Professional Documents
Culture Documents
Kotak Life Insurance
Kotak Life Insurance
ON PROJECT
SUBMITTED TO
It was a great privilege and honor to express my deep sense of gratitude and
whole-hatred thanks to Mr.BIKRAMJIT SINGH BUTALIA. For giving
me the opportunity to summer tanning with the esteemed organization and
providing me all sort of guidance needed for the project from time to time,
putting my concepts right & constant encouragement at every stage of the
project.
Sonpreet kaur.
PREFACE
“Theoretical knowledge without practical learning is of little value.”
2.INTRODUCTION OF PROJECT
• Introduction
• Objective of research
• Research methodology
INTRODUCTION
HISTORY
The story so far...
Almost 4,500 years ago, in the ancient land of Babylonia, traders used to
bear risk of the caravan trade by giving loans that had to be later repaid with
interest when the goods arrived safely. In 2100 BC, the Code of Hammurabi
granted legal status to the practice.
Life insurance had its origins in ancient Rome, where citizens formed burial
clubs that would meet the funeral expenses of its members as well as help
survivors by making some payments.
Since most of the trade took place by sea, there was also the fear of pirates.
So these guilds even offered ransom for members held captive by pirates.
Burial expenses and support in times of sickness and poverty were other
services offered. Essentially, all these revolved around the concept of
insurance or risk coverage. That's how old these concepts are, really.
Enter companies...
The first stock companies to get into the business of insurance were
chartered in England in 1720. The year 1735 saw the birth of the first
insurance company in the American colonies in Charleston, SC.
However, it was after 1840 that life insurance really took off in a big way.
The trigger: reducing opposition from religious groups.
The 19th century saw huge developments in the field of insurance, with
newer products being devised to meet the growing needs of urbanization and
industrialization.
In 1835, the infamous New York fire drew people's attention to the need to
provide for sudden and large losses. Two years later, Massachusetts became
the first state to require companies by law to maintain such reserves. The
great Chicago fire of 1871 further emphasized how fires can cause huge
losses in densely populated modern cities. The practice of reinsurance,
wherein the risks are spread among several companies, was devised
specifically for such situations.
With the advent of the automobile, public liability insurance, which first
made its appearance in the 1880s, gained importance and acceptance.
In the 19th century, many societies were founded to insure the life and
health of their members, while fraternal orders provided low-cost, members-
only insurance.
In India...
Bombay Mutual Assurance Society, the first Indian life assurance society,
was formed in 1870. Other companies like Oriental, Bharat and Empire of
India were also set up in the 1870-90s.
It was during the swadeshi movement in the early 20th century that
insurance witnessed a big boom in India with several more companies being
set up.
In the life insurance market, Kotak Life Insurance, one of the fastest
growing companies in India, demonstrated a first year premium income
growth of 260% in 2004
Special Advantages:
The group has a net worth of around Rs.1,700 crore and employs over 4,000
employees in its various businesses. With a presence in 74 cities in India and
offices in New York, London, Dubai and Mauritius, it services a customer
base of over 5,00,000.
Management
• Mr. Gaurang Shah (Managing Director)
• Mr. G Murlidhar (Chief Financial Officer)
• Mr. Nihar Rao (Chief Technology Officer)
• Mr. Chandrashekar Sathe (Investment Advisor)
• Mr.Nandip Vaidya (Vice President-Tied Agency Sales)
• Mr. Arun Patil (Vice President-Sales & Mgt Dlpmt)
• Mr. Jim Thompson (Appointed Actuary)
• Mr. Eksteen de Waal (Head Sales Training)
OTHER GROUPS:
1) Kotak Mahindra Bank Ltd.
2) Kotak Mahindra Primus Ltd.
3) Kotak Mahindra Capital Company Ltd.
4) Kotak Mahindra Asset Management Company
5) Kotak Mahindra International Ltd
6) Kotak Securities
MERGER
A marriage within the family is usually eyed with a lot of skepticism and
often disgust. But when it comes to corporate, getting together as one has its
own charm and probably less harm. Take the latest case of kotak mahindra
OLD MUTUAL
OLD MUTUAL was established more than 150 years ago and has developed
into an International financial services group whose activities are focused on
asset gathering and asset management. The Old Mutual Group offers a
diverse range of financial services in three principal geographies: South
Africa, the United States and the United Kingdom. The company is listed on
the London Stock Exchange with a market capitalisation of approximately
$6 billion and is a member of the elite FTSE 100 index. In the 2003 rankings
of the World's 500 largest corporations by Fortune magazine, Old Mutual
climbed 87 places to position number 366 and was also listed as the 14th
largest insurance company in the world.
Old Mutual is the largest financial services business in South Africa, through
its life insurance, asset management, banking and general insurance
operations. The company serves 4 million life insurance policyholders and
employs over 13 000 South Africans in its local operations.
In the USA, Old Mutual is one of the top ten fixed annuity businesses
offering an array of specialist asset management skills through its 23 asset
management businesses. The company’s US Life business recorded sales of
$4 billion at the end of 2002.
The Old Mutual Group has the ability to cater for a variety of consumer
segments and offers a comprehensive and innovative range of products for
all income groups.
PRODUCTS:
Individual:
1. Kotak Term Plan
2. Kotak Preferred Term Plan
3. Kotak Money Back Plan
4. Kotak Child Advantage Plan
5. Kotak Endowment Plan
6. Kotak Capital Multiplier Plan
7. Kotak Retirement Income Plan
8. Kotak Retirement Income Plan (Unit-linked)
9. Kotak Safe Investment Plan
10.Kotak Safe Investment Plan II
11.Kotak Flexi Plan
12.Kotak Easy Growth Plan
13.Riders
14.Exclusions Under Riders
Group:
1. Employee Benefits
2. Kotak Term Group plan
3. Kotak Credit-Term Group plan
4. Kotak Complete Cover Group plan
5. Kotak Gratuity Group plan
6. Kotak Superannuation Group plan
Rural :
1. Kotak Gramin Bima Yojana
Mr. Gaurang Shah, Managing Director of Kotak Mahindra Old Mutual Life
Insurance Limited, in his first press meet at the Capital announced bullish
future plans for Kotak's Life Insurance joint venture with Old Mutual plc.
On the back of two successive years of about 200%+ growth, Mr. Shah has
all reasons to believe that Kotak Life Insurance has got it right.
Kotak Life Insurance saw its First Year Premium income jump from Rs 126
cr in 2003-04 to 375 cr in 2004-05, a growth of 198%. This follows a 246%
growth in the previous year. "The last two years have seen us grow very fast.
This was largely due to exploiting our existing relationships and building up
our organization. The loss has also reduced from Rs 49 cr in 2003-04 to Rs
45.6 cr in 2004-05. Today the key challenge for us is to strengthen our
organization by building superior execution culture and result orientation.
Our energies will be directed towards delivering superior value to our key
stakeholders in our long term growth and profitability targets - the customer,
the distributor, the shareholder and the employee."
Kotak Life Insurance shall continue with its pilot project in Kerala of trying
out the All Full Time Advisor model of Old Mutual, the South African
Insurance Major and its JV partner. This coupled with drives to strengthen
presence in high potential states is Kotak Life's key steps in increasing
Geographical presence. "Our belief on segmented approach towards
selecting target markets and segments shall continue and I believe that with
higher penetration in states like Tamil Nadu and Punjab we will be able to
exploit the opportunity that the vibrant economy is offering in even smaller
towns and rural markets."
Kotak Group is building a strong financial services offering under the banner
of "Think Investment. Think Kotak." and Kotak Life Insurance's lead
products, Kotak Safe Investment Plan II and Kotak Flexi Plan have captured
a significant share of the business. Built around the promise of Capital
Guarantee, both these products offer excellent opportunity for their
customers and embody the brand promise perfectly. "Kotak Life builds
around the same innovative streak for which Kotak has been famous in other
segments of the financial services earlier. Our offerings in the market are
rated highly by both the distributors as well as the customers. We are
committed to build stronger and better products in the future too."
Kotak Life Insurance is very bullish about its future. Built around the three
pillars of stronger leverage on group synergies, greater focus on quality
execution and innovative product offerings, Mr. Shah is confident that Kotak
Life will be a key player in the Indian Insurance market. "I believe that our
challenge will lie in channelising our accumulated learning across the group
to our advantage and build a culture which encourages performance linked
growth. Kotak is and shall remain a company that encourages people to take
challenges and build value for all the stakeholders"
OBJECTIVE OF STUDY:
HISTORY OF
INSURANCE
Insurance in India - A historical perspective
Thus Life Insurance Corporation of India in the field of life insurance and
General Insurance Corporation of India in the field of general insurance have
enjoyed absolute monopoly. However, the reforms in financial sector in the
early 90s have since touched Insurance also. The Govt of India set up a
committee with Sh. R.N. Malhotra as the Chairman to recommend suitable
reforms in this sector. As a consequence of the recommendation of the
Malhotra Committee, the Government of India set up an Insurance
Regulatory Authority. On the 2nd December, 1999, Indian Parliament has
passed, Insurance Regulatory and Development Act, throwing open the
Insurance sector to Banks and other private parties. Since then, RBI has
come out with draft guidelines for entry to this sector. This is seen as a
major step in financial sector reforms, which introduce, for the first time
since nationalization of the insurance business, an element of competition in
this sector. This should bring competitively priced insurance for the
customer and improve the service available to him.
INDUSTRY INDIAN INSURANCE:
Insurers
Insurance industry, as on 1.4.2000, comprised mainly two players: the state
insurers:
Life Insurers:
General Insurers:
GIC had four subsidary companies, namely ( with effect from Dec'2000,
these subsidaries have been de-linked from the parent company and made as
independent insurance companies.
1. The Oriental Insurance Company Limited
2. The New India Assurance Company Limited,
3. National Insurance Company Limited
4. United India Insurance Company Limited.
General Insurers :
Life Insurers:
General Insurers :
Yr: 2003-2004 :
Life Insurers:
1) Life Insurance
2) Fire Insurance
3) Marine Insurance
4) Miscellaneous Insurance.
Life Insurers transact life insurance business; General Insurers transact the
rest.
Life Insurance:
General Insurance:
Fire and Miscellaneous insurance businesses are predominant. Motor
Vehicle insurance is compulsory.
Tariff Advisory Committee (TAC) lays down tariff rates for some of the
general insurance products (please visit website of GIC for details )
2001
New products have been launched by life insurers. These include linked-
products. For details, please visit the websites of life insurers.
INFORMATION
INSURANCE:
Insurance is a system to alleviate financial losses by transferring risk
of loss from one entity to another.
Insurance means promise of reimbursement in the case of loss; paid to
people or companies so concerned about hazards that they have made
prepayments to an insurance company.
Life insurance:
A policy that will pay a specified sum to beneficiaries upon the death
of the insured.
If the donor makes the Foundation the owner of the policy, the value
of the gift will be approximately the policy's cash surrender value as
provided by the insurance policy. If the gift is not paid at the time of
the donation, you may make additional contributions each year of the
premiums and the WVU Foundation will handle the payment to keep
the policy in force. If the donor makes the Foundation the beneficiary
of the policy, the estate will receive a charitable deduction for the
policy's proceeds.
You know that life insurance companies administer benefits when you die,
but were you aware of the benefits you receive while you're alive? One
benefit you'll have, is better sleep at night, because your loved ones are
protected from unforeseen tragedies. Additionally, permanent life
insurance allows you to build accessible cash value that pays you
competitive interest rates that grows tax free. You'll have the freedom to do
other things with your money and investments because you have an asset
your family can count on. Insuring the future happiness of your loved ones
is the most precious gift you can give.
There are two main types: Term vs. Whole Life Insurance:
You can find out if you're getting the best life insurance
rates here online at lifeinsure.com.& many more sites we s quickly to find
you a customized rate and policy. Search for instant term life insurance
quotes and instant quotes on return of premium term life policies. For
whole life or universal life policies, we'll need to gather some basic
information from you to deliver an accurate quote. It's to your advantage to
have lifeinsure.com working for you because we're not affiliated with the
companies we provide for you, therefore, we can look after your best
interest without conflicts of interest. That's where we stand.
First, choose the coverage amount you desire and then get a
quote. If it's term or return of premium term life coverage you’ll get a
market survey right here on the lifeinsure.com site. Then choose the policy
that suits your needs and move to the next step.
The next steps are application, a short medical exam at one of the life
insurance companies you choose, review of your information by the life
insurance company, then approval and premium paid and you’re on your
way. Learn more about the process to obtain competitive life insurance.
Getting life insurance to pay off major obligations in case of death is one of
the most responsible and generous acts of love you can provide. Feel free
to quote inexpensive term life or return of premium life insurance for the
amount of your mortgage but also strongly consider getting coverage for
the entire amount that is appropriate for you and your loved ones--not just
enough to pay off your mortgage.
There are different rate classes for life insurance. When calculating the
exact rate for you, the company does take your weight into consideration.
There is a height weight chart on this site that can give you an idea how
weight affects the way insurance companies might judge your rating class.
IRDA
MISSION
To protect the interests of the policyholders, to
regulate, promote and ensure orderly growth of
the insurance industry and for matters connected
therewith or incidental there to
(a) a Chairman;
(b) five whole-time members;
(c) four part-time members,
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.
(d) specifying the code of conduct for surveyors and loss assessors;
(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;
2. Sources of Receipts
During 2001-02, the Authority's receipts were Rs.42.17 crores as against its
expenditure of Rs.5.89 crores. The receipts mainly consisted of fees received
from various Insurance companies operating in India on account of their
Registration and Renewal charges.
1. Funds
5. Comments on Accounts
The Authority in its reply stated that it would make provisions for payment
of salary and other benefits from the date of joining if their previous
employer make a demand for the period they were with the Authority on
working arrangement. .
(2) No provision was made in the accounts for the value of 'PCs amounting
to Rs. 2.93 lakhs purchased by LIC on behalf of IRDA, the payment for
which was released to LIC on 25th July 2002. Hence Current Liabilities and
provisions remained understated to that extent.
4.3 Incorrect depiction of investment to the tune of Rs. 37.40 lakhs and
excess accounting of interest of Rs. 2.25 lakhs on investments.
As on 31st March, 2001, an investment of Rs. 5742.28 Lakhs has been made
as fixed deposit with the Indian Overseas Bank and HDFC Bank by
Insurance Regulatory and Development Authority. Scrutiny of Certificate of
Fixed Deposit and consolidated statement of Investment revealed that the
maturity amount of Investment has been taken as Rs. 6644.99 lakhs instead
of Rs. 6607.59 lakhs resulting in a difference of Rs. 37.40 lakhs between the
two. Similarly interest accrued has been taken into account as Rs. 191.00
1akhs instead of Rs. 188.75Iakhs. Thus, an excess interest of Rs. 2.25 1akhs
was depicted in the Balance Sheet resulting in overstatement of income to
the extent of Rs. 2.25 lakhs. The details of Investment and Interest is
enclosed as' Annexure I'
The authority accepted the audit observation and stated that necessary
rectification would be carried in the accounts of 2002-2003. Interest
accrued/actual on investment may be reconciled arid necessary
rectification/adjustment be made into account under intimation to audit.
Sd/-
Director General of Audit
Central Revenues
As you are aware, section 12 of Insurance Act 1938 prescribes that all
insurance companies must be Audited annually by the Auditors. Regulation
3(4) of IRDA (Preparation of Financial Statements and Auditors Report of
Insurance Companies) Regulations 2002 provides that “The Authority may,
from time to time, issue separate directions/guidelines in the matter of
appointment, continuance or removal of auditors of an insurer or reinsurer,
as the case may be, and such directions/guidelines may include prescriptions
regarding qualifications and experience of auditors, their rotation, period of
appointment, etc., as may be deemed necessary by the Authority”.
The Authority has also been maintaining a panel of auditors based on the
applications received consequent to the circular issued by the Authority in
February 2001 on the qualification, rotation etc., and advised insurers to
appoint auditors from the above list available in the website.
The procedure for maintaining a panel of auditors has been reviewed in the
light of (1) the constraints in verifying and processing the applications
received from Chartered Accountant firms for inclusion of their names in the
panel and (ii) the need to provide more opportunities to the eligible audit
firms. The revised guidelines are accordingly issued herewith in
supersession of earlier circular issued in February 2001 and the main
features of the proposals are as under :-
(I) It has been decided that the Authority would not maintain
henceforth a panel of auditors and instead prescribe the
requirements to be satisfied by the Chartered Accountant
Firms for appointment of Statutory Auditors. The
qualifications and other requirements of the intending
auditors are detailed in the enclosure.
(II) Consequent to (I) above, the insurance companies would
be responsible for selection of audit firms that satisfy the
eligibility criteria set by the Authority. The audit firms
selected by the company should submit the information to
the Insurance company in the prescribed form along with
certificates from ICAI/ by way of self declaration
confirming (a) constitution of the firm and (b) absence of
any pending disciplinary cases against them.
(C.R.
Muralidharan)
Member
Insurance Regulatory and Development Authority
Head Office:
Phone +91-040-55820964
+91-040-55789768
Fax +91-040-55823334
Surveyor Department:
Gate No. 3
Jeevan Tara Building,
First Floor,
Sansad Marg,
New Delhi-110001,
1912: The Indian Life Assurance Companies Act enacted as the first statute
to regulate the life insurance business.
1956: 245 Indian and foreign insurers and provident societies taken over by
the central government and nationalized. LIC formed by an Act of
Parliament, viz. LIC Act,
1956, with a capital contribution of Rs. 5 core from the Government of
India. The General insurance business in India, on the other hand, can
trace its roots to the Triton Insurance Company Ltd., the first
general insurance company established in the year
1907: The Indian Mercantile Insurance Ltd. set up, the first company to
transact all classes of general insurance business.
1968: The Insurance Act amended to regulate investments and set minimum
solvency margins and the Tariff Advisory Committee set up.
1972 nationalized the general insurance business in India with effect from
1st January 1973 .107 insurers amalgamated and grouped into four
companies viz. the National Insurance Company Ltd., the New India
Assurance Company Ltd., the Oriental Insurance Company Ltd. and
the United India Insurance Company Ltd. GIC incorporated as a
company.
Insurance sector reforms
In 1993, Malhotra Committee, headed by former Finance Secretary and RBI
Governor R.N. Malhotra, was formed to evaluate the Indian insurance
industry and recommend its future direction. The Malhotra committee was
set up with the objective of complementing the reforms initiated in the
financial sector. The reforms were aimed at “creating a more efficient and
competitive financial system suitable for the requirements of the economy
keeping in mind the structural changes currently underway and recognising
that insurance is an important part of the overall financial system where it
was necessary to address the need for similar reforms…” In 1994, the
committee submitted the report and some of the key recommendations
included:
i) Structure
G overnment stake in the insurance Companies to be brought down to 50%
Government should take over the holdings of GIC and its subsidiaries so
that these subsidiaries can act as independent corporations
All the insurance companies should be given greater freedom to operate
ii) Competition
Private Companies with a minimum paid up capital of Rs.1bn should be
allowed to enter the industry
No Company should deal in both Life and General Insurance through a
single entity
Foreign companies may be allowed to enter the industry in collaboration
with the domestic companies
Postal Life Insurance should be allowed to operate in the rural market
Only one State Level Life Insurance Company should be allowed to
operate in each state
iv) Investments
Mandatory Investments of LIC Life Fund in government securities to be
reduced from 75% to 50%
GIC and its subsidiaries are not to hold more than 5% in any company
(There current holdings to be brought down to this level over a
period of time)
v) Customer Service
LIC should pay interest on delays in payments beyond 30 days
Insurance companies must be encouraged to set up unit linked pension
plans
Computerisation of operations and updating of technology to be carried
out in the insurance industry The committee emphasised that in order to
improve the customer services and increase the coverage of the insurance
industry should be opened up to competition. But at thesame time, the
committee felt the need to exercise caution as any failure on the part of
new players could ruin the public confidence in the industry.Hence, it
was decided to allow competition in a limited way by stipulating the
minimum capital requirement of Rs.100 crores. The committee felt the
need to provide greater autonomy to insurance companies in order to
improve their performance and enable them to act as independent
companies with economic motives. For this purpose, it had
proposed setting up an independent regulatory body.
COMPETITION:
ANALYSIS:
An investigation of the component parts of a whole and their relations
in making up the whole.
The process of systematically applying statistical and/or logical
techniques to describe and illustrate, condense and recap, and evaluate
data
Analysis refers to the ability to break down material into its
component parts so that its organizational structure may be
understood. This may include the identification of the parts, analysis
of the relationships between parts, and recognition of the
organizational principles involved. Learning outcomes here represent
a higher intellectual level than comprehension and application because
they require an understanding of both the content and the structural
form of the material
Unit linked insurance policy
Unit Linked Insurance Plans (ULIPs) were always seen as a 'wonder
product' that simultaneously fulfilled an individual's needs for investment
and insurance.
Our experience suggests that many a time people do not realise what they
are getting into (in fact we have been approached by several people who
wanted to cancel the ULIPs they had been coerced into taking by
unscrupulous agents). Gather information on ULIPs, the various options
available and understand their working.
Read the literature available on ULIPs on the Web sites and brochures
circulated by insurance companies.
Identify a plan that is best suited for you (in terms of allocation of money
between equity and debt instruments). Your risk appetite should play an
important role in the plan you choose.
Unit-linked insurance plans, ULIPs, are distinct from the more familiar ‘with
profits’ policies sold for decades by the Life Insurance Corporation.
‘With profits’ policies are called so because investment gains (profits) are
distributed to policyholders in the form of a bonus announced every year.
Every year, the insurer calculates how much has to be paid to settle death
and maturity claims. The surplus in the life fund left after meeting these
liabilities is credited to policyholders’ accounts in the form of a bonus.
In a ULIP too, the insurer deducts charges towards life insurance (mortality
charges), administration charges and fund management charges.
The rest of the premium is used to invest in a fund that invests money in
stocks or bonds.
The value of the unit is determined by the total value of all the investments
made by the fund divided by the number of units.
If the insurance company offers a range of funds, the insured can direct the
company to invest in the fund of his choice. Insurers usually offer three
choices — an equity (growth) fund, balanced fund and a fund, which invests
in bonds.
The two strong arguments in favour of unit-linked plans are that — the
investor knows exactly what is happening to his money and two; it allows
the investor to choose the assets into which he wants his funds invested.
The transparency makes the product more competitive. So if you are willing
to bear the investment risks in order to generate a higher return on your
retirement funds, ULIPs are for you. Traditional ‘with profits’ policies too
invest in the market and generate the same returns prevailing in the market.
But here the insurance company evens out returns to ensure that
policyholders do not lose money in a bad year. In that sense they are safer.
ULIPs also offer flexibility. For instance, a policyholder can ask the
insurance company to liquidate units in his account to meet the mortality
charges if he is unable to pay any premium installment.
This eats into his savings, but ensures that the policy will continue to cover
his life.
Since ULIPs are devised to mobilize savings, they give insurance companies
an opportunity to get a large chunk of the asset management business, which
has been traditionally dominated by mutual funds.
Enquire about the charges you will have to pay. In ULIPs the
costs involved are a big deciding factor.
Enquire about the number of times you can make free switches
(i.e. change the asset allocation of the money in your ULIP
account) from one investment plan to another.
Some insurance companies offer you free switch for a 2-year
period while others do so only for 1 year.
Go for an experienced insurance advisor
Select an advisor who is not only professional and informed, but also
independent and unbiased. Also enquire whether he has serviced clients like
you.
Company asks him a few product-related questions to test him and also ask
him why the other products should not be considered. Insurance advice at all
times must be unbiased and independent and your agent must be willing to
inform you about the pros and cons of buying a particular plan.
Unit linked insurance plans (Ulip) are the flavor of the season. These plans
are now contributing over 50 per cent of the private life insurance companies
since their inception in 2004. In an era of booming stock market, these
schemes are giving investors a higher return as well as life protection.
According to the IRDA, a company offering unit linked plans must give the
investor an option to choose among debt, balanced and equity funds. This
policy is suitable for young people who can take risk. These give flexibility
of insurance and mutual funds.
In the event of the insured person's untimely death, his nominees would
normally receive an amount that is the higher of the sum assured or the value
of the units (investments). To put it simply, ULIP attempts to fulfill
investment needs of an investor with protection/insurance needs of an
insurance seeker. It saves the investor/insurance-seeker the hassles of
managing and tracking a portfolio or products.
The high returns (above 20 per cent) are definitely not sustainable
over a long term, as they have been generated during the biggest Bull
Run in recent stock market.
The research problem call for an appropriate methodology. The study of the
project is based on LIFE INSURANCE . The information gives in this
project is factual in nature and has been collected from various sources since
the study is based on both historical and present design both, primary and
secondary secondary source of material is being utilized .The secondary
source of data has been mainly obtained from Om kotak mahindra life
insurance ltd.The primary data was collected to know the role of various
life insurance company’s.
C: Data sources:
Two types of data sources were taken into consideration i.e. primary and
secondary data .major emphasis was laid on gathering the needed
information .major emphasis was laid on gathering the primary has been
used to give a clear view of things.
Primary data-direct collection of data from the information, techniques
include personal interview and survey etc.
D: Research approach:
Survey are best suited for descriptive research survey are undertaken to learn
about peoples knowledge, beliefs, attitudes, values, preferences, satisfaction,
and so on and to measure these magnitudes in general public, I have done
this survey for the descriptive research process.
E: Sampling plan:
The sampling plan call for three decisions :
Sampling procedures:
• Presentation of findings:
This is the last and important step in the research process . the findings are
presented in the form of graphs ,pie charts , conclusions, suggestions and
recommendations after data analysis.
ANALYSIS OF DATA &
INTERPRETATION
COMPARISON OF UNIT LINKED PLANS OF
VARIOUS INSURANCE COMPANIES
KOTAK
LIFE ICICI HDFC BIRLA
KOTAK INVEST INVEST LIFE TIME UNIT CLASSIC
SAFE SHIELD SHIELD || LINKED LIFE
INVEST CASH GOLD INVESTM ENDOW PREMIER
MENT ENT PLAN MENT
PLAN || PLAN
MATURITY sum assured guarantee guarantee guarantee on guarantee on no guarantee on
GUARANTEE is is only on is only on market value market value sum assured or
guaranteed. premiums premiums of funds. of funds. on returns.
net of net of
charges charges
and not on and not on
sum sum
assured. assured.
Also, there Also, there
is no equity is only a
exposure in 30% equity
this plan. exposure in
this plan.
INVESTMENT 5 funds- unit fund unit fund 4 funds- maxi 5 funds- 5 funds-
PORTFOLIO growth/balan (debt & (fixed miser/balanc liquid/secure/ protector,
ced/bond/floa money debt :equity er/ protector/ defensive/bal builder,
ting market ratio - preserver. ance enhancer,
rate/gilt.max -100%) no 70:30) 100% equity managed/gro creator, &
equity option of only 30% exposure in wth. magnifier.
exposure different equity maxi miser. 100% equity Max equity
limit is 80% in funds. exposures. exposure in exposure limit is
growth. 0% equity growth. 90% in
Higher equity exposures. magnifier.
could Reduces
generate the
better returns potential of
in the long higher
run. returns.
DEATH sum assured sum sum sum assured sum assured face amount(life
BENEFIT or market assured+ assured+ or market or market cover) will be to
value of unit higher of higher of value of unit value of unit 10 times the
whichever is unit fund or unit fund or whichever is whichever is premium. Upto
higher. guaranteed guaranteed higher. higher. the age of 72,
value of value of higher of the
unit funds. unit funds. policy fund or
To combat To combat the face amount
this, a term this, a term less all
rider may rider may withdrawals
be be made in the 24
attached attached months
along with along with preceding the
KSIP ||. KSIP ||. death.
Beyond that, the
face amount will
be reduced by
all withdrawal
made after the
age of 70.
MATURITY sum assured higher of higher of market value market value market value of
BENEFIT or market unit fund or unit fund or of fund. of the fund.& units.
value of unit guaranteed guaranteed policy will
whichever is value of value of terminate.
higher. unit fund. unit fund.
PARTIAL allowed after after 6 after 6 can make any time allowed after
WITH year 1 (from years,10% years,10% partial provided: year 3. two
DRAWAL supplementar of unit of unit withdrawal # Min withdrawals in
y account). fund, once fund, once after 3 yrs at Withdrawal every policy
After yr 3, in a year. in a year. no penalty. amt is year will be free
from main limited limited Minimum amt Rs.10,000 of charge and
account with liquidity liquidity of withdrawal # after other 2 addition
a 2.5 % due to due to is Rs 2000. withdrawal, withdrawals will
charge till the restrictions restrictions the fund be subject to a
10th yr. on the on the exceeds charge of 0.5%
withdrawals amount & amount & Rs.15k of the amount
can be made number of number of # surrender withdrawn.
subject to withdrawal withdrawal charges r minimum
leaving s. s. forced. withdrawal
behind a amount Rs.
balance of Rs 25000. subject
10,000 giving to a minimum
flexibility to policy fund
choose the balance of
amount. Rs.25,000.
COMPLETE after year 3. after year after year after 3 yrs. if paid 3 yrs NA
SURRENDER 1,high 1,high of regular
surrender surrender premium then
charge. A charge. A no charges
5% charge 5% charge otherwise
continues continues high charges.
even after even after
the 10th the 10th
police yr. police yr.
LPP OPTION Available- Not Fixed NA NA if plan duration
3,5,7,10,15. allowed. premium is up to age 75 -
paying 3,5years of
term. LPP. Up to age
100 - 10,15,20
years or
throughout.
RIDERS ADB,PDB, ADB, CI, ADB, CI. ADR, CI, AD. Term , CI,
CI,TERM, WOP. Term rider WOP,CI, CI plus, ADB,
WOP. Term rider not MSAB. Term dismemberment
not allowed. rider not , CI for women.
allowed. allowed.
OTHER automatic loyalty loyalty loyalty NA flexibility to
FEATURES cover addition -at addition -at addition -at increase
maintenance the end of regular 4th,8th,12th decrease sum
every 5th intervals. policy year. assured.
yr, Flexibility Flexibility to Loyalty addition
5%,10%,15 to increase on 10th
%... increase /decrease anniversary and
Flexibility /decrease premium. on every 5th
to premium. anniversary
increase thereafter.
/decrease Addition will be
premium. 2% of the
average policy
fund in last 60
months.
ALLOCATION year 1- 86%. yr 1- yr 1- contribution yr 1 & 2- year 1 - 87%
RATE Year 2 premium<1 premium<5 1styr 2nd- premium up year 2 - 96%
onwards- 5k-70%. 0k-81%. 6th- to 2l - 73 % year 3 onwards
96.5%. 15k to 50k to <5l - 11th yr from 2l to 5l -98%
<25k-72%. 85%. range - 80%
25k to < 5l & above 5th yr 10th from 5l to 10l
50k-75%. -88%. yr - 85%
50k & Yr 2 onwards above 10l
above -premium< up to 35,999 -90%
-77%. 50k - 81% 96% yr 3 onwards
Yr 2 92.5%,50k 98% - 99%.
-premium< to <5i - 99%
15k - 95%. 36k-99,999
90%,15k&a Yr 3 83% 96%
bove - premium 98%
92%. <50k - 99%
Yr 3 92.5%,50k 1l-4,99,999
onwards- to <5l-95%. 85% 96%
97%. yr 4,5 98%
-97%. 99%
yr 6 -10th -
99%.
ADMINISTRAT year 1- for Rs.50 per Rs.50 per Rs. 60 per Rs.15 per charge of Rs.
ION CHARGE premium less month. month. month. month. 60 per month.
than 20k - Sum assured
7%. For (face amount)
portions over related charges
20k-2%. in the first 3
Year 2- for years & varying
premium less with annual
than 20k-4%. premium.
For portions Charges per
over 20k-2%. Rs.1000 of sum
assured are as
follows:
for premiums
between Rs.25k
to Rs 50k - Rs
2, premiums Rs
50k to 1 lac-
Rs.1.25,
premiums Rs 1
lac to 4 lac -
Rs.0.40,
premiums
above 4 lac -
Rs.0.30.
OTHER underwriting NA NA NA RISK NA
CHARGES charge-only BENEFIT
in the first CHARGES:
year. Depends on
Depends on age. charge
age. charge decreases at
decreases at higher sum
higher sum assured.
assured.
FUND money unit fund- unit fund - maxi miser 0.80% per creator,
MANAGE market - 1.25% . 1.25% 2.25% annum of the magnifier -
MENT 0.60%, gilt - balance fund value. 1.25%. Other
CHARGES 1.00%, bond 2.25% funds -1%
- 1.20%, protector
floating rate - 1.50%
1.2%, preserve
balanced 0.75%
1.30%,
growth
-1.50%.
BUY SELL Money Switching Switching 4 free NA(do not 2 free switches
SPREAD market - not not switches charge in a year. After
0.01%, gilt - allowed. allowed. allowed every currently.) that a charge of
0.10%, bond policy year, Rs 100
- 0.22%, other with be
floating rate - charged at
0.22%, Rs.100 per
balanced - switch.
0.5%, growth
-0.58%.
SWITCHING any number Switching Switching any number 4 switches r year 1 - 25%
of times at not not of times at available in a year 2 - 15%
just the buy allowed. allowed. just the buy policy year. year 3 - 10%
sell spread. sell spread. year 4 - 7%
year 5 - 5%
year 6 - 3%
year 7onwards -
no charge.
LUMP SUM 2.50% 1% 1% 1% 1% 2%
CHARGE
SURRENDER Surrender Surrender Surrender Before 1 yr's Surrender of NA
TERMS after year 3 charge charge contribution policy before
at 2.5% exit year - 1 year - 7 is paid 3 yr will
load. no no nil charge 25%
No exit load surrender surrender after 1st yr's of
after year 10. year -2 year -8 contribution outstanding
90% 40% is paid premium.
year -3 year -9 25%
80% 30% after 2nd yr's
year -4 year -10 contributions
70% 20% r paid
year -5 year -11& 40%
60% 10% after 3rd yr's
year -6 above contributions
50% 5% r paid
60%
after 4th yr's
contributions
r paid
100%
GRAPHICAL REPRESENTATION OF
20
18.6 17.75
18
16
14
12
Returns
0
1m 2m 6m 12m 18m
Time Horizon
Equity funds
30
kotak
24.57
25
22.54
growth fund
birla
20
enhancer
Returns
15.52
15 birla creator
12.17
9.8
10
7.65
4.89 7.12 kotak agg.
5.89
4.44
5.57
4.9 Growth fund
5 3.38 3.08 3.24
3.81 3.96 3.9
2.52
2.17 birla
0 magnifier
1m 2m 6m 12 m 18 m
Time Horizon
96.50% 86%
1st yr
2nd yr
96.50% 3rd yr
96.50%
4th yr
5th yr
96.50% 96.50% 6th yr onwards
97% 70%
1st yr
2nd yr
90%
3rd yr
97% 4th yr
5th yr
6th yr onwards
97%
97%
98% 81%
1st yr
2nd yr
96% 3rd yr
96% 4th yr
5th yr
6th yr onwards
96%
96%
99% 73%
1st yr
73% 2nd yr
3rd yr
99% 4th yr
5th yr
99% 6th yr onwards
99%
98% 87%
1st yr
2nd yr
96% 3rd yr
98%
4th yr
5th yr
6th yr onwards
98% 98%
Administration charges
70
60 60
60
50 50
50
charges (in rupees)
40
33
30
20
15
10
0
kotak safe inve stshie ld inve stshie ld life time || unit linke d birla classic life
inve stme nt cash gold investme nt endowme nt premier
plan || plan plan
SWOT ANALYSIS:
WEAKNESSES:
OPPORTUNITIES:
THREATS:
The insurance products in India can be broadly classified into Life Insurance
and Non-life insurance.
Life Insurance
Life insurance is a well established product in the country. People view life
insurance policy as a secure, risk-free investment. Instead of product
innovation the need of the hour is to take it to the masses as estimates say
250-300 mn Indians are still insurable.
Non-Life Insurance
Crop Insurance
DISTRIBUTION STRATEGY
In a country of 1 Billion people, there is a vast untapped potential waiting to
be mined. The key to reaching them is to develop sound distribution
channels.
The traditional distribution model comprises
The various channels that can be used under the purview of the amendments
are:
PRICING STRATEGY
Tariff is a schedule of premium rates, policies and conditions applicable to
risks in a class of business. Historically rates of premium have been
arbitrarily founded and progressively refined as experience was gained.
Statistics on the frequency and intensity of claims were built over long
periods and amorphous rate schedules constructed.
The Tariff market in India has been viewed to have a mixed bag of merits
and demerits.
Pros:
1. Global perception of Indian market as a stable market in terms of rates
terms and conditions.
Cons:
CUSTOMER SERVICE
Products and prices in an Insurance industry can be easily duplicated. Thus
service becomes the only differentiator which will provide the competitive
advantage in the long run.
The Insurance agents are the interface between the customer and the
Insurance company. The agents should be able to accomplish the following
to improve service.
Premia Collection
The Insurance premia till date are paid by cash or cheques. With the internet
technology revolutionizing the way business is done, a lot of time and
money could be saved by premium payment through this mode.
Claims Processing
• Response time between the claim and the actual payment should be
fast
• Incase of delayed payments ,fine should be paid by the Insurance
company
• In case of conflicting interests case should be referred to the
Ombudsman or Courts as the case may be.
Among all the hoopla, one factor that can, and is bringing sweeping changes
in the industry, in the manner it will work henceforth, is Information
Technology. Companies will need to redefine the way business was
conducted so far. Innovations in technology will help the following areas:
Channel Management
Knowledge Management
Insurance Processing
LIMITATIONS:
Due to the company’s polices they haven’t gave us the real picture
of the company’s performance.
CONCLUSION
CONCLUSION:
In the light of above for going discussions the survey was carried out in
Jalandhar City to know the competition among the UNIT LINKED
INSURANCE PLANS of following 4 insurance companies:
Kotak life insurance
ICICI prudential life insurance
HDCF standard life insurance
Birla sun life insurance Company.
The research is done to compare the unit linked plans of above mentioned
companies :
The surrender terms are also easy going in case of kotak life
as compared to other companies.
From the research we can conclude that kotak mahindra life insurance is
outperforming and provides better term and conditions as compared to
HDFC, ICICI and BIRLA sun life insurance. At some points kotak lack due
to recent emergence as HDFC, ICICI, and birla are old player in insurance
sector.
Thus, future prospectus of insurance sector is very much bright in the Indian
market.
BIBLIOGRAPHY
BIBLIOGRAPHY:
Websites visited:
• www.kotakmahindralifeinsuraceltd.com
• www.irdaonline.com
• www.dinaonline.com
Newspapers
• Hindustan times
• Economics times
Magazines
• Insurance plus
• Business world
• Business today
Information broacher of
• KOTAK life.
• ICICI prudential life insurance.
• HDFC standard life insurance.
• BIRLA sun life insurance.