Kotak Project | Marketing Research | Working Capital

A PROJECT REPORT

ON “Consumer Investment & Buying Behaviour at Kotak Life Insurance”

Submitted By:-

Pulkit Mittal M.B.A. 3rd sem. M.I.T, Meerut Roll No. 0829270023

Submitted To:-

U.P.Technical University, Lucknow

Declaration
I declare that the project entitled “A STUDY ON A INSURANCE COMPANY” (Conducted on behalf of ‘KOTAK LIFE INSURANCE LTD, Janakpuri New-Delhi) under the guidance of Mr. Sachin Jain submitted in partial fulfillment of the requirement for the award of the degree of Masters in Business Administration to Uttar Pradesh Technical University, Lucknow is my original work – carried out during 1July, 2009 to 31August, 2009, and not submitted for the award of any other degree, diploma, fellowship or other similar or prize to any other institute, organization or university by any other person.

Pulkit Mittal

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Certificate of the Organisation

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Certificate of the Institute

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Acknowledgement
In preparation of this report by me, I feel great pleasure because it gives me extensive practical knowledge in my career. I get idea about Indian Life Insurance Industry by this project.

I express my deep sense of gratitude to My Company Guide Mr. Vishal Kumar (ABM), Mr. Sachin Jain (SM) for his valuable guidance during my project work. I also like to all staff of Kotak Life Insurance who guide me in project work directly or indirectly to complete my training project.

I am thankful to Mr. Vikhyat Singhal (Faculty Guide) for valuable inspiration and guidance provided me throughout the course of this project. They have patient and critically gone the subject matter.

I would like to take opportunity to express my gratitude towards all of them who have contributed directly or indirectly in my project work.

At last I would like to extend my deep sense of gratitude to my friends, colleagues and each individual who directly or indirectly help me during the project work.

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Table of Contents :-

1. Executive summary……………….…… 2. Company Profile……………………..… 3. Objectives of the Research……………. 4. Literature Review …………………….. 5. Research Methodology ……………….. 6. Data Analysis & Interpretation………. 7. Conclusions and Recommendations….. 8. Limitations……………………………... 9. Bibliography / References……………... 10.Appendices…………………………...…

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Executive Summary

Executive Summary :I was given the opportunity to pursue my training in KOTAK LIFE INSURANCE for a period of 2 months. My project is titled Consumer Investment & Buying Behaviour at Kotak Life Insurance. The basic project objectives are as follows:✔ To study consumer investment behaviour ✔ To study brand awareness of Kotak 7

✔ Comparison of ULIPs. ✔ To discuss various new avenues in insurance and find the Market potential of ULIP in NCR region (Delhi). As a part of my project I was required to carry out two surveys. The following vital conclusions were derived: Trust needs to be developed among the customers both as far as the ULIP as a product is concerned Some respondents despite of knowing about ULIP were hesitant to talk on it because they were not too confident about their knowledge. This very fact completely declines the concept of providing switches as a lucrative feature in ULIP (which is done by most of the companies). The reason is that very rarely people have the ability or time to use these features. Important Recommendations that were suggested are: Building trust by providing the customers with adequate knowledge about the company and then the product. Enhancing the level of awareness in terms of the company, their Partners and then the product and special emphasis among the female chunk of the population. Adequate advertisement via appropriate media should be done by the various companies as is done in the case of mutual Funds. The Insurance Regulatory and Development Authority (IRDA)

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The Insurance Act, 1938 had provided for setting up of the Controller of Insurance to act as a strong and powerful supervisory and regulatory authority for insurance. Post nationalization, the role of Controller of Insurance diminished considerably in significance since the Government owned the insurance companies. But the scenario changed with the private and foreign companies foraying in to the insurance sector. This necessitated the need for a strong, independent and autonomous Insurance Regulatory Authority was felt. As the enacting of legislation would have taken time, the then Government constituted through a Government resolution an Interim Insurance Regulatory Authority pending the enactment of a comprehensive legislation. The Insurance Regulatory and Development Authority Act, 1999 is an act to provide for the establishment of an Authority to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto and further to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the General insurance Business (Nationalization) Act, 1972 to end the monopoly of the Life Insurance Corporation of India (for life insurance business) and General Insurance Corporation and its subsidiaries (for general insurance business). The act extends to the whole of India and will come into force on such date as the Central Government may, by notification in the Official Gazette specify. Different dates may be appointed for different provisions of this Act. The Act has defined certain terms; some of the most important ones are as follows: Appointed day means the date on which the Authority is established under the act. Authority means the established under this Act.

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Interim Insurance Regulatory Authority means the Insurance Regulatory Authority set up by the Central Government through Resolution No. 17(2)/ 94-lns-V dated the 23rd January, 1996. Words and expressions used and not defined in this Act but defined in the Insurance Act, 1938 or the Life Insurance Corporation Act, 1956 or the General Insurance Business (Nationalization) Act, 1972 shall have the meanings respectively assigned to them in those Acts A new definition of "Indian Insurance Company" has been inserted. "Indian insurance company" means any insurer being a company (a) Which is formed and registered under the Companies Act, 1956

(b) in which the aggregate holdings of equity shares by a foreign company, either by itself or through its subsidiary companies or its nominees, do not exceed twenty-six percent, Paid up capital in such Indian insurance company .

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Company Profile
Stock broking businesses in the UK. Kotak Group was established in 1985.Kotak Mahindra Bank is the parent company of the group. Kotak Group entered into the life insurance business in 2001. Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak Mahindra Bank Ltd. (74%) and Old Mutual plc. (26%) Old Mutual plc is a

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world-Class international financial services company. It was established in South Africa before 160 years. OLD MUTUAL is the largest financial services business in South Africa, through its life insurance, asset management, banking and general insurance operations. The company serves 4 million life insurance policyholders and employs over 13 000 South Africans in its local operations. In the USA, OLD MUTUAL is one of the top ten fixed annuity businesses offering an array of specialist asset management skills through its 23 asset management businesses. The company’s US Life business recorded sales of $4 billion at the end of 2002. Operations in the United Kingdom are focused on wealth management, through Gerrard as one of the leading private client The OLD MUTUAL Group has the ability to cater for a variety of consumer segments and offers a comprehensive and innovative range of products for all income groups.

Objectives of the Research

The main motto of the present study accomplishes the following objectives :● To know about brand awareness of Kotak Life Insurance and potential customer’s perception for investment in ULIP. ● To estimate and analyze the MARKET POTENTIAL OF ULIP in a particular region (Delhi). 12

● To know about the Tax benefits under ULIP Plan :Life insurance plans are eligible for deduction under Sec. 80C , Pension plans are eligible for a deduction under Sec. 80CCC , Health insurance plans and critical illness riders are eligible for deduction under Sec. 80D , The maturity proceeds or withdrawals of life insurance policies are exempt under Sec 10(10D). ● To generate the premium in timely manner. ●To identify the qualities for a good financial Advisor to enhance the business, of the company at the particular duration of time.

Literature Review
Overview of LIFE INSURANCE:Life insurance is a form of insurance that pays monetary proceeds upon the death of the insured covered in the policy. Essentially, a life insurance policy is a contract between the named insured and the insurance company wherein the insurance company agrees to pay an

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agreed upon sum of money to the insured's named beneficiary so long as the insured's premiums are current. With a large population and the untapped market area of this population insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15-20% annually. Together with banking services, it adds about 7 percent to the country’s GDP. In spite of all this growth statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without life insurance cover and the health insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation “Malhotra Committee” was constituted by the government in 1993 to examine the various aspects of the industry. The key element of the reform process was participation of overseas insurance companies with 26% capital. Creating a more competitive financial system suitable for the requirements of the economy was the main idea behind this reform. Since then the insurance industry has gone through many changes. The liberalization of the industry the insurance industry has never looked back and today stand as one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today. The use of new distribution techniques and the IT tools has increased the scope of the industry in the longer run. Insurance is the business of providing protection against financial aspects of risk, such as those to property, life health and legal liability. It is one method of a greater concept known as risk management –which is the need to mange uncertainty on account of exposure to loss, injury, disadvantage or destruction.

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The business of insurance is related to the protection of the economic values of assets. Every asset has a value. The asset would have been created through the efforts of the owner. The asset is valuable to the owner, because he expects to get some benefit from it. The benefit may be an income or in some other form. In India, insurance began in 1818 with life insurance being transacted by an English company. The first insurance company was the Bombay mutual assurance society ltd, formed in 1870 in Mumbai. Insurance helps to reduce the consequences of adverse situation. Insurance is the method of spreading and transfer of risk. The fortunate many who are exposed to some or similar risk shares loss of the unfortunate. Insurance does not protect the assets but only compensates the economic or financial loss. In insurance the insured makes payment called “premiums” to an insurer, and in return is able to claim a payment from the insurer if the insured suffers a defined type of loss. This relationship is usually drawn up in a formal legal contract. Insurance companies also earn investment profits, because they have the use of the premium money from the time they receive it until the time they need it to pay claims. This money is called the float. When the investments of float are successful they may earn large profits, even if the insurance company pays out in claims every penny received as premiums. In fact, most insurance companies pay out more money than they receive in premiums. The excess amount that they pay to policyholders is the cost of float. An insurance company will profit if they invest the money at a greater return than their cost of float. An insurance contract or policy will set out in detail the exact circumstances under which a benefit payment will be made and the amount of the premiums. Marine insurance is the oldest type of insurance and one of the earliest records of a marine policy relates to a Mediterranean voyage in 1347. This was followed by

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life insurance some 300 years later. Fire insurance, however, did not begin until after the Great fire of London in 1666. In India all the three insurance developed as under:

INSURANCE Security against a contingent loss. Where ever there is uncertainty there is risk. The risk cannot be averted. The risk is uncertainty of the financial loss .we don’t have any command on uncertainties. This makes it is essential that we think in favor of advice that becomes instrumental in spreading the loss. It is in this context that we think about Insurance, which is considered to be a social device to accumulate funds to meet uncertain losses. The Main Functions of Insurance are :-

It provides protection against the possible changes of generating losses.

 It eliminates worries to miseries of losses of poverty and death.

 It provides capital to national economy since the accumulated funds are invested in productive heads. The insurance industry in India can broadly classify in two parts. They are. 1) Life insurance. 2) Non-life (general) insurance. 1. Life Insurance:Life insurance can be defined as “life insurance provides a sum of money if the person who is insured dies while the policy is in effect”. In 1818 British introduced to India, with the establishment of the oriental life insurance company in Calcutta. The first Indian owned Life Insurance Company; the Bombay mutual life assurance society was set up in 1870. The life insurance act, 1912 was the first 16

statuary measure to regulate the life insurance business in India. In 1983, the earlier legislation was consolidated and amended by the insurance act, 1938, with comprehensive provisions for detailed effective control over insurance. The union government had opened the insurance sector for private participation in 1999, also allowing the private Companies to have foreign equity up to 26 %. Following the opening up of the insurance sector, 12 private sector companies have entered the life insurance business.

Benefits:℘ ℘ ℘ ℘ ℘ Life insurance encourages saving and forces thrift. It is superior to a traditional savings vehicle. It helps to achieve the purpose of life assured. It can be enchased and facilitates quick borrowing. It provides valuable tax relief.

Thus insurance is found to be very useful in the lives of the person both in short term and long term. Fundamental principles of life insurance contract:-

A. Principle of good faith: “A positive duty to voluntary disclose, accurately and fully, all facts, material to the risk being proposed whether requested or not”.

B. Principle of Insurable Interest: “Relationships with the subject matter (a person) which is recognized in law and gives legal right to insure that person”. 17

2. Non-Life (general) Insurance:Triton insurance co. ltd was the first general insurance company to be established in India in 1850, whose shares were mainly held by the British. The first general insurance company to be set up by an Indian was Indian mercantile insurance co. Ltd., which was stabilized in 1907. There emerged many a player on the Indian scene thereafter. The general insurance business was nationalized after the promulgation of General Insurance Corporation (GIC) OF India undertook the post-nationalization general insurance business. Brief history of Insurance Sector in India:The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. The story of insurance is probably as old as the story of mankind. The same instinct that prompts modern businessmen today to secure themselves against loss and disaster existed in primitive men also. They too sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is largely a development of the recent past, particularly after the industrial era – past few centuries – yet its beginnings date back almost 6000 years. Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and these companies were not insuring Indian natives. However, later with the efforts of eminent 18

people like Babu Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian lives were being treated as sub-standard lives and heavy extra premiums were being charged on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance companies. The United India in Madras, National Indian and National Insurance in Calcutta and the Co-operative Assurance at Lahore were established in 1906. In 1907, Hindustan Cooperative Insurance Company took its birth in one of the rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were some of the companies established during the same period. Prior to 1912 India had no legislation to regulate insurance business. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed. The Life Insurance Companies Act 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary. But the Act discriminated between foreign and Indian companies on many accounts, putting the Indian companies at a disadvantage. The first two decades of the twentieth century saw lot of growth in insurance business. From 44 companies with total business-in-force as Rs.22.44 Crore, it rose to 176 companies with total business-in-force as Rs.298 Crore in 1938. During the mushrooming of insurance companies many financially unsound concerns were also floated which failed miserably. The Insurance Act 1938 was the first legislation governing not only life insurance but also non-life insurance to provide strict state control over insurance business. The demand

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for nationalization of life insurance industry was made repeatedly in the past but it gathered momentum in 1944 when a bill to amend the Life Insurance Act 1938 was introduced in the Legislative Assembly. However, it was much later on the 19th of January 1956 that life insurance in India was nationalized. About 154 Indian insurance companies, 16 non-Indian companies and 75 provident were operating in India at the time of nationalization. Nationalization was accomplished in two stages; initially the management of the companies was taken over by means of an Ordinance, and later, the ownership too by means of a comprehensive bill. The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the year 1956. Since life insurance contracts are long-term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. Reorganization of LIC took place and large numbers of new branch offices were opened. As a result of re-organization servicing functions were transferred to the branches, and branches were made accounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 Crore of New Business in 1957 the corporation crossed 1000.00 Crore only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 Crore mark of new business. But with re-organization happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 Crore Sum Assured on new policies. Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices, 7 zonal offices and the corporate office. LIC’s Wide Area Network covers 100

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divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer on-line premium collection facility in selected cities. LIC’s ECS and ATM premium payment facility is an addition to customer convenience. Apart from on-line Kiosks and IVRS, Info Centers have been commissioned at Mumbai, Ahmadabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access to its policyholders, LIC has launched its SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many other conveniences in the future. From then to now, LIC has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business. The same motives which inspired our forefathers to bring insurance into existence in this country inspire us at LIC to take this message of protection to light the lamps of security in as many homes as possible and to help the people in providing security to their families.

Some of the important milestones in the life insurance business in India are:• 1850 Non life insurance debuts with triton insurance company. 1870 Bombay mutual

life assurance society is the first Indian owned life insurer • 1912 The Indian Life Assurance Companies Act enacted as the first statute to

regulate the life insurance business. • 1928 The Indian Insurance Companies Act enacted to enable the government to

collect statistical information about both life and non-life insurance businesses. 21

1938

Earlier legislation consolidated and amended to by the Insurance Act with the

objective of protecting the interests of the insuring public. • 1956 245 Indian and foreign insurers and provident societies taken over by the central

government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 Crore from the Government of India. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. Some of the important milestones in the general insurance business in India are: • 1907 The Indian Mercantile Insurance Ltd. set up, the first company to transact all

classes of general insurance business. • 1957 General Insurance Council, a wing of the Insurance Association of India, frames a

code of conduct for ensuring fair conduct and sound business practices. • 1968 The Insurance Act amended to regulate investments and set minimum solvency

margins and the Tariff Advisory Committee set up. • 1972 The General Insurance Business (Nationalization) Act, 1972 nationalized the

general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies’ viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.

Insurance Sector Reforms:-

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In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor R. N. Malhotra, was formed to evaluate the Indian insurance industry and recommend its future direction. The Malhotra committee was set up with the objective of complementing the reforms initiated in the financial sector. The reforms were aimed at “creating a more efficient and competitive financial system suitable for the requirements of the economy keeping in mind the structural changes currently underway and recognizing that insurance is an important part of the overall financial system where it was necessary to address the need for similar reforms” In 1994, the committee submitted the report and some of the key recommendations included.   1997 2000 Insurance regulator IRDA set up IRDA starts giving licenses to private insurers: Kotak Life Insurance, ICICI

prudential and HDFC Standard Life insurance first private insurers to sell a policy  2001 Royal Sundaram Alliance first non life insurer to sell a policy 2002 Banks

allowed selling insurance plans.

Existing Insurance Companies:-

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Research Methodology:Research always starts with a question or a problem. Its purpose is to question through the application of the scientific method. It is a systematic and intensive study directed towards a more complete knowledge of the subject studied. Marketing research is the function which links the consumer, customer and public to the marketer through information- information used to identify and define marketing opportunities and problems generate, refine, and evaluate marketing actions, monitor marketing actions, monitor marketing performance and improve understanding of market as a process.

Marketing research specifies the information required to address these issues, designs, and the method for collecting information, manage and implemented the data collection process, analyses the results and communicate the findings and their implication. I prepared my project as Exploratory as well as Qualitative Research type, as the objective of the study demands the answers of the question related to find the potentiality of life insurance in the city.

The Marketing Research Process As marketing research is a systemic and formalized process, it follows a certain sequence of research action. The marketing process has the following steps: 1. Formulating the problems 2. Developing objectives of the research 25

3. Designing an effective research plan 4. Data collection techniques 5. Evaluating the data and preparing a research report There are two types of data collection method use in my project report:Primary data & Secondary data.

RESEARCH –
EXPLORATORY RESEARCH As there was a need to know the best possible practices regarding customer’s perception and mere description of the situation will not be sufficient, exploratory research has been used. This research was done through the Secondary Data Collection:1.

Provided by the organization itself

2. Various Websites 3. Books and Magazines 4. News-papers, etc.

QUANTITATIVE RESEARCH To give numerical evidence to the research, Survey Method has been adopted. Questionnaires have been used to collect Primary data for the research. Questionnaire help in easy quantification and this is a quick and cheaper method, since time and financial constraints were there. This way, larger sample size could be used from sources situated at other cities as well. A Five point Graphic Rating Scale or Likert Scale has been used in this research to find out the degree of agreement of respondents with given statements relating to subject. 26

Research Design
In our live project, we decided primary data collection method because our study nature does not permit to apply observational method. In survey approach we had selected a questionnaire method for taking a customer view because it is feasible from the point of view of our subject & survey purpose. We conducted 50 sample of survey in our project in Delhi region.

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Data Analysis and Interpretation:In it through the help of questionnaires we conducted the research and these are as below:-

Statement 1 :- Annual Income of the people.

12%

8%

30%

< 2 Lac 2 - 4 Lac 4 - 5 Lac 5> Lac

50%

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Statement 2 :- People want to Invest their surplus Money.

F ix e d D e p o s it (5 0 % ) M u t u a l F u n d s (2 0 % ) S t o c k s (1 5 % ) R e a l E s t a t e (1 5 % )

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Statement 3 :- Benefits required by the people regarding their Investments.

S aving (28% ) H igh R eturns (40% ) Tax -rebates (12% ) R is k -c over (30% )

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Statement 4:- Expectations from the Life Insurance Companies.

60 50 40 30 20 10 0 High-rtrn Liquidity Security Lower (20%) (13%) (52%) Premium (15%)

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Statement 5:- Preference among various Insurance Plans

35 30 25 20 15 10 5 0
Term -cover (18%) Endo
-wment

(33%)

Child advantage (21%)

Pension scheme (6%)

Unit link (22%)

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Statement 6:- Customer’s awareness about the Product

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
LIC ICICI TATA AIG BIRLA OMKM HDFC Bajaj Allianz

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Statement 7:- At an age point people have taken Insurance-policy

35 30 25 20 15 10 5 0 20 - 30 31 - 40 41 - 50 Above 50 Yr. (33%)Yr. (31%)Yr. (22%) (14%)

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Statement 8:- Occupation Group

G o vt . E m p lo y e e (1 5 % ) P riva t e E m p . (5 2 % ) B us. P ro fe s s io n a l(2 1 % ) O t h e rs (1 2 % )

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Statement 9:- Awareness about Unit Linked Investment Plan

70 60 50 40 30 20 10 0 Yes (30%) No (70%)

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Statement 10:- Company which ULIP’s you have taken

60 50 40 30 20 10 0
HDFC Prudential ICICI (50%) Standard (15%) KLI (17%) Others (18%)

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Statement 11:- People’s interest of investing in KLI

60 50 40 30 20 10 0 Intd. (15%) Semi-intd. (30%) Not Interested (55%)

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Statement 12:- Medium to select KLI.

In s u ra n c e C o n s u lt a n t s (1 2 % ) R e la t ive s (2 5 % ) A d ve rt is e m e n t (4 2 % ) O t h e r S o u rc e s (2 1 % )

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KOTAK MAHINDRA BANK ( 74% )

OLD MUTAL PLC ( 26% )

KOTAK LIFE INSURANCE ( 100% )

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Old Mutual Plc:Old Mutual was established more than 150 years ago. Old mutual plc, Is a world-class international financial service company. It owns the largest companies in the following areas in South Africa.

They are: 1. Life Insurance Company 2. Asset Management Company 3. Bank 4. Non-life insurance company It has been developed into an International financial services group whose activities are focused on asset gathering and asset management. The Old Mutual Group offers a diverse range of financial services in three principal geographies: South Africa, the United States and the United Kingdom. The company is listed on the London Stock Exchange with a market capitalization of approximately $6 billion and is a member of the elite FTSE 100 index. In the 2003 rankings of the World's 500 largest corporations by Fortune magazine, Old Mutual climbed 87 places to position number 366 and was also listed as the 14th largest insurance company in the world. Old Mutual is the largest financial services business in South Africa, through its life insurance, asset management, banking and general insurance operations. The company serves 4 million life insurance policyholders and employs over 13 000 South Africans in its local operations. In the USA, Old Mutual is one of the top ten fixed annuity businesses offering an array of specialist asset management skills through its 23 asset management businesses. The company’s US Life business recorded sales of $4 billion at the end of 2002.

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Operations in the United Kingdom are focused on wealth management, through Gerrard as one of the leading private client stock broking businesses in the UK. The Old Mutual Group has the ability to cater for a variety of consumer segments and offers a comprehensive and innovative range of products for all income groups.

Kotak Mahindra Old Mutual Life Insurance
• • • • • • • A 26%-74% Joint venture between Old Mutual plc and KotaK Mahindra Bank Ltd. Started operations May 2001 209% growth in premium income (year ending March 2005) Presence in 55 cities across the country More than 1,60,000 policies issue (year ending March 2005) More than 7000 Life Advisors ( year ending March 2005) Over 1000 professional employees (year ending March 2005)

 44 branches in 31 cities.  7500 life advisors.  1000employees of very good quality.
 

Ranks 2nd in terms of average premium per policy. Ranks 4th in total advertising awareness.

 First year premium income:

2001-02: 7Crores 2002-03: 35Crores 43

2003-04: 125Crores 2005-06: 373Crores 2006-07: 396Crores 2007-08: 614Crores

AWARDS
2004  Best equity House in India by Euro Money  Best Equity House in India by Asia Money

2005  India’s Best Equity House in India by Finance Asia  Best Equity House in India by Euro Money  Best Equity House in India by Asia Money  Best India Equity House by IFR

2006  Best Broker in India by Finance Asia  Best Equity House in India by Euro money

2007

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Ranked no.1 in six categories in the Annual Euro money Private Banking Survey Poll for 2006 for India

 Best Investment Bank in India by Finance Asia  Ranked #1 in the league table for Book runner/Lead Manager in public equity offerings in terms of the value of transaction completed during fiscal 2006 according to Prime Database  Best Broker In India by Finance Asia  Topped the best Mutual Fund House in the NDTV Business Leadership Awards2006  Best Bond Fund Group Over Three Years by Lipper Fund Awards India  Ranked the best debt fund over 5 years by lipper for the Kotak Bond Regular Plan  Ranked ICRA- MFRI and was the recipient of the Silver Awards by ICRA for the

‘Kotak Bond Regular Plan’

2008  Most Popular Inventor Relation Website for the Asia/Pacific Region Conducted by IR Global Rankings

Emerged winner in 16 categories in the Euro money Private Banking Poll2007, including the Best local Private Bank.

Problem Identification:
The basic step of any research is to find out the problem of the company, the problem may be inside in the company or outside of the company. “Well Defined problem is half

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solved”. The researcher has defined the problem of the organization which is converted in to the study topic. “To study the organizational activities of all the department with the help of secondary as well as primary data collection method”

Promoters:
℘ Kotak Mahindra Private Ltd. Kotak Mahindra Prime Limited (KMPL) is a 100% subsidiary of Kotak Mahindra Group (Kotak Group) formed to finance all passenger vehicles. The company is dedicated to financing and supporting automotive and automotive related manufacturers, dealers and retail customers. The Company offers car financing in the form of loans for the entire range of passenger cars and multi utility vehicles. The Company also offers Inventory funding to car dealers and has entered into strategic arrangement with various car manufacturers in India for being their preferred financier. As on March 31, 2005, KMP has a retail distribution network comprising of 54 branches (including representative offices) covering about 100 locations in 17 states in the country and has a wide network of Direct Marketing Associates, brokers and agencies supporting the distribution network and servicing around 113,000 customers.

℘ Kotak Mahindra Bank Ltd.

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Kotak Mahindra Bank Limited (KMBL) is the holding company and the flagship of the Kotak Mahindra Group. It was actually incorporated as Kotak Capital Management Finance Limited on November 2, 1985 and obtained its ‘Certificate of Commencement of Business on February 11, 1986. It commenced operations with Bill Discounting and soon started other fundbased activities like corporate leasing & hire purchase, automobile finance and money market operations. Subsequently, it also entered the funds syndication and the Investment banking business. ℘ Old Mutual Plc It has been developed into an International financial services group whose activities are focused on asset gathering and asset management. The Old Mutual Group offers a diverse range of financial services in three principal geographies: South Africa, the United States and the United Kingdom. The company is listed on the London Stock Exchange with a market capitalization of approximately $6 billion and is a member of the elite FTSE 100 index. In the 2003 rankings of the World's 500 largest corporations by Fortune magazine, Old Mutual climbed 87 places to position number 366 and was also listed as the 14th largest insurance company in the world. Old Mutual is the largest financial services business in South Africa, through its life insurance, asset management, banking and general insurance operations. The company serves 4 million life insurance policyholders and employs over 13 000 South Africans in its local operations. In the USA, Old Mutual is one of the top ten fixed annuity businesses offering an array of specialist asset management skills through its 23 asset management businesses. The company’s US Life business recorded sales of $4 billion at the end of 2002. 47

Operations in the United Kingdom are focused on wealth management, through Gerrard as one of the leading private client stock broking businesses in the UK.

Distribution
Kotak life has one of the largest distribution networks amongst private life insurers in India. It has a strong presence across India with over 2000 branches (including 1,095 micro-offices) and an advisor base of over 261,000 (as on August 31, 2008). The company has 24 bank assurance partners having tie-ups with ICICI Bank, Bank of India, South Indian Bank, Shamrao Vitthal Co-Op Bank, Jalgaon Peoples Coop Bank, Ernakulam District Co-op Bank, Idukki District Co-op Bank, Ratnagiri Sindhudurg Gramin Bank, Solapur Gramin Bank, Wainganga Kshetriya Gramin Bank, Aryawart Gramin Bank, Jharkhand Gramin Bank, Narmada Malwa Gramin Bank, Baitarani Gramya Bank, Ratnagiri District Central Co-op Bank, Seva Vikas Co-op Bank, Sangli Urban Co-Operative Bank, Baramati Co-operative Bank, Ballia Kshetriya Co-Operative Bank, The Haryana State Co-Operative Bank, Renuka Nagrik Sahakari Bank, Amanath Co-Operative Bank, Arvind Sahakari Bank, Bhandara Urban Co Operative Bank.

SALES DISTRIBUTION: Tied Agency:

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Tied Agency is the largest distribution channel of Kotak Life, comprising a large advisor force that targets various customer segments. The strength of tied agency lies in an aggressive strategy of expanding and procuring quality business. With focus on sales & people development, tied agency has emerged as a robust, predictable and sustainable business model. Bank assurance and Alliances: Kotak life was a pioneer in offering life insurance solutions through banks and alliances. Within a short span of two years, and with nearly a large number of partners, B & A has emerged as a vital component of the company’s sales and distribution strategy, contributing to approximately one third of company’s total business. The business philosophy at B&A is to leverage distribution synergies with our partners and add value to its customers as well as the partners. Flexibility, adaptation and experimenting with new ideas are the hallmarks of this channel.

Market Share:-

Life Insurance Company’s Market share Based On premium in India.

2003-04 LIC 98%

2004-05

2005-06

2006-07

2007-08

94%

87%

78%

72%

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Private Players 2% 6% 13% 22% 28%

Industry growth rate at 36% (2007-08) with premium income From new Business.

What is customer satisfaction?
Customer satisfaction refers to how satisfied customers are with the products or services they receive from a particular agency. The level of satisfaction is determined not only by the quality and type of customer experience but also by the customer’s expectations. A customer may be defined as someone who: • • has a direct relationship with, or is directly affected by your agency and Receives or relies on one or more of your agency’s services or products.

Customers in human services are commonly referred to as service users, consumers or clients. They can be individuals or groups. An organization with a strong customer service culture places the customer at the centre of service design, planning and service delivery. Customer centric organizations will: • • • • determine the customers expectations when they plan listen to the customer as they design focus on the delivery of customer service activities Value customer feedback when they measure performance.

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Why is it important?
There are a number of reasons why customer satisfaction is important in Insurance Sector: • Meeting the needs of the customer is the underlying rationale for the existence of community service organizations. Customers have a right to quality services that deliver outcomes. • Organizations that strive beyond minimum standards and exceed the expectations of their customers are likely to be leaders in their sector. • Customers are recognized as key partners in shaping service development and assessing quality of service delivery. The process for measuring customer satisfaction and obtaining feedback on organizational performance are valuable tools for quality and continuous service improvement.

Insurance Solutions for Individuals:
Kotak Life Insurance offers a range of innovative, customer-centric products that meet the needs of customers at every life stage. Its products can be enhanced with up to 4 riders, to create a customized solution for each policyholder.

Protection Helping you to grow and protect your wealth. Retirement The road to retirement, Make it easy 51

Savings & Investments Manage today for a better tomorrow. Child Plan a good future for your child.

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The field of finance refers to the concepts of time, money and risk and how they are interrelated. Banks are the main facilitators of funding through the provision of credit, although private equity, mutual funds, hedge funds, and other organizations have become important. Financial assets, known as investments, are financially managed with careful attention to financial risk management to control financial risk. Financial instruments allow many forms of securitized assets to be traded on securities exchanges such as stock exchanges, including debt such as bonds as well as equity in publicly-traded corporations.

The main techniques and sectors of the financial industry:Finance is used by individuals (personal finance), by governments (public finance), by businesses (corporate finance), as well as by a wide variety of organizations including schools and non-profit organizations. In general, the goals of each of the above activities are achieved through the use of appropriate financial instruments and methodologies, with consideration to their institutional setting.

Corporate finance
Managerial or corporate finance is the task of providing the funds for a corporation's activities. For small business, this is referred to as SME finance. It generally involves balancing risk and profitability, while attempting to maximize an entity's wealth and the value of its stock. Long term funds are provided by ownership equity and long-term credit, often in the form of bonds. The balance between these forms the company's capital structure. Shortterm funding or working capital is mostly provided by banks extending a line of credit.

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Another business decision concerning finance is investment, or fund management. An investment is an acquisition of an asset in the hope that it will maintain or increase its value. In investment management – in choosing a portfolio – one has to decide what, how much and when to invest. To do this, a company must:

 Identify relevant objectives and constraints: institution or individual goals, time horizon, risk aversion and tax considerations;

Identify the appropriate strategy: active v. passive – hedging strategy

 Measure the portfolio performance Financial management is duplicate with the financial function of the Accounting profession. However, financial accounting is more concerned with the reporting of historical financial information, while the financial decision is directed toward the future of the firm. The Accounts of the Authority for the financial year 2007-08 have been audited by the Comptroller and Auditor General of India (C&AG). C&AG, in their draft separate audit report, has advised revision in the accounts due to some wrong classifications. The same has been carried out. A copy of revised accounts for the year 2007-08 is placed at Annexure. X. The revised accounts are under submission to C&AG and final report on the same is awaited.

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WORKING CAPITAL MANAGEMENT
Working capital refers to that part of the firm’s capital which is required for financing short-term or current assets, such as, cash, marketable securities, debtors, inventories, bills receivable etc. the assets of this type are relatively temporary in nature. Unfortunately, there is much disagreement among financiers, accountant, economics and businessmen as to the exact meaning of the team “working capital” However, working capital is also known as circulating capital or short term capital. Working capital can be derived by the deference between current assets and current liabilities of the firm. GROSS WORKING CAPITAL= TOTAL CURRENT ASSETS

WORKING CAPITAL= CURRENT ASSETS – CURRENT LIABILITIES

Particular Current Assets Cash and Bank Balances Advances and Other Assets Sub-Total (A) Current Liabilities Provisions Sub-Total (B)

2008 1,248,644 444,163 1,692,807 1,551,719 70,969 1,622,688

2007 570,984 343,225 914,209 818,943 26,729 845,672

Working capital = Current Assets – Current Liabilities

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For year 2008 Working Capital = C.A – C.L = 1,692,807- 914,209 = 70,119

For year 2007 Working Capital = C.A – C.L = 914,209 – 845,672 = 68,537

RATIO ANALYSIS:

Ratio analysis isn't just comparing different numbers from the balance sheet, income statement, and cash flow statement. It's comparing the number against previous years, other companies, the industry, or even the economy in general. Ratios look at the relationships between individual values and relate them to how a company has performed in the past, and might perform in the future.

Ratio analysis is the method or process by which the relationship of items or group of items in the financial statement are computed, determined and presented.

CURRENT RATIO:

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Meaning: This ratio compares the current assets with the current liabilities. It is also known as ‘working capital ratio’ or ‘solvency ratio’. It is expressed in the form of pure ratio. E.g. 2:1

CURRENT RATIO = Current Assets / Current Liabilities.

Particular Current Assets Cash and Bank Balances Advances and Other Assets Sub-Total (A) Current Liabilities Provisions Sub-Total (B)

31-MAR08 1,248,644 444,163 1,692,807 1,551,719 70,969 1,622,688

31-MAR07 570,984 343,225 914,209 818,943 26,729 845,672

For year 2008

Current Ratio = C.A / C.L = 1,692,807 / 1,622,688 = 1.04

For year 2007

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Current Ratio = C.A / C.L = 914,209 / 845,672 = 1.08

INTERPRETATION
The current ratio in the year 2008 has decrease the current ratio as compare

to the year 2008 in steadily it indicates good liquidity of current assets.

TURNOVER RATIO / INTEREST COVERAGE RATIO / ACTIVITY RATIO

INTEREST COVERAGE RATIO = Profit before Interest and Tax / Interest

Particular

31-MAR08

31-MAR07

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Profit before tax Less Interest Profit before interest & tax

1,096,357

435,951

96,373 999,984

65,644 370307

INTEREST COVERAGE RATIO = Profit before Interest and Tax / Interest

FOR YEAR 2008

INTEREST COVERAGE RATIO = Profit before Interest and Tax / Interest

= 999,984 / 96,373

= 10.38%

FOR YEAR 2007

INTEREST COVERAGE RATIO = Profit before Interest and Tax / Interest

= 370,307 / 65,644

=5.64%

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INTERPRETATION:
The current ratio in the year 2008 has decrease the current ratio as compare the year

2007 it mean that company has done less investment in interest coverage ratio or turnover ratio.

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STRENGTHS:

I.

Financial Acumen - Holds a stable and diversified portfolio and has received some of the highest ratings in financial strength from industry’s independent rating agencies.

II.

Disciplined fund management - Years of experience in asset management, and a strong track record in managing funds - backed by the acclaimed expertise of Old Mutual plc

III.

Innovativeness - Known for being an innovator in providing world-class pragmatic financial solutions, with a constant focus on customization and flexibility 62

IV.

Unrelenting Customer Focus - A highly committed sales force, with customer satisfaction as the key driving force - a major differentiator

V.

Transparency in Services - Daily declaration of fund performances, regular performance benchmarking, well regulated asset management, and monthly newsletter on market updates

WEAKNESSES:

 Industry in nascent stage.  Rural areas still not covered.  Not very known among Indian population.  Lack of credibility among the people because Kotak being a private player.  Premiums are high as compared to its competitors.  Very few branches in the country.  Products:

» The policy doesn’t have the surrender option before third year. » Plan does not offer any guarantee or assured return. » Product profile is not very comprehensive. » Mortality, management and administrative charges are sky scrapping as
compared to its competitors.

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OPPORTUNITIES:

 Liberalization of Indian economy.  As the industry is growing the whole market is virgin.  The whole private sector is opened to be trapped even though the competition is fierce from government owned insurance companies.  It’s a volume business that is even if the company has few good corporate the turnover cease to increase by manifold.  Products: » Preserver funds look good due to comfortable liquidity in the economy and there is little chance hike in short-term rate by RBI. » Finance minister unveiled a budget favoring consumer spending, boosting demand and therefore higher economic growth.

THREATS

 The government players will become aggressive thus growth is going to be tough.  Entry of other players is not ruled out.  Apprehension towards Kotak being a private life insurance company.  We expect the industry to rationalize in future that is mergers and acquisitions will happen, which will impact the industry and Kotak life fortunes. 64

Products: » Past performance of these plans is not indicative of the future performance of the plan. » The sum invested in the funds is subject to market risks and there can be no assurance that the objective of plan will be achieved. » All benefits payable under the policy are subject to tax laws and other financial enactment, as they exist from time to time.

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CONCLUSION
After analysing the all situation we come at the following conclusions:● The important facts which we could conclude from our data regarding the buying behavior of individuals are that people give maximum importance to the tax benefit that they receive after investing in the unit linked insurance plan. ● Regarding the acceptance of ULIP as a product over other investments it is analyzed that though a lot of our sample population was aware about it and had invested in it but still a lot of them (including Females) wanted to invest in it but were confused regarding other options like mutual funds. So a lack of public awareness was encountered. ● Almost all the companies offer similar features and facilities, therefore for impressing a customers to invest in ULIP of there company is a very difficult task. Credit goes to ICICI prudential for their aggressive marketing tactics with the help of which they have been able to gather maximum number of investors both male and female. Aggressive Marketing is the key to increasing the market share in this area, since the market has a lot of potential both in terms of untapped market. This is the main reason why ICICI is ahead of Kotak Life Insurance and others. ● The level of service in terms of delivering whatever is promised, fast response in case of problems, is the most important benefit that the customers seek from the company in which they are investing their money as savings as well as they are getting life cover so it becomes very important for the companies that what they are promising to there customers they should deliver those things to them.

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● Most of the customers are not aware about the ULIP and also the Product as such which companies are providing to them. So it is very important for the companies that they should convince their customers that they are getting something out of there money that they are going to invest in there company. • There are very tough competitions among the private insurance companies on the level of new trend of advertising to attract a major part of Customers. • • Kotak is not left behind in the present race of advertisement. The entry of more Pvt. Players in the Insurance Sector has expanded the product segment to meet the different level of the requirement of the customers. It has brought about greater choice to the customers. • Kotak has vast market and very firm grip on its traditional customers and monopoly of life insurance products.

IRDA is also playing very comprehensive role by regulating norms mandating to private players in this sector, that increases the confidence level of the customers to the private players.

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Suggestions or Recommendations
The study has provided with the useful data from the respondents. There has a lot to be recommended. Following are the recommendations:• There is a need for better promotion for the investment products & services. The bank should advertise its products through television because it will reach to the masses. • • More returns should be provided on Insurance plans. As the bank provides the Insurance facility to its customers. It should provide this facility by tie up with the other Insurance organizations as well. The main reason is that, the entire customers do not want Insurance of only one company. They should have choice while selecting a suitable Insurance plans. This will definitely add to the goodwill & profit for the insurance industry. • Discount charges should be made available because of the severe competition within the private players as well as the biggest threat posed by LIC and SBI. • Most of the customers as per our sample are inclined towards ICICI Prudential because of the strong policy base and easy accessibility. So other competitors really need to make a new brand awareness policy. • Normally ULIP has a lock-in of 3 years. This should be reduced to 1 or 2 years so as to make it more flexible.

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Findings
• Talking of its the market share of the leading players it was found that LIC rules when it comes to an age group of 50 plus due to the credibility and trust it has gained in all past years. Where the other age groups prefer to explore the leading private players where in our sample KLI and ICICI prudential make a clean sweep. Other banks like HDFC were found with a limited proportion only (according to our findings).

• How to present oneself before the customer • Get out the real need from the customer • How to handle the pressure of targets • How to work in teams

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Limitations:
Some of the difficulties and limitations faced by me during my training are as follows:

Lack of awareness among the people – This is the biggest limitation

found in this sector. Most of the people are not aware about the importance and the necessity of the insurance in their life. They are not aware how useful life insurance can be for their family members if something happens to them.

Perception of the people towards Insurance sector – People still

consider insurance just as a Tax saving device. So today also there is always a rush to buy an Insurance Policy only at the end of the financial year like January, February and March making the other 9 months dry for this business.

Insurance does not give good returns – Still today people think that

Insurance does not give good returns. They are not aware of the modern Unit Linked Insurance Plans which are offered by most of the Private sector players. They are still under the perception that if they take Insurance they will get only 5-6% returns which is not true nowadays. Nowadays most of the modern Unit Linked Insurance Plans gives returns which are many times more than that of bank Fixed deposits, National saving certificate, Post office deposits and Public provident fund.

Lack of awareness about the earning opportunity in the Insurance

sector – People still today are not aware about the earning opportunity that the Insurance sector gives. After the privatization of the insurance sector many private giants have entered the insurance sector. These private companies in order to beat the 70

competition and to increase their Insurance Advisors to increase their reach to the customers are giving very high commission rates but people are not aware of that.

Increased competition – Today the competition in the Insurance sector

has became very stiff. Currently there are 14 Life Insurance companies working in India including the LIC (life insurance Corporation of India). Today each and every company is trying to increase their Insurance Advisors so that they can increase their reach in the market. This situation has created a scenario in which to recruit Life insurance Advisors and to sell life Insurance Policy has became very very difficult.

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• Sr.no 1 2 3 4 5

BIBLIOGRAPHY / REFERENCES:Book Basic Marketing Research Insurance principles & practice Life insurance Marketing management Marketing Research Author Churchill & Brown P.A.S.Mani. Prof. O.S.Gupta. Philip kotler. Naresh Malhotra

Web sites:www.kotak.com www.licindia.com www.irda.org www.lifeinsure.com www.kotakdirect.in www.financeindiamart.com www.google.com www.businesstoday.com

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APPENDICES
Appendix-I

NEED ANALYSER

PERSONAL DETAIL

Name: _____________________________________

Age: ______________________________________

Address: __________________________________

__________________________________

Mobile/Phone No: __________________________

Gender:

Male

Female

Marital Status: Married

Unmarried

Children: ____________

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Employment Status:

Employed

Selfemployed

Unemployed

DETAIL

Saving:

Yes

No

Monthly Range: ____________________

Direct your savings: 1) Bank Deposits 2) Stock Market 3) Other Investment

If Bank Deposit Why: ________________________________________________________________ _________________________________________________________ _______

Why not: _______________________________________________________________ ________________________________________________________ ________

If Stock / Mutual Why: ________________________________________________________________

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_______________________________________________________ _________

Other Investment: ________________________________________________________________ ___________________________________________________________ _____ How much money do you need to secure your future? Rs._________________

Any Dream: ________________________________________________________________

Do you like the KOTAK Life advisor to serve you a beneficial plan?

Yes

No

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Appendix-II

QUESTIONNAIRE:Q1. What is your Annual income? (In lakhs) (1) <2 (2) 2-4 (3) 4-5 (4) > 5

Q2. Where do you want to invest your surplus money? (1) Fixed deposit (2) Mutual funds (3) Stocks (4 Real Estate Q3. What benefits do you want from your Investments? (1) Savings (2) High returns (3) Tax rebates (4) Risk cover

Q4. What do you expect from the life insurance companies? (1) High return (2) Liquidity (3) Security (4) Low premium 76

Q5. At this point of time if you were taking a life insurance plan you would like to take which scheme? (1) Endowment (2) Term cover (3) Child advantage (4) Pension scheme (5) Unit link

Q6. Do you know about the product of these Companies? (1) LIC (2) ICICI (3) TATA AIG (4) BIRLA (5) OMKM (6) HDFC (7) Bajaj Allianz

Q7. At what age have have you taken Life Insurance Policy? (1) 20 – 30 (2) 31 – 40 (3) 41 – 50 (4) Above 50

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Q8. What is your occupation group? (1) Government Employee (2) Private Employee (3) Business Professional (4) Others

Q9. Are you aware about ULIP? (1) Yes (2) No

Q10. Which company’s ULIP have you taken? (1) ICICI Prudential (2) HDFC Standard Life (3) KLI (4) Others

Q11. Are you interested in investing in KLI? (1) Interested (2) Semi-interested (3) Not-interested Q12. Through which medium you opted for KLI? (1) Insurance Consultants (2) Relatives (3) Advertisements (4) Other Sources

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