A Project Study Report On

ANALYSIS OF ICICI PRUDENTIAL LIFE INSURANCE

Submitted in partial fulfillment for the Award of degree of Master of Business Administration

VINAYAKA MISSION UNIVERSITY, TAMILNADU

Submitted To Vinayak Mission University,

Submitted By Mr. Punit Shrivastava

VINAYAKA MISSION UNIVERSITY, TAMILNADU

CERTIFICATE

This is to certify that Mr. Punit Shrivastava student of MBA Second Semester of Vinayak Mission University, Tamilnadu has completed his project report on the topic of ICICI PRUDENTIAL LIFE INSURANCE. To best of my knowledge the report is original and has not been copied or submitted anywhere else. It is an independent work done by her.

Head of Management Vinayaka Mission University

ACKNOWLEDGEMENT
I express my sincere thanks to my project guides, Department of Management Studies, Vinayak Mission University, Tamilnadu for guiding me right from the inception till the successful completion of the project. I sincerely acknowledge him for extending their valuable guidance, support for literature, critical reviews of project and the report and above all the moral support he had provided to me with all stages of this project.

Punit Shrivastava MBA 2nd Sem.

PREFACE
This project report has been prepared as per the requirement of the syllabus of MBA course structure under which the students are required to undertake real life short term corporate study. Performing such study and surveying the market was a firsthand experience for me. I was exposed to the professional set-up and faced the market, which was really a great experience. During project period, I had very touching experiences. When business is involved, experiences counts a lot, as we know, experience are an instrument, which leads towards success. We all know that working in market on the grass route level has always been a pleasure. Now I take this opportunity to present the project report and sincerely hope that it will be as much knowledge enhancing to the readers as it was to use during the fieldwork and the completion of the report.

EXECUTIVE SUMMARY
ICICI PRUDENTIAL Life insurance is the oldest life insurance company in the world. It is the largest insurer in the UK and is the 28th largest company in the world. In India, the company is marketing life insurance products and unit linked investment plans. From my research at ICICI , I found that the company has a lot of competition from other private insurers like HDFC, Aviva, Birla Sun Life and Tata AIG. It also faces competition from LIC. To compete effectively ICICI PRUDENTIAL could launch cheaper and more reasonable products with small premiums and short policy terms (the number of years premium is to be paid). The ideal premium would be between Rs. 5000 Rs. 25000 and an ideal policy term would be 10 20 years. ICICI must advertise regularly and create brand value for its products and services. Most of its competitors like Aviva, HDFC, Max, Reliance and LIC use television advertisements to promote their products. The Indian consumer has a false perception about insurance they feel that it would not benefit them if they do not live through the policy term. Nowadays however, most policies are unit linked plans where a customer is benefited even if their death does not occur during the policy term. This message should be conveyed to potential customers so that they readily invest in insurance. Family responsibilities and high returns are the two main reasons people invest in insurance. Optimum returns of 16 20 % must be provided to consumers to keep them interested in purchasing insurance.

TABLE OF CONTENTS

1. Intoduction to the industry 2. Introduction to the organization 3. Research Methodology 3.1 Title of the study 3.2 Duration of the study 3.3 Objective of the study 3.4 Type of research 3.5 Sample size 3.6 Scope of the study 3.7 Limitation of the study 4. Interpretation & analysis 5. Facts & findings 6. SWOT 7. Conclusion 8. Recommendation 9. Appendix 10. Bibliography

life insurance is the bridge which covers the economic gap between the time a man dies & the time he should die INTRODUCTION OF INDUSTRY
Insurance is a legal Contract that protects people from the financial costs those results from loss of life, loss of health, lawsuits, or property damage. Insurance provides a means for individuals & society to cope up with some of the risks faced in every day life by every body. People purchase contracts of insurance, called a Policy, from various insurance companies. Insurance can be divided into three categories: 1) Life Insurance 2) General Insurance 3) Health Insurance Life insurance is a contract for payment of a sum of money to the person assured on the happening of the event insured against. Usually the contract provides for the payment of an amount on the date of maturity or at specified intervals or at unfortunate death. The contract also provides for payment of premium periodically to the corporation by the assured. General insurance includes many areas of insurance like marine, motor, engineering, health, fire, etc. The contract provides for the payment of an amount on the happening of some contingency. These types of contracts are annual in nature.

History of insurance
In some sense we can say that insurance appears simultaneously with the appearance of human society. We know of two types of economies in human societies: money economies (with markets, money, financial instruments and so on) and non-money or natural economies (without money, markets, financial instruments and so on). The second type is a more ancient form than the first. In such an economy and community, we can see insurance in the form of people helping each other. For example, if a house burns down, the members of the community help build a new one. Should the same thing happen to one's neighbour, the other neighbours must help. Otherwise, neighbours will not receive help in the future. This type of insurance has survived to the present day in some countries where modern money economy with its financial instruments is not widespread (for example countries in the territory of the former Soviet Union). Turning to insurance in the modern sense (i.e., insurance in a modern money economy, in which insurance is part of the financial sphere), early methods of transferring or distributing risk were practised by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively.[8] Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practised by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen. Achaemenian monarchs of Ancient Persia were the first to insure their people and made it official by registering the insuring process in governmental notary offices. The insurance tradition was performed each year in Norouz (beginning of the Iranian New Year); the heads of different ethnic groups as well as others willing to take part, presented gifts to the monarch. The most important gift was presented during a special ceremony. When a gift was worth more than 10,000 Derrik (Achaemenian gold coin) the issue was registered in a special office. This was advantageous to those who presented such special gifts. For others, the presents

were fairly assessed by the confidants of the court. Then the assessment was registered in special offices. The purpose of registering was that whenever the person who presented the gift registered by the court was in trouble, the monarch and the court would help him. Jahez, a historian and writer, writes in one of his books on ancient Iran: "[W]henever the owner of the present is in trouble or wants to construct a building, set up a feast, have his children married, etc. the one in charge of this in the court would check the registration. If the registered amount exceeded 10,000 Derrik, he or she would receive an amount of twice as much. A thousand years later, the inhabitants of Rhodes invented the concept of the 'general average'. Merchants whose goods were being shipped together would pay a proportionally divided premium which would be used to reimburse any merchant whose goods were jettisoned during storm or sinkage. The Greeks and Romans introduced the origins of health and life insurance c. 600 AD when they organized guilds called "benevolent societies" which cared for the families and paid funeral expenses of members upon death. Guilds in the Middle Ages served a similar purpose. The Talmud deals with several aspects of insuring goods. Before insurance was established in the late 17th century, "friendly societies" existed in England, in which people donated amounts of money to a general sum that could be used for emergencies. Separate insurance contracts (i.e., insurance policies not bundled with loans or other kinds of contracts) were invented in Genoa in the 14th century, as were insurance pools backed by pledges of landed estates. These new insurance contracts allowed insurance to be separated from investment, a separation of roles that first proved useful in marine insurance. Insurance became far more sophisticated in post-Renaissance Europe, and specialized varieties developed. Toward the end of the seventeenth century, London's growing importance as a centre for trade increased demand for marine insurance. In the late 1680s, Edward Lloyd opened a coffee house that became a popular haunt of ship owners, merchants, and ships captains, and thereby a reliable source of the latest shipping news. It became the meeting place for parties wishing to insure cargoes and ships, and those willing to underwrite such ventures. Today, Lloyd's of London remains the 9

leading market (note that it is not an insurance company) for marine and other specialist types of insurance, but it works rather differently than the more familiar kinds of insurance. Insurance as we know it today can be traced to the Great Fire of London, which in 1666 devoured 13,200 houses. In the aftermath of this disaster, Nicholas Barbon opened an office to insure buildings. In 1680, he established England's first fire insurance company, "The Fire Office," to insure brick and frame homes. The first insurance company in the United States underwrote fire insurance and was formed in Charles Town (modern-day Charleston), South Carolina, in 1732. Benjamin Franklin helped to popularize and make standard the practice of insurance, particularly against fire in the form of perpetual insurance. In 1752, he founded the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. Franklin's company was the first to make contributions toward fire prevention. Not only did his company warn against certain fire hazards, it refused to insure certain buildings where the risk of fire was too great, such as all wooden houses. In the United States, regulation of the insurance industry is highly Balkanized, with primary responsibility assumed by individual state insurance departments. Whereas insurance markets have become centralized nationally and internationally, state insurance commissioners operate individually, though at times in concert through a national insurance commissioners' organization. In recent years, some have called for a dual state and federal regulatory system (commonly referred to as the Optional federal charter (OFC)) for insurance similar to that which oversees state banks and national banks.

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FEATURES OF INDIAN INSURANCE INDUSTRY:

Low market penetration. Ever-growing middle-class component in population. Growth of consumer movement with an increasing demand for better insurance products. Inadequate application of information technology for business. Adequate fillip from the Govt. in the form of tax incentives to the insured.

59% of the advisors are satisfied by the commission provided by the co. Those who are not satisfied said that the commission provided is very low as compared other players in the industry. Most of the advisors are satisfied by the working conditions. This need has become even more important due to steady disintegration of the prevalent joint family system, and emergence of nuclear families. The need to protect your familys ever growing needs is why you need Life Insurance. Following are the reasons:

Lifestyle Maintenance. Costs of Education. Mortgage and Debt protection. Hardships Protection. Replacement of Income. Retirement Expenses.

Principles of insurance
Commercially insurable risks typically share seven common characteristics. 1. A large number of homogeneous exposure units. The vast majority of insurance policies are provided for individual members of very large classes. Automobile insurance, for example, covered about 175 million automobiles in the United States in 2004.[2] The existence of a large number of homogeneous exposure units allows insurers to benefit from the so-called law of large numbers, which in effect states that as the number of exposure units increases, the actual results are increasingly likely to become close to 11

expected results. There are exceptions to this criterion. Lloyd's of London is famous for insuring the life or health of actors, actresses and sports figures. Satellite Launch insurance covers events that are infrequent. Large commercial property policies may insure exceptional properties for which there are no homogeneous exposure units. Despite failing on this criterion, many exposures like these are generally considered to be insurable. 2. Definite Loss. The event that gives rise to the loss that is subject to the insured, at least in principle, take place at a known time, in a known place, and from a known cause. The classic example is death of an insured person on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory. Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objectively verify all three elements. 3. Accidental Loss. The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be pure, in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable. 4. Large Loss. The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is little point in paying such costs unless the protection offered has real value to a buyer. 5. Affordable Premium. If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards, the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. 12

If there is no such chance of loss, the transaction may have the form of insurance, but not the substance. (See the U.S. Financial Accounting Standards Board standard number 113) 6. Calculable Loss. There are two elements that must be at least estimable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim. 7. Limited risk of catastrophically large losses. The essential risk is often aggregation. If the same event can cause losses to numerous policyholders of the same insurer, the ability of that insurer to issue policies becomes constrained, not by factors surrounding the individual characteristics of a given policyholder, but by the factors surrounding the sum of all policyholders so exposed. Typically, insurers prefer to limit their exposure to a loss from a single event to some small portion of their capital base, on the order of 5 percent. Where the loss can be aggregated, or an individual policy could produce exceptionally large claims, the capital constraint will restrict an insurer's appetite for additional policyholders. The classic example is earthquake insurance, where the ability of an underwriter to issue a new policy depends on the number and size of the policies that it has already underwritten. Wind insurance in hurricane zones, particularly along coast lines, is another example of this phenomenon. In extreme cases, the aggregation can affect the entire industry, since the combined capital of insurers and reinsurers can be small compared to the needs of potential policyholders in areas exposed to aggregation risk. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any individual insurers capital constraint. Such properties are generally shared among several insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market.

Types of insurance
Any risk that can be quantified can potentially be insured. Specific kinds of risk that may give rise to claims are known as "perils". An insurance policy will set out in 13

detail which perils are covered by the policy and which are not. Below are (nonexhaustive) lists of the many different types of insurance that exist. A single policy may cover risks in one or more of the categories set out below. For example, auto insurance would typically cover both property risk (covering the risk of theft or damage to the car) and liability risk (covering legal claims from causing an accident). A homeowner's insurance policy in the U.S. typically includes property insurance covering damage to the home and the owner's belongings, liability insurance covering certain legal claims against the owner, and even a small amount of coverage for medical expenses of guests who are injured on the owner's property. Business insurance can be any kind of insurance that protects businesses against risks. Some principal subtypes of business insurance are (a) the various kinds of professional liability insurance, also called professional indemnity insurance, which are discussed below under that name; and (b) the business owner's policy (BOP), which bundles into one policy many of the kinds of coverage that a business owner needs, in a way analogous to how homeowners insurance bundles the coverages that a homeowner needs.[9]

Auto insurance
Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy. Auto insurance provides property, liability and medical coverage: 1. Property coverage pays for damage to or theft of your car. 2. Liability coverage pays for your legal responsibility to others for bodily injury or property damage. 3. Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses. An auto insurance policy comprises six kinds of coverage. Most countries require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have requirements. Most auto policies are for six months to a year.

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In the United States, your insurance company should notify you by mail when its time to renew the policy and to pay your premium

Home insurance
Home insurance provides compensation for damage or destruction of a home from disasters. In some geographical areas, the standard insurances excludes certain types of disasters, such as flood and earthquakes, that require additional coverage. Maintenance-related problems are the homeowners' responsibility. The policy may include inventory, or this can be bought as a separate policy, especially for people who rent housing. In some countries, insurers offer a package which may include liability and legal responsibility for injuries and property damage caused by members of the household, including pets.[11]

Health
Health insurance policies by the National Health Service in the United Kingdom (NHS) or other publicly-funded health programs will cover the cost of medical treatments. Dental insurance, like medical insurance, is coverage for individuals to protect them against dental costs. In the U.S., dental insurance is often part of an employer's benefits package, along with health insurance.

Disability

Disability insurance policies provide financial support in the event the policyholder is unable to work because of disabling illness or injury. It provides monthly support to help pay such obligations as mortgages and credit cards.

Disability overhead insurance allows business owners to cover the overhead expenses of their business while they are unable to work. Total permanent disability insurance provides benefits when a person is permanently disabled and can no longer work in their profession, often taken as an adjunct to life insurance.

Workers' compensation insurance replaces all or part of a worker's wages lost and accompanying medical expenses incurred because of a job-related injury.

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Casualty
Casualty insurance insures against accidents, not necessarily tied to any specific property.

Crime insurance is a form of casualty insurance that covers the policyholder against losses arising from the criminal acts of third parties. For example, a company can obtain crime insurance to cover losses arising from theft or embezzlement.

Political risk insurance is a form of casualty insurance that can be taken out by businesses with operations in countries in which there is a risk that revolution or other political conditions will result in a loss.

Life
Life insurance provides a monetary benefit to a decedent's family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial, funeral and other final expenses. Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity. Annuities provide a stream of payments and are generally classified as insurance because they are issued by insurance companies and regulated as insurance and require the same kinds of actuarial and investment management expertise that life insurance requires. Annuities and pensions that pay a benefit for life are sometimes regarded as insurance against the possibility that a retiree will outlive his or her financial resources. In that sense, they are the complement of life insurance and, from an underwriting perspective, are the mirror image of life insurance. Certain life insurance contracts accumulate cash values, which may be taken by the insured if the policy is surrendered or which may be borrowed against. Some policies, such as annuities and endowment policies, are financial instruments to accumulate or liquidate wealth when it is needed. In many countries, such as the U.S. and the UK, the tax law provides that the interest on this cash value is not taxable under certain circumstances. This leads to

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widespread use of life insurance as a tax-efficient method of saving as well as protection in the event of early death. In U.S., the tax on interest income on life insurance policies and annuities is generally deferred. However, in some cases the benefit derived from tax deferral may be offset by a low return. This depends upon the insuring company, the type of policy and other variables (mortality, market return, etc.). Moreover, other income tax saving vehicles (e.g., IRAs, 401(k) plans, Roth IRAs) may be better alternatives for value accumulation. A combination of low-cost term life insurance and a higherreturn tax-efficient retirement account may achieve better investment return.

Property
This tornado damage to an Illinois home would be considered an "Act of God" for insurance purposes Property insurance provides protection against risks to property, such as fire, theft or weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, inland marine insurance or boiler insurance.

Automobile insurance, known in the UK as motor insurance, is probably the most common form of insurance and may cover both legal liability claims against the driver and loss of or damage to the insured's vehicle itself. Throughout the United States an auto insurance policy is required to legally operate a motor vehicle on public roads. In some jurisdictions, bodily injury compensation for automobile accident victims has been changed to a nofault system, which reduces or eliminates the ability to sue for compensation but provides automatic eligibility for benefits. Credit card companies insure against damage on rented cars.
o

Driving School Insurance insurance provides cover for any authorized driver whilst undergoing tuition, cover also unlike other motor policies provides cover for instructor liability where both the pupil and driving instructor are equally liable in the event of a claim.

Aviation insurance insures against hull, spares, deductibles, hull wear and liability risks.

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Boiler insurance (also known as boiler and machinery insurance or equipment breakdown insurance) insures against accidental physical damage to equipment or machinery.

Builder's risk insurance insures against the risk of physical loss or damage to property during construction. Builder's risk insurance is typically written on an "all risk" basis covering damage due to any cause (including the negligence of the insured) not otherwise expressly excluded.

Crop insurance "Farmers use crop insurance to reduce or manage various risks associated with growing crops. Such risks include crop loss or damage caused by weather, hail, drought, frost damage, insects, or disease, for instance.

Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property. Most ordinary homeowners insurance policies do not cover earthquake damage. Most earthquake insurance policies feature a high deductible. Rates depend on location and the probability of an earthquake, as well as the construction of the home.

A fidelity bond is a form of casualty insurance that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees.

Flood insurance protects against property loss due to flooding. Many insurers in the U.S. do not provide flood insurance in some portions of the country. In response to this, the federal government created the National Flood Insurance Program which serves as the insurer of last resort.

Home insurance or homeowners' insurance: See "Property insurance". Landlord insurance is specifically designed for people who own properties which they rent out. Most house insurance cover in the U.K will not be valid if the property is rented out therefore landlords must take out this specialist form of home insurance.

Marine insurance and marine cargo insurance cover the loss or damage of ships at sea or on inland waterways, and of the cargo that may be on them. When the owner of the cargo and the carrier are separate corporations, marine cargo insurance typically compensates the owner of cargo for losses sustained from fire, shipwreck, etc., but excludes losses that can be recovered from the carrier or the carrier's insurance. Many marine insurance 18

underwriters will include "time element" coverage in such policies, which extends the indemnity to cover loss of profit and other business expenses attributable to the delay caused by a covered loss.

Surety bond insurance is a three party insurance guaranteeing the performance of the principal. Terrorism insurance provides protection against any loss or damage caused by terrorist activities. Volcano insurance is an insurance that covers volcano damage in Hawaii. Windstorm insurance is an insurance covering the damage that can be caused by hurricanes and tropical cyclones.

Liability
Liability insurance is a very broad superset that covers legal claims against the insured. Many types of insurance include an aspect of liability coverage. For example, a homeowner's insurance policy will normally include liability coverage which protects the insured in the event of a claim brought by someone who slips and falls on the property; automobile insurance also includes an aspect of liability insurance that indemnifies against the harm that a crashing car can cause to others' lives, health, or property. The protection offered by a liability insurance policy is twofold: a legal defense in the event of a lawsuit commenced against the policyholder and indemnification (payment on behalf of the insured) with respect to a settlement or court verdict. Liability policies typically cover only the negligence of the insured, and will not apply to results of wilful or intentional acts by the insured.

Directors and officers liability insurance protects an organization (usually a corporation) from costs associated with litigation resulting from mistakes made by directors and officers for which they are liable. In the industry, it is usually called "D&O" for short.

Environmental liability insurance protects the insured from bodily injury, property damage and cleanup costs as a result of the dispersal, release or escape of pollutants.

Errors and omissions insurance: See "Professional liability insurance" under "Liability insurance". Prize indemnity insurance protects the insured from giving away a large prize at a specific event. Examples would include offering prizes to contestants 19

who can make a half-court shot at a basketball game, or a hole-in-one at a golf tournament.

Professional liability insurance, also called professional indemnity insurance, protects insured professionals such as architectural corporation and medical practice against potential negligence claims made by their patients/clients. Professional liability insurance may take on different names depending on the profession. For example, professional liability insurance in reference to the medical profession may be called malpractice insurance. Notaries public may take out errors and omissions insurance (E&O). Other potential E&O policyholders include, for example, real estate brokers, Insurance agents, home inspectors, appraisers, and website developers.

Credit
Credit insurance repays some or all of a loan when certain things happen to the borrower such as unemployment, disability, or death.

Mortgage insurance insures the lender against default by the borrower. Mortgage insurance is a form of credit insurance, although the name credit insurance more often is used to refer to policies that cover other kinds of debt.

Other types

Collateral protection insurance or CPI, insures property (primarily vehicles) held as collateral for loans made by lending institutions. Defense Base Act Workers' compensation or DBA Insurance provides coverage for civilian workers hired by the government to perform contracts outside the U.S. and Canada. DBA is required for all U.S. citizens, U.S. residents, U.S. Green Card holders, and all employees or subcontractors hired on overseas government contracts. Depending on the country, Foreign Nationals must also be covered under DBA. This coverage typically includes expenses related to medical treatment and loss of wages, as well as disability and death benefits.

Expatriate insurance provides individuals and organizations operating outside of their home country with protection for automobiles, property, health, liability and business pursuits. 20

Financial loss insurance protects individuals and companies against various financial risks. For example, a business might purchase coverage to protect it from loss of sales if a fire in a factory prevented it from carrying out its business for a time. Insurance might also cover the failure of a creditor to pay money it owes to the insured. This type of insurance is frequently referred to as "business interruption insurance." Fidelity bonds and surety bonds are included in this category, although these products provide a benefit to a third party (the "obligee") in the event the insured party (usually referred to as the "obligor") fails to perform its obligations under a contract with the obligee.

Kidnap and ransom insurance Locked funds insurance is a little-known hybrid insurance policy jointly issued by governments and banks. It is used to protect public funds from tamper by unauthorized parties. In special cases, a government may authorize its use in protecting semi-private funds which are liable to tamper. The terms of this type of insurance are usually very strict. Therefore it is used only in extreme cases where maximum security of funds is required.

Nuclear incident insurance covers damages resulting from an incident involving radioactive materials and is generally arranged at the national level. See the Nuclear exclusion clause and for the United States the PriceAnderson Nuclear Industries Indemnity Act)

Pet insurance insures pets against accidents and illnesses - some companies cover routine/wellness care and burial, as well. Pollution Insurance, which consists of first-party coverage for contamination of insured property either by external or on-site sources. Coverage for liability to third parties arising from contamination of air, water, or land due to the sudden and accidental release of hazardous materials from the insured site. The policy usually covers the costs of cleanup and may include coverage for releases from underground storage tanks. Intentional acts are specifically excluded.

Purchase insurance is aimed at providing protection on the products people purchase. Purchase insurance can cover individual purchase protection, warranties, guarantees, care plans and even mobile phone insurance. Such insurance is normally very limited in the scope of problems that are covered by the policy.

Title insurance provides a guarantee that title to real property is vested in the purchaser and/or mortgagee, free and clear of liens or encumbrances. It is 21

usually issued in conjunction with a search of the public records performed at the time of a real estate transaction. Travel insurance is an insurance cover taken by those who travel abroad, which covers certain losses such as medical expenses, loss of personal belongings, travel delay, personal liabilities, etc.

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MAJOR PLAYERS IN INSURANCE SECTOR

LIFE INSURANCE BUSINESS Life Insurance Corporation ICICI Prudential Life Insurance HDFC Life Insurance Max Life Insurance Birla Sun Life Insurance Kotak Mahindra Life Insurance Reliance Life Insurance Bajaj Allianz Life Insurance IDBI Federal Life Insurance ING Life Insurance SBI Life Insurance PNB Met Life Insurance BOB Life Insurance NON-LIFE INSURANCE BUSINESS

General Insurance Corporation National Insurance Company The New India Assurance Company The Oriental Insurance Company United India Insurance Company Reliance General Insurance TATA-AIA Insurance Royal Sundaram Alliance General Ins. Bajaj Allianz General Insurance ICICI Lombard Insurance Future Generali General Insurance

Insurance financing vehicles

Fraternal insurance is provided on a cooperative basis by fraternal benefit societies or other social organizations.[13] No-fault insurance is a type of insurance policy (typically automobile insurance) where insureds are indemnified by their own insurer regardless of fault in the incident.

Protected Self-Insurance is an alternative risk financing mechanism in which an organization retains the mathematically calculated cost of risk within the 23

organization and transfers the catastrophic risk with specific and aggregate limits to an insurer so the maximum total cost of the program is known. A properly designed and underwritten Protected Self-Insurance Program reduces and stabilizes the cost of insurance and provides valuable risk management information.

Retrospectively Rated Insurance is a method of establishing a premium on large commercial accounts. The final premium is based on the insured's actual loss experience during the policy term, sometimes subject to a minimum and maximum premium, with the final premium determined by a formula. Under this plan, the current year's premium is based partially (or wholly) on the current year's losses, although the premium adjustments may take months or years beyond the current year's expiration date. The rating formula is guaranteed in the insurance contract. Formula: retrospective premium = converted loss + basic premium tax multiplier. Numerous variations of this formula have been developed and are in use.

Formal self insurance is the deliberate decision to pay for otherwise insurable losses out of one's own money. This can be done on a formal basis by establishing a separate fund into which funds are deposited on a periodic basis, or by simply forgoing the purchase of available insurance and paying out-of-pocket. Self insurance is usually used to pay for high-frequency, lowseverity losses. Such losses, if covered by conventional insurance, mean having to pay a premium that includes loadings for the company's general expenses, cost of putting the policy on the books, acquisition expenses, premium taxes, and contingencies. While this is true for all insurance, for small, frequent losses the transaction costs may exceed the benefit of volatility reduction that insurance otherwise affords.

Reinsurance is a type of insurance purchased by insurance companies or self-insured employers to protect against unexpected losses. Financial reinsurance is a form of reinsurance that is primarily used for capital management rather than to transfer insurance risk.

Social insurance can be many things to many people in many countries. But a summary of its essence is that it is a collection of insurance coverages (including components of life insurance, disability income insurance, unemployment insurance, health insurance, and others), plus retirement savings, that requires participation by all citizens. By forcing everyone in society to be a policyholder and pay premiums, it ensures that everyone can 24

become a claimant when or if he/she needs to. Along the way this inevitably becomes related to other concepts such as the justice system and the welfare state. This is a large, complicated topic that engenders tremendous debate, which can be further studied in the following articles (and others):
o o o o o o

National Insurance Social safety net Social security Social Security debate (United States) Social Security (United States) Social welfare provision

Stop-loss insurance provides protection against catastrophic or unpredictable losses. It is purchased by organizations who do not want to assume 100% of the liability for losses arising from the plans. Under a stop-loss policy, the insurance company becomes liable for losses that exceed certain limits called deductibles.

Closed community self-insurance

Some communities prefer to create virtual insurance amongst themselves by other means than contractual risk transfer, which assigns explicit numerical values to risk. A number of religious groups, including the Amish and some Muslim groups, depend on support provided by their communities when disasters strike. The risk presented by any given person is assumed collectively by the community who all bear the cost of rebuilding lost property and supporting people whose needs are suddenly greater after a loss of some kind. In supportive communities where others can be trusted to follow community leaders, this tacit form of insurance can work. In this manner the community can even out the extreme differences in insurability that exist among its members. Some further justification is also provided by invoking the moral hazard of explicit insurance contracts. In the United Kingdom, The Crown (which, for practical purposes, meant the Civil service) did not insure property such as government buildings. If a government building was damaged, the cost of repair would be met from public funds because, in the long run, this was cheaper than paying insurance premiums. Since many UK government buildings have been sold to property companies, and rented back, this arrangement is now less common and may have disappeared altogether. 25

Insurance companies
Insurance companies may be classified into two groups:

Life insurance companies, which sell life insurance, annuities and pensions products. Non-life, General, or Property/Casualty insurance companies, which sell other types of insurance.

General insurance companies can be further divided into these sub categories.

Standard Lines Excess Lines

In most countries, life and non-life insurers are subject to different regulatory regimes and different tax and accounting rules. The main reason for the distinction between the two types of company is that life, annuity, and pension business is very long-term in nature coverage for life assurance or a pension can cover risks over many decades. By contrast, non-life insurance cover usually covers a shorter period, such as one year. In the United States, standard line insurance companies are "mainstream" insurers. These are the companies that typically insure autos, homes or businesses. They use pattern or "cookie-cutter" policies without variation from one person to the next. They usually have lower premiums than excess lines and can sell directly to individuals. They are regulated by state laws that can restrict the amount they can charge for insurance policies. Excess line insurance companies (aka Excess and Surplus) typically insure risks not covered by the standard lines market. They are broadly referred as being all insurance placed with non-admitted insurers. Non-admitted insurers are not licensed in the states where the risks are located. These companies have more flexibility and can react faster than standard insurance companies because they are not required to file rates and forms as the "admitted" carriers do. However, they still have substantial regulatory requirements placed upon them. State laws generally require insurance placed with surplus line agents and brokers not to be available through standard licensed insurers. 26

Insurance companies are generally classified as either mutual or stock companies. Mutual companies are owned by the policyholders, while stockholders (who may or may not own policies) own stock insurance companies. Demutualization of mutual insurers to form stock companies, as well as the formation of a hybrid known as a mutual holding company, became common in some countries, such as the United States, in the late 20th century. Other possible forms for an insurance company include reciprocals, in which policyholders 'reciprocate' in sharing risks, and Lloyds organizations. Insurance companies are rated by various agencies such as A. M. Best. The ratings include the company's financial strength, which measures its ability to pay claims. It also rates financial instruments issued by the insurance company, such as bonds, notes, and securitization products. Reinsurance companies are insurance companies that sell policies to other insurance companies, allowing them to reduce their risks and protect themselves from very large losses. The reinsurance market is dominated by a few very large companies, with huge reserves. A reinsurer may also be a direct writer of insurance risks as well. Captive insurance companies may be defined as limited-purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups. This definition can sometimes be extended to include some of the risks of the parent company's customers. In short, it is an in-house selfinsurance vehicle. Captives may take the form of a "pure" entity (which is a 100% subsidiary of the self-insured parent company); of a "mutual" captive (which insures the collective risks of members of an industry); and of an "association" captive (which self-insures individual risks of the members of a professional, commercial or industrial association). Captives represent commercial, economic and tax advantages to their sponsors because of the reductions in costs they help create and for the ease of insurance risk management and the flexibility for cash flows they generate. Additionally, they may provide coverage of risks which is neither available nor offered in the traditional insurance market at reasonable prices. The types of risk that a captive can underwrite for their parents include property damage, public and product liability, professional indemnity, employee benefits,

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employers' liability, motor and medical aid expenses. The captive's exposure to such risks may be limited by the use of reinsurance. Captives are becoming an increasingly important component of the risk management and risk financing strategy of their parent. This can be understood against the following background:

heavy and increasing premium costs in almost every line of coverage; difficulties in insuring certain types of fortuitous risk; differential coverage standards in various parts of the world; rating structures which reflect market trends rather than individual loss experience; insufficient credit for deductibles and/or loss control efforts.

There are also companies known as 'insurance consultants'. Like a mortgage broker, these companies are paid a fee by the customer to shop around for the best insurance policy amongst many companies. Similar to an insurance consultant, an 'insurance broker' also shops around for the best insurance policy amongst many companies. However, with insurance brokers, the fee is usually paid in the form of commission from the insurer that is selected rather than directly from the client. Neither insurance consultants nor insurance brokers are insurance companies and no risks are transferred to them in insurance transactions. Third party administrators are companies that perform underwriting and sometimes claims handling services for insurance companies. These companies often have special expertise that the insurance companies do not have. The financial stability and strength of an insurance company should be a major consideration when buying an insurance contract. An insurance premium paid currently provides coverage for losses that might arise many years in the future. For that reason, the viability of the insurance carrier is very important. In recent years, a number of insurance companies have become insolvent, leaving their policyholders with no coverage (or coverage only from a government-backed insurance pool or other arrangement with less attractive payouts for losses). A number of independent rating agencies, such as Best's, Fitch, Standard & Poor's, and Moody's Investors Service, provide information and rate the financial viability of insurance companies.

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Global insurance industry

Life insurance premia written in 2005 Non-life insurance premia written in 2005 Global insurance premiums grew by 11% in 2007 (or 3.3% in real terms) to reach $4.1 trillion. The macro-economic environment was characterised by slower economic growth in 2007 and rising inflation. Profitability improved in life insurance and fell slighlty in the non-life sector during the year. Life insurance premiums grew by 12.6%, accelerating in the advanced economies with the exception of Japan and Continental Europe. Non-life insurance premiums grew by 7.6% during the year. Figures for premium income are not yet available for 2008, but the insurance industry is likely to see a slowdown in new business and falling investment revenue. Advanced economies account for the bulk of global insurance. With premium income of $1,681bn, Europe was the most important region, followed by North America ($1,330bn) and Asia ($814bn). The top four countries accounted for nearly 60% of premiums in 2007. The US and UK alone accounted for 42% of world insurance, much higher than their 7% share of the global population. Emerging markets accounted for over 85% of the worlds population but generated only around 10% of premiums.

Complexity of insurance policy contracts

Insurance policies can be complex and some policyholders may not understand all the fees and coverages included in a policy. As a result, people may buy policies on unfavorable terms. In response to these issues, many countries have enacted detailed statutory and regulatory regimes governing every aspect of the insurance business, including minimum standards for policies and the ways in which they may be advertised and sold. For example, most insurance policies in the English language today have been carefully drafted in plain English; the industry learned the hard way that many courts will not enforce policies against insureds when the judges themselves cannot understand what the policies are saying. 29

Many institutional insurance purchasers buy insurance through an insurance broker. While on the surface it appears the broker represents the buyer (not the insurance company), and typically counsels the buyer on appropriate coverage and policy limitations, it should be noted that in the vast majority of cases a broker's compensation comes in the form of a commission as a percentage of the insurance premium, creating a conflict of interest in that the broker's financial interest is tilted towards encouraging an insured to purchase more insurance than might be necessary at a higher price. A broker generally holds contracts with many insurers, thereby allowing the broker to "shop" the market for the best rates and coverage possible. Insurance may also be purchased through an agent. Unlike a broker, who represents the policyholder, an agent represents the insurance company from whom the policyholder buys. An agent can represent more than one company. An independent insurance consultant advises insureds on a fee-for-service retainer, similar to an attorney, and thus offers completely independent advice, free of the financial conflict of interest of brokers and/or agents. However, such a consultant must still work through brokers and/or agents in order to secure coverage for their clients.

Redlining
Redlining is the practice of denying insurance coverage in specific geographic areas, supposedly because of a high likelihood of loss, while the alleged motivation is unlawful discrimination. Racial profiling or redlining has a long history in the property insurance industry in the United States. From a review of industry underwriting and marketing materials, court documents, and research by government agencies, industry and community groups, and academics, it is clear that race has long affected and continues to affect the policies and practices of the insurance industry. All states have provisions in their rate regulation laws or in their fair trade practice acts that prohibit unfair discrimination, often called redlining, in setting rates and making insurance available. In determining premiums and premium rate structures, insurers consider quantifiable factors, including location, credit scores, gender, occupation, marital status, and education level. However, the use of such factors is often considered to be unfair or unlawfully discriminatory, and the reaction against this practice has in 30

some instances led to political disputes about the ways in which insurers determine premiums and regulatory intervention to limit the factors used. An insurance underwriter's job is to evaluate a given risk as to the likelihood that a loss will occur. Any factor that causes a greater likelihood of loss should theoretically be charged a higher rate. This basic principle of insurance must be followed if insurance companies are to remain solvent. Thus, "discrimination" against (i.e., negative differential treatment of) potential insureds in the risk evaluation and premium-setting process is a necessary by-product of the fundamentals of insurance underwriting. For instance, insurers charge older people significantly higher premiums than they charge younger people for term life insurance. Older people are thus treated differently than younger people (i.e., a distinction is made, discrimination occurs). The rationale for the differential treatment goes to the heart of the risk a life insurer takes: Old people are likely to die sooner than young people, so the risk of loss (the insured's death) is greater in any given period of time and therefore the risk premium must be higher to cover the greater risk. However, treating insureds differently when there is no actuarially sound reason for doing so is unlawful discrimination. What is often missing from the debate is that prohibiting the use of legitimate, actuarially sound factors means that an insufficient amount is being charged for a given risk, and there is thus a deficit in the system. The failure to address the deficit may mean insolvency and hardship for all of a company's insureds. The options for addressing the deficit seem to be the following: Charge the deficit to the other policyholders or charge it to the government (i.e., externalize outside of the company to society at large).

Insurance patents
New assurance products can now be protected from copying with a business method patent in the United States. A recent example of a new insurance product that is patented is Usage Based auto insurance. Early versions were independently invented and patented by a major U.S. auto insurance company, Progressive Auto Insurance (U.S. Patent 5,797,134) and a Spanish independent inventor, Salvador Minguijon Perez (EP patent 0700009). 31

Many independent inventors are in favor of patenting new insurance products since it gives them protection from big companies when they bring their new insurance products to market. Independent inventors account for 70% of the new U.S. patent applications in this area. Many insurance executives are opposed to patenting insurance products because it creates a new risk for them. The Hartford insurance company, for example, recently had to pay $80 million to an independent inventor, Bancorp Services, in order to settle a patent infringement and theft of trade secret lawsuit for a type of corporate owned life insurance product invented and patented by Bancorp. There are currently about 150 new patent applications on insurance inventions filed per year in the United States. The rate at which patents have issued has steadily risen from 15 in 2002 to 44 in 2006. Inventors can now have their insurance U.S. patent applications reviewed by the public in the Peer to Patent program. The first insurance patent application to be posted was US2009005522 Risk assessment company. It was posted on March 6, 2009. This patent application describes a method for increasing the ease of changing insurance companies The insurance industry and rent seeking Certain insurance products and practices have been described as rent seeking by critics. That is, some insurance products or practices are useful primarily because of legal benefits, such as reducing taxes, as opposed to providing protection against risks of adverse events. Under United States tax law, for example, most owners of variable annuities and variable life insurance can invest their premi

LIFE INSURANCE
Life insurance is the only tool to secure out life in future. It also provides a safe guard to the uncertainty of our life. Life insurance is the cheapest investment tool in which we can earn more in a short period of time. In the words of D S Hansell Insurance may be defined as a social device providing financial compensation for the effects of misfortune, the payment being made from the accumulated contributions of all the parties participating in the scheme.

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The function of insurance is to protect you against losses you cant afford. Insurance reduces anxiety over a possible loss and absorbs the financial brunt of its consequences. India has traditionally been a high savings oriented country being on par with the thrifty Japan. Insurance sector in the United States of America is as big in size as the banking industry there. This gives us an ideal of how important the sector is. Insurance sector changeless the savings of the people to long- term investments. In India where infrastructure is said to be of critical importance, this sector will bring the nations own money for the nation. The global life insurance market stands at $ 1,521.2 billion while the nonlife insurance market is placed at $922.4 billion.

India takes the 23rd position with US $ 9.933 billion annual premium collections and a meager 0.41% share.

Out of the billion people is India; only 35 million people are covered by insurance. Indian insurance market is set to touch $25 billion by 2010, on the assumption of a 7 per cent real annual growth in GDP. In 3 years time we would expect the 10% of the population to be under some sort of an insurance cover. This assuming a premium of Rs. 5000 on an average, amounts to 100 million x Rs. 5000= Rs. 500 bn. This has made the sector the hottest one in India after IT. With social security and security to the people at large being the agenda for opening the sector, the role of the regulator becomes all the more serious and one that would be carefully watched at every step.

ABOUT LIFE INSURANCE:

The life insurance corporation was established on 01.09.1956 and has been the sole corporation to write the life insurance business in India. The Indian insurance industry saw a new sun when the Insurance regulatory & Development Authority (IRDA) invited the applications for registration as insurers in August, 2000. With the liberalization and opening up of the sector to private players, 33

the industry has presented promising prospects for the coming future. The transition has also resulted into introduction complete opportunities for the professionals. Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured individual's or individuals' death or other event, such as terminal illness or critical illness. In return, the policy owner agrees to pay a stipulated amount called a premium at regular intervals or in lump sums. There may be designs in some countries where bills and death expenses plus catering for after funeral expenses should be included in Policy Premium. In the United States, the predominant form simply specifies a lump sum to be paid on the insured's demise. As with most insurance policies, life insurance is a contract between the insurer and the policy owner whereby a benefit is paid to the designated beneficiaries if an insured event occurs which is covered by the policy. The value for the policyholder is derived, not from an actual claim event, rather it is the value derived from the 'peace of mind' experienced by the policyholder, due to the negating of adverse financial consequences caused by the death of the Life Assured. To be a life policy the insured event must be based upon the lives of the people named in the policy. Insured events that may be covered include:

Serious illness

Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; for example claims relating to suicide, fraud, war, riot and civil commotion. Life-based contracts tend to fall into two major categories:

Protection policies - designed to provide a benefit in the event of specified event, typically a lump sum payment. A common form of this design is term insurance. 34

Investment policies - where the main objective is to facilitate the growth of capital by regular or single premiums. Common forms (in the US anyway) are whole life, universal life and variable life policies.

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Types of life insurance

Life insurance may be divided into two basic classes temporary and permanent or following subclasses - term, universal, whole life and endowment life insurance.

TEMPORARY TERM

Term assurance: provides for life insurance coverage for a specified term of years for a specified premium. The policy does not accumulate cash value. Term is generally considered "pure" insurance, where the premium buys protection in the event of death and nothing else.

The three key factors to be considered in term insurance are: face amount (protection or death benefit), premium to be paid (cost to the insured), and length of coverage (term).

Various insurance companies sell term insurance with many different combinations of these three parameters. The face amount can remain constant or decline. The term can be for one or more years. The premium can remain level or increase. A common type of term is called annual renewable term. It is a one year policy but the insurance company guarantees it will issue a policy of equal or lesser amount without regard to the insurability of the insured and with a premium set for the insured's age at that time. Another common type of term insurance is mortgage insurance, which is usually a level premium, declining face value policy. The face amount is intended to equal the amount of the mortgage on the policy owners residence so the mortgage will be paid if the insured dies.

A policy holder insures his life for a specified term. If he dies before that specified term is up, his estate or named beneficiary receives a payout. If he does not die before the term is up, he receives nothing. In the past these policies would almost always exclude suicide. However, after a number of court judgments against the industry, payouts do occur on death by suicide (presumably except for in the unlikely case that it can be shown that the suicide was just to benefit from the policy). Generally, if an insured person commits suicide within the first two policy years, the insurer will return the premiums paid. However, a death benefit will usually be paid if the suicide occurs after the two year period. 36

Permanent Life Insurance

Permanent life insurance is life insurance that remains in force (in-line) until the policy matures (pays out), unless the owner fails to pay the premium when due (the policy expires OR policies lapse). The policy cannot be canceled by the insurer for any reason except fraud in the application, and that cancellation must occur within a period of time defined by law (usually two years). Permanent insurance builds a cash value that reduces the amount at risk to the insurance company and thus the insurance expense over time. This means that a policy with a million dollar face value can be relatively expensive to a 70 year old. The owner can access the money in the cash value by withdrawing money, borrowing the cash value, or surrendering the policy and receiving the surrender value.

The four basic types of permanent insurance are whole life, universal life, limited pay and endowment.

Whole life coverage

Whole life insurance provides for a level premium, and a cash value table included in the policy guaranteed by the company. The primary advantages of whole life are guaranteed death benefits, guaranteed cash values, fixed and known annual premiums, and mortality and expense charges will not reduce the cash value shown in the policy. The primary disadvantages of whole life are premium inflexibility, and the internal rate of return in the policy may not be competitive with other savings alternatives. Riders are available that can allow one to increase the death benefit by paying additional premium. The death benefit can also be increased through the use of policy dividends. Dividends cannot be guaranteed and may be higher or lower than historical rates over time. Premiums are much higher than term insurance in the short-term, but cumulative premiums are roughly equal if policies are kept in force until average life expectancy.

Cash value can be accessed at any time through policy "loans". Since these loans decrease the death benefit if not paid back, payback is optional. Cash values are not paid to the beneficiary upon the death of the insured; the beneficiary receives the death benefit only. If the dividend option: Paid up additions is elected, dividend cash values will purchase additional death 37

benefit which will increase the death benefit of the policy to the named beneficiary.

Universal life coverage

Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return. There are several types of universal life insurance policies which include "interest sensitive" (also known as "traditional fixed universal life insurance"), variable universal life insurance, and equity indexed universal life insurance.

A universal life insurance policy includes a cash account. Premiums increase the cash account. Interest is paid within the policy (credited) on the account at a rate specified by the company. Mortality charges and administrative costs are then charged against (reduce) the cash account. The surrender value of the policy is the amount remaining in the cash account less applicable surrender charges, if any.

With all life insurance, there are basically two functions that make it work. There's a mortality function and a cash function. The mortality function would be the classical notion of pooling risk where the premiums paid by everybody else would cover the death benefit for the one or two who will die for a given period of time. The cash function inherent in all life insurance says that if a person is to reach age 95 to 100 (the age varies depending on state and company), then the policy matures and endows the face value of the policy.

Actuarially, it is reasoned that out of a group of 1000 people, if even 10 of them live to age 95, then the mortality function alone will not be able to cover the cash function. So in order to cover the cash function, a minimum rate of investment return on the premiums will be required in the event that a policy matures.

Universal life insurance addresses the perceived disadvantages of whole life. Premiums are flexible. Depending on how interest is credited, the internal rate of return can be higher because it moves with prevailing interest rates (interest-sensitive) or the financial markets (Equity Indexed Universal Life and Variable Universal Life). Mortality costs and administrative charges are known. And cash value may be considered more easily attainable because the owner can discontinue premiums if the cash value allows it. And 38

universal life has a more flexible death benefit because the owner can select one of two death benefit options, Option A and Option B.

Option A pays the face amount at death as it's designed to have the cash value equal the death benefit at maturity (usually at age 95 or 100). With each premium payment, the policy owner is reducing the cost of insurance until the cash value reaches the face amount upon maturity.

Option B pays the face amount plus the cash value, as it's designed to increase the net death benefit as cash values accumulate. Option B offers the benefit of an increasing death benefit every year that the policy stays in force. The drawback to option B is that because the cash value is accumulated "on top of" the death benefit, the cost of insurance never decreases as premium payments are made. Thus, as the insured gets older, the policy owner is faced with an ever increasing cost of insurance (it costs more money to provide the same initial face amount of insurance as the insured gets older).

Limited-pay

Another type of permanent insurance is Limited-pay life insurance, in which all the premiums are paid over a specified period after which no additional premiums are due to keep the policy in force. Common limited pay periods include 10-year, 20-year, and paid-up at age 65.

Endowments

Endowments are policies in which the cash value built up inside the policy, equals the death benefit (face amount) at a certain age. The age this commences is known as the endowment age. Endowments are considerably more expensive (in terms of annual premiums) than either whole life or universal life because the premium paying period is shortened and the endowment date is earlier.

In the United States, the Technical Corrections Act of 1988 tightened the rules on tax shelters (creating modified endowments). These follow tax rules as annuities and IRAs do.

Endowment Insurance is paid out whether the insured lives or dies, after a specific period (e.g. 15 years) or a specific age (e.g. 65).

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Accidental Death

Accidental death is a limited life insurance that is designed to cover the insured when they pass away due to an accident. Accidents include anything from an injury, but do not typically cover any deaths resulting from health problems or suicide. Because they only cover accidents, these policies are much less expensive than other life insurances.

It is also very commonly offered as "accidental death and dismemberment insurance", also known as an AD&D policy. In an AD&D policy, benefits are available not only for accidental death, but also for loss of limbs or bodily functions such as sight and hearing, etc.

Accidental death and AD&D policies very rarely pay a benefit; either the cause of death is not covered, or the coverage is not maintained after the accident until death occurs. To be aware of what coverage they have, an insured should always review their policy for what it covers and what it excludes. Often, it does not cover an insured who puts themselves at risk in activities such as: parachuting, flying an airplane, professional sports, or involvement in a war (military or not). Also, some insurers will exclude death and injury caused by proximate causes due to (but not limited to) racing on wheels and mountaineering.

Accidental death benefits can also be added to a standard life insurance policy as a rider. If this rider is purchased, the policy will generally pay double the face amount if the insured dies due to an accident. This used to be commonly referred to as a double indemnity coverage. In some cases, some companies may even offer a triple indemnity cover.

Related Life Insurance Products

Riders are modifications to the insurance policy added at the same time the policy is issued. These riders change the basic policy to provide some feature desired by the policy owner. A common rider is accidental death, which used to be commonly referred to as "double indemnity", which pays twice the amount of the policy face value if death results from accidental causes, as if both a full coverage policy and an accidental death policy were in effect on the insured. Another common rider is premium waiver, which waives future premiums if the insured becomes disabled.

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Joint life: insurance is either a term or permanent policy insuring two or more lives with the proceeds payable on the first death or second death. Survivorship life: is a whole life policy insuring two lives with the proceeds payable on the second (later) death. Single premium whole life: is a policy with only one premium which is payable at the time the policy is issued. Modified whole life: is a whole life policy that charges smaller premiums for a specified period of time after which the premiums increase for the remainder of the policy.

Group life insurance: is term insurance covering a group of people, usually employees of a company or members of a union or association. Individual proof of insurability is not normally a consideration in the underwriting. Rather, the underwriter considers the size and turnover of the group, and the financial strength of the group. Contract provisions will attempt to exclude the possibility of adverse selection. Group life insurance often has a provision that a member exiting the group has the right to buy individual insurance coverage.

Senior and preneed productS: Insurance companies have in recent years developed products to offer to niche markets, most notably targeting the senior market to address needs of an aging population. Many companies offer policies tailored to the needs of senior applicants. These are often low to moderate face value whole life insurance policies, to allow a senior citizen purchasing insurance at an older issue age an opportunity to buy affordable insurance. This may also be marketed as final expense insurance, and an agent or company may suggest (but not require) that the policy proceeds could be used for end-of-life expenses. Preneed (or prepaid) insurance policies: are whole life policies that, although

available at any age, are usually offered to older applicants as well. This type of insurance is designed specifically to cover funeral expenses when the insured person dies. In many cases, the applicant signs a prefunded funeral arrangement with a funeral home at the time the policy is applied for. The death proceeds are then guaranteed to be directed first to the funeral services provider for payment of services rendered. Most contracts dictate that any excess proceeds will go either to the insured's estate or a designated beneficiary um payments in the stock market and defer or eliminate paying any taxes on their investments until withdrawals are 41

made. Sometimes this tax deferral is the only reason people use these products.
[citation needed]

Another example is the legal infrastructure which allows life insurance to

be held in an irrevocable trust which is used to pay an estate tax while the proceeds themselves are immune from the estate tax

Criticism of insurance companies

Some people believe that modern insurance companies are money-making businesses which have little interest in insurance. They argue that the purpose of insurance is to spread risk so the reluctance of insurance companies to take on high-risk cases (e.g. houses in areas subject to flooding, or young drivers) runs counter to the principle of insurance. Other criticisms include:

Insurance policies contain too many exclusion clauses. For example, some house insurance policies do not cover damage to garden walls. Many insurance companies now use call centres and staff attempt to answer questions by reading from a script. It is difficult to speak to anybody with expert knowledge. While policyholders find their premium payments decrease when dealing with companies who sacrifice the use of trained insurance agents, they also risk greater financial loss due to inadequate coverage protection. Those companies who invest in educated insurance agents provide a valued service to the community. Policyholders who work with knowledgeable insurance agents are more likely to identify needs, evaluate options, purchase sufficient insurance protection, and minimize the risk of heavy financial loss for themselves and their family.

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ABOUT THE ORGANISATION

Company Profile
Overview
ICICI Bank is India's second-largest bank with total assets of Rs. 3,744.10 billion (US$ 77 billion) at December 31, 2008 and profit after tax Rs. 30.14 billion for the nine months ended December 31, 2008. The Bank has a network of 1,438 branches and about 4,644 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse, and prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first 43

private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). ICICI Prudential equity base stands at Rs. 925 crores with ICICI Bank and Prudential policy holding 74% and 26% stake respectively. In the period AprilDecember 2004, the company garnered Rs 860 crores of new business premiums for a total sum assured of over Rs 7,360 crores and wrote nearly 345,000 policies. Today the company is the No. 1 private life insurer in the country.

History
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group's universal banking strategy. The merger would enhance value for ICICI shareholders through the merged entitys access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payments system and provide transaction-banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICI's strong corporate relationships built up 44

over five decades, entry into new business segments, higher market share in various business segments, particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmadabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and banking operations, both wholesale and retail, have been integrated in a single entity. ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors and employees. ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, and Prudential Policy, a leading international financial services group which has its headquarters in U.K.ICICI Prudential was amongst the first private sector companies to begin operation in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). ICICI Prudential total equity is 6.75 Bn with ICICI Bank & Prudential Policy In the end of year 2003-04, ICICI Prudential had issued over 7.8 lackhs policies, for a total sum assured of over 16000 crores and premium collection is over 951 crores. The company has a network of about 33000 advisors: as well as 12 banc assurance tie-ups. Today the company stands first in private life insurance in India with a market share of nearly 40%.

Foundation of ICICI

1955 The Industrial Credit and Investment Corporation of India Limited (ICICI) was incorporated at the initiative of World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses.

1994 ICICI established Banking Corporation as a banking subsidiary.formerly Industrial Credit and Investment Corporation of India. Later, ICICI Banking Corporation was renamed as 'ICICI Bank Limited'. ICICI founded a separate 45

legal entity, ICICI Bank, to undertake normal banking operations - taking deposits, credit cards, car loans etc.

2001 ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a Chettiar bank, and had acquired Chettinad Mercantile Bank (est. 1933) and Illanji Bank (established 1904) in the 1960s.

2002 The Boards of Directors of ICICI and ICICI Bank approved the reverse merger of ICICI, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, into ICICI Bank. After receiving all necessary regulatory approvals, ICICI integrated the group's financing and banking operations, both wholesale and retail, into a single entity. Also in 2002, ICICI Bank bought the Shimla and Darjeeling branches that Standard Chartered Bank had inherited when it acquired Grind lays Bank. ICICI started its international expansion by opening representative offices in New York and London.

2003 ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the UK it established an alliance with Lloyds TSB. It also opened an Offshore Banking Unit (OBU) in Singapore and representative offices in Dubai and Shanghai.

2004 ICICI opens a rep office in Bangladesh to tap the extensive trade between that country, India and South Africa.

2005 ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank with about US$4mn in assets, head office in Balabanovo in the Kaluga region, and with a branch in Moscow. ICICI renamed the bank ICICI Bank Eurasia. Also, ICICI established a branch in Dubai International Financial Centre and in Hong Kong.

2006 ICICI Bank UK opened a branch in Antwerp, in Belgium. ICICI opened representative offices in Bangkok, Jakarta, and Kuala Lumpur.

2007 ICICI amalgamated Sangli Bank, which was headquartered in Sangli, in Maharashtra State, and which had 158 branches in Maharashtra and another 31 in Karnataka State. Sangli Bank had been founded in 1916 and was particularly strong in rural areas

.ICICI also received permission from the government of Qatar to open a branch in Doha. ICICI Bank Eurasia opened a second branch, this time in St. Petersburg. 46

2008 The US Federal Reserve permitted ICICI to convert its representative office in New York into a branch. ICICI also established a branch in Frankfurt.

ICICI Group

ICICI Bank also has banking subsidiaries in UK, Canada and Russia

Bank Profile:In 1955, the Government, in World Bank and a steering committee of 5 prominent businessmen and other to cater to private sector needs of longs-term finance promoted ICICI. Since then, the capital structure of the company has undergone significant changes with that role of the government getting minimized. In the last fiscal, the company created history by becoming the first Indian Company to list it shares on NYSE. The company has presence in various businesses in the financial sector. The prominent ones are Infrastructure Finance, Structured Finance, Project Finance, Treasury Services, Corporate Finance, Advisory services, Demat Services etc.

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Due to the increase competition in the financial markets and fund-based business getting affected by lower margins and higher level of NPAs, the company is typing to get a major possible through the various subsidiaries, which the company has floated and through expansion of the distribution network. The company had realized the growing importance of technology revolution in the market and has taken major initiatives to enter the e-commerce segment in the year 1999-2000. It has launched a number of portals and has also entered into alliances with other major portals in the market. Over the year, ICICI has gained prominence in most of the segments in financial sector through its various subsidiaries. Some of the important ones are: ICICI Bank ICICI Securities ICICI Personal financial Services ICICI Infotech ICICI Web Trade Over the years ICICI promoted a number of specialized Financial Institutions like HDFC, CRISIL, TDICI etc. ICICI Bank is Indias second largest bank and largest private sector bank with over 50 years of financial experience and with assets of Rs. 2416.79 Billions as on July 31, 2007. ICICI Bank offers a comprehensive range of deposit and loan products at its branches to cater to different customer profiles and needs. ICICI Bank has over 746 branches and extension counters and over 2270 ATMs spread across the country. The bank services its large customer base of more than 17.5 million customers accounts through a multi-channel delivery network of branches. ATMs call centers and Internet Banking (www.icicibank.com) to ensure that customers have access to its services at all times. ICICI Bank has emerged as Indias fastest growing retail bank. It offers individuals a broad spectrum of deposit, investment and credit policies. The bank is often credited for bringing in the retail finance phenomenon to India by pioneering the effort to make retail loans much more accessible and affordable enabling the rising Indian middle class to fund their lifestyle requirements across the country. The bank 48

has market leadership in retail credit, which comprises mortgages, car loans, two wheeler, credit cards, personal loans etc. ICICI Bank is also Indias foremost technology bank. ICICI Bank uses IT as a strategic tool in all the business operation, so as to gain competitive advantages. ICICI Bank offers a wide range of baking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital, asset management and information technology. ICICI Banks equity shares are listed in India on stock exchanges at Chennai, Delhi, Kolkata and Vadodara, the Stock Exchange, Mumbai and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution and was reduce to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Banks acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution offering only project financing to Indian businesses. In the 1990s, ICICI transformed its business from a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999. ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the management of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for 0both entities, and banking strategy. The company has seven ban assurance tie-ups, having agreements with ICICI Bank, Federal Bank, South Indian Bank, Bank of India, Lord Krishna Bank and some co-operative banks, as well as over 160 corporate agents and brokers. It has also tied up with Specialized like Dhan for distribution of Salaam Zindagi, a policy for the socially and economically underprivileged sections of society. 49

ICICI Prudential has recruited and trained about 50,000 insurance advisors to interface with and advise customers. Further, it leverages its state-of-the-art IT infrastructure to provide superior quality of service to customers.ICICI (Industrial Credit and Investment Corporation of India): The World Bank; the Government of India and the Indian Industry, to promote industrial development of India by providing project and corporate finance to Indian industry, established ICICI Ltd. In 1955. ICICI has thus far financed all the major sectors of the economy, covering 6,848 companies and 16,851 projects As of March 31st, 2000. ICICI had disbursed a total of Rs. 1, 13,070 crores, since inception.

VISION
The companys vision is to make ICICI Prudential the dominant Life and Pensions player built on trust by world-class people and service. They hope to achieve this by: Understanding the needs of customers and offering them superior products and service. Leveraging technology to device customers quickly, conveniently. Developing and implementing superior risk management and investment strategies to offer sustainable and stable returns to their policyholders. Providing an enabling environment to foster growth and learning for their employees. And above all, building transparency in all their dealings The success of the company is due to its unflinching commitment to 5 core values Integrity, Customer First, Ownership, Passion, efficiently and

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MISSION OF THE ICICI BANK

To identify and support initiatives, which are, designed to improve the capacity of the poorest of the poor to participate in the larger economy. These initiatives must be cost effective, capable of large-scale replication and should have the potential for both near and long-term impact. To leverage technology in order to overcome constraints and enhance the

Present Scenario
ICICI Bank has its equity shares listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited. Overseas, its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). As of December 31, 2008, ICICI is India's second-largest bank, boasting an asset value of Rs. 3,744.10 billion and profit after tax Rs. 30.14 billion, for the nine months, that ended on December 31, 2008.

FUNCTION
ICICI Prudential offers exciting career opportunities for people from a variety of streams. Find out more about how each of the functions contribution growing business.

SALES DISTRIBUTION
Tied Agency is the largest distribution channel of ICICI Prudential, comprising a large advisor force that targets various customer segments. The strength of tied agency lies in an aggressive strategy of expanding and procuring quality business. With focus on sales & people development, tied agency has emerged as a robust, predictable and sustainable business model. 51

 BANK ASSURANCE AND ALLIANCES

ICICI Prudential was a pioneer in offering life insurance solutions through banks and alliances. Within a short span of two years, and with nearly a large number of partners, B & A has emerged as a vital component of the company's sales and distribution strategy, contributing to approximately one third of company's total business. The business philosophy at B&A is to leverage distribution synergies with our partners and add value to its customers as well as the partners. Flexibility, adaptation and experimenting with new ideas are the hallmarks of this channel.

GROUP
The Group Business of ICICI Prudential has been in existence for over 2 years. Today, we are the Number 1 player among private life insurance companies in Group Business excluding Mortgage Reducing Term Assurance (MRTA) with a market share of 26 %( FY 2004-2005). We offer the entire gamut of products including Gratuity, Superannuation Term Insurance, Leave Encashment, Employee Deposit Linked Insurance (EDLI), Mortgage Reducing Term Assurance (MRTA) & Informal Group Term covers.

CUSTOMER SERVICE & OPERATIONS

The Operations department oils the work processes between the customer and the company to ensure consistent and quality service to the customer. To streamline the operations, the Operations department interfaces between the clients and the agents, the branches and the underwriters, and manages work processes. The Vision at Customer Service is to deliver 'World Class Service' at every opportunity. Units such as the 9 to 9 contact centre, Outbound Call Centre, Customer Care and Query Resolution Unit are all committed to providing effective solutions to over lakhes of customers across the country.

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INFORMATION TECHNOLOGY
The Information Technology function at ICICI Prudential is committed to enable business through the use of technology. It is segmented into 4 groups to enable highest levels of delivery to the customers: Life Asia Solutions Group that provides flexibility in designing better product offerings to endusers, the Solutions Group- Web that provides real-time information to customers and is responsible for customer relationship management, IT Architecture & Corporate Solutions Group is in charge of developing and maintaining a blueprint for the IT architecture for the enterprise as a whole. This team works as an in house R&D Solution Group, exploring new technological initiatives and also caters to information needs of corporate functions in the organization. IT Infrastructure group is responsible for providing hardware, software, network services to the whole organization. This group runs the 'Digital Nervous System' of the Enterprise at the highest levels of efficiency and provide robust, scalable and highly available platform for deployment of business application.

MARKETING

The

Marketing function at ICICI Prudential covers an array of activities -

brand and media management, channel support, direct marketing and corporate communications. The Brand and Communications team is in charge of advertising, consumer research, media planning & buying and Public Relations; that helps develop and nurture ICICI Prudential's corporate identity while effectively communicating its varied product offerings to the customer. Channel marketing provides support to the sales force by streamlining the design and development of collaterals and sales tools across distribution channels. The Direct marketing team was set up to generate high quality leads for profitable business. The team achieves this through target database acquisition and communicating customized product information through e-mailers, telemarketing and innovative direct mailers.

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FINANCE
Finance function in ICICI Prudential is committed to create an infrastructure that is aligned to shareholder expectations. Finance basically comprises of four functions. . Corporate Planning and MIS provide feedback on business strategies. This includes driving the budgeting process, providing strategic inputs for decision-making and management reporting and analysis. The Accounts function includes preparation and maintenance of financial records, funds management, and expense processing and treasury operations. Compliance ensures that every action is within the regulatory framework. This includes reviewing compliance requirements and supporting the ethical framework of ICICI Prudential life. Internal audit provides assurance to the management over the organizations' control framework and includes process risk management, information security assessment and business continuity assessment.

HUMANRE SOURCE

The people strategy of ICICI Prudential is "To build a committed team with a
culture of innovation, learning and growth. The Human Resource Function at ICICI Prudential drives the people strategy of the business. With its initial focus on operational excellence to deliver benefits and services to staff members, HR is now committed to building capability through state of the art processes. A robust performance management system, compensation system and a segmented training architecture enable it to deliver value to the organization.

BUSINESS

Excellence the Business Excellence function is committed to building a quality mindset across the organization. ICICI Prudential is the first organization in the Insurance Industry that has adopted the Six Sigma Methodology for process efficiency and measurement. The team is also driving the Malcolm Baldrige framework across the organization, an

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intervention that examines management of key inputs for Business Excellence.

Strategy1. Identify and support projects and programmes that are within its focus areas and, have a large- scale and measurable impact are replicable in a cost effective manner; and are time bound.

2. Identify and support pilot projects within its focus areas. 3. Contribute towards improving the efficacy of assisted organizations through: capacity building providing access to research and information; and providing platforms for an

Business Overview

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ICICI Bank is India's second-largest bank with total assets of about Rs.1,67,659 crore at March 31, 2006 and profit after tax of Rs. 2,005 crore for the year ended March 31, 2006 (Rs. 1740 crore in fiscal 2004). ICICI Bank has a network of about 570 branches and extension counters and over 2200 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross border needs of clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom, Canada and Russia, branches in Singapore and Bahrain and representative offices in the United States, China, United Arab Emirates, Bangladesh and South Africa. ICICI Bank's equity shares are listed in India on the Stock Exchange, Mumbai and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). As required by the stock exchanges, ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors and employees.

At April 4, 2006 ICICI Bank, with free float market capitalization* of about Rs. 308.00 billion (US$ 7.00 billion) ranked third amongst all the companies listed on the Indian stock exchanges. ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001

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and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group's universal banking strategy. The merger would enhance value for ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payments system and provide transaction-banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICI's strong corporate relationships built up over five decades, entry into new business segments, higher market share in various business segments, particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and banking operations, both wholesale and retail, have been integrated in a single entity. *Free float holding excludes all promoter holdings, strategic investments and cross holdings among public sector entities.

Awards & Recognitions

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ICICI Bank 2009

ICICI Bank bags the Best bank in SME financing (Private Sector) at the Dun & Bradstreet Banking awards 2009. ICICI Bank NRI services wins the Excellence in Business Model Innovation Award in the eighth Asian Banker Excellence in Retail Financial Services Awards Programme. ICICI Bank's Rural Micro Banking and Agri-Business Group wins

WOW Event & Experiential Marketing Award in two categories - Rural Marketing programme of the year and Small Budget On Ground Promotion of the Year. These awards were given for Cattle Loan 'Kamdhenu Campaign' and 'Talkies on the move campaign' respectively. ICICI Bank's Rural Micro Banking and Agri-Business Group wins

WOW Event & Experiential Marketing Award in two categories - Rural Marketing program of the year and Small Budget On Ground Promotion of the Year. These awards were given for Cattle Loan 'Kamdhenu Campaign' and 'Talkies on the move campaign' respectively. ICICI Bank's Germany Branch has been certified by Stiftung

Warrentest. ICICI Bank is ranked 2nd amongst 57 savings products across 19 banks ICICI Bank Germany won the yearly banking test of the investor

magazine uro in the call moneycategory. The ICICI Bank was awarded the runner's up position in Gartner

Business Intelligence and Excellence Award for Asia Pacific for its Business Intelligence functions. ICICI Bank's Organizational Excellence Group was recently awarded

ISO 9001:2008 certification by TUV Nord. The scope of certification comprised processes around consulting and capability building on methods of quality & improvements. ICICI Bank has been awarded the following titles under The Asset Best Transaction Bank in India Best Trade Finance Bank in India Best Cash Management Bank in India 58

Triple A Country Awards for 2009:

 Best Domestic Custodian in India ICICI Bank has bagged the Best Cash Management Bank in India award for the second year in a row. The other awards have been bagged for the third year in a row. ICICI Bank Canada received the prestigious Canadian Helen Keller

Award at the Canadian Helen Keller Centre's Fifth Annual Luncheon in Toronto. The award was given to ICICI Bank its long-standing support to this unique training centre for people who are deaf-blind.

Performance of ICICI Bank

Profit before tax for FY2009 was Rs. 51.17bn compared to Rs. 50.56bn for FY2008. Profit after tax for FY2009 was Rs. 37.58bn compared to Rs. 41.58bn for FY2008 due to the higher effective tax rate on account of lower proportion of income taxable as dividends and capital gains. 15% increase in net interest income from Rs. 73.04bn in FY2008 to Rs. 83.67bn in FY2009. NIM increased from 2.2% in FY2008 to 2.4% in FY2009. Fee income decreased marginally from Rs. 66.27bn in FY2008 to Rs. 65.24bn in FY2009.Lower corporate fees in H2-2009 due to slowdown in corporate activity. Reduced third party distribution and low disbursals impacted retail fees

Operating expenses (including direct marketing agency expenses) decreased 14% to Rs. 68.35bn in FY2009 from Rs. 79.72bn in FY2008. The cost/average asset ratio for FY2009 was 1.8% compared to 2.2% for FY2008.

Operating profit increased 12% from Rs. 79.61bn in FY2008 to Rs. 89.25bn in FY2009 as lower treasury and other income were offset by higher net interest income and lower operating and DMA expenses.

Balance Sheet Highlights

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Continued focus on capital, liquidity and risk containment.

OVERVIEW
India's Number One private life insurer, ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank-one of India's foremost financial services companies-and prudential plc- a leading international financial services group headquartered in the United Kingdom. Total capital infusion stands at Rs. 20.60 billion, with ICICI Bank holding a stake of 74% and Prudential plc holding 26%. We began our operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). Today, our nation-wide team comprises of over 580 offices, over 234,000 advisors; and 22 bank assurance partners.ICICI Prudential was the first life insurer in India to receive a National Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. For three years in a row, ICICI Prudential has been voted as India's Most Trusted Private Life Insurer, by The Economic Times - AC Nielsen ORG Marg survey of 'Most Trusted Brands'. As we grow our distribution, product range and customer base, we continue to tirelessly uphold our commitment to deliver world-class financial solutions to customers all over India. Promise a fixed income after you retire or Health insurance that arms you with the funds you might need to recover from a dreaded disease. 1. Ensure that our customers can access them easily and quickly. To this end, ICICI Prudential has an advisor base across the length and breadth of the country, and also partners with leading banks, corporate agents and brokers to distribute our products. 2. Robust risk management and underwriting practices form the core of our business. With clear guidelines in place, we ensure equitable costing of risks, and thereby ensure a smooth and hassle-free claims process. 3. Entrusted with helping our customers meet their long-term goals, we adopt an investment philosophy that aims to achieve risk adjusted returns over the long-term. 4. Last but definitely not the least, our 16,000 plus strong team is given the opportunity to learn and grow, every day in a multitude of ways.

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Key attributes

Services are said to have several key attributes:

Intangibility - They cannot be seen, handled, smelled, etc. There is no need for storage. Because they are difficult to conceptualize, services marketing require creative visualizations to effectively make the intangible more concrete. From the customers point of view, this makes it difficult to evaluate or compare services prior to experiencing the service.

Perishability - Unsold service time is "lost", that is, it cannot be regained. It is a lost economic opportunity. For example a doctor who is booked for only two hours a day can never regain that economic opportunity.

Lack of transportability - Services must be consumed at the point of "production".

Lack of standardization - Services are typically custom designed for each client or each new situation. Mass production of services is very difficult. This can be seen as a problem of inconsistent quality. Both inputs and outputs are highly variable making it difficult to maintain consistent quality.

Labour intensity - Services usually involve considerable human activities. Human resource management is important. The human factor is often the key success factor in service industries. It is difficult to achieve economies of scale or gain dominant market share.

Demand fluctuations - It is very difficult to estimate demand. Demand can vary by season, time] of day, business cycle, etc.

Buyer involvement - Most service provision requires a high degree of interaction between client and service provider.

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PRODUCTS OF THE COMPANY

Insurance Solutions for Individuals ICICI Prudential Life Insurance offers a range of innovative, customer-centric products that meet the needs of customers at every life stage. Its 20 products can be enhanced with up to 6 riders, to create a customized solution for each policyholder.

Savings Solutions
Secure Plus is a transparent and feature-packed savings plan that offers 3 levels of protection. Cash Plus is a transparent, facture-packed savings plan that offers 3 levels of protection as well as liquidity options. Save n Protect is a traditional endowment savings plan that offers life protection along with adequate returns. Cash Bank is an anticipated endowment policy ideal for meeting milestone expenses like a childs marriage, expenses for a childs higher education or purchase of an asset. Life Time & Life Time II offer customers the flexibility and control to customize the policy to meet the changing needs at different life stages. Each offer 4 fund options? Preserver, Protector, Balancer and Maxi miser. market. option. Premier Life is a limited premium paying plan that offers customers life insurance cover till the age of 75. Invest Shield Life is a Market Linked plan that provides capital guarantee on the invested premiums and declared bonus interest. Invest Shield Cashs a Market Linked plan that provides capital guarantee on the invested premiums and declared bonus interest along with flexible liquidity Life link II is a single premium Market Linked Insurance Plan which combines life insurance cover with the opportunity to stay invested in the stock

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Invest Shield Gold is Market Linked plan that provides capital guarantee on the invested premiums and declared bonus interest along with limited premium payment terms.

Pension Term Assurance

Although available before April 2006, from this date pension term assurance became widely available in the UK. Most UK product providers adopted the name "life insurance with tax relief" for the product. Pension term assurance is effectively normal term life assurance with tax relief on the premiums. All premiums are paid net of basic rate tax at 22%, and higher rate tax payers can gain an extra 18% tax relief via their tax return. Although not suitable for all, PTA briefly became one of the most common forms of life assurance sold in the UK until the Chancellor, Gordon Brown, announced the withdrawal of the scheme in his pre-budget announcement on 6 December 2006. The tax relief ceased to be available to new policies transacted after 6 December 2006, however, existing policies have been allowed to enjoy tax relief so far.

Market trends
Life insurance premiums written in 2005 According to a study by Swiss Re, the EU was the largest market for life insurance premiums written in 2005 followed by the USA and Japan.

Criticism
Although some aspects of the application process (such as underwriting and insurable interest provisions) make it difficult, life insurance policies have been used in cases of exploitation and fraud. In the case of life insurance, there is a motivation to purchase a life insurance policy, particularly if the face value is substantial, and then kill the insured. Usually, the larger the claim, and/or the more serious the incident, the larger and more intense will be the number of investigative layers, consisting in police and insurer investigation, eventually also loss adjusters hired by the insurers to work independently. The television series Forensic Files has included episodes that feature this scenario. There was also a documented case in 2006, where two elderly women 63

are accused of taking in homeless men and assisting them. As part of their assistance, they took out life insurance on the men. After the contestability period ended on the policies (most life contracts have a standard contestability period of two years), the women are alleged to have had the men killed via hit-and-run car crashes Recently, viatical settlements have thrown the life insurance industry into turmoil. A viatical settlement involves the purchase of a life insurance policy from an elderly or terminally ill policy holder. The policy holder sells the policy (including the right to name the beneficiary) to a purchaser for a price discounted from the policy value. The seller has cash in hand, and the purchaser will realize a profit when the seller dies and the proceeds are delivered to the purchaser. In the meantime, the purchaser continues to pay the premiums. Although both parties have reached an agreeable settlement, insurers are troubled by this trend. Insurers calculate their rates with the assumption that a certain portion of policy holders will seek to redeem the cash value of their insurance policies before death. They also expect that a certain portion will stop paying premiums and forfeit their policies. However, viatical settlements ensure that such policies will with absolute certainty be paid out. Some purchasers, in order to take advantage of the potentially large profits, have even actively sought to collude with uninsured elderly and terminally ill patients, and created policies that would have not otherwise been purchased. Likewise, these policies are guaranteed losses from the insurers' perspective. The criticism goes also in the direction of pointing out much lower payouts for life insurance than for health or disability insurance in some countries (for example, UK).

Benefits
Both cash value life and term life insurance have their benefits. The most significant benefit of cash value life insurance is its ability to offer coverage for the entire life of the policyholder. Many people take advantage of buying this type of insurance when they are young when they need it most. Cash value accounts may also be borrowed against or drawn from during the life of the policy. Policyholders are also not required to pay taxes on any interest or earnings attached to cash value accounts.

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Individuals and corporations also benefit from term life insurance. The biggest advantage of term life are the often very cheap premiums, especially when a person is young and healthy. It is possible, in many situations, for significantly large face amounts to be purchased for monthly costs of $20 to $30. Term life is good for covering obligations that will eventually end, such as mortgages, automobile loans and educational needs.

How to Buy Life Insurance Online

One of the advantages of purchasing life insurance online is getting an idea of how much life insurance might cost you.

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Instructions
Things youll need:

Financial Calculator
Internet Access

Computers
Life Insurance

Step1
Roughly estimate the amount of insurance you need by multiplying your gross annual income by 6, 7, or 8 (if under 40), or 4, 5, or 6 (if over 40). If you have a mortgage to pay off, consider adding that amount to whatever result you have.

Step2
Go to ICICI insure.com Web sites that feature life insurance quotes.

Step3
Fill out the questionnaires as honestly as possible; if in doubt about any health question, be a little pessimistic - at least for a quote.

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Step4
A medical or paramedical exam is necessary, schedule the exam time in the morning, if possible, for best results.

Step5
After successful underwriting, check your policy carefully for errors or inaccuracies.

Step6
Sign the delivery documents and return them to the insurance company along with your first premium check to put the coverage in force.

Step7
Keep your insurance policy in a safe place, treating it like any other legal document. Step8 Make sure your beneficiary knows the policy's location and/or provide that person with a full copy of the policy.

Protection Solutions:
Life Guard is a protection plan, which offers life covers at very low cost. It is available in 3 options?

Child Plans:
Smart Kid education plans provide guaranteed educational benefits to a child along with life insurance cover for the parents who purchase the policy. The policy is designed to provide money at important milestones in the childs life. Smart Kid plans are also available in unit-linked from?

Retirement Solutions:
Forever Life is a retirement product targeted at individuals in their thirties. Secured plus Pension is a flexible pension plan that allows one to select between 3 of cover.

Market-linked retirement products:

Life Time Pension II is a regular premium market-linked pension plan. Life Link Pension II is a single premium market-linked pension plan. 66

Invest Shield Pension is a regular premium pension plan with a capital guarantee on invest able premium and declared bonuses.

ICICI Prudential also launched? Salaam Zindagi. A social sector group insurance policy targeted at the economically underprivileged sections of the society.

Group Insurance Solutions:

ICICI Prudential also offers Group Insurance Solutions for companies seeking to enhance benefits to their employees. ICICI Prudential Group Gratuity Plan: ICICI Prudential? Group gratuity plan helps employers fund their statutory gratuity obligation in a scientific manner. The plan can also be customized to structure schemes that can provide benefits beyond the statutory obligations. ICICI Prudential Group Super annuity Plan: ICICI Prudential offers a flexible defined contribution Super annuity scheme to provide a retirement kitty for each member of the group. Employees have the option of choosing from various annuity options of opting for a partial commutation of the annuity at the time of retirement. ICICI Prudential Group Term Plan: ICICI Prudential flexible group term solution helps provide affordable cover to members of a group. The cover could be uniform or based on designation rank or a multiple of salary. The benefit under the policy is paid to the beneficiary nominated by the member on his/her death.

Flexible Rider Options:

ICICI Prudential Life offers flexible riders, which can be added to the basis policy at a marginal cost, depending on the specific needs of the customer.

Accident & disability benefit: If death occurs as the result of an accident during the tern of the policy, the beneficiary receivers an additional amount equal to the sum assured under the policy. Accident Benefit. This rider option pays the sum assured under the rider on death due to accident.

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Critical Illnesses Benefit: protects the insured against financial loss in the event of 9 specific critical illnesses. Benefits are payable to the insured for medical expanses prior to death.

Major Surgical Assistance Benefit: provides financial support in the event of medical emergencies, ensuring benefits are payable to the life assured for medical expenses incurred for surgical procedures. Cover is offered against 43 surgical procedures.

Income Benefit: This rider pays the 10% of the sum assured to the nominee every year till maturity, in the event of the death of the life assured. It is available on Secure Plus and Cash Plus.

Waiver of Premiums: In case of total and permanent disability due to an accident the premiums are waived till maturity. This rider is available with Secure Plus and Cash Plus.

Types of mortgage protection life insurance

Consumers interested in mortgage protection life insurance have two choices: level term insurance and decreasing term insurance.

Level term mortgage protection life insurance is designed for homeowners with
an unchanging principle balance. Commonly this occurs when the homeowner has an interest-only mortgage. As the name suggests, with an interest-only mortgage, the homeowner pays the interest on the loan. The principle balance remains the same throughout the term of the mortgage. Because the mortgage principle does not change, the amount of the mortgage protection life insurance benefit remains the same throughout the term of the coverage.

Decreasing term mortgage protection life insurance is for homeowners with

fixed-rate loans or adjustable-rate loans in which the loan principal is reduced over time. Since the amount needed to pay off the mortgage decreases, the amount of the mortgage protection life insurance benefit decreases as well. The two sums the principle balance and the death benefitare matched throughout the term of the insurance. When the mortgage protection life insurance policyholder pays off the home loan, the amount of the benefit becomes zero.

Low-cost alternative
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There is no surrender value on either type of mortgage protection life insurance policy. Once the mortgage is paid off or the property is sold, the policy becomes void. For this reason, mortgage protection life insurance is less expensive than most traditional life insurance.

Hurdling the health barrier

The cost of traditional life insurance is calculated based on the policyholders health and life expectancy. Young, healthy people have lower premiums than young unhealthy people, older healthy people, and older unhealthy people. Because of existing health conditions, some people find they do not qualify for traditional health insurance. They are uninsurable. Others are insurable, but the premiums are so high that they cannot afford them. In these cases, traditional life insurance cannot be used to protect a home. Many people who cannot afford traditional life insurance find that they can easily afford mortgage protection life insurance. Mortgage protection life insurance is often dismissed as inflexible compared to traditional life insurance, but the truth is that many life insurance beneficiaries use the money to pay off their homes. Mortgage protection life insurance guarantees that the pay-off will be made in a timely, cost-effective, and hassle-free manner at a time when family members have little inclination to engage in large financial transactions. In worst case scenarios, mortgage protection life insurance may be the only thing that keeps a family from losing its home. It can be a home saver.

ADVANTAGES OF LIFE INSURANCE

It is a general belief that life insurance is meant only for those with families. It is true that Life Insurance Policies like whole-life insurance, joint-life-insurance, pensionlife-insurance etc are essential for family's financial security, but they are equally important for individuals. Term Insurance policies protect your financial resources against the uncertainties of life so you can protect your family's future. Some of the life insurance advantages are:

If an estate owner has not accumulated enough assets for his family, Insurance quote helps create an instant estate for the sake of the Familys security. 69

Life Insurance provides the option to pass equal assets to the children who are not active in the Family business at the time the family business is passed on.

Life Insurance policies can help secure the future of children for college/educational purposes as the amount of life Insurance Policy increases on a minors or parents life.

The growth of a cash-value policy is tax-deferred - you do not pay taxes on the cash value accumulation until you withdraw funds from the policy. Life Insurance can be useful in paying estate taxes, along with other estate settlement amounts. Federal Estate Taxes are due nine months after death. If theres a Business Transfer, life insurance can provide ready cash to finance a transaction between business owners who are ready to buy the deceased owners share from his or her estate after death.

If theres a home mortgage, one can pass the family residence to their spouse/children to free them of any mortgage if one has a Life Insurance Policy for the same. It is preferred to have a decreasing term policy that decreases in face amount as the mortgage balance is paid down.

Life Insurance helps retain your Business from the loss of a key employee. Untimely death of a key employee can pose severe financial loss to the business.

The right insurance proceeds can provide liquidity to pay off personal loans or business loans. Charitable Remainder Trusts provide tax benefits. Life Insurance helps replace a charitable gift. A lot of Insurance products presently provide good returns, which could be a beneficial way for saving necessary funds for retirement years. Benefits are available immediately and may be used to help pay expenses such as final illness and funeral costs, eliminating the need to sell estate assets to cover these costs.

Disadvantages

Premiums increase as you grow older. Coverage may terminate at the end of the term or may become too expensive to continue.

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Generally, the policy doesn't offer cash value or paid-up insurance. Life insurance, to many, is a necessary evil. Many policyholders swear by them in protecting their families from loss of income and hefty debt obligations in the event of their untimely death. With several types of life insurance on the market, generally speaking, two varieties still remain the most popular: term and whole life, or "cash value" life insurance. Both varieties have pros and cons.

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The importance of advisors:

ICICI Prudential Life Insurance Co. Ltd. Aspires to provide state of the art of customers service & opportunities & avenues for enterprising people to grow & prosper. The company wish to grow exponentially that is backed by the latest technology, hence offering its customers:

Faster & more accurate service. Multi-channel distribution systems. Highly trained professional sales people offering quality pre & post sales service. It is in the above mentioned areas of personal specialization where the importance of an advisor clearly stands out the advisor not only contribute in bring in new business for the company, but also plays an important part in offering world-class pre & post sales service to the clients to the clients with the support of the organization. But the company in its principles clearly states out that an advisor to means much more than a salesman or a saleswoman, we at ICICI Prudential recognize out advisors as the ambassadors of our organization in the market place & we consider the advisor force would be our biggest differentiating factor in the coming years. The advisor is an important asset not only for the organization from 71

the business point of view but also to the society on the whole as he/she is someone who provide valuable service to the community be helping people attain financial security & build funds for their future needs thereby assisting them in getting their financial freedom. If looked from the other side of the business where the company is operating the competitive Indian market & more so in the business of life insurance where the customers looks for self-belief & faith then the advisor certainly holds the vital link in the overall business proposition. They represent the companys face & words on which the customers can trust because the customers know that face. The advisor helps to create a web for the business to grow & driving the customer to come to the company with complete trust & faith.

Roles of life insurance

Risks and uncertainties are part of life's great adventure -- accident, illness, theft, natural disaster - they're all built into the working of the Universe, waiting to happen.

Role 1: Life insurance as "Investment"

Insurance is an attractive option for investment. While most people recognize the risk hedging and tax saving potential of insurance, many are not aware of its advantages as an investment option as well. Insurance products yield more compared to regular investment options, and this is besides the added incentives (read bonuses) offered by insurers.

You cannot compare an insurance product with other investment schemes for the simple reason that it offers financial protection from risks, something that is missing in non-insurance products. In fact, the premium you pay for an insurance policy is an investment against risk. Thus, before comparing with other schemes, you must accept that a part of the total amount invested in life insurance goes towards providing for the risk cover, while the rest is used for savings. In life insurance, unlike non-life products, you get maturity benefits on survival at the end of the term. In other words, if you take a life insurance policy for 20 years and survive the term, the amount invested as premium in the policy will come back 72

to you with added returns. In the unfortunate event of death within the tenure of the policy, the family of the deceased will receive the sum assured. Now, let us compare insurance as an investment options. If you invest Rs 10,000 in PPF, your money grows to Rs 10,950 at 9.5 per cent interest over a year. But in this case, the access to your funds will be limited. One can withdraw 50 per cent of the initial deposit only after 4 years. The same amount of Rs 10,000 can give you an insurance cover of up to approximately Rs 5-12 lakh (depending upon the plan, age and medical condition of the life insured, etc) and this amount can become immediately available to the nominee of the policyholder on death. Thus insurance is a unique investment avenue that delivers sound returns in addition to protection.

Role 2: Life insurance as "Risk cover"

First and foremost, insurance is about risk cover and protection - financial protection, to be more precise - to help outlast life's unpredictable losses. Designed to safeguard against losses suffered on account of any unforeseen event, insurance provides you with that unique sense of security that no other form of investment provides. By buying life insurance, you buy peace of mind and are prepared to face any financial demand that would hit the family in case of an untimely demise. To provide such protection, insurance firms collect contributions from many people who face the same risk. A loss claim is paid out of the total premium collected by the insurance companies, who act as trustees to the monies.

Insurance also provides a safeguard in the case of accidents or a drop in income after retirement. An accident or disability can be devastating, and an insurance policy can lend timely support to the family in such times. It also comes as a great help when you retire, in case no untoward incident happens during the term of the policy.

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With the entry of private sector players in insurance, you have a wide range of products and services to choose from. Further, many of these can be further customized to fit individual/group specific needs. Considering the amount you have to pay now, it's worth buying some extra sleep

Role 3: Life insurance as "Tax planning"\

Insurance serves as an excellent tax saving mechanism too. The Government of India has offered tax incentives to life insurance products in order to facilitate the flow of funds into productive assets. Under Section 88 of Income Tax Act 1961, an individual is entitled to a rebate of 20 per cent on the annual premium payable on his/her life and life of his/her children or adult children. The rebate is deductible from tax payable by the individual or a Hindu Undivided Family. This rebate is can be availed upto a maximum of Rs 12,000 on payment of yearly premium of Rs 60,000. By paying Rs 60,000 a year, you can buy anything upwards of Rs 10 lakh in sum assured. (depending upon the age of the insured and term of the policy) This means that you get a Rs 12,000 tax benefit. The rebate is deductible from the tax payable by an individual or a Hindu Undivided Family.

FAQS ON TAXATION:
What are the tax rebates available to an individual in respect of premium paid on life insurance policies? Life insurance premium paid by an individual qualifies for rebate under section 88 of income tax act. An individual can claim rebate on premium paid for a maximum of Rs. 70000 in each financial year. How is tax rebate under section 88 calculated? Calculation of tax rebate under section 88 depends on the individuals gross total income and contribution made towards life insurance premium. Thus if the gross total income is: Less than Rs. 150000 rebate is calculated at 20% of the premium paid towards life insurance.

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Greater than Rs. 150000 but less than Rs. 500000, rebate is computed at 15% of the premium paid. Greater than Rs. 150000 the individual is not eligible to claim any tax benefit on the Life insurance premium paid.

Are maturity life insurance and pension policies taxable? The maturity process of life insurance policies is not taxable. However under pension plans, any amount received on surrender of the plan shall be deemed to be the assessed income and taxed accordingly. Can a tax rebate to be calculated of the premium is paid by an individual on his/her spouses polices. An individual can make payment on his/her spouses policy and the premium paid will qualify for rebate under section 88. What are the tax benefits available under plans? Under section 88CC where an assess has paid/deposited any amount towards any annuity plan receiving pension fund, he/she will be allowed deduction up to Rs. 100 from the total income. Where the amount paid/deposited into consideration for the purpose of claming deduction a rebate where reference to shall not be allowed under section 88. If a person discontinues premium on his insurance or a pension policy, does he get tax benefit If a person stops paying premium amount on his/her life insurance policy, it amounts to discontinues of the policy; hence he is not entitled to claim any tax benefits. If a tax payer discontinues the life insurance policy before premiums have been paid of a period of 2 years from the commencement of the policy, no tax deduction is allowed is respect of any premium paid on that policy in the year in which the policy s terminated. Further the amount of tax deduction allowed for the premium paid in the preceding year is also treated as the tax payable for the year in which the policy is terminated. 75

If a person participating in a unit linked insurance plan (ULIP) terminates his policy, and he claim any rebate on the same? If a person participates as unit linked plan (ULIP) and terminates his participation, he will no be entitled to claim ant rebate. Is the amount received on maturity of UTI ULIP scheme taxable? No, the maturity proceeds of UTI ULIP scheme are exempt from tax under section 10(33) subject to the same being received on or after April, 2002. What are the deductions is available in respect of medical insurance premium? The premium paid under financial insurance premium qualifies for rebate under section 80D as follows: Insurance premium paid or Rs. 10000 whichever is lower. The aforesaid limit is Rs. 15000, where the individual or his spouse of dependent parents or any member of the family (for whom such premium is paid is a senior citizen (i.e. one who is resident in India and who is at least 65 years of age at any time during the previous years).

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RESEARCH METHODOLOGY
In this section of my project, the requirement is to describe the sources of collecting primary and secondary data. For collecting primary data, method adopted was focus group method.

Source of primary data

1. Natural Market Relatives Friends Neighbors

2. Stall Operation 3. Survey 4. Seminar (Focus Group)

Source of Secondary Data

1. Yellow Pages

2. Database of different companies LI\GI Agents

3. Tele calling leads

Title of the study
Analysis of icici prudential life insurance

Duration of the study

3 months

Objective of the study

Analitical study of the icici prudential

Type of research Discriptive research

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This chapter discusses the types of quantitative study that fall under the broad heading of descriptive quantitative research. This type of research involves either identifying the characteristics of an observed phenomenon or exploring possible correlations among two or more phenomena. In every case, descriptive research examines a situation as it is. It does not involve changing or modifying the situation under investigation, nor is it intended to detect causeeffect relationships. Examples of descriptive research that yields quantitative data are correlation studies, developmental designs, observation studies, and survey research.

Sample size and method of selecting sample

Sample size- 50 Method of selecting sample- judgemental

LIMITATIONS
As the movement throughout the city is not possible due to certain constraints so the movement was quite restricted. People are not ready to go for training. As the training period is of 17 days and it involves full day, so it becomes difficult for them to leave their offices or shops for such a long time. The compulsion of selling 12 policies in a year also restricts them from becoming advisors. If they do not fulfill this target, then their license is cancelled after a year. Lack of trust on any company of Private Sector. Lack of knowledge about the products of ICICI Prudential and their total and blind faith on LIC. Sometimes, fresh graduates want to become advisors but the company denies making them an advisor as they are very fickle-minded and also unreliable. There is a problem in targeting Chartered Accountants. ICAI, which is the governing body of Chartered Accountants, does not allow them to become advisors. However, now they have permitted some CAs to become advisors, but these are only those ones who are doing jobs somewhere and not allowed the ones who are doing their practice. So, still this decision is very dicey.

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Sometimes, even those people want to become advisors for the company who are not a localities but then the major problem that they face is that they have got no natural market, so they are very susceptible about their performance and whether they will be able to generate business for the company or not, so they avoid to take up this challenge. It was a great problem to get appointments form people in the month of March, as most of them were busy in filing their returns. Some people ask about comparative analysis with LIC. Some people consider IRDA fees of Rs. 1000 as a constraint. Non-availability of part-time training. All small towns are not open for doing this business. One person cannot take Life Insurance Agency of two different Companies.

Time constraint is the biggest constraint in taking up the stud

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DATA ANALYSIS
1.What is your annual income? a) less than 100000 b) 100000-300000 c) 300000-500000 d) more than 500000

As per the analysis we can say that most of the people fall under the group of annual income of Rs.300000-500000 i.e.40% they can be called as middle income group. The next 30% are under or have annual income of Rs.100000-300000. Only 15% have income more than 500000 and remaining 10% have less than 100000as their annual income

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2. Do you have any insurance plan? a) yes b)no

It can be interpreted from the chart that 84% of the people have insurance plans and most have them have life insurances, it means that they are less aware about other insurances or are less interested in taking insurance for their vehicle, house etc. Only 16% people do not have or are not interested in taking insurance.

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3.What is your motive of taking insurance plan? a) protection b) saving c) tax benefits d) investment

People have or want to have insurance plans mostly for the safety or protectioni.e.30% it is the basic reason behind taking insurance. 26% have it for savings, and 22% for tax rebateand remaining 22% for investment purpose.

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4.In which scheme you have invested or would like to invest? a) traditional b) modern

It can be said that people have equal preference for making investment or have invested in Traditional and Modern scheme i.e.57% and 43%respectively.

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5.which company you would prefer? a) icici prudential b) hdfc standerd life c) LIC d) others

d) o ther 6% c) L IC 44 %

a) icici pru de ntial 30 % b ) hd fc sta nd erd life 20 %

a ) icici pru den tial b ) hdfc sta nd erd life c) L IC d ) othe r

The most preferred company is LIC . people still have preference for public company and they have more trust on LICi.e.44%, the next preferred company is HDFC(32%), 16% prefer ICICI and remaining 8% go for other companies

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6. Why? a) efficient financial advisor b) brand value c) others

People prefer a particular company mostly because of its brand valuei.e. 64% , 26% prefer because of efficient financial advisors and remaining 10% for other reasons. Still people see brand or the companies name as the criteria for purchasing insurance rather the advice or services of financial advisors.

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7. Which fund do you prefer? a) government securities b) equity fund c) debentures

customers have somewhat equal preference for Government securities, debentures and equity fund. As they like to have safety and assured returns out of their investments.

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8. Is it a right time to invest in unit linked insurance plan? a) yes b) no

People are not interested in investing their money in ULIP in this scenerio or time of recession ,it does not seem them to be a safe option.

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FACTS AND FINDINGS

We find that 47% of the respondents fall in the age group of 18 25 years, 25% fall in the age group of 26 35 years and 17% fall in the age group of 36 49 years. Therefore most of the respondents are relatively young (below 26 years of age). These individuals could be induced to purchase insurance plans on the basis of its tax saving nature and as an investment opportunity with high returns.

In India, the largest life insurance company is Life Insurance Corporation of India. It has been in existence in India since 1956 and is completely owned by the Government of India. Today the organization has grown to 2048 offices serving 18 crore policies and has a corpus of over 340000 crore INR. The outlook of insurance as a product should be changed from something which you pay for your whole life (whole life policy) and do not receive any benefit (the nominee only receives the benefit in case of your death) to an extremely useful investment opportunity with the prospects of good returns on savings, tax saving opportunities as well as providing for every milestone in your life like marriage, education, children and retirement.

ICICI PRUDENTIAL is faced with a large amount of competition. There are 18

insurance companies in India inclusive of LIC. Hence to capture a larger part of the market the company could introduce more reasonable plans with lesser premium payable per annum.

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SWOT ANALYSIS

Environmental Scan

Internal Analysis

External Analysis

Strength

Weaknesses

Opportunities

Threats

SWOT Matrix

STRENGTH
ICICI Prudential Life Insurance Company Limited is right now the market leader in Private Insurer segment. Strong brand name Customer loyalty Product Quality Good reputation among customers

WEAKNESS
The company right now has lesser number of agents (i.e. financial advisors) than LIC of India, which affects their sales in comparison to LIC of India. Insufficient product promotion Unawareness about the product 89

OPPURTUNITY
ICICI Prudential Life Insurance Company Limited can give LIC of INDIA agents an opportunity to join ICICI Prudential Life Insurance Company Limited as ICICI Prudential has got more incentive packages & servicing quality better than LIC of INDIA. Doing this they can reduce their cost of training and can exploit their experience.

THREAT
Other big brand names like BIRLAS, TATA, HDFC, SBI and AVIVA, RELIANCE etc. Emergence of substitute products Resistance to change Non- response from the target customers .

POLITICAL Right one ICICI Prudential Life Insurance Company Limited, can go for opening up more & more offices, as the present political environment is business friendly. ECONOMIC Insurance as we have already discussed is very essential for every person on this face of earth. Being an insurance company, the responsibility of the company also increases by many multiples, as they have to keep an eye on each & every happening going around & provide better & fast service to customers. Along with this, insurance is also very important for building up the infrastructure of any country. The money collected from the people is invested in many sectors to develop the infrastructure & hence ultimately make the life of the citizens better.

SOCIAL ICICI Prudential Life Insurance Company Limited enjoys a good brand name; they can use it for their profit.

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TECHNOLOGICAL ICICI Prudential Life Insurance Company Limited uses latest technology for their operations, which give them an edge over the competition. Support provided by the Unit Manager Fields visits for the incumbents. Training on products & selling skills. Regular business reviews to monitor the progress. The UM acts both as a coach & a mentor. The UM recognizes the high performers. Helps in becoming financially independent. But the expectations from the team To achieve the sales targets given. To participate in all the meetings being placed Attending all the training programs being arranged. Report for the weekly reviews at the office. Regularly following the sales process. And the advisors are also required to follow the weekly reporting process

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CONCLUSION
1. ICICI PRUDENTIAL has interested and profitable planes for different age group.

2. There are lots of scopes of life insurance in Indian only 2.5 people are secure
with life insurance so the insurance sector is its booming stage this boom will more increase in 2 or 3 years. 3. Good profile insurance advisor could do the better job. If ICICI PRUDENTIAL mentions the level of advisor them they may give great sales to the company. 4. ICICI PRUDENTIAL has tuff competition with LIC as well as TATA AIG, BAJAJ ALLIAZE, BIRLA SUNLIFE INSURANCE, SAHARA, ING VYSYA, OM KOTAK MAHINDRA, HDFC INSURANCE, SBI LIFE AND RELIANCE LIFE INSURANCE, PNB LIFE INSURANCE. 5. ICICI PRUDENTIAL LIFE INSURANCE COMPANY has great goodwill in market in liberalized Indian market there are approximately 13 big companies in Indian market and ICICI PRUDENTIAL is the No.1 private insurance company. I found this fact in my recent survey. 6. If the company starts to concentrate on village segment market. Then company can get great business. 7. I got the good profile people near by bank and share market. When I concentrated on the 20-25 year age group people I found good result. 8. Within 20-25 year age group the sincerity level is high. They are career oriented and want to earn more. 9. In the age group people made interest to purchase the kids plan and pension plan and money back plan. 10. In the age group of 30-35 years the people who earning more then 3 lakh p.a. made interest to purchase ULIP. 11. I found that in insurance sector a person should have great communication and convenience skill. 12. People made interest in the business opportunity of ICICI PRUDENTIAL because there are lots of chances to increase earning and make high place in the company. 13. People took interest in pinnacle programme and also life the professional environment of the company.

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14. In my survey I found that low percentage of people is aware with the life insurance. AWARDS

India's Most Customer Responsive Insurance Company Avaya Global Connect - Economic Times Customer Responsiveness Awards

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RECOMMENDETATION
After going through the above table regarding market share of various companies in the financial year 2003-04, there is no reason why ICICI prudential should rejoice of being the number one company in the country. The growth that companies like BIRLA SUNLIFE, SBI LIFE INSURANCE, TATA-AIG, BAJAJ ALLIANZ, OM KOTAK MAHINDRA, AVIVA, ING VYASA, METLIFE & AMP SANMAR have produced that can be quite a big unseen threat for the company in the coming years. So the company should start thinking of what they want from the market & where they want to see themselves after a span of 10 years because if the popularity of these companies continues then one day they will become good competitors of ICICI Prudential & then the consequences can be quite disturbing for the company.

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BIBLIOGRAPHY

Philip Kotler Marketing Management Fact sheets of ICICI standard Life Company

Websites

www.google.com www.yahoo.com www.wikipedia.com

Newspapers Economics times Times of India

Magazines Business Today Business World

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