Prepared by:- zala Devendnasinh p. Year:- T.Y.B.B.A Roll No:-137 Topic:- ni!

"in#ed $ns%ranse Plan & "$Ps' Acade(ic year:- )**+-)*1* ,%b(i!!ed To:- s-a(i ,ha.anand colle/e o0 co((erce 1 (ana/e(en!

&B.B.A' Bhavna/er

niversi!y

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

DATE ! "#$"#$%"#" P&A'E !B(A)*AGE+

-: SIGN !"#$ :Zala Devendrasinh Pratapsinh

A',*-.&EDGEME*T
first of all I am thankful to G%& because of him , my e'istence is created and that(s why I am able to doing this work ) than how can I forget my * #$N!S ,their warm guidance and moti+ation helps through out my journey of de+eloping the project) I feel great pleasure in submitting this report as a part of a practical training and studies in the professional course of management )this +isit has been helped me a lot in ac,uiring the knowledge regarding the company) I am +ery helpful to our principal shilpa /hatt ) our coordinator *eatra medam and the all supporti+e college staff for gi+ing me the information about the project) I am also +ery thankful to branch manager Girirajsinh Gohil business de+elopment -anager and agency manager jignesh pandya and whole staff of ! ! IG B(A)*AGE+. #esearch of any unit is different as more as you attempt more you go deep ,new and new detail emerged) It is not easy e'ercise )it is with the help of combine efforts and guidelines of our teacher, present and friends) Howe+er, I can(t e'press my thank to all the people of the staff in tata IG, .H /N G$# and for their support gi+ing us such a great help,without a guidance of whom it is +ery difficult to prepare such a report)

Zala Devedrasinh Pratapsinh

P+E0A'E
s we know that +itamins are +ital to the heelth of people and animals) In the present world not only the theoretical work is important but also the practical work is important ,which is not gi+en in the classroom)we know that the practical work is useful in e+ery field as well as our future lifetime) In short,student can impro+e his knowledge about all the sectors of markets)during the study,the student can impro+e their skills) In comparison to bookish knowledge, practical studies pro+e to be +ery impru+enent and nessassary as it helps a student to the practical tobe +ery important and necessary as it helps a student to the practical fields and get the idea about the e'act position of the entrepreneur and the manager)in this way after competing studies ,one can better in the fiel of business)s1ami shahajanad college o2 commerce 3sscc45 B(A)*AGE+5helps the student to de+elop their knowledge in the field of industry en+ironment and business by the means of management of company) s a student of !)0).).) TATA A6G5 B(A)*AGE+. program, I ha+e opportunity to ha+e got practical training in the

In this report I ha+e tried to do my best to collect much can do my best as much information as I can) !his report is reflection of which I undestad and learn from my traning session )this report is prepared the purpose of the study, not in theoretical way but in a practical way) Heredy I am submitting the report11))

Zala Devendrasinh Pratapsinh !)y).).)

MA6* '-*TE*T7

General in2ormation

% 8 9 < >

6nsurance Mutual 2und :nit lin; insurance plan +esearch = conclusion Bi/liography

GE*E+A& 6*0-+MAT6-*
Tata Group pro2ile American 6nternational Group Pro2ile Tata A6G insurance company &TD )ision Product pro2ile ? @ 9 < <

Tata group pro2ile

!H$ !ata Group comprises 23 operating companies in se+en business sectors) Information systems and communications,engineering, materials, ser+ices,energy,consumer products, and chemicals)the group was founded by jamsetji !ata in the mid 42th centure , a period when India had just set out on the road to gaining independence from british rule) 5onse,uently, jamsetji !ata and those who followed him aligned business opportunities with the objecti+e of nation buidding)!his approach remains enshrined in the Group(s to this day) !ata is a rapidly growing business group based in India with significant international operation) #e+enues in 6778-73 are "S& 96): billion;around rs) 6:4,:<= crores>, of which 94? was from business outside India)!he Group(s Net profit for 6778-73 are "S& :)< billion;around #s)64,:83 crores>!he grup emplos around =:7,777 people wordwide) !he !ata name has been respected in India for 4<7 years for its adherence to strong +alues and business ethics !he business operations of the !ata group currently encompass se+en business sectors @ communications and information !echnology,$ngineering, -aterials Ser+ices energy,consumer products and chemicals !he Group 63 publicly listed enterprises ha+e a combined market capitaliAation of around B97 billion, among the highest among Indian business houser and a shareholder base of 6)2 million)!he major companies in the Group include !ata steel,!ata -otors,!ata consultancy ser+ices;!5S>,!ata powar,!ata chemicals, !ata tea, Indian hotels,!ata !eleser+ices and tata communications)

American international group5 inc. 3A6G4 Pro2ile

merican intarnatinal group) Inc) ; IG>, a world leader in insurance and financial ser+ices ,is the leading international insurance organiAation with operation in more than 4=7 countris and jurisdiction) IG companies ser+e commercial,institutional and indi+idual customers through the most e'tensi+e wordwide property-casuaity and life insurance networks of any insurer in addition IG companies are leading pro+iders of retirement ser+ices,financial ser+ices and asset management around the world) IG(s common stock e'changes in paris,switAerIand and !okyo)

Tata A6G &i2e 6nsurance company &imited 3Tata A6G &i2e4

!ata IG Cife insurance company Cimited ;!ata IG Cife > is a joint +enture company,formed by the !ata Grooup and merican Intarnatinal Group,Inc) ; IG>!ata IG Cife combines the !ata Group(s pre-eminent Ieadership position in India and IG(s global presence as one of the world(s leading intarnatinal insurance and financial ser+ices organiAation !he !ata Group holds 8< per cent stake in the insurance +enture with IG holding the balance 69 per cent !ata IG Cife pro+ides insurance solutions to indi+iduais and corporates) !ata IG Cife insurance company was licensed to operate in India on India on Debruary 46,6774 and started operations on pril 4,6774)

Year1ise *um/er o2 Policies and +evenue !

Fiscal No.of policies sold in FY

)**1-)**)
)**)-)**3 )**3-)**5 )**5-)**4 )**4-)**3 )**3-)**7 )**7-)**6

)12373
12142+34 12652553 )266216+ 72612364 )*27+2)17 3*2152316

Ne !"siness FY#$s.in c$.% 7 3+ 16* 647 )717 5)7* 473*

in

Key Achievement !
#. %. 8. 9. -ver <"5""5""" satis2ied costomers A country1ide net1or; o2 @?> o22ices. Asset under management rs.<5<"" cr. 7hareholders capital /ase o2 rs. ?"" cr. Accelerated gro1th

)ision
#. %. 8. 9. <. >. 0inancial strength and sta/ility to support the insurance /usines A strong /rand!eAuity. A good mar;et reputation as a 1orld class organiBation An eCtensive distri/ution net1or;. AdeAuate eCperience o2 running a large organiBation. A #" million strong /ase o2 retail customers using tata products.

P+-D:'T P+-06&E

0-+ '(6&D+A*
1. mple money a+ailable to pay for education or marriage with tata A6G li2e assure %# years money saver

2. 3. 4. 5. 6. 7. 8.

steady ,lifetime income with tata A6G li2e mahali2e Gold. Ehat sefty net and more control o+er your returnsF See Tata A6G li2e investAssure ##. Ehat a unit @linked policy with a single-premium paying termF See tata A6G li2e invest AA77:+E plus. !he money they need to start a succesfuly career with Tata A6G li2e assure carreer /uilder. Dinancial support to recei+e the best education possible with Tata A6G li2e assure Educated at #@ = Assure Educare at %#. !he +ery best college Gpost graduate education with Tata A6G li2e star;id. Eatch your sa+ing grow as fast as your chiled(s aspirations with Tata A6G li2e :nited :jj1al Bhavishya.

0-+ AD:&T
1. 2. 3. 4. 5. re hospitaliAed or ha+e aprolonged illnessF See !ata IG life in+estassure helth Gtata Ig life health first G tata A6G li2e health protector !< year guaranteed rene1al accident and health plan. Ehat your children to ha+e asteady income ,no matte rwhat happensF See Tata A6G &i2e Mahali2e gold. Stay protected against 46 critical illnesses) Ge tyour life back and your money) see Tata A6G health investor Ehat a safety net and more control o+er your returnFsee Tata A6G li2e investassure %. Eant unit linked insurance plan with inbuilt critical illness benefitF See Tata A6G li2e investassure care

1. 2. 3. 4. 5. 6.

Eant a unit-linked insurance plan with an in-built *ayor .enefitF See Tata A6G &i2e 6nvestAssure ECtra Eant a unit-linked endowment in+estment plan with a host of fle'ible featuresF See Tata A6G &i2e 6nvestAssure 0leCi #eap attracti+e rewards for a lifetime with a whole life unit linked plan) See Tata A6G &i2e 6nvestAssure Gold Eant a unit-linked policy with a single premium paying termF See Tata A6G &i2e 6nvestAssure Plus Eant to optimiAe your return, and protect yourself against any unforeseen e+entualityF See Tata A6G &i2e 6nvestAssure -ptima &on(t want to face financial risk, but cannot afford high premiumsF See Tata A6G &i2e Assure # year$< Years$#" Years$#< Years$%" Years$%< Years &i2eline Plans5 and term to age >" ;no1n as Assure &i2eline to Age >" Eant your money back if you outli+e your policyF See Tata A6G &i2e &i2ePlus Eant co+erage and fle'ibility to get your money when you need itF See Tata A6G &i2e Assure %# years Money 7aver Eant safety and high returnsF See Tata A6G &i2e Assure #" Years$#< Years$%" Years$8" Years 7ecurity and Gro1th Plans Eant a low-cost term plan which offers a large co+erF See Tata A6G &i2e +a;sha #"$#<$%"$%< Eant high returns at a low premiumF See Tata A6G &i2e 7hu/h&i2e Heep your capital safe and growing with Tata A6G &i2e Assure Golden Years Plan Eant an immediate annuity plan with return of *urchase priceF See Tata A6G &i2e Easy +etire

7. 8. 9. 10. 11. 12. 13.

+ET6+EME*T
1. Heep your capital safe and growing with Tata A6G &i2e Assure Golden Years Plan 2. Eant an immediate annuity plan with #eturn of *urchase priceF See Tata A6G &i2e Easy +etire

3. *ro+ide a stable, lifetime income for you and your family with Tata A6G &i2e Maha&i2e Gold 4. Gi+e you the fle'ibility to choose when to retire with Tata A6G &i2e *irvana 5. Eant a safety net and more control o+er your returnsF See Tata A6G &i2e 6nvestAssure 66 6. #eap attracti+e rewards for a lifetime with a whole life unit linked plan) See Tata A6G &i2e 6nvestAssure Gold 7. Eant a custom-made retirement solutionF See Tata A6G &i2e 6nvestAssure 0uture 8. Guarantee additions to your sum assured with Tata A6G &i2e *irvana Plus

6*7:+A*'E
0undamental o2 insurance &$ief histo$y of ins"$ance secto$ Brie2 history o2 insurance sector in 6ndia ## '( #9

Types of ins"$ance 6nsurance regulatory = development

') #D

0:*DAME*TA&7 -0 6*7:+A*'E
In life e+ery human being @ you and we included is e'posed to an element of risk, commonly defined as the possibility of loss) !hese broadly relate to two spheres @ our li+es and our material possessions) Durther, e+ery loss has two implications: financial and non-financial) Dor instance when a person dies, the family suffers a grie+ous loss, which can perhaps ne+er be compensated) .ut the family also suffers another significant loss @ financial lossI particularly person who dies was an earning member or e+en potentially earning member) !here are then concerns about the financial stability of the dependents) Similarly, when a factory is gutted in a fire, in addition to the loss of property, there are other considerations: the effort to rebuild the factory, the future of workers and fate of suppliers and consumer attached to the business) In both instances, little can be done about non-financial losses) .ut financial losses can and must be addressed and using risk management tool and that is Insurance)

.(AT 67 6nsuranceE
JInsurance is a financial ser+ice for collecting the sa+ing of the public and pro+iding them with a risk co+erage) K!hus in insurance, The +is; The 6nsured The 6nsurer General De2inition In words of Lohn -agee, K6nsurance is a plan /y 1hich large num/er o2 people associate and trans2er to the shoulders o2 all ris;s that attach to individuals.F

B+6E0 (67T-+Y -0 6*7:+A*'E 7E'T-+

Insurance Caw had its genesis in Condon) In the early Condon 5offeehouses were centers not only of commerce and literature but of debate and intellectual e'ercise as well) !hey also had a political influence that mo+ed the reigning king 5harles II to attempt unsuccessfully their suppression) mong such se+enteen century Condon coffee houses was one called Cloyd( 5offee house owned by $dward Cloyd and situated in !ower Street) !he coffee house and the ad+antage of

being near to ri+er !hames thus attracting the patronage of men interested and connected with marine acti+ities) In the se+enteenth century there were no corporate entities engaged in insurance acti+ities) !he practice pre+alent was that indi+iduals wrote their names below some clauses to guarantee commercial +entures on personal basis, Cloyd(s 5offee house thus the fa+orite +enue for such guarantors who came to be called "nderwrites to conduct business informally o+er cups of coffee) Eith passage of time Cloyd(s 5offee house become recogniAed as a place for people wanting insurance o+er to fine the underwriters) $dward Cloyd encouraged the business by pro+iding the customers in the coffee house with pen, ink, paper and shipping information obtained for the water front) !he insurance acti+ities in the coffee house culminated in the formation of 5orporation of Cloyd under the ct of 4384) !he name was immortaliAed although $dward Cloyd(s passed away in the year 484=)

CloydMs -arine Insurance policy originally adopted in the year 4882, is still commonly used as standard form with suitable additional clauses to suit modern re,uirements) Cloyds may thus be rightly known as the creators of insurance concept) -arine insurance law was thus the first form of insurance, other forms of insurance e+ol+ed gradually with dynamic re,uirements of the society) .ritish statutes inspire the statutes in India) In $ngland -arine a specific statute regulates insurance while other forms of insurance are co+ered by general legislation) In India the marine insurance ct 429= base on the $nglish -arine Insurance 5!, 4279 is the legislation dealing only with aspect of -arine Insurance policies) !he pro+isions of the Insurance ct 42=3 regulate the other +ariations of insurance policies) ll insurance policies ha+e to be in agreement with the pro+isions of law if contracts) policy of insurance codifies a contract between the insurer and the insured hence all principles of law of contracts between two or more is the Indian 5ontract ct 4386)

B+6E0 (67T-+Y -0 &60E 6*7:+A*'E7E'T-+ 6* 6*D6A

!he early de+elopments of life insurance were closely linked with that of marine insurance) !he first insurers of life were the marine insurance underwriters who started issuing life insurance policies on the life of master and crew of the ship, and the merchants) !he early insurance contracts took the nature of policies for a short period only) !he first life insurance policy was issued on 43th Lune 4:3=, on the life of Eilliam Gibbons for a period of 46 months) It was in the eighteenth century, societies began to be formed for issuing life insurance policies) mong such societies the micable Society ;487:>, !he $,uitable life ssurance society ;4896>, the Eest -inister Society ;4826> was the important societies) !he premium rates were +aried in +iew of reputation and the health condition of the insured) !he .ritish companies started life insurance business in India, by issuing policies e'clusi+ely on the li+es of $uropean soldiers and ci+ilians) !hey sometimes issued policies on the li+es of Indian(s by charging e'tra) &ifferent insurance companies like .ombay Insurance 5ompany C!&) ;482=> and %riental life ssurance 5ompany, the first Indian 5ompany named as .ombay -utual Cife Insurance Society Ctd) Eas formed in &ec) 4387) &uring the period from 4387 to 4277, a larger number of Indian companies were formed under the Indian companies ct, 4399) !he business was confined to few communities and occupations only) &uring the period from 4277 to 4226, the insurance business attracted attention among middle class people) s a result, Go+ernment of India passed the insurance ct on the model of .ritish ssurance ct) &uring the period from 4246-42=7, the insurance business witnessed a setback) fter se+eral changes ha+e been made for the period from 42=7 to 42=3, the Go+ernment of India passed insurance ct, 42=3) !he act still applies to all kinds of insurance business by instituting necessary amendments from time to time)

.y 42:9, 4:< Indian insurers, 49 foreign insurers and 8: pro+ident societies were carrying on life insurance business in India) t that time life insurance business was concentrated

in urban areas and confined to the higher strata of the society) Lanuary 42:9 the management of life insurance business of 6<: Indian and foreign insurers and pro+ident societies were taken o+er by the central Go+ernment with a capital contribution of #s):7 mn, and than nationaliAed on 4st September 42:9 in the parliament an Cife insurance 5orporation;CI5>) !he Indian insurance market was restricted sector) %nly two go+ernment giants namely CI5 G GI5 ruled it till it was set open to the pri+ate players) !he Narasimha #ao go+ernment unleashed liberal changes in india(s rigid economic sector) !he #ao go+ernment appointed a committee of #eforms in the insurance sector in pril 422= under the chairmanship of #)N)-alhotra) the insurance #egulatory uthority ;I#& > ct, 4222 could be passed by the *arliament during No+ember 4222) I#& open its window for pplication for gi+ing new licenses to the prospecti+e players on 49th ugust, 6777)

Types o2 6nsurance
!here are basically two types of Insurance) !hey can be classified into following two categories,

INSURANCE

LIFE INSURACNE

GENERAL INSURANCE

&60E 6*7:+A*'E
0our family counts on you e+ery day for financial support, food) Shelter, transportation, education, and much more) Insurance pro+ides you with that uni,ue sense of security that no other form of in+estment pro+ides) Cife insurance is all about making sure your family has ade,uate financial resources to make those plans and dreams come true) It pro+ides financial protection to help your family or business to manage after your death) Ehole life policies @ co+er the insured for life) !he insured does not recei+e money while he is ali+eI the nominee recei+es the sum assured plus bonus upon death of the insured) Endo1ment Policies G 5o+er the insured for a specific period) !he insured recei+es money on sur+i+al of the term and is not co+ered thereafter) Money /ac; policies G !he nominee recei+es money immediately on death of the insured) %n sur+i+al the insured recei+es money at regular

Inter+als during the term) !hese policies cost more than endowment with profit policies) Annuities $ 'hildrenHs policies G !he nominee recei+es a guaranteed amount of money at a predetermined time and not immediately on death of the insured) %n sur+i+al the insured recei+es money at the same pre-determined time) !hese policies are best suited for planning children(s future education and marriage costs)

Pension schemes G !here are policies that pro+ide benefits to the insured only upon retirement) If the insured dies during the term of the policy, his nominee would recei+e the benefits either as a lump sum or as a pension e+ery month) Since a single policy cannot meet all the insurance objecti+es, one should ha+e a portfolio co+ering all the needs)

GE*E+A& 6*7:+A*'E
$+ery asset has a +alue and the business of general insurance is related to the protection of economic +alue of assets) ssets would ha+e been created through the efforts of owner, which can be in the form of building, +ehicles, machinery and other tangible properties) 5oncepts of insurance ha+e been e'tended beyond the co+erage of tangible asset) Now the risk of losses due to sudden changes in currency e'change rates, political disturbance, negligence and liability for the damages can also be co+ered) .ut if a person judiciously in+ests in insurance for his property prior to any une'pected contingency then he will be suitably compensated for his loss as soon as the e'tent of damage is ascertained) Property 6nsurance G !he home is most +alued possession) !he policy is designed to co+er the +arious risks under a single policy) It pro+ides protection for property and interest of the insured and family) (ealth 6nsurance G It pro+ides co+er, which takes care of medical e'penses following hospitaliAation from sudden illness or accident)

Personal Accident 6nsurance G !his insurance policy pro+ides compensation for loss of life or injury ;partial or permanent> caused by an accident) !his includes reimbursement of cost of treatment and the use of hospital facilities for the treatment)

Travel 6nsurance G the policy co+ers the insured against +arious e+entualities while tra+eling abroad) It co+ers the insured against personal accident, medical e'penses and repatriation, loss of checked baggage, passport etc) &ia/ility 6nsurance G !his policy indemnifies the &irectors or %fficers or other professionals against loss arising from claims made against them by reason of any wrongful ct in their %fficial capacity) Motor 6nsurance G -otor /ehicles ct states that e+ery motor +ehicle plying on the road has to be insured, with at least Ciability only policy) !here are two types of policy one co+ering the act of liability, while other co+ers insurers all liability and damages caused to one(s +ehicles) Since a single policy cannot meet all the insurance objecti+es, one should ha+e a portfolio co+ering all the needs)

6nsurance +egulatory and Development Authority 36+DA4

!he insurance #egulatory and &e+elopment uthority ;I#& > was constituted as an autonomous body to regulate and de+elop the business of insurance and re-insurance in India) !he uthority was constituted on pril 42, 6777I +ide Go+ernment of India(s notification No) 688) !he insurance #egulatory and &e+elopment uthority ct, 4222, was enacted by *arliament in the fiftieth year of the #epublic of India to pro+ide for the establishment of an uthority to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected there with or incidental there to and further to amend the insurance ct, 42=3, the life Insurance 5orporation ct, 42:9 and the General Insurance .usiness act, 4286) I#& was constituted in terms of the Insurance #egulatory and &e+elopment uthority ct, 4222, as the regulator of the Indian Insurance industry) I#& #egulator and &e+elopment uthority as it was pro+ided that it had broader role to perform in the Indian insurance market) It has not only to frame was setup in 4229 but it was formally constituted as a regulator of the insurance industry in pril 6777) !he regulator was initially known as the insurance #egulator uthority but was subse,uently

rechristened as Insurance and issue statutory and regulator stipulations, guidelines, and clarification but it has also to perform a de+elopmental and promotional role) !hus, the objecti+es of I#& are twofold: policyholder protection and healthy growth of the insurance market) I#& has till 6774 issued se+enteen regulations in the areas of registration of insurers, their conduct of business, sol+ency margins, conduct of reinsurance business, licensing, and code of conduct intermediaries) It

4)

Dollows the practice of prior consultation and discussion with +arious interest groups before issuing regulation and guidelines)

The 2ollo1ing players have applied and some have got licenses and even started operations in 6ndia.

Indian partner H&D5 #eliance Sundaram -a' India .ajaj auto Hotak mahindra I5I5I I5I5I IDD5% !ata group ditya birla group S.I /ysya bank

Doreign partner Stander life "H No partner #oyal G sun alliance New york life llianA %ld mutual south *rudential,"H Combard !okyo marin,japan IG,"S Sun life 5ardif france ING

specialiAation Cife Non-life Non-life life Non-life and life Cife Cife Non-lilfe Non-life Cife, non-life Cife Cife life

*resent status In operation %peration to begin shortly In operation In operation pplied for license Started operation In operation pplied for license #ecei+ed license In operation In operation #ecei+ed license #ecei+ed license

*:MBE+ -0 +EG67T+E+ED 6*7:+E+7 6* 6*D6A

Type o2 Pu/lic sector /usiness Cife insurance 74 General insurance 79 reinsurance total 74 "@

Private sector 4= 73 7 %#

Total 4< 4< 74 %D

M:T:A& 0:*D

De2inition *hat is m"t"al f"nd 'haracteristics Advanta+es Disadvantages -$od"ct types

%% (( %9 (, %> (.

DE06*AT6-* !
Mutual 0und is a pool o2 money5 collected 2rom investors5 and is invested according to certain investment o/jective.

*hat is M"t"al F"nd/

mutual fund is a pool of money that is managed on behalf of in+estors by a professional money manager) !he manager uses the money to buy stocks, bonds or other securities according to specific in+estment objecti+es that ha+e been established for the fund) In return for putting money into the fund, you(ll recei+e either units or shares that represent your proportional share of the pool of fund assets) In return for administering fund and managing its in+estment portfolio, the fund manager charges fees based on the +alue of the fund(s assets) -utual funds are Mopen-ended( in+estment funds, meaning that new in+estors can contribute money to the fund at any time, and e'isting in+estor can return their units or share to the fund for redemption at any time) Ehen you redeem your units or shares of a mutual fund you will recei+e a che,ue based on the current market +alue of the fund(s portfolio) Se+eral parties are in+oked in the organiAation and operation of a mutual fund, including: Mutual 0und Manager $stablishes one or more mutual funds, markets them and o+ersees their general administration) Port2olio Adviser !he professional money manager appointed by the -utual Dund -anager to direct the fund(s in+estments) !he -utual Dund -anager also often acts as the *ortfolio d+iser) Principal Distri/utor 5o-ordinates the sale of the fund to in+estors, either directly or through a network of registered dealers)

'ustodian !he bank or trust company appointed by the -utual fund manager to hold all of the securities owned by the fund Trans2er Agent and +egistrar !he group responsible for maintaining a list of all in+estor in the fund) Auditor !he independent accountants retained by the -utual Dund -anager to audit each year, and report on the financial statements of the fund) Trustee !he entity that has title to the securities owned by the fund on behalf of the unit holders)

Mutual 2unds can /e classi2ied as ! 4> closed-end funds 6> open-end funds => large cap funds <> mid cap funds 2> e'change traded funds 47> +alue funds 44> money market funds 46> international mutual funds

:> e,uity funds 9> balanced funds 8> growth funds 3> no load funds

4=> regional mutual funds 4<> sector funds 4:> inde' funds 49> fund of funds

'(A+A'TE+67T6'7 !
4) 6) =) <) mutual fund actually belongs to the in+estors who ha+e pooled their funds) !he ownership of the mutual fund is in the hands of the in+estors) In+estment professionals and other ser+ice pro+iders) Eho earn a fee for their ser+ices, from the fund, manage a mutual fund) !he pool of funds is in+ested in a portfolio of marketable in+estments) !he +alue of the portfolio is updated e+ery day) !he in+estor(s share in the fund is denominated by Munits() !he +alue of the units changes with change in the portfolio(s +alue, e+ery day) !he +alue of one unit of in+estment is called the Net sset +alue or N /) !he in+estment portfolio of the mutual fund is created according to the stated in+estment objecti+es of the fund)

:)

Advantages o2 mutual 2unds investor

9) 8) 3) 2) 47) 44) *ortfolio di+ersification *rofessional management Higher rate of return #eduction of transaction Ci,uidity 5on+enience and fle'ibility

Disadvantages o2 mutual 2unds to investors

#%. *o control over costs Since in+estor do not directly monitor the fund(s operations they cannot the costs effecti+ely) #egulators usually limit the e'penses of mutual funds) *o tailor!made port2olios -utual fund portfolios are created and marketed by in+estors in+est) !hey cannot create made portfolios) -5s, into which

#8.

#9.

Managing port2olio o2 2unds s the number of mutual funds increases, in order to tailor a portfolio for him, an in+estor may be holding a portfolio of funds, with the costs of monitoring them and using them, being incurred by him)

Product types
EAuity 2unds

De/t 2unds

Balance 2unds

EAuity 2unds
!his fund is pre-dominantly in e,uity share of component) !here are +arieties of ways in which an e,uity portfolio can be created for in+estors)

#<. #>. #?. #@.

7imple eAuity 2unds Primary mar;et 2unds 7ectorial 2unds 6ndeC 2unds

De/t 2unds
&ebt funds are those that pre-dominantly in+est in debt securities) Since most debt securities pay periodic interest to in+estors, these funds are also known as income funds) Howe+er funds in+esting in debt products can also offer a growth option to their in+ertors) !he uni+erse of debt securities comprise of long-term instruments such as: 4) 6) =) .ond issues by central and state go+ernments *ublic financial institutions and pri+ate sector companies *ublic sector organiAations

<) :) 9) 8)

5all money lending 5ommercial papers 5ertificates of deposit !reasury bills

&ebt funds tend to create a +ariety of option for in+estors by choosing one or more of these segments of the dent markets in their in+estment portfolio) #. %. 8. 9. &iAuid 2unds = money mar;et 2unds Gilt 2unds 7imple de/t 2unds 7ectoral de/t 2unds

Balanced 2unds
Dunds that in+est both in debt and e,uity markets are called balanced funds) typical balanced fund would an almost e,ually in+ested in both the markets) !he +ariations are funds that in+est pre-dominantly in e,uity ;about 87?> and keep a smaller part of their portfolios indebt securities) !hese funds seek to enhance the income potential of their e,uity component, by bringing in debt) Similarly there are predominantly debt funds ;o+er 87?in debt securities>, which in+est in e,uity, to pro+ide some growth potential their funds) balanced fund also tends to pro+ide in+estors e'posure to both e,uity and debt markets in one product)

:*6T &6*,ED 6*7:+A*'E P&A*

6ntroduction o2 :&6Ps -vervie1 o2 :&6Ps ,ey 2eatures o2 :&6Ps Bene2its o2 :&6Ps ECpenses involved in :&6Ps :&6Ps plan comparison 7hould investor opt 2or :&6Ps 0ive steps 2or selecting right :&6Ps

8" 8# 88 89 8@ 8D 9< 9>

6ntroduction
s the competition increases in insurance industry and more in+stament a+enues are a+ailable to in+estor) Insurance industry has also upgraded them by introducing marketing linked insurance plan) !he main different is in choice of in+estment )in unit linked insurance plan companies will generally offer combination of different product with different combination of debt-e,uity mi' )this fund differ decides that risk e'posure and appreciation) In addition non- guaranteed bonuses in the from of share in the profits of the company may also be offered depending on whether the policy is participating policy or not) *olicyholder has no say in the choice of in+estment, which are decided by the companies on his behalf) !he premium amount is fi'ed at the outset and the same ,uantum of premium needs to be paid throughout the term of policy) So unit linked insurance plans can be said the combination of characteristic of mutual fund and insurance)

Mutual

6nsurance

:&6Ps

-vervie1 o2 :&6P
-ost insurers in the year 677< ha+e started offering at least a few unit-linked plans) "nit-linked life insurance products are those where the benefits are e'pressed in terms of number of units and unit price) !hey can be +iewed as a combination of insurance and mutual funds) !he number of units, which the customer would get, would depend on the unit price when he pays his premium) !he daily unit price is based on the market +alue of the underlying assets ;e,uities, bonds, go+ernment securities etc)> and computed from the net asset +alue) !he ad+antages of unit linked plans are that they are simple, clear, and easy to understand) .eing transparent the policyholder gets the entire upside on the performance of his fund) "nit-linked products are e'empted from ta' and they pro+ide life insurance) In+estors welcome these products as they pro+ide capital appreciation e+en as the yields on go+ernment securities ha+e fallen below 9 percent, which has made the insurers slash payouts) ccording to the I#& , a company offering unit linked plans must gi+e the in+estor an option to choose among debt, balanced and e,uity funds) If you opt for a unit-linked endowment policy, you can choose to in+est your premiums in dent, balanced or e,uity plans) If you choose a debt plan, the majority of your premiums will get in+ested in debt securities like gilts and bonds) !he ideal time to buy a unit-linked plan is when one can e'pect long-term growth ahead) !his is especially so if one also belie+es that current market +alues ;stock +aluations> are relati+ely low) So if you are opting for a plan that in+ests primarily in e,uity, the buAAing market could lead to windfall returns) Howe+er, should the buAA die down, in+estors could be left stung) If one in+est in a unit-linked pension plan early on ,say 6:,one can afford you take the risk associate with e,uities, at least in the plan(s initial stages) Howe+er, as one approaches retirement the ,uantum of return should be subordinated to capital preser+ation) t this stage, in+estigating in a plan that has an e,uity tilt may not be a good idea) 5onsidering that unit-linked plans are relati+ely new launches, their short history does not permit an assessment of how they will perform in different phases of the stock market)

,ey 0eatures o2 :&6Ps

4) 6) *remiums paid can be single, regular or +ariable) !he payment period too can be regular or +ariable) !he risk co+er can be increased or decreased) s in all insurance policies, the risk charge ;mortality rate> +aries with age)

=) <) :) 9) 8) 3) 2)

!he maturity benefit is not typically a fi'ed amount and the maturity period can be ad+anced or e'tended) In+estments can be made in gilt funds, balanced funds, money markets funds, growth funds or bonds) !he policyholder can switch between schemes, for instance, balanced to debt or gilt to e,uity, etc) !he maturity benefit is the net asset +alue of the units) !he costs in "CI* are higher because there is a life insurance, component in it as well, in addition to the in+estment component) Insurance companies ha+e the discretion to decide on their in+estment portfolios) !hey are simple, clear, and easy to understand)

47) .eing transparent the policyholder gets the entire episode on the performance of his fund) 44) Cead to an efficient utiliAation of a capital) 46) "CI* products are e'empted from ta' and they pro+ide life insurance) 4=) *ro+ides capital appreciation) 4<) In+estor gets an option to choose among debt, balanced and e,uity funds)

Bene2its
'over!plus ! In a sense, unit-linked plans work like endowment plans-they combine insurance with in+estment) part of the premium you pay goes towords buying you insurance co+er and what(s left of the rest is in+ested in e,uitl and debt instruments) !he in+estment components of the premium is con+erted into unit-much like mutual fund premiums are unitiAed through the policy tenure, typically 4: or 67 years) nd information on this is put out regurarly by insurere) J%ne of the major ad+antages of unit-linked plans is that they are +ery transparent,K says Stuart *urdy, managing director, +i+a life insuranceK

6nvestment options !
It is in the range of in+estment option that unt-linked plans offer that they stand apart from other insurance-cum-in+estment products) Jwith these plans ,you can choose a mi' of asset classes for your in+estment chief actuary, I5I5I prudential life insurance) -ost insurers in fallow you to switch from one stream to another, between once and four times a year free of cost )this means that as your risk appetite changes with age, an you want to mo+e to a lower risk

appetite changes with age, and you want to mo+e a lower risk option secure your accumulations, you can migrate your money to safer ha+ens)

TaC /rea;s !
!he premiums you pay on unit-linked plans ,ualify for rebate under section 33) ; in the case on unit-linked pension plans ,they ,ualify for deduction under section 37555)> mong mutual funds, only e,uity-linked sa+ing schemes offer section 33 rebate, with a three-year lock-in) page: lthough ta' breaks aren(t by themsel+es reasons enough to decide on a choice of in+estments, there(s no denying that tilt the balance in fa+our of unit-linked plans-e+en if you are financially sa++y an feel e,uipped to manage your in+estments through, say, e,uity funds)

ECpenses !
one area where unit-linked plans come in for widespread criticism related to the e'penses that insurers charge under three broad heads :-mortality charges ; which goes towards paying for your insurance co+er>, general e'penses;agent(s commissions and underwriting costs>,and fund management costs) !he second head, general e'penses ,accounts for the biggest components-typically, around <7 per cent ;of the premium paid > in the first two years ,which goes down sharply in later years) Dor instance, e'pense ratio of 92)3 per cent in year 4 ; for a premium of #s47,777 a year>,which comes down to 64)9 per cent,46)= per cent and 2)3 per cent in the subse,uent years) !he actual e'pense structure may +ery from one product to another depending on, among other things, the amount in+ested, the in+estment tenure and the period beyond which withdrawals are permitted) Dor instance, upon in+esting #s67,777 a year for 4: in !ata IG(s in+est assure policy, you will pay <6)= per cent from the third year onwards I in rupee terms, that works out to #s 3,<97, #s <,<97 and #s 997 respecti+ely) %n the other hand, if you in+est #s :7,777 a year in the same plan for the sane tenure, your e'pense structure scales back from <7)2 per cent ;or #s 67,<:9> in the first year to 67)2 per cent ;or #s 47,<:9> in the second year to 4)2 per cent;or #s 2:9> from the third year onwards)

Since these e'penses are deducted from the premium you pay, the in+estment component shrinks to that e'tent-and Impacts your returns) J !he rationale behind the high commissions is that unit-linked plans need greater le+el of ad+isory ser+ices ,K says -ysore) .ut in response to greater in+estor awareness about the high e'pense , insurers ha+e scaled back their e'pense structures in newer products, insurers ha+e scaled life(s new unit-linked plan, classic life, has an e'pense ratio of 49 per cent in the first yearI I5I5I prudential(s lifetime charges 42 per cent in the first technology in administration and management , insurers are e'pected to lower these e'pense structure further)

Tenures !

!he hea+y frontloading of e'penses effecti+ely acts as a disincenti+e for early withdrawals) Dor instance, o+er three- or fi+e-year tenure, unit-linked plans in most cases compare poorly with e,uity funds on pre-ta' returnI only if you factor in the income accruing from the additional in+estment of the section 33 drawback in **D do the return from unit-linked plans fare better those from e,uity funds) nd for those who don(t must perforce be 4: years or more for it to make financial sense) %n the other hand, staying in+ested for longer tenures offers returns that can match-and e+en better-e,uity funds )for instance, if you in+est for 4: years, you get ta'-free return of #s 3)9 lakh from the unit-linked plan e+en if you(re not eligible for section 33 rebate) %n the other hand, the e,uity fund will only return #s 3)= lakh, post-ta') Junlike mutual funds, unit-linked plans don(t face redemption pressureI a fund manager for a unit-linked product can, therefore, perform better in the long run, Ksays #ohit Sarin of client associates, a pri+ate wealth management firm)

Top!up strategy !
%ne way of lowering your e'pense structure is by making imaginati+e use of the top-up pro+ision that most insurers offer) "nder this, you can keep your premium to the minimum re,uired under the plan, typically #s 47,777 a year) 0ou can then Mto up( from the second year onwards) by which time the e'pense ratio is much smaller) .ut ,you may ha+e to pay a fee for this the this facility, which is small if the top-up e'ceeds a threshold defined by the particular insurer) ;for instance, single top-ups abo+e #S 6:,777 on !ata Ig(s in+est assure policy in+ite a 4): per cent chargeI top-ups in the charges decline o+er the tenure)> what this strategy lets you do is to lower your e'pense outgo in the early years ;when they ere are +ery high>, and o+er the years lets you di+ert more of your o+erall premium payout to the in+estment component)

Are they 2or youE

Junit-linked products are finally products of choice,K says #ajagopalan) If you feel e,uipped to manage your in+estment on your own or are not comfortable with long lock-ins or you can(t make the most of these ta' breaks, you may be better off in+esting elsewhere after securing your life insurance needs) but if you are not financially sa++y or ha+e little time to monitor your in+estments and don(t ha+e access to professional in+estment managers and still want marketlinked returns on your in+estment, you might just want to sa+our the fla+our of the season)

ECpenses involved in :&6P

Policy 6ci 'i pru Bir &a 7/i &i2e ,m -m Met &i2e Alli AnB Baj Aj (d2c 6cici Prude *tial Ma C Ta Ta A6G

$'pense 5harges In first 0ear 5ost of life co+er dminis !rati+e charges !otal

*re -ier life 46)7 7? 4)<<?

5las Sic life 4:)7 7? 4)<< ?

Hori Aon 4:)7 7? 4)93 ?

Hsi p 4:)7 7? =)77 ?

-$! CID$ 49)6 7 ? <)37 ?

"nit Gain pluse 6<)77 7? 7)<3 ?

$ndow -ent "nit linked 68)77 ? 7)=9 ?

Duture project <9)<7? 7)97 ?

Cife -ak er <9)77? 4)67 ?

In+e St ssu #e :7)7 7? 7)24 ?

4=)< <?

49)< <?

49)9 3?

43)7 7?

64)7 7 ?

6<)<3 ?

68)=9 ?

<8)77 ?

<8)6 7?

:7)2 4?

:*6T &6*,ED P&A*7 '-MPA+676-* !

In a "CI*, part of the monthly premium is used to pro+ided insurance co+er for the person and the remaining amount is in+ested in the stock market) If a person is wealthy or has no dependents, insurance co+er may not be re,uired) t a young age ;less than =7>, insurance premium are low, so purchasing a term policy may be a better option) !he o+erheads for the "CI* are higher compared to a mutual fund, so the returns may be lower) Howe+er, the buyer of "CI*s should also be prepared for negati+e returns when share prices fall) -ost of the insurance companies offer attracti+e commissions to their agents for "nit Cinked Insurance *lans ;"CI*>, so many people buy "CI*s without reading the print as theses is marketed aggressi+ely by companies pro+iding in+estor ser+ices)

0ortune Plus and Pro2it Plus 2rom &6' !

4) 6) =) "nit Cinked $ndowment *lans from Cife Insurance 5orporation of India) Dortune *lus ;!) no) 438> *rofit *lus ;!) no) 433>

0eatures !
4) 6) =) <) .ond Dund, Secured Dund, .alanced Dund, Growth Dund "nlimited switches ;< free switches per year> ccident benefit rider 5ritical illness rider ;*rofit *lus>

Dor *rofit *lus, premium can be paid in one installment or a number of installments o+er a period of up to : years) -inimum premium is #s) 67,777 for single premium and #s) 47,777 per annum for term policies) It is a+ailable for persons up to 9: years) !he premium is limited to : years for Dortune *lus and is a+ailable for the age group 4697) -inimum premium payable in the first year is #s) 67,777) *remium paid in "nit Cinked Cife Insurance *olicies are subject to in+estment risks associated with capital -arkets and the N / of the units may go up or down based on the performance of the fund and factor influencing capital markets and the insured responsible for hisNher decisions)

6nvest Assure Gold 2rom TATA A6G &i2e 6nsurance 'ompany !

3whole life unit linked insurance policy4

0eatures !
4) 6) =) Di+e year premium period $ntry e+en at 87 Coyalty units e+ery co+er till age of 477

*remium paid in "CI*s are subject to in+estment risks associated with capital markets and the N / of the units may go up or down based on the performance of the fund and factor influencing capital -arkets and the insured are responsible for his decision) !ata IG life insurance company limited is the name of the insurance company and in+est ssure Gold is the name if the "CI* contract and does not in any way indicate the ,uality of the contracts, its future prospects or returns) !his product is underwritten by !ata IG Cife Insurance 5ompany Cimited) *ast performance is not indicati+e of future results)

&i2e 7tage +P 2rom 6'6'6 prudential li2e insurance !

;"nit linked insurance policy, which adjusts e,uity ? automatically with age>

0eatures !
"nit linked insurance plan which adjusts the in+estment according to age 4) 6) =) <) :) 9) .ased on the age of the person, the debt e,uity component is periodically adjusted +ailable in select cities ge at entry : 43-8: years -inimum premium : #s 4:,777 p)a

%ption : Cife cycle based and fi'ed portfolio, mid term option change allowed up to < times free of cost Dunds a+ailable : Dle'i Growth I/, -a'imiser I/, Dle'i .alanced I/, .alancer I/, *rotector I/, *reser+er I/ 7. 3) 477 ? fund +alue paid on surrender from :th policy year New fund opens at #s 47 on ugust 6:, 6778

1.

&etails of risk factor, terms and conditions are a+ailable in sales brochure)

In+estments in "CI*s are subject to market risk) (oriBon 66 pension 2rom 7B6 li2e !
"nit linked insurance policy ;"CI*>, e,uity ? is higher initially and reduces close to the retirement age)

0eatures !

4) 6) =) <) :)

"nit linked insurance plan which adjusts the in+estment according to age) .ased on the age of the person, the debt e,uity component is periodically adjusted ge at entry : 43-97 year) -inimum premium : #s 46,777 p)a %ption : &ynamic plan and Growth plan)

9) Dor &ynamic plan, 37-477? of the funds will be in+ested in e,uity markets initially and the remaining amount in bonds or the money market) 8) s the person ages, the e,uity in+estment decreases gradually to 7-4:? at the end of the 67 year term and the in+estment in bonds increases) 3) 2) 47) 11. Growth plan is similar to dynamic plan, but the initial e,uity component is e+er lower) %nce a dynamic or growth plan is selected, it cannot be changed) Dunds a+ailable : $,uity pension, bond pension and money market pension funds) 477? fund +alue paid on surrender from <th policy year onward)

lus Gold 2rom Tata A6G. ! I:nit lin;ed insurance policy 3:&6P4J
46) 4=) 4<) 4:) High allocation up to 3:? "C wai+er of premium and "C family income benefit Dle'ibility with premiums, top-ups and switches !a' sa+ings under section 375 and 37& of pre+ailing income ta' regulations)

ures !

49) Insurance co+er of #s <)6 Cakh for a policy taken at age 6: with a premium of #s 6777 per month)

+is; 2actors $ 1arning statements !

"nit gain *lus Gold is a "nit Cinked insurance *la;"CI*>)

In+estment in "CI*s is subject to risks associated with capital market) !he policy holder is solely responsible for hisNher decisions while in+esting in "CI*s) .ajaj lliance Cife Insurance and "nit Gain *lus Gold are only the name of the insurance company and the product respecti+ely and does not in any way indicate the ,uality of the products, its future prospects or returns)

Aspire li2e 2rom Bharti ACa li2e insurance ! Iunit lin;ed insurance policy 3:&6P4J 0eatures 3claimed /y the company4

4) 6) =) <) :)

Guarantees return of up to 48:? of first year(s premium In+est up to 477? of all subse,uent premiums *artial withdrawals allowed *remium holiday option Dle'ibility to switch between in+estment funds

7hould 6nvestors opt 2or :&6PsE

Dirst and foremost, in+estors need to understand that a "CI* is a bundled product of their in+estment and their insurance proceeds) So if you ha+e a "CI* in+ested in e,uities, you are e'posing your life insurance monies as well as your in+estable surplus to the +agaries of e,uity markets) Ehile it is fine and e+en sensible to let your in+estable assets get an e,uity fla+or, the same cannot be said about your life insurance monies, which to a large e'tent should be scared) !he +olatility in e,uity markets can disturb the calmest of minds and the last thing you want to see is your nest egg being eroded by the latest slide in e,uity markets) n e'pert elaborates, M "CI* policyholder has the option to in+ent in a +ariety of funds, depending on his risk profile) If one does not ha+e the appetite to in+est in e,uity, they can choose a debt or balanced fund)( Howe+er, the structure of a "CI* takes care of ,uite a bit of the uncertainty in the markets) Insurance companies understand the need to gi+e insurance-seekers the fle'ibility to rethink their in+estment strategy in +iew of market histrionics) !here is an option for the insurance-seeker to switch to another plan with a lower or Aero e,uity components to stem the loss in a falling e,uity market) $'perts( points out, M!he switch option allows customers to switch between fund option, thereby making adjustments to any percei+ed risks)( !ata IG allows policyholder to make this switch four times a year at no cost, with #s 477 at e+ery additional switch after that) H&D5 standard life allows policyholder to make as many switches as they like) Howe+er, for in+estors to make the right switch they need to track markets acti+ely and be well informed, which is actually the job of the in+estment ad+isorNconsultant) "CI*s are suitable for indi+iduals who are already ade,uately insured and are reasonably well-informed and sa++y to take acti+e in+estment decisions by using the Mswitch option( that is pro+ided to a "CI* policyholder) lso policyholder with regular endowment plans who are not satisfied with the <-9? returns can consider taking a "CI* with a lower e,uity component) It is best if insurance-seekers tread the middle path and choose balanced plans ;with about :7-97? e,uity component>) Ideally they need to a+oid taking the aggressi+e 477? e,uity "CI*, which could needlessly e'pose their assets to market +olatility) So if insuranceseekersNin+estors play their cards right, they can make this options work)

06)E 7TEP7 0-+ 7E&E'T6*G +6G(T :&6P

"nit linked insurance plans ;"CI* s> were seen as a Jwonder productK that simultaneously fulfilled an indi+idual(s needs for in+estments and insurance to do a rethink) /ery often it was poor selection that was responsible for the in+estors( woes) Ee present a :-step strategy for in+esting in "CI* s)

#. :nderstand the concept o2 :&6Ps !

!ry to do as much homework as possible before in+esting in an "CI*) !his way you will know what you are getting into and won(t be faced with unpleasant surprises at a later stage) %ur e'perience suggests that many a time people do not realiAe what they are getting into ;in fact we ha+e been approached by se+eral people who wanted to cancel the "CI* s they had been coerced into talking by unscrupulous agents>) Gather information on "CI* s, the +arious options a+ailable and understand their working) #ead the literature on "CI* s on the websites and brochures circulated by insurance companies)

%. 0ocus on your reAuirements and ris; pro2ile !

Identify a plan that is best suited for you ;in terms of allocation of money between e,uity and debt instruments>) 0our risk appetite should play an important role in the plan you choose) So if you ha+e a high-risk appetite, go in for a more aggressi+e in+estment option and +ice-a-+ersa) %pting for a plan that is lop-sided in fa+or of e,uities when you are a risk-a+erse indi+idual might spell disaster for you ;this is true in most cases currently>)

8. 'ompare :&6P s o2 di22erent insurance companies !

5ompare products of the leading insurance companies) $n,uire about the premium as "CI* s work on minimum premium basis as opposed to sum assured in the case of con+entional insurance policies) 5heck the fund(s performance o+er the past si' months) Dind out how the debt and e,uity schemes are performing and how steady the performance has been) $n,uire about the charges you will ha+e to pay) In "*IC s the costs in+ol+ed are a big deciding factor) sk about the top-up facility offered by "CI* s i)e) additional lump sum in+estments you can make to increase the sa+ings portion of your policy) !he companies gi+e you the option to increase the premium amounts, thereby pro+iding you with the opportunity to gainfully utiliAe surplus funds at your disposal) $n,uire about the number of times you can make free switches ;i)e) change the asset allocation of the money in your "CI* account> from one in+estment plan to another) Some insurance companies offer you free switch for a 6-yr period while others do so only for 4 year)

9. Go 2or an eCperienced insurance advisor !

Select an ad+isor who is not only professional and informed, but also independent and unbiased) lso en,uire whether he has ser+iced clients like you) Ehen your agent recommends a "CI* of O company ask him a few product-related ,uestions o him and ask him also why the other products should not be considered

Insurance ad+ice at all times must be unbiased and independent and your agent must be willing to inform you about the pros and cons of buying a particular plan) His job should not just begin by filling the form and end after he deposits the check and gi+es you the receipt) He should keep a track of your plan and inform you on a regular basis) !he key is to do for an ad+isor who will offer +alue-added products)

<. Does your :&6P o22er a minimum guaranteeE

In market linked product if your in+estment(s downside can be protected, it would be a huge ad+antage) Dind out if the "CI* you are considering offers a minimum guarantee and what costs ha+e to be borne for the same) !his will enable you to make an informed choice)

+E7EA+'( = '-*'&:76-*

+esearch -/jectives
Study of "nit Cinked Insurance *lan as an in+estment option in -utual Dunds is of major importance to the financial markets as well as finds the net sset +alue of the insurance) "nit Cinked Insurance plan is like to in+est your money in mutual funds as a safer side with co+ering your life insurance and that keeps your in+estment mo+ing and ma'imiAe your financial le+el of return) !he main aim of this report is to study the mechanism of mutual fund and "CI*s in the emerging sector of the capital market) -utual Dund is an instrument which helps in the measuring the risk) .ut without ha+ing the proper and inade,uate knowledge in the market one can(t get proper return but can get secure his life with life insurance) $+en a small and a simple game to be played needs proper and accurate knowledge, and compared to that this is +ery +ital market ha+ing +ery wide scope of getting returns) So knowing about the risk and the proficiency, skill, e'pertise and the technology through which the actual game is played makes the winning easier)

-ther -/jectives
9) 8) 3) 2) 47) 44) !o know basic mechanism of "CI*s and -utual Dund) !o identify market potential of "CI*s as a part of in+estment in -utual fund 5omparati+e analysis of "CI*s of !ata IG with other competiti+e plans) !o know e+olution and growth of insurance sector) !o understand the criteria for in+estment in "CI*s)

+esearch Methodology
7-:+'E -0 6*0-+MAT6-*

ata 'ollection Methods %nce the research design has been decided, the ne't stage is that of selecting sources of data) $ssentially, there are two sources of data)

46) 4=)

*rimary &ata 5ollection Secondary &ata 5ollection

Primary 7ources o2 Data !

*rimary data may pertain to demographic, socio- economic haracteristics of consumers, attitudes and opinions of people, their he main methods, which are used, for obtaining primary data are as under)

awareness and other similar as

7econdary 7ources o2 Data !

Secondary data are those data, which are collected from earlier research work and application as well as usa tudy of research) !here are mainly two types of secondary sources of data and they are:

Types o2 secondary Data

al

It includes +arious internal reports prepared by the firm like, sales rt, production report) I can(t use any internal primary data)

nal data $'ternal data can be collected from the web site, magaAines, naws paper and so on)

0ESEA0C1 FINDIN2
Potentiality in the insurance sector

*um/er polices in 2orces

%" #@ #> #9 #% #" @ > 9 % " #DDD %""" %""% %""9 %""> %""@ %"#"

GD7K

Year &i2e premium as a proportion o2 gross domestic savings

A/out investment pattern

80 70 60 50 40 30 20 10 0

gov

sha

insu

mu

If has been found out that out of sur+ey only 67? people were in+esting in mutual funds) majority of people were in+esting in D)&,**D and other fi'ed return securities)

nd

A/out mutual 2unds

A/out insurance Dirst of the respondents were asked that whether they are ha+ing insurance or not then it was e'plained that what is ade,uate or not on the basis of below formula) de,uate insuranceP;:< years-present age>Qyearly income

:nit lin;ed insurance plans &uring the sur+ey it was asked to respondents that whether they know about marked linked plans which pro+ides insurance co+er and returns) most of them knew little about the plans)

+esearch scope
!he information gi+en in research findings is collected by data collection method) ll the data(s collected are secondary) So the scope for collecting this data is +ery wide, the data are collected from internet, magaAines and newspaper)

+ecommendations
4<) In insurance it was found out that most of the people did not know the benefits of "CI*s so first of all company should e'plain the benefits of "CI*s to the customers)

4:)

In some cases people didn(t ha+e the faith it pri+ate companies) So company should make them con+ince about the benefits of pri+ate companies and about the products which are more fle'ilbe) *eople know the options a+ailable for the in+estment but they don(t know which option will be best suited for them) *ri+ate companies ha+e to create awareness of not only those products which will be mare beneficial to them but all products)

49) 48)

'-*'&:76-*
.oth these instruments are designed to ser+e different purpose and are not comparable) unit-linked plan from an insurance company is in an insurance policy designed to pay a lump sum on maturity or on death if earlier) *remium paid under these plans is eligible for ta' act) %n the other hand, mutual funds are in+estments a+enues to participate in the growth of financial markets and do not pro+ide any ta' deduction ;e'cept $CSS and pension funds>) -oreo+er, unit-linked plans are not as li,uid as mutual funds) !here is a lock-in of three years) $+en if one redeems after three years, you would be at a loss because of higher initial administrati+e charges) Dor e'ample, the upfront charges for the first two premium amounts are as high as 67-68 percent) !hen there is an annual management fee of 7)3-4)6: percent and a flat fee of #s4:-67 per month) Dinally is a deduction for risk co+er) !his goes to the sum assured or the life insurance co+er, which is based on mortality rates as calculated by actuaries) !hough mutual funds too ha+e entry e'it loads ;ma'imum 6 per cent> and e'penses ;ma'imum 6): per cent>, these costs are lower than unit-linked plans)

Bi/liography
MagaBines
.usiness Eord ;%ctober 6774> .usiness today ;Lune 6774> .usiness !oday ; pril 677:> .usiness India ; -ay 677<>

.e/sites
1. 2. 3. 4. 5. 6. 7. www)tataaing)com www)ilo+eindia)com www)moneycontrol)com www)Sebi)go+)in www)traderji)com) www)kar+y)com cccwww)mutualfundsindia)com