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Dissertation submitted In Partial fulfillment for the Post Graduate Diploma in Business Management
Kshetrimayum Chitaranjan Singh Roll No.: GJUJUL08AC062 Batch: July 2008-2010
Under the Guidance of Sumit Bathla Channel Development Manager HDFC SLIC, Paschim Vihar
NSB SCHOOL OF BUSINESS B-II/1, MCIE, Delhi-Mathura Road, New Delhi
B-II/1, MCIE, Delhi-Mathura Road, New Delhi
This is to certify that the summer project report title “Comparative Analysis Of HDFC SLIC with Other Insurance Company” is a bonafide work done by Mr. Oinam Vikram SIngh, Roll No.: (GJUJUL08AB199) of Batch July 2008 – 2010, Submitted to NSB School of Business, New Delhi in partial fulfillment of the requirement for the award of Post Graduate Diploma In Business Management, and that the report represents independent and original work on the part of the candidate.
Prof. Alok Satsangi Corporate Relations Cell
This is to certify that the summer project report title “Comparative Analysis Of HDFC SLIC with Other Insurance Company” is a
bonafide work done by Mr. Kshetrimayum Chitaranjan Singh,
Roll No.: (GJUJUL08AC062) of Batch July 2008 – 2010, Submitted to NSB School
of Business, New Delhi has worked under my supervision. The work embodied in this report is original and was conducted at NSB School of Business. This work has not been submitted in part or full to this or any other university for the award of any other degree or diploma.
Chenal Development Manager HDFC, Pachim Vihar
I would like to thank my project guide Mr. Sumit Bathla , Channel Development Manager HDFC Standard Life Insurance, New Delhi for guiding me through my summer internship and research project. His encouragement, time and effort are greatly appreciated. I would like to thank Prof. Alok Satsangi 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 dedicate this project to my colleagues and all those who help me to complete this project. Without their help and constant support this project would not have been possible. Lastly I would like to thank all the respondents who offered their opinions and suggestions through the survey that was conducted by me in Delhi.
HDFC Standard Life insurance is the oldest life insurance company in the world. It is the largest insurer in the UK and is the 28th largest company in the world. In India, the company is marketing life insurance products and unit linked investment plans. From my research at HDFC SLIC, I found that the company has a lot of competition from other private insurers like ICICI, Aviva, Birla Sun Life and Tata AIG. It also faces competition from LIC. To compete effectively HDFC SLIC could launch cheaper and more reasonable products with small premiums and short policy terms (the number of year’s premium is to be paid). The ideal premium would be between Rs. 5000 – Rs. 25000 and an ideal policy term would be 10 – 20 years. HDFC must advertise regularly and create brand value for its products and services. Most of its competitors like Aviva, ICICI, Max, Reliance and LIC use television advertisements to promote their products. The Indian consumer has a false perception about insurance – they feel that it would not benefit them if they do not live through the policy term. Nowadays however, most policies are unit linked plans where a customer is benefited even if their death does not occur during the policy term. This message should be conveyed to potential customers so that they readily invest in insurance.
Family responsibilities and high returns are the two main reasons people invest in insurance. Optimum returns of 16 – 20 % must be provided to consumers to keep them interested in purchasing insurance. On the whole HDFC standard life insurance is a good place to work at. Every new recruit is provided with extensive training on unit linked funds, financial instruments and the products of HDFC. This training enables an advisor/sales manager to market the policies better. HDFC was ranked 13 in the Best Places to Work survey. The company should try to create awareness about itself in India. In the global market it is already very popular. With an improvement in the sales techniques used, a fair bit of advertising and modifications to the existing product portfolio, HDFC would be all set to capture the insurance market in India as it has around the globe.
TABLE OF CONTENTS
Introduction to Insurance Research Design Company Profile of HDFC SLIC Competitive analysis Marketing problems Analysis and Interpretation Future line of research Conclusion References
1 10 16 51 57 58 82 83
INDIAN INSURANCE INDUSTRY
THE INSURANCE INDUSTRY IN INDIA
With the largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. It’s a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 1560.41 billion (for the financial year 2006 – 2007). Together with banking services, it adds about 7% to the country’s Gross Domestic Product (GDP). The gross premium collection is nearly 2% of GDP and funds available with LIC for investments are 8% of the GDP. Even so nearly 65% of the Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. A large part of our population is also subject to weak social security and pension
systems with hardly any old age income security. This in itself is an indicator that growth potential for the insurance sector in India is immense. A well-developed and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and strengthens the risk taking ability of individuals. It is estimated that over the next ten years India would require investments of the order of one trillion US dollars. The Insurance sector, to some extent, can enable investments in infrastructure development to sustain the economic growth of the country.
In India, insurance has a deep-rooted history. It finds mention in the writings of Manu ( Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ). The writings talk in terms of pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor to modern day insurance. Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and carriers’ contracts. Insurance in India has evolved over time heavily drawing from other countries, England in particular. 1818 saw the advent of life insurance business in India with the establishment of the Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency. This era,
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however, was dominated by foreign insurance offices which did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard competition from the foreign companies. In 1914, the Government of India started publishing returns of Insurance Companies in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies. In 1938, with a view to protecting the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers. The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of insurance companies and the level of competition was high. There were also allegations of unfair trade practices. The Government of India, therefore, decided to nationalize insurance business. An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. The history of general insurance dates back to the Industrial Revolution in the west and the consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a legacy of British occupation. General Insurance in India has its
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roots in the establishment of Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd, was set up. This was the first company to transact all classes of general insurance business. 1957 saw the formation of the General Insurance Council, a wing of the Insurance Association of India. The General Insurance Council framed a code of conduct for ensuring fair conduct and sound business practices. In 1968, the Insurance Act was amended to regulate investments and set minimum solvency margins. The Tariff Advisory Committee was also set up then. In 1972 with the passing of the General Insurance Business (Nationalization) Act, general insurance business was nationalized with effect from 1st January, 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on January 1sst 1973. This millennium has seen insurance come a full circle in a journey extending to nearly 200 years. The process of re-opening of the sector had begun in the early 1990s and the last decade and more has seen it been opened up substantially. In 1993, the Government set up a committee under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations for reforms in the insurance sector. The objective was to complement the reforms initiated in the financial sector. The committee submitted its report in 1994 wherein , among other things, it recommended that the private sector be permitted to enter the insurance industry. They stated that foreign companies be allowed to enter by floating Indian companies, preferably a joint venture with Indian partners.
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Following the recommendations of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market. The IRDA opened up the market in August 2000 with the invitation for application for registrations. Foreign companies were allowed ownership of up to 26%. The Authority has the power to frame regulations under Section 114A of the Insurance Act, 1938 and has from 2000 onwards framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholders’ interests. In December, 2000, the subsidiaries of the General Insurance Corporation of India were restructured as independent companies and at the same time GIC was converted into a national re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July, 2002. Today there are 14 general insurance companies including the ECGC and Agriculture Insurance Corporation of India and 14 life insurance companies operating in the country. The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together with banking services, insurance services add about 7% to the country’s GDP. A well-developed and evolved insurance sector is a boon for economic development as it provides long- term funds for infrastructure development at the same time strengthening the risk taking ability of the country.
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1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers along with provident societies were taken over by the central government and nationalized. LIC was formed by an Act of Parliament- LIC Act 1956- with a capital contribution of Rs. 5 crore from the Government of India.
Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies. Since being set up as an
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independent statutory body the IRDA has put in a framework of globally compatible regulations. The other decision taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDA online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products.
PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA
The life insurance industry in India grew by an impressive 47.38%, with premium income at Rs. 1560.41 billion during the fiscal year 2007-2008. Though the total volume of LIC's business increased in the last fiscal year (2007-2008) compared to the previous one, its market share came down from 85.75% to 81.91%. The 17 private insurers increased their market share from about 15% to about 19% in a year's time. The figures for the first two months of the fiscal year 2008-09 also speak of the growing share of the private insurers. The share of LIC for this period has further come down to 75 percent, while the private players have grabbed over 24 percent. With the opening up of the insurance industry in India many foreign players have entered the market. The restriction on these companies is that they are not allowed to have more than a 26% stake in a company’s ownership. Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the Indian market and 19 private life insurance companies have been granted licenses.
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Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies to sign up Indian customers faster than anyone expected. Indians, who had always seen life insurance as a tax saving device, are now suddenly turning to the private sector and snapping up the new innovative products on offer. Some of these products include investment plans with insurance and good returns (unit linked plans), multi – purpose insurance plans, pension plans, child plans and money back plans.
Reforms in the Insurance sector were initiated with the passes of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously such to its schedule of framing regulations and registering the private sector insurance companies. The other decision taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDA online service for issue and renewal of licenses to agents.
Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA.. (1) Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business. (2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include, (a) issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration;
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(b) protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance; (c) specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents; (d) specifying the code of conduct for surveyors and loss assessors; (e) promoting efficiency in the conduct of insurance business; (f) promoting and regulating professional organisations connected with the insurance and re-insurance business; (g) levying fees and other charges for carrying out the purposes of this Act; (h) calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organisations connected with the insurance business; (i) control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938); (j) specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries; (k) regulating investment of funds by insurance companies; (l) regulating maintenance of margin of solvency; (m) adjudication of disputes between insurers and intermediaries or insurance intermediaries; (n) supervising the functioning of the Tariff Advisory Committee; (o) specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations referred to in clause
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(p) specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and (q) exercising such other powers as may be prescribed
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A Research Design is the framework or plan for a study which is used as a guide in collecting and analyzing the data collected. It is the blue print that is followed in completing the study. The basic objective of research cannot be attained without a proper research design. It specifies the methods and procedures for acquiring the information needed to conduct the research effectively. It is the overall operational pattern of the project that stipulates what information needs to be collected, from which sources and by what methods.
TITLE OF THE STUDY
“Comparative analysis of HDFC standard life insurance company limited with other insurance company for HDFC standard life insurance company ltd.”
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STATEMENT OF THE PROBLEM
This study was undertaken to identify which type of insurance plans HDFC SLIC should market to beat other insurance company in India. A survey was undertaken to understand the preferences of Indian consumers with respect to insurance. While marketing policies the sole duty of an advisor/ agent is to provide insurance plans as per customer requirements.
In effect plans (insurance products) should be flexible to suit individual requirements. This research tries to analyze some key factors which influence the purchase of insurance like the term of the policy, the type of company, the amount of annual premium payable (capacity and willingness to spend), risk taking ability and the influence of advertising. Solutions and recommendations are made based on qualitative and quantitative analysis of the data.
OBJECTIVES OF THE STUDY
To analysis the product details of HDFC Standard life Insurance Company limited and other insurance company. To find ‘Points of Parity’ and ‘Points of Difference’ of HDFC Standard Life Insurance Company Limited and other insurance company. To find out factors that influence customers to purchase insurance policies and give suggestions for further improvement.
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TYPE OF DATA COLLECTED
There are two types of data used. They are primary and secondary data. Primary data is defined as data that is collected from original sources for a specific purpose. Secondary data is data collected from indirect sources.
These include the survey or questionnaire method, telephonic interview as well as the personal interview methods of data collection.
These include books, the internet, company brochures, product brochures, the company website, competitor’s websites etc, newspaper articles etc.
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Sampling refers to the method of selecting a sample from a given universe with a view to draw conclusions about that universe. A sample is a representative of the universe selected for study.
The sample size for the survey conducted was 270 respondents. This sample size was taken on 95% confidence level and 6 significant level. Data universe for this sample is 10,00,000 which is approx population of Delhi excluding people below age of 18 years.
SAMPLING TECHNIQUE Random sampling technique was used in the survey conducted.
PLAN OF ANALYSIS
Tables were used for the analysis of the collected data. The data is also neatly presented with the help of statistical tools such as graphs and pie charts. Percentages and averages have also been used to represent data clearly and effectively.
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The samples referred to were residing in Jodhpur City. The areas covered were Paschim Vihar, Panjabi Bagh, Naraina, New Friends Colony, Nehru Place.
OVERVIEW OF CHAPTER SCHEME
CHAPTER 1: Introduction to insurance - An overview of the insurance industry in India, history, key milestones, reforms in the industry, present scenario in India.IRDA
CHAPTER 2: Research Design - Introduction, title of the study, statement of the problem, objectives of the study, research methodology, sampling, plan of analysis and study area.
CHAPTER 3: Company profile of HDFC SLIC – Introduction of HDFC SLIC, Board members, HDFC Profile, Standard life Profile, Join venture, products and services, Awards and Accolades, Distribution Strategy , Achievements, Limitation, Field methodology
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CHAPTER 4: Competitive analysis – Information about the plans offered by LIC, ICICI prudential, Birla Sun Life, Bajaj Allianz and Tata AIG.
CHAPTER 5: Marketing problems - The techniques used to market insurance and their advantages and disadvantages along with suggestions for improvement.
CHAPTER 6: Analysis and Interpretation – A survey on factors that influence people to purchase Life Insurance Policy.
CHAPTER 7: Future Line Of Research – Future topic for research.
CHAPTER 8: Conclusion.
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COMPANY PROFILE OF
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HDFC STANDARD LIFE INSURANCE COMPANY LTD.
HDFC STANDARD LIFE INSURANCE COMPANY LIMITED
HDFC Standard Life Insurance Company Limited. is one of India's leading private insurance companies, which offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Limited), India's leading housing finance institution and a Group Company of the Standard Life Plc, UK. As on February 28, 2009 HDFC Ltd. holds 72.43% and Standard Life (Mauritius Holding) 2006, Ltd. holds 26.00% of equity in the joint venture, while the rest is held by Others.
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As a joint venture of leading financial services groups, HDFC Standard Life has the financial expertise required to manage your long-term investments safely and efficiently. HDFC SLIC have a range of individual and group solutions, which can be easily customised to specific needs. Group solutions have been designed to offer complete flexibility combined with a low charging structure. The gross premium income, for the year ending March 31, 2009 stood at Rs. 5,564.69 crores. The company has covered over 8,33,070 lives as on March 31, 2009. HDFC Standard Life believes that establishing a strong and ethical foundation is an essential prerequisite for long-term sustainable growth. To ensure this, we have concentrated our focus on expansion of branch network, organising an efficient and well trained sales force, and setting up appropriate systems and processes with optimum use of technology. As all these areas form the basic infrastructure for establishing the highest possible customer service standards. Our core values are drilled down to all levels of employees, as these are inviolable. We continue to promote high integrity in business practices and shun short cuts and unethical practices, as we wish to be perceived as an institution with high moral standing. Since our inception in 2000, when the Indian insurance space was opened for private participation, we have consistently focused on setting benchmarks in all aspect on insurance business. Being the first private player to be registered with the IRDA and the first to issue a policy on December 12, 2000, our differentiators are:
HDFC Standard Life is a strong, financially secure business supported by two strong
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and secure promoters – HDFC Ltd and Standard Life. HDFC Ltd’s excellent brand strength emerges from its unrelenting focus on corporate governance, high standards of ethics and clarity of vision. Standard Life is a strong, financially secure business and a market leader in the UK Life & Pensions sector.
Preferred and Trusted Brand
Our brand has managed to set a new standard in the Indian life insurance communication space. We were the first private life insurer to break the ice using the idea of self-respect instead of ‘death’ to convey our brand proposition (Sar Utha Ke Jiyo). Today, we are one of the few brands that customers recognize, like and prefer to do business. Moreover, our brand thought, Sar Utha Ke Jiyo, is the most recalled campaign in its category.
We follow a conservative investment management philosophy to ensure that our customer’s money is looked after well. The investment policies and actions are regularly monitored by a formal Investment Committee comprising non-executive directors and the Principal Officer & Executive Director. As a life insurance company, we understand that customers have invested their savings with us for the long term, with specific objectives in mind. Thus, our investment focus is based on the primary objective of protecting and generating good, consistent, and stable investment returns to match the investor’s long-term objective and return expectations, irrespective of the market condition.
Need-Based Selling Approach
Despite the criticality of life insurance, sales in the industry have been characterized by over reliance on tax benefits and limited advice-based selling. Our eight-step
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structured sales process ‘Disha’ however, helps customers understand their latent needs at the first instance itself without focusing on product features or tax benefits. Need-based selling process, 'Disha', the first of its kinds in the industry, looks at the whole financial picture. Customers see a plan not piecemeal product selling.
Risk Control Framework
HDFC Standard Life has fully implemented a risk control framework to ensure that all types of risks (not just financial) are identified and measured. These are regularly reported to the board and this ensures that the company management and board members are fully aware of any risks and the actions taken to ensure they are mitigated
Focus on Training
Training is an integral part of our business strategy. Almost all employees have undergone training to enhance their technical skills or the softer behavioural skills to be able to deliver the service standards that our company has set for itself. Besides the mandatory training that Financial Consultants have to undergo prior to being licensed,
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we have developed and implemented various training modules covering various aspects including product knowledge, selling skills, objection handling skills and so on.
Focus on Long-Term Value
HDFC Standard Life do not focus in the business of ramping up the topline only, but to create maximisation of stakeholder's value. Today, we are extremely satisfied with the base that we have created for the long-term success of this company.
We are one of the few companies whose product details, pricing, clauses are clearly communicated to help customers take the right decision.
Strict Compliance with Regulations
We have initiated and implemented many new processes, some of which were found useful by the IRDA and later made mandatory for the entire industry.The agents who successfully completed this training only, were authorized by the company to sell ULIPs. This has now been made compulsory by IRDA for all insurance companies under the new Unit Linked Guidelines.
Diversified Product Portfolio
HDFC Standard Life’s wide and diversified product portfolio help individuals meet their various needs, be it: • Protection: Need for a sound income protection in case of your unfortunate demise
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• • • •
Investment: Need to ensure long-term real growth of your money Savings: Save for the milestones and protect your savings too Pension: Need to save for a comfortable life post retirement Health: Cover for health related exigencies
Brief Profile of The Board of Directors
Mr. Deepak S. Parekh is the Chairman of the Company. He is also the Executive Chairman of Housing Development Finance Corporation
Limited (HDFC Limited). He joined HDFC Limited in a senior management position in 1978. He was inducted as a whole-time director of HDFC Limited in 1985 and was appointed as its Executive Chairman in 1993. He is the Chief
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Executive Officer of HDFC Limited. Mr. Parekh is a Fellow of the Institute of Chartered Accountants (England & Wales). Sir Alexander M. Crombie joined the Board of Directors of the Company in April, 2002. He has been with the Standard Life Group for 34 years holding various senior management positions. He was appointed as the Group Chief Executive of the Standard Life Group in March 2004. Sir Crombie is a fellow of the Faculty of Actuaries in Scotland. Mr. Keki M. Mistry joined the Board of Directors of the Company in December, 2000. He is currently the Managing Director of HDFC Limited. He joined HDFC Limited in 1981 and became an Executive Director in 1993. He was appointed as its Managing Director in November, 2000. Mr. Mistry is a Fellow of the Institute of Chartered Accountants of India and a member of the Michigan Association of Certified Public Accountants. Ms. Marcia D. Campbell is currently the Group Operations Director in the Standard Life group and is responsible for Group Operations, Asia Pacific Development, Strategy & Planning, Corporate Responsibility and Shared Services Centre. Ms. Campbell joined the Board of Directors in November 2005.
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Ms. Renu S. Karnad is the Executive director of HDFC Limited, is a graduate in law and holds a Master's degree in economics from Delhi University. She has been employed with HDFC Limited since 1978 and was appointed as the Executive Director in 2000. She is responsible for overseeing all aspects of lending operations of HDFC Limited. Mr. Norman K. Skeoch is currently the Chief Executive in Standard Life Investments Limited and is responsible for overseeing Investment Process & Chief Executive Officer Function. Prior to this, Mr. Skeoch was working with M/s. James Capel & Co. holding the positions of UK Economist, Chief Economist, Executive Director, Director of Controls and Strategy HSBS Securities and Managing Director International Equities. He was also responsible for Economic and Investment Strategy research produced on a worldwide basis. Mr. Skeoch joined the Board of Directors in November 2005. Mr. Gautam R. Divan is a practising Chartered Accountant and is a Fellow of the Institute of Chartered Accountants of India. Mr. Divan was the Former Chairman and Managing Committee Member of Midsnell Group International, an International Association of Independent Accounting Firms and has authored several papers of professional interest. Mr. Divan has wide
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experience in auditing accounts of large public limited companies and nationalised banks, financial and taxation planning of individuals and limited companies and also has substantial experience in structuring overseas investments to and from India.
Mr. Ranjan Pant is a global Management Consultant advising CEO/Boards on Strategy and Change Management. Mr. Pant, until 2002 was a Partner & Vice-President at Bain & Company, Inc., Boston, where he led the worldwide Utility Practice. He was also Director, Corporate Business Development at General Electric headquarters in Fairfield, USA. Mr. Pant has an MBA from The Wharton School and BE (Honours) from Birla Institute of Technology and Sciences. Mr. Ravi Narain is the Managing Director & CEO of National Stock Exchange of India Limited. Mr. Ravi Narain was a member of the core team to set-up the Securities & Exchange Board of India (SEBI) and is also associated with various committees of SEBI and the Reserve Bank of India (RBI).
Mr. Gerald E. Grimstone was appointed Chairman in May 2007, having been Deputy Chairman since March 2006. He became a director of The Standard Life Assurance Company in July 2003. He is also Chairman of Candover Investments plc and was
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appointed as one of the UK’s Business Ambassadors by the Prime Minister in January 2009. Gerry held senior positions within the Department of Health and Social Security and HM Treasury until 1986. He then spent 13 years with Schroders in London, Hong Kong and New York, and was Vice Chairman of Schroders’ worldwide investment banking activities from 1998 to 1999. He is the Alternate Director to Sir Alexander Crombie.
Mr. Paresh Parasnis is the Principal Officer and Executive Director of the company since November 14, 2008. A fellow of the Institute of Chartered Accountants of India, he has been associated with the HDFC Group since 1984. During his 16-year tenure at HDFC Limited, he was responsible for driving and spearheading several key initiatives. As one of the founding members of HDFC Standard life, Mr. Parasnis has been responsible for setting up branches, driving sales and servicing strategy, leading recruitment, contributing to product launches and performance management system, overseeing new business and claims settlement, customer interactions etc.
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HDFC Incorporated in 1977 with a 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 gross premium income for the year ending March 31, 2007 stood at Rs. 2,856 Crores and new business premium income at Rs. 1,624 Crores. The company has covered over 8,77,000 lives year ending March 31, 2007. HDFC operates through almost 450 locations throughout the country with its corporate head quarters in Mumbai, India. HDFC also has an International Office in Dubai, UAE with service associates in Kuwait, Oman and Qatar. HDFC is the largest housing company in India for the last 27 years. SNAPSHOT - I • • Incorporated in 1977 as the first specialized Mortgage Company in India. Almost 90% of initial shareholding in the hands of domestic institutes and retail investors. Current 77% of shares held by foreign institutional investors. • Besides the core business of mortgage HDFC has evolved into a financial conglomerate with holdings In: HDFC Standard Life insurance Company- HDFC holds 78.07 %. HDFC Asset Management Company – HDFC holds 50.1% HDFC Bank- HDFC holds 22.25%. Intelenet Global (Business Process Outsourcing) – HDFC holds 50%. HDFC Chubb General Insurance Company – HDFC holds 74%.
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Rs. 805 billion. (US $ 18.30 bn.) Rs.669 billion (US $ 15.20 bn) 2.5 million.
(up to Dec 2007) • Loan Disbursements
(up to Dec. 2007) • • Housing Units Financed Distribution
Mr. Deepak S Parekh is the Chairman of the Company. He is also the Executive Chairman of Housing Development Finance Corporation Limited (HDFC Limited). He joined HDFC Limited in a senior management position in 1978. He was inducted as a whole-time director of HDFC Limited in 1985 and was appointed as its Executive Chairman in 1993. He is the Chief Executive Officer of HDFC Limited. Mr. Parekh is a Fellow of the Institute of Chartered Accountants (England & Wales). Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company since November, 2000. Prior to this, he was the Managing Director of HDFC Limited since 1993. Mr. Satwalekar obtained a Bachelors Degree in Technology from the Indian Institute of Technology, Bombay and a Masters Degree in Business Administration from The American University, Washington DC.
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HDFC Bank: World Class Indian Bank- among the top private banks in India. HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager. Intelenet Global: BPO services for international customers. CIBIL: Credit Information Bureau India Limited. HDFC Chubb: Upcoming Private companies in the field of General Insurance. HDFC Mutual Fund HDFC reality.com: Helps to search properties in all major cities in India HDFC securities
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Standard Life is Europe’s largest mutual life assurance company. Standard Life, which has been in the life insurance business for the past 175 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 kits original Edinburgh premises, opening offices in other towns and acquitting 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 six years by Standard and Poor.
• • • Founded in 1875, company supporting generation for last 179 years. Currently over 5 million Policy holders benefiting from the services offered. Europe’s largest mutual life insurer.
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HDFC Standard Life Insurance Company Limited was one of the first companies to be granted license by the IRDA to operate in life insurance sector. Reach of the JV player is highly rated and been conferred with many awards. HDFC is rated ‘AAA ’ by both CRISIL and ICRA. Similarly, Standard Life is rated ‘AAA’ both by Moody’s and Standard and Poor’s. These reflect the efficiency with which HDFC and Standard Life manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr. respectively.
HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000. HDFC is the majority stakeholder in the insurance JV with 81.4% staple and Standard of as a staple 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture. HDFC Standard Life Insurance Company Ltd. Is one of India’s 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.) India’s leading housing finance institution and the Standard Life Assurance Company, a leading provider of financial services from the United Kingdom. Both the promoters are will 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.
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Track Record so far The gross premium income of HDFC, for the year ending March 31, 2007 stood at Rs. 2,856 crores and new business premium income at Rs. 1,624 crores. The company has covered over 8,77,000 lives year ending March 31, 2007. Company also declared our 5th consecutive bonus in as many years for our ‘with profit’ policyholders.
Financial Expertise As a joint venture of leading financial services groups. HDFC standard Life has the financial expertise required to manage long-term investments safely and efficiently.
Range of Solutions HDFC SLIC has a range of individual and group solutions, which can be easily customized to specific needs. These group solutions have been designed to offer complete flexibility combined with a low charging structure.
Strong Ethical Values: HDFC SLIC is an ethical and Cultural Organization. False selling or false commitment with the customers is not allowed.
Most respected Private Insurance Company
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HDFC SLIC was awarded No-1 Private Insurance Company in 2004 by the World Class Magazine Business World for Integrity, Innovation and Customer Care.
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'. 'The most obvious choice for all'.
Values .Integrity .Customer centric .Teamwork .Innovation .People Care One for all .Joy and Simplicity
PRODUCTS & SERVICES
The right investment strategies won't just help plan for a more comfortable tomorrow -- they will help you get “Sar Utha ke Jiyo”. At HDFC SLIC, life insurance plans are created keeping in mind the changing needs of family. Its life insurance plans are designed to provide you with flexible options that meet both protection and savings needs. It offers a full range of transparent, flexible and value for money products. HDFC SLIC products are modern and contemporary unitized products that offer unique customer benefits like flexibility to choose cover levels, indexation and partial withdrawals.
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PLANS THAT ARE OFFERED BY HDFC STANDARDS LIFE INSURANCE
A person can protect his family against the loss of his income or the burden of a loan in the event of his unfortunate demise, disability or sickness. These plans offer valuable peace of mind at a small price. Protection range includes our Term Assurance Plan & Loan Cover Term Assurance Plan.
HDFC SLIC’s Single Premium Whole of Life plan is well suited to meet long term investment needs. This provides attractive long term returns through regular bonuses.
Pension Plans help to secure financial independence even after retirement. Pension range includes Personal Pension Plan, Unit Linked Pension, Unit Linked Pension Plus.
Savings Plans offer a flexible option to build savings for future needs such as buying a dream home or fulfilling your children’s immediate and future needs. Savings range includes Endowment Assurance Plan, Unit Linked Endowment, Unit Linked Endowment Plus, Unit Linked Endowment Plus II, Money Back, Unit Linked Enhanced Life Protection II, Children's Plan, Unit Linked Young Star, Unit Linked Young Star Plus, Unit Linked Young Star Plus II.
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One-stop shop for employee-benefit solutions HDFC Standard Life has the most comprehensive list of products for progressive employers who wish to provide the best and most innovative employee benefit solutions to their employees. It offers different products for different needs of employers ranging from term insurance plans for pure protection to voluntary plans such as superannuation and leave encashment. HDFC SLIC offers the following group products to esteemed corporate clients: A) Group Term Insurance B) Group Variable Term Insurance C) Group Unit-Linked Plan An investment solution that provides funding vehicle to manage corpuses with Gratuity, Defined Benefit or Defined Contribution Superannuation or Leave Encashment schemes of your company Also suitable for other employee benefit schemes such as salary saving schemes and wealth management schemes.
Development Insurance Plan
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Development Insurance plan is an insurance plan which provides life cover to members of a Development Agency for a term of one year. On the death of any member of the group insured during the year of cover, a lump sum is paid to those member beneficiaries to help meet some of the immediate financial needs following their loss. Eligibility Members of the development agency and their spouses with: Minimum age at the start of the policy 18 years last birthday Maximum age at the start of policy 50 years last birthday Employees of the Development Agency are not eligible to join the group. The group to be covered is only eligible if it contains more than 500 members.
Premium Payments The premium to be paid will be quoted per member in the group and will be the same for all members of the group. The premium can only be paid by the Development Agency as a single lump sum that includes all premiums for the group to be covered. Cover will not start until the premium and all the member information in our specified format has been received.
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On the death of each member covered by the policy during the year of cover a lump sum equal to the sum assured will be paid to their beneficiaries or legal heirs. Where the death is as a result of an accident, an additional lump sum will be paid equal to half the sum assured. There are no benefits paid at the end of the year of cover and there is no surrender value available at any time. The role of the Development Agency Due to the nature of the groups covered, HDFC Standard Life will be passing certain administrative tasks onto the Development Agency. By passing on these tasks the premium charged can be lower. These tasks would include: Submission of member data in a specified computer format Collection of premiums from group members Recording changes in the details of group members Disbursement of claim payments and the mortality rebate (if any) to group members These tasks would be in addition to the usual duties of a policyholder such as: Payment of premiums Reporting of claims Keeping policy holder information up to date Training and support will be available to give guidance on how to complete the tasks appropriately. Since these additional tasks will impose a burden on the Development Agency, the Development Agency may charge a Rs. 10 administration fee to their members.
Prohibition of rebates
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Section 41 of the Insurance Act, 1938 states No person shall allow or offer to allow, either directly or indirectly, as an inducement to any person to take out or renew or continue an insurance in respect of any kind of risk relating to lives or property in India, any rebate of the whole or part of the commission payable or any rebate of the premium shown on the policy, nor shall any person taking out or renewing or continuing a policy accept any rebate, except such rebate as may be allowed in accordance with the published prospectus or tables of the insurer If any person fails to comply with sub regulation (previous point) above, he shall be liable to payment of a fine which may extend to rupees five hundred
INTROUCTION TO UNIT LINKED FUNDS
Unit linked plans are based on the component of the premium or the contribution of the customer towards the plan. This contribution can be in different modes like yearly, half yearly, quarterly and monthly. Unit linked plans have multiple benefits like life protection, rider protection, savings, transparency, investment choices, liquidity and planning for taxes. These plans work like mutual funds. The premium is collected from the policy holder. He is allotted a certain number of units based of his contribution. The Net Asset Value is the value of each unit of the fund. It is found by subtracting the charges and current liabilities from the current assets and investments and dividing this number by the total number of outstanding units. Let us take an example. There are 100 investors and each invests Rs. 10 in a fund. The total value of the fund is Rs. 1000 and each person is allotted 1 unit of Rs 10. Now the
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money (Rs. 1000) is invested in the debt or equity market. Suppose the fund value increased by 20%. As a result the Rs. 1000 invested became Rs. 1200. Hence the value of every investor is now Rs. 12 and not Rs. 10. UNIT LINKED VERSUS OTHER FINANCIAL INSTRUMENTS Parameters Safety Liquidity Returns Life Cover Tax benefits RBI Bonds High None Low 1 time amount Tax free Fixed Deposits High High Low 1 time amount Taxed Mutual Funds Medium High High 1 time amount Taxed Unit linked High High High 10 times Tax free
We find that life insurance unit linked plans is a good area to invest money in as it provides liquidity, safety, high returns, life cover and tax benefits in a single plan. HDFC SLIC offers the option of indexation to beat inflation. Risk is reduced to a large extent as the company invests in a diversified portfolio of stocks.
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INCOME TAX GROSS SECTION Sec. 80C SALARY Across Slabs
ANNUAL HOW MUCH TAX HDFC STANDARD CAN YOU SAVE? income Upto Rs. LIFE PLANS
33,990 All the life insurance
saved on investment plans. of
Sec. 80 CCC
Rs. 1,00,000. income Upto Rs. 33,990 All the pension plans. saved on Investment
Sec. 80 D
of Rs.1,00,000. income Upto Rs. 3,399 saved All on Investment of Rs. 10,000.
health riders with the
conventional plans. TOTAL SAVINGS POSSIBLE Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399 under Sec. 80 D, calculated for a male with gross annual income Rs37,389
exceeding Rs. 10,00,000.
Sec. 10 (10)D
Under Sec. 10(10D), the benefits you receive are completely tax-free, subject to the conditions laid down therein.
Awards & Accolades
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Received 2008 CIO Bold 100 and CIO Security Awards HDFC Standard Life has received the 2008 CIO Bold 100 Award. This annual award recognizes organizations that exemplify the highest level of operational and strategic excellence in information technology. This year's award theme, ‘The Bold 100,’ recognized those executives and organizations that embraced great risk for the sake of great reward. HDFC Standard Life has also been one of the five recipients of the Special 2008 CIO Security Award aimed at CIOs, whose pioneering implementations have taken their enterprise security to the next level. This award category identifies innovative of and
aimed at creating a secure business infrastructure. The company received the 2008 CIO Bold Award for its mobile workforce portal and the CIO Security Award for its initiatives for a secure computing environment, including identity management.
May, 2008 Received PCQuest Best IT Implementation Award 2008
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HDFC Standard Life received the PCQuest Best IT Implementation Award 2008 for Consultant Corner, the applications for its financial consultants, providing centralized control over a vast geographical spread for key business units such as inventory, training, licensing, etc. Read more about the ‘Consultant Corner’ tool in the ‘HDFCSL in News’ Section. HDFC Standard Life has won the PCQuest Best IT Implementation Award for two years consequently. Last year, the company received the award for Wonders, its pathbreaking implementation of an enterprise-wide workflow system. March, 2008 Silver Abby at Goafest 2008 HDFC Standard Life's radio spot for Pension Plans won a Silver Abby in the radio writing craft category at the Goafest 2008 organised by the Advertising Agencies Association of India (AAAI). The radio commercial ‘Pata nahin chala’ touched several changes in life in the blink of an eye through an old man’s perspective. The objective was drive awareness and ask people to invest in a pension plan to live life to the fullest even after retirement, without compromising on one’s self-respect March, 2008 Unit Linked Savings Plan Tops Mint Best TV Ads Survey The Unit Linked Savings Plan advertisement of HDFC Standard Life, one of the leading private insurance companies in India, has topped Mint’s Top Television Advertisement survey conducted, for February 2008. HDFC Standard Life’s Unit Linked Savings Plan advertisement was ranked 4th in terms of a combined score of ad awareness and brand recall and 3rd in terms of ad diagnostic scores (likeability, enjoyment, believability, and claim). The respondents were between 18 and 40 years. Mint’s exclusive report, ‘New voices in a makeover’ outlines the survey in detail. February, 2008 Deepak M Satwalekar Awarded QIMPRO Gold Standard Award 2007
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Mr Deepak M Satwalekar, Managing Director and CEO, HDFC Standard Life, received the QIMPRO Gold Standard Award 2007 in the business category at the 18th annual Qimpro Awards function. The award celebrates excellence in individual performance and highlights the quality achievements of extraordinary individuals in an era of global competition and expectations. January, 2008 Sar Utha Ke Jiyo Among India’s 60 Glorious Advertising Moments HDFC Standard Life’s advertising slogan honoured as one of ‘60 Glorious Advertising & Marketing Moments' over the last 60 years in India,’ by 4Ps Business and Marketing magazine. The magazine said that HDFC Standard Life is one of the first private insurers to break the ice using the idea of self respect (Sar Utha Ke Jiyo) instead of 'death' to convey its brand proposition. This was then, followed by others including ICCI Prudential, thus giving HDFC Standard Life the credit of bringing up one such glorious advertising and marketing moment in the last 60 years.
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Why HDFC is better …?
1. Investment returns: investment returns and business growth provided by
HDFC is validated by bajaj Capital report. HDFC pacify the need of invertors up to healthy level and make the strong relationship with them.
2. Financial Background and Experience: HDFC existing in the market since
1977. It has a very handsome experience in the field of finance because it completely involved in finance Sector only where as the others are running in many other field also like Reliance (Petroleum, Textile, Telecom etc.)
3. Ethics and Values: HDFC is an ethical and cultural organization which
prevents the false selling and prohibit the false commitment to the customer.
4. Sales Force: Properly trend licensed and Educated People are the strength of
the company. So that they could give the best customer service. 5. Huge branch network HDFC is having 450 branches in all over the country.
6. Online accessibility : It makes the process faster and make the customer
Who can be the financial consultant: ? Section 42(4) of the amended Insurance Act, 1938 states an agent to be one who is not: A minor. • • • Found to be sound mind by a court of competition jurisdiction. Found guilty of criminal background. Found guilty of having knowingly participated in or connived at any fraud /dishonesty or misrepresentation against an insured.
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Work of financial consultant: The FC is the interface between the customer and insurance company. The agent should be able to accomplish the following service. • • • • Assessing and analyzing the clients risk profile. Finding the best product or products available in the market. Negotiating the best deal available. Continuity of service throughout the period of insurance.
Objective of FC: Recruitment of Financial consultant (FCs) of a excellent profile and their retention strategies and what are their benefit that company going to provided for retention of their FCs. (A) What type of people are we looking for ?
1- Committed people who have the drive, determination and ability to become professional financial consultants. 2- Ability to sell a range of financial products. (B) What do We Expect from financial Consultant ?
1- Devote a time and energy during training. 2- Sell at least 5 policies each month once after licensed with company. 3- We look forward to a long term mutually beneficial relationship.
Why should financial consultant choose HDFC standard life ?
Brand value and the reputation of the partners (HDFC Limited) Market leader in housing finance: 15 lakhs home financed.
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11 lakhs retail deposits customer base.
Reputation for providing the higher standards of customer service. Financial Strength of the partners. Brand value and the reputation of the partners standard life: 175 years experience in life insurance. Largest mutual life insurer in Europe. Product innovation. Strategies for recruitment of FC: Strategies Employed to achieve the target are as follows: Telecalling Contacting the person directly (interview) Collect references.
Some important steps to make effective telecalling:Open the call in a friendly and positive way. State the name, position and company name. Check the prospect has time to speak. State the reason for the call. Clearly succinctly explain how the meeting will be benefiting the prospect.
Recruited eight financial consultants for company. Increase in confidence level. Got the knowledge about, how to differentiate our product form that of LIC. Made more and more people aware about my companies Products (Policies)
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Taken some appointments for policies and got positive response from 8 persons with the help of my BDM.
Limitations:So though the study aim to achieve the above mentioned Objective in full earnest and accuracy, it may be hampered due to certain limitation. Some of the limitations are as follows: • • To cover the various section for the society. Respondents may not be at home and may have to re-contacted or replaced by others. • Getting accurate response form the respondents due to their inherent problem is difficult. • • Limited response from client. There is a time limitation it is not possible to study whole thing I covered some special aspect as well as some topics.
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The methodology adopted in the field to collect the data represented diagrammatically below:
Segmentation of People
Meeting with People
Filling up questionnaire and Schedule
In order to determine the willingness of the people to become FC for HDFC SLIC in Bilaspur, data collected by surveying is treated as analysis. Response to the parameter like professional, unemployed students, housewives, investment consultant, post office agent.
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Willingness to be FC for HDFC Professional Working employees House wives Students Investment consultants Post office agents Others Total Yes 2 2 2 3 2 3 14 No 28 33 18 22 18 12 131 Total 30 35 20 25 20 15 10 155
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LIFE INSURANCE CORPORATION OF INDIA (LIC) LIC has an excellent money back policy which provides for periodic payments of partial survival benefits as long as the policy holder is alive. 20% of the sum assured is payable after 5, 10, 15 and 20 years and the balance 40% is payable at the 20 th year along with accrued bonus. (www.lic.com) For a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20 years and the balance 40% plus the accrued bonus becomes payable at the 25th year. An important feature of these types of policies is that in the event of the death of the policy holder at any time within the policy term the death claim comprises of full sum assured without deducting any of the survival benefit amounts which have already been paid. The bonus is also calculated on the full sum assured. HDFC SLIC does not have a money back policy. It could offer a money back plan and capture some portion of this market. While marketing insurance products I found that many customers wanted to purchase these plans.
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LIC offers 66 different plans; plans are formulated for specific occasions – whole life plans, term assurance plans, money back plan for women, child plans, plans for the handicapped individuals, endowment assurance plans, plans for high worth individuals, pension plans, unit linked plans, special plans, social security schemes – diversified portfolio of products. HDFC SLIC could diversify its product portfolio. It could add more plans for high worth individuals and women.
ICICI PRUDENTIAL ICICI Prudential is a stiff competitor for HDFC SLIC. The company is a merger between ICICI Bank which is the biggest private bank in India and Prudential Plc which is a global life insurance company. The company has an investment plan which is market related – Invest Shield Life. In this plan even if the market falls, the premium will be returned to investors. It is a guaranteed plan which ensures the company carefully invests your money. The stock market performance of ICICI Prudential is much better than HDFC SLIC. The returns on the growth fund were 46.28% compared to the 42.70% offered by HDFC SLIC. Customers are attracted by higher returns and this is a plus point for Prudential. The company is very well advertised. The advertisements are showcased in movies, television, newspapers, magazines, bill boards, radio etc. The company has an excellent brand ambassador – Mr. Amitabh Bacchan. His promotion of the company builds trust and faith in the minds of our people. However the charges are very high in the plans offered by ICICI Prudential. It is 35% during the first year, 15% in the next year and 3% from the third year onwards. Also a
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higher minimum premium of Rs. 8000 is charged. Hence the policies are not accessible to the lower strata of the society.
BIRLA SUN LIFE Birla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla Group, one of the largest business houses in India and Sun Life Financial Inc., a leading international financial services organization. The local knowledge of the Aditya Birla Group combined with the expertise of Sun Life Financial Inc., offers a formidable protection for your future. (Source: www.birlasunlife.com) The Aditya Birla Group has a turnover close to Rs. 33000 crores with a market capitalization of Rs. 53400 crores (as on 31st March 2007). It has over 72000 employees across all its units worldwide. It is led by its Chairman - Mr. Kumar Mangalam Birla. Some of the key organizations within the group are Hindalco and Grasim. Sun Life Financial Inc. and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. It had assets under management of over US$343 billion, as on 31st March 2007. The company is a leading player in the life insurance market in Canada. Being a customer centric company, BSLI has invested heavily in technology to build world class processing capabilities. BSLI has covered more than a million lives since inception and its customer base is spread across more than 1000 towns and cities in India. All this has assisted the company in cementing its place amongst the leaders in the industry in terms of new business premium income. The company has a capital base of 520 crores as on 31st July, 2007.
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Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100 years of age. There are guaranteed returns of 3% p.a. net of policy charges after every 5 years from the eleventh policy year onwards. However the charges are very high. The initial charges for the first year are 65%. Hence the fund value is greatly reduced.
BAJAJ ALLIANZ Bajaj Allianz is a joint venture between Allianz AG with over 110 years of experience in over 70 countries and Bajaj Auto, a trusted automobile manufacturer for over 55 years in the Indian market. Together they are committed to offering you financial solutions that provide all the security you need for your family and yourself. Bajaj Allianz is the number one private life insurer for the year 2005 – 2006. It is leading by 78 crores. It has experienced a whopping growth of 216% in the last financial year. The company has sold 13, 00,000 policies and is backed by 550 offices across India. It offers travel insurance, motor insurance, home insurance, health and corporate insurance. The mortality charges are lower than HDFC SLIC. The entry age could be zero years which allow even new born babies to be insured.
Tata Aig is a joint venture between the Tata group and American International Group Inc. In one of the plans the company offers hospital cash benefit wherein it will pay
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Rs. 2500 per day in case of hospitalization and Rs.12.5 lakhs in case the person suffers from any critical illness. Annual premium is much less (about Rs. 6712) to avail such a good benefit. Charges are relatively low compared to HDFC SLIC for some policies. The company offers high coverage plans at low cost. There is a plan even for a policy term of 1 year. Your family can continue to enjoy their current lifestyle even in the case of something happening to you. These plans are very flexible and HDFC SLIC could adopt this idea of insuring individuals for short periods of time. For example; there is a family of four. The only earning member is the father. He has just taken a loan from a bank of 20 lakhs to purchase a new home. He is able to repay the loan with his current salary in 15 years. The problem arises if something were to happen to him within these fifteen years. Not only will the family face the emotional and financial loss of their father but they will also have to repay the home loan or risk being homeless.
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MARKETING PROBLEMS The old and out dated technique of tele marketing is used to prospect customers. More modern techniques must be adopted. The company must sponsor shows and give presentations in corporate houses. The financial health check must be performed for every prospect to assess his/her true financial position and needs. Some of the advisors skip this vital step and the prospect ends up with a plan they do not appreciate and soon surrender or discontinue. Some of the main problems in marketing the policies are: Large amount of competition (18 players in the market) Other brands are well advertised and have higher recall value LIC is considered a safer option Face competition from banks and mutual funds High premium policies are difficult to market Incorrect perception about insurance Interested prospects might have a lack of time and postpone investments
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Customers get defensive if you cold call Short term plans are available only at large premium Customers do not have risk appetite to invest in shares Some prospects have already invested and are not interested in further investments Consumers don’t want to undertake medical examinations Large amount of documentation Customers do not like their money locked up for many years Lack of awareness about the unit linked funds in the market No money back plan present in the product portfolio
SUGGESTIONS FOR IMPROVEMENT Advertise about the company and its products – it motivates individuals to purchase insurance Create a positive perception about insurance Speak about the good features a plan offers like high returns, life cover, tax benefits, indexation, accident cover while prospecting customers Try to sell the product/plan which the consumer requires and not the plan where the advisors benefit is higher Improve the efficiency in operations Bring out policies with small premiums payable for short periods of time – Rs. 5000 – Rs. 10000 per annum for 10 years Attract the youth of India with higher returns on investment as returns are the motivating factor which influence purchase of insurance
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Promote insurance in colleges and corporate houses Promote HDFC SLIC as an Indian Company to build trust HDFC SLIC could have a brand ambassador or a mascot to promote its services Should have partial withdrawals from the first year onwards Tap the rural market where there is large potential Diversify product portfolio Make products more straight forward – reduce complexities
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ANALYSIS & INTERPRETATION
“A SURVEY ON THE LIFE INSURANCE INDUSTRY IN INDIA”
AGE GROUP OF SURVEYED RESPONDENTS
No. of Respondents
18 - 25 years
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26 - 35 years
36 - 49 years
50 - 60 years
More than 60 years
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From the chart above we find that 47% of the respondents fall in the age group of 18 – 25 years, 25% fall in the age group of 26 – 35 years and 17% fall in the age group of 36 – 49 years.
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Therefore most of the respondents are relatively young (below 26 years of age). These individuals could be induced to purchase insurance plans on the basis of its tax saving nature and as an investment opportunity with high returns. Individuals at this age are trying to buy a house or a car. Insurance could help them with this and this fact has to be conveyed to the consumer. As of now many consumers have a false perception that insurance is only meant for people above the age of 50. Contrary to popular belief the younger you are the more insurance you need as your loss will mean a great financial loss to your family, spouse and children (in case the individual is married) who are financially dependent on you
GENDER CLASSIFICATION OF SURVEYED RESPONDENTS
Particulars Male Female
No. of Respondents 193 77
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CUSTOMER PROFILE OF SURVEYED RESPONDENTS
Customer profile Student Housewife Working Professional Business Self Employed Government service employee No. of respondents 62 5 116 49 24 14
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From the chart above it can clearly be seen that 43% of the respondents are working professionals, 23% are students and 18% are into business. Therefore the target market would be working individuals in the age group of 18 – 25 years having surplus income, interested in good returns on their investment and saving income tax.
NO. OF RESPONDENTS WHO HAVE LIFE INSURANCE POLICY IN THEIR NAME TABLE 4: Person who have life insurance policy Yes 103 No 167 CHART 4:
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ANALYSIS: This graph shows that out of total 270 respondents only 103 or 38% respondents have life insurance policy in their name. Rest all don’t have a single policy in their name. So there is a very big scope for life insurance companies to cover these people. So in future business of life insurace will gro further.
MARKET SHARE OF LIFE INSURANCE COMPANIES TABLE 5:
LIFE INSURER HDFC STANDARD LIFE BIRLA SUN LIFE AVIVA LIFE INSURANCE BAJAJ ALLIANZ LIC TATA AIG ICICI PRUDENTIAL ING VYSYA
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NUMBER OF POLICIES 4 3 6 7 55 6 12 6
BHARTI AXA OTHERS
In India, the largest life insurance company is Life Insurance Corporation of India. It has been in existence in India since 1956 and is completely owned by the Government of India. Today the organization has grown to 2048 offices serving 18 crore policies and has a corpus of over 340000 crore INR.
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ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE
Premium paid (p.a.) Rs. 5000 - Rs. 10000 Rs. 10001 - Rs. 15000 Rs. 15001 - Rs. 24900 Rs. 25000 - Rs. 50000 Rs. 50001 - Rs. 60000 Rs.60001 - Rs. 80000 Rs. 80001 - Rs. 100000 CHART 6:
No. of respondents 40 26 18 10 4 2 3
ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE
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From the chart above we find that, 39% of the respondents surveyed pay an annual premium less than Rs. 10001 towards life insurance. 25% of the respondents pay an annual premium less than Rs. 15001 and 17% pay an annual premium less than Rs. 25000. Hence we can safely say that HDFC SLIC would be able to capture the market better if it introduced products/plans where the minimum premium starts at Rs. 5000 per annum. Only 19% of the respondents pay more than Rs. 25000 as premium and most products sold by HDFC SLIC have Rs.12000 as the minimum annual premium amount. They should introduce more products like Easy Life Plus and Safe Guard where the minimum premium is Rs.6000 p.a. and Rs. 12000 p.a. respectively. This would definitely increase their market share as more individuals would be able to afford the policies/plans offered.
POPULAR LIFE INSURANCE PLANS TABLE 7:
Type of Plan Term Insurance Plans Endowment Plans Pension Plans Child Plans Tax Saving Plans
No. of Respondents 105 122 16 8 19
CHART 7: POPULAR LIFE INSURANCE PLANS
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From the chart given above we can clearly see that 45% of the respondents hold endowment plans and 39% of the respondents hold term insurance plans. Endowment plans are very popular and serve two purposes – life cover and savings. If the policy holder dies during the policy term the nominee gets the death benefit that is, sum assured and accumulated bonus. On survival the policy holder receives the survival benefit with a bonus. A term plan is a pure risk cover plan wherein the insured pays a lower premium for a higher sum assured. Term insurance is the cheapest form of insurance and helps the policy holder insure himself for a relatively low premium. For the returns sensitive investor term plans do not find favor as they do not offer a return in case the individual does not die during the policy term.
AWARENESS OF UNIT LINKED INSURANCE PLANS
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Awareness of Unit Linked Plans Yes No No. of Respondents 154 116
AWARENESS OF UNIT LINKED INSURANCE PLANS
From the chart given above we find that 57% of the respondents are aware of unit linked life insurance plans and 43% are not aware of such plans. These plans should
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be promoted through advertising. The company can advertise through television, radio, newspapers, bill boards and pamphlets. This would increase awareness and arouse curiosity in the minds of the consumer which would enable the company to market its products more effectively. Unit – linked plans are those where the benefits are expressed in terms of number of units and unit price. They can be viewed as a combination of insurance and mutual funds. The number of units a customer would get would depend on the unit price when they pay the premium. When the policy matures the individual gets his fund value. The value of his fund is calculated by multiplying the net asset value and number of units held by them on that day.
CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM
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Willingness to spend on premium Less than Rs. 6,000 Rs. 6,001 - Rs. 10,000 Rs. 10,001 - Rs. 25,000 Rs. 25,001 - Rs. 50,000 Rs. 50,001 - Rs. 1,00,000 CHART 9:
No. of respondents 41 73 110 41 5
Percentage 15% 27% 41% 15% 2%
CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM
From the graph above, we can clearly see that 41% of the respondents would be willing to spend between Rs. 10001 – Rs. 25000 for life insurance. 27 % would be
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willing to spend between Rs. 6001 – Rs. 10000 per annum. Only 15% would be willing to spend more than Rs. 25000 per annum as life insurance premium. We could say that the maximum premium payable by most consumers is less than Rs. 25000 p.a. This is further reduced as most customers have already invested with LIC, ICICI Prudential, Birla Sun Life, Bajaj Allianz etc. HDFC SLIC is faced with a large amount of competition. There are 18 insurance companies in India inclusive of LIC. Hence to capture a larger part of the market the company could introduce more reasonable plans with lesser premium payable per annum.
CHART SHOWING IDEAL POLICY TERM TABLE 10: Ideal policy term 3 - 5 years 6 - 9 years 10 - 15 years
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No. of respondents 51 41 95
16 - 20 years 21 - 25 years 26 - 30 years More than 30 years Whole life Policy CHART 10:
38 24 5 3 13
CHART SHOWING IDEAL POLICY TERM
From the chart given above it can be seen that 35% of the respondents prefer a policy term of 10 – 15 years, 19% prefer a term of 3 – 5 years and 15% prefer a term of 6 – 9 years. This means that HDFC SLIC could introduce more plans wherein the premium paying term is less than 15 years. The outlook of insurance as a product should be changed from something which you pay for your whole life (whole life policy) and do not receive any benefit (the nominee only receives the benefit in case of your death) to an extremely useful
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investment opportunity with the prospects of good returns on savings, tax saving opportunities as well as providing for every milestone in your life like marriage, education, children and retirement.
FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE
Parameter Advertisements High returns Advice from friends Family responsibilities Others
No. of Respondents 35 84 46 89 16
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From the chart above it can be seen that 33% of the respondents purchase life insurance to secure their families, 33% take life insurance to get high returns, 17% purchase insurance on the advice of their friends and 13% purchase insurance because of the influence of advertisements. The main purpose of insurance is to cover the financial or economic loss that occurs to the family in case of the uncertain death of the policy holder. But now a days this trend is changing. Along with protection (life cover), a savings element is being added to insurance. With the introduction of the new unit linked plans in the market, policy holders get the option to choose where their money will be invested. They can invest their money in the equity market, debt market, money market or a combination of these. The debt and money markets usually have low risk attached whereas the equity market is a high risk investment option.
PREFERRED COMPANY TYPE OF THE RESPONDENTS
Type of Company Government Owned Company Public Limited Company
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No. of Respondents 127 62
Percentage 47% 23%
Private Company Foreign Company
CHART 12: PREFERRED COMPANY TYPE OF THE RESPONDENTS
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From the graph above we find that 60% of the respondents preferred to purchase insurance from a government owned company, 29% of the respondents preferred to purchase insurance from a public limited company and only 4% of the respondents preferred a foreign based company. Heavy advertising through television, newspapers, magazines and radio is required.
MINIMUM EXPECTED RETURN ON INVESTMENT
TABLE 13: Expected Returns Less than 5% 5% - 10% 11% - 15% 16% - 20% 21% - 25% 26% - 30% 31% - 40% 41% - 50% More than 50% CHART 13: No. of respondents 5 39 46 49 46 27 22 14 22
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From the chart above it can clearly been seen that 18% of the respondents would like 16 – 20% returns, 17% would like returns between 21 – 25% and 17% would like returns of 11 – 15% on their investments. Therefore the average return on investment should be at least 16 – 20 %. Most consumers are willing to adapt to some amount of risk but still want some guaranteed returns. Therefore the bulk of investment should be made in the balanced fund with 50% debt and 50% equity. The returns on the Secure Fund are guaranteed as these involve investment is government securities and the debt market. But the returns on these instruments are low (8 – 10%). If the company invests in shares, returns are higher (39%) but correspondingly risk borne by the policy holder is also higher. Therefore a good combination of the two instruments is often a wise choice.
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1- Customers are less aware about the private insurance company in market. 2- Some customer likes to join HDFC as FCs because it is a Part-time job. 3- Many professions like CA, tax planner wants corporate agency rather than to be a financial consultant. 4- HDFC is too selective in making a FC rather than to appoint any one like LIC. 5- Customer don’t want to join as financial consultant because it’s on commission basis and they want the job on salary basis. 6- Educated customers are now vending towards private insurance Companies, due to the attractive packages and services provided by various new insurance companies. 7- LIC has created a branded image in 3-4 decades, due to which new insurance companies are facing trouble in capturing market share.
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If the customers are joining HDFC the segment is more of tax consultant, investment for consultant and other people who are engaged in investment business that is because they want to diversity their portfolio.
9- HDFC SLIC is having good retention strategies for their financial consultant.
Customers should be made aware of the brand name of Insurance company through advertisement.
The fear in the customer mind should be removed by company.
The insurance companies should try to nurture their brand name timely and attractive facility provide to customer.
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FUTURE LINE OF RESEARCH
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FUTURE LINE OF RESEARCH The future topics for research in the organization could be setting up of an appropriate ad campaign. It is very vital to the companies’ success that the people of India know about HDFC SLIC, its products and their special features and how insurance in general can help them in their future. The advertisements have to be emotionally appealing. They might also include a celebrity. The brand name of HDFC could be used to give a push to HDFC SLIC and its products. The general perception of insurance as “inauspicious” should be done away with and individuals and corporations accept insurance on power with other investment opportunities. The other area of research could be in the management of funds HDFC SLIC possesses and how it can maximize returns for its investors. A research project could be undertaken on how to ensure that the money gets invested in the right companies and earns a medium – high return on investment. Another area of research could be an
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analysis of the sales and marketing techniques used by HDFC SLIC. A large number of changes could be introduced and this would help in saving operating costs and improving the efficiency of the firm.
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CONCLUSION HDFC standard life insurance is first life insurance company in India. It has businesses spread out across the globe. It was registered on 23rd December 2000. It currently ranks number 4 amongst the insurers in India (Source: annual premium provided by the company) The company faces a large amount of competition. To sustain itself it must promote its products through advertising and improve its selling techniques. Consumers must be aware of the new plans available at HDFC SLIC. The medium of advertising used could be television since most of its competitors use this tool to promote their products. The company must be promoted as an Indian company since consumers seem to have more trust in investing in Indian firms. The unit linked concept must be specifically promoted. The general perception of life insurance has to change in India before progress is made in this field. People should
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not be afraid to invest money in insurance and must use it as an effective tool for tax planning and long term savings. HDFC SLIC could tap the rural markets with cheaper products and smaller policy terms. There are individuals who are willing to pay small amounts as premium but the plans do not accept premiums below a certain amount. It was usually found that a large number of males were insured compared to females. Individuals below the age of 30 (mostly male) were interested in investment plans. This was a general conclusion drawn during prospecting clients.
A SURVEY ON ‘INSURANCE INDUSTRY’ Dear Sir/Madam, I am a student of NSB School of Business, New Delhi. As part of the requirements for my Post Graduation Diploma in Business Management I am required to do a research based project. Kindly spend a few minutes of your valuable time and fill in this questionnaire. Do you have a life insurance policy/investment plan in your name? o Yes o No
If yes which company’s insurance policies do you hold? o HDFC Standard Life Insurance o o o Aviva Life Insurance LIC ICICI Prudential Life Insurance o Birla Sun Life Insurance o Bajaj Allianz Life Insurance o Tata AIG Life Insurance o ING Vysya Life Insurance
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Bharti Axa Life Insurance
o Others (specify name) ______________________________
What is the approximate premium paid by you annually (in Rupees)? o o o o o Rs. 5,000 – Rs. 10,000 Rs. 15,001 – Rs. 25,000 Rs. 50,001 – Rs. 60,000 Rs. 80,001 – Rs. 1,00,000 More than Rs. 1,00,000 (specify premium) ____________________________ o Rs. 10,001 – Rs. 15,000 o Rs. 25,001 – Rs. 50,000 o Rs. 60,001 – Rs. 80,000
What kind of insurance policy would suit you best in your current stage of life? o Life Insurance o Pension Plans o Life Insurance and Investment Plans o Child Plans
o Tax saving plans Are you aware of the new unit linked insurance plans in the market? o Yes o No
How much would you be willing to spend per annum if you were to go for an investment/insurance plan? o o o Less than Rs. 6,000 Rs. 10,001 – Rs. 25,000 Rs. 50,000 – Rs. 1,00,000 o Rs. 6,001 – Rs. 10,000 o Rs. 25,001 – Rs. 50,000 o More than Rs. 1,00,000
Which according to you is an ideal policy term? (Number of years you would be willing to pay premium) o 3 to 5 years o 6 to 9 years
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o o o
10 to 15 years 21 to 25 years More than 30 years
o 16 to 20 years o 26 to 30 years o Whole life policy
What motivates you to purchase insurance/investment plans? o o Advertisements Advice from friends o High Returns o Family responsibilities
o Others (specify) In which kind of company would you prefer to make a purchase of insurance? o o Government owned company Private Company o Public Limited Company o Foreign based company
Typically what kind of returns would you look at from your investments? (Please note: Higher returns involve greater risk) o o o o o Less than 5% 11% - 15 % 21% - 25% 31% - 40% More than 50% o 6% - 10 % o 16% - 20 % o 26% - 30% o 41% - 50%
Personal Details :
: __________________________________________________ : __________________________________________________
Age : __________________________________________________
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Contact No. Profile of respondent: Student Housewife Working Professional
Business Self-Employed Government Service Employee
Web-Site : www.hdfcslic.com www.tata-aig-life.com www.irdaindia.com www.lic.com www.money control.com www.bajajallianz.com www.icici.prulife.com www.indiacore.com www.bajajallianz.com www.iciciprulife.com
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www.tataaig.com Magazine –
Insurance World The Outlook Money Secrets of Successful Insurance Sales by Mr. Jack Kinder
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