12,000 to 4,99,999

60%

60%

60%

5,00,000 to 10,00,000

80%

80%

80%

Annualized regular premium -Year 2

85%

80%

80%

Annualized regular premium -Year 3+

98%

98%

98%

Annualized regular premium -Year 1

Single Premium top up Allocation:

The allocation rate for single premium top up are given below:

SINGLE PREMIOUM TOP-UP (s)

ALLOCATION RATE

Paid during -Year 1

97.50%

Paid during -Year 2+

98.00%

3. Unit Linked Endowment II

Its massage is to invest in financial security and self respect for your and your family in this
policy, the investment risk in investment portfolio is borne by the policy holder.

70

Benefits of this product

The HDFC unit linked endowment plus II gives

A valuable protection to your family in case you are not around.

An outstanding investment opportunity by providing a choice of the thoroughly

Researched and selected investment.

Flexible additional benefit options such as critical illness cover.

Flexibility benefits combination and premium payment option.

Simple steps for this product

Step1: CHOOSE YOUR REGULAR PREMIUM

This is the premium you will continue to pay each year of the policy. You can pay monthly, halfyearly or annually. The minimum regular premium is Rs 12,000 per year for annual and half
yearly policies. For monthly mode, the minimum regular premium is Rs.1,500 per month.
You may also choose to pay although single premium or additional regular premiums
depending on your convenience.

Step2: CHOOSE YOUR LEVEL OF PROTECTION

You can choose any amount of sum Assured with:

A minimum of 5 times your chosen annual regular premium.

A maximum of 40 times your chosen annual regular premium.

71

Step3: CHOOSE ADITION PLAN BENEFIT

It offer a range of valuable protection options to secure the future for your family

Life option

Death Benefit

Extra Life option

death benefit + accidental Death benefit

Life and health option

Death benefit + critical illness benefit

Extra life and health option -

Death benefit + critical illness benefit + Accidental Death

benefit.

Benefit types

Summary
We will pay the greater of your sum assured (less any

Death Benefit

withdrawals you have made in the two year before your

claim) and your total fund value to your family.
The policy will terminate.
We will pay the greater of your sum assured (less any
withdrawals you have made in the two year before your
claim) and your total fund value to your family.

Critical illness benefit

The policy will terminate.

In addition to the death benefit, we will pay a further

Accidental Death Benefit.

sum assured to your family.

The policy will terminate.

Step4: CHOOSE YOUR INVESTMENT FUNDS

72

The most significant part of the Unit Linked Plan is that investor can choose the mode of
investment. In this plan the investment risk in your chosen investment portfolio is borne by the
investor. This means that the premiums you pay in this plan are subject to investment risks
associated with the capital markets. The unit prices of the funds may go up or down, reflecting
changes in the capital markets.
So to balance investors level of risk and return, making the right investment choice is
very important and you are responsible for the choices you make.
It has 7 funds that give investor:a) The potential for higher but more variable returns over the term of your policy; or
b) The more stable returns with lower long-term potential.
Your investment will buy units in any of the following 7 funds designed to meet your risk
appetite.
Table of funds are given below:-

73

Asset Class
Money

Bank

Govt.

market++

Deposit++

securities

Fund
Liquid Fund
Stable Managed

Risk &
Equity

Return Rating

+ Composition
&bonds
Fund
100%

Low

70-100%

Low

Low-

0-30%

Fund
Secure Managed

0-5%

0-20%

75-100%

Fund
Defensive Managed

Moderate
0-5%

0-15%

50-85%

15%-30%

Moderate

0-5%

0-15%

20-70%

30%-60%

High

Equity Managed Fund

0-5%

0-10%

0-40%

60%-100%

Very high

Growth Fund

0-5%

95%-100%

Very high

Fund
Balanced Managed
Fund

+ note on the funds shows will manage the investment in each fund so that the proportion of
each Asset class is always with the ranges. + + shows Money market instruments. It include
liquid Mutual Funds, commercial papers, commercial bills, treasury bills, government securities
having an unexpired maturity up to one year. Bank deposits means deposits issued by any
primary dealer or non Banking and banking financial company approved by the reserve by the
reserve bank of India or any other public Financial institutions or by Housing Finance
Companies approved by the National Housing Bank. The past performance of any of the funds
is not necessarily an indication of future performance. Unit prices can go up and down. No
fund offers an assured return. The names of the fund it offer under this plan do not, in any way,
indicate the quality of the plan, its future prospects or returns.

74

ELIGLBILTY
The age and term limit for taking out a HDFC unit linked Endowment II are as show below:

BENEFIT OPTION

TERM PERIOD (Yrs.)

AGE AT ENTRY (Yrs.)

Minimum

Minimum

Maximum

Maximum

MAXIMUM AGE
AT MATURITY
(Yrs.)

Life option

10

30

18

65

75

Extra life option

10

30

18

55

70

Life and health option

10

30

18

55

65

Extra life and health

10

30

18

55

65

option

Single Premium top up Allocation:

The allocation rate for single premium top up are given below:

SINGLE PREMIOUM TOP-UP (s)

ALLOCATION RATE

Paid during -Year 1

97.50%

Paid during -Year 2

97.50%

Paid during -Year 3+

98.00%

Tax benefit (Based on current tax law)

You will be eligible for tax benefit under section 80C and section 10(10D) of the income tax,
1961, subject to the provision contain therein.

Under section 80C, you can save up to Rs. 33,990 from your tax each year (calculate
on the higher tax bracket) as premium up to Rs. 1,00,000 are allowed at a deduction
from your taxable income.
75

Under section 10(10D), the benefit you receive from this policy are exempt from tax.

The above mentioned tax benefits are subjected to the change in the tax law.

76

INTRODUCTION OF FUNDS

All the unit linked plans of HDFC standard life insurance company have the 7 types of fund.
They are as follows:-

1. Liquid fund
2. Stable managed fund
3. Secure managed fund
4. Defensive managed fund
5. Balanced managed fund
6. Equity managed fund
7. Growth fund

The HDFC standard life insurance provide these 7 funds to their investor. These fund are
different from each other according to their investment paturn. This fund is useful and fruitful
for all type of investors. These funds are different from each other some fund provide higher
return to their investor with a high risk, some fund provide less return with very less risk, and
some funds provide moderate return with a moderate rate of risk. So the investors have
various types of options to invest their fund. If the investor want less return but security of
investment then there is liquid fund for them, if the investor wants high return and accept the
high risk factor then there is growth fund is available. For the moderate return there are
balanced managed fund, equity managed fund, defensive managed fund are available. Thus
the investors have various option for investment their money.

77

FUNDS AND INVESTMENTS

The fund choices available on our unit linked young Star plan are the same as the
funds under the existing unit linked endowment plan. You would already be familiar with
these funds:

a) Liquid Fund
The Liquid fund invests 100% in bank deposits and high quality short-term money market
instruments. The fund is designed to be cash secure and has a very low level of risk;
however unit prices may occasionally go down due to the use of short-term money market
instruments.
At inception, investments up to 20% can be allocated to this fund. Individual life

78

b)

Secure Managed Fund

The Secure Managed fund invests 100% in Government Securities and Bonds issued by
companies or other bodies with a high credit standing, however a small amount of working
capital may be invested in cash to facilitate the day- to-day running of the fund. This fund
has a low level of risk but unit prices may still go up or down.

individual pension

79

C)

Defensive Managed Fund

15% to 30% of the Defensive Managed fund will be invested in high quality Indian equities.
The remainder will be invested

in

Government Securities and

Bonds issued

by

companies or other bodies with a high credit standing. In addition, a small amount of
working capital may be invested in cash to facilitate the day-to-day running of the fund. The
fund has a moderate level of risk with the opportunity to earn higher returns in the long
term from some equity investment. Unit prices may go up or down.

80

d) Balanced Managed Fund

30% to 60% of the Balanced Managed fund will be invested in high quality Indian equities. The
remainder will be invested in Government Securities and Bonds issued by companies or
there bodies with a high credit standing. In addition a small amount of working capital may be
invested in cash to facilitate the day-to-day running of the fund. The fund has a higher level
of risk with the opportunity to earn higher returns in the long term from the higher proportion it
invests in equities Unit prices may go up or down.

81

E) Growth Fund
The Growth fund invests 100% in high quality Indian equities. In addition a small amount of
working capital may be invested in cash to facilitate the day-to-day running of the fund.
The fund has a higher level of risk with the opportunity to earn higher returns in the long term.

82

F) Stable Manage fund

100% fund of stable manage fund are invested in Government securities & bonds issues by
companies and other bodies with a high credit standing. This fund have a low level of risk due
to exposure only to short term bond (maximum 2 years). This fund gives the higher potential
return than liquid fund over a long period of time. this fund have no invest in short term money
market instruments.

G) Equity managed fund

60 to 100% of equity managed fund will be invested in high quality Indian equity and remaining
of fund is invested in government securities and bonds issues by companies and other bodies
with a high credit standing. In addition a small amount of working capital may be invested in
cash to facilitate to day-to-day running of the funds. The fund has the high level of risk with a
greater long term return. The small bond holding will add diversification and provide a little
stability.

83

Performance Statistics
The long-term worth of any Unit Linked policy comes from
# The investment return it gives over time
# The effect of the charges over the lifetime of the policy
The illustration provide at the point of sale comply with IRDA guidelines and show the effect of charges.
This investment return data show that how, in general the various funds are performing.
This illustrated shows how our unit-linked funds available to our Retail Pension business have
performed so far.
We are illustrating our performance from 01-Jan-05 (1-year after launch: 02-Jan-04) to July,
2009.using charts.
These charts are showing that actual year-on-year performance of our fund against the year-on-year
performance of a comparable market index @ (Source: AMFI).they are not showing the unit prices
(normally called NAVs)
They are the superior way of understanding performance because:
# Allow us to compare different funds with different starting NAVs
# Allow us to compare Actual performance
# Provide us with a more comprehensive summary than traditional charts.
For a day where the green column is higher than the red line, HDFC SL has provided a better return
than the index over the preceding year. For a day where the green column is lower than the red line,
HDFC SL has provided a lower return than the index over the preceding year.
To let you see both when HDFC SL has make under or over performed the Index we have shown the
index returns as a line not a series of columns.
CRISIL Indices are the sole property of CRISIL Limited (CRISIL). CRISIL Indices shall not be copied,
retransmitted or redistributed in any manner for any commercial use. CRISIL has taken due care and
caution in computation of the Indices, based on the data obtained from sources, which it considers
reliable.

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INDIVIDUAL-PENSION
A look at changes in unit prices over a various period of time

1. Liquid fund

2. Secure managed fund

3. Balanced managed fund

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4. Growth fund

5. Equity managed fund

86

6. Defensive managed fund

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CONCLUSION
The main objective of all the investor is to earn the higher return on their investment so they
always try to invest in those securities and fund which give them higher return with a less risk.
In this project i tried to focus on the performance of various funds of the HDFC SLI. From the
various data available for helping in the project compilation I we said that the performance of
the various funds of the HDFC Standard life insurance is better than what is prescribed by
CRISIL
In this project I conclude that the return on the various funds of the HDFC standard life
insurance is high than the CRISIL indexed. The return of the growth fund of HDFC SLI is
greater than the BSE 100. The return on the balanced managed fund is also greater than the
CRISIL balanced fund. The return of this fund was equal for some time to the CRISIL balanced
fund.
The performance of the defensive managed fund of the HDFC standard life insurance is
always better than the CRISIL mip blended index. This fund always gives the high return to
their customer.
The performance of the secure managed fund of HDFC standard life insurance is mostly
equal to the performance of the I-sec composite index. Both the fund give the good return to
their customer.
The liquid fund of the HDFC standard life insurance is very high than the CRISIL liquid fund.
The performance of this fund is always better than the other fund.
The equity fund of HDFC standard life insurance not gives the good return to their investor but
it is fair and sufficient.
Thus after see all the available data we can said that the all the funds of the HDFC standard
life insurance give the higher return to their customer than the other fund. The performance of
the entire fund in the market is good and the investor like to invest in these funds. On the
above discussion we can said that the performance of those funds may be good in future but is
totally depends upon the market condition and fluctuation.

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RECMONDATION

The performance of fund is good. They give higher return to their investor but all the investor
wants higher and higher return because its human nature. So HDFC SLI should try to
increase their return of various funds.
Company can increase their return through selection of better securities, shares, bonds,
government securities etc. Company should take the effective portfolio investment decision.
No doubt company provides good return to their investor but if the company selects effective
and fruitful portfolio investment plan than company increase their return. If the company
provides better return to their investor than it increases the goodwill and market share of the
company and it become a top insurance company.

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APPENDIX

(This Information is for our internal use only, will not to be disclosed to any other
organization / department)
Consumer Behavior towards Insurance

Name

Address

Telephone

Age

Occupation

Annual Income

Marital Status Single Married

(Age of Children if applicable)

--------------------------------------------------------------------------------------------------Q. 1 Any There Insurance Companies, which you are aware of ?

Q. 2 What do you think Insurance Is ?

A2.

Necessity for Protection and security

Imposition as an Extra Burden on expenditure
A compulsory Tool for Tax Saving

Q.3

What are the main considerations that a customer looks at while purchasing an
insurance policy.

A3.

Tax

Saving

Protection
90

Pension

Investment

Q.4

What would you see while purchasing an Insurance Policy from a Company ?

A4.

Standing and Goodwill of the Company

Product range of the Company
Advertisement being given by the company
Services beings given by the Company
Communications and Knowledge of the representative
Returns and Bonus declared by the Company
Other Please specify _________________________________

Q.5

Why you want to buy another Insurance ?

A.5

Tax Benefits Savings Other

Q.6

If saving, What are your financial needs in next 10-20 years.

A.6

Child Education Marriage

House Construction

Retirement Needs

Q. 7 Are you aware about the Unit Link Plans beings launched by various Insurance
Companies.
A.7. Yes

No

(If yes, name the Co. and products)

Any other comments :

________________________________________________________________
________________________________________________________________
________________________________________________________________

(Thank You)
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BIBLIOGRAPHY
WEBSITES
www.hdfcinsurance.com
www.economictimes.com
www.irdaindia.com
www.iiifindia.com
www.google.com and other search engines

BROUCHERS
HDFC Standard Life Insurance

BOOKS
Life Insurance of RNIS Collage of Insurance
Mishra, M.N.; Insurance Principal and Practice

References

Websites
http://www.hdfcstandardlifeinsurance.com
http://www.iciciprulife.com/index.jsp

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