A Summer Placement Report on HDFC Standard Life Insurance Company Limited

Submitted in partial fulfillment for Post Graduate Diploma in Management from Aravali Institute of Management, Jodhpur.

Submitted to:

Submitted by:

NEW DELHI INSTIT TI!N !F "ANA#E"AENT

EXECUTIVE SUMMARY
HDFC Standard Life insurance is the oldest life insurance company in the world. It is the largest insurer in the U and is the !"th largest company in the world. In India# the company is mar$eting life insurance products and unit lin$ed in%estment plans. From my research at HDFC SLIC# I found that the company has a lot of competition from other pri%ate insurers li$e ICICI# &%i%a# 'irla Sun Life and (ata &I). It also faces competition from LIC. (o compete effecti%ely HDFC SLIC could launch cheaper and more reasonable products with small premiums and short policy terms *the number of year+s premium is to be paid,. (he ideal premium would be between -s. ./// 0 -s. !./// and an ideal policy term would be 1/ 0 !/ years. HDFC must ad%ertise regularly and create brand %alue for its products and ser%ices. 2ost of its competitors li$e &%i%a# ICICI# 2a3# -eliance and LIC use tele%ision ad%ertisements to promote their products. (he Indian consumer has a false perception about insurance 0 they feel that it would not benefit them if they do not li%e through the policy term. 4owadays howe%er# most policies are unit lin$ed plans where a customer is benefited e%en if their death does not occur during the policy term. (his message should be con%eyed to potential customers so that they readily in%est in insurance. Family responsibilities and high returns are the two main reasons people in%est in insurance. 5ptimum returns of 16 0 !/ 7 must be pro%ided to consumers to $eep them interested in purchasing insurance. 5n the whole HDFC standard life insurance is a good place to wor$ at. 8%ery new recruit is pro%ided with e3tensi%e training on unit lin$ed funds# financial instruments and the products of HDFC. (his training enables an ad%isor9sales manager to mar$et the policies better. HDFC was ran$ed 1: in the 'est ;laces to <or$ sur%ey. (he company should try to create awareness about itself in India. In the global mar$et it is already %ery popular. <ith an impro%ement in the sales techni=ues used# a fair bit of ad%ertising and modifications to the e3isting product portfolio# HDFC would be all set to capture the insurance mar$et in India as it has around the globe.

TABLE OF CONTENTS
Introduction to Insurance -esearch Design Company ;rofile of HDFC SLIC Company ;rofile of (ata &I) LIC ;5;+s and ;5D+s Competiti%e analysis 2ar$eting problems &nalysis and Interpretation Future line of research Conclusion -eferences &ppendi3 :" ?: ?6 6: 6. 6@ 6" !> :: . 1/ 16

ACKNOWLEDGMENT
I would li$e to than$ my proAect guide 2r. '. . ;anda# Sales De%elopment 2anager

HDFC Standard Life Insurance# 4ew Delhi for guiding me through my summer internship and research proAect. His encouragement# time and effort are greatly appreciated. I would li$e to than$ ;rof. Barun &rya# ;rof. 2. 2. 2ehta and 2r. SanAay Diddee for supporting me during this proAect and pro%iding me an opportunity to learn outside the class room. It was a truly wonderful learning e3perience. I would li$e to dedicate this proAect to my parents. <ithout their help and constant support this proAect would not ha%e been possible. Lastly I would li$e to than$ all the respondents who offered their opinions and suggestions through the sur%ey that was conducted by me in Codhpur.

CHAPTER I

INDIAN INSURANCE INDUSTRY AN OVERVIEW

THE INSURANCE INDUSTRY IN INDIA

AN OVERVIEW
<ith the largest number of life insurance policies in force in the world# Insurance happens to be a mega opportunity in India. It+s a business growing at the rate of 1.D!/ per cent annually and presently is of the order of -s 1.6/.?1 billion *for the financial year !//6 0 !//@,. (ogether with ban$ing ser%ices# it adds about @7 to the country+s )ross Domestic ;roduct *)D;,. (he gross premium collection is nearly !7 of )D; and funds a%ailable with LIC for in%estments are "7 of the )D;. 8%en so nearly 6.7 of the Indian population is without life insurance co%er while health insurance and nonDlife insurance continues to be below international standards. & large part of our population is also subAect to wea$ social security and pension systems with hardly any old age income security. (his in itself is an indicator that growth potential for the insurance sector in India is immense. & wellDde%eloped and e%ol%ed insurance sector is needed for economic de%elopment as it pro%ides long term funds for infrastructure de%elopment and strengthens the ris$ ta$ing ability of indi%iduals. It is estimated that o%er the ne3t ten years India would re=uire in%estments of the order of one trillion US dollars. (he Insurance sector# to some e3tent# can enable in%estments in infrastructure de%elopment to sustain the economic growth of the country. *Source: www.indiacore.com,

HISTORICAL PERSPECTIVE
(he history of life insurance in India dates bac$ to 1"1" when it was concei%ed as a means to pro%ide for 8nglish <idows. Interestingly in those days a higher premium was charged for Indian li%es than the non D Indian li%es# as Indian li%es were considered more ris$y to co%er. (he 'ombay 2utual Life Insurance Society started its business in 1"@/. It was the first company to charge the same premium for both Indian and nonD Indian li%es.

(he 5riental &ssurance Company was established in 1""/. (he )eneral insurance business in India# on the other hand# can trace its roots to (riton Insurance Company Limited# the first general insurance company established in the year 1"./ in Calcutta by the 'ritish. (ill the end of the nineteenth century insurance business was almost entirely in the hands of o%erseas companies. Insurance regulation formally began in India with the passing of the Life Insurance Companies &ct of 1>1! and the ;ro%ident Fund &ct of 1>1!. Se%eral frauds during the 1>!/Es and 1>:/Es sullied insurance business in India. 'y 1>:" there were 1@6 insurance companies. (he first comprehensi%e legislation was introduced with the Insurance &ct of 1>:" that pro%ided strict State Control o%er the insurance business. (he insurance business grew at a faster pace after independence. Indian companies strengthened their hold on this business but despite the growth that was witnessed# insurance remained an urban phenomenon. (he )o%ernment of India in 1>.6# brought together o%er !?/ pri%ate life insurers and pro%ident societies under one nationaliFed monopoly corporation and Life Insurance Corporation *LIC, was born. 4ationaliFation was Austified on the grounds that it would create the much needed funds for rapid industrialiFation. (his was in conformity with the )o%ernmentEs chosen path of State led planning and de%elopment. (he nonDlife insurance business continued to thri%e with the pri%ate sector till 1>@!. (heir operations were restricted to organiFed trade and industry in large cities. (he general insurance industry was nationaliFed in 1>@!. <ith this# nearly 1/@ insurers were amalgamated and grouped into four companiesD 4ational Insurance Company# 4ew India &ssurance Company# 5riental Insurance Company and United India Insurance Company. (hese were subsidiaries of the )eneral Insurance Company *)IC,.

KEY MILESTONES

1912: (he Indian Life &ssurance Companies &ct enacted as the first statute to regulate the life insurance business. 1928: (he Indian Insurance Companies &ct enacted to enable the go%ernment to collect statistical information about both life and nonDlife insurance businesses. 19 8: 8arlier legislation consolidated and amended by the Insurance &ct with the obAecti%e of protecting the interests of the insuring public. 19!": !?. Indian and foreign insurers along with pro%ident societies were ta$en o%er by the central go%ernment and nationaliFed. LIC was formed by an &ct of ;arliamentD LIC &ct 1>.6D with a capital contribution of -s. . crore from the )o%ernment of India.

INDUSTRY REFORMS
-eforms in the Insurance sector were initiated with the passage of the I-D& 'ill in ;arliament in December 1>>>. (he I-D& since its incorporation as a statutory body in &pril !/// has fastidiously stuc$ to its schedule of framing regulations and registering the pri%ate sector insurance companies. Since being set up as an independent statutory body the I-D& has put in a framewor$ of globally compatible regulations. (he other decision ta$en simultaneously to pro%ide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the I-D& online ser%ice for issue and renewal of licenses to agents. (he appro%al of institutions for imparting training to agents has also ensured that the insurance companies would ha%e a trained wor$force of insurance agents in place to sell their products.

PRESENT SCENARIO # LIFE INSURANCE INDUSTRY IN INDIA

(he life insurance industry in India grew by an impressi%e ?@.:"7# with premium income at -s. 1.6/.?1 billion during the fiscal year !//6D!//@. (hough the total %olume of LICEs business increased in the last fiscal year *!//6D!//@, compared to the pre%ious one# its mar$et share came down from "..@.7 to "1.>17. (he 1@ pri%ate insurers increased their mar$et share from about 1.7 to about 1>7 in a yearEs time. (he figures for the first two months of the fiscal year !//@D/" also spea$ of the growing share of the pri%ate insurers. (he share of LIC for this period has further come down to @. percent# while the pri%ate players ha%e grabbed o%er !? percent. <ith the opening up of the insurance industry in India many foreign players ha%e entered the mar$et. (he restriction on these companies is that they are not allowed to ha%e more than a !67 sta$e in a company+s ownership. Since the opening up of the insurance sector in 1>>># foreign in%estments of -s. ".@ billion ha%e poured into the Indian mar$et and 1> pri%ate life insurance companies ha%e been granted licenses. Inno%ati%e products# smart mar$eting# and aggressi%e distribution ha%e enabled fledgling pri%ate insurance companies to sign up Indian customers faster than anyone e3pected. Indians# who had always seen life insurance as a ta3 sa%ing de%ice# are now suddenly turning to the pri%ate sector and snapping up the new inno%ati%e products on offer. Some of these products include in%estment plans with insurance and good returns *unit lin$ed plans,# multi 0 purpose insurance plans# pension plans# child plans and money bac$ plans. *www.wi$ipedia.com,

CHAPTER II RESEARCH DESIGN

RESEARCH DESIGN
INTRODUCTION
& -esearch Design is the framewor$ or plan for a study which is used as a guide in collecting and analyFing the data collected. It is the blue print that is followed in

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completing the study. (he basic obAecti%e of research cannot be attained without a proper research design. It specifies the methods and procedures for ac=uiring the information needed to conduct the research effecti%ely. It is the o%erall operational pattern of the proAect that stipulates what information needs to be collected# from which sources and by what methods.

TITLE OF THE STUDY

T$ C$%&'() *+) &($,-.*/ $0 HDFC S*'1,'(, L20) I1/-('1.) C$%&'13 L2%2*), '1, T'*' AIG L20) I1/-('1.) C$%&'13 L2%2*), 0$( HDFC S*'1,'(, L20) I1/-('1.) C$%&'13 L*,4

STATEMENT OF THE PROBLEM

(his study was underta$en to identify which type of insurance plans HDFC SLIC should mar$et to beat (ata &I) LIC in India. & sur%ey was underta$en to understand the preferences of Indian consumers with respect to insurance. <hile mar$eting policies the sole duty of an ad%isor9 agent is to pro%ide insurance plans as per customer re=uirements. In effect plans *insurance products, should be fle3ible to suit indi%idual re=uirements. (his research tries to analyFe some $ey factors which influence the purchase of insurance li$e the term of the policy# the type of company# the amount of annual premium payable *capacity and willingness to spend,# ris$ ta$ing ability and the influence of ad%ertising. Solutions and recommendations are made based on =ualitati%e and =uantitati%e analysis of the data.

OB5ECTIVES OF THE STUDY

(o analysis the product details of HDFC Standard life Insurance Company limited and (ata &I) life Insurance Company Limited.

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 (o find G;oints of ;arity+ and G;oints of Difference+ of HDFC Standard Life Insurance Company Limited and (ata &I) Life Insurance Company Limited. (o find out factors that influence customers to purchase insurance policies and gi%e suggestions for further impro%ement.

RESEARCH METHODOLOGY

TYPE OF DATA COLLECTED (here are two types of data used. (hey are primary and secondary data. ;rimary data is defined as data that is collected from original sources for a specific purpose. Secondary data is data collected from indirect sources. *Source: -esearch 2ethodology# 'y C. -. othari, PRIMARY SOURCES (hese include the sur%ey or =uestionnaire method# telephonic inter%iew as well as the personal inter%iew methods of data collection. SECONDARY SOURCES (hese include boo$s# the internet# company brochures# product brochures# the company website# competitor+s websites etc# newspaper articles etc.

SAMPLING
Sampling refers to the method of selecting a sample from a gi%en uni%erse with a %iew to draw conclusions about that uni%erse. & sample is a representati%e of the uni%erse selected for study. SAMPLE SI6E

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(he sample siFe for the sur%ey conducted was 278 ()/&$1,)1*/4 (his sample siFe was ta$en on >.7 confidence le%el and 6 significant le%el. Data uni%erse for this sample is 1/#//#/// which is appro3 population of Codhpur e3cluding people below age of 1" years.

SAMPLING TECHNI9UE R'1,$% /'%&:21; *).+12<-) was used in the sur%ey conducted.

PLAN OF ANALYSIS
(ables were used for the analysis of the collected data. (he data is also neatly presented with the help of statistical tools such as graphs and pie charts. ;ercentages and a%erages ha%e also been used to represent data clearly and effecti%ely.

STUDY AREA
(he samples referred to were residing in Codhpur City. (he areas co%ered were Shastri 4agar# Sardarpura# 2asuriya# Subhash 4agar# City &rea and amla 4ehru 4agar.

OVERVIEW OF CHAPTER SCHEME

CHAPTER 1: I1*($,-.*2$1 *$ 21/-('1.) # &n o%er%iew of the industry in India# history# $ey milestones# reforms in the industry# present scenario in India.

CHAPTER 2:

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R)/)'(.+ D)/2;1 D Introduction# title of the study# statement of the problem# obAecti%es of the study# research methodology# sampling# plan of analysis and study area.

CHAPTER : C$%&'13 &($02:) $0 HDFC SLIC 0 Introduction of HDFC SLIC# products and ser%ices# %ision and core %alues# human resource# organiFational structure# introduction to unit lin$ed funds# national H international presence of the organiFation.

CHAPTER =: C$%&'13 &($02:) $0 T'*' AIG > Introduction of (ata &I)# products and ser%ices# %ision and core %alues. (he ad%antages of in%esting in HDFC SLIC compared to other financial instruments. CHAPTER !: P$21*/ $0 P'(2*3 '1, P$21*/ $0 D200)()1.) ?)*@))1 HDFC SLIC '1, T'*' AIG LIC 0 Comparison between different plans# charges# fees# deductions and riders a%ailable with HDFC SLIC and (ata &I) LIC CHAPTER ": C$%&)*2*2A) '1':3/2/ 0 Information about the plans offered by LIC and other pri%ate insurers in India. Comparisons between the plans to find the most popular and beneficial plans which HDFC SLIC can incorporate into their product portfolio.

CHAPTER 7: M'(B)*21; &($?:)%/ # (he techni=ues used to mar$et insurance and their ad%antages and disad%antages along with suggestions for impro%ement. CHAPTER 8: A1':3/2/ '1, I1*)(&()*'*2$1 0 & sur%ey on factors that influence people to purchase Life Insurance ;olicy.

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CHAPTER 9: P($?:)%/ ()<-2(21; %$() ()/)'(.+ > Future line of wor$ CHAPTER 18: C$1.:-/2$1 R)0)()1.)/ A&&)1,2.)/

CHAPTER III
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COMPANY PROFILE OF HDFC STANDARD LIFE INSURANCE COMPANY LTD4

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HDFC STANDARD LIFE INSURANCE COMPANY LIMITED

INTRODUCTION
HDFC Incorporated in 1>@@ with a share capital of -s 1/ Crores# HDFC has since emerged as the largest residential mortgage finance institution in the country. (he corporation has had a series of share issues raising its capital to -s. 11> Crores. (he gross premium income for the year ending 2arch :1# !//@ stood at -s. !#".6 Crores and new business premium income at -s. 1#6!? Crores. (he company has co%ered o%er "#@@#/// li%es year ending 2arch :1# !//@.

HDFC operates through almost ?./ locations throughout the country with its corporate head =uarters in 2umbai# India. HDFC also has an International 5ffice in Dubai# U&8 with ser%ice associates in uwait# 5man and Iatar. HDFC is the largest housing company in India for the last !@ years.

SNAPSH!T$I
Incorporated in 1>@@ as the first specialiFed 2ortgage Company in India. &lmost >/7 of initial shareholding in the hands of domestic institutes and retail in%estors. Current @@7 of shares held by foreign institutional in%estors. 'esides the core business of mortgage HDFC has e%ol%ed into a financial conglomerate with holdings In: HDFC Standard Life insurance CompanyD HDFC holds @"./@ 7. HDFC &sset 2anagement Company 0 HDFC holds ./.17 HDFC 'an$D HDFC holds !!.!.7. Intelenet )lobal *'usiness ;rocess 5utsourcing, 0 HDFC holds ./7. HDFC Chubb )eneral Insurance Company 0 HDFC holds @?7.

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SNAPSH!T$II
Loan &ppro%als *up to Dec !//@, Loan Disbursements *up to Dec. !//@, Housing Units Financed Distribution 5ffices 5utreach ;rograms 1"1 >/ -s. "/. billion. *US J 1".:/ bn., -s.66> billion *US J 1..!/ bn, !.. million.

%E& PLA&ERS
M(4 D))&'B S P'()B+ is the Chairman of the Company. He is also the 83ecuti%e Chairman of Housing De%elopment Finance Corporation Limited *HDFC Limited,. He Aoined HDFC Limited in a senior management position in 1>@". He was inducted as a wholeDtime director of HDFC Limited in 1>". and was appointed as its 83ecuti%e Chairman in 1>>:. He is the Chief 83ecuti%e 5fficer of HDFC Limited. 2r. ;are$h is a Fellow of the Institute of Chartered &ccountants *8ngland H <ales,.

M(4 D))&'B M S'*@':)B'( is the 2anaging Director and C85 of the Company since 4o%ember# !///. ;rior to this# he was the 2anaging Director of HDFC Limited since 1>>:. 2r. Satwale$ar obtained a 'achelors Degree in (echnology from the Indian Institute of (echnology# 'ombay and a 2asters Degree in 'usiness &dministration from (he &merican Uni%ersity# <ashington DC.

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#R! P C!"PANIES
HDFC 'an$: <orld Class Indian 'an$D among the top pri%ate ban$s in India. HDFC &2C: 5ne of the top : &2Cs in IndiaD ;referred in%estment manager. Intelenet )lobal: ';5 ser%ices for international customers. CI'IL: Credit Information 'ureau India Limited. HDFC Chubb: Upcoming ;ri%ate companies in the field of )eneral Insurance. HDFC 2utual Fund HDFC reality.com: Helps to search properties in all maAor cities in India HDFC securities

STANDARD LIFE
Standard Life is 8urope+s largest mutual life assurance company. Standard Life# which has been in the life insurance business for the past 1@. years is a modern company sur%i%ing =uite a few changes since selling its first policy in 1"!.. (he company e3panded in the 1>th century from $its original 8dinburgh premises# opening offices in other towns and ac=uitting other similar businesses.

Standard Life Currently has assets e3ceeding o%er K @/ billion under its management and has the distinction of being accorded L&&&M rating conse=uently for the si3 years by Standard and ;oor.

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SNAPSH!T
Founded in 1"@.# company supporting generation for last 1@> years. Currently o%er . million ;olicy holders benefiting from the ser%ices offered. 8urope+s largest mutual life insurer.

5OINT VENTURE
HDFC Standard Life Insurance Company Limited was one of the first companies to be granted license by the I-D& to operate in life insurance sector. -each of the CB player is highly rated and been conferred with many awards. HDFC is rated G&&& + by both C-ISIL and IC-&. Similarly# Standard Life is rated G&&&+ both by 2oody+s and Standard and ;oor+s. (hese reflect the efficiency with which HDFC and Standard Life manage their asset base of -s. 1.#/// Cr and -s. 6//#/// Cr. respecti%ely.

HDFC Standard Life Insurance Company Ltd was incorporated on 1? th &ugust !///. HDFC is the maAority sta$eholder in the insurance CB with "1.?7 staple and Standard of as a staple 1".67 2r. Deepa$ Satwale$ar is the 2D and C85 of the %enture. HDFC Standard Life Insurance Company Ltd. Is one of India+s leading ;ri%ate Life Insurance Companies# which offers a range of indi%idual and group insurance solutions. It is a Aoint %enture between Housing De%elopment Finance Corporation Limited *HDFC Ltd., India+s leading housing finance institution and the Standard Life &ssurance Company# a leading pro%ider of financial ser%ices from the United ingdom. 'oth the promoters are will $nown for their ethical dealings and financial strength and are thus committed to being a longDterm player in the life insurance industryD all important factors to consider when choosing your insurer.

'

SINESS

#R!WTH

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Trac( Record so far

(he gross premium income of HDFC# for the year ending 2arch :1# !//@ stood at -s. !#".6 crores and new business premium income at -s. 1#6!? crores. (he company has co%ered o%er "#@@#/// li%es year ending 2arch :1# !//@. Company also declared our .th consecuti%e bonus in as many years for our Gwith profit+ policyholders.

%E& STREN#TH
Financial E)pertise
&s a Aoint %enture of leading financial ser%ices groups. HDFC standard Life has the financial e3pertise re=uired to manage longDterm in%estments safely and efficiently.

Ran*e of Solutions
HDFC SLIC has a range of indi%idual and group solutions# which can be easily customiFed to specific needs. (hese group solutions ha%e been designed to offer complete fle3ibility combined with a low charging structure.

Stron* Et+ical ,aluesHDFC SLIC is an ethical and Cultural 5rganiFation. False selling or false commitment with the customers is not allowed.

"ost respected Pri.ate Insurance Company

HDFC SLIC was awarded 4oD1 ;ri%ate Insurance Company in !//? by the <orld Class 2agaFine 'usiness <orld for Integrity# Inno%ation and Customer Care.

CORPORATE OB5ECTIVE
V2/2$1

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E(he most successful and admired life insurance company# which means that we are the most trusted company# the easiest to deal with# offer the best %alue for money# and set the standards in the industryE4

'The most obvious choice for all'.

V':-)/ .Integrity
.Inno%ation .Customer centric .;eople Care 5ne for all .(eamwor$ .Coy and Simplicity

PRODUCTS C SERVICES
(he right in%estment strategies wonEt Aust help plan for a more comfortable tomorrow DD they will help you get LSar Utha $e Ciyo. &t HDFC SLIC# life insurance plans are created $eeping in mind the changing needs of family. Its life insurance plans are designed to pro%ide you with fle3ible options that meet both protection and sa%ings needs. It offers a full range of transparent# fle3ible and %alue for money products. HDFC SLIC products are modern and contemporary unitiFed products that offer uni=ue customer benefits li$e fle3ibility to choose co%er le%els# inde3ation and partial withdrawals. *Source: www.hdfcslic.com,

PLANS THAT ARE OFFERED BY HDFC STANDARDS LIFE INSURANCE

I1,2A2,-': P($,-.*/

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P($*).*2$1 P:'1/ & person can protect his family against the loss of his income or the burden of a loan in the e%ent of his unfortunate demise# disability or sic$ness. (hese plans offer %aluable peace of mind at a small price. ;rotection range includes our T)(% A//-('1.) P:'1 H L$'1 C$A)( T)(% A//-('1.) P:'1. I1A)/*%)1* P:'1/ HDFC SLIC+s S21;:) P()%2-% W+$:) $0 L20) &:'1 is well suited to meet long term in%estment needs. (his pro%ides attracti%e long term returns through regular bonuses. P)1/2$1 P:'1/ ;ension ;lans help to secure financial independence e%en after retirement. ;ension range includes P)(/$1': P)1/2$1 P:'1# U12* L21B), P)1/2$1# U12* L21B), P)1/2$1 P:-/. S'A21;/ P:'1/ Sa%ings ;lans offer a fle3ible option to build sa%ings for future needs such as buying a dream home or fulfilling your children+s immediate and future needs. Sa%ings range includes E1,$@%)1* A//-('1.) P:'1# U12* L21B), E1,$@%)1*# U12* L21B), E1,$@%)1* P:-/# U12* L21B), E1,$@%)1* P:-/ II# M$1)3 B'.B# U12* L21B), E1+'1.), L20) P($*).*2$1 II# C+2:,()1D/ P:'1E U12* L21B), Y$-1; S*'(# U12* L21B), Y$-1; S*'( P:-/# U12* L21B), Y$-1; S*'( P:-/ II.

#roup Products
O1)#/*$& /+$& 0$( )%&:$3))#?)1)02* /$:-*2$1/ HDFC Standard Life has the most comprehensi%e list of products for progressi%e employers who wish to pro%ide the best and most inno%ati%e employee benefit solutions

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to their employees. It offers different products for different needs of employers ranging from term insurance plans for pure protection to %oluntary plans such as superannuation and lea%e encashment. HDFC SLIC offers the following group products to esteemed corporate clients: G($-& T)(% I1/-('1.) G($-& V'(2'?:) T)(% I1/-('1.) G($-& U12*#L21B), P:'1 &n in%estment solution that pro%ides funding %ehicle to manage corpuses with )ratuity# Defined 'enefit or Defined Contribution Superannuation or Lea%e 8ncashment schemes of your company &lso suitable for other employee benefit schemes such as salary sa%ing schemes and wealth management schemes

Social Product
D)A):$&%)1* I1/-('1.) P:'1 De%elopment Insurance plan is an insurance plan which pro%ides life co%er to members of a De%elopment &gency for a term of one year. 5n the death of any member of the group insured during the year of co%er# a lump sum is paid to those member beneficiaries to help meet some of the immediate financial needs following their loss.

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E:2;2?2:2*3 2embers of the de%elopment agency and their spouses with: D 2inimum age at the start of the policy 1" years last birthday D 2a3imum age at the start of policy ./ years last birthday 8mployees of the De%elopment &gency are not eligible to Aoin the group. (he group to be co%ered is only eligible if it contains more than .// members. P()%2-% P'3%)1*/ (he premium to be paid will be =uoted per member in the group and will be the same for all members of the group. (he premium can only be paid by the De%elopment &gency as a single lump sum that includes all premiums for the group to be co%ered. Co%er will not start until the premium and all the member information in our specified format has been recei%ed.

B)1)02*/ 5n the death of each member co%ered by the policy during the year of co%er a lump sum e=ual to the sum assured will be paid to their beneficiaries or legal heirs. <here the death is as a result of an accident# an additional lump sum will be paid e=ual to half the sum assured. (here are no benefits paid at the end of the year of co%er and there is no surrender %alue a%ailable at any time. T+) ($:) $0 *+) D)A):$&%)1* A;)1.3 Due to the nature of the groups co%ered# HDFC Standard Life will be passing certain administrati%e tas$s onto the De%elopment &gency. 'y passing on these tas$s the premium charged can be lower. (hese tas$s would include: Submission of member data in a specified computer format Collection of premiums from group members -ecording changes in the details of group members Disbursement of claim payments and the mortality rebate *if any, to group members (hese tas$s would be in addition to the usual duties of a policyholder such as: ;ayment of premiums -eporting of claims eeping policy holder information up to date

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(raining and support will be a%ailable to gi%e guidance on how to complete the tas$s appropriately. Since these additional tas$s will impose a burden on the De%elopment &gency# the De%elopment &gency may charge a -s. 1/ administration fee to their members. P($+2?2*2$1 $0 ()?'*)/ Section ?1 of the Insurance &ct# 1>:" states 4o person shall allow or offer to allow# either directly or indirectly# as an inducement to any person to ta$e out or renew or continue an insurance in respect of any $ind of ris$ relating to li%es or property in India# any rebate of the whole or part of the commission payable or any rebate of the premium shown on the policy# nor shall any person ta$ing out or renewing or continuing a policy accept any rebate# e3cept such rebate as may be allowed in accordance with the published prospectus or tables of the insurer If any person fails to comply with sub regulation *pre%ious point, abo%e# he shall be liable to payment of a fine which may e3tend to rupees fi%e hundred

INTROUCTION TO UNIT LINKED FUNDS

Unit lin$ed plans are based on the component of the premium or the contribution of the customer towards the plan. (his contribution can be in different modes li$e yearly# half yearly# =uarterly and monthly. Unit lin$ed plans ha%e multiple benefits li$e life protection# rider protection# sa%ings# transparency# in%estment choices# li=uidity and planning for ta3es. (hese plans wor$ li$e mutual funds. (he premium is collected from the policy holder. He is allotted a certain number of units based of his contribution. (he 4et &sset Balue is the %alue of each unit of the fund. It is found by subtracting the charges and current liabilities from the current assets and in%estments and di%iding this number by the total number of outstanding units. Let us ta$e an e3ample. (here are 1// in%estors and each in%ests -s. 1/ in a fund. (he total %alue of the fund is -s. 1/// and each person is allotted 1 unit of -s 1/. 4ow the money *-s. 1///, is in%ested in the debt or e=uity mar$et. Suppose the fund %alue increased by !/7. &s a result the -s. 1/// in%ested became -s. 1!//. Hence the %alue of

26

e%ery in%estor is now -s. 1! and not -s. 1/.

UNIT LINKED VERSUS OTHER FINANCIAL INSTRUMENTS

P'('%)*)(/ S'0)*3 L2<-2,2*3 R)*-(1/ L20) C$A)( T'F ?)1)02*/ RBI B$1,/ H2;+ N$1) L$@ 1 *2%) '%$-1* T'F 0()) F2F), D)&$/2*/ H2;+ H2;+ L$@ 1 *2%) '%$-1* T'F), M-*-': F-1,/ M),2-% H2;+ H2;+ 1 *2%) '%$-1* T'F), U12* :21B), H2;+ H2;+ H2;+ 18 *2%)/ T'F 0())

<e find that life insurance unit lin$ed plans is a good area to in%est money in as it pro%ides li=uidity# safety# high returns# life co%er and ta3 benefits in a single plan. HDFC SLIC offers the option of inde3ation to beat inflation. -is$ is reduced to a large e3tent as the company in%ests in a di%ersified portfolio of stoc$s.

Ta) 'enefits
INCOME SECTION TAX GROSS SALARY ANNUAL HOW MUCH TAX CAN YOU SAVEG HDFC STANDARD

LIFE PLANS

27

Sec. "/C

&cross &ll income Upto Slabs sa%ed

-s.

::#>>/ &ll the life insurance on plans. of

in%estment -s. 1#//#///. Sec. "/ CCC &cross all income Upto slabs. sa%ed In%estment -s.1#//#///. Sec. "/ D &cross all income Upto slabs sa%ed In%estment -s. 1/#///. (5(&L S&BI4)S -s. -s.

::#>>/ &ll the pension plans. on of

:#:>> &ll the health insurance on riders a%ailable with the of con%entional plans.

R/ 7E 89 -s. ::#>>/ under Sec. "/C and under Sec. "/ CCC # -s.:#:>> under Sec. "/ D# calculated for a male with gross annual income e3ceeding -s. 1/#//#///.

;5SSI'L8

Sec. 1/ *1/,D

Under Sec. 1/*1/D,# the benefits you recei%e are completely ta3D free# subAect to the conditions laid down therein.

28

CHAPTER IV COMPANY PROFILE OF TATA AIG LIFE INSURANCE COMPANY LTD4

29

TATA AIG LIFE INSURANCE COMPANY LIMITED I1*($,-.*2$1

(ata &I) Life Insurance Company Limited *(ata &I) Life, is a Aoint %enture company# formed by the (ata )roup and &merican International )roup# Inc. *&I),. (ata &I) Life combines the (ata )roup+s preDeminent leadership position in India and &I)+s global presence as the world+s leading international insurance and financial ser%ices organiFation. (he (ata )roup holds @? per cent sta$e in the insurance %enture with &I) holding the balance !6 percent. (ata &I) Life pro%ides insurance solutions to indi%iduals and corporate. (ata &I) Life Insurance Company was licensed to operate in India on February 1!# !//1 and started operations on &pril 1# !//1.

THE TATA GROUP

(he (ata )roup is one of IndiaEs largest and most respected business conglomerates# with re%enues in !//?D/. of J1@." billion *-s. @>>#11" million,# the e=ui%alent of about !." per cent of the countryEs )D;. (ata companies together employ some !1.#/// people. (he )roupEs :! publicly listed enterprises D among them standout names such as (ata Steel# (ata Consultancy Ser%ices# (ata 2otors and (ata (ea D ha%e a combined mar$et capitaliFation that is the highest among Indian business houses in the pri%ate sector# and a shareholder base of o%er ! million. (he (ata )roup has operations in more than ?/ countries across si3 continents# and its companies e3port products and ser%ices to 1?/ nations.

AIG
&merican International )roup# Inc. *&I),# world leaders in insurance and financial ser%ices# is the leading international insurance organiFation with operations in more than 1:/ countries and Aurisdictions. &I) companies ser%e commercial# institutional and indi%idual customers through the most e3tensi%e worldwide propertyDcasualty and life insurance networ$s of any insurer. In addition# &I) companies are leading pro%iders of retirement ser%ices# financial ser%ices and asset management around the world. &I)Es common stoc$ is listed on the 4ew Nor$ Stoc$ 83change as well as the stoc$ e3changes in London# ;aris# SwitFerland and (o$yo.

30

(ata &I) has strong brand name and recall factor which most of its competitors lac$ in. 5ther than the public behemoth Life Insurance Corporation *LIC, of India which has a maAor hold in the mar$et share *of appro3imately @>7,# the pri%ate players too are ha%ing more and more opportunities to tighten their hold of the mar$et. 5f the pri%ate players# ICICI ;rudential comes first with an almost ?../7 of the mar$et share followed by (ata &I) with about !.1/7 of the pie. (he pri%ate players ha%e e%erything to wor$ for# especially with LIC not meeting the needs of its clientele with respect to the ser%ices they need. (his pro%ides a prospect for the pri%ate sector players to increase their share of the mar$et. Companies with a familiarity such as (ata &I) can especially achie%e their targets due to the brand image that the (ata group has. *Source: www.tata-aig-life.com, & recent sur%ey conducted by the Boluntary 5rganiFation in Interest of Consumer 8ducation *B5IC8, re%ealed (ata &I) Life Insurance Company *(ata &I) Life, as the clear winner in terms of customer satisfaction in the life insurance category . (his is IndiaEs firstDe%er customer satisfaction study for the insurance sector. (he sur%ey also re%ealed that (ata &I) Life had a high recall as a reputed brand name. (he ability to pro%ide inno%ati%e and customerDfocused ser%ice such as allowing the ma3imum grace period for premium payment has not only further distinguished (ata &I) Life from other life insurance companies but also appealed to consumers.

PRODUCTS C SERVICES:

31

C$(&$('*) :20) 21/-('1.) &($,-.*/: 8mployee 'enefits Credit Life )roup ;ensions <or$place Solutions

I1,2A2,-': :20) 21/-('1.) &($,-.*/: Health First Health ;rotector 2ahalife In%est&ssure II# In%est&ssure )old Shubh life# 4irbhay life

<ith respect to indi%idual life insurance products# (ata &I) has an array of policies to suit the needs and re=uirements of all age groups %iF# children# students# adults# retirees etc. (he GSU;;5-(+ arm of (ata &I) Life is constituted of 5perations# Human -esources# 2ar$eting# Corporate (raining# Finance and Compliance. (ata &I) Life possesses the philosophy and dri%e to customiFe retirement obligations *for the company, which occur in the form of cash outflows# for the ma3imum benefit of both the employer and the departing employee.

32

CHAPTER V

POINTS OF PARITY AND

POINTS OF DIFFERENCE

BETWEEN
HDFC SLIC AND TATA AIG

33

P$21*/ $0 P'(2*3

F-1,/ 'A'2:'?:) @2*+ ULIP P:'1/

G)1)(': D)/.(2&*2$1 E<-2*3 F-1,/

N'*-() $0 I1A)/*%)1*/ ;rimarily in%ested in company stoc$s with the general aim of capital appreciation In%ested in corporate bonds# go%ernment securities and other fi3ed income instruments Sometimes $nown as 2oney 2ar$et Funds O in%ested in cash# ban$ deposits and money mar$et instruments Combining e=uity in%estment with fi3ed interest instruments

R2/B C'*);$(3 High

I1.$%)E F2F), I1*)()/* '1, B$1, F-1,/

2edium

C'/+ F-1,/

Low

B':'1.), F-1,/

2edium

)enerally all life insurance companies ha%e three types of fund which are 8=uity fund# Debt fund and 'alance fund. (hese fund ha%e different ris$ profile. 8=uity fund has high ris$ but it gi%es high return# Debt fund has low ris$ so it gi%es low return and 'alanced fund is combination of both 8=uity and Debt fund so ris$ is medium and return is also low. 'oth HDFC SLIC and (ata &I) LIC ha%e @ types of funds based on combination of Debt08=uity fund. T+)/) '() :2<-2, 0-1,E /*'?:) %'1';), 0-1,E /).-() %'1';), 0-1,E ,)0)1/2A) %'1';), 0-1,E ?':'1.), %'1';), 0-1,E )<-2*3 %'1';), 0-1,E ;($@*+ 0-1,4 I1,)F'*2$1 Nou ha%e the option to increase your regular premiums by an inde3ation rate at any policy anni%ersary to protect the real %alue of your in%estment against inflation. (he rate of inde3ation will be in line with the increase in the <hole Sale ;rice Inde3 *or in the e%ent that this Inde3 ceases to be published such other inde3 as the Company may select for this purpose,. (he base sum assured and sum assured of any attached rider would also be increased by the corresponding inde3ation increase.

34

C+'(;)/E F))/ '1, D),-.*2$1/ 21 ULIP

P()%2-% A::$.'*2$1 C+'(;)

(his is a premiumDbased charge. &fter deducting this charge from premiums# the remainder is in%ested to buy units. (he &llocation charges are guaranteed for the entire duration of policy term. M$(*':2*3 C+'(;)

(he 2ortality Charge will apply on the Sum at -is$ *S&- P Sum &ssured less the Fund Balue pertaining to regular premiums,. It will be deducted by monthly cancellation of units from the accumulation unit account. (he 2ortality Charge shall remain guaranteed throughout the policy term.

F-1, M'1';)%)1* C+'(;)

17 p.a. on <ith ;rofits Fund# 17 p.a. on Debt Fund# 1.!.7 p.a. on 'alanced Fund and 1../7 p.a. on )rowth Fund. F2C will be applied on the fund while calculating 4&B on a daily basis. (he ma3imum F2C on any fund is !7 p.a. subAect to prior appro%al by the I-D&.

P$:2.3 A,%212/*('*2$1 C+'(;)

-s. 6/ per month# which will increase by .7 p.a. on the 1st of Canuary each year. ;&C will be deducted monthly by cancellation of units from the accumulation unit account. If premiums are discontinued# this charge would reduce to 6/7 of the charge applicable for the premium paying policies

S-(()1,)( C+'(;)

35

(his is the charge that applies when the policy is surrendered. It is e=ual to ./7 of the difference between regular premiums e3pected and those paid in the first year of the contract. S)(A2.) T'F D),-.*2$1/

1!.:67 ser%ice ta3 is applicable on the first premium of life insurance policy.

T'F B)1)02*/
(a3 benefits will be as per Section "/C H Section 1/*1/D, of the Income (a3 &ct# 1>61. Insurance is ta3 free up to -s. 1///// per annum and the returns on in%estment on maturity of the policy are also ta3 free.

R2,)(/ '1, B$1-/)/ HDFC S*'1,'(, L20) I1/-('1.) 1. days 'ased on companyEs performance 'ased on companyEs performance 2inimum -s. ./// )i%es on diagnosis of anyone of 6 critical illness ;ro%ides ;ro%ides ;ro%ides ;ro%ides Does not pro%ide ;ro%ides T'*' AIG L20) I1/-('1.) 1. days 'ased on companyEs performance 'ased on companyEs performance 2inimum -s. ./// )i%es on diagnosis of anyone of 1! critical illness ;ro%ides ;ro%ides Does not pro%ide Does not pro%ide ;ro%ides ;ro%ides

F()) L$$B P)(2$, R)A)(/2$1'(3 B$1-/ T)(%21': B$1-/ TOP UP R2,)(/ C(2*2.': I::1)// HCII B)1)02* A,,2*2$1': T)(% B)1)02* HATBI A..2,)1*': D)'*+ B)1)02* HADBI D$-?:) B)1)02* T(2&:) B)1)02* P'3)( B)1)02* R2,)( HPBRI W'2A)( $0 P()%2-% HWOPI B)1)02*

P$21*/ $0 D200)()1.)

36

G('.) P)(2$, P$:2.3 A,%212/*('*2$1 C+'(;) G-'('1*)), B$1-/ L$3':*3 B$1-/ F-1, S@2*.+21; C+'(;) G-'('1*)), S-(()1,)( A':-) F-1, M'1';)%)1* C+'(;)

HDFC S*'1,'(, L20) I1/-('1.) 1. days -s. 6/ per month Does not gi%e /.17 e%ery year (otal !? free switches in a policy after this -s. 1// per Switch ./7 of all premium paid e3cluding 1st premium /."/7 per annum on the fund %alue (otal 1! free ;remium -edirection in a policy after this -s. !./ per ;remium -edirection =2478J

T'*' AIG L20) I1/-('1.) :1 days -s. .. per month 1/7 on sumDassured after 1/ year /.!.7 after e%ery ?th year ? free switches per year after this -s. !./ per switch :/7 of all premium paid e3cluding 1st premium 1.@.7 per annum on the fund %alue First ! ;remium -edirection in a year is free after this -s. 1/// per ;remium -edirection 72J

P()%2-% R),2().*2$1 C+'(;)

L'/* Y)'( R)*-(1

<e see that both the life insurance companies+ products are almost same. (hey ha%e same charges# fees and deductions. (here is slightly difference in charges and ma3imum limits of all charges are fi3ed by I-D&. 'efore buying any life insurance policy one should chec$ charges and fees on policy and company+s o%erall performance and return gi%en to its consumer.

37

CHAPTER VI COMPETITIVE ANALYSIS

38

COMPETITIVE ANALYSIS
LIFE INSURANCE CORPORATION OF INDIA HLICI LIC has an e3cellent money bac$ policy which pro%ides for periodic payments of partial sur%i%al benefits as long as the policy holder is ali%e. !/7 of the sum assured is payable after .# 1/# 1. and !/ years and the balance ?/7 is payable at the !/ th year along with accrued bonus. *www.lic.com, For a !. years term # 1.7 of the sum assured becomes payable after .#1/#1. and !/ years and the balance ?/7 plus the accrued bonus becomes payable at the !. th year. &n important feature of these types of policies is that in the e%ent of the death of the policy holder at any time within the policy term the death claim comprises of full sum assured without deducting any of the sur%i%al benefit amounts which ha%e already been paid. (he bonus is also calculated on the full sum assured. HDFC SLIC does not ha%e a money bac$ policy. It could offer a money bac$ plan and capture some portion of this mar$et. <hile mar$eting insurance products I found that many customers wanted to purchase these plans. LIC offers 66 different plansQ plans are formulated for specific occasions 0 whole life plans# term assurance plans# money bac$ plan for women# child plans# plans for the handicapped indi%iduals# endowment assurance plans# plans for high worth indi%iduals# pension plans# unit lin$ed plans# special plans# social security schemes 0 di%ersified portfolio of products. HDFC SLIC could di%ersify its product portfolio. It could add more plans for high worth indi%iduals and women. ICICI PRUDENTIAL ICICI ;rudential is a stiff competitor for HDFC SLIC. (he company is a merger between ICICI 'an$ which is the biggest pri%ate ban$ in India and ;rudential ;lc which is a global life insurance company. (he company has an in%estment plan which is mar$et related 0 In%est Shield Life. In this plan e%en if the mar$et falls# the premium will be returned to in%estors. It is a

39

guaranteed plan which ensures the company carefully in%ests your money. (he stoc$ mar$et performance of ICICI ;rudential is much better than HDFC SLIC. (he returns on the growth fund were ?6.!"7 compared to the ?!.@/7 offered by HDFC SLIC. Customers are attracted by higher returns and this is a plus point for ;rudential. (he company is %ery well ad%ertised. (he ad%ertisements are showcased in mo%ies# tele%ision# newspapers# magaFines# bill boards# radio etc. (he company has an e3cellent brand ambassador 0 2r. &mitabh 'acchan. His promotion of the company builds trust and faith in the minds of our people. Howe%er the charges are %ery high in the plans offered by ICICI ;rudential. It is :.7 during the first year# 1.7 in the ne3t year and :7 from the third year onwards. &lso a higher minimum premium of -s. "/// is charged. Hence the policies are not accessible to the lower strata of the society. *Source: www.iciciprulife.com,

BIRLA SUN LIFE 'irla Sun Life Insurance Company Limited is a Aoint %enture between (he &ditya 'irla )roup# one of the largest business houses in India and Sun Life Financial Inc.# a leading international financial ser%ices organiFation. (he local $nowledge of the &ditya 'irla )roup combined with the e3pertise of Sun Life Financial Inc.# offers a formidable protection for your future. *Source: www.birlasunlife.com, (he &ditya 'irla )roup has a turno%er close to -s. ::/// crores with a mar$et capitaliFation of -s. .:?// crores *as on :1st 2arch !//@,. It has o%er @!/// employees across all its units worldwide. It is led by its Chairman D 2r. )rasim. Sun Life Financial Inc. and its partners today ha%e operations in $ey mar$ets worldwide# including Canada# the United States# the United ingdom# Hong ong# the ;hilippines# Capan# Indonesia# India# China and 'ermuda. It had assets under management of o%er umar 2angalam 'irla. Some of the $ey organiFations within the group are Hindalco and

40

USJ:?: billion# as on :1st 2arch !//@. (he company is a leading player in the life insurance mar$et in Canada. 'eing a customer centric company# 'SLI has in%ested hea%ily in technology to build world class processing capabilities. 'SLI has co%ered more than a million li%es since inception and its customer base is spread across more than 1/// towns and cities in India. &ll this has assisted the company in cementing its place amongst the leaders in the industry in terms of new business premium income. (he company has a capital base of .!/ crores as on :1st Culy# !//@. Its Fle3i Life Line ;lan offers life long insurance co%er till the policy holder is 1// years of age. (here are guaranteed returns of :7 p.a. net of policy charges after e%ery . years from the ele%enth policy year onwards. Howe%er the charges are %ery high. (he initial charges for the first year are 6.7. Hence the fund %alue is greatly reduced. BA5A5 ALLIAN6 'aAaA &llianF is a Aoint %enture between &llianF &) with o%er 11/ years of e3perience in o%er @/ countries and 'aAaA &uto# a trusted automobile manufacturer for o%er .. years in the Indian mar$et. (ogether they are committed to offering you financial solutions that pro%ide all the security you need for your family and yourself. 'aAaA &llianF is the number one pri%ate life insurer for the year !//. 0 !//6. It is leading by @" crores. It has e3perienced a whopping growth of !167 in the last financial year. (he company has sold 1:# //#/// policies and is bac$ed by ../ offices across India. It offers tra%el insurance# motor insurance# home insurance# health and corporate insurance. (he mortality charges are lower than HDFC SLIC. (he entry age could be Fero years which allow e%en new born babies to be insured. *Source: www.baAaAallianF.com, TATA AIG (ata &ig is a Aoint %enture between the (ata group and &merican International )roup Inc. In one of the plans the company offers hospital cash benefit wherein it will pay -s. !.// per day in case of hospitaliFation and -s.1!.. la$hs in case the person suffers

41

from any critical illness. &nnual premium is much less *about -s. 6@1!, to a%ail such a good benefit. Charges are relati%ely low compared to HDFC SLIC for some policies. (he company offers high co%erage plans at low cost. (here is a plan e%en for a policy term of 1 year. Nour family can continue to enAoy their current lifestyle e%en in the case of something happening to you. (hese plans are %ery fle3ible and HDFC SLIC could adopt this idea of insuring indi%iduals for short periods of time. For e3ampleQ there is a family of four. (he only earning member is the father. He has Aust ta$en a loan from a ban$ of !/ la$hs to purchase a new home. He is able to repay the loan with his current salary in 1. years. (he problem arises if something were to happen to him within these fifteen years. 4ot only will the family face the emotional and financial loss of their father but they will also ha%e to repay the home loan or ris$ being homeless. *Source: www.tataaig.com,

42

CHAPTER VII MARKETING PROBLEMS

43

MARKETING PROBLEMS
(he old and out dated techni=ue of tele mar$eting is used to prospect customers. 2ore modern techni=ues must be adopted. (he company must sponsor shows and gi%e presentations in corporate houses. (he financial health chec$ must be performed for e%ery prospect to assess his9her true financial position and needs. Some of the ad%isors s$ip this %ital step and the prospect ends up with a plan they do not appreciate and soon surrender or discontinue. Some of the main problems in mar$eting the policies are: Large amount of competition *1" players in the mar$et, 5ther brands are well ad%ertised and ha%e higher recall %alue LIC is considered a safer option Face competition from ban$s and mutual funds High premium policies are difficult to mar$et Incorrect perception about insurance Interested prospects might ha%e a lac$ of time and postpone in%estments Customers get defensi%e if you cold call Short term plans are a%ailable only at large premium Customers do not ha%e ris$ appetite to in%est in shares Some prospects ha%e already in%ested and are not interested in further in%estments Consumers don+t want to underta$e medical e3aminations Large amount of documentation Customers do not li$e their money loc$ed up for many years Lac$ of awareness about the unit lin$ed funds in the mar$et

44

 4o money bac$ plan present in the product portfolio

SUGGESTIONS FOR IMPROVEMENT &d%ertise about the company and its products 0 it moti%ates indi%iduals to purchase insurance Create a positi%e perception about insurance Spea$ about the good features a plan offers li$e high returns# life co%er# ta3 benefits# inde3ation# accident co%er while prospecting customers (ry to sell the product9plan which the consumer re=uires and not the plan where the ad%isors benefit is higher Impro%e the efficiency in operations 'ring out policies with small premiums payable for short periods of time 0 -s. ./// 0 -s. 1//// per annum for 1/ years &ttract the youth of India with higher returns on in%estment as returns are the moti%ating factor which influence purchase of insurance ;romote insurance in colleges and corporate houses ;romote HDFC SLIC as an Indian Company to build trust HDFC SLIC could ha%e a brand ambassador or a mascot to promote its ser%ices Should ha%e partial withdrawals from the first year onwards (ap the rural mar$et where there is large potential Di%ersify product portfolio 2a$e products more straight forward 0 reduce comple3ities

45

CHAPTER VIII ANALYSIS C INTERPRETATION

46

ANALYSIS C INTERPRETATION
A SURVEY ON THE L !E NSURAN"E N#USTRY N N# A$ AGE GROUP OF SURVEYED RESPONDENTS TABLE 1:
A;) ;($-& 18 # 2! 3)'(/ 2" # ! 3)'(/ " # =9 3)'(/ !8 # "8 3)'(/ M$() *+'1 "8 3)'(/ N$4 $0 R)/&$1,)1*/ 127 "7 =" 2= "

CHART 1:

A1':3/2/: From the chart abo%e we find that ?@7 of the respondents fall in the age group of 1" 0 !. years# !.7 fall in the age group of !6 0 :. years and 1@7 fall in the age group of :6 0 ?> years.

47

(herefore most of the respondents are relati%ely young *below !6 years of age,. (hese indi%iduals could be induced to purchase insurance plans on the basis of its ta3 sa%ing nature and as an in%estment opportunity with high returns. Indi%iduals at this age are trying to buy a house or a car. Insurance could help them with this and this fact has to be con%eyed to the consumer. &s of now many consumers ha%e a false perception that insurance is only meant for people abo%e the age of ./. Contrary to popular belief the younger you are the more insurance you need as your loss will mean a great financial loss to your family# spouse and children *in case the indi%idual is married, who are financially dependent on you.

GENDER CLASSIFICATION OF SURVEYED RESPONDENTS

TABLE 2: %articulars M':) F)%':) No& of Res'on(ents
19 77

CHART 2:

CUSTOMER PROFILE OF SURVEYED RESPONDENTS

48

TABLE : C-/*$%)( &($02:)

S*-,)1* H$-/)@20) W$(B21; P($0)//2$1': B-/21)// S):0 E%&:$3), G$A)(1%)1* /)(A2.) )%&:$3))

N$4 $0 ()/&$1,)1*/
"2 ! 11" =9 2= 1=

CHART :

A1':3/2/: From the chart abo%e it can clearly be seen that ?:7 of the respondents are wor$ing professionals# !:7 are students and 1"7 are into business. (herefore the target mar$et would be wor$ing indi%iduals in the age group of 1" 0 !. years ha%ing surplus income# interested in good returns on their in%estment and sa%ing income ta3. NO4 OF RESPONDENTS WHO HAVE LIFE INSURANCE POLICY IN THEIR NAME TABLE =:

49

P)(/$1 @+$ +'A) :20) 21/-('1.) &$:2.3 Nes 1/: 4o 16@ CHART =:

ANALYSIS: (his graph shows that out of total !@/ respondents only 1/: or :"7 respondents ha%e life insurance policy in their name. -est all don+t ha%e a single policy in their name. So there is a %ery big scope for life insurance companies to co%er these people. So in future business of life insurace will gro further. MARKET SHARE OF LIFE INSURANCE COMPANIES TABLE !: LIFE INSURER
HDFC STANDARD LIFE BIRLA SUN LIFE AVIVA LIFE INSURANCE BA5A5 ALLIAN6 LIC TATA AIG ICICI PRUDENTIAL ING VYSYA BHARTI AXA OTHERS

NUMBER OF POLICIES
= " 7 !! " 12 " 2 2

CHART !:

50

A1':3/2/: In India# the largest life insurance company is Life Insurance Corporation of India. It has been in e3istence in India since 1>.6 and is completely owned by the )o%ernment of India. (oday the organiFation has grown to !/?" offices ser%ing 1" crore policies and has a corpus of o%er :?//// crore I4-.

51

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE TABLE ":

P()%2-% &'2, H&4'4I R/4 !888 # R/4 18888 R/4 18881 # R/4 1!888 R/4 1!881 # R/4 2=988 R/4 2!888 # R/4 !8888 R/4 !8881 # R/4 "8888 R/4"8881 # R/4 88888 R/4 88881 # R/4 188888

N$4 $0 ()/&$1,)1*/ =8 2" 18 18 = 2

CHART ": ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

A1':3/2/:

52

From the chart abo%e we find that# :>7 of the respondents sur%eyed pay an annual premium less than -s. 1///1 towards life insurance. !.7 of the respondents pay an annual premium less than -s. 1.//1 and 1@7 pay an annual premium less than -s. !.///. Hence we can safely say that HDFC SLIC would be able to capture the mar$et better if it introduced products9plans where the minimum premium starts at -s. ./// per annum. 5nly 1>7 of the respondents pay more than -s. !./// as premium and most products sold by HDFC SLIC ha%e -s.1!/// as the minimum annual premium amount. (hey should introduce more products li$e 8asy Life ;lus and Safe )uard where the minimum premium is -s.6/// p.a. and -s. 1!/// p.a. respecti%ely. (his would definitely increase their mar$et share as more indi%iduals would be able to afford the policies9plans offered.

POPULAR LIFE INSURANCE PLANS TABLE 7:

T3&) $0 P:'1 T)(% I1/-('1.) P:'1/ E1,$@%)1* P:'1/ P)1/2$1 P:'1/ C+2:, P:'1/ T'F S'A21; P:'1/

N$4 $0 R)/&$1,)1*/ 18! 122 1" 8 19

53

CHART 7: POPULAR LIFE INSURANCE PLANS

A1':3/2/: From the chart gi%en abo%e we can clearly see that ?.7 of the respondents hold endowment plans and :>7 of the respondents hold term insurance plans. 8ndowment plans are %ery popular and ser%e two purposes 0 life co%er and sa%ings. If the policy holder dies during the policy term the nominee gets the death benefit that is# sum assured and accumulated bonus. 5n sur%i%al the policy holder recei%es the sur%i%al benefit with a bonus. & term plan is a pure ris$ co%er plan wherein the insured pays a lower premium for a higher sum assured. (erm insurance is the cheapest form of insurance and helps the policy holder insure himself for a relati%ely low premium. For the returns sensiti%e in%estor term plans do not find fa%or as they do not offer a return in case the indi%idual does not die during the policy term.

AWARENESS OF UNIT LINKED INSURANCE PLANS

54

TABLE 8:
A@'()1)// $0 U12* L21B), P:'1/ Y)/ N$ N$4 $0 R)/&$1,)1*/ 1!= 11"

CHART 8: AWARENESS OF UNIT LINKED INSURANCE PLANS

A1':3/2/: From the chart gi%en abo%e we find that .@7 of the respondents are aware of unit lin$ed life insurance plans and ?:7 are not aware of such plans. (hese plans should be promoted through ad%ertising. (he company can ad%ertise through tele%ision# radio# newspapers# bill boards and pamphlets. (his would increase awareness and arouse curiosity in the minds of the consumer which would enable the company to mar$et its products more effecti%ely. Unit 0 lin$ed plans are those where the benefits are e3pressed 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 a customer would get would depend on the unit price when they pay the premium.

55

<hen the policy matures the indi%idual gets his fund %alue. (he %alue of his fund is calculated by multiplying the net asset %alue and number of units held by them on that day.

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM TABLE 9:

W2::21;1)// *$ /&)1, $1 &()%2-% L)// *+'1 R/4 "E888 R/4 "E881 # R/4 18E888 R/4 18E881 # R/4 2!E888 R/4 2!E881 # R/4 !8E888 R/4 !8E881 # R/4 1E88E888

N$4 $0 ()/&$1,)1*/ =1 7 118 =1 !

P)(.)1*';) 1!J 27J =1J 1!J 2J

CHART 9: CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

A1':3/2/:

56

From the graph abo%e# we can clearly see that ?17 of the respondents would be willing to spend between -s. 1///1 0 -s. !./// for life insurance. !@ 7 would be willing to spend between -s. 6//1 0 -s. 1//// per annum. 5nly 1.7 would be willing to spend more than -s. !./// per annum as life insurance premium. <e could say that the ma3imum premium payable by most consumers is less than -s. !./// p.a. (his is further reduced as most customers ha%e already in%ested with LIC# ICICI ;rudential# 'irla Sun Life# 'aAaA &llianF etc. HDFC SLIC is faced with a large amount of competition. (here are 1" insurance companies in India inclusi%e of LIC. Hence to capture a larger part of the mar$et the company could introduce more reasonable plans with lesser premium payable per annum.

CHART SHOWING IDEAL POLICY TERM TABLE 18:

I,)': &$:2.3 *)(% # ! 3)'(/ " # 9 3)'(/ 18 # 1! 3)'(/ 1" # 28 3)'(/ 21 # 2! 3)'(/ 2" # 8 3)'(/ M$() *+'1 8 3)'(/ W+$:) :20) P$:2.3 1 N$4 $0 ()/&$1,)1*/ !1 =1 9! 8 2= !

CHART 18: CHART SHOWING IDEAL POLICY TERM

57

A1':3/2/: From the chart gi%en abo%e it can be seen that :.7 of the respondents prefer a policy term of 1/ 0 1. years# 1>7 prefer a term of : 0 . years and 1.7 prefer a term of 6 0 > years. (his means that HDFC SLIC could introduce more plans wherein the premium paying term is less than 1. years. (he outloo$ of insurance as a product should be changed from something which you pay for your whole life *whole life policy, and do not recei%e any benefit *the nominee only recei%es the benefit in case of your death, to an e3tremely useful in%estment opportunity with the prospects of good returns on sa%ings# ta3 sa%ing opportunities as well as pro%iding for e%ery milestone in your life li$e marriage# education# children and retirement.

FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE TABLE 11:

P'('%)*)( N$4 $0 R)/&$1,)1*/

58

A,A)(*2/)%)1*/ H2;+ ()*-(1/ A,A2.) 0($% 0(2)1,/ F'%2:3 ()/&$1/2?2:2*2)/ O*+)(/

! 8= =" 89 1"

CHART 11:

A1':3/2/: From the chart abo%e it can be seen that ::7 of the respondents purchase life insurance to secure their families# ::7 ta$e life insurance to get high returns# 1@7 purchase insurance on the ad%ice of their friends and 1:7 purchase insurance because of the influence of ad%ertisements. (he main purpose of insurance is to co%er the financial or economic loss that occurs to the family in case of the uncertain death of the policy holder. 'ut now a days this trend is changing. &long with protection *life co%er,# a sa%ings element is being added to insurance. <ith the introduction of the new unit lin$ed plans in the mar$et# policy holders get the option to choose where their money will be in%ested. (hey can in%est their money in the e=uity mar$et# debt mar$et# money mar$et or a combination of these. (he debt and

59

money mar$ets usually ha%e low ris$ attached whereas the e=uity mar$et is a high ris$ in%estment option. PREFERRED COMPANY TYPE OF THE RESPONDENTS TABLE 12:
T3&) $0 C$%&'13 G$A)(1%)1* O@1), C$%&'13 P-?:2. L2%2*), C$%&'13 P(2A'*) C$%&'13 F$()2;1 C$%&'13 N$4 $0 R)/&$1,)1*/ 127 "2 =9 2 P)(.)1*';) =7J 2 J 18J 12J

CHART 12: PREFERRED COMPANY TYPE OF THE RESPONDENTS

A1':3/2/: From the graph abo%e we find that 6/7 of the respondents preferred to purchase insurance from a go%ernment owned company# !>7 of the respondents preferred to purchase insurance from a public limited company and only ?7 of the respondents

60

preferred a foreign based company. Hea%y ad%ertising through tele%ision# newspapers# magaFines and radio is re=uired. MINIMUM EXPECTED RETURN ON INVESTMENT TABLE 1 :
EF&).*), R)*-(1/ L)// *+'1 !J !J # 18J 11J # 1!J 1"J # 28J 21J # 2!J 2"J # 8J 1J # =8J =1J # !8J M$() *+'1 !8J N$4 $0 ()/&$1,)1*/ ! 9 =" =9 =" 27 22 1= 22

CHART 1 :

A1':3/2/: From the chart abo%e it can clearly been seen that 1"7 of the respondents would li$e 16 0 !/7 returns# 1@7 would li$e returns between !1 0 !.7 and 1@7 would li$e returns of 11 0 1.7 on their in%estments. (herefore the a%erage return on in%estment should be at least 16 0 !/ 7.

61

2ost consumers are willing to adapt to some amount of ris$ but still want some guaranteed returns. (herefore the bul$ of in%estment should be made in the balanced fund with ./7 debt and ./7 e=uity. (he returns on the Secure Fund are guaranteed as these in%ol%e in%estment is go%ernment securities and the debt mar$et. 'ut the returns on these instruments are low *" 0 1/7,. If the company in%ests in shares# returns are higher *:>7, but correspondingly ris$ borne by the policy holder is also higher. (herefore a good combination of the two instruments is often a wise choice.

CHAPTER IX
62

FUTURE LINE OF RESEARCH

63

FUTURE LINE OF RESEARCH

(he future topics for research in the organiFation could be setting up of an appropriate ad campaign. It is %ery %ital to the companies+ success that the people of India $now about HDFC SLIC# its products and their special features and how insurance in general can help them in their future. (he ad%ertisements ha%e to be emotionally appealing. (hey might also include a celebrity. (he brand name of HDFC could be used to gi%e a push to HDFC SLIC and its products. (he general perception of insurance as LinauspiciousM should be done away with and indi%iduals and corporations accept insurance on power with other in%estment opportunities.

(he other area of research could be in the management of funds HDFC SLIC possesses and how it can ma3imiFe returns for its in%estors. & research proAect could be underta$en on how to ensure that the money gets in%ested in the right companies and earns a medium 0 high return on in%estment. &nother area of research could be an analysis of the sales and mar$eting techni=ues used by HDFC SLIC. & large number of changes could be introduced and this would help in sa%ing operating costs and impro%ing the efficiency of the firm.

64

CHAPTER X CONCLUSION

CONCLUSION
65

HDFC standard life insurance is first life insurance company in India. It has businesses spread out across the globe. It was registered on !:rd December !///. It currently ran$s number ? amongst the insurers in India *Source: annual premium pro%ided by the company, (he company faces a large amount of competition. (o sustain itself it must promote its products through ad%ertising and impro%e its selling techni=ues. Consumers must be aware of the new plans a%ailable at HDFC SLIC. (he medium of ad%ertising used could be tele%ision since most of its competitors use this tool to promote their products. (he company must be promoted as an Indian company since consumers seem to ha%e more trust in in%esting in Indian firms. (he unit lin$ed concept must be specifically promoted. (he general perception of life insurance has to change in India before progress is made in this field. ;eople should not be afraid to in%est money in insurance and must use it as an effecti%e tool for ta3 planning and long term sa%ings. HDFC SLIC could tap the rural mar$ets with cheaper products and smaller policy terms. (here are indi%iduals who are willing to pay small amounts as premium but the plans do not accept premiums below a certain amount. It was usually found that a large number of males were insured compared to females. Indi%iduals below the age of :/ *mostly male, were interested in in%estment plans. (his was a general conclusion drawn during prospecting clients.

66

REFERENCES
@@@4+,0./:2.4.$% @@@4*'*'#'2;#:20)4.$% @@@42(,'21,2'4.$% @@@4:2.4.$% @@@4%$1)3 .$1*($:4.$% @@@4?'K'K'::2'1L4.$% @@@42.2.24&(-:20)4.$% M';'L21) > I1/-('1.) W$(:, T+) O-*:$$B M$1)3 S).()*/ $0 S-..)//0-: I1/-('1.) S':)/ ?3 M(4 5'.B K21,)(

67

A SURVEY ON MINSURANCE INDUSTRYN

Dear Sir92adam# I am a student of &ra%ali Institute of 2anagement# Codhpur. &s part of the re=uirements for my ;ost )raduation Diploma in 2anagement I am re=uired to do a research based proAect. indly spend a few minutes of your %aluable time and fill in this =uestionnaire. D$ 3$- +'A) ' :20) 21/-('1.) &$:2.3O21A)/*%)1* &:'1 21 3$-( 1'%)G o Nes o 4o &$:2.2)/ ,$ 3$&%i%a Insurance 'aAaA &llianF Insurance LIC I4) Bysya Insurance 'harti &3a Insurance Life Life

I0 3)/ @+2.+ .$%&'13N/ 21/-('1.) +$:,G o o HDFC Standard Life Insurance o o 'irla Sun Life Insurance o o (ata &I) Life o Insurance o ICICI ;rudential o Life Insurance o 5thers *specify name,

Life Life

W+'* 2/ *+) '&&($F2%'*) &()%2-% &'2, ?3 3$- '11-'::3 H21 R-&))/IG o o o o o -s. .#/// 0 -s. o -s. ./#//1 0 -s. 1/#/// 6/#/// -s. 1/#//1 0 -s. o -s. 6/#//1 0 -s. 1.#/// "/#/// -s. 1.#//1 0 -s. o -s. "/#//1 0 -s. !.#/// 1#//#/// -s. !.#//1 0 -s. ./#/// 2ore than -s. 1#//#/// *specify premium,

W+'* B21, $0 21/-('1.) &$:2.3 @$-:, /-2* 3$- ?)/* 21 3$-( .-(()1* /*';) $0 :20)G o o o Life Insurance Life Insurance and In%estment ;lans (a3 sa%ing plans o o ;ension ;lans Child ;lans

68

A() 3$- '@'() $0 *+) 1)@ -12* :21B), 21/-('1.) &:'1/ 21 *+) %'(B)*G o Nes o 4o

H$@ %-.+ @$-:, 3$- ?) @2::21; *$ /&)1, &)( '11-% 20 3$- @)() *$ ;$ 0$( '1 21A)/*%)1*O21/-('1.) &:'1G Less than -s. o -s. !.#//1 0 -s. 6#/// ./#/// o -s. 6#//1 0 -s. o -s. ./#/// 0 -s. 1/#/// 1#//#/// o -s. 1/#//1 0 -s. o 2ore than -s. !.#/// 1#//#/// W+2.+ '..$(,21; *$ 3$- 2/ '1 2,)': &$:2.3 *)(%G HN-%?)( $0 3)'(/ 3$- @$-:, ?) @2::21; *$ &'3 &()%2-%I o o o o o : to . years 6 to > years 1/ to 1. years 16 to !/ years o o o o !1 to !. years !6 to :/ years 2ore than :/ years <hole life policy

W+'* %$*2A'*)/ 3$- *$ &-(.+'/) 21/-('1.)O21A)/*%)1* &:'1/G o o o &d%ertisements High -eturns 5thers *specify, o o &d%ice from friends Family responsibilities

I1 @+2.+ B21, $0 .$%&'13 @$-:, 3$- &()0)( *$ %'B) ' &-(.+'/) $0 21/-('1.)G o o )o%ernment owned company ;ublic Limited Company o o ;ri%ate Company Foreign based company

T3&2.'::3 @+'* B21, $0 ()*-(1/ @$-:, 3$- :$$B '* 0($% 3$-( 21A)/*%)1*/G HP:)'/) 1$*): H2;+)( ()*-(1/ 21A$:A) ;()'*)( (2/BI

69

o o o o o

Less than .7 67 D 1/ 7 117 D 1. 7 167 D !/ 7 !17 D !.7

o o o o

!67 D :/7 :17 D ?/7 ?17 D ./7 2ore than ./7

P)(/$1': D)*'2:/:
N'%): A,,()//: A;): P($02:) $0 ()/&$1,)1*: Student Housewife <or$ing ;rofessional D'*): C$1*'.* N$4 :

'usiness Self 0 8mployed )o%ernment Ser%ice 8mployee

70