Prepared by:- zala Devendnasinh p. Year:- T.Y.B.B.

A Roll No:-137 Topic:- Unit Linked Insuranse Plan (ULIPs) Academic year:- 2009-2010 Submitted To:- swami Shajanand college of commerce & management

(B.B.A) Bhavnager University

I undersigned Zala Devendrasinh Pratapsinh , the student of T.Y B.B.A. Hereby declares that the project work presented in this report is my own and carried under the guideline of Branch Maneger Girirajsinh Gohil and Business Development Manager and agency manager jignesh pandya


-: SIGNATURE :Zala Devendrasinh Pratapsinh

first of all I am thankful to GOD because of him , my existence is created and that’s why I am able to doing this work . than how can I forget my PARENTS ,their warm guidance and motivation helps through out my journey of developing the project. I feel great pleasure in submitting this report as a part of a practical training and studies in the professional course of management .this visit has been helped me a lot in acquiring the knowledge regarding the company. I am very helpful to our principal shilpa bhatt . our coordinator Neatra medam and the all supportive college staff for giving me the information about the project. I am also very thankful to branch manager Girirajsinh Gohil business development Manager and agency manager jignesh pandya and whole staff of TATA AIG BHAVNAGER. Research of any unit is different as more as you attempt more you go deep ,new and new detail emerged. It is not easy exercise .it is with the help of combine efforts and guidelines of our teacher, present and friends. However, I can’t express my thank to all the people of the staff in tata AIG, BHAVNAGER and for their support giving us such a great help,without a guidance of whom it is very difficult to prepare such a report.

Zala Devedrasinh Pratapsinh

As we know that vitamins are vital to the heelth of people and animals. In the present world not only the theoretical work is important but also the practical work is important ,which is not given in the classroom.we know that the practical work is useful in every field as well as our future lifetime. In short,student can improve his knowledge about all the sectors of markets.during the study,the student can improve their skills. In comparison to bookish knowledge, practical studies prove to be very impruvenent and nessassary as it helps a student to the practical tobe very important and necessary as it helps a student to the practical fields and get the idea about the exact position of the entrepreneur and the this way after competing studies ,one can better in the fiel of business.swami shahajanad college of commerce (sscc), BHAVNAGER,helps the student to develop their knowledge in the field of industry environment and business by the means of management of company. As a student of T.Y.B.B.A program, I have opportunity to have got practical training in the TATA AIG, BHAVNAGER. In this report I have tried to do my best to collect much can do my best as much information as I can. This report is reflection of which I undestad and learn from my traning session .this report is prepared the purpose of the study, not in theoretical way but in a practical way. Heredy I am submitting the report……..

Zala Devendrasinh Pratapsinh T.y.B.B.A



General information

2 3 4 5 6

Insurance Mutual fund Unit link insurance plan Research & conclusion Bibliography

Tata Group profile American International Group Profile Tata AIG insurance company LTD Vision Product profile 7 8 4 5 5

energy. Consequently. materials. 251.Engineering.Tata group profile THE Tata Group comprises 98 operating companies in seven business sectors. a period when India had just set out on the road to gaining independence from british rule. and chemicals.consumer products. The Tata name has been respected in India for 140 years for its adherence to strong values and business ethics The business operations of the Tata group currently encompass seven business sectors – communications and information Technology. of which 61% was from business outside India. Tata tea. Materials Services energy.578 crores)The grup emplos around 350. (AIG) Profile .This approach remains enshrined in the Group’s to this day.Tata powar.Tata Teleservices and tata communications.Tata chemicals. services. Indian hotels.consumer products and chemicals The Group 28 publicly listed enterprises have a combined market capitalization of around $60 billion. million. Tata is a rapidly growing business group based in India with significant international operation. Information systems and communications. jamsetji Tata and those who followed him aligned business opportunities with the objective of nation buidding.543 crores).The Group’s Net profit for 2007-08 are USD 5.4 billion(around Rs. Revenues in 2007-08 are USD 62.Tata Motors.5 billion(around rs. American international group.the group was founded by jamsetji Tata in the mid 19th centure .The major companies in the Group include Tata steel.Tata consultancy services(TCS). among the highest among Indian business houser and a shareholder base of 2.000 people wordwide.21.

(AIG)Tata AIG Life combines the Tata Group’s pre-eminent Ieadership position in India and AIG’s global presence as one of the world’s leading intarnatinal insurance and financial services organization The Tata Group holds 74 per cent stake in the insurance venture with AIG holding the balance 26 per cent Tata AIG Life provides insurance solutions to individuais and corporates.2001 and started operations on April 1. Tata AIG Life Insurance company Limited (Tata AIG Life) Tata AIG Life insurance company Limited (Tata AIG Life ) is a joint venture company.Inc.switzerIand and the leading international insurance organization with operation in more than 130 countris and jurisdiction. Tata AIG Life insurance company was licensed to operate in India on India on February 12.institutional and individual customers through the most extensive wordwide property-casuaity and life insurance networks of any insurer in addition AIG companies are leading providers of retirement services and asset management around the world. .AIG companies serve commercial.AIG’s common stock exchanges in paris. Inc.formed by the Tata Grooup and American Intarnatinal Group. (AIG).2001.American intarnatinal group. a world leader in insurance and financial services .

Shareholders capital base of rs.00. Asset under management rs. 3.318 New business FY(rs. 4.79.376 1. 2.88.15.) 7 69 180 857 2717 4270 5730 in Key Achievement :1.965 1. Accelerated growth .443 2.000 satisfied costomers A countrywide network of 876 cr.500 cr.5.Yearwise Number of Policies and Revenue:Fiscal No.217 30.685 20.14.189 7.of policies sold in FY 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 21. 700 cr.84.81. Over 50.

Vision 1. 3. A good market reputation as a world class organization An extensive distribution network. PRODUCT PROFILE FOR CHILDRAN 1. Adequate experience of running a large organization. 5. A 10 million strong base of retail customers using tata products. 2. 6. Financial strength and stability to support the insurance busines A strong brand-equity. 4. Ample money available to pay for education or marriage with tata AIG life assure 21 years money saver .

Watch your saving grow as fast as your chiled’s aspirations with Tata AIG life United Ujjwal Bhavishya.2. see Tata AIG health investor What a safety net and more control over your return?see Tata AIG life investassure 2. 6. 5. Want unit linked insurance plan with inbuilt critical illness benefit? See Tata AIG life investassure care . 3. 5. FOR ADULT 1. What your children to have asteady income . Financial support to receive the best education possible with Tata AIG life assure Educated at 18 & Assure Educare at 21. 7. 8. The money they need to start a succesfuly career with Tata AIG life assure carreer builder.lifetime income with tata AIG life mahalife Gold. 3. 4. What a unit –linked policy with a single-premium paying term? See tata AIG life invest AASSURE plus. 4. The very best college &post graduate education with Tata AIG life starkid. Are hospitalized or have aprolonged illness? See Tata AIG life investassure helth &tata AIg life health first & tata AIG life health protector -5 year guaranteed renewal accident and health plan. A steady . What sefty net and more control over your returns? See Tata AIG life investAssure 11. matte rwhat happens? See Tata AIG Life Mahalife gold. Stay protected against 12 critical illnesses. Ge tyour life back and your money.

5. 11. 8. but cannot afford high premiums? See Tata AIG Life Assure 1 year/5 Years/10 Years/15 Years/20 Years/25 Years Lifeline Plans. 4.1. and term to age 60 known as Assure Lifeline to Age 60 Want your money back if you outlive your policy? See Tata AIG Life LifePlus Want coverage and flexibility to get your money when you need it? See Tata AIG Life Assure 21 years Money Saver Want safety and high returns? See Tata AIG Life Assure 10 Years/15 Years/20 Years/30 Years Security and Growth Plans Want a low-cost term plan which offers a large cover? See Tata AIG Life Raksha 10/15/20/25 Want high returns at a low premium? See Tata AIG Life ShubhLife Keep your capital safe and growing with Tata AIG Life Assure Golden Years Plan Want an immediate annuity plan with return of Purchase price? See Tata AIG Life Easy Retire 7. 12. Want a unit-linked insurance plan with an in-built Payor Benefit? See Tata AIG Life InvestAssure Extra Want a unit-linked endowment investment plan with a host of flexible features? See Tata AIG Life InvestAssure Flexi Reap attractive rewards for a lifetime with a whole life unit linked plan. 2. 13. 6. Want an immediate annuity plan with Return of Purchase price? See Tata AIG Life Easy Retire . 9. See Tata AIG Life InvestAssure Gold Want a unit-linked policy with a single premium paying term? See Tata AIG Life InvestAssure Plus Want to optimize your return. Keep your capital safe and growing with Tata AIG Life Assure Golden Years Plan 2. RETIREMENT 1. 10. 3. and protect yourself against any unforeseen eventuality? See Tata AIG Life InvestAssure Optima Don’t want to face financial risk.

lifetime income for you and your family with Tata AIG Life MahaLife Gold 4. Reap attractive rewards for a lifetime with a whole life unit linked plan.3. See Tata AIG Life InvestAssure Gold 7. Provide a stable. Guarantee additions to your sum assured with Tata AIG Life Nirvana Plus INSURANCE Fundamental of insurance Brief history of insurance sector Brief history of insurance sector in India 11 12 14 . Want a safety net and more control over your returns? See Tata AIG Life InvestAssure II 6. Give you the flexibility to choose when to retire with Tata AIG Life Nirvana 5. Want a custom-made retirement solution? See Tata AIG Life InvestAssure Future 8.

which can perhaps never be compensated. the family suffers a grievous loss. particularly person who dies was an earning member or even potentially earning member. commonly defined as the possibility of loss. every loss has two implications: financial and non-financial. These broadly relate to two spheres – our lives and our material possessions. For instance when a person dies. But financial losses can and must be addressed and using risk management tool and that is Insurance. But the family also suffers another significant loss – financial loss. In both instances. Further. . the future of workers and fate of suppliers and consumer attached to the business. Similarly. little can be done about non-financial losses.Types of insurance Insurance regulatory & development 16 19 FUNDAMENTALS OF INSURANCE In life every human being – you and we included is exposed to an element of risk. there are other considerations: the effort to rebuild the factory. in addition to the loss of property. There are then concerns about the financial stability of the dependents. when a factory is gutted in a fire.

”Insurance is a plan by which large number of people associate and transfer to the shoulders of all risks that attach to individuals. They also had a political influence that moved the reigning king Charles II to attempt unsuccessfully their suppression. In the early London Coffeehouses were centers not only of commerce and literature but of debate and intellectual exercise as well.WHAT IS Insurance? “Insurance is a financial service for collecting the saving of the public and providing them with a risk coverage. The coffee house and the advantage of . Among such seventeen century London coffee houses was one called Lloyd’ Coffee house owned by Edward Lloyd and situated in Tower Street. ”Thus in insurance.” BRIEF HISTORY OF INSURANCE SECTOR Insurance Law had its genesis in London. The Risk The Insured The Insurer General Definition: In words of John Magee.

With passage of time Lloyd’s Coffee house become recognized as a place for people wanting insurance over to fine the underwriters. Edward Lloyd encouraged the business by providing the customers in the coffee house with pen. The provisions of the Insurance Act 1938 regulate the other variations of insurance policies. The insurance activities in the coffee house culminated in the formation of Corporation of Lloyd under the Act of 1871. paper and shipping information obtained for the water front. The name was immortalized although Edward Lloyd’s passed away in the year 1713. 1906 is the legislation dealing only with aspect of Marine Insurance policies. Lloyds may thus be rightly known as the creators of insurance concept. All insurance policies have to be in agreement with the provisions of law if contracts.being near to river Thames thus attracting the patronage of men interested and connected with marine activities. In England Marine a specific statute regulates insurance while other forms of insurance are covered by general legislation. Marine insurance law was thus the first form of insurance. . British statutes inspire the statutes in India. A policy of insurance codifies a contract between the insurer and the insured hence all principles of law of contracts between two or more is the Indian Contract Act 1872. is still commonly used as standard form with suitable additional clauses to suit modern requirements. In India the marine insurance Act 1963 base on the English Marine Insurance ACT. Lloyd’s Coffee house thus the favorite venue for such guarantors who came to be called Underwrites to conduct business informally over cups of coffee. other forms of insurance evolved gradually with dynamic requirements of the society. The practice prevalent was that individuals wrote their names below some clauses to guarantee commercial ventures on personal basis. Lloyd‘s Marine Insurance policy originally adopted in the year 1779. ink. In the seventeenth century there were no corporate entities engaged in insurance activities.

the insurance business attracted attention among middle class people. Different insurance companies like Bombay Insurance Company LTD. (1793) and Oriental life Assurance Company. The early insurance contracts took the nature of policies for a short period only. By 1956. 16 foreign insurers and 75 provident societies were carrying on life insurance business in India. societies began to be formed for issuing life insurance policies. Among such societies the Amicable Society (1705). the first Indian Company named as Bombay Mutual Life Insurance Society Ltd. During the period from 1912-1930. the insurance business witnessed a setback. As a result. The British companies started life insurance business in India. 1938. on the life of William Gibbons for a period of 12 months. The premium rates were varied in view of reputation and the health condition of the insured. the West Minister Society (1792) was the important societies. 154 Indian insurers. At that time life insurance business was concentrated . a larger number of Indian companies were formed under the Indian companies Act. Was formed in Dec. Government of India passed the insurance Act on the model of British Assurance Act. and the merchants. 1866. The first life insurance policy was issued on 18th June 1583. It was in the eighteenth century. During the period from 1900 to 1992. by issuing policies exclusively on the lives of European soldiers and civilians.BRIEF HISTORY OF LIFE INSURANCESECTOR IN INDIA The early developments of life insurance were closely linked with that of marine insurance. During the period from 1870 to 1900. 1870. After several changes have been made for the period from 1930 to 1938. The business was confined to few communities and occupations only. The Equitable life Assurance society (1762). The act still applies to all kinds of insurance business by instituting necessary amendments from time to time. The first insurers of life were the marine insurance underwriters who started issuing life insurance policies on the life of master and crew of the ship. the Government of India passed insurance Act. They sometimes issued policies on the lives of Indian’s by charging extra.

Only two government giants namely LIC & GIC ruled it till it was set open to the private players. the insurance Regulatory Authority (IRDA) Act. The Narasimha Rao government unleashed liberal changes in india’s rigid economic sector. The Indian insurance market was restricted sector. The Rao government appointed a committee of Reforms in the insurance sector in April 1993 under the chairmanship of R. January 1956 the management of life insurance business of 245 Indian and foreign insurers and provident societies were taken over by the central Government with a capital contribution of Rs. INSURANCE LIFE INSURACNE GENERAL INSURANCE urban areas and confined to the higher strata of the society. 2000. They can be classified into following two categories.50 mn. IRDA open its window for Application for giving new licenses to the prospective players on 16th August. and than nationalized on 1st September 1956 in the parliament an Life insurance Corporation(LIC). 1999 could be passed by the Parliament during November 1999. Types of Insurance There are basically two types of Insurance.Malhotra.

LIFE INSURANCE : Your family counts on you every day for financial support. Life insurance is all about making sure your family has adequate financial resources to make those plans and dreams come true. Money back policies – The nominee receives money immediately on death of the insured. food. education. These policies are best suited for planning children’s future education and marriage costs. transportation. Endowment Policies – Cover the insured for a specific period. and much more. These policies cost more than endowment with profit policies. It provides financial protection to help your family or business to manage after your death. Annuities / Children’s policies – The nominee receives a guaranteed amount of money at a predetermined time and not immediately on death of the insured. the nominee receives the sum assured plus bonus upon death of the insured. On survival the insured receives money at regular Intervals during the term. Shelter. The insured does not receive money while he is alive. On survival the insured receives money at the same pre-determined time. Whole life policies – cover the insured for life. The insured receives money on survival of the term and is not covered thereafter. . Insurance provides you with that unique sense of security that no other form of investment provides.

political disturbance. Property Insurance – The home is most valued possession. which takes care of medical expenses following hospitalization from sudden illness or accident. It provides protection for property and interest of the insured and family.Pension schemes – There are policies that provide benefits to the insured only upon retirement. If the insured dies during the term of the policy. Health Insurance – It provides cover. machinery and other tangible properties. . negligence and liability for the damages can also be covered. Now the risk of losses due to sudden changes in currency exchange rates. This includes reimbursement of cost of treatment and the use of hospital facilities for the treatment. GENERAL INSURANCE : Every asset has a value and the business of general insurance is related to the protection of economic value of assets. Since a single policy cannot meet all the insurance objectives. Personal Accident Insurance – This insurance policy provides compensation for loss of life or injury (partial or permanent) caused by an accident. Concepts of insurance have been extended beyond the coverage of tangible asset. The policy is designed to cover the various risks under a single policy. Assets would have been created through the efforts of owner. his nominee would receive the benefits either as a lump sum or as a pension every month. vehicles. which can be in the form of building. one should have a portfolio covering all the needs. But if a person judiciously invests in insurance for his property prior to any unexpected contingency then he will be suitably compensated for his loss as soon as the extent of damage is ascertained.

The regulator was initially known as the insurance Regulator Authority but was subsequently . IRDA was constituted in terms of the Insurance Regulatory and Development Authority Act. 2000. 277. medical expenses and repatriation. 1938. 1956 and the General Insurance Business act. Motor Insurance – Motor Vehicles Act states that every motor vehicle plying on the road has to be insured. to regulate. was enacted by Parliament in the fiftieth year of the Republic of India to provide for the establishment of an Authority to protect the interests of holders of insurance policies. as the regulator of the Indian Insurance industry. passport etc. It has not only to frame was setup in 1996 but it was formally constituted as a regulator of the insurance industry in April 2000.Travel Insurance – the policy covers the insured against various eventualities while traveling abroad. IRDA Regulator and Development Authority as it was provided that it had broader role to perform in the Indian insurance market. Liability Insurance – This policy indemnifies the Directors or Officers or other professionals against loss arising from claims made against them by reason of any wrongful Act in their Official capacity. vide Government of India’s notification No. Insurance Regulatory and Development Authority (IRDA) The insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the business of insurance and re-insurance in India. with at least Liability only policy. The insurance Regulatory and Development Authority Act. There are two types of policy one covering the act of liability. Since a single policy cannot meet all the insurance objectives. while other covers insurers all liability and damages caused to one’s vehicles. 1999. 1972. the life Insurance Corporation Act. promote and ensure orderly growth of the insurance industry and for matters connected there with or incidental there to and further to amend the insurance Act. The Authority was constituted on April 19. 1999. one should have a portfolio covering all the needs. It covers the insured against personal accident. loss of checked baggage.

IRDA has till 2001 issued seventeen regulations in the areas of registration of insurers. Indian partner HDFC Reliance Sundaram Max India Bajaj auto Kotak mahindra ICICI ICICI IFFCO Tata group Aditya birla group SBI Vysya bank Foreign partner Stander life UK No partner Royal & sun alliance New york life Allianz Old mutual south Prudential. and code of conduct intermediaries. The following players have applied and some have got licenses and even started operations in India. and clarification but it has also to perform a developmental and promotional role. It 1. the objectives of IRDA are twofold: policyholder protection and healthy growth of the insurance market. Thus.UK Lombard Tokyo marin. licensing. Follows the practice of prior consultation and discussion with various interest groups before issuing regulation and guidelines. non-life Life Life life Present status In operation Operation to begin shortly In operation In operation Applied for license Started operation In operation Applied for license Received license In operation In operation Received license Received license NUMBER OF REGISTRERED INSURERS IN INDIA .USA Sun life Cardif france ING specialization Life Non-life Non-life life Non-life and life Life Life Non-lilfe Non-life Life. solvency margins. their conduct of business.rechristened as Insurance and issue statutory and regulator stipulations. conduct of reinsurance business. guidelines.japan AIG.

Type of Public sector business Life insurance 01 General insurance 06 reinsurance total 01 08 Private sector 13 08 0 21 Total 14 14 01 29 MUTUAL FUND Definition What is mutual fund Characteristics Advantages Disadvantages Product types 22 22 24 25 26 27 .

Several parties are invoked in the organization and operation of a mutual fund.DEFINATION :Mutual Fund is a pool of money. meaning that new investors can contribute money to the fund at any time. bonds or other securities according to specific investment objectives that have been established for the fund. including: Mutual Fund Manager: Establishes one or more mutual funds. Portfolio Adviser: The professional money manager appointed by the Mutual Fund Manager to direct the fund’s investments. When you redeem your units or shares of a mutual fund you will receive a cheque based on the current market value of the fund’s portfolio. Principal Distributor: Co-ordinates the sale of the fund to investors. either directly or through a network of registered dealers. the fund manager charges fees based on the value of the fund’s assets. Mutual funds are ‘open-ended’ investment funds. What is Mutual Fund? A mutual fund is a pool of money that is managed on behalf of investors by a professional money manager. . collected from investors. The manager uses the money to buy stocks. The Mutual Fund Manager also often acts as the Portfolio Adviser. In return for putting money into the fund. you’ll receive either units or shares that represent your proportional share of the pool of fund assets. In return for administering fund and managing its investment portfolio. and is invested according to certain investment objective. markets them and oversees their general administration. and existing investor can return their units or share to the fund for redemption at any time.

Trustee: The entity that has title to the securities owned by the fund on behalf of the unit holders. Auditor: The independent accountants retained by the Mutual Fund Manager to audit each year.Custodian: The bank or trust company appointed by the Mutual fund manager to hold all of the securities owned by the fund Transfer Agent and Registrar: The group responsible for maintaining a list of all investor in the fund. Mutual funds can be classified as :1) closed-end funds 2) open-end funds 3) large cap funds 4) mid cap funds 9) exchange traded funds 10) value funds 11) money market funds 12) international mutual funds . and report on the financial statements of the fund.

5) equity funds 6) balanced funds 7) growth funds 8) no load funds 13) regional mutual funds 14) sector funds 15) index funds 16) fund of funds CHARACTERISTICS:1. The pool of funds is invested in a portfolio of marketable investments. The value of the portfolio is updated every day. The investor’s share in the fund is denominated by ‘units’. 5. from the fund. A mutual fund actually belongs to the investors who have pooled their funds. The value of one unit of investment is called the Net Asset value or NAV. every day. Investment professionals and other service providers. manage a mutual fund. 4. The value of the units changes with change in the portfolio’s value. . 2. Who earn a fee for their services. 3. The investment portfolio of the mutual fund is created according to the stated investment objectives of the fund. The ownership of the mutual fund is in the hands of the investors.

No tailor-made portfolios: Mutual fund portfolios are created and marketed by AMCs. being incurred by him. They cannot create made portfolios. an investor may be holding a portfolio of funds. 7. Regulators usually limit the expenses of mutual funds. 11. with the costs of monitoring them and using them. 8. 13. Portfolio diversification Professional management Higher rate of return Reduction of transaction Liquidity Convenience and flexibility Disadvantages of mutual funds to investors 12. 14. 9. No control over costs: Since investor do not directly monitor the fund’s operations they cannot the costs effectively. Managing portfolio of funds: As the number of mutual funds increases. into which investors invest. in order to tailor a portfolio for him.Advantages of mutual funds investor 6. . 10.

3. 17. 2. However funds investing in debt products can also offer a growth option to their invertors.Product types Equity funds Debt funds Balance funds Equity funds This fund is pre-dominantly in equity share of component. 18. these funds are also known as income funds. Bond issues by central and state governments Public financial institutions and private sector companies Public sector organizations . Simple equity funds: Primary market funds: Sectorial funds: Index funds: Debt funds Debt funds are those that pre-dominantly invest in debt securities. 16. 15. Since most debt securities pay periodic interest to investors. The universe of debt securities comprise of long-term instruments such as: 1. There are varieties of ways in which an equity portfolio can be created for investors.

which invest in equity. Liquid funds & money market funds : Gilt funds : Simple debt funds : Sectoral debt funds : Balanced funds Funds that invest both in debt and equity markets are called balanced funds. 1. A balanced fund also tends to provide investors exposure to both equity and debt markets in one product. 5. .4. Similarly there are predominantly debt funds (over 70%in debt securities). 6. 7. 4. A typical balanced fund would an almost equally invested in both the markets. Call money lending Commercial papers Certificates of deposit Treasury bills Debt funds tend to create a variety of option for investors by choosing one or more of these segments of the dent markets in their investment portfolio. by bringing in debt. 2. to provide some growth potential their funds. 3. The variations are funds that invest pre-dominantly in equity (about 70%) and keep a smaller part of their portfolios indebt securities. These funds seek to enhance the income potential of their equity component.

UNIT LINKED INSURANCE PLAN Introduction of ULIPs Overview of ULIPs Key features of ULIPs Benefits of ULIPs Expenses involved in ULIPs ULIPs plan comparison Should investor opt for ULIPs Five steps for selecting right ULIPs 30 31 33 34 38 39 45 46 .

which are decided by the companies on his behalf.Introduction As the competition increases in insurance industry and more invstament avenues are available to investor. Mutual Insurance ULIPs . In addition non.guaranteed bonuses in the from of share in the profits of the company may also be offered depending on whether the policy is participating policy or not. The main different is in choice of investment .this fund differ decides that risk exposure and appreciation. So unit linked insurance plans can be said the combination of characteristic of mutual fund and insurance. Policyholder has no say in the choice of unit linked insurance plan companies will generally offer combination of different product with different combination of debt-equity mix . The premium amount is fixed at the outset and the same quantum of premium needs to be paid throughout the term of policy. Insurance industry has also upgraded them by introducing marketing linked insurance plan.

the buzzing market could lead to windfall returns. According to the IRDA. Unit-linked life insurance products are those where the benefits are expressed in terms of number of units and unit price. investors could be left can afford you take the risk associate with equities. would depend on the unit price when he pays his premium. the majority of your premiums will get invested in debt securities like gilts and bonds. At this stage. So if you are opting for a plan that invests primarily in equity.say 25. The daily unit price is based on the market value of the underlying assets (equities. and easy to understand. Key Features of ULIPs 1. balanced and equity funds. balanced or equity plans. . you can choose to invest your premiums in dent. The number of units. investigating in a plan that has an equity tilt may not be a good idea. Investors welcome these products as they provide capital appreciation even as the yields on government securities have fallen below 6 percent. Considering that unit-linked plans are relatively new launches. Premiums paid can be single. This is especially so if one also believes that current market values (stock valuations) are relatively low. bonds.) and computed from the net asset value. Unit-linked products are exempted from tax and they provide life insurance. However. They can be viewed as a combination of insurance and mutual funds.Overview of ULIP Most insurers in the year 2004 have started offering at least a few unit-linked plans. as one approaches retirement the quantum of return should be subordinated to capital preservation. regular or variable. Being transparent the policyholder gets the entire upside on the performance of his fund. If you opt for a unit-linked endowment policy. at least in the plan’s initial stages. the risk charge (mortality rate) varies with age. should the buzz die down. 2. which has made the insurers slash payouts. clear. The advantages of unit linked plans are that they are simple. The ideal time to buy a unit-linked plan is when one can expect long-term growth ahead. If you choose a debt plan. government securities etc. The payment period too can be regular or variable. which the customer would get. The risk cover can be increased or decreased. their short history does not permit an assessment of how they will perform in different phases of the stock market. As in all insurance policies. However. a company offering unit linked plans must give the investor an option to choose among debt. If one invest in a unit-linked pension plan early on .

this means that as your risk appetite changes with can choose a mix of asset classes for your investment chief actuary. The policyholder can switch between schemes. The maturity benefit is not typically a fixed amount and the maturity period can be advanced or extended. 11. for instance. The maturity benefit is the net asset value of the units. 6. ICICI prudential life insurance. Insurance companies have the discretion to decide on their investment portfolios. balanced and equity funds. 5. Provides capital appreciation. unit-linked plans work like endowment plans-they combine insurance with investment. Being transparent the policyholder gets the entire episode on the performance of his fund. and easy to understand. 7. A part of the premium you pay goes towords buying you insurance cover and what’s left of the rest is invested in equitl and debt instruments.3. Benefits Cover-plus:In a sense. growth funds or bonds. 13. 4. Aviva life insurance” Investment options:It is in the range of investment option that unt-linked plans offer that they stand apart from other insurance-cum-investment products. in addition to the investment component. etc. 9. balanced funds. 14. They are simple. managing director. “One of the major advantages of unit-linked plans is that they are very transparent.” says Stuart Purdy. typically 15 or 20 years. clear. Lead to an efficient utilization of a capital. The investment components of the premium is converted into unit-much like mutual fund premiums are unitized through the policy tenure. ULIP products are exempted from tax and they provide life insurance. Investor gets an option to choose among debt. Investments can be made in gilt funds. between once and four times a year free of cost . component in it as well. Most insurers in fallow you to switch from one stream to another. And information on this is put out regurarly by insurere. 8. an you want to move to a lower risk . money markets funds. The costs in ULIP are higher because there is a life insurance. 12. 10. balanced to debt or gilt to equity. “with these plans .

456) in the second year to 1. Expenses:one area where unit-linked plans come in for widespread criticism related to the expenses that insurers charge under three broad heads :-mortality charges ( which goes towards paying for your insurance cover). ICICI prudential’s lifetime charges 19 per cent in the first technology in administration and management . equity funds. ( in the case on unit-linked pension plans . you can migrate your money to safer havens. The second head.) Among mutual funds. only equity-linked saving schemes offer section 88 rebate.460. classic life. upon investing Rs20.and fund management costs.000 a year).456) in the first year to 20.which goes down sharply in later years.9 per cent (or Rs 20. your expense structure scales back from 40. insurers have scaled back their expense structures in newer products. if you invest Rs 50. insurers are expected to lower these expense structure further.which comes down to 21. Since these expenses are deducted from the premium you pay.9 per cent(or Rs 956) from the third year onwards. among other things.12. around 40 per cent (of the premium paid ) in the first two years .460 and Rs 660 respectively. Tenures:- . “ The rationale behind the high commissions is that unit-linked plans need greater level of advisory services . you will pay 42. For instance.appetite changes with age. But in response to greater investor awareness about the high expense .3 per cent and 9. say. the investment component shrinks to that extent-and Impacts your returns. general expenses(agent’s commissions and underwriting costs). the amount invested. For instance.they qualify for deduction under section 80CCC. the investment tenure and the period beyond which withdrawals are permitted. general expenses . The actual expense structure may very from one product to another depending on. expense ratio of 69. insurers have scaled life’s new unit-linked plan.” says Mysore. has an expense ratio of 16 per cent in the first year.9 per cent (or Rs 10.6 per cent. Rs 4.accounts for the biggest components-typically.000 a year in the same plan for the sane tenure.8 per cent in year 1 ( for a premium of Rs10. and you want to move a lower risk option secure your accumulations.000 a year for 15 in TataAIG’s invest assure policy.3 per cent from the third year onwards . that works out to Rs 8.8 per cent in the subsequent years. there’s no denying that tilt the balance in favour of unit-linked plans-even if you are financially savvy an feel equipped to manage your investments through. page: Although tax breaks aren’t by themselves reasons enough to decide on a choice of investments. with a three-year lock-in. On the other hand. in rupee terms. Tax breaks:The premiums you pay on unit-linked plans qualify for rebate under section 88.

staying invested for longer tenures offers returns that can match-and even better-equity funds .or five-year tenure. you may be better off investing elsewhere after securing your life insurance needs. you get tax-free return of Rs 8. Top-up strategy:One way of lowering your expense structure is by making imaginative use of the top-up provision that most insurers offer. For instance. but if you are not financially savvy or have little time to monitor your investments and don’t have access to professional investment managers and still want marketlinked returns on your investment. unit-linked plans in most cases compare poorly with equity funds on pre-tax return. therefore. (for instance.) what this strategy lets you do is to lower your expense outgo in the early years (when they ere are very high). Are they for you? “unit-linked products are finally products of choice.3 lakh.6 lakh from the unit-linked plan even if you’re not eligible for section 88 rebate. ”says Rohit Sarin of client associates. and over the years lets you divert more of your overall premium payout to the investment component. a private wealth management firm.5 per cent charge. only if you factor in the income accruing from the additional investment of the section 88 drawback in PPF do the return from unit-linked plans fare better those from equity funds. On the other hand. which is small if the top-up exceeds a threshold defined by the particular insurer. single top-ups above RS 25.000 on Tata AIg’s invest assure policy invite a 1.for instance. . if you invest for 15 years. perform better in the long may have to pay a fee for this the this facility. Under this. But . unit-linked plans don’t face redemption pressure.” says Rajagopalan. a fund manager for a unit-linked product can. you can keep your premium to the minimum required under the plan. And for those who don’t must perforce be 15 years or more for it to make financial sense.The heavy frontloading of expenses effectively acts as a disincentive for early withdrawals. you might just want to savour the flavour of the season. post-tax. If you feel equipped to manage your investment on your own or are not comfortable with long lock-ins or you can’t make the most of these tax breaks. the equity fund will only return Rs 8. On the other hand. top-ups in the charges decline over the tenure. by which time the expense ratio is much smaller. You can then ‘to up’ from the second year onwards. typically Rs 10.000 a year. “unlike mutual funds. over three.

00 % 0.91 % 13.0 0 % 24.00 % 47.2 0 % 4.80 % Unit Gain pluse 24.9 1% .0 0% 1.48 % Endow Ment Unit linked 27.60 % Life Mak er 46.00% 1.00 0% 0.44% Clas Sic life 15.36 % 47.4 4% 16.0 0% 1.36 % Future project 46.6 8% 18.44 % Hori zon 15.2 0% 50.0 0% 0.0 0% 1.0 0% 21.48 % 27.40% 0.Expenses involved in ULIP Policy Ici Ci pru Bir La Sbi Life Km Om Met Life Alli Anz Baj Aj Hdfc Icici Prude Ntial Ma x Ta Ta AIG Expense Charges In first Year Cost of life cover Adminis Trative charges Total Pre Mier life 12.68 % Ksi p 15.20 % Inve St Assu Re 50.00 % MET LIFE 16.4 4% 16.0 0% 3.

Fortune Plus and Profit Plus from LIC:1. 2. 2. insurance cover may not be required. no. If a person is wealthy or has no dependents. At a young age (less than 30). 187) Profit Plus (T. the buyer of ULIPs should also be prepared for negative returns when share prices fall. 3. so the returns may be lower. 4. Fortune Plus (T. Balanced Fund. Unit Linked Endowment Plans from Life Insurance Corporation of India. Bond Fund. so purchasing a term policy may be a better option. so many people buy ULIPs without reading the print as theses is marketed aggressively by companies providing investor services. 188) Features:1. no. The overheads for the ULIP are higher compared to a mutual fund. However. insurance premium are low. 3. part of the monthly premium is used to provided insurance cover for the person and the remaining amount is invested in the stock market. Secured Fund. Most of the insurance companies offer attractive commissions to their agents for Unit Linked Insurance Plans (ULIP).UNIT LINKED PLANS COMPARISION:In a ULIP. Growth Fund Unlimited switches (4 free switches per year) Accident benefit rider Critical illness rider (Profit Plus) .

3. .000. It is available for persons up to 65 years. Five year premium period Entry even at 70 Loyalty units every cover till age of 100 Premium paid in ULIPs are subject to investment risks associated with capital markets and the NAV of the units may go up or down based on the performance of the fund and factor influencing capital Markets and the insured are responsible for his decision.000 for single premium and Rs. Minimum premium is Rs.000 per annum for term policies. Tata AIG life insurance company limited is the name of the insurance company and invest Assure Gold is the name if the ULIP contract and does not in any way indicate the quality of the contracts. its future prospects or returns. 20. Minimum premium payable in the first year is Rs. The premium is limited to 5 years for Fortune Plus and is available for the age group 1260. Premium paid in Unit Linked Life Insurance Policies are subject to investment risks associated with capital Markets and the NAV of the units may go up or down based on the performance of the fund and factor influencing capital markets and the insured responsible for his/her decisions. This product is underwritten by Tata AIG Life Insurance Company Limited. 20. premium can be paid in one installment or a number of installments over a period of up to 5 years. 10. 2. Past performance is not indicative of future results.For Profit Plus. Invest Assure Gold from TATA AIG Life Insurance Company :(whole life unit linked insurance policy) Features:1.

Preserver IV 7.Life Stage RP from ICICI prudential life insurance :(Unit linked insurance policy. equity % is higher initially and reduces close to the retirement age. 8.a Option : Life cycle based and fixed portfolio. which adjusts equity % automatically with age) Features:Unit linked insurance plan which adjusts the investment according to age 1. 2007 1. 6. 3. 5. Balancer IV. Details of risk factor. Protector IV. 100 % fund value paid on surrender from 5th policy year New fund opens at Rs 10 on August 25. the debt equity component is periodically adjusted Available in select cities Age at entry : 18-75 years Minimum premium : Rs 15. mid term option change allowed up to 4 times free of cost Funds available : Flexi Growth IV. Horizon II pension from SBI life :Unit linked insurance policy (ULIP). Based on the age of the person. Flexi Balanced IV. Maximiser IV. 4.000 p. 2. terms and conditions are available in sales brochure. Investments in ULIPs are subject to market risk. Features :- .

For Dynamic plan. the debt equity component is periodically adjusted Age at entry : 18-60 year. ures:- 16. Based on the age of the person. Once a dynamic or growth plan is selected. bond pension and money market pension funds. High allocation up to 85% UL waiver of premium and UL family income benefit Flexibility with premiums. 2. Growth plan is similar to dynamic plan.a Option : Dynamic plan and Growth plan.000 p. 100% fund value paid on surrender from 4th policy year onward. Unit linked insurance plan which adjusts the investment according to age. As the person ages. the equity investment decreases gradually to 0-15% at the end of the 20 year term and the investment in bonds increases. 13. Risk factors / warning statements:Unit gain Plus Gold is a Unit Linked insurance Pla(ULIP). 10. it cannot be changed. 5. Funds available : Equity pension. . 11. but the initial equity component is ever lower. 15. top-ups and switches Tax savings under section 80C and 80D of prevailing income tax regulations.:[Unit linked insurance policy (ULIP)] 12. 80-100% of the funds will be invested in equity markets initially and the remaining amount in bonds or the money market. 3. Minimum premium : Rs 12. 9. 4. Insurance cover of Rs 4. 7.2 Lakh for a policy taken at age 25 with a premium of Rs 2000 per month.1. 6. lus Gold from Tata AIG. 14. 8.

Guarantees return of up to 175% of first year’s premium Invest up to 100% of all subsequent premiums Partial withdrawals allowed Premium holiday option Flexibility to switch between investment funds . its future prospects or returns. 2. 4. The policy holder is solely responsible for his/her decisions while investing in ULIPs. Aspire life from Bharti Axa life insurance:[unit linked insurance policy (ULIP)] Features (claimed by the company) 1.Investment in ULIPs is subject to risks associated with capital market. 5. Bajaj Alliance Life Insurance and Unit Gain Plus Gold are only the name of the insurance company and the product respectively and does not in any way indicate the quality of the products. 3.

Very often it was poor selection that was responsible for the investors’ woes. So if you have a ULIP invested in equities. Ideally they need to avoid taking the aggressive 100% equity ULIP.’ Tata AIG allows policyholder to make this switch four times a year at no cost. If one does not have the appetite to invest in equity.’ However. for investors to make the right switch they need to track markets actively and be well informed. thereby making adjustments to any perceived risks. While it is fine and even sensible to let your investable assets get an equity flavor. which could needlessly expose their assets to market volatility. ULIPs are suitable for individuals who are already adequately insured and are reasonably well-informed and savvy to take active investment decisions by using the ‘switch option’ that is provided to a ULIP policyholder. depending on his risk profile. HDFC standard life allows policyholder to make as many switches as they like. There is an option for the insurance-seeker to switch to another plan with a lower or zero equity components to stem the loss in a falling equity market. the structure of a ULIP takes care of quite a bit of the uncertainty in the markets. which is actually the job of the investment advisor/consultant. Insurance companies understand the need to give insurance-seekers the flexibility to rethink their investment strategy in view of market histrionics. FIVE STEPS FOR SELECTING RIGHT ULIP Unit linked insurance plans (ULIP s) were seen as a “wonder product” that simultaneously fulfilled an individual’s needs for investments and insurance to do a rethink. However. Also policyholder with regular endowment plans who are not satisfied with the 4-6% returns can consider taking a ULIP with a lower equity component. which to a large extent should be scared. they can make this options work. So if insuranceseekers/investors play their cards right. Understand the concept of ULIPs:- . ‘The switch option allows customers to switch between fund option. the same cannot be said about your life insurance monies. with Rs 100 at every additional switch after that. investors need to understand that a ULIP is a bundled product of their investment and their insurance proceeds. 1. Experts’ points out. An expert elaborates. ‘A ULIP policyholder has the option to invent in a variety of funds. you are exposing your life insurance monies as well as your investable surplus to the vagaries of equity markets.Should Investors opt for ULIPs? First and foremost. they can choose a debt or balanced fund. It is best if insurance-seekers tread the middle path and choose balanced plans (with about 50-60% equity component). The volatility in equity markets can disturb the calmest of minds and the last thing you want to see is your nest egg being eroded by the latest slide in equity markets. We present a 5-step strategy for investing in ULIP s.

Gather information on ULIP s. change the asset allocation of the money in your ULIP account) from one investment plan to another. Find out how the debt and equity schemes are performing and how steady the performance has been. The companies give you the option to increase the premium amounts.Try to do as much homework as possible before investing in an ULIP.e. When your agent recommends a ULIP of X company ask him a few product-related questions o him and ask him also why the other products should not be considered . So if you have a high-risk appetite. Check the fund’s performance over the past six months. go in for a more aggressive investment option and vice-a-versa.e. 2. 4. thereby providing you with the opportunity to gainfully utilize surplus funds at your disposal. additional lump sum investments you can make to increase the savings portion of your policy. 3. but also independent and unbiased. Some insurance companies offer you free switch for a 2-yr period while others do so only for 1 year. Enquire about the premium as ULIP s work on minimum premium basis as opposed to sum assured in the case of conventional insurance policies. Also enquire whether he has serviced clients like you. Read the literature on ULIP s on the websites and brochures circulated by insurance companies. Our experience suggests that many a time people do not realize what they are getting into (in fact we have been approached by several people who wanted to cancel the ULIP s they had been coerced into talking by unscrupulous agents). Ask about the top-up facility offered by ULIP s i. Enquire about the number of times you can make free switches (i. Opting for a plan that is lop-sided in favor of equities when you are a risk-averse individual might spell disaster for you (this is true in most cases currently). Focus on your requirements and risk profile:Identify a plan that is best suited for you (in terms of allocation of money between equity and debt instruments). This way you will know what you are getting into and won’t be faced with unpleasant surprises at a later stage. In UPIL s the costs involved are a big deciding factor. Your risk appetite should play an important role in the plan you choose. Enquire about the charges you will have to pay. the various options available and understand their working. Compare ULIP s of different insurance companies:Compare products of the leading insurance companies. Go for an experienced insurance advisor:Select an advisor who is not only professional and informed.

Find out if the ULIP you are considering offers a minimum guarantee and what costs have to be borne for the same. Mutual Fund is an instrument which helps in the measuring the risk. 9. To understand the criteria for investment in ULIPs. He should keep a track of your plan and inform you on a regular basis. But without having the proper and inadequate knowledge in the market one can’t get proper return but can get secure his life with life insurance. . His job should not just begin by filling the form and end after he deposits the check and gives you the receipt. it would be a huge advantage. Other Objectives 6. RESEARCH & CONCLUSION Research Objectives Study of Unit Linked Insurance Plan as an investment option in Mutual Funds is of major importance to the financial markets as well as finds the net Asset value of the insurance. 10. 8. To know basic mechanism of ULIPs and Mutual Fund. 7. expertise and the technology through which the actual game is played makes the winning easier.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. The main aim of this report is to study the mechanism of mutual fund and ULIPs in the emerging sector of the capital market. and compared to that this is very vital market having very wide scope of getting returns. This will enable you to make an informed choice. Even a small and a simple game to be played needs proper and accurate knowledge. So knowing about the risk and the proficiency. Does your ULIP offer a minimum guarantee? In market linked product if your investment’s downside can be protected. To know evolution and growth of insurance sector. The key is to do for an advisor who will offer value-added products. skill. 11. To identify market potential of ULIPs as a part of investment in Mutual fund Comparative analysis of ULIPs of Tata AIG with other competitive plans. Unit Linked Insurance plan is like to invest your money in mutual funds as a safer side with covering your life insurance and that keeps your investment moving and maximize your financial level of return. 5.

Essentially. their he main methods. sales rt. production report. there are two sources of data. I can’t use any internal primary data. There are mainly two types of secondary sources of data and they are: Types of secondary Data al It includes various internal reports prepared by the firm like.economic haracteristics of consumers. which are used. which are collected from earlier research work and application as well as usa tudy of research. naws paper and so on. socio. nal data External data can be collected from the web site.Research Methodology SOURCE OF INFORMATION ata Collection Methods Once the research design has been decided. for obtaining primary data are as under. attitudes and opinions of people. the next stage is that of selecting sources of data. magazines. RESEARCH FINDING Potentiality in the insurance sector . awareness and other similar as Secondary Sources of Data :- Secondary data are those data. 12. 13. Primary Data Collection Secondary Data Collection Primary Sources of Data :- Primary data may pertain to demographic.

D.Number polices in forces 20 18 16 14 12 10 8 6 4 2 0 1999 2000 2002 2004 2006 2008 2010 GDS% Year Life premium as a proportion of gross domestic savings About investment pattern 80 70 60 50 40 30 20 10 0 gov sha insu mu If has been found out that out of survey only 20% people were investing in mutual funds.PPF and other fixed return securities. . And majority of people were investing in F.

About mutual funds About insurance First of the respondents were asked that whether they are having insurance or not then it was explained that what is adequate or not on the basis of below formula. Adequate insurance=(54 years-present age)*yearly income .

Research scope The information given in research findings is collected by data collection method. In insurance it was found out that most of the people did not know the benefits of ULIPs so first of all company should explain the benefits of ULIPs to the customers. All the data’s collected are secondary. most of them knew little about the plans. Recommendations 14. magazines and newspaper. So the scope for collecting this data is very wide. the data are collected from internet. .Unit linked insurance plans During the survey it was asked to respondents that whether they know about marked linked plans which provides insurance cover and returns.

unit-linked plans are not as liquid as mutual funds. Then there is an annual management fee of 0. Private companies have to create awareness of not only those products which will be mare beneficial to them but all products. Though mutual funds too have entry exit loads (maximum 2 per cent) and expenses (maximum 2. Premium paid under these plans is eligible for tax act.25 percent and a flat fee of Rs15-20 per month. Finally is a deduction for risk cover.15.5 per cent). 17. CONCLUSION Both these instruments are designed to serve different purpose and are not comparable. For example. There is a lock-in of three years. Moreover. On the other hand. So company should make them convince about the benefits of private companies and about the products which are more flexilbe. In some cases people didn’t have the faith it private companies. This goes to the sum assured or the life insurance cover.8-1. the upfront charges for the first two premium amounts are as high as 20-27 percent. People know the options available for the investment but they don’t know which option will be best suited for them. A unit-linked plan from an insurance company is in an insurance policy designed to pay a lump sum on maturity or on death if earlier. . these costs are lower than unit-linked plans. 16. which is based on mortality rates as calculated by actuaries. mutual funds are investments avenues to participate in the growth of financial markets and do not provide any tax deduction (except ELSS and pension funds). you would be at a loss because of higher initial administrative charges. Even if one redeems after three years.

gov. 3.moneycontrol. www. .mutualfundsindia.Bibliography Magazines Business Word (October 2001) Business today (June 2001) Business Today (April 2005) Business India ( May 2004) Websites 1. www. cccwww.Sebi.traderji. www. 6.

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