Acknowledgement

I would like to thank employees of SUD Life insurance company for giving me an
opportunity to intern with them. The training at the company was held over a period of 45
days. During this period I was guided by the development manager Mr. Avneet Singh Pahwa.
The project report and the learning process would not have been possible without his inputs
and guidance at critical points of the project. He imparted to me the knowledge of mutual
funds and shared with me the practical marketing techniques of mutual funds. He also made
sure that I was exposed to all the distribution channels, the operational processes and also was
exposed to the sale of mutual funds. Under his guidance I was able to enhance my marketing
and inter-personal skills.
During the course of the 45 days I also came across other people who put in their time and
effort towards acclimatizing me towards the working of their organization. I express my
thanks to every one of them.
These 45 days were very important to me as it helped me in going beyond the class room and
get a practical feel of how things worked.

Executive Summary
A mutual fund is a scheme in which several people invest their money for a common
financial goal. The collected money invests in the capital market, debt and the money market,
which they earned, is divided based on the number of units which they hold.
The topic of this project is A comparative study on Mutual Funds Vs Insurance . The
mutual fund industry in India has seen dramatic improvements in quantity as well as quality
of product and service offerings in recent years. Along with this project also Steps of how to
invest in Mutual Fund.

An effort has been made to work on the concepts that have been taught in class
along with other useful parameters so that better study can be done.

Introduction to Star Union Dai-ichi Life Insurance Co. Ltd.

Corporate profile
Star Union Dai-ichi Life Insurance Co. Ltd. (SUD Life), a joint venture between Bank of
India, Union Bank of India and the Dai-ichi Mutual Life Insurance Company. Star Union
Dai-ichi Life Insurance Co. Ltd was incorporated on 25th September, 2007. The company
received license from Insurance Regulatory and Development Authority (IRDA) on 26th Dec
2008. The launch of the company was announced in presence of Home Minister of IndiaShri P. Chidambaram on 9th February 09. Soon after its launch, in 43 working days, Star
Union Dai-ichi Life Insurance Co. completed business of 51.75 crore Premium Income.
Star Union Dai-ichi Life Insurance has a capital participation of 51% by BOI, 26% by Daiichi Life and 23% by Union Bank. The Company has authorized capital of Rs. 250.00 crores.
This fulfills the solvency margin requirement of the company for the time being. Star Union
Dai-ichi Life Insurance aims to reach out to the people of India with a wide range of needbased, affordable insurance products and contribute towards a financially secure future for all
sections of Society. In the financial year 2009-10 the company has already issued 57961
policies with Rs 232 crores of first year premium during the current year 2009-10. The
company has also secured Rs 6.08 crores as premium for Group Insurance business. The
business target of the company is to achieve Rs 600 crores of premium by 2009-10, which
would make it one of the fastest growing Insurance Companies in India. It has added more
products to its existing product portfolio by developing several new products to meet various
needs of the insuring public. The company unveiled its six new policies under Group and
Individual Insurance category and also announced strengthening its IT structure with revamp
of its existing Corporate website, and launch of three new additional portals.
NEW PRODUCTS LAUNCHED
1. INDIVIDUAL INSURANCE PLANS

i.

SUD Life Instant Endowment Plan- An Individual in age group of

18- 49 years can buy this policy. As the name suggests, the procedure
to avail this plan has been kept simple, particularly keeping in mind
todays fast pace life. Like most of the SUD Life Insurance Plans,
SUD Life Instant Endowment Plan comes with Accidental Death &
Total and Permanent Disability Benefit Rider. The other special
features of this plan are Guaranteed Surrender Value and 2% rebate
for women on the tabular premium.

ii.

SUD Life Pure Term Assurance Plan- This is a Term Insurance

Plan, with sum assured ranging from Rs 500000 to Rs 24,99,000.
Individuals in age group of 18 to 60 years can avail this policy with
the term ranging from 5 to 25 years. The Sum assured is in multiples
of 1000. This plan also comes with Accidental Death & Total and
Permanent Disability Benefit Rider.

iii.

SUD Life Premier Protection Plan- The Premium Rate is

comparatively lower as compared to SUD Life Term Assurance Plan
in view of the distinctively higher life expectancy and Health Care
enjoyed by the people in upper segment of society. This plan is
particularly designed for companies for KMI/ Partnership and
H.N.Is, who desire higher security for their future. With the policy
term ranging from 5 to 25 years, the minimum sum assured for this
plan is Rs 2500000. Individuals in age group of 18 to 60 years can
avail this policy. This policy also comes with Accidental Death &
Total and Permanent Disability Benefit Rider.

2. GROUP INSURANCE PLANS

i.

SUD Life Group Gratuity Plan- This scheme helps the employers
to manage the gratuity liability of their employees in a scientific way.
Along with the regular benefit of gratuity, employees can also be
entitled for death benefits through this scheme, where the estimated
amount of his gratuity till retirement is paid to his legal heir anytime
during service period. Thus this scheme is beneficial to the employers
to retain their employees.

ii.

SUD Life Group Leave Encashment Plan- Working professionals

in age group of 18 to 59 years can avail this plan though their
employer. SUD Life will conduct an actuarial valuation in respect of
leave encashment liability and determine the funding requirements
which will be furnished to the organization. SUD Life will maintain a
running account for each scheme, and the contributions net of risk
premium will be credited to this account. The funds of all the running
accounts will be pooled and invested by SUD Life and interest will
be declared at the end of each year based on earnings net of expenses.
On the exit of an employee from the service of the employer, or on
encashment of leave during his service with the employer, the leave
encashment amount will be paid from the fund of the Scheme. SUD
Life Accidental Death and Dismemberment Benefit Rider can also
be opted for so as to compensate for loss of income resulting through
injury/dismemberment caused by accident. Moreover, if an accidental
death claim arises, the beneficiary will receive basic sum assured as
well as rider sum assured.

iii.

Reverse Mortgage Loan- Annuity Plan- Reverse Mortgage Loan- Annuity Plan
aims to provide financial security to senior citizens who have assets but not
enough liquidity to lead a life with dignity. Senior citizens can approach Central
Bank of India, which is the partner bank of SUD Life, to avail a reverse mortgage
loan against their existing property. The Bank will act as a master policy holder
and buy for the senior citizens a life annuity from SUD Life. The senior citizens
do not have to repay this loan and in case the legal heirs wish to retain back the
property they need to repay the loan amount to the bank with the accrued interest
on it. Reverse Mortgage Loan- Annuity can be paid in yearly, half-yearly,
quarterly and monthly installments. There are two options under the Plan.
Through the first option, the senior citizens can receive the stated annuity
throughout their life time and no amount will be refunded thereafter. Through the
second option, senior citizens will receive comparatively lower annuity, which
will be adequately compensated for by the return of the original purchase price to
the Banks or their legal heirs thereafter as the case may be.

IT INITIATIVES FROM SUD LIFE

SUD Life is striving to create state of the art IT systems. The company is revamping its
existing Customer website to make it user friendly. Besides SUD Life is also launching its
three new portals, viz- Customer Portal, Employee Portal and Distribution Portal.
SUD Lifes Customer Portal will provide almost real time policy information to customers.
Customers can access this portal 24x7 from anywhere and will be able to see policy data,
fund details, premium due details with facility to print premium receipts, change address etc.
on real time basis. SUD Life will be the 1st Life Insurance Company to launch its customer
portal within first year of its launch.
SUD Life is also launching Distribution Portal for all distribution partners and Employee
Portal for all its employees, which will have inherent capacity of Business Intelligence to
serve business needs and to satisfy queries of customers.
Along with these initiatives SUD Life has also launched automated SMS alerts, E-Mail alerts
and a full fledged contact centre for its customers as a part of its Communication strategy and
hence fulfilling its mission of becoming a highly customer centric organization.
Rs. 250.00 crores. This fulfills the solvency margin requirement of the company for the time
being.

History of Mutual Funds

The mutual fund industry in India started in 1963 with the formation of Unit
Trust of India, at the initiative of the Government of India and Reserve Bank of
India. The history of mutual funds in India can be broadly divided into four
distinct phases.
First Phase 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It
was set up by the Reserve Bank of India and functioned under the Regulatory
and administrative control of the Reserve Bank of India. In 1978 UTI was delinked from the RBI and the Industrial Development Bank of India (IDBI) took
over the regulatory and administrative control in place of RBI. The first scheme
launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700
Crores of assets under management.
Second Phase 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public
sector banks and Life Insurance Corporation of India (LIC) and General
Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI
Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec

87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund
(Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in
December 1990.
At the end of 1993, the mutual fund industry had assets under management of
Rs.47, 004 Crores.
Third Phase 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund
families. Also, 1993 was the year in which the first Mutual Fund Regulations
came into being, under which all mutual funds, except UTI were to be
registered and governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual fund registered in July
1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign
mutual funds setting up funds in India and also the industry has witnessed
several mergers and acquisitions. As at the end of January 2003, there were 33
mutual funds with total assets of Rs. 1, 21,805 Crores. The Unit Trust of India
with Rs.44, 541 Crores of assets under management was way ahead of other
mutual funds
Fourth Phase since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI
was bifurcated into two separate entities. One is the Specified Undertaking of
the Unit Trust of India with assets under management of Rs.29, 835 crores as at
the end of January 2003, representing broadly, the assets of US 64 scheme,
assured return and certain other schemes. The Specified Undertaking of Unit
Trust of India, functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of
the Mutual Fund Regulations.

Concept of Mutual Funds

Mutual funds are institutions that collect money from several sources individuals or institutions by issuing 'units', invest them on their behalf with
predetermined investment objectives and manage the same all for a fee. They
invest the money across a range of financial instruments falling into two broad
categories equity and debt. Individual people and institutions no doubt, can
and do invest in equity and debt instruments by themselves but this requires
time and skill on both of which there are constraints. Mutual funds emerged as
professional financial intermediaries bridging the time and skill constraint. They
have a team of skilled people who identify the right stocks and debt instruments
and construct a portfolio that promises to deliver the best possible 'constrained'
returns at the minimum possible cost. In effect, it involves outsourcing the
management of money. More explicitly, the benefits of investing in equities and
debt instruments are supposedly much better if done through mutual funds. This
is because of the following reasons: Firstly, fund managers are more skilled.
They are trained to identify the best investment options and to assess the
portfolio on a continual basis; secondly, they are able to invest in a diversified
portfolio consisting of 15-20 different stocks or bonds or a combination of them.
For an individual such diversification reduces the risk but can demand a lot of
effort and cost. Each purchase or sale invites a cost in terms of brokerage or
transactional charges such as demat account fees in India. The need to possibly
sell 'poor' stocks/bonds and buy 'good' stocks/bonds demands constant tracking
of news and performance of each company they have invested in. Mutual funds
are able to maintain and track a diversified portfolio on a constant basis with
lesser costs. This is because of the pecuniary economies that they enjoy when it
comes to trading and other transaction costs; thirdly, funds also provide good
liquidity. An investor can sell her/his mutual fund investments and 17
receive payment on the same day with minimal transaction costs as compared to
dealing with individual securities, this totals to superior portfolio returns with
minimal cost and better liquidity.

9. Advantages Of Mutual Fund

Diversification - It can help an investor diversify their portfolio with a
minimum investment. Spreading investments across a range of securities can
help to reduce risk. A stock mutual fund, for example, invests in many stocks .
This minimizes the risk attributed to a concentrated position. If a few securities

in the mutual fund lose value or become worthless, the loss may be offset by
other securities that appreciate in value. Further diversification can be achieved
by investing in multiple funds which invest in different sectors.
Professional Management - Mutual funds are managed and supervised by
investment professional. These managers decide what securities the fund will
buy and sell. This eliminates the investor of the difficult task of trying to time
the market.
Well regulated - Mutual funds are subject to many government regulations that
protect investors from fraud.
Liquidity - It's easy to get money out of a mutual fund.
Convenience - we can buy mutual fund shares by mail, phone, or over the
Internet.
Low cost - Mutual fund expenses are often no more than 1.5 percent of our
investment. Expenses for Index Funds are less than that, because index funds
are not actively managed. Instead, they automatically buy stock in companies
that are listed on a specific index
Transparency - The mutual fund offer document provides all the information
about the fund and the scheme. This document is also called as the prospectus or
the fund offer document, and is very detailed and contains most of the relevant
information that an investor would need.
Choice of schemes - there are different schemes which an investor can choose
from according to his investment goals and risk appetite.
Tax benefits - An investor can get a tax benefit in schemes like ELSS (equity
linked saving scheme)