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Life Insurance Marketing in India (C) The Changing Product & Pricing Norms

We will design our products specifically for every segment of Indian consumers and not just hawk our North American products in the country.

- Gary M C Standard, Vice President, Sun Life Canada, in 1997. We would not lack in our efforts to innovate new products." - G. Krishnamurthy, former LIC Chairman, in 2000. THE CHANGING PRODUCT PROFILE In July 2002, Indias state-owned insurer Life Insurance Corporation of India (LIC) launched a new insurance policy, Anmol Jeevan (Priceless Life). This was seen by industry observers as something LIC had to do in the wake of the increasing competition in the insurance sector. Before the launch of Anmol Jeevan, two of LICs major competitors, ICICI Prudential Life and HDFC Standard Life had launched similar, competitively priced insurance products.

In the newly opened Indian insurance sector, private insurers were coming up with many innovative products, offering riders[1] on the policies in order to woo the consumers. LIC, which had been exercising monopoly in the Indian insurance sector, had been offering only plain policies without any riders to its policyholders. Analysts pointed out that LIC never seemed to have had any proper strategy for bringing out innovative products and customer-friendly pricing of its products. Though LIC offered around 60 products, only seven to eight were popular with policyholders. With almost all private players premium rates being more or less similar to LICs premium rates, the only areas where they could distinguish themselves was in the marketing, distribution and product innovation. The private insurers decided to develop products that would not compete with LICs money back and endowment policies at the initial stages (Refer to Exhibit I for a note on various kinds of insurance products). Thus, the new players launched a host of group insurance and term-life schemes, as LIC had not focused intensively on these aspects of insurance. However, the private players soon began to launch products that competed with LICs core products. With innovative product designing and intelligent pricing methods being adopted by these players, industry observers commented, LIC seemed to have realized that it would have to rapidly adapt itself to the changing market dynamics. The decision to launch Anmol Jeevan was, thus, not entirely unexpected. BACKGROUND NOTE The life insurance industry in India dates back to 1818, when a British firm Oriental Life Insurance Company opened its office in Kolkata, followed by the Bombay Life Assurance Company in 1823. During the British rule in India, the Indian Life Assurance Companies

Act was passed in 1912, which was followed by the Indian Insurance Companies Act, 1928, enabling the government to collect the data regarding life and non-life business conducted by both Indian and foreign insurance companies. The 1928 Act was amended and a new act, Insurance Act was formed in 1938.

By the mid-1950s, 154 Indian insurers, 16 foreign insurers and 75 provident societies were operating in the country. The life insurance business was concentrated in urban areas and was confined only to the higher strata of the society. In 1956, the government of India took over the management of these companies. The LIC was formed in September 1956 through the LIC Act, 1956, with a capital of Rs 50 million. One of the main objectives of setting up LIC was to extend the reach of insurance cover and make it available to the lower segments of the society. In 1972, the government of India took over the management of 106 private general insurance companies and set up the General Insurance Corporation (GIC). Over the next few years, LIC expanded its network to all parts of the country and emerged as one of the largest corporations in India. The growth of the Indian insurance industry was minimal in the 1960s and 1970s due to factors like low savings, low investment, inadequate infrastructure, and low literacy level. However, changes in the countrys economy in 1980s, such as growth of industrialization, infrastructure, the capital markets, savings rate and capital formation resulted in tremendous growth in the life insurance industry, which meant the growth of LIC. Eventually, LIC launched several schemes aimed at reaching out to the rural areas. The company launched many group insurance and social security schemes. LIC had seven zonal offices, 100 divisional offices, 2,048 branch offices and about 6,28,031 agents. In the early 1990s, it was felt that the insurance industry needs to be reformed in order to provide better coverage to the customers and to increase the inflow of long-term financial resources to finance the enhancement of infrastructure. In 1993, the Indian government set up the Malhotra Committee to suggest reforms in the industry. The Committee submitted its report in 1994, with suggestions like opening the insurance sector to private players, improving service standards and extending insurance coverage to larger sections of the population. The Committees suggestions were strongly opposed by various labor unions and political parties in the country. They opined that the entry of private players would lead to job cuts by the nationalized players in order to compete with them. There were a host of other arguments against the Malhotra Committees suggestions. The government tried to deal them by restricting foreign stake in insurance companies to only 26%, which was well below the 51% that was needed for managing the company in the Insurance Bill. Though one of LICs basic objectives was to provide insurance cover to all Indians, insurance penetration in India was considered to be very low. According to reports, only 65 million people were covered by insurance. In 1999, R N Jha, LICs former Executive Director, commented in his book, Insurance in India, Insurance coverage has been extended only to about 25% of the insurable population in 40 years, indicating the huge uncovered market potential in the country. It was reported that the per capita insurance premium [2]in developed countries was much higher than that in India. In 1999, the per capita insurance premium in India was only

$8, while it was $4,800 in Japan, $1000 in the Republic of Korea, $887 in Singapore, $823 in Hong Kong and $144 in Malaysia.

Also, in terms of gross insurance premium, Indias share in the global market was only 0.3%, though it ranked second in the world in terms of population. The corresponding figures in 1999 was 31% for Japan, 25% for the European Union, 2.3% for South Africa and 1.7% for Canada. Further, in 2001, while the ratio of insurance premium and the Gross Domestic Product (GDP)[3] was 9% for UK and Japan, and 5% for the US, it was only 1.9% for India. Attracted by the potential of the insurance market in India, many private players entered it after the Insurance Bill was passed in late 2000. A majority of these were collaborations between Indian companies and leading multinational insurance/financial services company (Refer to Table I).

TABLE I PRIVATE PLAYERS IN THE INDIAN INSURANCE MARKET


COMPANY Birla Sun Life OM Kotak INDIAN PARTNER Kotak Finance FOREIGN INSURER AREA Life Life Life Life and Non-Life Life Life Life and Non-Life

Aditya Birla Group Sun Life, Canada Mahindra Old Mutual, Africa South

HDFC-Standard HDFC Life

Standard Life, UK

Royal Sundaram Sundaram Finance Royal Sun, UK ICICI-Prudential ICICI Max Life New York Max India Tata Group Vysya Bank Dabur Prudential, UK New York Life, USA AIG, USA

Tata-AIG ING Vysya Aviva MetLife India Bajaj Allianz AMP Sanmar SBI Insurance Life

ING Insurance, Life Netherlands CGU Life, UK Life Life Life & NonLife Life Life

Jammu & Kashmir MetLife, USA Bank Bajaj Auto Sanmar Group SBI Allianz AMP, Australia Cardiff, France

Source: www.knowledgedigest.com

The life insurance market in India was divided into two customer segments: individual and corporate. The segment comprised of individual customers was further divided into four sub-segments protection, investment, savings and pension. Protection products offer only protection to the customer from risk. They do not provide any savings facility to the policyholder. Investment products offer long-term investment growth and insurance cover. Savings products like endowment and money back policies provide protection and investment benefits in combination. Pension policies are products offered to customers as income during their years of retirement. The corporate segment was divided into three sub-segments protection, statutory savings and pension.

Group term insurance products provided low cost life insurance cover as part of employee benefit packages as a motivation to employees or to cover housing/vehicle loan of the employee. The statutory savings segment comprised gratuity products for companies. The pension policies included products such as group superannuation, enabling a company to benefit from investment and the operational expertise of a specialist company to manage its funds. It was reported that in the individual insurance segment, investment products segment was growing rapidly as they provided long-term investment growth and insurance cover (Refer to Table II for the customer segments and products offered under them).

TABLE II CUSTOMER SEGMENTS IN INSURANCE INDUSTRY


INDIVIDUALS Protection Investment Savings Pensions Term Assurance Single Premium Bonds Endowment/Moneyback Pension Plans, Annuities CORPORATES Group Term Insurance Gratuity Superannuation

Source: Strategic marketing. Over the years, LIC catered to both individual and corporate segments. Its individual insurance policies included Endowment Policies, Money Back Policies, Term Assurance Plans, Periodic Money Back Plans and Joint Life Plans. The corporate policies included group insurance schemes such as group gratuity schemes, group term insurance schemes, group savings linked insurance scheme and group leave encashment schemes (Refer to Exhibit II for the products offered by LIC and other major private insurers). LIC provided a return of 7% on average on all its policies. Around 80% of LICs premium income came from endowment and money back policies.

However, according to some analysts, one of the major problems faced by the Indian insurance industry was the high premium rate charged by LIC over the decades. They argued that, when life expectancy had increased substantially, LIC did not revise its mortality table and reduce the premium accordingly. Analysts also said that, due to poor customer service, more than 10% of LIC policies reportedly lapsed or were surrendered every year. LIC never paid attention to market research in order to understand customer preferences, while developing new products. It was pointed out that with no proper social security schemes implemented by the government of India, there was huge untapped potential in the pensions and annuities in India. LIC offered only one pension policy, Jeevan Suraksha (Life Protection), the returns from which contributed significantly to its revenues. However, with the liberalization of the industry, not only were premiums expected to go down, but increased products, improvements in customer service and deeper insurance penetration were also expected. PRODUCT INNOVATIONS The new, private insurers focused on providing customized products products that contain innovative features to the customers. It was observed that in the Indian market, only endowment and money back policies were popular among consumers. Private insurers came up with need-based insurance policies such as whole life policies, term insurance policies as well products designed according to needs of the customer. In so far as the premium is concerned, the pure risk protection products introduced by some new private insurers had no facility for savings, and hence, their premiums were very low, as compared to money back and endowment policies. In cases where LIC offered policies at relatively low premiums, private insurers were expected to score over LIC because of the additional benefits offered by their policies for a marginally higher premium. Analysts pointed out the affluent and busy customers would prefer policies offered by private insurers to avoid LICs tardy and cumbersome procedures. Though private insurers were trying to strengthen their presence in the market and increase brand awareness with large-scale multi media promotional campaigns, the real test awaited them in the area of distribution. The companies had realized this and, as a result, conducted extensive market research to figure out what type of products would appeal to customers. Max New York reportedly spent eight months conducting exhaustive market research, and according to company sources, its policies were developed on the basis of the results of this research. One of the innovations of Max New York was that it added life insurance to credit risk insurance, whereby individuals could get their housing/vehicle loans insured. Thus, if a person failed to repay the loan amount because of a certain disability or death, the asset would not be impounded, because the bank or the institution would pick up the life insurance amount instead Max New York Life also introduced new endowment policies children endowment at the age of 18, 24 and 60. According to company sources, two new riders were added to these policies the payor benefit rider and 5-year term renewable and convertible rider. Payor benefit allows childs coverage to continue even in the case payor was disabled. The endowment policy for children at age 18 covered children aged between 91 days and 13 years, and policy would mature when the child is aged 18. The policy for childrens endowment at the age of 24, covers children between age of 91 days and 15 years with the policy maturing at age 24. The policy endowment at the age of 60 covered individuals

aged between 91 days and 50 years and the policy would mature at the age of 60. Maturity benefits under this policy included sum assured and terminal bonus.

Having realized the untapped potential of the rural markets for insurance products, AMP Sanmar decided to target semi-urban and small towns by having product features simple and straightforward. It also attached riders to its various policies, which did not feature in LICs products. AMP Sanmar decided to keep its product strategy as offering simple life insurance solutions to individuals primarily aiming at wealth creation and risk protection. Birla Sun Life also launched products meant for the rural population in order to capture a larger market share. It launched the Birla Sun Life Bima Kavach Yojana, a three-year single premium insurance cover available in denominations of Rs 50, 100 and 200, which offered 100 times the amount of premium paid in the event of death of the insurer. HDFC Standard Life stated that it would target the mass market comprised of retail customers in the low and medium income group for its insurance products. The company also announced that it would concentrate on secondary and tertiary towns to reach out to a larger percentage of the population. The companys MD, Deepak Satwalekar, said, Our studies have shown that there is a high level of economic activity in these towns and the potential for encouraging savings exists. According to companys sources, in the first year of its operations, company set up branches in 12 cities in the country, which included metros and mini-metros. HDFC Standard Life also announced that it would design special products for targeting the rural markets and the socially underprivileged sections. HDFC Standard Life also strengthened its organizations (NGOs)[4] in order to determine rural population. It had already decided, in insurance cover to over 1,000 families in population of Karnataka, with low interest policies. relation with over 90 non-governmentwhat kinds of products would best suit the association with various NGOs to provide the economically weaker section of the housing loans provided as riders to the

According to company sources, it planned to offer high quality service to customers. This way, it could distinguish itself from others on the service plank along with the product aspects. The company also offered its customers a choice between the base products (the company offered two products the endowment policy and the money back policy) each of which would be accompanied by four riders (critical illness, accidental death benefit, waiver of premium and double sum assured), according to the requirements of the customer. HDFC Standard Life offered 14 pre-packaged products from which customer could choose the one that best suited their needs. Also, the customers were allowed mix and match the benefits in order to create a most suitable product according to their needs. The company also planned to introduce unit-linked products and individual pension products after the required amendments were made to the Insurance Bill.

According to insurance agents of different companies, investors had started showing interest in the products being offered by private insurers. ICICI Prudentials products were classified under four categories: savings plans, protection plans, retirement plans, investment plans. Savings plans

provided the option of savings along with insurance, protection plans provided protection, retirement plans were meant to provide regular income to an individual after a certain time period and investment plans enabled individuals to invest their money in the market and receive high returns. According to an insurance agent, ICICI policies had an edge over LICs policies meant for long-term investors, because ICICI offered compound interest while LIC offered simple interest. It was reported that, for a 20-year endowment policy, ICICI Prudential Save n Protect, the annual premium was lower than that of LICs endowment policy. ICICI even offered accident benefit and disability benefit riders with a marginally higher premium of Rs 270 per annum. ICICI Prudential also launched a pension plan ICICI Pru Forever which would provide the policyholder a fixed income after a certain period of time with additional riders such as critical illness benefit, major surgical benefit, accident and disability benefit. Tata AIG came up with whole life policy known as MahaLife, which would provide life cover for 100 years, with guaranteed annual payments of 5% of the sum assured each year from the 13th year for the rest of the policyholders life. Policyholders needed to pay premiums only for the first 12 years of the policy or until their depending on death whichever came earlier. Aviva launched three products in early 2002 LifeLong, a whole life flexible protection plan, LifeSaver, a premium endowment savings plan, and LifeBond, a single premium investment bond. These three products were available under two options unit linked and unitized with profits. Aviva was the first company in India which offered unitized with profit products (like unit-linked products, under unitized with profit, the premium was spilt into many units. A part of the investment returns were held back by the insurance company to offset market fluctuations during the term of the policy, and the surplus was distributed as terminal benefits). Three optional riders, for critical illness and permanent total disability, accidental death and dismemberment and hospital cash benefits accompanied both LifeLong and LifeSaver. The company also announced its plans to launch a term-plan, which would return the premium back to the policyholder at the end of the policy period, an individual pension product and group protection product for corporates. According to company sources, unitized products were more flexible, as the customer would be able to increase or reduce the level of protection or savings benefits. LIC REJIGS ITS PORTFOLIO

With the above developments in the market, LIC too had to gear up for competition. In the year 2002, LIC introduced a new facility the term assurance rider that would accompany select life insurance policies. This facility provided an extra risk cover, which was double the existing risk cover under the plan, subject to an overall limit of Rs 25 lakh. In addition to Anmol Jeevan, it introduced a few other new policies in early 2002 Jeevan Anand (a combination of an endowment and a whole life plan), Jeevan Rekha (a combination of money back and whole life plan), Jeevan Surabhi (a money back policy) and Jeevan Mitra (an endowment policy).

The Jeevan Surabhi policy offered early payment of survival benefits and money back facility. LIC also launched a new Bima Kiran policy, which had an accident benefit and extended term cover beyond maturity period in addition to risk cover during the term of the policy. In addition to the new launches, LIC also made changes to its product portfolio by withdrawing certain schemes and bringing down returns on some others. In March 2002, the company withdrew Jeevan Sanchay, its childrens growth scheme and the childrens money back policy due to the falling yield on investments. It also brought down the assured returns on its newly launched schemes following a 0.5% rate cut by the Reserve Bank of India and the depressed sentiments in the market. Initially, Bima Nivesh offered about 10.5% assured return and it was reported that newer schemes would assure returns lower than 9.3% (Refer Exhibits III, IV & V for a comparison between the policies of LIC and other players). In late 2001, LIC launched a special campaign to revive peoples interest in its policies, which now carried customer-friendly incentives. A 30% waiver on late fees was offered (subject to a ceiling of Rs 250) during the period of this campaign. Additional incentives were allowed relaxation in the procedures for mandatory self-declaration of good health and offered spot revival facilities.

FUTURE IMPLICATIONS The issue of bonus rates on policies emerged as an important factor that could determine the future prospects of various players in the insurance industry. LIC was criticized for offering low bonus rates[5] traditionally. However, many private players were apprehensive that, by increasing the bonus rates on its policies in the future, LIC could strangle them. Coincidentally, LIC announced a guarantee of minimum bonus and additional loyalty bonus on some of its policies. The company also offered attractive bonuses on its endowment policies.

Analysts pointed out that the new insurers were indeed at a disadvantage as they would not be able to offer high bonuses. They opined that, during the initial years, it would be very difficult for these companies to offer bonus on account of lower bonus valuation surplus (the difference between assets and liabilities excluding shareholders funds). However, to operate in competition with others, the new companies reportedly planned to offer bonuses by bringing in additional start-up capital. Many analysts pointed out that, though the entry of several private insurers and their rigorous advertising and marketing efforts had led to intense competition in the Indian insurance market, LIC continued to dominate it. To make LICs market share come down, many private insurers reportedly following the way of personal finance companies. Increased competition in the personal finance business led companies (into housing finance and credit cards for instance) to attract customers from competitors by offering lower interest rates and easier installment schemes. These strategies, known as buyouts, were widely used by US-based insurers, and analysts felt that the Indian market would replicate these trends. However, analysts also pointed out that buyouts or motivated surrenders would not succeed as a strategy for marketing individual policies. They added that the current

legislative provisions were not enough to deal with such practices, and they needed to be strengthened. But some analysts have pointed out that with the vast untapped market and impending reforms in pension and health insurance, there would be no players adopting buyout strategies in the short term in India. In March 2002, the government permitted private insurers to offer annuity products to beneficiaries of the approved superannuation funds run by corporates. Earlier, companies used to deposit gratuity funds in the group gratuity scheme run by LIC or in a post office savings account or in an account in any scheduled bank. When new private players were allowed to enter the market, companies could deposit gratuity funds in the gratuity schemes of private insurers. The government also offered tax rebates on group gratuity schemes offered by private insurers. Analysts expected that, ultimately, the customer would stand to gain the most because innovative and consumer-friendly products were offered as a result of the above. Insurance companies give policyholders a share in the companys profits in form of bonuses. Generally there are two types of bonuses. Reversionary bonus is a guaranteed addition to the insured amount and is paid when the policy matures (that is, when the sum assured becomes payable) or when the life assured died. Cash Bonuses are paid out at periodical intervals.
[5]

QUESTIONS FOR DISCUSSION: 1. Discuss the evolution of the Indian insurance industry over the decades and critically comment on LICs products and pricing practices. Why do you think the average Indian insurance customer has largely been a buyer of money back and endowment policies? 2. Analyze the different kinds of innovative products being offered by various insurance companies in India in the early 21st century, highlighting the essential differences as compared to LICs product portfolio. 3. Critically comment on LICs decision to shuffle its portfolio in response to the product/pricing moves of the new companies. Do you think that the private players would be able to make a significant difference to the market with their strategies in the long run? Give reasons to support your stand.

EXHIBIT I DIFFERENT TYPES OF LIFE INSURANCE POLICIES


Endowment Policy: This policy covers risk for a specified period, at the end of which the sum assured is paid back to the policyholder, along with the bonus accumulated during the term of the policy. It is this feature - the payment of endowment to the policyholder when the policy's term is complete - that rightly accounts for the popularity of endowment policies. Whole Life Policy: This policy runs as long as the policyholder is alive. In other words, risk is covered for the entire life of the policyholder. The whole life policy amount and bonus are payable only to the nominee of

the policy on the death of the policyholder. The policyholder is not entitled to any money during his or her own lifetime there is no survival benefit. Term Life Policy: This policy covers risk only during the selected term period. If policyholder survives the term, the risk cover comes to an end. A term policy is designed to meet the needs of people who are initially unable to pay the larger premium required for a whole life or an endowment assurance policy. No surrender, loan or paid-up values are granted under these policies because reserves are not accumulated. On the usual term assurance plans, accident and/or disability benefits are not granted. Money Back Policies: Unlike endowment insurance policies, where the survival benefits are payable at the end of the endowment period, money-back policies provide for periodic payments of partial survival benefits during the term of the policy, as long as the policyholder is alive. An important feature of this type of policies is that in the event of death at any time within the policy term, the death claim comprises the full sum assured, without deduction of any of the survival benefit amounts, which may have already been paid as money-back components. Similarly, the bonus is also calculated on the full sum assured. Joint Life Policies: This policy is similar to endowment policies offering maturity benefits to the policyholders, apart from covering risks like all life insurance policies. But joint life policies are categorized separately as they cover two lives simultaneously, thus offering a unique advantage in some cases, notably, for a married couple or for partners in a business firm. Childrens Insurance Policies: This policy includes those through which parents or legal guardians can provide for life insurance for their child from birth. The risk cover commences from the child attaining the age of 12/17/18/21 (known as the Date of Risk), and will vest itself on the child upon his or her attaining adulthood at the completion of 21 years, if the case demands so. Until the child attains adulthood, the parents are owners of the policy and have to pay the premium periodically. Pension Plan or Annuities: An annuity is an investment that you make, either as a single lumpsum amount or through installments paid over a some years, in return for which you receive a specific sum every year, every half-year or every month, either for life or for a fixed number of years. After the death of the individual, or after the fixed annuity period expires for annuity payments, the invested annuity fund is refunded, perhaps along with a small addition, calculated at that time. Annuities differ from all the other forms of life insurance discussed so far in one fundamental way an annuity does not provide any life insurance cover but, instead, offers a guaranteed income either for life or a certain period. Womens Policy: Womens Policy provides funds for women in times of needs like education, marriage or sickness, with Guaranteed and Loyalty Additions during the policy term and after maturity. At present, the sole womens policy available in the market in Jeevan Sneha from LIC.

Group Insurance: Group Insurance offers life insurance protection under group policies to various groups such as employers employees, professionals, co-operatives, and weaker sections of society. It also provides insurance coverage for people in certain approved occupations at the lowest possible premium cost. Besides providing insurance coverage, it also offers group schemes to employers that allow the funding of the gratuity and pension liabilities of the employers. Source: www.myiris.com

EXHIBIT II PRODUCTS FOR INDIVIDUALS OFFERED BY DIFFERENT COMPANIES


COMPANY LIC WHOLE LIFE Rekha TERM PLAN ENDOWMENT MONEYBACK Jeevan Rekha Jeevan Plan

Jeevan Anmol Jeevan Anand

- Jeevan Mitra Jeevan - New Bima (double & - Money Back Anand Kiran triple cover Plan plans) - Two year - Whole Life - Bhavishya - Temporar Plan Jeevan y plan - ConvertibleConvertible - New Whole LifeTerm Raksha Plan Assurance Plan Jana Jeevan Surabhi

- Endowment plan ICICI PRU HDFC - ICICI - ICICI Pru - Life Guard Save Life Time Protect Single Term Pru - ICICI n Cashbak Pru

Endowment -

HDFC

STANDARD Premium Assurance LIFE Whole of Life Plan Loan Cover Term Assurance - Anticipated ING VYSYA whole life plan

Assurance Plan

Standard Lifes Money Back Plan

Reassuring Life - Maximizing Endowment Life Plan Money Plan Back

- Whole Life Policy MAX NEW (Participating YORK LIFE & Non participating) TATA AIG -

20 Year Endowment Participating Policy - Money Saver Plan - OM Money Back Plan Save - Flexi Flow Cash

Lifeline Plans -

OM OM KOTAK Endowment Plan

- Flexi Life BIRLA SUN - Flexi Term - Flexi Line (Whole LIFE Plus Plus Life Plan) Source :ICMR

EXHIBIT III COMPARING ENDOWMENT POLICIES


COMPANY POLICY FEATURES

LIC

Jeevan Anand: endowment scheme, Rs 4047 yearly premium for a 30-year old Loan facility accident benefits person for an assured sumcover sum assured+ bonus of Rs 1 lakh for 16-year period.

ICICI Pru Save n Protect: For a 20-year policy of Rs 2 ICICI lakh sum assured. A 30- Rider options for accident, Prudential year old will pay an annualdisability and critical illness Life premium of Rs 8,868 to getavailable about Rs 4.80 lakh on maturity. HDFC Standard Life Birla Endowment assurance: 30 year-old to pay Rs 4,835 Optional benefits on additional annual premium for Rs 1 premium lakh assured for a 20-year policy. options for accident,

Sun Flexi Save Plus: 35-year Rider

Life

old to pay Rs 4,848 annual premium for Rs 1 lakhdismemberment, term rider assured for a 20-yearand critical illness available. policy. Personal accident benefit Endowment Participating rider, term rider, option to Policy: 35-year old to pay New purchase paid up additions Rs 5,415 annual premium rider, guaranteed insurability for Rs 1 lakh assured for a option rider, waiver of 20 year policy premium rider available. Source: www.easylifeindia.com

Max York

EXHIBIT IV COMPARING MONEY BACK POLICIES


COMPANY POLICY LIC FEATURES

Moneyback: Rs 6,564Interim benefit of Rs 20,000 for every annual premium for5 years, accidental benefit rider, and the 35-year old for andeclared bonus of Rs 65 per Rs 1,000 assured sum of Rs 1in the last year. lakh over 20-year period. Interim benefit of Rs 25,000 in 4th, 8th, 12th and 15th years, accidental Jeevan Chaya: Rsbenefit rider, cover increases by 50% 5,686 annualevery 5 years beginning from the 6th premium for the 35-year and premium paying term is less year old for anthan the term of the policy. assured sum of Rs 1 lakh over 20-year Comes with accidental benefit rider. period. Jeevan Surabhi: Rs 9,581 annual

premium for the 35old for an assured sum of Rs 1 lakh over 20-year period. Cashbak: Rs 6,618 Interim benefits of Rs 10,000 in 4th annual premium for year, 15,000 in 8th year, 20,000 in the 35 year old on 12th year and 25,000 in 16th year, assured sum of Rs 1 accident benefit rider, guaranteed lakh over 20-year returns @ 3.5% per annum ICICI PRU period. (compounded) for the first 7 years, 120% of the sum assured is returned during the term of the policy.

Birla Life

Moneyback: Rs 6,144Interim benefits of Rs 15,000 in 5th, annual premium for10th and 15th year, accident benefit Sunthe 35 year old onrider, the insured has the option to assured sum of Rs lchoose the rate of guaranteed returns lakh over 20-yearfrom 3-6% per annum (compounded) period. depending on the investment fund.

Moneyback: Rs 7,330 annual premium for the 35 OM Kotak Comes with accident benefit rider. year old on assured sum of Rs 1 lakh over 20-year period. Moneyback: Rs 7,981 annual Interim benefits of Rs 25,000 in 5th, premium for the 35HDFC 10th and 15th year, accident benefit year-old on an Standard rider, and no guaranteed returns assured sum of Rs 1 were given. lakh over 20-year period. Assure 21 yrs: Rs Interim benefits Rs 10,000 every 3 9,369 annualyears, if the policys term continues premium for the 35for 10 years, 10% of the sum assured TATA AIG year old on assuredis guaranteed. The company indicates sum of Rs 1 lakh over5% of the bonus per annum and 20-year period. accident benefit rider is allowed. Source: www.easylifeindia.com

EXHIBIT V COMPARING TERM LIFE POLICIES


INSURER POLICY FEATURES

LifeGuard ICICI Annual premium of Rs 2,680. Accident and Level Term Prudential disability benefit rider is available. Assurance HDFC Standard Term Assurance Annual premium of Rs 2,920. Accident death benefit, Critical Illness and Accelerated sum assured riders are available. Annual premium of Rs 3,700. Permanent disability benefit and critical illness rider are available. The insured can convert the term policy into either money back or endowment policy if there are more than five years before the expiry of the policy. Annual premium of Rs 3,710. Accidental death and dismemberment and critical illness riders are available. Annual premium of Rs 4,550. Accidental death and dismemberment rider is available. Annual premium of Rs 4,830. four plans are available to consumer to choose from economy, protect, health care and total. Accidental permanent total/partial disability benefit, waiver of premium, critical illness and hospital cash riders are available. Annual premium of Rs 2,813. The plan offers less than two-year temporary insurance provision and it can be converted to whole life or an endowment insurance plan after 5 or 7 years.

Term OM Kotak Assurance Mahindra Plan

Birla Life

Sun

Term Plan Assurance Lifeline Plan

TATA-AIG

Allianz Bajaj

Risk Care

LIC

Anmol Jeevan

* Illustration for a Rs 10 lakh cover for a 30-year-old healthy male for a 20-year term. Source: www.biz.yahoo.com ADDITIONAL READINGS & REFERENCES: 1. Bose Jayshree, A Rocky Road Ahead, Financial Express, December 25, 1999. 2. Jagannathan Venkatachari, LIC Awakens, Shrugs at New Competition, www.domainb.com, November 26, 2000. 3. Jayaram Anup & Dhawan Radhika, Free at Last, Business World, November 13, 2000. 4. Suthanan Madhu, Changing the Face of Indian Insurance, Financial Express, April 13, 2000. 5. Jagannathan Venkatachari, Its War Out There, Or is it?, www.domain-b.com, October 18, 2001. 6. Sen. K. Sarbajeet, Vast Potential, More Players, Frontline, January 5, 2002. 7. Kumar Manoj, More Options in Life Insurance, The Tribune, March 18, 2002. 8. Ramesh. M, Aviva Life Kicks Off With Seven Products, Business Line, June 20, 2002. 9. www.watsonwyatt.com

10. 11. 12. 13. 14. 15. 16. 17. 18. 19. www.knowledgedigest.com

www.insuremagic.com www.indiainfoline.com www.bimaonline.com www.expressindia.com www.responsiveservice.com www.economictimes.com www.biz.yahoo.com www.easylifeindia.com www.myiris.com